The Federal Housing Administration (FHA) announced last month that it is ending the COVID-19 era loss mitigation waterfall. In Mortgagee Letter 2025-12, FHA indicated that the COVID-19 loss mitigation options, which were intended to be temporary, will officially sunset on September 30, 2025. The new permanent loss mitigation options previously scheduled to go into effect on February 2, 2026, will now be effective October 1, 2025.

Borrower eligibility for a permanent loss mitigation will now be limited to once every 24 months instead of once every 18 months as currently permitted. And consistent with the agency’s mission to streamline the loss mitigation process, FHA is officially eliminating its FHA-HAMP program, a pre-COVID program that required borrowers to submit extensive documentation as part of the application process. The HAMP program, which had already been temporarily suspended, will officially sunset on September 30, 2025.

Additionally, the latest mortgagee letter removed the language accessibility disclosure requirements which would have required mortgagees to provide a notice in both English and Spanish regarding the availability of language access services offered by the mortgagee to borrowers with limited English proficiency.