HUD Publishes Final Rule On LIBOR Transition

HUD Publishes Final Rule On LIBOR Transition

The Department of Housing and Urban Development published Mortgagee Letter 2023-09, which implements the Department’s final rule published on March 1 that governs the transition away from the LIBOR Index.

In the final rule, FHA established the spread-adjusted Secured Overnight Financing Rate (SOFR) as a Secretary-approved index. The ML provides direction to mortgagees on using the applicable Refinitiv USD IBOR Consumer Cash Fallback (“Refinitiv”) transition spread-adjusted SOFR tenor for transitioning existing ARMs from LIBOR to SOFR and the specific SOFR index for use in newly originated ARMs, including Home Equity Conversion Mortgages.

In addition, for monthly HECM ARMs, FHA established the maximum lifetime note rate of up to ten percent of the initial note rate in accordance with the final rule.

FHA also announced the availability of updated HECM model documents, revised to be consistent with the final rule and ML, and to provide fallback language for future transition index transition events that can be downloaded from the Single Family Model Documents web page on

The provisions in the ML have various effective dates. Mortgagees are advised to carefully review the ML for the effective dates pertaining to HECM ARMs.

NRMLA encourages our members to share the following information from the CFPB with any borrowers who may have concerns about the LIBOR transition:


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Darryl Hicks

Darryl Hicks is Vice President of Communications for the National Reverse Mortgage Lenders Association. In this capacity, Hicks writes for NRMLA's publications, manages the association's web sites and social media accounts, assists committees and the Board of Directors, and manages the Certified Reverse Mortgage Professional designation. Prior to joining NRMLA in 1999, Hicks spent three years in the Washington, D.C. bureau for National Mortgage News.