New Mortgage Rules Set 90-Day Notice and Strict Loss Mitigation for FHA and Enterprise Loan Sales

The Preserving Homes and Communities Act of 2026 is a major overhaul of how the government handles mortgages that have fallen behind. When FHA, Fannie Mae, or Freddie Mac decide to sell off 'non-performing' loans—those where the homeowner hasn't been able to make payments—this bill steps in to ensure the process doesn't just become a fast track to foreclosure. It mandates that every possible 'loss mitigation' option, like loan modifications or payment plans, must be exhausted before a loan can be sold. Plus, it hits the pause button by requiring a 90-day written notice to the homeowner before their loan is bundled into a sale, giving families a three-month window to understand their options and potentially save their homes. For the thousands of homeowners currently in forbearance plans, the bill offers a hard shield: their loans cannot be sold until they’ve been out of that plan for at least 90 days (Sections 2 and 3).

Keeping the Neighborhood Intact

When these loans are sold, they won't just go to the highest bidder with the sharpest elbows. The bill creates a 'priority' system that favors local governments and nonprofits with a track record in affordable housing. Think of it as a 'first look' for the good guys. If a property does end up in foreclosure, the rules remain strict: 75 percent of those homes must either be sold to someone who will actually live there (an owner-occupant), donated to a land bank, or rented out for at least 10 years to tenants making 100 percent or less of the area's median income. For a nurse or a construction worker looking for a home in a tight market, this could mean more inventory is reserved for them rather than being snapped up by giant corporate landlords looking to flip properties for a quick profit.

The Fine Print for New Owners

The bill doesn't just walk away once the sale is final. New owners of these loans are legally tethered to FHA-style protections. They are prohibited from charging fees for modifications that make payments affordable and must offer deferral programs for borrowers who have recovered from a financial hit. In a move that adds real teeth to the law, if a purchaser fails to follow these loss mitigation rules, the homeowner can use that failure as a legal defense to stop a foreclosure in court. This shifts the power dynamic significantly, ensuring that 'affordable level' payments aren't just a suggestion but a requirement for anyone buying government-backed debt.

Watching the Watchmen

While the bill aims to stabilize neighborhoods, it grants a lot of 'vague authority' to government officials. For example, the FHA can only sell these loans if it’s the 'only reasonable measure' to fix their insurance fund—but the bill doesn't strictly define what 'reasonable' looks like. There is also a massive data-tracking requirement: purchasers have to report loan-level details and borrower demographics every quarter for four years. While this transparency is great for catching discriminatory lending or 'zombie' properties (vacant homes left to rot), the sheer amount of paperwork might drive up costs. If it becomes too expensive or legally risky for smaller nonprofits to participate, we might see the market for these loans shrink, leaving the government holding the bag or relying on a few massive players who can afford the compliance teams.