FHA Refunds
Have you had an FHA-insured mortgage? If the answer is yes, then you could be eligible for a refund from HUD (the US Department of Housing and Urban Development) or FHA.
There are two types of FHA refunds; premium refunds and distributive shares. A premium refund gives back a portion of the insurance premium to you. With a distributive share, you may receive a portion of the excess profit from the Mutual Mortgage Insurance Fund. However, there are eligibility standards for both types of refunds.
In order to qualify for a Premium Refund you must have:
- Acquired your loan after September 1, 1983
- Paid an up-front mortgage insurance premium at closing AND
- Not defaulted on your mortgage payments
For a Distributive Share Refund you must have:
- Originated your loan before September 1, 1983
- Paid on your loan for more than seven years AND
- Had your FHA insurance terminated before November 5, 1990
There are some exceptions to these eligibility guidelines. These four exceptions are: Assumptions, Claims, FHA to FHA Refinances and Statute of Limitations.
- Assumptions are when an FHA-insured loan is assumed - the insurance remains in force, the seller receives no refund. The owner (or owners) of the property at the time the insurance is terminated is entitled to any refund.
- Claims occur when a mortgage company submits a claim to HUD for insurance benefits. However, in these cases no refund is due to the homeowner.
- FHA to FHA Refinances are when an FHA loan is refinanced and the refund from the old premium may be applied towards the new loan. However, the old premium may only be used when paying towards the up-front premium that is required for the new loan.
- Statute of Limitations happens when the HUD is not at fault for a distributive share that remains unclaimed for six years from the date that notification was first sent to the last known address of the mortgagor.
How are Refunds Determined?
Refunds are based on the number of months the loan is insured. The FHA commissioner will determine how much of the up-front premium will be given back as soon as the loan has terminated.
- For FHA-insured loans with a closing date before January 1, 2001 and endorsed before December 8, 2004, no refund will be processed after the seventh year of insurance.
- For FHA-insured loans closed on or after January 1, 2001 and endorsed before December 8, 2004, no refund will be processed after the fifth year of insurance.
- For any FHA-insured loans endorsed on or after December 8, 2004, no refund will be processed for the homeowner unless he or she refinanced to a new FHA-insured loan. No refund is due to these homeowners after the third year of insurance.
To get your refund request started, you can contact the HUD at:
(800) 697-6967
8:30 am to 8:30 pm, Eastern Standard Time - Monday through Friday
US Department of Housing and Urban Development
P.O. Box 23699
Washington, DC 20026
Return back to the FHA Mortgage Center home or the FHA Lending Guide.