Below is information from the National Housing Resource Center about a series of significant policy changes recently announced by the Federal Housing Administration (FHA) and the Federal Housing Finance Agency (FHFA). These changes impact mortgage eligibility, tenant protections, housing equity efforts, and fair lending requirements.

FHA Changes – Effective May 25, 2025

Residency Requirement Update:

• Only U.S. citizens and lawful permanent residents will be eligible for FHA-insured loans.
• Non-permanent residents will no longer qualify for FHA financing.
• Borrowers must provide valid documentation, such as a Permanent Resident Card (Green Card)

Read the mortgagee letter here. (Link opens a PDF.)

The FHFA is rolling back a number of initiatives designed to protect consumers, support first-time homebuyers, and promote climate and equity goals. Here’s what’s changing:

Multifamily Properties:

• Ends rental payment flexibility and advance notice requirements for tenants in FHFA-backed multifamily properties.

Lending Equity:

• Ends Special Purpose Credit Programs (SPCPs) that helped expand mortgage access for underserved borrowers.
• Waives Equitable Housing Finance Plan requirements for Fannie Mae and Freddie Mac, ending their obligations to proactively address disparities in homeownership and credit access.

Environmental Risk Management in Housing:

• Rescinds climate-related risk management guidance, reducing the role of climate concerns in housing finance decision-making.
• Terminates the “Repair All REO” strategy, which previously ensured HUD-owned homes were repaired before resale, likely increasing the number of “as-is” distressed properties sold in underserved areas.

Consumer Protections:

• Rescinds UDAP (Unfair, Deceptive, or Abusive Practices) requirements for regulated entities, reducing enforcement of key consumer safeguards in mortgage lending.

 The Impact to Housing in the US:

• Homebuyers may lose access to special loan programs and need more help navigating alternative financing.
• Renters in multifamily properties backed by FHFA may face reduced protections around rent increases and late payments.
• Communities of color, low-income households, and climate-vulnerable areas may experience long-term negative impacts due to these rollbacks.