Housing and Urban Development Department
FHA INFO 2026-16: Draft Partial Claim Reinstatement Advance Payment Demonstration Mortgagee Letter Posted on the Drafting Table for Stakeholder Feedback
July 20, 2026
Summary
FHA posted a draft Mortgage Letter (ML) on its Single Family Housing Drafting Table that would establish a Reinstatement Advance Payment (RAP) Demonstration for Partial Claims. Under the proposal, mortgagees could voluntarily secure partial claim or payment supplement debt through a RAP Repayment Agreement held under the FHA-insured first mortgage, eliminating the partial claim note and subordinate mortgage. Feedback is due September 3, 2026, and the draft is not official policy until finalized.
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Today, the Federal Housing Administration (FHA) posted on its Single Family Housing Drafting Table for stakeholder review and feedback the draft Mortgage Letter (ML) Reinstatement Advance Payment. This ML, if finalized, would establish policy to help implement a Reinstatement Advance Payment (RAP) Demonstration for Partial Claims. The RAP Demonstration would provide an alternative method of securing the partial claim or payment supplement debt through a RAP Repayment Agreement secured under the FHA-insured first mortgage. This would eliminate the need for a partial claim note and subordinate mortgage.
Participation in the RAP Demonstration would be voluntary, and all mortgagees would be eligible to participate. Mortgagees would be permitted to decide when to utilize a RAP on a case-by-case basis. Under the RAP Demonstration, mortgagees would retain the RAP Repayment Agreement and remain responsible for servicing the partial claim or payment supplement and collecting the amount due from the borrower.
The RAP is intended to reduce the burden on servicers in obtaining and recording notes and subordinate mortgages, as well as to align with standard industry practice. Additionally, it would help facilitate the sale, refinance, assumption, and transfer processes since there will no longer be a subordinate lien to resolve. Finally, because the RAP does not create a subordinate federal lien, this would also remove challenges associated with nonjudicial foreclosures of mortgages.
Stakeholders are encouraged to thoroughly review today’s draft ML and provide feedback through September 3, 2026, using the feedback instructions posted on the Drafting Table. FHA will carefully consider all feedback received before publishing a final ML. If finalized, the ML and corresponding Federal Register Notice are expected to publish in the coming months and will establish the Demonstration.
As a reminder, this draft is not official departmental policy and cannot be used in connection with any FHA-insured mortgage until finalized.
Stakeholder questions should be directed to the FHA Resource Center (referenced below).
Source: https://www.hud.gov/hud-partners/single-family-fha-info#fha-info-2026-16
Common questions
- What does "FHA INFO 2026-16: Draft Partial Claim Reinstatement Advance Payment Demonstration Mortgagee Letter Posted on the Drafting Table for Stakeholder Feedback" cover?
- FHA posted a draft Mortgage Letter (ML) on its Single Family Housing Drafting Table that would establish a Reinstatement Advance Payment (RAP)…
- Which agency issued this update?
- This update was issued by Housing and Urban Development Department.
- When was it published?
- It was published on July 20, 2026.