FHA

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old lender must first notify the FHA that coverage has been terminated. Then the agency determines how much of the upfront premium will be refunded based on the number of months the loan was insured. And finally, the agency requests that the Treasury Department issue a check.

With today’s technology, those steps shouldn’t be terribly timeconsuming. But the FHA is woefully behind the times electronically, so the process could take longer than 30 days. Much longer.

In fact, the FHA suggests that if you don’t receive your money or an application for a refund within 45 days after you paid off your loan, you should check with your old lender to confirm it has sent a request to end coverage. And if you don’t see anything in your mailbox after 120 days, the agency says to call its Washington headquarters at (800) 697-6967.

While the hope is that the FHA will decide to handle refunds in a more borrower-friendly manner, there is evidence to suggest the agency will turn into a post-holiday Scrooge and eliminate the rebates altogether.

That has been the course since 2000, when then-FHA Commissioner William Apgar, now a senior advisor on mortgage-finance matters to current Secretary of Housing and Urban Development Shaun Donovan, lowered the upfront insurance premium but shortened the refund period to five years from seven. (The FHA is a division of HUD.)

Then, in 2004, Congress not only trimmed the refund period to three years in an effort to shore up the sagging insurance fund, but it also ordered the FHA to end refunds except when the borrower refinances into another FHA-insured mortgage.