Questions and Answers
What is a case termination?
A case termination is the ending of FHA Single Family mortgage insurance. When is a case termination processed? An FHA case is automatically terminated in HUD's system when the mortgage reaches maturity. However, the lender may terminate the case beforehandunder various termination types:
- Prepayment (Term Type 11): Borrower paid the mortgage in full before the maturity date.
- Non-conveyance Foreclosure (Term Type 13): The property was acquired by a lender or third party at a foreclosure sale or was redeemed after foreclosure and no insurance claim will be submitted to HUD,
- Voluntary Termination (Term Type 21): Both the lender and borrower agreed to voluntarily terminate FHA insurance.
Termination of a case must be reported to HUD within 15 days of the actual event.
How do I report a case termination?
Process Insurance Termination (HUD Form 27050-A) using the FHA Connection, Business to Government (B2G), or Electronic Data Interchange (EDI).
When do monthly (periodic) premium payments end for a terminated case?
Monthly premium is assessed for the month in which the termination is effective. Payment is due on or before the 10th day of the next month. For example, if a case is terminated with an effective date of November 5, the monthly premium must be paid for November by December 10.
What if a loan is being refinanced as another FHA-insured loan?
Do NOT terminate the old FHA case. When the new case is processed for FHA insurance, the old case is automatically terminated.
What if the case is transferred to another servicer or holder?
Do NOT terminate the case. Simply process a Servicer/Holder Transfer (HUD Form 92080) using the FHA Connection or Electronic Data Interchange (EDI).
What if the monthly premiums are paid up before schedule (i.e., accelerated payments were made on the loan and the unpaid principal balance is 78% or less)?
Do NOT terminate the case. Process a Monthly MIP Cancellation using the FHA Connection or Electronic Data Interchange (EDI). Note: Monthly MIP Cancellation is only applicable to active risk-based cases that have a closing date after December 31, 2000 and a case number assignment date before June 3, 2013 and meet the eligibility requirements described in Mortgagee Letter 2000-46. For all other cases, use Insurance Termination (HUD Form 27050-A), Prepayment (Term Type 11) if the mortgage is paid in full before the maturity date.
How can a termination date be corrected?
Contact the Single Family Insurance Operations Division, Systems Management Branch, Data Quality Control Section for assistance.
What happens if the case is terminated by mistake?
Contact the Single Family Insurance Operations Division, Systems Management Branch, Data Quality Control Section for assistance. A reverse termination is processed by an authorized HUD staff member when a case is terminated in error. Past charges are reassessed and credits are reapplied to the case. Charges are generated for any past premium owed together with any late or interest fees. The case is returned to an Active status.
What happens if there is an owed amount when (or after) the case is terminated?
The current servicer of the case is billed until the owed amount is paid. The "current servicer" is the lender on record in HUD's monthly mortgage insurance premium collection system (SFPCS Periodic).
Can a case be transferred to another servicer/holder in SFPCS Periodic after it is terminated?
No. Contact the Single Family Insurance Operations Division, Systems Management Branch, Data Quality Control Section for assistance.