How is the effective date of mortgage insurance termination determined and what are the Mortgagee’s documentation requirements?

The effective date of termination of the contract of insurance is the last Day of the month in which one of the following occur:
  • the date a voluntary termination request is received by the Commissioner;
  • the date the Mortgage was prepaid; or
  • where the Mortgagee notifies the Commissioner that a claim will not be filed; the date foreclosure proceedings were initiated; or the Property was acquired by another party, including the Mortgagee.
The Mortgagee must note in the servicing file and report in FHA Connection (FHAC), Business to Government (B2G), or Electronic Data Interchange (EDI), the date on which the voluntary termination request is received by the Commissioner; the date notice is received by the Commissioner that the Mortgage was prepaid; or the date notice is received by the Commissioner that a claim will not be filed; or that the Property will not be conveyed. For FHA-to-FHA refinances, the Mortgagee processing the new refinance must report the projected and actual Closing Date.
 
The Mortgagee is obligated to pay the Mortgage Insurance Premium (MIP) due until the effective date of termination.

See policy in Handbook 4000.1, Section III.A.1.l.ii (C) 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-05249