HUD Mortgagee Letter 2026-09
HUD Mortgagee Letter 2026-09 (June 23, 2026) — Eliminating Unnecessary Requirements for FHA Mortgagee Approval and Quality Control. Eliminates/updates unnecessary Mortgagee approval and QC requirements (Officer in Charge full-time/exclusive employment, Training access-to-guidance, Identifying Patterns, and an EPD sampling exception for PDMDAs) across FHA-insured mortgage programs; effective immediately. Full verbatim text captured section-by-section from the HUD source PDF.
Update kit
Need to act on this regulation? FHA - Streamlined Mortgagee-Approval & QC (ML 2026-09) →
Verbatim regulatory text
Verbatim provisions from HUD Mortgagee Letter 2026-09 — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.
HUD ML 2026-09 — Subject
Eliminating Unnecessary Requirements for FHA Mortgagee Approval and Quality Control
HUD ML 2026-09 — Purpose
This Mortgagee Letter (ML) eliminates and updates unnecessary requirements related to FHA Mortgagee approval and quality control.
HUD ML 2026-09 — Effective Date
The provisions of this ML are effective immediately. All updates will be incorporated into a forthcoming update of the HUD Handbook 4000.1, FHA Single Family Housing Policy Handbook (Handbook 4000.1).
HUD ML 2026-09 — Affected Programs
The provisions of this ML apply to all FHA-insured mortgage programs.
HUD ML 2026-09 — Background (streamlining Handbook 4000.1)
FHA has identified several opportunities to streamline Handbook 4000.1 by eliminating outdated, redundant, or otherwise unnecessary requirements in section I, Doing Business with FHA, and section V, Quality Control, Oversight, and Compliance. These changes align with the Trump Administration’s broader goals to reduce costs and unnecessary regulatory burdens as well as foster long-term economic stability.
HUD ML 2026-09 — Background (permanent EPD exception for PDMDAs)
In section V, FHA is creating a permanent exception to its Sample Composition Standard (V.A.3.a.iv) policy that exempts Early Payment Defaults (EPD) from the required monthly Quality Control (QC) review sample for certain Mortgages impacted by Presidentially-Declared Major Disasters. FHA has repeatedly issued waivers of EPD review requirements for Properties located in specific Presidentially-Declared Major Disaster Areas (PDMDA). Increased EPDs following a major disaster are expected, and many defaults in PDMDAs are likely the result of loss of employment/income, property damage, forced relocation, and other factors unrelated to noncompliance with FHA requirements. A permanent exception eliminates the need for FHA to issue a waiver for each PDMDA.
HUD ML 2026-09 — Background (removed Access to FHA Guidance in Training)
FHA has removed the outdated policy in Training (V.A.2.b.i(A)) that required Mortgagees to provide their staff with access to the internet or hard copies of current FHA guidance. Internet access is essentially universal for the mortgage industry and all current FHA guidance is available online. Additionally, Mortgagees are responsible for compliance with applicable guidance whether their staff are actively referencing such guidance or not.
HUD ML 2026-09 — Background (removed Identifying Patterns QC requirement)
FHA has removed redundant and potentially confusing QC requirements related to Identifying Patterns (V.A.2.c) of noncompliance, which described an implicit component of an effective QC Program. Other FHA policy requires Mortgagees to expand the scope of loan-level QC when fraud or patterns of deficiencies are identified in Scope (V.A.3.a.ii) making the previous Identifying Patterns (V.A.2.c) section redundant. The previous section also focused on loan performance even though a focus on loan quality (patterns of Findings) is the most direct way to uncover control weaknesses. Moreover, the expectation that Mortgagees review loan performance data is addressed indirectly by Credit Watch Termination of Title II Mortgagees (V.E.3.a.iii), which describes FHA’s continuous monitoring process for loan performance trends.
HUD ML 2026-09 — Background (removed full-time/exclusive Officer in Charge requirement)
Finally, FHA has removed the section I requirement for the Mortgagee’s Officer in Charge to be a full-time Corporate Officer exclusively employed by the Mortgagee. FHA already allowed an exception to the exclusive employment requirement for Investing Mortgagees without servicing authority, and requirements applicable to all Corporate Officers include specific conditions under which Corporate Officers may represent more than one Mortgagee. Since the Officer in Charge will be subject to the same conditions, the full-time/exclusive employment requirement is unnecessary.
HUD ML 2026-09 — Summary of Changes (Officer in Charge)
This ML: • updates Officer in Charge – Standard (I.A.3.c.iv(B)(2)(b)) to remove the full-time/exclusive employment requirement and the exception for Investing Mortgagees, which is no longer necessary;
HUD ML 2026-09 — Summary of Changes (Training, Identifying Patterns, EPD)
updates Training (V.A.2.b.i(A)) to renumber the section and remove Access to FHA Guidance (V.A.2.b.i.(A)(2)); • removes Identifying Patterns (V.A.2.c) and renumbers subsequent sections; and • updates Sample Composition Standard – Early Payment Defaults (V.A.3.a.iv(B)) with an exception to the EPD sampling requirement for certain Mortgages impacted by PDMDAs. The Handbook 4000.1 sections impacted by this ML are provided in Attachment 1, with changes tracked in redline to help users clearly identify the policy requirements being revised or removed from the Handbook.
HUD ML 2026-09 — Handbook 4000.1 Doing Business with FHA — Officer in Charge, Standard (I.A.3.c.iv(B)(2)(b))
The Mortgagee must designate as the Officer in Charge a Corporate Officer who is employed by the Mortgagee and has at least three years of experience in the specific Mortgagee functions or activities that the Mortgagee is approved to perform, including: • originating or servicing Single Family or multifamily Mortgages; • investing funds in real estate Mortgages; or • managing other individuals performing these services. A Corporate Officer’s Experience in real estate sales or brokerage does not qualify.
HUD ML 2026-09 — Handbook 4000.1 Quality Control — Personnel: Training (V.A.2.b.i(A))
Personnel (V.A.2.b.i) (A) Training [Text was deleted in this section.] (1) Standard The Mortgagee must train all staff involved in FHA Loan Administration and QC processes to ensure that staff know all current FHA requirements for the FHA Loan Administration practices for which the Mortgagee is responsible. (2) Required Documentation The Mortgagee must maintain a list of all training provided to staff. For each training, the Mortgagee must include a summary of the content covered.
HUD ML 2026-09 — Handbook 4000.1 Quality Control — Sample Composition Standard: Early Payment Defaults (V.A.3.a.iv(B))
Sample Composition Standard (V.A.3.a.iv) (B) Early Payment Defaults (1) Definition Early Payment Defaults (EPD) are all Mortgages that become 60 Days delinquent within the first six payments. (2) Standard The Mortgagee must review all EPDs underwritten by the Mortgagee, regardless of which Mortgagee services the Mortgage, unless the EPDs are covered by the exception below. Title II Mortgagees may use Neighborhood Watch to assist with identifying EPDs. (3) Exception for Mortgages Impacted by Presidentially-Declared Major Disasters The Mortgagee is not required to review EPDs that: • are secured by Properties located in a Presidentially-Declared Major Disaster Area (PDMDA); • have a mortgage Closing Date before the Incident Period start date (as defined by FEMA); and • become EPDs after the Incident Period start date.