November 9, 2010
FHA loan applicants go into the process expecting to pay money for a down payment, mortgage insurance, closing costs and the typical fees associated with getting an FHA mortgage. What they don’t expect is to get money back from the Department of Housing and Urban Development. But in some cases, that’s exactly what they’ll get.
There are two situations where FHA mortgage holders could be entitled to a payment from the FHA. One is called a Premium Refund and is basically a refund of up-front mortgage insurance premiums, the other is called Distributive Share, which is a dividend paid from proceeds of the FHA’s participation in the Mutual Mortgage Insurance Fund.
The FHA Premium Refund is something all who have FHA mortgages should investigate if the loan was acquired on or after September 1, 1983. Who is potentially eligible for this refund? Those who paid an up front mortgage insurance premium on the closing date of the loan on or after September 1, 1983 and did NOT default on FHA mortgage payments.
Those who would otherwise qualify for the refund are not eligible if the FHA loan went into default status.
The FHA encourages borrowers to check the details of their loan settlement papers or call their lender if they aren’t sure an up front mortgage insurance premium (UFMIP for short) was paid. The FHA also offers a handy database for homeowners to use. The FHA or your lender can tell you when you would be eligible to get the payment if you qualify.
The other source of payment from the FHA, the Distributive Share, is for those with FHA loans that started BEFORE September 1, 1983. FHA borrowers who made mortgage payments for more than seven years on such loans and had their FHA insurance terminated before November 5, 1990 are eligible. Normally there is a process that’s followed when such refunds are available and the FHA official site also states, “The rules governing eligibility for premium refunds and distributive share payments are based on the financial status of the FHA insurance fund and are subject to change.”
Check with the FHA by email at [email protected] for further details if you’re unsure of your eligibility or have questions about the program.
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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