The Federal Housing Administration (FHA) issued multiple Mortgagee Letters (ML) on June 27, 2025, implementing several policy changes affecting FHA-insured single family loans. These changes, which take effect immediately, are part of what the Trump administration says is a broader effort to reduce regulatory burden in the housing market. The policy modifications affect various aspects of the FHA-insured loans, from construction standards in flood zones to appraisal protocols and borrower data collection.

  • Rescission of Federal Flood Risk Management Standard (FFRMS) for New Construction Eligibilitypdf: This ML rescinds the FFRMS for new construction that was implemented in November 2024. Under FFRMS, new construction in Special Flood Hazard Areas was required to be built at least two feet above the FEMA Base Flood Elevation. The ML reverts to the previous standard that required building at or above the 100-year flood elevation. In 2023, NAR supported the FFRMS, noting that the extra height requirements help reduce flood risk for FHA borrowers and create fewer challenges for real estate professionals marketing properties in flood-prone areas.
  • Rescission of Outdated and Costly FHA Appraisal Protocolspdf: This ML modifies several FHA appraisal requirements. The changes eliminate requirements for appraisers to estimate the remaining economic life of properties and remove additional appraisal requirements for Section 223(e) mortgages, which cover properties in older, declining urban areas. The ML also reduces photography requirements and provides appraisers with more flexibility when conducting a market analysis. These streamlined requirements should make the FHA loan process more efficient for borrowers.
  • Rescission of Mandatory Pre-Endorsement Inspection Requirements for Properties Located in Presidentially Declared Major Disaster Areas (PDMDAs)pdf: This ML eliminates mandatory damage inspection requirements for properties in disaster areas before FHA loan endorsement. For example, if a house is under contract and a hurricane hits the area before closing, the property would automatically require a mandatory FHA inspection under the old rules, even if the house appeared undamaged. The new policy gives lenders discretion to determine if inspections are necessary based on their own risk assessment. This change should benefit NAR members by reducing transaction delays in disaster-affected areas, as lenders now determine inspection needs based on their own risk assessment rather than automatic requirements.
  • Rescission of the Supplemental Consumer Information Form Requirementpdf: This ML eliminates the requirement for FHA borrowers to complete the Supplemental Consumer Information Form (SCIF), which collects data about borrowers' language preferences and homeownership education or counseling received. The SCIF requirement was implemented in June 2023 but is not statutorily mandated. This new policy removes a data collection tool that could help the government and housing industry better understand how to serve diverse homebuyers and help families avoid foreclosure.