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August 17, 2006

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| Regulations Division              |                                   |
|                                   |                                   |
| Office of General Counsel         |                                   |
|                                   |                                   |
| Department of Housing and Urban   |                                   |
| Development                       |                                   |
|                                   |                                   |
| 451 Seventh Street, SW, Room      |                                   |
| 10276                             |                                   |
|                                   |                                   |
| Washington, DC 20410-0500         |                                   |
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**Re: Adjustable Rate Mortgages -- Additional Index - Proposed Rule**

**Docket No. FR-4969-P-01; HUD-2006-0176**

Dear Sir or Madam:

The National Reverse Mortgage Lenders Association ("NRMLA") writes
regarding the Department of Housing and Urban Development's proposed
amendments to the rules governing adjustable rate mortgages ("ARMs"), 24
C.F.R. § 203.49, ("Proposed ARMs Rule").[^1]

NRMLA is the principal nationwide trade association for financial
services companies that originate, service, and invest in reverse
mortgages. NRMLA was founded to enhance the professionalism of those
engaged in reverse mortgage lending, and NRMLA is dedicated to assuring
quality and integrity in reverse mortgage lending. Over 80% of the
reverse mortgages originated and purchased in the United States today
are originated by NRMLA members, and over 85% of the reverse mortgages
originated in the United States at this time are home equity conversion
mortgage ("HECM") loans insured by the Federal Housing Administration.

This Proposed Rule would amend HUD's regulations at 24 C.F.R. §
203.49(b) to add the one-year London Interbank Offered Rate ("LIBOR") as
an acceptable index for the rate of HUD-insured ARM loans, in addition
to the U.S. treasury index that is used now. This Proposed Rule would
not cover Home Equity Conversion Mortgage loans governed by 24 C.F.R. §
206. 1 *et seq.*

Respectfully, for the reasons outlined below, we request that the
Proposed Rule be revised so that the LIBOR rate also be allowed with the
HUD HECM program, governed under 24 C.F.R. Part 206. Specifically, we
request that allowable interest rates for HECMs additionally include
rates based on the LIBOR index, and thus the reference in 24 C.F.R. §
206.21 to 24 C.F.R. § 203.49 be amended to include a cross-reference to
LIBOR in addition to the existing reference to the U.S. Treasury rate.

For the same reasons that adding the LIBOR rate would benefit "forward"
FHA-insured ARM programs, as stated in your advanced notice of proposed
rulemaking ("ANPR") with respect to "forward" ARM loans, adding the
LIBOR rate as an option would equally benefit reverse mortgages under
the HUD HECM program. Specifically, as stated in your ANPR:

-   "LIBOR loans have become very popular in the secondary market, and
    this greater liquidity allows lenders to offer lower margins to
    borrowers."

-   "The LIBOR rate and the Treasury one-year constant maturity index
    have historically tracked each other closely over time. While the
    LIBOR rate may often be slightly higher, the better margins
    available for LIBOR-indexed loans often make LIBOR-based loans a
    better deal for consumers."

-   " ... as LIBOR loans become more popular, it is necessary for HUD to
    offer a LIBOR option to remain competitive in the secondary market."

Moreover, we respectfully request that the introductory language in 24
C.F.R. § 203.49, which references the applicable sections of the
National Housing Act ("NHA") that authorize the "forward" ARM programs,
be amended to include a reference to Section 255 of the NHA, which is
the authorizing legislation for the HUD HECM program. The Proposed Rule
does not currently include a reference to Section 255 of the NHA. Adding
such a reference would be appropriate if the LIBOR rate were to be
allowed as an alternative index in connection with reverse mortgages
under the HUD HECM program, which we believe is essential for the
continued success of the program.

NRMLA appreciates the opportunity to comment on the proposed amendments.

Regards,

Peter Bell, President

/media/pszemraj/PeterTrove/project-files/DATA/ms-word-files/big-DOC/895539.doc

[^1]: 71 Fed. Reg. 35370 (June 19, 2006).