source:
  type: guide
  id: hud-4000-1-iii-l-mortgage-insurance-termination
  authority: FHA Single Family Housing Policy Handbook 4000.1, Part III — l. Mortgage
    Insurance Termination (03/31/2022)
  description: FHA Single Family Housing Policy Handbook 4000.1, Part III — l. Mortgage
    Insurance Termination (03/31/2022).
  coverage_tier: operative
obligations:
- id: hud-4000-1-iii-l-mortgage-insurance-termination-full
  canonical_id: hud-4000-1-iii-l-mortgage-insurance-termination-full
  section: FHA Single Family Housing Policy Handbook 4000.1, Part III — l. Mortgage
    Insurance Termination (03/31/2022)
  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 — l. Mortgage
      Insurance Termination (03/31/2022)
    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: 'l. Mortgage Insurance Termination (03/31/2022) i. Definition
      A Mortgage Insurance Termination is the ending of FHA Single Family mortgage
      insurance at which time the Mortgagee’s obligation to remit MIP to HUD ends.
      Upon termination, the Borrower and Mortgagee will enjoy only those rights, if
      any, to which they would be entitled under the National Housing Act if the insurance
      contract terminated as a result of the insured Mortgage being paid in full.
      III. SERVICING AND LOSS MITIGATION A. Title II Insured Housing Programs Forward
      Mortgages 1. Servicing of FHA-Insured Mortgages Handbook 4000.1 1181 Last Revised:
      11/26/2025 ii. Standard (A) Termination of Mortgage Insurance HUD terminates
      the FHA insurance contract as follows: • automatically when the Mortgage reaches
      maturity; or • when the Mortgagee reports a termination code, such as: o prepayment
      (Borrower paid the Mortgage in full before the maturity date); o use of Home
      Disposition Option or non-conveyance foreclosure (the Property was acquired
      by a Mortgagee or third party at a foreclosure sale or was redeemed after foreclosure
      and no insurance claim or Claims Without Conveyance of Title (CWCOT) will be
      submitted to HUD); o conveyance for insurance benefits; or o voluntary termination
      (both the Mortgagee and Borrower agreed to voluntarily terminate FHA insurance).
      The Mortgagee must report termination of a case to HUD via FHAC, B2G, or EDI
      within 15 Days of the actual event. (B) Voluntary Termination of Mortgage Insurance
      (1) Definition A Voluntary Termination of Mortgage Insurance is when the Secretary,
      upon the mutual request of the Borrower and Mortgagee, terminates the FHA insurance
      contract associated with the Mortgage. (2) Standard The Borrower and the Mortgagee
      may agree to voluntarily terminate FHA mortgage insurance in accordance with
      Section 229 of the National Housing Act (12 U.S.C. § 1715(t)). A voluntary termination
      has the same effect on the Borrower and Mortgagee as a termination for payment
      in full. (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 on the Mortgage. (b) Effect of Voluntary Termination
      on Outstanding Partial Claims Upon receipt of a Borrower’s request for a voluntary
      termination, the Mortgagee must advise the Borrower that the Partial Claim promissory
      Note and Subordinate Mortgage amounts owed by the Borrower will become immediately
      due and payable upon termination if provided for under the terms of the Borrower’s
      Partial Claim promissory Note. III. SERVICING AND LOSS MITIGATION A. Title II
      Insured Housing Programs Forward Mortgages 1. Servicing of FHA-Insured Mortgages
      Handbook 4000.1 1182 Last Revised: 11/26/2025 (c) Request for Voluntary Termination
      To request voluntary termination, the Mortgagee must: • submit the request for
      voluntary termination of mortgage insurance in FHAC within 15 Days of receiving
      the executed Borrower’s Consent form. On the Mortgage Record Changes menu, select
      Insurance Termination (form HUD-27050-A, Insurance Termination) and select Voluntary
      Termination (Term Type 21); and • certify in FHAC that all Borrowers on the
      Mortgage have signed the consent form. (C) Effective Date of Termination (1)
      Standard The effective date of termination of the contract of insurance is the
      last Day of the month in which one of the following occur: • the date a voluntary
      termination request is received by the Commissioner; • the date the Mortgage
      was prepaid; or • where the Mortgagee notifies the Commissioner that a claim
      will not be filed, the date foreclosure proceedings were initiated or the Property
      was acquired by another party, including the Mortgagee. (2) Required Documentation
      The Mortgagee must note in the Servicing File and report in FHAC, B2G, or EDI:
      • the date on which the voluntary termination request is received by the Commissioner;
      • the date notice is received by the Commissioner that the Mortgage was prepaid;
      or • the date notice is received by the Commissioner that a claim will not be
      filed, or that the Property will not be conveyed. For FHA-to-FHA refinances,
      the Mortgagee processing the new refinance must report the projected and actual
      Closing Date. (D) MIP Due until Effective Date of Termination The Mortgagee
      is obligated to pay the MIP due until the effective date of termination. (E)
      Escrow Balance Returned to Borrower If no claim for insurance benefits will
      be filed, the Mortgagee must timely release the funds held in escrow in accordance
      with federal regulations, including RESPA, after the termination of the FHA-insured
      Mortgage. III. SERVICING AND LOSS MITIGATION A. Title II Insured Housing Programs
      Forward Mortgages 1. Servicing of FHA-Insured Mortgages Handbook 4000.1 1183
      Last Revised: 11/26/2025'
  judgment: false
