How long is MIP collected for a loan closed on or after January 1, 2001 with a case number assigned prior to June 3, 2013?

The below policies apply only to FHA-insured Mortgages that:
  • closed on or after January 1, 2001; and
  • have a case number assignment before June 3, 2013.  
HUD automatically cancels FHA Mortgage Insurance Premiums (MIPs) under the conditions set forth below. The FHA contract of insurance remains in force for the Mortgageā€™s full term, unless otherwise terminated.

HUD will not consider new appraised values when calculating whether the Borrower has reached the required Loan-to-Value (LTV) ratio necessary for annual MIP cancellation. The LTV ratio is based on the principal balance excluding Upfront MIP (UFMIP).  HUD bases the cancellation of the annual MIP on the initial amortization schedule.
  
Mortgage Term of More Than 15 Years
HUD automatically cancels the annual MIP when the LTV ratio reaches 78 percent of the lesser of the initial sales price or appraised value at origination, provided the Borrower has paid the annual MIP for at least five years. 
 
Mortgage Term of 15 Years or Less; and
  • LTV Ratio 90% and Greater (Closed on or after January 1, 2001 with Case Assigned Before July 14, 2008); or
  • LTV Ratio Greater than 90% (Case Assigned on and after July 14, 2008 and Before June 3, 2013) ; or
  • LTV Ratio Greater than 78% but Equal or Less Than 90% (Closed on or after January 1, 2001 with Case Assigned Before June 3, 2013) 
HUD automatically cancels the annual MIP when the LTV ratio reaches 78 percent of the lesser of the initial sales price or appraised value at origination regardless of the length of time the Borrower has paid the annual MIP.
 
NOTE: HUD does not charge annual MIP for Mortgages with terms of 15 years or less which
  • closed on or after January 1, 2001 and have a case number assigned before July 14, 2008 with an LTV ratio of less than 90%;
  • have a case number assigned on or after July 14, 2008 but before April 18, 2011 with an LTV ratio of 90% or less; or
  • have a case number assigned on or after April 18, 2011 but before June 3, 2013 with an LTV Ratio of 78% or less    
In cases where Mortgage Payments have been accelerated or modified, HUD may base cancellation on the actual amortization of the Mortgage as provided to HUD by the servicing Mortgagee. A borrower may initiate a request for cancellation of the collection of annual MIPs through their Mortgagee when the following requirements have been met: 
  • the Borrower has reached the 78 percent threshold in advance of the scheduled amortization due to prepayments, but not sooner than five years from the Closing Date except for 15-year term Mortgages; and
  • the Borrower has not been more than 30 Days Delinquent on the Mortgage during the previous 12 months.  
For policy information see Handbook 4000.1, Section III.A.1.k. at: https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh
 

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.


Topic Number: KA-05246