Servicing Guide

Published September 11, 2019

B-8.2-03: Termination or Cancellation of FHA Mortgage Insurance and FHA Mortgage Insurance Premium (11/12/2014)

For automatic cancellation of the FHA MIP or for borrower-initiated cancellation of the FHA MIP based on a partial prepayment, the servicer must execute the cancellation of FHA MI in accordance with applicable FHA guidelines.

Upon receipt of a borrower’s written request to cancel the FHA MI based on the current value of the property, the servicer must evaluate the request in accordance with Fannie Mae’s provisions to terminate conventional MI based on the current value of the property, as described in Borrower-Initiated Termination of Conventional Mortgage Insurance Based on Current Value of the Property in B-8.1-04, Termination of Conventional Mortgage Insurance.

The servicer must not cancel FHA MI for any FHA-insured mortgage loan in an MBS or other Fannie Mae-issued mortgage security pool.

The following table outlines the servicer’s responsibilities if the criteria for canceling FHA MI are satisfied.

The servicer must...

Notify FHA to cancel the FHA MI.

Notify Fannie Mae of the cancellation in accordance with Reporting Discontinuance of Mortgage Insurance in the Investor Reporting Manual for detailed reporting requirements.

Retain supporting documentation in the mortgage loan servicing file.