Thousands of Chicago-area families are among the long list of American homeowners owed refunds by one federal agency, and many may have no idea that it is waiting for them.
The refunds range in size; some only for a few hundred dollars, while others are in the thousands.
A joint investigation by NBC 5 Responds and Telemundo Chicago Responde was first to inform many families that they were owed money by the U.S. Dept. of Housing and Urban Development (HUD).
The investigation also found that once a homeowner finds out that HUD owes them a refund, the process to retrieve it is cumbersome; one that HUD admits it is trying to improve.
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The refunds are tied to mortgage insurance premiums that homebuyers paid years back on loans through the Federal Housing Administration (FHA).
These FHA loans were designed for homebuyers with little or low credit history, and they came with a requirement that the homebuyer purchase mortgage insurance. Those insurance premiums were then paid to the FHA.
Based on when those borrowers eventually sold the property they purchased, they may have paid insurance premiums ahead of time – now leading to refunds owed to them by HUD.
In the Chicago-area alone, NBC 5 found more than 30,000 homeowners owed a total of more than $16.8 million. That area includes homeowners in 12 Chicago-area counties in Illinois, five counties in northwest Indiana, and four counties in southwest Wisconsin.
Are you owed a refund? To find out if you are owed money, you can search your name in the database below or click here. If you’re on the list, click here to find your refund on HUD’s website, and start the process towards obtaining it. More information on that process below.
While there are many homebuyers owed refunds, a HUD spokesperson cautioned that “most homeowners who have, or had, an FHA-insured mortgage are not eligible for a refund.”
Those who are owed refunds specifically “paid an up-front mortgage insurance premium at a loan closing after September 1, 1983 or in other limited circumstances,” the HUD spokesperson said.
While many families across the country are still recovering from the pandemic’s economic wrath, news of this money comes at an important time.
NBC 5 Responds and Telemundo Chicago Responde tracked down some of the local families on HUD’s refund list to find out if they were even aware of the fact they were owed this kind of money.
In case after case, the refunds were a welcomed surprise.
“Praise God, I can’t believe it,” Juana Sanchez said when NBC 5 informed her she was owed more than $600.
Sanchez’s refund was tied to an FHA loan she was approved for when purchasing a Humboldt Park condo back in 1998; a moment that has never left her.
“I remember the day that they [the FHA] called us, and said, ‘You do qualify,” Sanchez recalled. “You know, that's an experience that few people have, especially a Latina, and a single mom.”
HUD told NBC 5 that the agency is, “committed to finding and helping homeowners who are owed [these] refunds.”
But Sanchez questions why HUD had not reached out to her sooner.
“It’s because they’re not looking,” Sanchez said. “They’re the government: if they want to find you, they can find you.”
That same sentiment is shared by the Magana family out of Logan Square.
“If you owe money to the government, the government looks for you,” Raul Magana Sr. said. “But when they owe you this money, they don’t look for you.”
This past October, NBC 5 informed Raul and his wife Teresa Magana that they were owed more than $4,100, according to HUD’s list. The refund was for insurance premiums they paid ahead of for an FHA loan they received in the late eighties when they purchased a home in Logan Square.
The good news came at a crucial time: Raul Magana’s semi-truck he uses for work had broken down, and was in the shop. The repair bill was in the thousands.
“This [refund] is going to help a lot of my family,” Raul said, adding that he “never heard anything, [HUD] never notified me about this money.”
In addition to finding and notifying homeowners about these refunds, NBC 5 also found the process that followed for HUD verifying a person is owed these funds, and then actually paying it out, is long. Homeowners label it tedious.
Last October, NBC 5 Responds and Telemundo Chicago Responde tracked down many on the refund list, informed them of the good news, then watched as the process unfolded.
One of the first steps in retrieving a refund is receiving the necessary paperwork from HUD to start the application process. This application form – labeled a “Form HUD-27050-B” – is tailored to each homeowner and comes directly from HUD.
The agency will only share it with a homeowner by mail through the Postal Service.
For Juana Sanchez, after several calls with HUD, including calls by NBC 5 made on her behalf, it took five weeks for the application to arrive.
For Raul and Teresa Sanchez, nearly the same timeline: The application arrived in four weeks.
When asked why the process takes so long, and more specifically, why HUD is not sharing the application with homebuyers electronically, a spokesperson said, “Because of the amount of specific information that is pre-generated on the form, it is not publicly available, nor can it be emailed.”
The agency also indicated that while a “large percentage” of refunds are processed automatically, in these other cases, it’s the homeowner’s responsibility to provide HUD with the necessary details and documents it needs to pay out a refund claim.
“[This] is often contingent upon a number of factors, including the homeowner’s willingness to respond, provide accurate contact information and identify heirs or estates, among others,” a spokesperson wrote by email.
HUD’s figures for the last two years seem to show a small amount of these refunds are processed annually nationwide.
During the first year of the coronavirus pandemic, in 2020, HUD said it processed 3,800 refund claims totaling $5.9 million. The average refund was for $1,500.
The next year, the numbers were smaller: HUD processed 3,300 refund claims totaling $4.4 million, with the average refund totaling $1,300.
Those numbers may be a drop in the bucket given in the Chicago-area alone, NBC 5 found 30,269 homeowners who are owed collectively $16.8 million, as of last June.
When NBC 5 and Telemundo Chicago asked HUD for the total amount of money owed to homeowners nationwide, the agency said it did not have that figure on-hand, and that it required a Freedom of Information Act request to obtain.
For its part, HUD said it has implemented changes recently to try and expedite the refund process.
In August 2020, the agency said it implemented an “interactive process” for homeowners to submit supportive documents about their premium refunds electronically to the agency.
And starting this year, on Jan. 14, HUD removed a notary requirement for the refund application form that homeowners receive by mail.
In the future, the agency said it is working to reduce the amount of documentation required for processing 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 should not happen,” Juana said, referring to the challenges she faced when trying to get her refund. “Towards the end, it took over my life.”
With that said, both families still encourage everyone to check the website, and pursue the money they are rightfully owed.
“I encourage people to try to get this money,” Raul Magana said.
