WASHINGTON (6/10/14)--A U.S. Department of Housing and Urban Development (HUD) proposal to revise the Federal Housing Administration's (FHA) regulations governing its single-family adjustable-rate mortgage (ARM) program is needed to enable lenders to meet notification requirements prior to a borrower's rate adjustment.
The Credit Union National Association made that point in its June 9 comment letter to HUD regarding the plan.
The proposed revisions would align FHA interest rate adjustment and notification regulations with the requirements for notifying mortgagors of ARM adjustments, as required by the regulations implementing the Truth in Lending Act (TILA), as recently revised by the Consumer Financial Protection Bureau.
HUD is proposing to require FHA-approved lenders, in setting a new interest rate for an ARM loan, to use the current index figure that is the most recent one available--45 days, rather than the current 30 days--before the date of an interest rate adjustment.
CUNA supports this proposed requirement, as revising the current 30-day look-back period to 45 days would enable lenders to meet the 60- to 120-day notification period prior to any adjustment to a borrower's monthly payment, as required by the CFPB's mortgage servicing rules.
With the proposed change to the look-back period as proposed, CUNA also supports the agency's plan to cross-reference FHA's regulations to the disclosure and notification requirements for interest rate and payment adjustments for ARMs, including the timing, content and format of these disclosures as contained in section 1026.20(c) and (d) of Regulation Z under the CFPB's mortgage servicing rules.
CUNA maintains that this cross-referencing and requiring FHA-approved mortgagees to comply with the ARM notification requirements as contained in the CFPB's mortgage servicing rules will assist in providing greater uniformity for ARM loan interest rate notifications for a larger number of consumers nationwide.
Use the resource link to access the complete comment letter.