An end to pandemic-era loss mitigation provisions is not a return to norms

Servicers face a compressed timeline and complex new rules as HUD accelerates the next chapter of loss mitigation. Read this HousingWire article from Vicki Vidal, regulatory associate general counsel at ICE, to learn the five things to consider ahead of the Oct. 1 deadline. Below is an excerpt, with a link to the full article following.

Servicers have known the loss mitigation waterfalls enacted during the COVID-19 pandemic were eventually going to change. But a recent acceleration of the new governance has left the industry with only six months to make critical adjustments to loss mitigation workflows.

When the U.S. Department of Housing and Urban Development (HUD) issued a Mortgagee Letter outlining the loss mitigation program changes, the effective date was set for February 2026. However, a new letter issued in April moved the implementation deadline up to Oct. 1, 2025, leaving servicers with a much tighter time frame to ready their teams and technology to comply with the new requirements.

According to HUD Mortgagee Letter 2025-12, the changes are intended to “prevent foreclosures while protecting taxpayers and mitigating financial risks to the Mutual Mortgage Insurance Fund (MMIF).” One common problem these changes are trying to address is loss mitigation churning —where customers repeatedly switch between different loss mitigation options without making progress towards financial stability. And while the spring 2025 Mortgagee Letter from HUD goes into detail about the new requirements, there are still many questions from servicers as they face the rapidly approaching deadline.

Five things to consider as you prepare for October 1

These changes do not revert loss mitigation requirements back to what they were pre-pandemic. Instead, after Sept. 30, servicers will have to support a completely new set of requirements that include complex provisions and conditional logic that can drastically affect how loss mitigation workflows are handled from customer to customer.

There are five main aspects to the changes that servicers need to be paying attention to ahead of the Oct. 1 deadline.

Read the full article here