Single Family Premium Collection Subsystem-Periodic Information Packet

This is a copy of the information packet for the Single Family Premium Collection Subsystem-Periodic (SFPCS-P), the Department of Housing and Urban Development's (HUD) automated data processing system for the collection and case-level reconciliation of Federal Housing Administration (FHA) Single Family monthly mortgage insurance premiums.

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<font face="Verdana, Geneva, Arial, Helvetica, sans-serif" ,="," font="font" size="2" color="#330066">Contacts

If you have a question that is not covered by the Answers to Mortgagee Questions, contact one of the following:

<font face="Verdana, Geneva, Arial, Helvetica, sans-serif" ,font=",font" size="2" color="#330066">Overview

The Department of Housing and Urban Development (HUD) has changed the way it handles monthly Mortgage Insurance Premiums for both Risk-based and Section 530 cases. On October 1, 1999, the Federal Housing Administration (FHA) implemented the Single Family Premium Collection Subsystem-Periodic (SFPCS-P) to track the collection and payment of periodic premiums for these loans. 

The bill for payments due October 1, 1999, was available on September 20, 1999. All payments due October 1, 1999, were to be made to the new collection system, SFPCS-P, at the case level. With the implementation of the new SFPCS-P, please note that all single family periodic premium calculations must be consistent with the formula in Mortgagee Letter 98-22.

For Risk-based loans closed on or after January 1, 2001, the periodic mortgage insurance premium may be canceled when it reaches 22% equity. See Mortgagee Letters 00-38 and 00-46 for more details.

Because of changes in the business process for compliance with Department of the Treasury (Treasury) debt collection policies, financial data from existing systems was NOT converted for inclusion in SFPCS-P. Any outstanding debt for periodic premiums or associated late and interest fees for periods prior to the implementation of SFPCS-P is being tracked and collected through another process. HUD's prior collection system was no longer available as of June 24, 2001. Please contact your Periodic Lender Representative for instructions.

The following sections detail the changes to HUD's business and the effects these changes have on mortgagees. 

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<font face="Verdana, Geneva, Arial, Helvetica, sans-serif" ,="," font="font" size="2" color="#330066">Monthly Billing

HUD provides monthly bills to mortgagees for both Risk-based and Section 530 loans. Electronic bills are available to mortgagees by the 17th of each month (please see Accessing HUD's Report Files). Accessing the billing information is optional. You may use your own systems to generate the amount owed on each case. However, HUD recommends cross-checking your initial calculations against HUD's generated bill for several months to ensure that the two are in agreement. 

• HUD provides case-level billing information for both Risk-based and Section 530 cases.

• Billing information includes premiums, late charges, and interest due through the billing period. The current premium amount is the premium due on the case for the month in which the bill is generated. For example, if a bill is generated on March 15, 1999, the premium shown on that bill is for the month of March and will be due April 1st. Interest and late charges are generated based on past due premiums of prior months.
• Case information, except payment data, used for billing is as of the first of the bill month. Changes to the Mortgage Insurance Premium (MIP) due to a change in the original loan information (mortgage amount, loan-to-value ratio, etc.), or case status (active, terminated, claim terminated) after the first of the month is reflected in the next month's bill. Example: Correction to mortgage amount from mortgagee processed by HUD on January 3. Change in premium amount and adjustment to past premium would be reflected in the February bill available February 17th. 
• Servicer transfers triggered by SFPCS-P payments are processed throughout the month. The servicer on record in SFPCS-P at the time of billing receives the bill for the case.
• Premiums are based on HUD's calculation. Previously, HUD allowed mortgagees to choose from three different premium calculations for Risk-based loans. The current process uses a standard calculation for all loans.

• Advance Notices of premium change for anniversary date is provided for both Section 530 and Risk-based cases. The monthly premium can be calculated by dividing the annual premium by 12 and rounding to nearest cent.
  

• NOTE: The make-up premium due in the month preceding the anniversary date for those cases not equally divisible by 12 has been eliminated. Payments consist of 12 equal installments.
  

• Example 1: Annual premium is $129.14: $129.14/12 = $10.7617 for 12 equal installments of $10.76
  

• Example 2: Annual premium is $129.18: $129.18/12 = $10.7650 for 12 equal installments of $10.77
  

• A late charge of four percent of the monthly premium will be applied to any premium not received by the 10th of the month in which due.

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<font face="Verdana, Geneva, Arial, Helvetica, sans-serif" ,="," font="font" size="2" color="#330066">Payments

Remittance of Payments

Remittances must include case-level payment data for both Risk-based and Section 530 program cases including FHA case number and payment amount with an optional field for the loan number (can be used for MERS MIN). Mortgagees no longer specify the program code (Risk-based or Section 530), billing period or payment distribution (i.e., late charge, interest, premium). There is no change to the remittance due date or grace period. 

Automated Clearing House (ACH)

On July 31, 1995, a final rule became effective authorizing the Federal Housing Commissioner to require the electronic remittance of periodic mortgage insurance premiums (MIPs) through the Automated Clearing House (ACH) program. The periodic premium collections are processed by mortgagees and confirmations are remitted back to the mortgagees electronically, using remote terminals or microcomputers with modems utilizing HUD MPC or CPU-CPU in lieu of sending checks with HUD forms to the lockbox. The lockbox closed the first quarter of calendar year 1996. Therefore, you must up sign up for the ACH program.

• ACH provides two options for remittances - either through new screens in HUD MPC or through CPU-CPU

• The HUD MPC screens for the periodic remittance allow mortgagees to enter a master file of remittance records which can be updated each month. For information on the HUD MPC process, please contact ACH Outreach. The ACH Outreach Team is located in Washington, D.C.: (202) 537-8004 or FAX (202) 537-8038. You may also download a copy of the HUD MPC User Guide in PDF format. For questions on the file format or connectivity options, contact Robyn Keefer of Mellon Bank at (412) 236-5043.
  
  An enhanced version of HUD MPC (ACH software) was effective June 25, 2001. This new version continues to provide periodic payment capability to SFPCS-P. However the old Section 530/Risk-based payment program has been eliminated. Contact HUD's ACH Outreach at (202) 537-8004 with any questions.
  
  Those mortgagees who choose to use the CPU-CPU process should build an FHA check digit routine into their remittance programs to eliminate sending invalid FHA case numbers. The check digit routine will be provided with the CPU-CPU format.
  

• Always print your sessions while entering transactions or maintain a transaction log. This log should include the following:

Date of Entry
Company No.
Unit/Mortgagee ID
Payment Amount (inclusive of premium, late charge, and interest)
Verification number

Without these components, you may not be able to verify payment.

• Some cases that closed in or before 1984 have less than a 9-digit case number. Most of these cases had closing dates in the late 1950's and early 1960's. Premiums for these cases must be paid through another process. Please send an e-mail for instructions.
  

• Received date is the date received by the designated ACH bank. Received date is the same as the mortgagee's transmission if the transmission is completed before 9:30 pm eastern time. Payments transmitted after 9:30 PM eastern time are posted the next business day. For payments being warehoused, the receipt date is one business day prior to the specified warehouse date.

Application of Payments

• The expected remittance per case is the amount billed - there is no "tolerance" amount. Any unpaid amount is included on the next month's bill, and a discrepancy is itemized on the reconciliation file.
  

• HUD applies payments to amounts due on the case in accordance with Treasury regulations governing payments of debts. When a payment is received, it is first applied to late charges, then interest, and then premiums.
  

• Overpayments are automatically applied to the next month's billing charges, unless a refund is requested. 

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<font face="Verdana, Geneva, Arial, Helvetica, sans-serif" ,="," font="font" size="2" color="#330066">Case Level Reconciliation

HUD no longer uses its previous contractor to do reconciliation. Mortgagees are still provided with an electronic reconciliation file which you can use to reconcile your records. Unlike the old reconciliation report, the current file does not provide space for lender updates and should not be returned to HUD. A list of the "unreconciled" categories and the instructions for action needed on each is provided at Reconciliation Discrepancy Types.

As stated in the Overview, no historical financial data was converted into SFPCS-P. Due to changes in the business rules, SFPCS-P started with no historical data. This allowed the billing process to start clean for easier case reconciliation. Any monies owed on cases prior to the start of SFPCS-P are still due HUD, but are tracked and collected through another process. Please contact your Periodic Lender Representative for instructions.

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<font face="Verdana, Geneva, Arial, Helvetica, sans-serif" ,="," font="font" size="2" color="#330066">Business Cycle

The following contains approximations on when business events occur during any given month.

<font face="Verdana, Geneva, Arial, Helvetica, sans-serif" ,="," font="font" size="2" color="#330066">Accessing HUD's Report Files

Billing, Reconciliation, Lender Notification, Portfolio, Advance Notices, and Refund Transaction report files are available to mortgagees via the Internet. These files can be viewed on the Internet or downloaded via the FHA Connection (See Mortgagee Letter 98-13). An option to use the Frame Relay Network instead of the Internet can be made available under special circumstances.

Reconciliation report files are generated following billing. These files show charges generated from the current month's billing cycle, but a case is not considered unreconciled if only the premium assessed in the current month is owed. 

At any point during the month a mortgagee may obtain your Lender Notification and Portfolio (Audit) report files. The Advance Notices, Billing, and Reconciliation files are generated automatically and remain available for three months on the FHA Connection. The Refund Transaction file is updated weekly with new refunds and statuses. 

File Descriptions/Layouts

The report file layouts show the format of the information that is provided. The "Picture" column shows the COBOL definition of these fields.
 

X = Alphanumeric

9 = Numeric

V = Decimal Point (these are not transmitted)
 

For the date fields, the following additional formatting information is included:

YYYY = Year (i.e. 1998)

MM = Month

DD = Day
 

For the time fields, the following additional formatting information is included:

HH = Hour

MM = Minute

SS = Second

For mortgagees with a small portfolio, the information can be displayed via the Internet. For mortgagees with a larger portfolio, it would be impractical to browse through the files on the Internet. These mortgagees should download the files and format a report as desired or use the file as input to their internal processing.

For mortgagees utilizing service bureaus or software providers, please check with that organization regarding their planned processing for these files. 

See Also

 

Using a Service Bureau
Frame Relay Network Header and Trailer Records

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