The U.S. Department of Housing and Urban Development published a proposed rule this week that would replace the London Interbank Offered Rate (LIBOR) with the Secured Overnight Financing Rate (SOFR) as an approved index for FHA-insured adjustable rate mortgages, including HECMs.
HUD has invited public comments through November 18, 2022.
HUD’s proposed rule would establish a spread-adjusted SOFR index as the Secretary-approved replacement index to transition existing forward and HECM ARMs off LIBOR. The proposed rule would also make clarifying changes to the HECM Monthly ARM regulation and establish a lifetime five percent interest rate cap for monthly adjustable rate HECMs.
Further details will be shared with the membership after NRMLA reviews the proposed rule in its entirety. View the proposed rule.