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FHA · Mortgagee Letter ML 2026-09 · Published

Eliminating Unnecessary Requirements for FHA Mortgagee Approval and Quality Control

FHA has eliminated the full-time and exclusive employment requirement for a Mortgagee's Officer in Charge and removed requirements for staff access to FHA guidance and identifying patterns of noncompliance. Additionally, FHA established a permanent Quality Control review exception for Early Payment Defaults on mortgages impacted by Presidentially-Declared Major Disasters.

Review recommendedIn effect nowChecks passed· adjusted automaticallyRead the letter ↗ (opens in a new tab)

Loan impact

From the letter text · verified

Applies to: All FHA-insured mortgages, with quality control sampling exceptions for early payment defaults on properties located in Presidentially-Declared Major Disaster Areas.

Addressed to
All FHA-Approved Mortgagees
Investor
FHAFrom the publisher, not quoted from the text
Programs
FHAFrom the publisher, not quoted from the text
Affected area
RecordsGuide Section V.A.3.a.iv
Exceptions
Early Payment Defaults on mortgages in Presidentially-Declared Major Disaster Areas closed before the incident period
Applicability confidence
Verified: every row taken from the source text is supported by it; rows marked "from the publisher" are not quoted
Supporting quotes from the letter
  • exceptions“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.”
  • affected areas“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.”
  • guide sections“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.”
  • guide sections“FHA has removed the outdated policy in Training (V.A.2.b.i(A)) that required Mortgagees to provide their staff with access to the internet or hard copies of current FHA guidance.”
  • guide sections“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.”

What changed

From the letter text · Sections I.A.3.c.iv(B)(2)(b), V.A.2.b.i(A), V.A.2.c, V.A.3.a.iv(B)
RequirementPreviouslyNow
Officer in Charge exclusive and full-time employmentRelaxedSection I.A.3.c.iv(B)(2)(b)Previously: The Officer in Charge was required to be a full-time Corporate Officer exclusively employed by the Mortgagee.The Officer in Charge must be a Corporate Officer employed by the Mortgagee with required experience, but is no longer required to be full-time or exclusively employed.
Staff access to current FHA guidanceRemovedSection V.A.2.b.i(A)Previously: The Mortgagee must provide all Loan Administration and QC staff with access to current FHA guidance including Handbooks, Mortgagee Letters (ML), Title I Letters (TI), Frequently Asked Questions (FAQ), and other guidance issued by FHA.The requirement to provide staff with access to current FHA guidance or confirm access to the internet or hard copies is removed.
QC review of loan performance data to identify patternsRemovedSection V.A.2.cPreviously: The Mortgagee must review its loan performance data to identify any patterns of noncompliance.The requirement to review loan performance data to identify patterns of noncompliance is removed.
Early Payment Default monthly QC review sampleRelaxedSection V.A.3.a.iv(B)Previously: All Early Payment Defaults underwritten by the Mortgagee were subject to monthly QC review without a permanent disaster exception.Mortgagees are exempted from QC review for EPDs secured by properties in a PDMDA closed before the FEMA incident period start date that become EPDs after that date.

Also affected: Section V.A.3.a.iv.

What to do

AWACS interpretation · not source language

What to review: Review the new Quality Control sampling exception that permits excluding qualifying disaster-impacted Early Payment Defaults, as well as the eliminated requirements for Officer in Charge exclusivity, staff guidance access, and noncompliance pattern reviews.

QC implications

  • Quality control may update monthly sampling procedures to exclude Early Payment Defaults secured by properties in a Presidentially-Declared Major Disaster Area that closed before the FEMA incident period start date and became delinquent after that date.
  • Quality control programs are no longer required to review loan performance data specifically to identify patterns of noncompliance.

Source and record

Version 1 · archived

Checks

  • Source verified: Passed

    The document ID, link and publication date match the official source.

  • Quotes match the source: Passed, adjusted automatically

    Every quoted passage appears word for word in the official document.

    • A detail the source does not support was removed or adjusted

  • Requirements backed by the source: Passed

    Anything marked required is backed by the requirement language and dates in the source.

  • In scope: Passed

    The document is about residential mortgage lending.

  • Format and labels: Passed

    The record follows the AWACS format and uses its standard labels.