Reverse Mortgage Daily, March 11, 2021, FHA Officially Drops LIBOR for Adjustable-Rate Reverse Mortgages, Adopts SOFR
The Federal Housing Administration (FHA) on Thursday officially announced that the Home Equity Conversion Mortgage (HECM) program is moving on from the London Interbank Offered Rate (LIBOR) index for adjustable-rate HECMs, and will instead adopt the Secured Overnight Financing Rate (SOFR). This was made official with the publication of Mortgagee Letter (ML) 2021-08 released on Thursday morning.
In long-awaited guidance from the federal government, the new ML “removes approval for use of the LIBOR index for adjustable interest rate HECMs,” approving the industry’s preferred index of SOFR while providing a timeline for how and when the changes will be implemented.
