Updates from HUD on FHA-Insured Mortgages

In recent weeks, the United States Department of Housing and Urban Development (HUD) has issued a couple of updates related to FHA-insured mortgages that credit unions should be aware of.  

The first was issued on March 19th in Mortgagee Letter 2025-08. The letter rescinds, among other things, the reconsideration of value (ROV) requirements applicable to FHA-insured mortgages as of October 31, 2024. Those requirements included: 

• Development of policies and procedures that outline the steps a borrower can take to appeal a valuation report,  
• Disclosure to a borrower of his/her right to request a ROV, and 
• The steps a credit union must take in response to a ROV request. 

HUD rescinded its ROV requirements in light of the President’s January 20th executive order directing federal agencies to reverse policies that have an adverse effect on key sectors of the economy, including the housing market. The interagency guidance on reconsiderations of value effective July 26, 2024, and FHFA’s ROV requirements effective October 31, 2024, both remain in effect. 

HUD followed up on March 26th with Mortgagee Letter 2025-09. That letter eliminates the eligibility of certain non-permanent residents for FHA-insured mortgages. The letter provides that on a go forward basis, only the following are eligible for FHA-insured financing: 

U.S. Citizens 

Permanent U.S. Residents 

Citizens of Micronesia, the Republic of the Marshall Islands, or the Republic of Palau 

Lenders will be required to provide evidence of the borrower’s lawful permanent residence to HUD. Such evidence should be obtained from the US Citizenship and Immigration Service (USCIS), a division of the Department of Homeland Security.