7-7: MONTHLY MORTGAGE INSURANCE PREMIUM (11/18/1994)

Owned by Kacey Olson
Nov 25, 2018
3 min read

© HUD Single Family Housing Policy Handbook 4235.1

All HECM loans are insured retroactively from the date of closing, so the monthly mortgage insurance premium will begin to accrue on the outstanding balance from the day after the expiration of the three-day rescission period. Any delays in endorsing the mortgage will not relieve the lender of MIP remittance requirements. The monthly MIP is remitted to HUD using the same procedures as with the initial MIP. The lender must use the same PAD account for the monthly transactions. The lender can only use this method for remitting the MIP for reverse mortgages. If a mortgage is rejected for insurance, a refund of any premium paid will be processed by the Department.

  1. Calculating the monthly MIP payment. The payment will be calculated based on the daily outstanding balance of the loan. An annual rate of .5% of the outstanding balance will be applied to the daily outstanding balance to determine the correct payment.

1) Assignment Insurance Option. If the lender has chosen this option at closing, it must remit 1/12 of the annual rate each month.

2) Shared Premium Insurance Option. If the lender has chosen this option at closing, it will retain a percentage of the monthly amount. The percentages are listed in the factor table of Appendix 20.

  1. Monthly Information Collection. Each month, the lender should enter information on the mortgage, if necessary, including any unscheduled payments, and the required MIP will be calculated based on this information. The following information must be entered as it becomes available, or by the last day of the month:

1) Recalculations of the borrower's monthly payments.

2) Unscheduled payments to the borrower, including payments from a line of credit, and dates that the payments were made.

3) Payments made on behalf of the borrower, including payments for taxes and insurance, and dates that the payments were made.

4) Any prepayment of the outstanding principal balance, and the dates that the payments were made.

5) Changes to the interest rate on the regular change date.

  1. Servicer and Holder Changes. Any changes in the holder or servicer of the mortgage must be reported as soon as they are made. The selling lender will notify HUD of these changes through the automated system and by submitting Form HUD-92080 to the Insurance Operations Division in HUD Headquarters. The acquiring lender must establish an PAD account with HUD if it is not already servicing reverse mortgages (see Appendix 23).
  2. Remitting the MIP.

1) The MIP is due on the first business day of the month, but must be received by the tenth day of the month to avoid a late charge.

2) The lender must be sure to enter information about each month's mortgage activity by the end of the last business day of the month.

3) Notice of the monthly MIP due will be available on the automated system on the first of the month, in order that the lender may place sufficient funds in the PAD account before the account is debited.

4) The automated system will automatically debit the lender's ACH account before the tenth of the month for the correct MIP amount.

  1. The amount of any monthly MIP payments are added to the borrower's outstanding balance when the lender makes the payments to HUD.
  2. The lender will have the capability of reviewing the complete history of each mortgage for reconciliation purposes.