FHA Single Family Housing Policy Handbook 4000.1, III. SERVICING AND LOSS MITIGATION > A. Title II Insured Housing Programs Forward Mortgages > 3. Programs and Products - Section 222 Mortgages (03/31/2022) — e. Section 222 Mortgages

FHA Single Family Housing Policy Handbook 4000.1, Part III — e. Section 222 Mortgages (03/31/2022)

Effective 2022-03-31 · publisher's stamp for this provision

e. Section 222 Mortgages (03/31/2022) Authority for Mortgages insured under Section 222 of the National Housing Act was repealed on July 30, 2008. The following policies apply for existing Section 222 Mortgages, for which Mortgage Insurance Premiums (MIP) are paid by the servicemember-Borrower’s branch of the military service until the servicemember’s eligibility is terminated. i. Requirements for Section 222 Mortgages (A) Military Branch Responsibility The military branch is responsible for payment of MIP on a Section 222 Mortgage when the Borrower is: • a certified servicemember at the time of application; and • the owner of the Property at the time of FHA endorsement. (B) Establishing Eligibility The servicemember-Borrower must submit the original and two copies of a written certification of a servicemember’s eligibility, issued by the servicemember’s commanding or personnel officer, with their application for mortgage insurance under Section 222. The respective service branch determines benefits eligibility. ii. Sale of a Property Covered by a Section 222 Mortgage When a servicemember-Borrower sells the mortgaged Property, the Mortgagee must complete a Mortgage Record Change in FHAC. (A) Sale of Mortgaged Property to Another Eligible Servicemember If a mortgaged Property is sold to another eligible servicemember who assumes the Section 222 Mortgage, the Mortgagee must request from the assumptor written certification from their service branch of their eligibility for a Section 222 Mortgage. If the Mortgagee fails to provide this certification to HUD when requesting insurance, HUD will hold the Mortgagee, and not the service branch, responsible for payment of MIP. The Mortgagee should continue to collect premiums from the servicemember- Borrower and pay the premiums to FHA. (B) Collection of MIP from Servicemember Assumptor When a mortgaged Property is sold to another eligible servicemember who will assume the Section 222 Mortgage, the Mortgagee must continue to collect premiums from the assumptor until advised by FHA that the service branch will be responsible for future premiums. If the Mortgagee has been paying the MIP as a result of prior termination of the service branch’s responsibility for payment of premiums, the Mortgagee must continue to collect premiums from the servicemember-Borrower and pay the premiums to FHA. iii. Mortgage Insurance Premium Payments upon Notice of Termination Under Section 222, HUD does not require the Mortgagee to collect MIP from the Borrower or to remit premiums to FHA until advised by FHA that the service branch will no longer pay the premiums. When FHA is notified that the mortgaged Property has been sold or that the servicemember has been discharged, retired, or has died, FHA will: • request confirmation from the service branch of the termination of MIP; and • notify the Mortgagee to begin collecting MIP from the servicemember-Borrower. iv. Continued Payment of Mortgage Insurance Premium by Service Branch When Servicemember Dies on Active Duty The service branch is responsible for determining continued eligibility of servicemember- Borrowers. If a servicemember-Borrower dies while on Active Duty and is survived by a spouse, the service branch will be responsible for the following: • continuing to pay MIP on the Mortgage until two years after the servicemember’s death or until the spouse disposes of the Property, whichever occurs first; • notifying FHA when eligibility terminates; and • paying MIP until confirmation of the termination is received by the FHA Comptroller. FHA will notify the Mortgagee of its responsibility for payment of the MIP. v. Loss Mitigation for Section 222 Mortgages The Mortgagee must evaluate all applicable Loss Mitigation Options for Section 222 Mortgages.

Source: FHA Single Family Housing Policy Handbook 4000.1, Update 18 (issued 2026-08-12) · source URL · snapshot e1bca3432cf19e09