Adjustable Rate Mortgages: Transitioning From LIBOR to Alternate Indices
Abstract
HUD is removing the London Interbank Offered Rate (LIBOR) as an approved index for adjustable interest rate mortgages (ARMs), and replacing LIBOR with the Secured Overnight Financing Rate (SOFR) as a Secretary-approved index for newly originated forward ARMs. HUD is also codifying 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 establishing a spread-adjusted SOFR index as the Secretary-approved replacement index to transition existing forward and HECM ARMs off LIBOR. HUD is also making clarifying changes to its HECM Monthly ARM regulation and establishing a lifetime adjustment cap for monthly adjustable rate HECMs. This final rule adopts HUD's October 19, 2022, proposed rule with minor changes.
Federal Register Source
This document is published by the Office of the Federal Register, National Archives and Records Administration. Access the full regulatory text, preamble, and docket comments below.
View Full Text on FederalRegister.gov →Opens in new tab · federalregister.gov
Other Rules from HUD
Frequently Asked Questions
What is the 2023-03952 Federal Register document?
Document 2023-03952 is a Final Rule published by the Department of Housing and Urban Development in the Federal Register on March 1, 2023, with an effective date of March 31, 2023. HUD is removing the London Interbank Offered Rate (LIBOR) as an approved index for adjustable interest rate mortgages (ARMs), and replacing LIBOR with the Secured Overnight Financing Rate (SOFR) as a Secretary-approved index for newly originated forward ARMs. HUD is also codifying 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 establishing a spread-adjusted SOFR index as the Secretary-approved replacement index to transition existing forward and HECM ARMs off LIBOR. HUD is also making clarifying changes to its HECM Monthly ARM regulation and establishing a lifetime adjustment cap for monthly adjustable rate HECMs. This final rule adopts HUD's October 19, 2022, proposed rule with minor changes. View the original at https://www.federalregister.gov/documents/2023/03/01/2023-03952/adjustable-rate-mortgages-transitioning-from-libor-to-alternate-indices.
Is document 2023-03952 an economically significant rule?
No. Document 2023-03952 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.