FHA Insurance Certificates Go Paperless

The U.S. Department of Housing and Urban Development (HUD) recently announced it will stop issuing paper Mortgage Insurance Certificates (MICs) when single-family mortgages are endorsed for insurance. With the initiative to expand its use of e-commerce, HUD said electronic records of MICs will replace paper versions starting mid-November and “will not only save time and reduce paperwork, it will produce savings to the industry and the Department.”

HUD, the country’s national housing agency, said that in the past year it issued over 1.3 million original paper MICs and 700,000 duplicates. With the change, “considering the lender’s staff time involved in requesting, receiving, filing, tracking and retrieving two million documents each year,” HUD reported the industry can save an estimated $80 million in the coming year alone, and the agency can save approximately $10 million.

Additionally, HUD will no longer require original or duplicate paper MICs to be submitted when filing a claim for FHA insurance benefits, according to a letter forwarded to FHA-approved mortgagees.

For this reason, people servicing single family FHA loans at the time of foreclosure will benefit most (from paperless MICs), since it is time consuming to retrieve these papers, said a spokeswoman from the HUD regional office in Fort Worth, Texas, in response to MortgageDaily.com inquiries.

Lenders involved in FHA single-family mortgage insurance programs will be able to download MICs through the “FHA Connection” on the Internet and confirm the endorsement status of FHA insured mortgages, according to the letter.

But, the basic mortgage insurance process will not change, said HUD, as a contract is not effective until HUD endorses the mortgage for insurance.