FAQs for the Enterprise 11th District COFI Replacement Index and 

Enterprise 11th District COFI Institutional Replacement Index

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Contents

Summary of Changes.................................................................................................................................................. 1

FAQs............................................................................................................................................................................ 2

Summary of Prior Changes......................................................................................................................................... 6

Summary of Changes

The table below details the list of changes since the February 2022 version of the FAQs published on the Fannie 

Mae and Freddie Mac websites. 

Section Summary of change

March 2022

FAQs • Q11: Changed LIBOR tenor used as a fallback by Fannie Mae 

Collateralized Mortgage Obligations indexed to COFI from one-month 

LIBOR to one-year LIBOR.

• Moved “Summary of change (February 2022)” to “Summary of prior 

changes” section at the end.
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FAQs

Q1: Why did Federal Home Loan Bank of San Francisco retire the 11th District Monthly Weighted 

Average Cost of Funds Index (COFI)?

A: The Federal Home Loan Bank of San Francisco announced that it would stop publishing COFI by 

January 2022 (for the December 2021 rate) because of the significant decline in the number of 

financial institutions eligible to report the data used to calculate the indices.

Q2: When did Federal Home Loan Bank of San Francisco retire COFI?

A: The last date for publication of the COFI index by the Federal Home Loan Bank of San Francisco was

January 31, 2022 (for the December 2021 rate). The Enterprise 11th District COFI Replacement Index 

and the Enterprise 11th District COFI Institutional Replacement Index were published starting 

February 28, 2022 for the January 2022 rate. 

Q3: What products at Freddie Mac/Fannie Mae are impacted by the COFIretirement? 

A: Single Family and Multifamily cash and MBS/PC loans are impacted, as well as CMOs. Freddie Mac and 

Fannie Mae no longer accept the delivery of ARM mortgage products indexed to COFI. There are no 

impacts to our Credit Risk Transfer securities.

Q4: What is the replacement index for mortgage loans and CMOs that use COFI?

A: Based on current comparability analysis, and based on a good faith determination, the GSEs selected 

the Federal Cost of Funds Index (Federal COFI) plus a spread adjustment, as the replacement index. 

The purpose of the spread adjustment is to minimize or eliminate any value transfer between

investors and consumers. The methodology for the spread adjustment is similar to the spread 

adjustment methodology that was recommended by the Alternative Reference Rates Committee 

(“ARRC”) in June 2020 for the LIBOR transition. Like the ARRC spread adjustment methodology, the 

COFI spread adjustment methodology includes a phased-in adjustment (1-year transition period) for 

consumer loans only. As a result, two replacement indices are being published – one for Single Family 

(consumer) loans and one for Multifamily loans and Freddie Mac CMOs. For information on Freddie 

Mac and Fannie Mae CMOs, please refer to Q11. The replacement index is for use on those products for 

which the legal documents did not specify a particular index to transition to in the event COFI retired.

Q5: How do end users know whether the index contains the 1-year transition period for consumer 

loans?

A: The replacement index for Single Family loans is called “Enterprise 11th District COFI Replacement 

Index” and the replacement index for Multifamily loans and Freddie Mac CMOs is called “Enterprise 

11th District COFI Institutional Replacement Index”. The publication of two indices will remain in 

place even after the 1-year transition period of the Consumer index, at which time the indices will 

reflect the same value. Consequently, the users of each index will not need to make another transition
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after the 1-year transition period ends. Refer to the COFI Playbook for further information about the 

spread adjustment methodology. 

Q6: Where are the replacement indices published?

A: Freddie Mac began publishing the replacement indices on its website on February 28, 2022.

The replacement indices are made available for use on Freddie Mac and Fannie Mae owned or 

guaranteed financial instruments, subject to the Enterprise 11th District COFI Replacement Index 

Notice And Disclaimer and the terms, conditions and restrictions set forth in applicable contracts 

pertaining to the Replacement Indices. The replacement indices are not created, calculated or 

published by or at the direction of, nor are the replacement indices or the decision that such indices

are appropriate for use in any financial instrument, in any way associated or affiliated with, the 

Federal Home Loan Bank of San Francisco. The replacement indices may not be used on any new 

financial instrument created or entered into on or after February 28, 2022.

For more information on Freddie Mac’s Federal COFI, visit Freddie Mac’s website.

Q7: May the replacement indices be used for legacy financial instruments other than those owned or 

guaranteed by the GSEs?

A: Entities other than the GSEs that choose to use the replacement indices on their legacy financial 

instruments do so “as is,” at their own risk, and subject to Freddie Mac’s COFI Replacement Index

Disclaimer (Disclaimer). The replacement indices may not be used on newly issued financial 

instruments as set forth in the Disclaimer.

Q8: What did Freddie Mac/Fannie Mae do to get ready for the transition away from COFI?

A: Fannie Mae and Freddie Mac worked on a number of tasks to ensure a smooth transition. Some of 

those are listed below:

# Activity Completion Date

1 Choosing names for the new indices and sending an 

announcement of this information to impacted Servicers 

and informing them about high level timing of the 

conversion. The new names are: 

• Enterprise 11th District COFI Replacement Index;

and 

• Enterprise 11th District COFI Institutional 

Replacement Index.

Completed Q2 2021

• Servicer Guide Bulletin

dated 6/9/21

• FAQs & Playbook update 

dated 7/27/21

2 Actively engaging impacted stakeholders (servicers, 

regulators and investors) on a regular basis to provide 

information to prepare for operational readiness and 

borrower notification of the index change and its impact.

Q1 2021 and onward.

• Emails to Servicers to

review notes for nonstandard language (week

of 7th June)
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# Activity Completion Date

• Response to Servicers on 

use of replacement index 

for notes with nonstandard language (Week 

of 9th August)

• Meetings with 3 Servicers 

on margin changes 

operational process 

(August 12, 18 & 25)

• Emails to Servicers to 

announce the publication 

of the Enterprise 11th 

District COFI 

Replacement Index web 

page and the availability 

of downloadable test 

data is available from 

October 20, 2021 to 

February 27, 2022 (week 

of 1

st November).

• MBS Announcement 

(week of 13th December).

• Follow-up Freddie Mac 

MBS Announcement 

(week of 24th January).

• COFI Transition reminder 

emails to Servicers (week 

of 31st January).

• Follow-up Fannie Mae 

MBS Announcement 

(week of 14th February)

3 Develop and publish new webpage hosting new indices. Completed Q4 2021

• FAQs & Playbook update 

dated 10/20/21

• Servicer Guide Bulletin

dated 10/20/21

4 Develop internal capability to support the replacement 

indices.

Completed Q1 2022

5 Convert legacy portfolio to replacement indices. Q1 2022 and until all COFI 

ARMs have been transitioned 

to the relevant Replacement 

Index based on the interest 

rate adjustment date and the 

lookback period.
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# Activity Completion Date

6 Updating Fannie Mae MBS Subtypes (MBS data construct 

that identifies the ARM characteristics of the underlying 

collateral) with the replacement index description.

Completed Q1 2022

7 Making necessary changes to be operationally ready to 

support the new replacement indices.

Q1 2022

Q9: Why were the Enterprise 11th District COFI Replacement Index and the Enterprise 11th

District COFI Institutional Replacement Index selected as the “replacement indices”?

A: Freddie Mac and Fannie Mae considered several potential alternative indices with the objectives of, 

among others, finding a fair, reasonable and comparable substitute index (by reviewing composition, 

tenors, and correlation) that met the following criteria:

• Based upon reliable, broad-based sources of information

• Based on instruments with a range of maturities

• High correlation to the original index

A spread-adjusted Federal COFI was determined to be the most fair, reasonable and comparable 

substitute index for COFI. This determination was made in consultation with FHFA following a review 

of 13 other indices, including the one-month simple average SOFR and 30-day average SOFR indices. 

The GSEs reassessed Federal COFI in Q4 2021 and the results indicate that that Federal COFI had 

continued to be the most comparable index.

The GSEs’ selection of spread-adjusted Federal COFI as the replacement index for COFI is not an 

indication of the GSEs’ intentions with respect to the replacement index for LIBOR-indexed financial 

instruments.

Q10: What impacts do you foresee to MBS/PC securities with the transition of COFI to a

successor index? 

A: Freddie Mac and Fannie Mae will update the index codes (as referenced in our disclosures) and 

subtypes (Fannie Mae only) to reflect the replacement indices. 

For more information about impacts to Freddie Mac securities, refer to the January 27, 2022 

announcement.

For more information about impacts to Fannie Mae securities, refer to the announcement sent the 

week of February 14, 2022.

Q11: Have you identified a successor index for Freddie Mac and Fannie Mae CMOs that use COFI? 

A: Outstanding Freddie Mac CMOs indexed to COFI have fallback language indicating that, if the Federal 

Home Loan Bank of San Francisco fails to publish COFI for a period of 65 days and does not publish or 

designate a replacement index, then Freddie Mac is required to select an index that performs in a 

manner substantially similar to COFI. Based on current comparability analysis, and based on a good 
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faith determination, Freddie Mac has selected the Enterprise 11th District COFI Institutional 

Replacement Index as the replacement index for its COFI-indexed CMOs.

Outstanding Fannie Mae CMOs tied to COFI contain waterfall fallback language in the governing 

prospectuses identifying the fallback index for interest accruals as 1) the National Median Cost of 

Funds Index published by the Office of Thrift Supervision and then 2) LIBOR. The National Median Cost 

of Funds Index was discontinued in February 2012. Thus, the fallback index for all outstanding COFIindexed Fannie Mae CMOs is one-year LIBOR. Since the anticipated index cessation date for one-year

LIBOR is June 30, 2023, it is currently anticipated that these COFI-indexed CMOs would switch from 

COFI to LIBOR after COFI is no longer published. Subsequently those CMOs would switch to a 

replacement index for LIBOR after June 30, 2023.

Q12: What if I have COFI ARM Notes that contain non-standard index replacement

 language?

A: Most Single-Family (consumer) COFI ARM Notes contain standard index replacement language stating 

that “If the Index is no longer available, the Note Holder will choose a new index which is based upon 

comparable information.” Some servicers may also service legacy COFI loans that were closed on nonstandard documents. The GSEs have required their COFI ARM servicers to identify loans closed on 

non-standard documents that provide for variations in selecting a replacement index, or in calculating 

the margin after COFI has been retired, and to bring those to applicable GSE’s attention as soon as 

possible for further instruction. There may be operational or other impacts based on the criteria 

prescribed in these non-standard documents.

Summary of Prior Changes

Section Summary of change

October 2021

Single Family Q4. Updated to include CMOs. Added that Fannie Mae’s CMOs tied to 

COFI are indexed to LIBOR (SOFR).

Q5. Reworded A. to reflect that the 2 indices will have the same value at 

the end of the 1-year transition period.

Q6, Q7, Q8, Q9 (Activity 4 & 5), Q11: Changed, “Enterprise 11th District 

COFI Replacement Indices” to “replacement indices” for reducing repeated 

use of the full name of the replacement indices.

Q7: New FAQ to address use of the COFI replacement indices for nonagency legacy financial instruments.

Q8: New FAQ to address availability of the replacement indices website 

with test data.

Q9 (Activity 3): Added completion date (Q4 2021) to develop and publish 

new webpage hosting new indices. Added completed actions under 

completed dates. 

Q12. Changed to “one-month LIBOR” from “LIBOR”.
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Section Summary of change

February 2022

FAQs • In general, updated Questions and Answers to reflect the passing of 

COFI transition milestones, including the final publication of COFI and 

the first publication of the indices chosen to replace COFI.

• Deleted previous Q8 as this was specific to test data available and test 

data is not available on/after 2/28/22. Renumbered remaining 

Questions.

• Q8: Added completed activities.

• Q9: Updated to reflect that the GSEs completed the replacement 

index comparable analysis in Q42021.

• Q10: Added links to the applicable MBS Announcements.

• Added new section at the end for Summary of Prior Changes.