As previously announced (see https://compliance.docutech.com/2020/02/06/compliance-news-major-gse-arm-notes-and-riders-changes/ and https://compliance.docutech.com/2020/02/21/docutechs-roadmap-to-libor-retirement/), the GSEs have announced that they will not purchase an ARM, with an application date on or after October 1, 2020, which uses LIBOR as its index.
To raise awareness of this fact, we have created a new, global data integrity check warning which will display the following:
“FNMA and FHLMC will not purchase LIBOR index-based ARMs with application dates on or after October 1, 2020 (see FNMA LL-2020-01 & FHLMC Bulletin 2020-1).”
This warning will trigger under the following conditions:
- When new field “Application Date On or After 10/01/2020” (FI 138621) equals “Yes”;
- “Base Type” (FI 2274) equals “Conventional”; and
- “ARM Index” (FI 2278) equals any of the following:
- “1 Yr WSJ LIBOR”
- “6 Mo FNMA LIBOR”
- “6 Mo WSJ LIBOR”
- “1 Mo WSJ LIBOR”
- “3 Mo WSJ LIBOR”
Please note that this warning is simply a warning and will not prevent the creation of loan documents for the aforementioned ARMs, since clients may still sell these loans to other investors or keep them in-house.
This warning will go into effect immediately. If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.