The Department of Housing and Urban Development (HUD) was initially called the Federal Housing Administration (FHA) which was established in 1934. These agencies were created to allow individuals to purchase a home with a minimum down-payment and to protect the lender's investment in case the buyer defaulted on the mortgage. In order to accomplish this, the home buyer needed to purchase an insurance policy on the mortgage.
The Program has two policies. Prior to 1983, the insurance was paid in monthly installments and is referred to as Mutual Mortgage Insurance or MMI. After 1983, a second policy was set in place making it possible to collect the full payment at the closing. This policy is known as One-Time Mortgage Insurance Premium or OTMIP.
As an example under the OTMIP policy, the insurance premium for an FHA 30-yr fixed mortgage in the amount of $150,000 was equal to as much as 2.25% of the loan or $3750.00
Regardless of the policy by which the insurance premium was paid, the borrower was informed that if they paid off the loan without missing any payments, sold the home or refinanced the loan with a non-FHA mortgage they would be eligible for a prorated refund on the premiums they had paid.
Over many years after the changes, a problem has presented itself. It takes the Government months to process the paperwork to cancel the mortgage insurance. By the time the refund notice is sent out to borrower, they have likely moved and the notice never reaches them. This occurs month after month and the notices are sent to the same address and never reach the borrowers.
After two years, the refund is placed into an unclaimed refund account and the borrower's name, last known address and refund amount is published in the public domain. As a result, there are currently over 750,000 unclaimed mortgage insurance refunds totaling more than $250 million. With the explosion of refinancing over the past few years due to low interest rates, this pool of unclaimed refunds is expected to swell to over $300 million by 2008.
Recently, the General Services Administration directed HUD/FHA to expedite the distribution of these unclaimed refunds. One method was to allow individuals to become "Third Party Processors" in locating these borrowers and assist them in recovering their refunds.
The opportunity provided is to notify the people owed the refunds, process the paperwork, and collect a processing fee for payment of your services. We provide step-by-step instructions, standard forms and letters, customer support, and the information you need to be successful in your own business!
The money comes from the United States Government Department of HUD because everyone who has ever purchased a home with an FHA/HUD OTMIP mortgage had to pay an MMI or MIP insurance policy premium on the loan. Each of the borrowers were told by the Government that if they paid back the loan in good faith, they would be entitled to receive a portion of what they paid back in a refund on their MMI or MIP insurance policy premium. Depending on how much the home was worth and the amount that the FHA loan was for, this can be anywhere from a few hundred dollars to a few thousand dollars.
Most of these people don't even know they have money sitting there that's due to them and some have even relocated. If you notify, and in some cases help locate these unsuspecting citizens of this refund and help them obtain their claim, you can charge a handsome processing fee (we recommend 25%) for helping them get their money back.