COMMENT: HUD/FHFA ARM notice rule change, align with CFPB Mortgage Servicing Rules
HUD/FHA Propose ARM notice rule change to align with CFPB’s mortgage servicing rule
The Department of Housing and Urban Development (HUD) and the Federal Housing Administration (FHA) have issued a proposed rule to revise FHA regulations regarding single family adjustable-rate mortgages (ARM) to align FHA interest rate notification regulations with the ARM adjustment notification requirements implemented by the CFPB’s recent mortgage servicing rule under the Truth in Lending Act (Regulation Z). The two proposed changes are as follows:
- Establish a 45-day look-back period for FHA-insured ARM loans, requiring an interest rate adjustment resulting in a corresponding change to a borrower’s monthly payment for the ARM be based on the most recent index value available 45 days before the date of the rate adjustment. The current look-back period is 30 days.
- Require that a mortgagee of an FHA-insured ARM loan comply with the disclosure and notification requirements in the CFPB’s mortgage servicing rule. This would include the requirement to provide at least a 60-day, but no more than 120-day, advance notice of an adjustment. Current notification is required at least 25 days in advance of a payment change.
The full text of the proposed rule can be found on the Federal Register’s website.
Comments are due to HUD on or before June 9, 2014.
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