Fannie Mae and Freddie Mac are transitioning away from the LIBOR index for their adjustable rate mortgages (ARMs) and will begin using the Secured Overnight Financing Rate (SOFR) as the index. New SOFR products will soon be available.
Important Dates
In order to comply with agency timeframes, the following dates are being provided:
- LIBOR Index ARMs
- Last day for applications or registrations will be August 31, 2020
- Loans must close or fund by November 30, 2020, and may not be switched into the new SOFR ARM products
- SOFR Index ARMs
- Date for new applications and registrations is currently TBD and will be provided once determined
New SOFR ARMs
The new SOFR ARM products will remain 5-, 7- or 10-year fixed to adjustable-rate products, with a subsequent 6-month rate change in place of the current yearly rate change, after the fixed-rate period.
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Index |
SOFR – The 30-day average of the overnight Secured Overnight Financing Rate as published by the Federal Reserve Bank of New York |
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Margin |
To be determined |
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Life Floor |
The floor is the margin |
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Interest Rate Caps |
Product |
First |
Subsequent |
Lifetime |
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5/6 |
2% |
1% |
5% |
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7/6 |
5% |
1% |
5% |
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10/6 |
5% |
1% |
5% |
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Change Date |
5/6 |
The first Change Date is the 61st payment due date. Subsequent Change Dates are every 6 months thereafter. |
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7/6 |
The first Change Date is the 85th payment due date. Subsequent Change Dates are every 6 months thereafter. |
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10/6 |
The first Change Date is the 121st payment due date. Subsequent Change Dates are every 6 months thereafter. |
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Qualifying Rate |
5/6 |
Greater of the Fully Indexed Rate or the Note Rate + 2% |
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7/6 & 10/6 |
Greater of the Fully Indexed Rate or the Note Rate |
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ARM Plans |
5/6 |
4927 |
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7/6 |
4928 |
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10/6 |
4929 |
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Conversion Option |
Not convertible |
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