Mortgage CUSO Prepares for FHA Changes, Implements Loss Mitigation Tool
- Roy Urrico
- Aug 6, 2025
- 3 min read
By Roy Urrico
Mortgagee Letter 2025-14 requires mortgage servicers to prepare for new Federal Housing Administration (FHA) loss mitigation rules, which takes effect October 1, 2025. Grand Rapids, Mich. based WaterfallCalc, a provider of automated loss mitigation tools for mortgage servicers, recently announced that mortgage CUSO The Servion Group implemented WaterfallCalc+, a loss mitigation analysis tool, ahead of those FHA changes.
“With new FHA rules going into effect this fall, it was the right time to upgrade,” said Andrea Larson, servicing manager at the New Brighton, Minn.-based The Servion Group. “WaterfallCalc+ gives us everything we need to stay compliant, but more importantly, it gives borrowers a faster and more convenient way to get help when they need it most.”
“Like many servicing organizations, Servion recognized that the old way of managing loss mitigation—mailing documents, chasing responses by phone—just isn’t sustainable,” said Donna Schmidt, founder of WaterfallCalc. “By adding WaterfallCalc+, they’re giving borrowers a much easier way to ask for help, and giving their team a more efficient way to deliver it.”
New FHA Rules
Key FHA rule changes and implications:
A new loss mitigation framework that includes phasing out of temporary COVID-19 recovery options and the FHA-Home Affordable Modification Program (FHA-HAMP) on September 30, 2025; extending the limit on permanent loss mitigation to one option every 24 months; and reversing scheduled increases in borrower and/or servicer incentives for certain loss mitigation options.
Emphasis on borrower engagement including extended requirements for borrower contact and documentation of efforts to arrange an "interview" (formerly "loss-mitigation consultation"); streamlined requirements for these interviews, providing more flexibility.
Structured timelines and evaluation for contact, notices, and loss mitigation evaluations.
Adaptable Platform
WaterfallCalc+, the borrower-facing version of WaterfallCalc’s loss mitigation analysis tool, enables servicers to modernize their loss mitigation workflows and navigate changes in reporting, documentation and borrower communication requirements, explained Schmidt. With WaterfallCalc+ mortgage servicers can calculate the appropriate loss mitigation option based on insurer and agency requirements while eliminating cumbersome manual processes. WaterfallCalc+ integrates directly with the WaterfallCalc platform, enabling a seamless workflow from borrower application to decisioning.
WaterfallCalc+, WaterfallCalc’s flagship application, she added, adapts to each loan’s investor or insurer — including Federal Housing Administration (FHA), Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corp. (Freddie Mac), Veterans Administration (VA) or Department of Agriculture (USDA)—and guides borrowers through the application process in a compliant, user-friendly interface.
Servicers, such as credit unions, can invite individual borrowers or a group of borrowers to use WaterfallCalc+, where they can safely log in and communicate with the servicer in a transparent manner. After identifying borrowers’ options, servicers can manage the entire loss mitigation process such as ordering title reports, creating modification and subordinate mortgage documents, and preparing FHA incentive claims.
Reaching Distressed Home Owners
Servion, which services about 60,000 loans, has been a WaterfallCalc client since 2022. The CUSO chose WaterfallCalc+ to better help distressed homeowners with their mortgages. With WaterfallCalc+, homeowners can securely apply for loss mitigation assistance through their phone, tablet or PC, making it more convenient to access relief on their own schedule.
The Servion Group was founded in 1987 as CU Mortgage Services, Inc., by three Minnesota credit unions – Twin City Co-ops Federal Credit Union (now Blaze Credit Union), City-County Federal Credit Union (purchased by Wings Financial Credit Union), and NWA Federal Credit Union (WINGS Financial Credit Union) – looking to offer competitive mortgage solutions. Today, Servion is co-owned by 53 credit unions and supports almost 500 credit unions and community banks.
