Home Equity Conversion Mortgage (HECM) Program – Changes to Interest Rate Requirements Including Removal of the London Interbank Offered Rate (LIBOR) Index
• Removes approval for use of the London Interbank Offered Rate (LIBOR) index for adjustable interest rate HECMs;
• Establishes the acceptance of the Secured Overnight Financing Rate (SOFR) index and permits mortgagees to commingle index types for newly originated annual adjustable interest rate HECMs when establishing the expected average mortgage interest rate using the U.S. Constant Maturity Treasury (CMT) and using the Secured Overnight Financing Rate (SOFR) index to establish the initial mortgage interest rate (Note rate) and periodic Note rate adjustments; and
• Sets zero as the “floor” for the index value used to determine the Note rate.