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HUD's Title I Lender Insurance Premium Collection Process
Background

FHA mortgage insurance premium payments are submitted directly to HUD and collected by the U.S. Department of the Treasury's Pay.gov collection service.

Pay.gov was developed to meet the commitment of the United States federal government and the U.S. Department of the Treasury's Financial Management Service to process collections electronically using Internet technologies. Pay.gov satisfies the demands of agencies and consumers for electronic alternatives by providing the ability to complete forms, make payments, and submit queries 24 hours a day electronically. Launched in October 2000, Pay.gov is a secure government-wide collection portal. The application is Web-based, allowing customers to access their accounts from any computer with Internet access. Pay.gov provides a suite of services allowing users to make payments to federal agencies in an efficient and timely manner. Additional information on Pay.gov is available at www.pay.gov.

HUD's mortgage insurance premium collection processes were modified to comply with the U.S. Department of the Treasury's mandate to discontinue the use of outside lockbox services and switch to the Treasury's Pay.gov collection service. Beginning July 15, 2009, Title I Upfront premium payments were collected directly by HUD and processed using Pay.gov. Beginning February 1, 2010, Title I Periodic premium payments will be collected by HUD and processed using Pay.gov.

Payment Processing Time

All payments that are fully received by 8:00 p.m. ET on a business day are included in the processing for that business day. All times specified in this document are in Eastern Time (ET). Any payment transaction received after 8:00 p.m. or received on a non-business day will be accepted but held for processing until the next business day. Lenders are encouraged to process payments early to avoid penalties as a result of transmission problems.

No Check Re-presentments

Payments are not re-presented for collection due to insufficient funds. If HUD fails to collect payments the first time, the payment shows a "Failed" status.

HUD's Web-based FHA Connection Premium Collection Applications

The Title I Property Improvement and Manufactured Housing Web-based application, including Upfront and Periodic Premium Payments, are hosted on HUD's FHA Connection Web portal. These options provide Title I Lenders with numerous advantages including the ability to make payments from any computer with Internet connectivity and the real-time validation of the entered case data against FHA's database (thereby minimizing data entry errors). Registered FHA Connection users can access these new screens if they are authorized by their FHA Connection Application Coordinator.

Upfront Premiums

Currently, Lenders can make Upfront loan insurance payments via HUD's FHA Connection website. On the FHA Connection, the case numbers, disbursement dates, and payment amounts are entered by the Lender and submitted. HUD uses the cash flow account information provided by the lender (described below under Account Setup) to process these payments. In addition, Lenders can perform case corrections on the FHA Connection.

Periodic (Monthly) Premiums

The FHA Connection pages for HUD's Title I Periodic collections allow a Lender to get a list of its billed cases and make a payment based on the current Periodic bill. The Lender can choose the cases to pay on and exclude the cases for which premium payments are not owed. In addition, Lenders have the ability to save any work in progress before submitting a payment. The list of cases remains available until the next billing period when it is replaced with a new list of billed cases. However, a late fee is assessed for payments submitted after the due date.

The monthly Billing report file can be used by a Lender to determine the breakdown of premium, late, and interest charges for cases in its portfolio.

Currently, future-dated Periodic payments (warehousing) are not accepted.

Cash Flow Account Setup

In order to use the new premium payment process, all Lenders must provide their cash flow account information designating which bank account will be used to withdraw funds for Upfront premium payments and which bank account will be used to withdraw funds for monthly Periodic payments.

  • Cash Flow Account Setup is on HUD's FHA Connection website. The link to Cash Flow Account Setup is located on the Lender Functions menu (which is accessed via the FHA Connection's main menu). In addition to providing the account information for the two cash flow accounts, Lenders can set up primary and alternate contact information along with their corresponding email IDs. This contact information is used to communicate any problems related to the premium payment. The Cash Flow Account Setup module of the FHA Connection Guide [PDF] has further instructions.

  • FHA Connection Registration: An employee of a Lender without access to FHA Connection applications, such as Cash Flow Account Setup, must complete a registration form to obtain an FHA Connection user ID. The FHA Connection Registration Procedures module of the FHA Connection Guide [PDF] has further instructions.

  • FHA Connection Authorization: If a Lender's employee has an FHA Connection user ID, the employee is granted authorization to use Cash Flow Account Setup by the Lender's FHA Connection Application Coordinator. This authorization is located in the Lender Approval section of the FHA Connection ID Administration page used by the Application Coordinator.

Prenote Process

As soon as the cash flow account information is set up, HUD initiates a Prenote test to verify the validity of the entered account information and the existence of any block on electronic ACH withdrawals. The test uses a zero-dollar amount transaction. The first payment can be made eight business days after Pay.gov acknowledges receipt of the Prenote transaction, if no errors are reported.

HUD only accepts payments from business checking accounts.

Security

Bank account information provided during the one-time cash flow account setup is encrypted using the Triple DES encryption standard and stored in a database with access limited to authorized support personnel. All bank account data is stored in HUD's databases only. The payment information is transmitted securely to the U.S. Department of the Treasury's Pay.gov system for collection processing. Data security is controlled by HUD's strict Automated Data Processing (ADP) security policies. All HUD technical support personnel are required to undergo background investigation.

FHA Connection security policies are followed for user access to the Cash Flow Account Setup function and the online FHA Connection premium payment functions. FHA Connection Application Coordinators are required to provide other users within their lending institutions access to these functions, if appropriate.

Questions and Comments

Please contact HUD?s Financial Operations Center as follows for any questions or comments you may have about its loan insurance premium collection process: