HUD Mortgagee Letter 2026-10 — Updates to FHA Quality Control Requirements for Appraisal Field Reviews
HUD Mortgagee Letter 2026-10 (June 23, 2026) — Updates to FHA Quality Control Requirements for Appraisal Field Reviews. Removes the mandatory 10-percent appraisal field review requirement and makes field reviews an optional/alternative component of appraisal QC under Handbook 4000.1 Property and Appraisals (V.A.3.c.ii(C)); effective immediately. Full verbatim text captured section-by-section from the HUD source PDF.
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Verbatim regulatory text
Verbatim provisions from HUD Mortgagee Letter 2026-10 — Updates to FHA Quality Control Requirements for Appraisal Field Reviews — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.
HUD ML 2026-10 — Purpose
This Mortgagee Letter (ML) updates FHA quality control (QC) requirements to allow greater flexibility and alternatives to appraisal field reviews.
HUD ML 2026-10 — Effective Date
The provisions of this ML are effective immediately. All updates will be incorporated into a forthcoming update of the HUD Handbook 4000.1, FHA Single Family Housing Policy Handbook (Handbook 4000.1).
HUD ML 2026-10 — Affected Programs
The provisions of this ML apply to all FHA-insured mortgage programs.
HUD ML 2026-10 — Background
FHA has identified an opportunity to allow greater flexibility in its QC policy for Property and Appraisals by removing the requirement for Mortgagees to obtain appraisal field reviews on at least 10 percent of origination and underwriting QC reviews. The update makes field reviews an optional component of appraisal QC, maintaining FHA’s core appraisal compliance framework while giving Mortgagees the ability to tailor review methods based on case-specific risk.
HUD ML 2026-10 — Summary of Changes
This ML: • updates requirements in Property and Appraisals (V.A.3.c.ii(C)).
HUD ML 2026-10 — Property and Appraisals — Standard — Property and Appraisal Reviews (V.A.3.c.ii(C)(1)(a))
For all FHA-insured Mortgages selected by the Mortgagee for origination and underwriting QC review, the Mortgagee must evaluate all Property documentation and the appraisal report used to support the Property Value and eligibility for FHA insurance. At a minimum, the Mortgagee must review all Property documentation and the appraisal report for completeness, technical accuracy, and overall quality in compliance with Property Acceptability Criteria for Forward Mortgages (II.A.3.a), Property Acceptability Criteria for Reverse Mortgages (II.B.4.a), and Appraiser and Property Requirements for Title II Forward and Reverse Mortgages (II.D). The Mortgagee should use valuation tools, Automated Valuation Models (AVM), multiple listing service data, public records data, and any other appropriate methods to identify potential valuation errors or other compliance issues.
HUD ML 2026-10 — Property and Appraisals — Field Reviews (V.A.3.c.ii(C)(1)(b))
The Mortgagee may obtain appraisal field reviews if needed to adequately assess the appraisal report for compliance with all applicable requirements. Field reviews must be performed by Appraisers listed on the FHA Appraiser Roster and must be reported on the applicable Residential Appraisal Field Review Report form or report.
HUD ML 2026-10 — Property and Appraisals — Exceptions (V.A.3.c.ii(C)(2))
Mortgagees are not required to perform the property and appraisal QC review (V.A.3.c.ii(C)(1)(a)) for Streamline Refinances where the Mortgagee was not required to order a new appraisal for a Property financed with an FHA-insured Mortgage.
HUD ML 2026-10 — Property and Appraisals — Required Documentation (V.A.3.c.ii(C)(3))
The Mortgagee must retain all results from the property and appraisal QC reviews required by this section, including any reports from valuation tools or appraisal field reviews. Results include all selection criteria, review documentation, Findings, and actions taken to mitigate Findings.
HUD Mortgagee Letter 2026-10 — Updates to FHA Quality Control Requirements for Appraisal Field Reviews — Background (whole section)
FHA has identified an opportunity to allow greater flexibility in its QC policy for Property and Appraisals by removing the requirement for Mortgagees to obtain appraisal field reviews on at least 10 percent of origination and underwriting QC reviews. The update makes field reviews an optional component of appraisal QC, maintaining FHA’s core appraisal compliance framework while giving Mortgagees the ability to tailor review methods based on case-specific risk. FHA’s previous appraisal field review requirement resulted in significant costs for Mortgagees, which often outweighed the limited risk mitigation benefits considering the frequent use of third-party tools and appraisal desk reviews. By making field reviews optional, FHA is removing a potential barrier to Mortgagee participation in FHA programs, as well as an expense that may be passed indirectly to consumers. In compliance with President Trump’s Executive Order, Promoting Access to Mortgage Credit, this change aligns FHA more closely with appraisal QC standards already adopted by the U.S. Department of Veterans Affairs and the mortgage industry generally.
HUD Mortgagee Letter 2026-10 — Updates to FHA Quality Control Requirements for Appraisal Field Reviews — Property and Appraisals (V.A.3.c.ii(C)) (whole section)
Property and Appraisals (V.A.3.c.ii(C)) (1) Standard (a) Property and Appraisal Reviews For all FHA-insured Mortgages selected by the Mortgagee for origination and underwriting QC review, the Mortgagee must evaluate all Property documentation and the appraisal report used to support the Property Value and eligibility for FHA insurance. At a minimum, the Mortgagee must review all Property documentation and the appraisal report for completeness, technical accuracy, and overall quality in compliance with Property Acceptability Criteria for Forward Mortgages (II.A.3.a), Property Acceptability Criteria for Reverse Mortgages (II.B.4.a), and Appraiser and Property Requirements for Title II Forward and Reverse Mortgages (II.D). The Mortgagee should use valuation tools, Automated Valuation Models (AVM), multiple listing service data, public records data, and any other appropriate methods to identify potential valuation errors or other compliance issues. (b) Field Reviews The Mortgagee may obtain appraisal field reviews if needed to adequately assess the appraisal report for compliance with all applicable requirements. Field reviews must be performed by Appraisers listed on the FHA Appraiser Roster and must be reported on the applicable Residential Appraisal Field Review Report form or report. (2) Exceptions [Text was deleted in this section.] Mortgagees are not required to perform the property and appraisal QC review (V.A.3.c.ii(C)(1)(a)) for Streamline Refinances where the Mortgagee was not required to order a new appraisal for a Property financed with an FHA-insured Mortgage. (3) Required Documentation The Mortgagee must retain all results from the property and appraisal QC reviews required by this section, including any reports from valuation tools or appraisal field reviews. Results include all selection criteria, review documentation, Findings, and actions taken to mitigate Findings.
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