Question:

How are late fees and interest on insurance premiums regulated by HUD?

Answer:

Mortgage insurance premiums (MIP) paid to HUD by a loan servicer or the holder of the loan have to be made on time, or late fees and interest are charged.

MIP payments are due on the 1st day of each month; grace period is 10 days and late fees and interest are charged on the 11th of the month. On the 15th a bill will be generated, listing the status of each MIP case.

Late fees and 4% interest apply to any shortages unpaid by owed by the 11th day of the month. When you make a late payment, it has to cover the monthly MIP payment, plus late fees and charged interest. If you only make a regular MIP payment, it will be applied to late fees and interest charges first, and then towards the base MIP amount. You will owe X dollars and additional interest will accrue.

Any time you are making a late payment, make sure late fees and interest are taken into account, so that you wouldn't incur even more penalty charges.

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