FHA INFO 2026-13: FHA Slashes More Red Tape to Promote Homeownership Affordability

Today, the Federal Housing Administration (FHA) published its next sweeping set of policy updates for its Single Family mortgage insurance program executed through a series of Mortgagee Letters (ML). These 14 individual updates, launched as part of HUD’s recognition of National Homeownership Month, are designed to reduce costs, mitigate risk, and make mortgage credit more accessible for prospective American homebuyers with FHA-insured mortgages in accordance with President Trump’s Executive Order Promoting Access to Mortgage Credit.

These updates bring the total to more than 150 streamlining measures taken in the FHA Single Family program since the start of the Trump administration.

Today, FHA issued the following MLs:

• Updates to FHA Quality Control Requirements for Appraisal Field Reviews. Through this ML, FHA is making field reviews an optional component of the appraisal quality control (QC) process. FHA previously required mortgagees to obtain appraisal field reviews on at least 10 percent of their origination and underwriting QC samples. By making field reviews optional, FHA is maintaining its core appraisal compliance framework while giving mortgagees greater flexibility to tailor review methods based on case-specific risk.

Appraisal field reviews represent one of the most expensive quality control components of the lender appraisal review process, with an average cost of $425 per field review. FHA estimates that eliminating this requirement will save industry partners approximately $3.3 million annually, meaningfully improving the cost structure for FHA lending.

• Increase in the Maximum Number of Draw Requests for Limited 203(k) Rehabilitation Mortgage Insurance Program. Through this ML, FHA is increasing the maximum number of allowable draws under its Limited 203(k) program from two to four per contractor. It further clarifies draw disbursement procedures for both the Limited and Standard 203(k) programs to strengthen risk controls that will protect FHA’s Mutual Mortgage Insurance Fund (MMIF) and align with industry standards. This ML incorporates stakeholder feedback received on the draft ML announced in FHA INFO-2025-53, dated December 4, 2025.
• Eliminating Unnecessary Requirements for FHA Mortgagee Approval and Quality Control. This ML streamlines FHA policies and processes by eliminating outdated, redundant, or unnecessary requirements that increase mortgage costs, limit access for borrowers, and drive some smaller lenders out of the market. Specifically, this ML:
  • Creates a permanent exception to exempt Early Payment Defaults from the required monthly Quality Control review sample for certain mortgages impacted by a Presidentially Declared Major Disaster Area (PDMDA), eliminating the need for FHA to issue a waiver for each PDMDA;
  • Removes outdated policy that required mortgagees to provide their staff with online access or hard copies of current FHA guidance;
  • Removes section V.A.2.c. Identifying Patterns from Single Family Housing Policy Handbook 4000.1. Other FHA policy requires mortgagees to expand the scope of loan-level Quality Control when fraud or patterns of deficiencies are identified, making the “Identifying Patterns” section redundant; and
  • Removes the requirement for the mortgagee officer in charge to be a full-time corporate officer exclusively employed by the mortgagee.
• Rescission of the Important Notice to Homebuyers Form HUD-92900-B Requirement. This ML formally and permanently removes the requirement for mortgagees to provide borrowers form HUD-92900-B, Important Notice to Homebuyers and retain the executed copy in the case binder. Removing this form will reduce the size of the paper stack homebuyers must work through at closing while easing document retention requirements. This ML supersedes the HUD waiver issued on November 19, 2025.
• Updates to Loss Mitigation Requirements. Through this ML, FHA clarifies its loss mitigation requirements governing Trial Payment Plans (TPPs) and borrower evaluation for loss mitigation assistance. Specifically, this ML:
  • Establishes a new reason for a TPP failure when a borrower repeatedly fails to accept a TPP agreement for the third time;
  • Permitting payments under a permanent home retention option to increase after a TPP due to increases in taxes or insurance; and
  • Limits borrower requests for re-review for loss mitigation prior to foreclosure initiation to instances where a change in the borrower’s circumstances impacts their eligibility for a loss mitigation option.

This ML also revises the TPP requirements to allow borrowers to make their TPP payments in advance of the month in which they are due, ensuring that proactive borrowers are not penalized, which aligns with the housing policy waiver issued on March 3, 2026.

FHA strongly believes that updating these requirements will strengthen the housing market, reduce unnecessary regulation, increase America’s affordable housing supply, and reduce financing costs, all while protecting the FHA Mutual Mortgage Insurance Fund.

You are encouraged to thoroughly review these MLs and contact the FHA Resource Center (referenced below) with any questions.

For more information, read today’s press release.