Adjustable Rate Mortgages: Transitioning From LIBOR to Alternate Indices

Document 2022-22538 is a Proposed Rule published by the Department of Housing and Urban Development in the Federal Register on October 19, 2022. HUD is proposing to remove the London Interbank Offered Rate (LIBOR) as an approved index for adjustable interest rate mortgages (ARMs), and replace LIBOR with the Secured Overnight Financing Rate (SOFR) as a Secretary-approved index for newly originated forward ARMs. HUD also proposes to codify its removal of LIBOR and approval of SOFR as an index for newly-originated Home Equity Conversion Mortgage (HECM or reverse mortgage) ARMs. In addition, HUD is proposing to establish a spread-adjusted SOFR index as the Secretary-approved replacement index to transition existing forward and HECM ARMs off LIBOR. HUD also proposes to make clarifying changes to its HECM Monthly ARM regulation and establish a lifetime five percent interest rate cap for monthly adjustable rate HECMs. View the original at https://www.federalregister.gov/documents/2022/10/19/2022-22538/adjustable-rate-mortgages-transitioning-from-libor-to-alternate-indices.

No. Document 2022-22538 is not classified as economically significant under Executive Order 12866. Economically significant rules require OIRA review and are estimated to have impacts of $100 million or more per year.