Why the FHA’s New Servicing Rules Are a Win for Borrowers — and a Relief for Servicers

Change is finally coming to some of the most burdensome aspects of mortgage servicing. In its latest issue, MortgagePoint covered how the FHA’s newly revised servicing rules are shaking up requirements for engaging with distressed borrowers — and the results look promising for both servicers and homeowners.

The updated guidance, laid out in Mortgagee Letter 2025-14, clarifies borrower contact requirements that had previously created unnecessary compliance pitfalls. By streamlining when and how servicers must reach out, FHA is giving mortgage companies more practical pathways to help borrowers avoid foreclosure — without compromising key protections.

As MortgagePoint highlighted, this is especially critical for small and mid-sized servicers managing borrowers across multiple time zones and diverse markets. Earlier drafts of the rule included rigid requirements that could have forced servicers into awkward or nearly impossible scheduling windows, adding compliance risk without real borrower benefit.

I was quoted on why this update matters:

“The revised rule is vastly better than the first draft. The rule mostly achieves the same results without overburdening the process. Specific requirements which would have proven extremely difficult to small servicers with geographically diverse portfolios have been removed. These include requiring that contact attempts be made during certain times of the day and requiring meetings during working hours within a property’s time zone. Mortgage servicers and borrowers alike will both benefit from the new approach, and more successful outcomes can be expected.”

At DLS Servicing, we’re already seeing how our clients are planning ahead under this new, more flexible framework. Many are leveraging the versatile scheduling component within WaterfallCalc+ to easily set up FHA loss mitigation interviews — taking advantage of the regulatory breathing room while keeping borrower communications proactive and well documented.

Ultimately, this is a meaningful shift that helps servicers stay focused on real borrower solutions, not just checking boxes. The result? Stronger relationships, fewer unnecessary hurdles, and hopefully more families staying in their homes.

If your servicing team wants to explore how these new rules impact your operations — or how WaterfallCalc+ can simplify scheduling and compliance — we’re here to help. Let’s talk.

Read the whole article here, starting on page 48.