FHFA Updates GSE Transition From LIBOR

FHFA Updates GSE Transition From LIBOR

February 6, 2020
Photo credit: Getty Images/krblokhin
The Federal Housing Finance Agency (FHFA) has updated the efforts being undertaken by Fannie Mae and Freddie Mac to transition from the London Interbank Offered Rate (LIBOR).
The FHFA noted new language will be required for single-family Uniform Adjustable Rate Mortgage (ARM) instruments closed on or after June 1, adding that all LIBOR-based single-family and multifamily ARMs must have loan application dates on or before Sept. 30 to be eligible for acquisition. Acquisitions of single-family and multifamily LIBOR ARMs will cease on or before Dec. 31.
“These steps represent important milestones in the Enterprises' transition away from LIBOR to a more robust reference rate.  We will continue to monitor exposure to LIBOR and ensure the Enterprises manage the risks associated with the transition in a safe and sound manner," said FHFA Director Mark Calabria. 
Last fall, the FHFA sent a letter to the 11 Federal Home Loan Banks directing them to cease purchasing investments in assets tied to LIBOR with a contractual maturity beyond Dec. 31, 2021.