HUD owes homebuyers nationwide refunds. Are you on the list? – NBC Chicago
Thousands of Chicago-area families are among the long list of U.S. homeowners who owe refunds to a federal agency, and many may have no idea it’s waiting for them.
Refunds vary in size; some only for a few hundred dollars, while others number in the thousands.
A joint investigation by NBC 5 Responds and Telemundo Chicago Responde was the first to inform many families that the US Department of Housing and Urban Development (HUD) owed them money.
The investigation also found that once a homeowner discovers that HUD owes them a refund, the process to collect it is cumbersome; one that HUD admits it is trying to improve.
The refunds are tied to mortgage insurance premiums that homebuyers paid years ago on loans through the Federal Housing Administration (FHA).
These FHA loans were designed for homebuyers with little to no credit history, and they come with a requirement that the homebuyer carry mortgage insurance. These insurance premiums were then paid to the FHA.
Depending on when these borrowers ultimately sold the property they purchased, they may have paid insurance premiums upfront, which now result in refunds owed to them by HUD.
In the Chicago area alone, NBC 5 found that more than 30,000 homeowners owed a total of more than $16.8 million. This area includes owners in 12 counties in the Chicago area of Illinois, five counties in northwestern Indiana and four counties in southwestern Wisconsin.
Do you owe a refund? To find out if you are owed money, you can search your name in the database below or click here. If you are on the list, click here to find your refund on the HUD website, and start the process to get it. More on this process below.
Although many homebuyers owe refunds, a HUD spokesperson warned that “most homeowners who have or had an FHA-insured mortgage are not eligible for a refund.”
Those to whom repayments are owed specifically “paid an initial mortgage insurance premium when closing a loan after September 1, 1983, or in other limited circumstances,” the HUD spokesperson said.
While many families across the country are still recovering from the economic wrath of the pandemic, news of the money comes at an important time.
NBC 5 Responds and Telemundo Chicago Responde tracked down some of the local families on HUD’s reimbursement list to find out if they even knew they were owed that kind of money.
Case after case, refunds have been a welcome surprise.
“Thank God I can’t believe it,” Juana Sanchez said when NBC 5 informed her she owed over $600.
Sanchez’s repayment was tied to an FHA loan she was approved for when buying a Humboldt Park condo in 1998; a moment that has never left her.
“I remember the day when they [the FHA] called us and said, “You qualify,” Sanchez recalled. “You know, it’s an experience that not many people have, especially a Latina and a single mom.”
HUD told NBC 5 that the agency is “committed to finding and assisting homeowners who are owed [these] refunds.
But Sanchez wonders why HUD didn’t contact her sooner.
“It’s because they’re not watching,” Sanchez said. “They are the government: if they want to find you, they can find you.”
This same sentiment is shared by the Magana family of Logan Square.
“If you owe the government money, the government is looking for you,” said Raul Magana Sr. “But when they owe you that money, they’re not looking for you.”
Last October, NBC 5 notified Raul and his wife Teresa Magana that they owed more than $4,100, according to the HUD listing. The refund was for insurance premiums they prepaid for an FHA loan they received in the late 1980s when they bought a house in Logan Square.
The good news came at a crucial time: Raul Magana’s tractor-trailer that he uses for the job had broken down and was in the workshop. The repair bill was in the thousands.
“This [refund] going to help a lot of my family,” Raul said, adding that he “never heard anything, [HUD] never informed me of this money.
In addition to finding and notifying owners of these refunds, NBC 5 also found that the process HUD follows to verify that someone owes these funds and then disburse them is lengthy. Owners call it tedious.
Last October, NBC 5 Responds and Telemundo Chicago Responde tracked down many on the refund list, updated them on the good news, and then followed the process as it unfolded.
One of the first steps to picking up a refund is to receive the necessary documents from HUD to start the application process. This application form – titled “Form HUD-27050-B” – is tailored to each homeowner and comes directly from HUD.
The agency will only share it with an owner by mail through the postal service.
For Juana Sanchez, after multiple calls with HUD, including calls from NBC 5 made on her behalf, it took five weeks for the request to arrive.
For Raul and Teresa Sanchez, almost the same schedule: the application arrived in four weeks.
When asked why the process is taking so long, and specifically why HUD is not sharing the app with homebuyers electronically, a spokesperson said, “Due to the amount of specific information pre-generated on the form, they are not accessible to the public. , it also cannot be sent by e-mail.
The agency also said that while a “large percentage” of refunds are processed automatically, in those other cases, it’s the owner’s responsibility to provide HUD with the necessary details and documents they need to make a refund request.
“[This] often depends on a number of factors, including the owner’s willingness to respond, providing accurate contact information, and identifying heirs or estates, among others,” a spokesperson wrote via email.
HUD’s numbers for the past two years appear to show that a small amount of these refunds are processed nationwide each year.
In the first year of the coronavirus pandemic, 2020, HUD said it processed 3,800 claims totaling $5.9 million. The average reimbursement was $1,500.
The following year, the numbers were smaller: HUD processed 3,300 claims for reimbursement totaling $4.4 million, with the average reimbursement being $1,300.
Those numbers may be a drop in the bucket given in the Chicago area alone, NBC 5 found 30,269 homeowners who collectively owed $16.8 million, last June.
When NBC 5 and Telemundo Chicago asked HUD for the total amount of money owed to landlords nationwide, the agency said it didn’t have that figure on hand and needed a request. of Freedom of Information Act to obtain it.
For its part, HUD said it recently implemented changes to try to speed up the reimbursement process.
In August 2020, the agency said it had implemented an “interactive process” for owners to electronically submit supporting documentation to the agency regarding their premium refunds.
And starting this year, on Jan. 14, HUD removed a notary requirement for the claim form that homeowners receive in the mail.
Going forward, the agency said it is working to reduce the amount of documentation required to process homeowner mortgage premium refunds of $300 or less.
After Juana Sanchez and the Magana family received the good news of their refund, the waiting was the hardest part.
“This shouldn’t happen,” Juana said, referring to the challenges she faced trying to get her money back. “Towards the end, it took over my life.”
That said, both families still encourage everyone to check out the website and seek out the money that is rightfully owed to them.
“I encourage people to try and get that money,” Raul Magana said.