This month’s HUD Insights centers on policy changes and draft guidance that could affect multifamily operations, underwriting, and deal planning. For FHA multifamily borrowers, the biggest themes are operating flexibility, compliance burden, and process efficiency. Here are the latest housing moves you need to know from Washington, D.C.:

• 1. Proposed Rule Calls for Optional Work Requirements
• 2. Federal 30-Day Rule for Eviction Notices Revoked
• 3. Senate Housing Package Targets Single-Family Rental Investors
• 4. Federal Judge Strikes Down HUD’s Energy-Code Compliance Rule
• 5. Draft Mortgagee Letter Aims to Improve MAP Efficiency

1. Proposed Rule Calls for Optional Work Requirements

The story: The Department of Housing and Urban Development (HUD) published a proposed rule on March 2 that would allow owners of project-based rental assistance (PBRA) properties to adopt work requirements for work-eligible adults and term limits for certain non-elderly, non-disabled households. The proposal is optional, not mandatory, and would apply only if HUD finalizes the rule.

• The proposal would let owners require up to 40 hours per week of qualifying work activity, with flexibility to set a lower threshold.
• The main significance is that PBRA owners have not previously had this kind of express regulatory flexibility.
• Owners that elect this option would need to:
• Provide supportive services directly or through partners
• Include the policy in tenant leases
• Give tenants at least three months’ written notice before implementation
• Document participation and track compliance

“Housing assistance was never meant to trap work-able individuals on government support their entire lives. Rather, it should be a temporary foundation to launch into a life of self-sufficiency. Getting a paycheck is empowering, getting a welfare check is not.”
– HUD Secretary Scott Turner said in a statement

The follow-up: HUD is seeking public comments from industry groups, owners, and other stakeholders on the proposed rule through May 1.

The bottom line: This could create a new optional operating and compliance framework for PBRA-assisted properties, which matters to borrowers evaluating long-term asset management responsibilities.

2. Federal 30-Day Rule for Nonpayment Evictions Revoked

The story: HUD published an interim final rule on Feb. 26 revoking the 2021 and 2024 rules that required owners and public housing authorities to provide 30 days’ notice before terminating a lease for nonpayment of rent. The rule was originally set to take effect March 30, but HUD later postponed that timeline without specifying a new date.

• Nonpayment notice standards return to the pre-2021 framework, which ranges from five to 30 days across HUD programs and depends on state and local law.
• HUD also removed the added notice-content requirements that had been imposed under the earlier rules.
• HUD is accepting public comments on the rule through April 27, even though it goes into effect sooner.

“For more than five years now, federal intrusion into the highly localized eviction process has only exacerbated the myriad housing challenges in communities nationwide—particularly as affordability remains one of the defining issues of our time.”
– National Apartment Association President and CEO Bob Pinnegar said in a statement

The follow-up: Owners and their legal counsel should review lease language, property procedures, and state-law notice requirements before the March 30 effective date.

The bottom line: This is an operations issue that could affect collections timelines, delinquency procedures, and lease-enforcement workflows.

3. Senate Passes Housing Package Targeting Single-Family Rental Investors

The story: The Senate has passed the 21st Century ROAD to Housing Act, a legislative package combining provisions of two major housing bills winding their way through Congress. The combined package includes a restriction on home purchases for large institutional investors in the single-family market, which the Trump administration has called for. The bill now goes to the House.

• The Senate text defines a large institutional investor as a for-profit entity with direct or indirect investment control over at least 350 single-family homes.
• The 21st Century ROAD to Housing Act would also impact multifamily owners of build-to-rent communities or rental communities that include townhomes or other properties that aren’t traditional apartment buildings.
• The restrictions would take effect 180 days after enactment and would repeal after 15 years.
• The prohibition does not require investors to divest homes they purchased before enactment of the bill.

“This proposal matters to multifamily borrowers because it shows that federal housing policy is increasingly focused on investor activity and housing availability—both of which can influence the wider rental market.”
– Megan Booth, Vice President of Commercial Real Estate Finance Policy, Mortgage Bankers Association (MBA)

The follow-up: Final details of the legislation could change during House debate. There are questions about whether the broader market impact may be uneven because large-investor ownership remains concentrated in select cities rather than the national market as a whole.

The bottom line: Federal housing policy debates are expanding beyond supply and subsidies to ownership restrictions, which could influence broader capital allocation and housing-market policy discussions.

4. Federal Judge Strikes Down HUD’s Energy-Code Compliance Rule

The story: The U.S. District Court for the Eastern District of Texas vacated HUD’s 2024 final determination that adopted newer energy standards for certain federally financed housing. The result of the case, which was brought by states and trade groups, like the National Association of Home Builders (NAHB), means HUD cannot enforce its Dec. 31 deadline to comply with the 2021 International Energy Conservation Code and ASHRAE 90.1.

• The court found that current law allows only one update to the relevant energy standards—and HUD had already made that update in 2015.
• The court also pointed to HUD’s own findings that the 2024 standards would reduce affordable-housing availability by 1.5%.
• The vacated standards had applied to new affordable housing construction and covered items such as insulation, windows, lighting, and HVAC systems.

“This ruling means that HUD cannot impose new energy-code mandates that will raise construction costs and limit access to federal mortgage programs at a time when many American families are already struggling to afford a home.”
– NAHB Chairman Bill Owens

The follow-up: The ruling leaves the 2024 determination out of force unless HUD pursues and wins on appeal or moves forward under a different legal path.

The bottom line: For multifamily developers and FHA borrowers, this removes near-term uncertainty tied to the 2024 HUD energy-code update. It does not end energy or resiliency considerations in FHA executions, but it does change the immediate federal standards backdrop.

5. Draft Mortgagee Letter Aims to Improve MAP Efficiency

The story: HUD posted a draft Mortgagee Letter titled “Multifamily Improvements for MAP Efficiency,” which would revise parts of the MAP Guide to streamline underwriting, modernize calculations and methodologies, give more latitude on certain third-party reports, and reduce overall costs while protecting the FHA insurance fund. For FHA multifamily borrowers, this is one of the most impactful initiatives that HUD is working on.

• HUD set a shortened period for public comment, which ended March 15. It’s unclear whether there will be changes in the final Mortgagee Letter based on feedback.
• The draft letter also says that for loans closed under the former Green and Energy Efficient Housing MIP category, legacy green requirements would be eliminated, including:
• Evidence of initial green-building achievement
• Annual energy-performance reporting
• The executed regulatory rider tied to green requirements.

“This draft Mortgagee Letter points to a simpler FHA process for multifamily borrowers. If finalized, the changes could reduce unnecessary third-party costs, align better with HUD underwriting and industry standards, and provide more certainty of execution. For borrowers, that means less process friction and a more efficient path to closing.”
– Adlana Buck, FHA Chief Underwriter, X-Caliber

The follow-up: If HUD finalizes the draft in similar form, lenders and borrowers could see changes to process, underwriting criteria, application requirements, and some legacy green-MIP obligations.

The bottom line: For FHA multifamily borrowers, this is the clearest near-term process item to watch. If finalized, it could reduce friction in parts of the MAP execution and remove some older compliance requirements.