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Catalog of Federal Domestic Assistance

Program Descriptions

14.175:  Adjustable Rate Mortgages

Popular Name:  ARMS

Objectives:  To provide mortgage insurance for an adjustable rate mortgage which offers lenders more assurance of long term profitability than a fixed rate mortgage, while offering consumer protection features.

PROGRAM AND AWARD	FINANCIAL AND INFORMATION CONTACTS
ELIGIBILITY REQUIREMENTS	FINANCIAL AND ADMINISTRATIVE INFO.
APPLICATION AND AWARD PROCESS	INFORMATION CONTACTS
RELATED PROGRAMS	ASSISTANCE CONSIDERATIONS
PROGRAM ACCOMPLISHMENTS	POST ASSISTANCE REQUIREMENTS

14.175 ELIGIBILITY REQUIREMENTS:

Applicant Eligibility:  All persons intending to occupy the property are eligible to apply.

Beneficiary Eligibility:  Individuals/Families.

Credentials/Documentation:  Documentation regarding the characteristics of the property and the qualifications of the mortgagor are assembled by the mortgagee and submitted with the application. This program is excluded from coverage under OMB Circular No. A-87.

14.175 APPLICATION AND AWARD PROCESS:

Preapplication Coordination:  None. This program is excluded from coverage under E.O. 12372.

Application Procedure:  Application is submitted for review and approval or disapproval to the local HUD Field Office through a HUD-approved lending institution. This program is excluded from coverage under OMB Circular Nos. A-102 and A-110.

Award Procedure:  See Application Procedure.

Deadlines:  None.

Range of Approval/Disapproval Time:  Varies.

Appeals:  HUD will state the reasons for refusing an application. The applicant may reapply subject to concurrence of the lender.

Renewals:  Not applicable.

Criteria for Selecting Proposals:  Not applicable.

Examples of Funded Projects:  Not applicable.

Range and Average of Financial Assistance:  See Uses and Use Restrictions.

14.175 RELATED PROGRAMS:

• 14.117 Mortgage Insurance: Homes;
• 14.133 Mortgage Insurance: Purchase of Units in Condominiums;
• 14.159 Section 245 Graduated Payment Mortgage Program.

14.175 PROGRAM ACCOMPLISHMENTS:

HUD insured 57,921 in fiscal year 1999. HUD anticipates insuring an equal number of loans in fiscal year 2000.

14.175 FINANCIAL AND ADMINISTRATIVE INFO:

Federal Agency:  HOUSING, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Type of Assistance:  Guaranteed/Insured Loans.

Obligations:  (Mortgages insured) Reported under program 14.117.

Budget Account Number:  86-4587-0-3-371.

Authorization:  National Housing Act, as amended; Housing and Urban-Rural Recovery Act of 1983, Section 251, Public Law 98-181, 12 U.S.C. 1715z-16.

Regulations, Guidelines, and Literature:  24 CFR 203.49; 234.79.

14.175 INFO CONTACTS:

Regional or Local Office:  Persons are encouraged to contact the Homeownership Center serving their State, or the nearest local HUD Office. See Catalog Address Appendix IV for a list of Offices.

Headquarters Office:  None.

(See Appendix IV for more contact info.)

14.175 ASSISTANCE CONSIDERATIONS:

Formula and Matching Requirements:  The maximum amount of the loan is the same as under Section 203(b). The downpayment is the difference between the maximum loan amount and the purchase price of the home. In addition to the downpayment, the purchaser must pay all items of prepaid expense. As of July 1, 1991, risk-based mortgage insurance premiums will be collected including 1) an up-front mortgage insurance premium which may be financed and 2) a periodic premium which is paid monthly. If the property is a condominium, the mortgage insurance premium is one-half percent paid monthly. The loan origination charge by the mortgagee varies, but may not exceed one percent of the total mortgage (minus the mortgage insurance premium, if financed). Mortgagors may be charged appraisal and inspection fees in accordance with fee schedules established by HUD. The interest rate adjustments of the mortgage may not increase more than one percent per year or five percent over the term of the mortgage. There is no negative amortization. The mortgagor must receive a disclosure statement explaining the adjustable rate features of their mortgage.

Length and Time Phasing of Assistance:  The mortgage term may extend for 30 years.

Uses and Use Restrictions:  HUD insures lenders against loss on mortgage loans. These loans may be used to finance the purchase of proposed, under construction, or existing one- to four-family housing as well as to refinance indebtedness on existing housing. The maximum insurable mortgage loan for an occupant mortgagor is the same as prescribed for Section 203(b) - program 14.117.

14.175 POST ASSISTANCE REQUIREMENTS:

Reports:  Defaults in meeting the mortgage terms must be reported. All approved mortgagees at any time upon request by HUD must furnish a copy of their latest financial statement.

Audits:  The Department of Housing and Urban Development reserves the right to audit the account of the mortgagee to determine its compliance and conformance with HUD regulations and standards.

Records:  Mortgagees are required to service and maintain records in accordance with acceptable mortgage practices of prudent lending institutions and the HUD regulations.