Announcement

Single-Family and Multifamily ARM Index Update

February 5, 2020

 

Today Fannie Mae announced updates to its Single-Family and Multifamily Adjustable-Rate Mortgage (ARM) products. It is widely known that the LIBOR index may no longer be available after 2021. Today's announcement further demonstrates Fannie Mae's commitment to prepare our customers for a successful transition and minimize disruption.

Retirement of LIBOR ARM Loans

Under FHFA guidance, Fannie Mae will no longer acquire Single-Family or Multifamily ARM loans indexed to LIBOR by the end of 2020.

The table below outlines eligibility requirements for LIBOR-indexed ARM loan delivery to Fannie Mae:

Single-Family LIBOR ARMs Multifamily LIBOR ARMs (including Structured ARM loans and Hybrid ARM loans)
  • Must have application date on or before September 30, 2020.
  • Must be purchased as whole loans on or before December 31, 2020.
  • Must be purchased as MBS pools with issue dates on or before December 1, 2020.
  • Must be designated as "under application" in the Deal Status field in DUS Gateway® on or before September 30, 2020.
  • Must be purchased as whole loans on or before December 31, 2020.
  • Must be purchased as MBS mortgage loans with issue dates on or before December 1, 2020.

Purchase of Single-Family Secured Overnight Financing Rate (SOFR) ARM Loans in Second Half of 2020

We anticipate accepting whole loan and MBS delivery of SOFR ARMs in the second half of 2020. The following table describes the key features of the new SOFR ARM product characteristics that use an index based on a 30-day average of SOFR that will be published by the Federal Reserve Bank of New York.

ARM Product Max Margin ARM Subtypes and Prefix (MBS Only) Fixed Rate Period Reset Period First Rate Change Caps Subsequent Rate Change Caps Life Cap (Ceiling)
3 Year (3yr/6m) 300 85A
SO		 3 years 6 months +2%/-2% +1%/-1% Up to +5%
5 Year (5yr/6m) 300 85B
SO		 5 years 6 months +2%/-2% +1%/-1% Up to +5%
7 Year (7yr/6m) 300 85C
SO		 7 years 6 months +5%/-5% +1%/-1% Up to +5%
10 Year (10yr/6m) 300 85D
SO		 10 years 6 months +5%/-5% +1%/-1% Up to +5%

We will share additional characteristics of the loans/subtypes in the coming months.

Purchase of Multifamily SOFR-Capped ARM Loans in Q4 2020

We anticipate accepting delivery of SOFR-Capped ARM loans as whole loans or MBS Mortgage Loans no later than the fourth quarter of 2020. We anticipate that the SOFR-Capped ARM loan will use an index based on a 30-day average of SOFR that will be published by the Federal Reserve Bank of New York.

In the coming months Fannie Mae will provide details related to Multifamily SOFR ARM Prefixes and Subtypes, including confirmation of the use of a 30-day average of SOFR.

Future Retirement of CMT ARM Loans

Under FHFA guidance, Fannie Mae will cease purchasing Single-Family Constant Maturity Treasury (CMT)-indexed ARM loans at some point in 2021. No specific dates have been established yet.

We will publish additional details as they become available.

Fannie Mae does not purchase Multifamily CMT loans.

Questions?

For additional information please see the Single-Family Lender Letter and/or Multifamily Lender Letter released today or contact us.