FHA rescinds 12 policies as Trump administration pushes to cut red tape

As part of the Trump administration’s broader effort to cut regulatory burdens, the Federal Housing Administration (FHA) on Friday announced the rescission of 12 policies related to appraisal protocols, underwriter employment, flood risk management and other areas. 

Scott Turner, the secretary of the U.S. Department of Housing and Urban Development (HUD), which oversees the FHA, said in a statement that the rescissions are “bold, necessary and long overdue.”

In practice, the FHA is formally retracting a series of rules implemented via Mortgagee Letters, which had governed various aspects of the loan origination process from the initial application through the issuance of FHA insurance endorsements.

Regarding appraisal protocols, HUD said it’s eliminating “antiquated and burdensome steps” to better align the FHA process with broader industry standards. This shift builds on investments made during the first Trump administration in the FHA Catalyst platform, a cloud-based system that enhances collateral valuation analytics.

The changes will also permit lenders to use part-time staff for direct endorsement underwriter eligibility, provided they remain permanent employees of a single lender and underwriting functions are not contracted out. 

Friday’s rescissions remove the requirement to submit the Supplemental Consumer Information Form (SCIF) to the FHA. In 2024, only 1.2% of FHA borrowers completed this form — including information such as language preference and any homeownership education or housing counseling received — in a manner that provided any potential benefit to them, according to HUD.

The rescissions also include a rollback of a November 2024 Mortgagee Letter establishing minimum property standards in special flood hazard areas.

HUD said the now-rescinded policy would have limited available land for development and increased construction costs for FHA-insured single-family homes — exacerbating the affordable housing shortage for future homebuyers. The policy had been under a temporary one-year waiver since February.

HUD is also removing the requirement for pre-endorsement damage inspections in properties located in federally declared disaster areas.

Previously, FHA Roster Appraisers were required to inspect these homes even if no damage had occurred, leading to unnecessary inspections and loan delays. Going forward, lenders can use internal risk assessment tools to determine the appropriate course of action.

“Under President Trump’s leadership, we’re slashing red tape that drives up costs and shuts families out of the market. Every hardworking American deserves a fair shot at owning a home — the American Dream should never be buried under a pile of regulations,” Turner said.