LIBOR-SOFR Transition

As of November 15, 2019

Additional Resources

Under the guidance of the Federal Housing Finance Agency (FHFA) and in coordination with Freddie Mac, we intend to implement the following changes:

Fallback language recommended by the Alternative Reference Rate Committee (ARRC) for adjustable-rate mortgages (ARMs)

  • The ARRC outlines the observable “triggers” that would signal an index for newly originated ARMs is no longer available and a waterfall to select a replacement index (“fallback language”).
  • This recommended language will be incorporated into the uniform notes and other legal documents for ARMs, regardless of what index is used.

New SOFR-based index and ARM products

We plan to offer several new ARM productsbased on a Secured Overnight Financing Rate (SOFR) index for new originations, once we complete an evaluation of our internal processes and systems, and subject to FHFA's approval.

  • The new index will be the 30-day average of the overnight SOFR. The Federal Reserve Bank of New York is working to publish averages of SOFR beginning in the first half of 2020.
  • In 2020, we plan to communicate the final SOFR ARM plan details for whole loan and MBS execution, and the timeline for when lenders can begin originating and delivering.
  • This does not affect our ability to purchase LIBOR ARMs and we are currently working on solutions to support the transition of legacy LIBOR ARMs to a replacement index.