Critical Update on FHA's New MIP Cancellation Procedures

The Federal Housing Administration (FHA) hasrnissued a critical update related to last week’s announcement of FHArnpremium changes.  The update contains instructions for lenders wishing to cancel case numbers forrnloans in process pursuant to Mortgagee Letter 2015-01.</p

The announcement of a .5 reduction in thernannual Mortgage Insurance Premium (MIP) for FHA loans affects loans with casernnumbers assigned on and after January 26, 2015. rnThe Mortgagee Letter acknowledges the need for borrowers with casernnumbers assigned but with loans not yet closed and funded, to benefit from thernreductions as well.   Lenders currently processing such loans may beginrnsubmitting Case Number Cancellation Requests<bbeginning on January 15.  All requestsrnmust be submitted prior to midnight on Thursday, February 26, 2015.   </p

Case Number Cancellation Requests may bernsubmitted either as an individual or a bulk request.  Bulk requests are those requestingrncancellation or two or more case numbers. rnThe process for each of these is detailed below.</p

Once the cancellation request, eitherrnindividual or bulk, is processed by FHA and appears as “Last Action:  Cancelled” on the FHA Connection Case Queryrnscreen, the new Case Number can be ordered. rnThat order must be placed on or after January 26, 2015.  FHA warns that placing a request for a new numberrnprior to the cancellation of the old one will result in significant delays.</p

To reiterate the timeline:</p

Jan 15 – FHA will begin accepting cancellation requests
Jan 26 – DO NOT order a new case number before this date
Feb 26 – Deadline for cancelling old case numbers</p

Completed Appraisals Require Certification</p

Special instructions apply for those loansrnwhere numbers are to be cancelled but an appraisal has already beenrnobtained.  The mortgagee in these casesrnwill be required to certify on the FHA Connection Appraisal Logging screen thatrnthe previous Case Number was cancelled and indicate inrnthe User Certification section, by checking the “Certify Effective Date” box,</p

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that the Case meets the certificationrncriteria regarding the reason the effective date of the appraisal is prior tornthe Case Assignment Date.   Allrnother appraisal processes and requirements from the previous Case Number arernapplicable to the new Case Number.</p

Cancellation Request Specifications</p

An Individual CasernNumber Cancellation Request can be submitted using the standard instructions asrndescribed on the FHA CasernProcessing Requirements webrnpage and must be submitted by the mortgagee; borrower requests will not bernprocessed.  </p

A Bulk Case Number CancellationrnRequest is defined as a request that includes more than one case number but notrnmore than 1,000.  These requests must bernsubmitted through the email address answers@hud.gov</bto the FHA Resource Center and contain the subject line "MIP REDUCTIONrnCANCELLATION – ML 20150-01."  The emailrnmust contain the name and Lender ID of the company submittingrnthe request, and contact information including the Mortgagee's Name, ContactrnPerson, Phone Number, and Fax Numberrnand includernas an attachment the Case Number Cancellation Request data as a Microsoft Excel® spreadsheet.  .  </p