Fannie Mae and Freddie Mac today announced plans to transition legacy Libor loans and securities to the Secured Overnight Financing Rate, the Alternative Reference Rates Committee’s preferred Libor alternative. The transition will occur July 1, 2023, the day after Libor is officially scheduled to sunset. In individual press releases, the GSEs outlined their transition plans for a number of specific products, including single-family adjustable-rate mortgages and related mortgage-backed securities, derivatives and others.
“The announcement of replacement rates for their Libor-indexed products today by Fannie Mae and Freddie Mac represents one of the closing milestones in the transition to more robust reference rates to replace Libor,” said Federal Housing Finance Agency Director Sandra Thompson. “FHFA and its regulated entities have worked closely with the Alternative Reference Rates Committee and the official sector to ensure a transparent and smooth transition.”