The Federal Housing Administration (“FHA”) recently announced several policy revisions “cutting red tape to more effectively deliver on President Trump’s priorities to reduce the costs of homeownership.” The FHA published five new Mortgagee Letters to update requirements for FHA insurance that eliminate disclosures, appraisal requirements and other activities the FHA now deems over burdensome. Each of the changes were effective immediately, as of publication on June 27, 2025.
Mortgagee Letter 2025-15 removes the requirement for lenders to provide the Supplemental Consumer Information Form (“SCIF”, DocMagic Form ID: SCIF.MSC) as part of the Uniform Residential Loan Application (“URLA”). The SCIF collects information from borrowers about any homebuyer education or counseling they have completed prior to the loan closing and solicits the borrower’s preference for negotiation or disclosures in a language other than English. Use of the SCIF was intended to offer support for those borrowers with Limited English Proficiency (“LEP”), allowing them to easily indicate an alternative language preference. However, despite collection of the preference, the SCIF did not impose any duties on the lender to provide disclosures or negotiate in that language. DocMagic currently provides the SCIF for all loans as part of the URLA. As of July 10, 2025, DocMagic will no longer automatically include the SCIF with the URLA for FHA loans.
The FHA also eased rules on employment of Direct Endorsement underwriters to allow part-time employment. Mortgagee Letter 2025-16 makes a simple update to the Eligibility requirements of Direct Endorsement underwriters to remove the requirement that their employment be full-time. All other eligibility criteria remain the same.
FHA makes several updates regarding property, appraisal, and inspection requirements. Mortgagee Letter 2025-17 rescinds ML 2024-20 published just last November, which we wrote about here. That Mortgagee Letter would have required newly constructed residential dwellings located within the 1-percent-annual-chance floodplain to have the lowest floor of the property be built at least two feet above the Base Flood Elevation (“BFE”) level determined by FEMA. The previous requirement was only that the lowest floor be built at least one foot above the BFE level, which again becomes the minimum property standard for eligibility under FHA guidelines.
Mortgagee Letter 2025-19 rescinds the requirement for mandatory pre-endorsement inspection of properties located in presidentially-declared major disaster areas. The changed guideline requires lenders to exercise due diligence in determining if additional inspections or repairs are necessary before endorsement, for properties in a presidentially-declared major disaster area.
The final rescission removes requirements for FHA appraisals that FHA has deemed too onerous or burdensome, or outside of industry standards. The changes include reduced requirements for photographs, removal of the requirement to determine remaining economic life, and reduced requirements for comparable sales including those aimed specifically at accounting for changing market conditions.