The biggest FHA quality control changes in years arrived in June 2026 with very little fanfare, and many lenders are still running QC plans written for the old rules. Mortgagee Letter 2026-09 and Mortgagee Letter 2026-10, both effective immediately, removed the requirement to obtain appraisal field reviews on 10% of QC-selected loans, eliminated the mandate to analyze loan performance data for patterns of noncompliance, and made the early payment default exception for disaster areas permanent. If your written QC plan still describes those requirements as mandatory, it no longer matches HUD policy, and that gap is exactly what an auditor will notice first.

Here is what changed, what did not, and how to rewrite your plan so it holds up.

The Five Mortgagee Letters HUD Issued in June 2026

HUD issued five Mortgagee Letters together in June 2026 (HUD’s summary is dated June 23, 2026), all framed as burden reduction under Executive Order 14393, Promoting Access to Mortgage Credit. HUD stated the changes will be incorporated into HUD Handbook 4000.1. Two of them go directly to your QC program:

• Mortgagee Letter 2026-09, Eliminating Requirements for FHA Mortgagee Approval and Quality Control. Effective immediately.
• Mortgagee Letter 2026-10, Updates to FHA Quality Control Requirements for Appraisal Field Reviews. Effective immediately.

The other three touch operations your QC team reviews:

• Mortgagee Letter 2026-06 raised the number of disbursements allowed per draw request under the Limited 203(k) program.
• Mortgagee Letter 2026-07 permanently rescinded Form HUD-92900-B, Important Notice to Homebuyers. You no longer provide it at application or retain a signed copy.
• Mortgagee Letter 2026-08 updated loss mitigation requirements, including trial payment plan rules. It was optional on issuance and mandatory no later than September 21, 2026.

If your pre-funding or post-closing checklists still test for an executed HUD-92900-B, remove that line item now. Citing a defect against a document HUD no longer requires inflates your defect rate and distorts your trending.

FHA Quality Control Changes in Mortgagee Letter 2026-09

Trend analysis of loan performance data is no longer a stand-alone mandate

Before ML 2026-09, FHA required lenders to review their loan performance data for patterns of noncompliance, and to document the methodology, the results, and any corrective action taken. That requirement is gone.

HUD gave three reasons. Other FHA policy already requires lenders to expand loan-level QC reviews when fraud or patterns of deficiencies surface. Focusing on loan quality, not loan performance, is the more direct way to find control weaknesses. And HUD’s Credit Watch termination provisions indirectly address performance anyway.

What this means for you: you can stop producing a separate FHA loan-performance analysis solely to satisfy HUD. You should not stop trending your QC findings. Fannie Mae and Freddie Mac still expect management reporting and trend analysis of QC results (verify current requirements in Fannie Mae Selling Guide Subpart D1 and Freddie Mac Guide Chapter 3402), and HUD can still pull your approval if your early default and claim rates run too high relative to your peers under Credit Watch (verify current compare-ratio thresholds). Losing the FHA mandate does not remove the business reason to watch performance. It removes the FHA-specific paperwork.

Permanent EPD review exception for presidentially declared disasters

FHA requires lenders to review all loans that experience an early payment default, whether or not the lender services the loan. ML 2026-09 creates a permanent exception when the property is in a Presidentially Declared Major Disaster Area. The exception applies only if both conditions are met:

1. The loan closed before the start of the incident period FEMA established for the disaster.
2. The default occurred after the start of that incident period.

HUD had previously issued repeated waivers for disaster-related EPDs. Its reasoning is sound: defaults after a hurricane or wildfire usually trace to job loss, property damage, or relocation, not to underwriting defects.

What this means for you: build the exception into your EPD intake process, but document it loan by loan. Record the FEMA declaration number, the incident period start date, the closing date, and the date of default. A loan that closed one day after the incident period began does not qualify. Because the exception removes loans from review entirely, expect auditors to sample excluded EPDs and ask you to prove eligibility.

Officer in Charge and access to FHA guidance

ML 2026-09 also removed the requirement that a lender’s Officer in Charge be a full-time employee working exclusively for the lender. The OIC must still be a corporate officer designated to manage FHA operations. It also dropped the requirement to give loan administration and QC staff access to FHA guidance online or in hard copy, since all current guidance is online and lenders remain responsible for compliance either way.

Neither change requires a QC plan rewrite, but update your FHA approval file and organizational documentation if you restructure the OIC role.

Mortgagee Letter 2026-10: Appraisal Field Reviews Are Now Optional

Under the prior rule, lenders had to obtain appraisal field reviews on at least 10% of FHA loans selected for origination and underwriting QC review. ML 2026-10 removes that quota. Field reviews are now an optional component of appraisal QC, used when needed to adequately assess whether the appraisal report complies with FHA requirements.

HUD’s stated rationale is cost. Field reviews often cost more than the risk they mitigated, especially when lenders were already using third-party tools and desk reviews.

This is the change most likely to be mishandled. “Optional” does not mean “eliminated.” You still own appraisal quality, and you still have to show how your QC process tests it. A plan that simply deletes the field review section leaves an obvious hole.

Replace the quota with a risk-based trigger

The better approach is to replace a fixed percentage with defined triggers. A defensible appraisal QC section should state:

• Baseline testing: every QC-selected FHA loan gets an appraisal desk review against FHA property and appraisal requirements, including minimum property requirements and the appraiser’s FHA roster status.
• Escalation triggers: a field review is ordered when the desk review or an automated valuation tool flags a material variance, when comparables appear unsupported, when the property type is higher risk (for example, manufactured housing, 2-4 units, or rural properties with thin comparable data), or when an appraiser or appraisal management company shows a pattern of findings.
• Pattern response: repeated findings tied to one appraiser, AMC, branch, or loan officer trigger targeted field reviews and expanded sampling.
• Documentation: the reviewer records why a field review was or was not ordered.

That structure keeps your appraisal QC credible, cuts unnecessary spend, and gives an auditor a clear decision logic to test.

What Did Not Change

Lenders sometimes read burden-reduction letters as broader than they are. The core of FHA’s QC framework in Handbook 4000.1 is intact:

• You still need a written QC plan that covers origination, underwriting, and servicing, as applicable.
• You still sample loans for full QC review on a monthly basis (verify the current sampling standard in Handbook 4000.1, commonly 10% of closed loans or a statistically random sample at a 95% confidence level with 2% precision).
• You still review early payment defaults outside the new disaster exception (verify the current EPD definition in Handbook 4000.1).
• You still expand review scope when you identify fraud or patterns of deficiencies.
• You still report findings to senior management and track corrective action to completion.
• You still self-report material findings through the Loan Review System as required.

Six Steps to Update Your FHA QC Plan

Here is the work, in order:

1. Redline the plan against ML 2026-09 and 2026-10. Strike the 10% field review requirement and the stand-alone performance-data analysis. Add the disaster EPD exception with its two eligibility tests.
2. Rewrite the appraisal QC section around desk reviews and escalation triggers, as described above.
3. Retire the HUD-92900-B checklist item and any defect codes tied to it, so your defect rates stay comparable over time.
4. Confirm your loss mitigation procedures reflect ML 2026-08, which became mandatory September 21, 2026, if you service FHA loans or review servicing files.
5. Keep your trending, but reframe it. Trend QC findings by defect category, channel, branch, underwriter, and vendor. That analysis still satisfies GSE expectations and is your early warning for Credit Watch exposure.
6. Date and approve the revision. Record the effective date of each change, who approved it, and the governing Mortgagee Letter. A plan with a June 2026 policy change and no 2026 revision date tells an auditor your program is not maintained.

If you outsource post-closing QC, send your vendor the revised plan and confirm in writing that their FHA checklists and sampling logic have been updated. Your vendor’s checklist is your QC program in practice.

Why This Matters Beyond FHA

These FHA quality control changes fit a broader 2026 pattern. Regulators are removing prescriptive, fixed-percentage requirements and replacing them with an expectation that lenders apply documented, risk-based judgment. That is good news for efficiency. It also shifts the burden. When the rule said “10%,” compliance was a count. When the rule says “as needed to adequately assess,” compliance is an argument, and you need the documentation to win it.

Our compliance services team has been helping lenders redline QC plans against the June Mortgagee Letters. You can read the source documents directly: Mortgagee Letter 2026-09 and Mortgagee Letter 2026-10.

Frequently Asked Questions

Do we still have to obtain any FHA appraisal field reviews?

No fixed number is required anymore. Under Mortgagee Letter 2026-10, field reviews are optional and used when needed to adequately assess an appraisal’s compliance with FHA requirements. You still need a documented method for testing appraisal quality, and field reviews remain the right tool when desk reviews or automated tools flag material concerns.

Can we stop tracking FHA loan performance entirely?

You can stop producing the stand-alone FHA performance-data analysis that ML 2026-09 removed. You should keep trending QC findings and monitoring early defaults. GSE QC requirements still expect trend analysis, and HUD’s Credit Watch program still evaluates your default and claim performance against peers.

Which early payment defaults qualify for the disaster exception?

The property must be in a Presidentially Declared Major Disaster Area, the loan must have closed before the FEMA incident period began, and the default must have occurred after the incident period began. Document all three facts in the file. If any one is missing, review the EPD under your normal procedures.

When do these FHA quality control changes take effect?

Mortgagee Letters 2026-09 and 2026-10 were effective immediately on issuance in June 2026. Mortgagee Letter 2026-08 on loss mitigation was mandatory no later than September 21, 2026. Your QC plan should already reflect all three.

Need help rewriting your FHA QC plan or recalibrating your appraisal review triggers? Synergy supports QC and compliance teams at mortgage banks and credit unions nationwide. Book a 30-minute call to talk through your program.