Key Dates for SOFR ARM Products
As previously announced, starting August 3, 2020, Fannie Mae will accept deliveries of single-family adjustable-rate mortgage (ARM) loans indexed to the Secured Overnight Financing Rate (SOFR) and begin issuing SOFR-based MBS.
The following table describes the key features of the new SOFR ARM products that use an index based on a 30-day average of SOFR published by the Federal Reserve Bank of New York.
| ARM Product | Max Margin | ARM Subtypes and Prefix | Fixed Rate Period | Reset Period | First Rate Change Caps | Subsequent Rate Change Caps | Life Cap (Ceiling) |
|---|---|---|---|---|---|---|---|
| 3 Year (3yr/6m) | 300 bps | 85A SO |
3 years | 6 months | +2%/-2% | +1%/-1% | Up to +5% |
| 5 Year (5yr/6m) | 300 bps | 85B SO |
5 years | 6 months | +2%/-2% | +1%/-1% | Up to +5% |
| 7 Year (7yr/6m) | 300 bps | 85C SO |
7 years | 6 months | +5%/-5% | +1%/-1% | Up to +5% |
| 10 Year (10yr/6m) | 300 bps | 85D SO |
10 years | 6 months | +5%/-5% | +1%/-1% | Up to +5% |
Fannie Mae to Accept Multifamily SOFR ARM Products Beginning October 2020
The Multifamily SOFR ARM subtypes will be updated by August 4, 2020 in anticipation of launching the products in September 2020 and accepting delivery beginning October 2020. This comes as a follow-up to our February 5, 2020 announcement.
As a reminder, under FHFA guidance, Fannie Mae will no longer acquire Single- Family or Multifamily ARM loans indexed to LIBOR by the end of 2020.
Questions?
For additional information please see the LIBOR Transition webpage or contact us.
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This announcement does not constitute an offer to sell or the solicitation of an offer to buy securities of Fannie Mae. Nothing in this announcement constitutes advice on the merits of buying or selling a particular investment. Any investment decision as to any purchase of securities referred to herein must be made solely on the basis of information contained in Fannie Mae's applicable Prospectus and the Prospectus Supplement and the related legal documentation, and no reliance may be placed on the completeness or accuracy of the information contained in this announcement.
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