1.Neighborhood Watch Data Fix and Possible Refresh Delay

FHA is expected to correct the April data errors in Neighborhood Watch shortly—possibly as soon as this weekend. In light of that, industry sources are indicating that the June 14 Neighborhood Watch refresh (which would typically include May data) may be delayed until June 21. This extra time is intended to give lenders a fair opportunity to review and analyze the corrected April metrics before new data is added. While not yet formally confirmed, we recommend preparing for the updated timeline and reviewing performance reports once the corrected data is live.

2.Streamlined Servicing Requirements in Mortgagee Letter 2025-14

On June 3, HUD released Mortgagee Letter 2025-14, which introduces several policy changes related to Early Default Intervention and provides minor technical corrections to permanent loss mitigation options. The borrower contact changes take effect on July 1, 2025, coinciding with the expiration of the interim policies found in Mortgagee Letter 2024-24.

HUD acknowledged that some of the earlier requirements were unnecessarily burdensome, prompting a shift toward simplification. Among the most notable changes: the formal terms like “Loss Mitigation Consultation” and “Verifiable Attempt” have been eliminated; certified mail is no longer required for first contact attempts; and servicers only need to make two contact attempts—without the prior requirement to double the efforts if the borrower doesn’t respond initially. Borrowers already complying with a forbearance plan no longer need to be interviewed, and FHA now allows flexibility in how outreach is made, including through CFPB early intervention notices or standard FHA delinquency communications. Documentation requirements have also been pared down to include only the essential details: reasons for exemption (if any), contact attempt records, and interview dates.

3.New Multi-Factor Authentication Requirements for FHA Connection

FHA is also reminding users of the upcoming requirement for phishing-resistant multi-factor authentication (MFA) for FHA Connection access, as outlined in FHA INFO 2025-27. While this added layer of cybersecurity may cause concern for some, FHA has clarified that most LOS platforms will not be impacted, since they typically connect via the Business-to-Government (BTG) interface—which is not subject to this change. Still, now is a good time to verify your internal access controls and ensure your users are prepared for the rollout.

4.FHA to Solicit Industry Feedback on “Buy Now, Pay Later” Loans

FHA appears to be preparing a formal Request for Information (RFI) regarding how “Buy Now, Pay Later” (BNPL) loans should be underwritten. Rather than issuing immediate guidance via Mortgagee Letter, the agency is taking a more measured approach, signaling that it wants to collect industry input before making policy changes. With BNPL products becoming more common, this is a topic worth monitoring closely as it could influence credit risk assessments and borrower qualification criteria going forward.

5.Final Thoughts

Taken together, these updates show that FHA is continuing to modernize both its policy approach and technological infrastructure. Lenders and servicers should begin aligning their contact procedures with the new borrower engagement requirements, monitor Neighborhood Watch for the upcoming data correction, and review access procedures in light of the MFA rollout. As always, we’ll keep you informed as additional guidance is issued.