FHA Homeowners Facts
Distributive Shares and Refunds
Who may be eligible for a FHA Refund or Share?
Premium Refund:
You may be eligible for a refund of a portion of the insurance premium if you:
- acquired your loan AFTER September 1, 1983
- paid an upfront mortgage insurance premium at closing AND
- did not default on your mortgage payments.
Review your settlement papers or check with your mortgage company to determine if you paid an upfront premium.
Distributive Share:
You may be eligible for a share of any excess earnings from the Mutual Mortgage Insurance fund if you:
- originated your loan before September 1, 1983
- paid on your loan for more than seven years, AND
- HUD processed your FHA insurance termination BEFORE November 5, 1990.
Exceptions:
Assumptions: When an FHA insured loan is assumed, the insurance remains in force (the seller receives no refund). The owner(s) of the property at the time the insurance is terminated is entitled to any refund.
FHA to FHA Refinances: When an FHA loan is refinanced, the refund from the old premium may be applied toward the upfront premium required for the new loan.
Claims: When a mortgage company submits a claim to HUD for insurance benefits, no refund is due the homeowner.
Statute of Limitations: HUD is not liable for a distributive share that remains unclaimed 6 years from the date notification was first sent to the last known address of the mortgagor.
How are Refunds Determined?
The FHA Commissioner determines how much premium is refunded when loans are
terminated. Refunds are based on the number of months the loan is insured.
At present, for loans terminating on or after January 1, 1994, with
insurance in force for 24 months, approximately 80 percent of the premium
is refundable; for 48 months, 39 percent; for 72 months, 8 percent. At the
end of the seventh year, no refund is due the homeowner.
How are Refunds Processed?
- Mortgage company notifies HUD of insurance termination.
- If you are eligible for a refund, HUD will either request Treasury to issue you a check directly, or will send you an Application for Premium Refund or Distributive Share Payment (form HUD-27050-B) for more information.
- Read the application carefully, sign it, have it notarized, and attach proof of ownership.
- HUD either requests Treasury to issue a check or requests additional information from you.
How to Follow-up:
If you do not receive a check or an application within 45 days after you
have paid off your loan, check with your mortgage company to confirm that
they have sent HUD a request for termination. If they confirm that the
correct termination information was sent, contact HUD. If you do not
receive a refund or any other documentation from HUD within 120 days from
the date you mailed your claim form, contact HUD immediately.
How to contact HUD:
Phone: Mail:
(703) 235-8117 U.S. Dept. of Housing and Urban Development
8:30 a.m. to 8:30 p.m. (ET) P.O. Box 23699
Monday through Friday Washington, DC 20026-3699
Note: All inquiries should include your name, 10-digit FHA case number, paid-in-full date, property address, and a daytime phone number.
IMPORTANT: The rules governing the eligibility for premium refunds and
distributive share payments are based on the financial status of the FHA
insurance fund and are subject to change.
form HUD-27050-C (2/95)
This information is contained in FHA Mortgagee Letter 95-16.