FHA INFO 2026-04: FHA Updates Requirements for the Foreclosure and Post-Foreclosure Processes

January 29, 2026 - Today, the Federal Housing Administration (FHA) published Mortgagee Letter (ML), 2026-03, Updates to Bidding at Foreclosure and Post-Foreclosure Sales Efforts. This ML updates the requirements for mortgagees’ bidding at a foreclosure sale and for utilizing Claims Without Conveyance of Title (CWCOT), including post-foreclosure sales efforts.

FHA’s CWCOT program allows a mortgagee to file an insurance claim without transfer of title provided the property is sold at foreclosure for at least its fair market value as determined by the Department of Housing and Urban Development (HUD). Historically, HUD has adjusted fair market value based on holding costs and other expenses that it would have incurred had the property been conveyed to the agency. This amount is referred to as the Commissioner’s Adjusted Fair Market Value (CAFMV). HUD regularly updates this amount based on market conditions.

With this ML, HUD is reaffirming its policy that a mortgagee may only participate in the CWCOT program if the mortgagee bids CAFMV at the foreclosure sale. A mortgagee that bids below the CAFMV at a foreclosure sale must either convey the property to HUD or forgo filing a claim. HUD is also eliminating the exemption for small servicers because they can convey the property to HUD instead, if they are unable to meet the CAMFV bidding requirement.

These changes align with the Administration’s overarching goals of reducing regulatory and financial burdens on industry partners, aligning with industry standards, reducing risks to FHA’s Mutual Mortgage Insurance Fund (MMIF), and making it easier for stakeholders to do business with FHA.

The FHA Single Family Housing Claim Filing Technical Guide (Claim Filing Guide) has been updated to reflect the changes in the ML and is available on the supplemental documents webpage.

The provisions of this ML may be implemented immediately but must be implemented for foreclosure sales scheduled on or after April 29, 2026.

You are encouraged to review today’s ML-2026-03. If you have questions, contact the FHA Resource Center (referenced below).