On April 15, 2025, HUD released ML 2025-12 titled Tightening and Expediting Implementation of the New Permanent Loss Mitigation Options. This letter makes changes to ML 2025-6 which was issued on January 16, 2025 to end COVID loss mitigation and adopt new permanent loss mitigation rules. ML 2025-6 scheduled the COVID era loss mitigation programs to end February 2, 2026.

The new loss mitigation rules under ML 2025-6 also made several changes including, but not limited to, requiring trial payment plans and limiting permanent loss mitigation options such as partial claims and loan modifications to once every 18 months (Note: COVID and disaster loss mitigation programs do not count toward this limit). The new ML moves the effective date to September 30, 2025. It also lengthens the prohibition period from 18 to 24 months. These changes could lead to more re-defaults moving to disposition options or foreclosure as borrowers would be prohibited from obtaining loan modification or partial claims for 24 months.

The new ML also states that HUD will review the entire permanent loss mitigation waterfall. While the new ML does not make any changes to the Payment Supplement Program, it specifically stated this program was under review. 

Ryan Bourgeois, Esq.

USFN Advocacy Committee Vice Chair