On July 11, 2019 both FNMA and FHLMC announced that they “expect” to make an ARM product based on the Secured Overnight Financing Rate (SOFR), which is becoming the preferred standard for replacing the LIBOR when it is retired towards the end of 2021 (a high-level overview of LIBOR’s retirement can be found on our website here: https://compliance.docutech.com/2018/12/12/phasing-out-london-interbank-offered-rate-libor-and-cost-of-funds-index-cofi/).
In addition to developing a SOFR product, FNMA announced that they are planning to adopt the “ARRC Consultation on LIBOR Fallback Contract Language for Adjustable Rate Mortgages” regardless of whether the ARMs are LIBOR- or SOFR-based. Further details can be found at:
- https://www.fanniemae.com/singlefamily/news; “Selling Notice in support of SOFR ARM framework”; and
We are currently monitoring these changes and will provide further updates as more actionable details are released by the GSEs. Any modifications we make will be announced on our website (https://compliance.docutech.com/).