www.hudclips.org U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT WASHINGTON, D. C. 20410-8000 July 21, 1988 OFICE OF THE ASSISTANT SECRETARY FOR HOUSING-FEDERAL HOUSING COMMISSIONER Mortgagee Letter 88-26 TO: ALL APPROVED MORTGAGEES SUBJECT: Disclosure Requirements Concerning the Origination of Adjustable Rate Mortgages (ARMs) This letter modifies the provisions of the "Loan Disclosure" section of Mortgagee Letter 84-16. In order to satisfy FHA's disclosure requirements relating to ARMs, mortgagees may now use either the Adjustable Rate Mortgage Disclosure Statement in Attachment II of Mortgagee Letter 84-16 or a disclosure statement that meets the criteria in Section 226.19(b)(2) (copy attached) of the Federal Reserve Board's recently issued rule amending the Truth- in-Lending regulations ("Regulation Z") at 12 CFR Part 226. The Federal Reserve Board (FRB) published the revisions as a final rule in the Federal Register on December 24, 1987, at 52 FR 48665-73. Footnote 45a in the attached copy of the revised Section 226.19(b)(2), states : "Information provided in accordance with variable-rate regulations of other federal agencies may be substituted for the disclosures required by paragraph (b) of this section." Therefore, a lender may continue to use HUD's Disclosure Statement in Attachment II of Mortgagee Letter 84-16 or use a disclosure statement satisfying the FRB's criteria, whichever better suits the lender's needs and operations. If your staffs have any questions on this letter, please contact the Programs and Procedures Branch at (202) 755-5676. We expect to issue a Mortgagee Letter concerning disclosure requirements for annual adjustments to ARMs. Sincerely yours, Thomas T. Demery Assistant Secretary Attachment