source:
  type: guide
  id: hud-4000-1-iii-u-mortgage-insurance-termination
  authority: FHA Single Family Housing Policy Handbook 4000.1, Part III — u. Mortgage
    Insurance Termination (04/29/2024)
  description: FHA Single Family Housing Policy Handbook 4000.1, Part III — u. Mortgage
    Insurance Termination (04/29/2024).
  coverage_tier: operative
obligations:
- id: hud-4000-1-iii-u-mortgage-insurance-termination-full
  canonical_id: hud-4000-1-iii-u-mortgage-insurance-termination-full
  section: FHA Single Family Housing Policy Handbook 4000.1, Part III — u. Mortgage
    Insurance Termination (04/29/2024)
  type: do
  tags:
  - regulator-direct
  - fha
  - hud-handbook
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: FHA Single Family Housing Policy Handbook 4000.1, Part III — u. Mortgage
      Insurance Termination (04/29/2024)
    source_class: hud-handbook
    source_url: https://www.hud.gov/hud-partners/single-family-handbook-4000-1
    snapshot_id: 8c03836f77f317e1
    fetched_at: '2026-05-23T00:28:40Z'
    content_hash: sha256:411430f29b13f9b54a2ebb0e6f6e7087ecd2b90d0da22eb0c8c792eaa2d7d0df
    paragraph_quote: 'u. Mortgage Insurance Termination (04/29/2024) i. Definition
      A Mortgage Insurance Termination refers to the ending of FHA mortgage insurance,
      at which time all rights of the Mortgagee shall terminate, including the right
      to file a claim for insurance benefits, and all obligations of HUD cease immediately.
      ii. Standard (A) Termination of Mortgage Insurance The Mortgagee may terminate
      the FHA insurance contract when the HERMIT case status is Endorsed and one of
      the following events has occurred: • Prepayment in Full, including sale of the
      Property by the Borrower or other authorized party, or a HECM-to-HECM Refinance;
      • acquisition of title through DIL by the Mortgagee or other party at a foreclosure
      sale, and no insurance claim will be submitted to HUD; or • acquisition of title
      by the Mortgagee through a DIL or foreclosure, or the Property is sold by the
      Borrower or other authorized party for less than the full Payoff, and a claim
      for insurance will not be submitted. The Mortgagee must report termination of
      a HECM to HUD by initiating a Termination transaction via HERMIT within 15 Days
      of a Payoff. Where the termination will result in submission of a claim, the
      claim serves as notice of termination. Claims must be submitted based on the
      date the FHA case number was assigned, as follows: • before September 19, 2017,
      within 15 Days of the Property being sold; or • on or after September 19, 2017,
      within 30 Days of the Property being sold. III. SERVICING AND LOSS MITIGATION
      B. Title II Insured Housing Programs Reverse Mortgages 1. Servicing of FHA-Insured
      HECMs Handbook 4000.1 1484 Last Revised: 11/26/2025 (B) Voluntary Termination
      of Mortgage Insurance (1) Definition A Voluntary Termination of Mortgage Insurance
      refers to a mutual agreement between the Borrower and the Mortgagee to terminate
      FHA mortgage insurance. (2) Standard The Borrower and the Mortgagee may agree
      to voluntarily terminate FHA mortgage insurance at any time. (a) Borrower’s
      Consent to Voluntary Termination The Mortgagee must obtain a signed Borrower’s
      Consent to Voluntary Termination of FHA Mortgage Insurance from each Borrower.
      The form must be on the Mortgagee’s letterhead and must follow the format found
      in the model document. (b) Reporting a Voluntary Termination To report a voluntary
      termination, the Mortgagee must initiate a Termination transaction via HERMIT
      within 15 Days of receiving the executed Borrower’s consent form. (C) Effective
      Date of Termination (1) Standard The effective date of termination of the contract
      of insurance is the date on which one of the following occurs: • the Mortgagee
      has received notice from HUD that it approves the voluntary Termination transaction;
      • the Mortgagee has notified HUD that the HECM was prepaid; • the Property was
      acquired by another party and the Mortgagee notifies the Commissioner that a
      claim will not be filed; or • the Mortgagee fails to make the payments to the
      Borrower. Where the Mortgagee acquires the Property through a foreclosure sale
      or DIL, the effective date of termination of the contract of insurance is the
      date on which a claim for insurance benefits is settled. (2) Required Documentation
      The Mortgagee must note in the Servicing File and initiate the termination transaction
      in HERMIT on the date on which the: • voluntary termination request is received;
      III. SERVICING AND LOSS MITIGATION B. Title II Insured Housing Programs Reverse
      Mortgages 1. Servicing of FHA-Insured HECMs Handbook 4000.1 1485 Last Revised:
      11/26/2025 • HECM was prepaid; or • Property was acquired by another party at
      a foreclosure sale and the Mortgagee determines that a claim will not be filed.
      If the Mortgagee wishes to submit a claim for insurance benefits, such claim
      must be submitted via HERMIT after selling a Property acquired through foreclosure
      sale or DIL. See the Due and Payable Servicing section for further information.
      (D) Termination of MIP Payments The Mortgagee must pay MIP due through the effective
      date of termination for HECMs paid in full or where the Mortgagee or other party
      acquires the Property through sale, DIL, or foreclosure sale and no claim for
      insurance benefits will be submitted. Where the termination will result in submission
      of a claim, the Mortgagee must pay the MIP due based on the date the FHA case
      number was assigned, as follows: • before September 19, 2017, until the claim
      for insurance benefits is paid; or • on or after September 19, 2017, until the
      date of the foreclosure sale, the date the DIL is recorded, or the date a sale
      by the Borrower or authorized party is completed.'
  judgment: false
