Department of Housing and Urban Development (HUD)

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On October 2, 2025, HUD, through FHA and Ginnie Mae, issued a Request for Information (RFI) seeking public input on the current and future roles of the Home Equity Conversion Mortgage (HECM) and HECM Mortgage-Backed Securities (HMBS) programs.  Stakeholders are invited to comment by December 1, 2025 (Docket No. FR-6551-N-01) via regulations.gov or mail.  …

On June 24, 2025, the Department of Housing and Urban Development (“HUD”) published a Request for Information (“RFI”) to better understand how increasing consumer use of Buy Now Pay Later (“BNPL”) products impacts housing affordability and stability in connection with the residential loan programs insured by the Federal Housing Administration (“FHA”). BNPL products, which allow consumers to purchase goods and services and repay over time (typically, though not always, through four or fewer deferred installments payable over six to eight weeks with no periodic interest or other finance charges), have continued to gain popularity over the past decade. To date, however, HUD has not incorporated consideration of BNPL products into underwriting guidelines for FHA-insured mortgage loans. With the RFI, HUD is seeking more information on whether it should develop policies to address potential ability-to-repay risks from these relatively new products.

Background on BNPL

While retail financing has a long history in the U.S., the concept of BNPL as a distinct class of product largely stems from the introduction of a “pay-in-4” product into the U.S. around 2018. This core element of the BNPL market involves the origination of unsecured, interest-free short-term installment loans to pay for relatively small-dollar retail purchases. Payments are usually due in four or fewer equal installments, with the first payment often due as a down payment at the time of sale. Subsequent payments are typically due every two weeks. Consumers enter into BNPL loans frequently through apps or purchase-and-origination flows managed by fintech BNPL providers. BNPL lenders may approve or deny a loan based on their own individual underwriting criteria, which may include reliance on a consumer report (often pulled as a soft pull to prequalify a consumer for a potential range of terms) and/or the consumer’s repayment history with the BNPL lender. BNPL lenders generally do not report repayment history or default to the consumer reporting agencies, although: (i) some lenders offer consumers the option to report positive repayment histories, and (ii) credit bureaus are planning to incorporate BNPL payments into credit scores and craft new categories to better match typical BNPL structures (as compared to reporting formats currently relevant for installment loans with monthly payments or traditional credit cards), each of which may increase adoption of BNPL credit reporting over time.Continue Reading HUD Requests Information on Buy Now Pay Later

FHA branch offices could become a thing of the past.

The Department of Housing and Urban Development published a final rule on February 2, 2024, eliminating the requirement for lenders to register each branch office where lenders and mortgagees conduct FHA business with HUD. FHA addressed questions from stakeholders in Frequently Asked Questions.

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In explaining its view of the pleading standards in a disparate treatment discrimination case, the Consumer Financial Protection Bureau (“CFPB”) shed light on its interpretation of the Truth in Lending Act’s (“TILA’s”) appraisal independence standards, providing that a lender is not required to rely on a biased appraisal.

The underlying case relates to a claim that an appraiser undervalued a home because of the homeowners’ race, and that the lender knew of the undervaluation. In mid-March, the CFPB and the Department of Justice filed a Statement of Interest in the case, addressing the applicability of nondiscrimination principles in the property valuation context. In doing so, the agencies also addressed the federal requirements for appraiser independence.

TILA and its Regulation Z prohibit lenders or other covered persons from coercing, instructing, or inducing an appraiser to cause the appraised value to be based on any factor other than the appraiser’s independent judgment. They also prohibit lenders from suborning any mischaracterization of a property’s appraised value or materially altering a property valuation. A lender that reasonably believes an appraiser has materially violated ethical or professional requirements must report the appraiser to the appropriate state agency. In addition, to comply with Regulation Z’s conflict-of-interest requirements, mortgage lenders generally ensure that the appraiser reports to a person who is not part of the lenders’ loan production function, and that no person in that function is involved in selecting the appraiser. Agencies and investors may impose additional requirements or prohibitions addressing appraisal independence.

The regulations expressly permit a lender to ask the appraiser to consider additional information, provide further detail or explanation, or correct errors. However, lenders must walk a fine line – while they may ask for additional information, explanations, or corrections, they are understandably careful in questioning an appraiser’s conclusions and are limited in their ability to obtain a second appraisal. (For instance, Fannie Mae generally prohibits its lenders from obtaining a second appraisal without a reasonable and documented basis for believing that the first appraisal is flawed.)Continue Reading CFPB Addresses the Fine Lines of Appraisal Independence

Earlier this week, the U.S. Department of Housing and Urban Development (HUD)’s Office of General Counsel (OGC) published guidance on the Fair Housing Act’s treatment of Special Purpose Credit Programs (SPCPs). An SPCP is a tool that lenders can use to target underserved communities without violating the Equal Credit Opportunity Act (ECOA) and its implementing…

The set of federal agencies tasked with determining which residential mortgage loans may be exempt from credit risk retention in securitizations are continuing to think about it. Late last month, the Securities and Exchange Commission, Comptroller of the Currency, Federal Deposit Insurance Corporation, Federal Reserve Board, Federal Housing Finance Agency (“FHFA”), and the Department of Housing and Urban Development (together, the “Agencies”) announced that they hope to have more answers by the end of this year. It seems likely those Agencies will continue to define those exempt mortgage loans (called “qualified residential mortgages,” or “QRMs”) in a manner that is fully aligned with the “qualified mortgage” (“QM”) definition of the Consumer Financial Protection Bureau (“CFPB”) (which interestingly is not among the Agencies tasked with the QRM/risk retention rules). If it were that easy, though, the Agencies probably would have done that by now. Of course, the CFPB’s QM definition has been a moving target itself.
Continue Reading Agencies Still Pondering QRM

As we detailed in our prior Legal Update, on January 19, 2021, the FHA expanded eligibility to apply for FHA-insured mortgages to individuals residing in the United States under the DACA program by waiving certain FHA Handbook requirements.[1]  On May 28, 2021, the FHA published Mortgagee Letter 2021-12, which clarifies FHA’s existing eligibility requirements for DACA participants and other non-permanent residents who apply for FHA loans and implements the eligibility requirements instituted by the prior waiver into the HUD Handbook.[2]

Specifically, non-permanent residents, including DACA participants, individuals with refugee or asylee status, citizens of the Freely Associated States (“FAS”)[3] and individuals with an H-1B visa, must meet the following requirements:Continue Reading FHA Issues Guidance on Eligibility of DACA Recipients

Last week, a pair of fair housing organizations got their wish when a federal judge in Massachusetts granted their request for a preliminary injunction and stay of the effective date of the Department of Housing and Urban Development’s (HUD) new disparate impact rule (the “2020 Rule”), discussed in our recent fair lending newsletter. Plaintiffs Massachusetts Fair Housing Center and Housing Works, Inc. filed a motion in the U.S. District Court for the District of Massachusetts seeking to vacate HUD’s 2020 Rule under the Administrative Procedure Act (APA), on the grounds that it is “contrary to law,” “arbitrary and capricious,” and that certain of its provisions violate the APA’s notice and comment requirements. The court only addressed the plaintiffs’ second argument—that the 2020 Rule is arbitrary and capricious—which it found was likely meritorious.

The court compared the disparate impact rule HUD had issued in 2013 (“2013 Rule”) to the 2020 Rule. Both versions of the rule state the general premise that liability may be established under the Fair Housing Act based on a practice’s discriminatory effect, if the practice was not motivated by a discriminatory intent. But as the court noted, the 2020 Rule significantly altered the 2013 Rule’s standards. The court found that the changes HUD had made constituted a “massive overhaul” of HUD’s disparate impact standards, by introducing onerous pleading requirements on plaintiffs while simultaneously easing the burden on defendants and arming them with broad new defenses.
Continue Reading More Uncertainty around the Future of the Disparate Impact Theory of Liability

Mayer Brown is pleased to announce that Krista Cooley, a partner in our Financial Services Regulatory and Enforcement group, has recently expanded her existing practice to take the lead in managing our state licensing practice.  Krista is an experienced Consumer Financial Services attorney with over 19 years of experience.  In this role, Krista advises clients on compliance with the requirements of federal and state laws governing the licensing, approvals and practices of brokers, lenders, purchasers and servicers of mortgages and other consumer loan products, as well as sales finance companies, money service businesses and collection agencies. She also assists clients in navigating the complex state and federal licensing and approval process in connection with, among others, new business lines, legal entity conversions, restructuring and change of control transactions.

Stacey Riggin, one of our Government Affairs Advisors, and Dana Lopez, our Licensing Manager, work closely with Krista and will continue to oversee our team of five regulatory compliance analysts, each of whom has over ten years of experience working together on licensing matters.  Our team has decades of experience in managing nationwide licensing projects and assisting clients in obtaining approval with state and federal government agencies to engage in a variety of financial services related activities.  Our team also coordinates regulatory approvals needed to facilitate mergers, equity investments, stock and asset acquisitions, and servicing sales and transfers.Continue Reading Mayer Brown Announces Consumer Finance Licensing Team Transition

In recent weeks, the US federal housing agencies and government-sponsored enterprises (GSEs) that insure, guarantee, or purchase “federally backed mortgage loans” covered by Section 4022 of the CARES Act (Act) have continued their intense pace of issuing temporary measures, and updates to such measures, intended to implement the Act’s provisions applicable to such loans. These…