The U.S. Department of Housing and Urban Development (HUD) has introduced a revised set of permanent options for mortgage servicers to assist borrowers with FHA-insured single-family mortgages in maintaining their homes or avoiding foreclosure. These updates, part of FHA's loss mitigation "waterfall," build on temporary measures implemented during the COVID-19 pandemic that helped over two million borrowers remain in their homes. The new options will be available from February 2, 2026, while the current temporary measures remain until February 1, 2026.
"HUD is focused on helping first-time homeowners, and we are also focused on helping homeowners keep their homes," said HUD Agency Head Adrianne Todman. She noted that these updates enhance the options created during the pandemic.
Federal Housing Commissioner Julia Gordon stated, "The updates we're announcing today are based on solutions that have proven to be effective in helping struggling homeowners avoid foreclosure and reduce losses to the Mutual Mortgage Insurance Fund." She expressed confidence in these measures supporting homeownership during challenging times.
The updated loss mitigation tools cater to various borrower needs through several categories:
- **Early Default Intervention:** For those experiencing payment difficulties, servicers can offer a repayment plan or a forbearance period up to 12 months. Special disaster forbearance provides additional flexibility for natural disaster victims.
- **Home Retention Options:** Depending on financial situations, tools such as standalone partial claims or loan modifications aim to bring mortgages current. For those unable to afford existing payments, options targeting a 25% reduction in principal and interest are available.
- **Home Disposition Options:** When retention isn't possible, pre-foreclosure sales and deeds-in-lieu of foreclosure help borrowers avoid foreclosure.
Deputy Assistant Secretary for Single Family Housing Sarah Edelman highlighted the success of evolving loss mitigation options during the pandemic. "The updated waterfall is based upon successful outcomes we've achieved...and adds additional guardrails to reduce risk and losses to HUD," she said.
Additionally, FHA announced a 60-day feedback period for its proposed Equity Saver Sale—an addition allowing borrowers with retained equity to list and sell homes while pausing foreclosure. Feedback is solicited until March 17, 2025.
