The Office of Management and Budget has finally cleared a regulation that will allow Federal Housing Administration lenders to offer a 5/1 hybrid adjustable-rate mortgage that is similar to conventional hybrid products.OMB cleared the hybrid rule after a three-month review. FHA lenders should be able to offer the 5/1 ARM in early April. Under the interim final rule, FHA can insure 5/1 hybrids with an initial interest rate adjustment of 200 basis points after five years and a 600 bp adjustment over the life of the loan. The new adjustment caps also apply to 7/1 and 10/1 hybrids. The hybrid rule still has to go to Congress for a 15-day review period. It will not go into effect until 30 days after it's published in the Federal Register.

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