The Federal Housing Administration (FHA) published Mortgagee Letter (ML) 2025-14, "Updates to Modernization of Engagement with Borrowers in Default and Loss Mitigation." 

The ML revised and streamlined policy established in ML 2024-24, “Modernization of Engagement with Borrowers in Default” and provided clarifications to ML 2025-12, “Tightening and Expediting Implementation of the New Permanent Loss Mitigation Options.”

The ML updated the requirement for what constitutes a “reasonable effort” to arrange an interview with borrowers in default, which includes using mailings, telephone calls, in-person outreach, electronic or other communication methods and a third-party vendor.

The mortgagee may now count compliance with any of the following as an attempt to arrange an interview:

Contact efforts for delinquent borrowers (III.A.2.h.vi);

Delinquency notice cover letter (III.A.2.h.x);

The Consumer Financial Protection Bureau’s (CFPB) early intervention requirements for live contact in 12 CFR § 1024.39(a); or

The CFPB’s early intervention requirements for written notice in 12 CFR §1024.39(b).

The ML replaced the loss mitigation consultation with the interview, removing “burdensome requirements associated with the interview with borrowers in default,” the FHA said in a release.

Additionally, the ML clarified home retention options for borrowers required to complete a trial payment plan (TPP). According to the ML, “the mortgagee must ensure borrowers in imminent default successfully complete a TPP for a period of four months before executing permanent home retention option documents.”

Lastly, the ML updated the disaster forbearance requirements.

“With the implementation of the provisions in ML 2025-14, FHA is further aligning its borrower engagement policies with the Trump administration’s goals of reducing unnecessary regulatory and financial burdens on the industry and fostering long-term economic stability and viability for all Americans,” the FHA said.

“These targeted policy updates expand the options available for mortgagees to reasonably engage with borrowers in default and are designed to help them achieve significant savings when compared to the considerable operational costs of fully implementing ML 2024-24 and ML 2025-12.”