DocMagic has revised the estimated schedule for releasing updated FHA adjustable-rate Notes and Riders. The change to the form release schedule is shown in an updated article found here.
FHA Lender Handbook 4000.1 requires lenders to use notes, riders and security instruments based on those published by Fannie Mae and Freddie Mac (the "GSEs"). The GSEs published revised notes and riders in February 2020 to reflect updated fallback language as a result of the discontinuance of the LIBOR index. The language allows lenders additional options in selecting a replacement index should the index on which the note is based no longer be available.
FHA statutory requirements restrict the indexes a lender may use to make a FHA loan to only either an index based on Treasury security yields or LIBOR. As LIBOR will no longer be available after 2021, FHA statutory requirements will only allow use of a Treasury security index for an FHA loan. Lenders will not, absent a statutory change, be able to select an alternative index beyond that for Treasury securities. For these reasons, FHA notes only have minor modifications to comport to both the newly revised notes published by the GSEs and FHA statutory requirements.
If you have any questions, please contact DocMagic's Compliance Department.
