FHA Updates Servicing Rules: July and October Deadlines
FHA Updates Servicing Rules: July and October Deadlines
HUD has issued Mortgagee Letter 2025-14, setting critical compliance updates for mortgage servicers. The changes respond to industry feedback and adjust borrower engagement and loss mitigation protocols under FHA guidelines. Readers can find prior information about these items in our prior posting here.
Two Key Deadlines to Watch:
July 1, 2025 – New borrower engagement rules take effect.
October 1, 2025 – Revised permanent loss mitigation framework and guidance on how to meet requirements effective.
What’s Changing on Borrower Engagement?
Under the new rules, the rigid “Loss Mitigation Consultation” standard will be gone. Replaced with a flexible “Interview,” servicers now have more options to comply, e.g., via phone, video, or vendors. CFPB’s Reg X can be used to meet FHA’s “reasonable effort” threshold. Interviews are not required in certain exempt situations.
Loss Mitigation Clarifications (Effective October 1):
COVID-19 options sunset September 30.
Trial Payment Plans now vary by borrower type.
Clarified rules for borrower attestations and exemptions.
Retention options restricted to loans 3+ months delinquent (with exceptions).
No partial claims for Section 247 Mortgages.
What Mortgage Servicers Should Do Now:
Revise borrower outreach policies for July compliance.
Update internal processes and vendor workflows ahead of October.
Conform documentation, training, and systems to FHA’s clarified standards.
Questions? Reach out to troy@garrishorn.com for guidance and check out Mortgagee Letter 2025-14.