The Federal Housing Administration (FHA) has
issued a critical update related to last week's announcement of FHA
premium changes. The update contains instructions for lenders wishing to cancel case numbers for
loans in process pursuant to Mortgagee Letter 2015-01.
The announcement of a .5 reduction in the
annual Mortgage Insurance Premium (MIP) for FHA loans affects loans with case
numbers assigned on and after January 26, 2015.
The Mortgagee Letter acknowledges the need for borrowers with case
numbers assigned but with loans not yet closed and funded, to benefit from the
reductions as well. Lenders currently processing such loans may begin
submitting Case Number Cancellation Requests
beginning on January 15. All requests
must be submitted prior to midnight on Thursday, February 26, 2015.
Case Number Cancellation Requests may be
submitted either as an individual or a bulk request. Bulk requests are those requesting
cancellation or two or more case numbers.
The process for each of these is detailed below.
Once the cancellation request, either
individual or bulk, is processed by FHA and appears as "Last Action: Cancelled" on the FHA Connection Case Query
screen, the new Case Number can be ordered.
That order must be placed on or after January 26, 2015. FHA warns that placing a request for a new number
prior to the cancellation of the old one will result in significant delays.
To reiterate the timeline:
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
Completed Appraisals Require Certification
Special instructions apply for those loans
where numbers are to be cancelled but an appraisal has already been
obtained. The mortgagee in these cases
will be required to certify on the FHA Connection Appraisal Logging screen that
the previous Case Number was cancelled and indicate in
the User Certification section, by checking the "Certify Effective Date" box,

that the Case meets the certification
criteria regarding the reason the effective date of the appraisal is prior to
the Case Assignment Date. All
other appraisal processes and requirements from the previous Case Number are
applicable to the new Case Number.
Cancellation Request Specifications
An Individual Case
Number Cancellation Request can be submitted using the standard instructions as
described on the FHA Case
Processing Requirements web
page and must be submitted by the mortgagee; borrower requests will not be
processed.
A Bulk Case Number Cancellation
Request is defined as a request that includes more than one case number but not
more than 1,000. These requests must be
submitted through the email address answers@hud.gov
to the FHA Resource Center and contain the subject line "MIP REDUCTION
CANCELLATION - ML 20150-01." The email
must contain the name and Lender ID of the company submitting
the request, and contact information including the Mortgagee's Name, Contact
Person, Phone Number, and Fax Number
and include
as an attachment the Case Number Cancellation Request data as a Microsoft Excel® spreadsheet. .
Case Numbers must be grouped by FHA
Homeownership Center (HOC) jurisdiction and requests for each jurisdiction must
be submitted in a separate spreadsheet and attached to a separate email.
The required Excel spreadsheet must be
formatted as follows:
-
Only
columns A and B are to be used and information must be in text format. Row 1 is the header row and must contain a
heading such as "FHA Case Number" for Column A and Cancellation Code for Column
B.
-
The
first FHA Number will be listed in Row 2, Column A with subsequent numbers
filling in the remaining necessary rows in that column. Case Numbers can be expressed either with or
without dashes and leading zeros.
-
The
Cancellation reason for all case numbers will be "Different MIP Structure" and
the Cancellation Code to be entered in Column B for each Case Number is DM.
The request for Bulk
Case Number Cancellations may not contain requests for cancellations for any
reason other than the Different MIP Structure outlined in Mortgagee Letter
2015-01. Cancellation requests for other
reasons must be submitted using the standard case number cancellation
instructions described on the FHA Case Processing
Requirements web page linked above.