November 9, 2010
FHA borrowers with loans acquired after September 1, 1983 may be entitled to a partial refund of their up front mortgage insurance premium. According to the FHA official site, borrowers could be eligible if they paid the UFMIP premium when the loan closed and did not default on their mortgage payments.
Refund eligibility is determined by the FHA based on a number of factors including how many months the loan was insured. Some FHA loans are not eligible after the seventh year of insurance, and on other loans no refund is due unless the loan was refinanced to another FHA mortgage. The rules can be complex and the FHA urges homeowners with questions about the program to call them directly at 1-800-697-6967 to learn more.
Those who could be eligible for such refunds are often approached by third party companies (either through direct mail, marketing phone calls or advertising) who offer to locate the refunds for a fee. But paying a third-party company to “trace” an FHA refund is NOT NEEDED and is an unnecessary expense. The FHA has published a warning about such third party companies which says while these activities are NOT illegal, home owners do not need to use them.
“Beware of ‘tracers’ who offer to help you collect your refund for a fee…you can get your refund directly from FHA for free.” The FHA welcomes reports by consumers who have been “misled or in some way harmed by a tracer; or you’ve been contacted by someone asking you to become a tracer, who you believe misled or harmed you…” The FHA has a simple, easy to use electronic form for reporting such incidents.
The market is full of companies willing to take your money for things you can get for free directly from the government including the FHA, VA and other agencies. Always check with the agency first before paying a third party to trace an FHA refund, deliver a copy of important government papers such as a DD Form 214 from the U.S. military or other data.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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