HUD Announces Mortgagee Letters Reducing Regulations and Homeownership Financing Costs

FHA has announced the publication of several Mortgagee Letters, which became effective immediately, aimed at eliminating or reducing “red tape” policies and regulations that FHA claims unnecessarily increase the cost of home ownership. 

Mortgagee Letter 2025-18 rescinds several appraisal requirements, including requirements relating to the effective age of the collateral property, photograph requirements that exceed non-FHA industry standards, and requirements for additional comparable sales and listings.  

Mortgagee Letter 2025-16 rescinds the full-time employment requirement for Direct Endorsement underwriters.

Mortgagee Letter 2025-15 eliminates the mandatory collection of the Supplemental Consumer Information Form, reducing data collection burdens for lenders.

Mortgagee Letter 2025-17 rescinds the Federal Flood Risk Management Standard for new construction eligibility and reverts to a requirement that the lowest floor of a residential building be built above the 100-year flood elevation, rather than two feet above the Base Flood Elevation, as recently required under ML 2024-20. 

Finally, Mortgagee Letter 2025-19 modifies pre-endorsement inspection requirements for properties in Presidentially-Declared Major Disaster Areas (PDMAs).  Previously, FHA required damage inspection reports prior to endorsement for all properties located in PDMAs, and further required that these inspections be completed by an FHA Roster Appraiser, oftentimes resulting in lengthy waiting periods.  Since Mortgagees are already responsible for Surchargeable Damage, or further damage to the property if the Mortgagee does not act quickly enough, FHA believes that Mortgagees have sufficient interest in proactively monitoring and managing this risk.  Therefore, FHA expects the elimination of pre-endorsement inspection requirements in PDMAs to speed up the loan origination process while still protecting the Mutual Mortgage Insurance Fund.