Federal Housing Administration (FHA) ML 2025-12

Mortgagee Letter 2025-12:

On Wednesday, September 24, 2025, FHA published FHA Info 2025-18 and Mortgagee Letter 2025-12 announcing updates to the requirements for servicing of FHA-insured forward Mortgages. In the ML, “FHA published minor changes to facilitate the implementation of servicing and loss mitigation requirements in ML 2025-12, with addressing feedback received from the industry.”

Link to the ML: Updates to Mortgagee Letter 2025-12, Tightening and Expediting Implementation of the New Permanent Loss Mitigation Options

Additionally, along with these updates, FHA recently published updated FAQs on Loss Mitigation.  Link to the updated and newly published FAQs below: Home

Summary of Changes per the ML Below:

• adds Adding Borrowers to a Mortgage (III.A.1.j.v);
• updates Eligibility to Participate in HUD Programs (III.A.2.h.iii(A));
• updates Financial Hardship Documentation (III.A.2.h.iv(C));
• updates Loss Mitigation Home Retention Options – Definitions (III.A.2.i.i);
• updates Borrower Qualifications (III.A.2.i.iii(A)(2));
• updates Borrower Affordability Attestation – Standard (III.A.2.i.iii(B)(2));
• updates Trial Payment Terms (III.A.2.i.iii(C)(2)(b));
• updates Reconsideration for Permanent Home Retention Options After TPP Failure (III.A.2.i.iii(C)(5)(b));
• updates Execution of Permanent Home Retention Option Documents (III.A.2.i.iii(D));
• updates Partial Claims – Standard (III.A.2.i.iv(B));
• updates Statutory Maximum for Partial Claims (including Payment Supplement) (III.A.2.i.iv(C));
• updates Payment of Partial Claim (III.A.2.i.iv(I));
• updates Combination Loan Modification and Partial Claim (III.A.2.i.v(G));
• updates Mortgage Reinstatement with Other Permanent Loss Mitigation Option – MoPR Terminates (III.A.2.i.vi(J)(3));
• updates Outside of the Waterfall Loan Modification – Eligibility (III.A.2.i.vii(B));
• updates Loss Mitigation Assumption (III.A.2.i.ix);
• updates DIL Exceptions for Borrowers with More than One FHA[1]Insured Mortgage (III.A.2.j.iii(C)(3));
•  updated Loss Mitigation Denial (III.A.2.q.i(D)(3));
•  updates Assumability of FHA-Insured Mortgages (III.A.3.b.i); and updates Appendix 4.0, Part A: Arrearages.

FHA Trainings on its Loss Mitigation Program:

On September 22, 2025, FHA announced the release of a series of pre-recorded trainings on its loss mitigation options. These pre-recorded trainings provide servicers and other interested stakeholders with an in-depth overview of FHA’s new loss mitigation options –announced in Mortgagee Letter (ML) 2025-12 and updated by ML 2025-14 – that are designed to assist homeowners with FHA-insured mortgages who are facing financial hardship avoid foreclosure.

Note:  The Default Servicing and Early Default Intervention presentation was very interesting as it relates to partial payments and the OUI.

The following pre-recorded trainings are accessible on HUD’s Electronic Courses on Loss Mitigation and Servicing System (ECLASS)

• Default Servicing and Early Default Intervention
• HUD’s Loss Mitigation Program – Home Retention
• HUD’s Loss Mitigation Program – Payment Supplement
• HUD’s Loss Mitigation Program – Home Disposition

Link: ECLASS | Electronic Courses on Loss Mitigation and Servicing System

Loss Mitigation Options Frequently Asked Questions Now Available

FHA is making available a Loss Mitigation Options questions and answers document that compiles the most common questions received following the publication of Mortgagee Letter (ML) 2025-12 and updated in ML 2025-14. The FHA Resource Center knowledge base has been updated more broadly with information related to the updated loss mitigation options.

Link: LOSS MITIGATION WATERFALL WEBINAR