The Draft Mortgagee Letter Rewriting the MAP Guide

HUD maintains a public drafting table where proposed mortgagee letters are posted for industry comment before issuance. In February 2026 a draft letter appeared there proposing a substantial set of revisions to the MAP Guide. Comments closed in March 2026. As of our review date it has not been issued as a numbered mortgagee letter and is not effective guidance.

What the draft would change

• Economic occupancy of 95% for qualifying 223(f) transactions. A meaningful underwriting change. The current regime applies minimum vacancy floors of 7%, 5% and 3% depending on the affordability tier; an economic occupancy standard is a different instrument and would change how NOI is underwritten.
• A $1 million cap on cash-out holdbacks. Currently a recently completed property taking cash-out has 50% of proceeds held back pending a six-month coverage test. A dollar cap would substantially improve the economics of a cash-out refinance on a large newly stabilized property.
• Firm Commitment validity extended from 60 to 90 days. Directly addresses one of the real timeline pressures in the program — the window between commitment and closing.
• A mortgageable contingency of 2–5%. Allows a contingency line to be included in the insured mortgage.
• Elimination of the CPA review requirement. Removes a cost and a scheduling dependency.
• Elimination of the large-loan segment entirely. Currently loans above $130 million are subject to separate, tighter parameters. Removing the segment would simplify sizing for institutional-scale transactions.
• Removal of the $475,000 wind deductible cap and revised insurance provisions.
• Fee caps of 3.5% and 5.5%.

The large-loan point is the one to watch

The large-loan threshold has moved recently — it is $130 million for 2025 and 2026, up from $120 million. Published figures across the industry are mostly stale: we found $120 million and $125 million on prominent lender sites, and one reference page asserting that loans over $50 million "may face tighter leverage," which is not the test.

If the draft is adopted as written, the segment disappears and the question becomes moot. If it is not, the threshold continues to index and the stale figures continue to mislead. Either way, a sponsor sizing a $125–135 million transaction should confirm the current threshold directly rather than from a term sheet.

The Section 232 handbook is also mid-revision

Separately, HUD has posted Rev-2 redlines to Chapters 2 and 3 of the Section 232 Handbook, covering loan sizing and related provisions. These touch the debt seasoning regime and the loan sizing criteria discussed in the seasoning article and the 232 sizing article.

We have found no competitor site covering the 232 redlines at all. One lender covers the MAP Guide draft; essentially nobody covers the healthcare one. For owners of nursing and assisted living facilities contemplating a 2027 refinance, that is the more consequential of the two documents.

How to use pending guidance

Three rules that serve borrowers well:

1. Underwrite to current guidance. A model built on a draft provision is a model of a transaction that may not exist.
2. Know the pending changes anyway, because they affect timing decisions. If the Firm Commitment extension and the holdback cap are adopted, a transaction that is flexible on timing might reasonably wait.
3. Ask your lender directly whether anything in your deal depends on a pending provision. If the answer is yes, that is a risk to price, not a feature to count on.

We check HUD's drafting table and the numbered mortgagee letter list on a recurring basis and date this page accordingly. If this draft is issued, the provisions above will move into the program pages and this article will say so.