Following the adoption by the Federal Reserve Board of a final rule under the Adjustable Interest Rate (LIBOR) Act, Fannie Mae and Freddie Mac have announced replacement indices for their legacy London Interbank Offered Rate (LIBOR)-based loans and securities.
For single family mortgage loans and related mortgage-backed securities, as expected, Fannie Mae and Freddie Mac have selected the relevant tenor of the spread adjusted CME Term Secured Overnight Financing Rate (SOFR). The transition to the replacement indices will occur the day after June 30, 2023. June 30, 2023, is scheduled to be the last date on which the Intercontinental Exchange, Inc. (ICE) Benchmark Administration Limited will publish a representative rate for all remaining tenors of U.S. dollar LIBOR. The full transition to the spread adjusted CME Term SOFR indices will occur over one year. Values for the spread adjusted CME Term SOFR indices will be available from Refinitiv Limited.
The Fannie Mae and Freddie Mac announcements also address replacement indices for multifamily loans and related mortgage-backed securities, single family and multifamily collateralized mortgage obligations and credit risk transfer securities, and derivatives.