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HUD Finalizes Changes on FHA-Insured ARMs, Prepayments

Posted on 8/27/2014

The Department of Housing and Urban Development is today finalizing changes in how Federal Housing Administration-insured adjustable-rate mortgages are adjusted and eliminated post-payment interest charges on single-family FHA-insured mortgages. The changes are intended to align the FHA's lender requirements with Consumer Financial Protection Bureau rules.

The ARM rule requires a 45-day "look-back" period -- that is, the gap between an ARM index calculation and the date the rate adjusts -- up from the current 30-day look-back. It also provides for a 60-120 day notice period prior to ARM adjustments, up from the 25 days FHA currently requires. It takes effect for FHA-insured ARMs originated after Jan. 10, 2015.

The second rule, governing prepayments, would allow lenders to charge interest only through the date a mortgage is paid in any given month. It takes effect on Jan. 21, 2015.

To read more on the ARM rule visit: https://www.federalregister.gov/articles/2014/08/26/2014-20215/federal-housing-administration-fha-adjustable-rate-mortgage-notification-requirements-and-look-back

To read more on the repayment rule visit: https://www.federalregister.gov/articles/2014/08/26/2014-20214/federal-housing-administration-fha-handling-prepayments-eliminating-post-payment-interest-charges



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