Fannie, Freddie Release Libor Transition Playbook

Fannie Mae and Freddie Mac today released a Libor Transition Playbook to help mortgage industry stakeholders prepare for the transition from the London Interbank Offered Rate—which is not guaranteed to be available after 2021—to alternative reference rates. The playbook provides transition details for single-family adjustable-rate mortgages and mortgage-backed securities, as well as single-family credit risk transfers; collateralized mortgage obligations; and multifamily ARMs, MBS and floating-rate notes and credit risk transfers.

The playbook provides timelines for when Fannie and Freddie will offer products using the Secure Overnight Financing Rate—the Alternative Reference Rates Committee’s preferred choice—and cease Libor. For example, Fannie will no longer offer Libor ARMs and securities after Dec. 31, 2020, while Freddie will issue its last ARM participation certificates referencing Libor on Dec. 1, 2020.

The playbook provides detailed transition guidance for each of the Fannie and Freddie products referenced above, including characteristics of SOFR-indexed products and transitioning legacy products referencing Libor. Fannie and Freddie also launched Libor transition webpages that provide FAQs for stakeholders and other resources.