January 3, 2013
In our previous blog post, we addressed a question from a reader who asked, “Is it possible for the previous lender to cancel the FHA Case Number?”
FHA case numbers may be canceled–there are rules that govern how this procedure is to be handled by the lender. The case number must be canceled in writing according to the procedure spelled out on the FHA/HUD official site. “The lender must notify the appropriate FHA Homeownership Center in writing to close outstanding files and cancel the FHA case number if the origination and closing of a loan will not be completed or if FHA mortgage insurance endorsement will not be sought.”
The rules also remind lenders, “Please note that you cannot request a case number cancellation for an endorsed (insured) loan or for a case number that your company does not hold. Written requests should include the reason for cancellation and any supporting documentation. Lenders are no longer able to cancel case numbers via FHA Connection.”
Canceling an FHA case number isn’t necessarily done at the same point in every FHA loan process. What happens to mortgage insurance payment money if the borrower has already paid these funds? Fortunately there are provisions in the FHA loan rules for this. From the official site, “If MIP funds have been paid, the lender must request a refund of all monies paid once the cancellation has been processed.”
What happens to FHA loan case numbers in situations where the borrower walks away from the loan or decides to go with a different lender? “Generally speaking, case numbers will remain with the property. Should a sale fail to close, the lender should update the borrower information if originating a new loan for subsequent purchasers or transfer the case number to a new lender if requested.”
Here is an important detail in the rules that cover FHA case numbers. Lenders and borrowers alike should know that according to FHA and HUD regulations, “Case numbers will not be canceled to facilitate obtaining a new appraisal prior to its expiration.”
In order to request a case number cancellation, contact the FHA Homeownership Center with jurisdiction over the area to initiate the process. This can be done by e-mail and must include the lender name, email address, telephone and contact information; and case number. FHA requests, “Please do not send a request multiple times. Include Case Cancellation in the subject line.”
The FHA official site offers the following link if you need to look up the appropriate FHA Homeownership Center near you.
Do you have questions about FHA home loans? Ask us in the comments section.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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