FHA eliminates 12 costly and burdensome policies in sweeping rollback
U.S. Department of Housing and Urban Development (HUD) Secretary Scott Turner announced the Federal Housing Administration (FHA) is rescinding more than 12 sub-regulatory policies under its Single Family mortgage insurance program. These sweeping changes cut red tape, help reduce the cost of homeownership, and eliminate financial and regulatory burdens. The rescissions span the loan origination process from the point of mortgage application submission through FHA’s issuance of an insurance endorsement on the mortgage.
“These rescissions are bold, necessary, and long overdue,” said HUD Secretary Scott Turner. “Under President Trump’s leadership, we’re slashing red tape that drives up costs and shuts families out of the market. Every hardworking American deserves a fair shot at owning a home – the American Dream should never be buried under a pile of regulations. These changes open doors for families and lenders, unlocking opportunities nationwide.”
Today’s policy retractions, executed through a series of Mortgagee Letters (ML), are aimed at eliminating policies that directly or indirectly increase the cost of home ownership for aspiring first-time buyers. The removal of these requirements will strengthen the housing market, reduce unnecessary regulations, increase America’s affordable housing supply, reduce financing costs, and save taxpayer funds by creating a more efficient FHA lending process. Specifically, the FHA:
- Rescinded Outdated and Costly FHA Appraisal Protocols. By removing antiquated and burdensome procedural steps that an appraiser must complete during each assignment, FHA is better aligning its appraisal policies with industry standards and reducing unnecessary costs and delays that are passed through to homebuyers. During the first Trump Administration, HUD made targeted technology investments through FHA Catalyst that have substantially improved FHA’s collateral valuation analytics. As a result, FHA is now able to extend the benefit of these investments to borrowers, lenders, and taxpayers in the form of streamlined appraisal procedures, lower costs, and quicker turn times.
- Rescinded Full-Time Direct Endorsement Underwriter Requirements. By rescinding its previous full-time employment requirement for Direct Endorsement underwriter eligibility and now allowing part-time employment, lenders will have increased flexibility to more effectively manage their staffing needs, reduce origination costs, and encourage greater participation in FHA programs.
- Rescinded the Supplemental Consumer Information Form (SCIF) Collection Requirement. Rescinding the required collection of the SCIF removes a requirement that had limited benefit and was an additional collection burden for lenders.
- Rescinded the Federal Flood Risk Management Standard (FFRMS) for New Construction Eligibility. Rescinding the FFRMS restores the previous established policy, thus removing what would have been limits on the land available for development and eliminating increases in the cost of construction for FHA-insured single-family properties, which would have exacerbated the insufficient supply of affordable housing for the next generation of homebuyers.
- Rescinded the Mandatory Pre-Endorsement Inspection Requirements for Properties Located in Presidentially-Declared Major Disaster Areas. Modifying FHA disaster inspection requirements aligns FHA’s policies with industry standards and allows lenders the discretion to assess property condition and determine appropriate risk-based actions prior to endorsement. This update reduces costly and unnecessary delays and will improve the bandwidth of home property inspectors that are often overwhelmed following a natural disaster.
This announcement, made during National Homeownership Month, underscores HUD’s ongoing commitment to expand homeownership opportunities for Americans.