"The letter also introduces minor changes to facilitate implementation of servicing and loss-mitigation requirements, aligning the updates with broader goals of supporting homeownership and safeguarding HUD's Mutual Mortgage Insurance Fund (MMIF) to protect taxpayer dollars. The FHA initially announced a replacement for the COVID-19-era loss-mitigation waterfall in April, setting an Oct. 1 deadline for servicers to adopt the new framework. Pandemic-era tools were implemented on an emergency basis and were never intended as permanent features of the waterfall, the agency said."
"But many of these provisions have persisted for years. Under the Trump administration, FHA said that this continuation increased risks to its programs. FHA's prior failure to definitively sunset the COVID-19 emergency loss mitigation waterfall' has increased risk in the MMIF, hurt taxpayers, set up many FHA borrowers for failure and enabled other FHA borrowers to abuse the current process, FHA said in its announcement of the waterfall."
FHA replaced the COVID-19-era loss-mitigation waterfall with a new framework and set an Oct. 1 deadline for servicers to adopt it. The update includes minor changes to facilitate servicing and loss-mitigation implementation while aiming to support homeownership and safeguard the Mutual Mortgage Insurance Fund (MMIF). Pandemic-era tools were emergency measures not intended as permanent, and their prolonged use increased program risks, harmed taxpayers, and enabled borrower abuse. FHA’s budget is funded by fees from borrowers and lenders, and the MMIF capital reserve ratio rose to 11.47% as of Sept. 30, 2024.
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