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MiltonOh+'0H $8 P\ |   @Assistant Secretary for Housing-Federal Housing Commisionersh03266 Housing ASVicki M. Milton2Microsoft Office Word@F#@@ ;X@ ;X GGVT$m[ x#i   .@Times Roman-  2 w  )'S2 0U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT5)5-)51-B-5-5)565)55565511655-5-.5)B-5- 2  )'@Times New Roman-+2 9-WASHINGTON, DC 20410 >/$00/(///,!!! ! 2 9& - 2 9; 8000! !! 2 9  @Times New Roman- 2   -@Times New Roman-- 2 X '@Times New Roman-:2 3XASSISTANT SECRETARY FOR HOUSING.)  $)*# #''##)'**&)** )* 2 3~-  2 3 52 ~XFEDERAL HOUSING COMMISSIONER#*#'*")** **')44 **#' 2 ~7 - 2 X -'@"Arial-- 2 0  ''@Times New Roman--2  www.hud.gov556(((%$$:2 E  espanol.hud.gov. ($($(((%$$- 2 O  -'--.  @Times New Roman- Courier New- @Times New Roman-   2 +XX, -- - 0X--/X-  2 /XX/  2 /qX/ -'- - ,X--i A ~,X(???ϟϟϟϟ'π7~ϟw~ϟs~fϿ>g?oy3?o?>|???9y?`>??Ϝ??π~>|}ϿgϿ??~8p8p8p 8p{8p?8p?8p8p?8p8p8p8p8p98pq8p|8p>?8p?8p?8p?8p8p8p8p8p8p8p8p8p8p8p8p}8p8p8p8p?8p8p8p8p8p8p8p?C8p8p8p8p8p8p8p8p8p8p8p8p8p8p8p8p?p?p?p>?8p?;p?=;p?=?;p=?;p?;p??;p;p?;;;?;x;{;{;{;{0;{;{{>?{{{|{<{<{<{{{{{{{?{{w{g{{{{{{{c{G{{3￿{{?{{￿{￿{?{?{{{{?{7{;{۾{{?|{{?{{{{?x{????c?<8?cg~??>8??x.xl?d__- - a--`-   2 ``  2 `` -'- ---  --'"Systemm|0$٣-  ''@Times New Roman- +2 _ MORTGAGEE LETTER 2007 ]MGBLGLBBBABAAG1111 2 _- 2 _1301 2 _P 4-#2 XOctober 12, 2007G+11+ 101011 2  , 2 FX -- 2 XTO:BM 2  ~ 2  ,.2 ALL APPROVED MORTGAGEESGBBG;;GMGBG]LGBLGLBB7 2   4 2 2X 5 2 X 52 XSUBJECT:7GB0BFB 2 1 12 Adjustable Rate MortgagesG7 6& 16+G1 +]1+ 001+& 2 %  c.2  Addition of LIBOR IndexG67070!B%BLG&67+1 2   4- 2 X - 2 X -b2 wX:The Federal Housing Administration is pleased to announce <1+6+1+ +G11%10G0M0& *01&0++&+11+11111++2 w that C1+82 w4 the Department of Housing and 1+G+1+M+11 G10&10+1152 XUrban Development published G 1+1G+1+01M+0101&1+1)2 a final rule in the + 1+ 0+11+#2  Federal Register6+1+ +B+0%+ 2 D  "2 \ at 72 FR 40048 +016B101112  amending 4+M+01102 ` X]regulations at 24 CFR 203.49(b) to permit FHA to insure all forward adjustable rate mortgage  +01+11%+01B5B10111 1 11+ M6GG11&1 +*1 G+ 1+11&*1+ ++M1 0+0+:2 X(ARM) loan products using the 1 GBX 1+11111+&0&001+1 2 _- e2 <Year London Interbank Offered Rate (LIBOR) as an acceptable G++ :111111+ 1+11G + +1B*+ ;AHB +&+0++++1+1+2 J X index opti11*2112 J on. 11 2 J p , 2 X -2 3 X`In addition, this final rule amended HUDs regulation at 24 CFR 206.3 to add the use of both the1+11011& 1+ 0++M+11+1GGG % +01+11+11B6B01111*011+1&+1 1111+ 2 3  - 2 X1 1 2 - 42 Month LIBOR index and the 1hX111;AGB11+1+011+1 2 V- g2 v=Month Constant Maturity Treasury (CMT) index for calculating gX101B10&+0X+1 .< ++&1!/ BX< 11*1 1 +++0+10h2  X>the interest rate adjustments on the monthly adjusting Home Eq1+1+ +& +++01%M+0&011*M010.+11&00G1M+<1=2  !uity Conversion Mortgage (HECM). 1.B111+ &01X1 0+0+ G<BX =2 X!The final rule also permits the 1<1+ 1+ 1*+&01+ L%1+1 2 .- n2 NBYear LIBOR index for calculating the interest rate adjustments on G++ ;AGB11*2 1 +++1+101+0+ +& +++10&M+1&10A2  X$the annually adjusting HECM. The 101++111*.+11&10G;BX<1+01 2  <- 2  \Y GX2  3ear LIBOR swap rate shall be used to calculate the c++ ;BHB&G+0 ++&1*1+1&*11+++0++1+:2 z XExpected Interest Rate on LIBOR<11+++11+ +&B+*11<AGB 2 z |- 2 z in1 2 z dexed HECMs. 1+2+0G<AX& 2 z r  - 2  -2 dXeThese new options are effective for mortgages insured on or after the date of this Mortgagee Letter. <1+&+1+G0111%+ ++ ++1+ 1 M10+0+&1&1+1111+ + 1+1++1 1&X1 0+0++:++ 2 X_While FHA expects that the market will determine the degree of usage of the LIBOR indices, the e^0+6GG*21+*&1+1+M+ 1+F1*+ M1+1+1+0 ++1 1&+0+1 1+<AGB11++&1+M2 MX,existing CMT indices will remain acceptable +1&10BW<11++%G +M+1++++1*1+2 M@ for 1C 11 2 M - 2 M , 31 2 My - 2 M , 51 2 M - 2 M , 71 2 Mz - 2 M , and 10+1011 2 M - 2 M Y G22 M7 ear forward ARMs, and for ++  1G+ 1GBW&+10 1 2 X HECM ARMs. G<BXFBW& 2  , 2 6X -@Times New Roman- - %2 XIndex Consistency&67+1G07%& +7*1- @ ! X- 2 P 4 2 "X 5-2 XYThe two index types, CMT and LIBOR, cannot be commingled. As an example, under the HECM ,<1+G111*1.1+&BX<+11;AGB++1111++1MM10+1F&+1*2*L1+011+ 1+G<AX#2 Xprogram, when a 1 10 +MG1+1+k2 @particular index type (LIBOR or CMT) is chosen to calculate the 1++0* 11*1.1+!;BGB1 AX< %+11&*10+++1*+1+&2 Expected Interest ;11+++11+ +&|2 ~XKRate, it must also be used to calculate the periodic interest rate changes.B++M1%+&11+1&+01+++0++1+1+ 11*1+ +& *++1+10+&42 ~2  Below is a matrix showing A+0G&+M+2%11G10k2 X@eligible index types for HECM and forward ARM product offerings.+01+11*1.1+& 1 G<BX+01 1 G+ 1FBX1 111+1 + 10& 2   , 2 gX - 2 X -- 2 RX Instructions&7& *7+ 07&- @ ! ]X- 2 RO 4 2 X 5-^2 :X7To provide clarity, instructions for using the indices <11 101+++.1&1*10& 1 1&101+11++%M2 :I ,have been separated into two sections: (1) 1+1+1++1&+1+ +*110G1&++11% 1;2 X Forward ARMs, and (2) HECM ARMs.61 G+ 1GBX%+111 G<BXFBW& 2 n , 2 #X - 2 X - 2 X -"System-                    ՜.+,D՜.+,x4 px  HUD~2 =Assistant Secretary for Housing-Federal Housing Commisioners Title X4<  _PID_HLINKS_AdHocReviewCycleID_NewReviewCycle_EmailSubject _AuthorEmail_AuthorEmailDisplayName_PreviousAdHocReviewCycleID _ReviewingToolsShownOnceA`d6http://www.hud.gov/( edited fileMargaret.Burns@hud.govBurns, MargaretY  !"#$%&'()*+,./012346789:;<=>?@ABCDEFGHIJKLMNOPQRSTUVWXYZ[]^_`abcdefghijklmnopqrstuvwxyz{|}~Root Entry F@