HUD ML 2014-13 Voluntary Termination of FHA Mortgage Insurance
On July 3, the U.S. Department of Housing and Urban Development (HUD) released Mortgagee Letter 2014-13, subtitled Voluntary Termination of FHA Mortgage Insurance.
MORTGAGEE LETTER 2014-13
To: All Approved Mortgagees
Subject: Voluntary Termination of FHA Mortgage Insurance
Purpose: This Mortgagee Letter requires mortgagees, requesting voluntary
termination of FHA mortgage insurance, to obtain a signed Borrower’s
Consent to Voluntary Termination of FHA Mortgage Insurance from each
borrower on the mortgage.
Effective Date: Mortgagees are required to comply with the requirements of this
Mortgagee Letter no later than October 1, 2014.
Affected Policy: The policies set forth in this Mortgagee Letter modify or supersede,
where there is conflict, HUD Handbook 4330.1, Section 5-1.B.
Background: Pursuant to 24 CFR 203.295, at the request of the borrower and
mortgagee, FHA may terminate a mortgage insurance contract. Upon the
voluntary termination of FHA insurance, the borrower and mortgagee are only
entitled to those rights or benefits available if the insurance contract was
terminated as a result of the insured mortgage being paid in full. Also, upon the
termination of FHA insurance for any other reason, the mortgage is no longer
governed by the FHA insurance program’s rules and regulations, including
FHA’s Loss Mitigation requirements.
Mortgagees will now be required to document that they have obtained the
borrowers’ informed consent to terminate.
Please click here to view letter in its entirety.
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