Navigating New Loan Rules in April 2025

The regulatory lending environment in America has undergone many changes, especially with the arrival of a new administration.

Below, we outline each of these changes and their impacts on consumers and institutions.

Current Regulatory Landscape

The federal government has issued a series of executive orders that directly impact payment processing and fraud regulation in federal transactions.

Additionally, a full migration to electronic means has been mandated by September 2025. Meanwhile, the CFPB announced regulatory relief for small loan providers.

This postponed or reduced the registration requirements initially set for April 14 and July 14, 2025, focusing oversight efforts on more urgent risk areas.

Key Changes in Home Loans

In April, HUD issued Mortgagee Letter 2025-09, which restricts FHA mortgage eligibility to U.S. citizens and permanent residents, excluding DACA recipients as of May.

This measure was justified by the need to ensure long-term obligations are assumed by borrowers with more stable immigration status, aiming to reduce default risks tied to residency uncertainty.

The FHFA raised the conforming loan limit to $806,500 in high-cost areas, reflecting a 4.3% increase in real estate values. In more expensive cities like NY and LA, the limit is now $1,209,750.

Student Loans and Federal Programs

The resumption of collections on defaulted student loans aims to ease the tax burden on citizens after a moratorium that began in March 2020.

Moreover, recent lawsuits blocked the implementation of new Income-Driven Repayment rules by a federal court ruling on February 18, 2025, keeping prior guidance in effect until a final resolution.

The Department of Education also has a clear plan to propose changes to debt forgiveness programs like PSLF, simplifying requirements to improve relief delivery efficiency.

Agricultural and Rural Financing

The USDA released its loan rates for farmers, with interest rates of 5.375% for direct operating loans and 5.750% for farm ownership loans, effective April 1, 2025.

Joint financing loans for farm ownership were set at 3.750%, while emergency and down payment loans carry rates of 1.750% and 3.750%, respectively.

These terms primarily benefit small and medium-sized farmers, offering access to cheaper capital compared to traditional commercial financing.

Loan Sales Market and Technological Innovations

Freddie Mac introduced new updates to the Loan Selling Advisor this month, including support for the Uniform Loan Delivery Dataset Phase 5 and the modernization of loan certificates, enhancing delivery efficiency and compliance.

There were indicators for Remote Online Notarization (RON) and loan allocation options on contract screens, strengthening digitization and automation processes in the mortgage sector.

Payday Loans and State Legislation

At least 10 states are currently considering specific legislation to regulate payday loans, especially regarding interest rate caps and abusive practices.

The core of the debate centers on using the Annual Percentage Rate (APR) as the standard measure of loan cost, along with requiring borrowers to give clear, prior consent before any check can be cashed.

Overdraft Fees and Personal Loans

The CFPB has set a $5 cap per overdraft fee for banks with over $10 billion in assets.

This measure is expected to save consumers approximately $5 billion annually and increase transparency around bank fees.

The rule targets longstanding practices of excessive charges and requires institutions to provide less costly credit alternatives.

Fair Lending Regulation and the Community Reinvestment Act

Federal regulators have already announced their intention to rescind updates to fair lending rules under the CRA.

This would reverse the 2023 rules following litigation with the banking sector over regulatory activity.

The decision would return to previous requirements, focusing on combating redlining and ensuring banking services for low-income communities, but without the planned expansions for the digital environment.

Recommendations for Consumers

1. Follow official communications from agencies like the CFPB and DOE to avoid being caught off guard by collection resumptions.
2. Evaluate income-driven repayment options before more severe penalties apply.
3. Consider products from federal agencies like the USDA or bank CDs to benefit from competitive rates and greater security.
4. Check FHA mortgage eligibility if you’re a DACA recipient or non-permanent immigrant, and adjust financing plans to meet new requirements.
5. Stay informed about overdraft and payday loan regulations in your state, and seek lower-cost loan alternatives such as regulated fintech options.

Written by

Gabriel Gonçalves