LIBOR Transition Playbook

December 2023
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Table of Contents

1. Overview...............................................................................................................................................8

1.1 Introduction..................................................................................................................................8

1.2 LIBOR transition timelines ......................................................................................................... 10

1.3 Replacement rate determination and spread methodology summary ................................... 10

1.4 Recommended actions market participants should consider................................................. 12

2. SF ARMs and MBS/PCs........................................................................................................................ 14

2.1 Introduction................................................................................................................................ 14

2.2 Transition milestones ................................................................................................................ 14

2.3 Replacement rate determination and spread methodology.................................................... 14

2.4 Preparation for the legacy transition ........................................................................................ 15

2.5 Servicing legacy LIBOR-indexed SF ARMs ................................................................................. 18

2.6 Administering legacy LIBOR-indexed SF MBS/PCs ................................................................... 20

3. Multifamily ARMs (Fannie Mae), Floating-Rate Loans (Freddie Mac), and Securities...................... 22

3.1 Introduction................................................................................................................................ 22

3.2 Transition milestones ................................................................................................................ 22

3.3 Replacement rate determination and spread methodology.................................................... 23

3.4 Servicing legacy LIBOR-indexed MF ARMs and Floating-Rate Loans ....................................... 25

3.5 Administering Legacy LIBOR-indexed MBS/PCs/K-Deals ......................................................... 27

4. CRT Transactions ............................................................................................................................... 30

4.1 Introduction................................................................................................................................ 30

4.2 Transition milestones ................................................................................................................ 30

4.3 Replacement rate determination and spread methodology.................................................... 30

4.4 Administering legacy LIBOR-indexed CRTs ............................................................................... 31

5. CMOs ................................................................................................................................................... 32

5.1 Introduction................................................................................................................................ 32

5.2 Transition milestones ................................................................................................................ 32

5.3 Replacement rate determination and spread methodology.................................................... 32

5.4 Administering legacy LIBOR-indexed CMOs.............................................................................. 33

6. Appendix: Introduction to SOFR based new products ..................................................................... 35

6.1 Introduction................................................................................................................................ 35
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6.2 SOFR-indexed key milestones ................................................................................................... 35

7. Appendix: Single-Family ARMs........................................................................................................... 37

7.1 Introduction................................................................................................................................ 37

7.2 Transition milestones................................................................................................................. 37

7.3 SOFR-indexed ARM characteristics............................................................................................ 37

7.4 Preparation for SF SOFR ARMs................................................................................................... 40

8. Appendix: Single-Family CRTs ........................................................................................................... 48

8.1 Introduction................................................................................................................................ 48

8.2 SOFR-indexed SF CRT new issuance and market developments ............................................. 48

8.3 Timelines and milestones .......................................................................................................... 48

9. Appendix: CMOs ................................................................................................................................. 50

9.1 Introduction................................................................................................................................ 50

9.2 Overview..................................................................................................................................... 50

9.3 Eligible collateral........................................................................................................................ 50

9.4 Issuance ...................................................................................................................................... 50

9.5 Administration............................................................................................................................ 50

9.6 Disclosure changes..................................................................................................................... 53

10. Appendix: Multifamily ARMs (Fannie Mae) ........................................................................................ 55

10.1 Introduction................................................................................................................................ 55

10.2 Transition Milestones................................................................................................................. 55

10.3 SOFR-indexed characteristics.................................................................................................... 56

10.4 Preparation for MF SOFR-indexed ARMs.................................................................................... 58

11. Appendix: Multifamily CRTs ............................................................................................................... 61

11.1 Introduction................................................................................................................................ 61

11.2 SOFR-indexed CRT new issuance............................................................................................... 61

11.3 Alignment with SF CRT............................................................................................................... 61

12. Appendix: Multifamily Floating-Rate Loans and Securities (Freddie Mac) ...................................... 62

12.1 Introduction................................................................................................................................ 62

12.2 Product modifications................................................................................................................ 62

12.3 Selling and delivering MF SOFR Floating-Rate Loans ............................................................... 63

12.4 MF floating-rate securities indexed to SOFR ............................................................................. 63
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12.5 Servicing MF SOFR Floating-Rate Loans.................................................................................... 72

12.6 Discontinuation of originating and selling MF LIBOR Floating-Rate Loans ............................. 73

12.7 Multifamily Legacy LIBOR Transition......................................................................................... 74

13. Appendix: Multifamily Credit Risk Transfer Transactions (Freddie Mac)......................................... 77

13.1 Introduction................................................................................................................................ 77

14. Summary of Prior Changes ................................................................................................................ 78
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Summary of Changes

The table below details the list of changes since the June 2023 version of the LIBOR Transition 

Playbook was published on the Fannie Mae and Freddie Mac websites.

Section Summary of changes

1. CMOs 

Additional 

Considerations 

▪ Provided updated guidance on CMO bonds or swaps with interest rate caps 

transitioning to the ISDA protocol Fallback rate 

2. Refinitiv 

Rebranding ▪ Updated data tables to reflect Refinitiv rebranding
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Legal information and disclaimer

Information in the London Interbank Offered Rate (“LIBOR”) Transition Playbook is preliminary and 

subject to revision and updates from time to time. This document is an indicative summary of our 

preliminary analysis regarding the potential upcoming LIBOR transition. This document and the 

analysis may be amended, superseded or replaced by subsequent summaries or actions. The 

analyses, preliminary views and opinions expressed herein are based on certain assumptions that also 

are subject to change. Readers should rely on the information contained in the loan documentation, 

securities offering documents, operative documents, etc. in order to evaluate the rights and 

obligations for each such loan or security. As a reminder, Fannie Mae and Freddie Mac (the “GSEs”) are 

in separate conservatorships and their conservator (“FHFA”) has the authority to direct either or both 

GSEs to take whatever actions it deems appropriate in respect of any LIBOR transition and product or 

contract.

Neither GSE guarantees the accuracy or completeness of information that is contained in this 

document, or that the information is appropriate or useful in any particular context, including the 

context of any investment decision, and it should not be relied upon as such. No representations or 

warranties are made as to the reasonableness of the assumptions made within or the accuracy or 

completeness of any information contained herein. All opinions and estimates are given as of the date 

hereof and are subject to change and neither GSE assumes any obligation to update this document to 

reflect any such changes. The information herein is not intended to predict actual results and no 

assurances are given with respect thereto. No representation is made that any strategy, performance, 

or result illustrated herein can or will be achieved or duplicated. The effect of factors other than those 

assumed, including factors not mentioned, considered or foreseen, by themselves or in conjunction 

with other factors, could produce dramatically different performance or results. Nothing herein will be 

deemed to constitute investment, legal, tax, financial, accounting or other advice. No part of this 

document may be duplicated, reproduced, distributed or displayed in public in any manner or by any

means without the written permission of Fannie Mae and Freddie Mac.

This playbook does not constitute an offer to sell or the solicitation of an offer to buy securities of 

either GSE. Nothing in this playbook 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 the respective GSE’s applicable offering documents, 

and no reliance may be placed on the completeness or accuracy of the information contained in this 

playbook. You should not deal in securities unless you understand their nature and the extent of your 

exposure to risk. You should be satisfied that they are suitable for you in light of your circumstances 

and financial position. If you are in any doubt, you should consult an appropriately qualified financial 

advisor.

Please be aware that the federal Adjustable Interest Rate (LIBOR) Act (the “LIBOR Act”) became law on 

March 15, 2022. As required by the Act, the Board of Governors of the Federal Reserve System 

(“Board”) published regulations identifying Board-selected benchmark replacement rates based on 

the Secured Overnight Financing Rate (“SOFR”) on December 16, 2022. The regulations published by 

the Board have a significant impact on steps that the GSEs will take in connection with the transition 

from LIBOR-indexed products to SOFR-indexed products.

The following disclaimer has been provided by London Stock Exchange Group plc (LSEG) and the GSEs 

take no responsibility for its contents: FTSE USD IBOR Cash Fallbacks are provided by London Stock 
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Exchange Group plc (“LSEG”) and its affiliates. LSEG and its affiliates shall not be liable for any errors or 

delays in providing or making available the data contained within this service or for any actions taken in 

reliance on the same. FTSE USD IBOR Cash Fallbacks cannot be used for any commercial purpose 

(including redistribution) without a license. Please contact LSEG D&A (formerly Refinitiv) if a license is 

required. FTSE USD IBOR Cash Fallbacks are subject to LSEG’s terms of use and disclaimer available at 

https://www.lseg.com/en/ftse-russell/benchmarks/usd-ibor-cash-fallbacks. 
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1. Overview

1.1 Introduction

❖ Playbook purpose and scope

The GSEs are jointly publishing this LIBOR Transition Playbook to assist stakeholders in preparing for 

the transition from LIBOR to alternative reference rates (“ARRs”). The Playbook contains information 

applicable to the following products:

• Single-Family (“SF”) Adjustable-rate Mortgages (“ARMs”) and securities, i.e., Mortgage-backed 

Securities (“MBS”) and Participation Certificates (“PCs”)

• Multifamily (“MF”) ARMs, Floating-Rate Loans and securities (i.e., MBS, PCs, and K-Deals)

• Credit Risk Transfer (“CRT”) transactions

• Collateralized Mortgage Obligations (“CMOs”)

This playbook describes key transition milestones and recommended actions for stakeholders to 

consider as they manage the upcoming transition from LIBOR. This document serves as a tool to help 

plan and adapt business policies, procedures, and processes to support products linked to ARRs and 

prepare for discontinuing the use of LIBOR as an index. Details regarding transition timing and 

impacts will be periodically updated in this playbook as new information becomes available for 

various products.

Under the guidance of FHFA, the GSEs have been working together on several aspects of the LIBOR 

transition. Where appropriate, the GSEs have aligned policies and milestones. However, each GSE’s 

timelines and product details may differ. Readers should take note of these differences, which are 

further explained in each chapter of this document.

For more details and FAQs on each GSE’s transition, refer to LIBOR transition webpages for Fannie 

Mae and Freddie Mac, respectively.

Please direct any additional questions to your Fannie Mae or Freddie Mac account management teams.

❖ Why is there a need to transition from LIBOR?

LIBOR is the most widely used global interest rate benchmark, and it is deeply embedded in global 

financial products. The long-term viability of LIBOR has been undermined due to cases of rate 

manipulation, low volumes for underlying interbank transactions and the reluctance of panel banks 

to submit quotes used to calculate LIBOR. As a result, the Financial Conduct Authority (“FCA”), the 

British regulator of the LIBOR benchmark administrator, has warned that:

• Publication of key LIBOR indexes is not guaranteed beyond June 30, 2023

• Sustainability of LIBOR is in question due to the absence of active market support

• The cessation of LIBOR poses a financial stability risk without advancedpreparation

On March 5, 2021, the FCA released an announcement regarding the end of LIBOR, which stated the 

following:

• 1-week and 2-month USD LIBOR will cease to be published or will be deemed no longer 

representative immediately after December 31, 2021

• All other USD LIBOR tenors either will cease to be published or will be deemed no longer 

representative immediately after June 30, 2023
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• The FCA does not expect that any USD LIBOR setting will become unrepresentative before the 

relevant dates set out above

• Spread adjustments for USD LIBOR benchmark replacements for non-cash products are set as 

of March 5, 2021

To prepare for the transition from LIBOR, public sector and private market participants have 

undertaken a series of benchmark reform initiatives, including design and selection of robust ARRs 

and incorporating comprehensive fallback language into derivative and cash products.

❖ What is the ARRC?

The Alternative Reference Rates Committee (“ARRC”) is a group of private market participants 

convened by the Board and the Federal Reserve Bank of New York (“NY Fed”) to support a successful 

transition from U.S. Dollar (“USD”) LIBOR to an ARR. The ARRC recommended SOFR as a benchmark 

replacement for USD LIBOR-indexed contracts.

❖ What is SOFR and why are we using it?

SOFR is an overnight interest rate based on USD Treasury repurchase agreements (“repos”). The ARRC 

recommended SOFR because it is:

• Based on observable market transactions from a robust and well-defined market that was 

able to weather the global financial crisis

• Produced in a transparent, direct manner

• Produced by the NY Fed, in line with international benchmark standards

❖ What is the LIBOR Act?

The LIBOR Act, signed into law on March 15, 2022, serves to create a uniform process for determining 

the benchmark replacement for legacy LIBOR-indexed contracts that do not explicitly indicate a 

benchmark replacement resulting from the cessation of LIBOR. The LIBOR Act authorized the Board to 

select and adjust benchmark replacements, providing safe harbor for financial institutions, including 

the GSEs, that use the selected benchmark replacements. On December 16, 2022, the Board published 

its final rulemaking identifying Board-selected benchmark replacements based on SOFR for certain 

legacy LIBOR-indexed contracts.

❖ Key industry and regulatory milestones

On March 2, 2020, the NY Fed began daily publication of 30-, 90- and 180-day compound historical 

averages of SOFR, which are also available from third-party vendors (e.g., Bloomberg and Refinitiv). 

On March 17, 2021, the ARRC selected Refinitiv to publish its recommended spread adjustments and 

spread-adjusted SOFR rates for cash products transitioning away from USD LIBOR. 

On July 29, 2021, the ARRC formally recommended the CME Group’s forward-looking SOFR Term Rates 

for business loan activity, where adapting to an overnight rate could be more difficult.

On March 15, 2022, the LIBOR Act was signed into law. 

On July 11, 2022, the ARRC welcomed a statement from Refinitiv that it intends to publish ARRCrecommended benchmark replacements based on CME Term SOFR Rates for 1-, 3-, 6- and 12-month 

tenors.

On December 16, 2022, the Board adopted a final rule implementing the LIBOR Act and confirmed 
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benchmark replacements for certain legacy LIBOR-indexed contracts.

On January 30, 2023, Refinitiv announced its intent to publish, subject to its terms of use and 

disclaimer, the FHFA-regulated-entity contract fallback rates specified in the Board’s final rule.

1.2 LIBOR transition timelines

The GSEs have established milestones leading to the transition from LIBOR, including timelines for 

beginning acquisition and issuance of SOFR-indexed products, ceasing acquisition and issuance of 

LIBOR-indexed products, and transitioning legacy products from LIBOR to benchmark replacements.

Transition timelines are defined for major products offered by the GSEs based on timing for finalizing 

transition strategies and external market dependencies. Milestones will continue to be updated as 

necessary. For more detailed timelines, refer to the individual chapters for each product.

Figure 1-1: Key transition milestones

1.3 Replacement rate determination and spread methodology summary

The GSEs have aligned replacement rates and spread methodologies used for each legacy product 

with replacement rates and spread methodologies outlined in the Board’s final rule. Figure 1-2

illustrates the LIBOR benchmark replacement for each product as communicated in the final rule.
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Figure 1-2: Benchmark replacement rate determinations

In September 2023, Refinitiv announced that rebranding efforts include the renaming of the USD IBOR replacement indices names from "Refinitiv USD IBOR" to "FTSE 

USD IBOR as reflected in the grid above. 

* Product Type relates to categories specified in the FRB’s final regulation for the LIBOR Act and is not intended to cover all of the GSEs’ products.

Note: FRBNY 30-Day Average SOFR rates can be found on the FRB website.
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1.4 Recommended actions market participants should consider

The GSEs encourage all market participants to conduct an operational assessment and start their 

operational builds as early as possible. Key resources include, but are not limited to:

• ARRC's User's Guide to SOFR

• ARRC's vendor survey

• ARRC's Buy-Side/Asset Owner Checklist

• ARRC's Recommended Best Practices for Vendors on Completing the Transition from LIBOR

• CFPB’s Consumer Handbook on Adjustable-Rate Mortgages (CHARM)

• ARRC’s LIBOR ARM Transition Resource Guide

• ARRC’s Progress Report

• Refinitiv’s prototype benchmark replacement data

• Federal Reserve regulation implementing the Adjustable Interest Rate (LIBOR) Act

❖ Accounting and tax considerations

The transition may have an impact on the accounting treatment for existing contracts, hedge 

accounting relationships, or other transactions that reference LIBOR. The Financial Accounting 

Standards Board (“FASB”) issued a final accounting standard update to provide temporary optional 

guidance to ease the potential burden in transitioning from LIBOR. The GSEs encourage market 

participants to evaluate the accounting standards update and the accounting relief that can be 

applied for transition. See below for the issued accounting standard update and additional 

implementation information:

• FASB Project – Reference Rate Reform

The transition of legacy LIBOR-indexed transactions may result in tax implications. The GSEs 

encourage all stakeholders to review regulations issued by the Internal Revenue Service (“IRS”) and 

Treasury to identify potential impacts due to transitioning from LIBOR:

• IRS final rule

❖ Compliance considerations

The transition of legacy LIBOR-indexed transactions may involve compliance risk related to 

disclosure. Both GSEs maintain processes which provide reasonable assurance that they comply with 

disclosure laws and regulations.
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The following sections of the LIBOR Playbook will focus primarily on the conversion of legacy products 

referencing LIBOR indices to the corresponding benchmark replacement. For information regarding new 

SOFR products and additional legacy details, please refer to the appendix.
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2. SF ARMs and MBS/PCs

2.1 Introduction

On December 22, 2022, the GSEs announced their selection of CME Term SOFR plus a tenor spread 

adjustment, published by LSEG (formerly Refinitiv Limited) as an all-in replacement rate, as the 

benchmark replacement for their LIBOR-indexed SF ARMs and MBS/PCs following the cessation of 

LIBOR. This decision aligns with the Board-selected benchmark replacements for consumer loans and 

is applicable to SF ARMs and MBS/PCs for which the GSEs are responsible for selecting the benchmark 

replacement. 

The following section will help you understand:

• Key milestone dates for transitioning LIBOR-indexed SF ARMs and MBS/PCs

• Guidance on when LIBOR-indexed SF ARMs will convert to SOFR-indexed SF ARMs

• Guidance on benchmark replacements and associated spread adjustments

• High-level considerations for transitioning legacy LIBOR-indexed ARMs 

• Guidance on servicing legacy LIBOR-indexed SF ARMs

• Guidance on legacy SF MBS/PCs 

More information on the legacy transition can be found on Fannie Mae’s LIBOR Transition website and 

Freddie Mac’s Reference Rates Transition website.

2.2 Transition milestones

The GSEs defined key dates related to the transition of legacy LIBOR-indexed ARMs and MBS/PCs. 

Milestones will continue to be updated as necessary. Figure 2-1 identifies these key transition 

milestones.

Figure 2-1: Single-Family LIBOR transition milestones

*The last LIBOR Rate will be calculated by the Intercontinental Exchange (ICE)on June 30th 2023, which will be published in The Wall Street 

Journal on July 3rd 2023.

2.3 Replacement rate determination and spread methodology

❖ Benchmark replacement determination

The LIBOR Act required the Board to publish regulations identifying a Board-selected benchmark 
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replacement based on SOFR. On December 16, 2022, the Board published its final rulemaking 

confirming the LIBOR benchmark replacements. For consumer products, the 1-, 3-, 6-, and 12-month 

LIBOR indices will fall back, respectively, to 1-, 3-, 6-, or 12-month CME Term SOFR with the applicable 

tenor spread adjustment, published by LSEG (formerly Refinitiv Limited) as an all-in replacement rate,

as defined in the LIBOR Act.

❖ SOFR spread adjustment methodology

Under the LIBOR Act, there will be a one-year phase-in period for consumer products in which the 

transition tenor spread adjustments defined in the LIBOR Act will be incorporated into the 

replacement rate. The spread adjustment immediately following the cessation of LIBOR will be the 

difference between the last published LIBOR rate and the corresponding SOFR replacement (“initial 

spread adjustment”). For every business day following the cessation of LIBOR, the initial spread 

adjustment will linearly converge to the corresponding transition tenor spread adjustments defined in 

the LIBOR Act. Figure 2-2 depicts the LIBOR benchmark replacements and spread adjustment 

methodology for consumer products as defined by the LIBOR Act.

For updates on regulatory and industry efforts to advance the legacy transition, refer to the Board's 

final rulemaking and ARRC’s website.

Figure 2-2: Benchmark replacement guidance for SF LIBOR ARMs and MBS/PCs

2.4 Preparation for the legacy transition

❖ Converting LIBOR ARMs to SOFR ARMs

The transition date of each legacy LIBOR-indexed ARM will depend on the characteristics of the ARM, 

such as the next interest rate reset date and its related interest rate at the start of the lookback period. 

Board 

Final Rule 

Category

Current 

LIBOR 

Index

Spread-adjusted 

SOFR Replacement 

Index

RIC All-In Replacement Rate Calculation

Consumer 

Loans

1 Month

LIBOR

FTSE USD IBOR 

Consumer Cash 

Fallback 1-Month

USDCFCFCTSA1M=

1M CME Term SOFR + Transition Tenor 

Spread Adjustment during the first year; 

1M CME Term SOFR + Fixed Tenor Spread 

Adjustment (0.11448 percent) after first year

6 Month

LIBOR

FTSE USD IBOR 

Consumer Cash 

Fallback 6-Month

USDCFCFCTSA6M=

6M CME Term SOFR + Transition Tenor Spread 

Adjustment during the first year; 

6M CME Term SOFR + Fixed Tenor Spread 

Adjustment (0.42826 percent) after first year

1 Year

LIBOR

FTSE USD IBOR 

Consumer Cash 

Fallback 12-Month

USDCFCFCTSA1Y=

1Y CME Term SOFR + Transition Tenor Spread 

Adjustment during the first year; 

1Y CME Term SOFR + Fixed Tenor Spread 

Adjustment (0.71513 percent) after first year
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The scenarios included below provide the expected payments and interest rate reset mechanics for 

LIBOR-indexed ARMs with different characteristics. The scenarios are not intended to be exhaustive 

but are intended to provide the reader with representative examples, such that they are able to 

anticipate changes to ARMs which do conform to the examples included below. The examples should 

be used as a guide to help readers understand when the interest rate and payment calculations of 

LIBOR-indexed ARMs switch to the corresponding benchmark replacements for the first time. 

For all Fannie Mae and Freddie Mac owned loans indexed to LIBOR with interest rate adjustments 

based on a lookback date that occurs after July 3, 2023, servicers must use the applicable, “all-in”, 

“no floor” FTSE USD IBOR Cash Fallback, as published by LSEG (formerly Refinitiv Limited)v. LSEG will 

be posting replacement indices on their consumer-facing website on a one-day delay, the same 

way The Wall Street Journal published LIBOR indices. Servicers servicing LIBOR-indexed ARM Notes 

must use the same lookback date and the most recent index value posted by LSEG, consistent with 

the LIBOR Index selection today.

❖ Scenario A: LIBOR-indexed ARM, with annual interest rate reset frequency, re-setting on 

August 1, 2023 and a 45-day loan interest rate lookback period

• Loan A is a 10-year seasoned ARM loan indexed to LIBOR, with an annual interest rate reset 

frequency and next interest rate reset date on August 1, 2023. Loan A has a 45-day loan 

interest rate lookback period.

• Since LIBOR is still available 45 days prior to the ARM’s interest rate reset date (i.e., June 17, 

2023), the interest rate calculations (and the related payment calculation) will use the 

applicable LIBOR index in effect on June 17, 2023.

• The respective benchmark replacement will be used on the subsequent annual interest rate 

reset date on August 1, 2024 and each reset date thereafter to calculate the interest rate and 

related payments.

Figure 2-3: Scenario A
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❖ Scenario B: LIBOR-indexed ARM, with annual interest rate reset frequency, re-setting on 

August 1, 2023 and a 1

st Business Day of the preceding month loan interest rate lookback 

period

• Loan B is a 10-year seasoned ARM loan indexed to LIBOR, with an annual interest rate reset 

frequency and next interest rate reset date on August 1, 2023. Loan A has a 1

st Business Day of 

the preceding month loan interest rate lookback period.

• The interest rate calculations (and the related payment calculation) are based on the 

applicable index value posted on July 3, 2023. Given the one-day delay in index publications, 

the applicable index will be the LIBOR index posted in The Wall Street Journal on July 3, 2023, 

which will be the LIBOR index value effective June 30, 2023.

• The respective FTSE USD IBOR Consumer Cash Fallback will be used on the subsequent 

annual interest rate reset date on August 1, 2024 and each reset date thereafter to calculate 

the interest rate and related payments.

❖ Scenario C: LIBOR-indexed ARM, with annual interest rate reset frequency, re-setting on 

September 1, 2023 and a 45-day loan interest rate lookback period

• Loan C is a 10-year seasoned ARM loan indexed to LIBOR, with an annual interest rate reset 

frequency and next interest rate reset date on September 1, 2023. Loan A has a 45-day loan 

interest rate lookback period.

• Since LIBOR is no longer published after the end of June 2023 and is not available 45 days 

prior to the ARM’s interest rate reset date (i.e., July 18, 2023), the respective FTSE USD IBOR 

Consumer Cash Fallback will be used to calculate the new interest rate and the related new 

payment.

• Be sure to use the applicable FTSE USD IBOR Consumer Cash Fallback posted on Refinitiv’s 

consumer-facing website on July 18, which is the value effective July 17.
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Figure 2-4: Scenario C

2.5 Servicing legacy LIBOR-indexed SF ARMs

SF ARMs indexed to LIBOR will transition to the benchmark replacements, requiring borrower 

communications and updated interest rate calculations. 

❖ Non-standard notes

If servicers identify any additional LIBOR ARM non-standard notes in their respective GSE servicing 

books, they are expected to contact the applicable GSE as soon as possible to discern if any specific 

accommodations are necessary. Servicers have been encouraged to initially focus their reviews on 

older vintages of loans, loans originated by Sellers no longer in business, and any loans originated 

under policies and procedures that are known to not require use of Fannie Mae/Freddie Mac uniform 

instruments. Identified non-standard loans may require a change to mortgage margin or designation 

to a specific benchmark replacement once LIBOR is no longer in effect. Fannie Mae and Freddie Mac

will work with each servicer individually to determine how to best manage through the transition 

away from LIBOR on any non-standard notes. 

❖ SOFR ARM index source

Refinitiv Limited has been selected as the publishing vendor for the Board-selected spread-adjusted 

term SOFR reference rates. 

Figures 2-5 and 2-6 show the changes in the description of SF ARM indices for Fannie Mae and Freddie 

Mac servicing, respectively.

Figure 2-5: Updated servicing index descriptions for active Fannie Mae SF ARM indices

Active ARM 

indices Pre-cessation index descriptions Post-cessation index descriptions 

45 6 MONTH WALL STREET JOURNAL LIBOR 

RATE

FTSE USD IBOR Consumer Cash Fallback 

6-Month 

51 6 MONTH WALL STREET JOURNAL LIBOR 

RATE – MONTHLY AVG

FTSE USD IBOR Consumer Cash Fallback 

6-Month 

58 6 MONTH WALL STREET JOURNAL LIBOR 

RATE - DAILY

FTSE USD IBOR Consumer Cash Fallback 

6-Month 
19

Active ARM 

indices Pre-cessation index descriptions Post-cessation index descriptions 

62 1 MONTH WALL STREET JOURNAL LIBOR

- DAILY

FTSE USD IBOR Consumer Cash Fallback 

1-Month 

75 1 YEAR WALL STREET JOURNAL LIBOR –

DAILY

FTSE USD IBOR Consumer Cash Fallback 

12-Month 

89 1 YR WSJ LIBOR-MONTHLY ON 1ST BUS. 

DAY

FTSE USD IBOR Consumer Cash Fallback 

12-Month 

Figure 2-6: Updated servicing index descriptions for active Freddie Mac SF ARM indices

Active ARM 

indices Pre-cessation index descriptions Post-cessation index descriptions 

007 LIBOR 6MO LIBOR Rep 6M

011 LIBOR CO 6MO LIBOR Rep 6M

017 FRBNY JCD 6M* LIBOR Rep 6M

036 LIBOR 1MO LIBOR Rep 1M

038 SLIBOR 6MO LIBOR Rep 6M

039 SM CD 6MW* LIBOR Rep 6M

041 LIBOR 1YR LIBOR Rep 1Y

*Previously transitioned to 6-Month LIBOR

❖ Actions to consider 

Servicers will need to incorporate the benchmark replacements into calculations and reconciliations 

for borrower payments. The calculations will need to be updated on an individual loan basis based on 

the terms of the ARM, which include:

• Payment adjustment frequency

• Rate adjustment frequency

• Loan payment lookback period

• Loan rate lookback period

• Initial/next payment reset date

• Initial/next interest rate reset date
20

Figure 2-7: Actions to consider when servicing SF ARMs

Focus areas Actions to consider

Borrower 

communications

▪ Provide timely notice of the change in the index to borrowers consistent 

with loan documents, applicable law and regulations, including those 

governing payment change notices under Regulation Z 

▪ Retain a copy of the notice in the servicing file

▪ Send a copy of the borrower notice to the document custodian with an 

instruction to maintain the copy with the original LIBOR-indexed note. At 

least one such notice, must, at a minimum be sent on or after July 1, 2023, 

and prior to the loan’s impacted interest-rate change date

▪ Supplementary notices may be sent prior to July 1, 2023. Servicers may 

consider using, and amending as necessary, the MBA Borrower 

Communication Template for Existing LIBOR ARMs (Notice) and MBA 

Borrower Communication Template for Existing LIBOR ARMs (Letter)

Legal documentation 

▪ Provide a copy of the note to the appropriate GSE if there are any variations 

to the Uniform ARM note’s replacement language that was used just prior to 

recent revisions and request instructions on how to proceed 

Use of a new index in 

rate and payment 

calculations

▪ Update and test systems, reporting and other processes or activities related 

to interest rate adjustment calculations to incorporate the benchmark 

replacements' product parameters 

▪ Adjust interest accrual calculations for changes in the underlying index

Transfer of servicing

▪ Ensure that servicing transferees have the capability to service loans 

indexed to the benchmark replacements

2.6 Administering legacy LIBOR-indexed SF MBS/PCs

The LIBOR transition impacts MBS/PCs consisting of pools of LIBOR-indexed ARMs. Unless terminated 

at or prior to the time of the LIBOR transition, those outstanding MBS/PCs will also transition to the 

respective CME Term SOFR index and spread adjustment, published by LSEG (formerly Refinitiv 

Limited) as an all-in replacement rate.

❖ Actions to consider 

Investors and vendors will need to maintain awareness of index and calculation changes. For Fannie 

Mae, SF MBS subtypes and index codes will not change; however, index descriptions associated with 

subtypes and index codes will be updated in Fannie Mae applications and disclosure reporting. Refer 

to Figure 2-8 for Fannie Mae index description changes. For Freddie Mac, prefixes and index codes will 

not change; however, index descriptions associated with prefixes and index codes will be updated to 

reflect the transition to the replacement indices. Refer to Figure 2-9 for Freddie Mac index description 

changes.
21

Figure 2-8: Updated Fannie Mae SF MBS/PC index descriptions for disclosure 

Disclosure 

Index Code

Fannie Mae Existing 

Description

Updated Description

35 1-Month Wall Street 

Journal LIBOR Rate (Daily)

FTSE USD IBOR Consumer Cash Fallback 1-Month

42 6-Month Wall Street 

Journal LIBOR Rate

FTSE USD IBOR Consumer Cash Fallback 6-Month

43 6-Month Wall Street 

Journal LIBOR Rate (Daily)

FTSE USD IBOR Consumer Cash Fallback 6-Month

44 6-Month Wall Street 

Journal LIBOR Rate

(Monthly AVG)

FTSE USD IBOR Consumer Cash Fallback 6-Month

37 1-Year Wall Street Journal 

LIBOR Rate (Monthly)

FTSE USD IBOR Consumer Cash Fallback 12-Month

38 1-Year Wall Street Journal 

LIBOR Rate (Daily)

FTSE USD IBOR Consumer Cash Fallback 2-Month

Figure 2-9: Updated Freddie Mac SF MBS/PC index descriptions for disclosure 

Disclosure 

Index Code

Freddie Mac Existing 

Description

Updated Description

36 LIBOR_1MO_WSJ FTSE USD IBOR Consumer Cash Fallback 1-Month

38 LIBOR_1YR_WSJ_DLY FTSE USD IBOR Consumer Cash Fallback 12-Month

42 LIBOR_6MO_WSJ FTSE USD IBOR Consumer Cash Fallback 6-Month

43 LIBOR_6MO_WSJ_DLY FTSE USD IBOR Consumer Cash Fallback 6-Month

44 LIBOR_6MO_WSJ_MNTH_A

VG

FTSE USD IBOR Consumer Cash Fallback 6-Month

02 CD_6MO_SEC_MRKT_MNT

H_AVG*

FTSE USD IBOR Consumer Cash Fallback 6-Month

*Previously transitioned to 6-Month LIBOR

Figure 2-10: Actions to consider when administering SF MBS/PCs

Focus Areas Actions to consider

Investor awareness ▪ Maintain awareness of the updates to impacted pools 

Use of a new index in 

rate and payment 

calculations

▪ Update and test systems, reporting and other processes or activities related 

to interest rate adjustment calculations to incorporate the benchmark 

replacements’ product parameters
22

3. Multifamily ARMs (Fannie Mae), Floating-Rate Loans (Freddie 

Mac), and Securities

3.1 Introduction

On December 22, 2022, the GSEs announced their selection of 30-day compounded Average SOFR

(“30-day Average SOFR”) plus a fixed tenor spread adjustment as the benchmark replacement for their 

LIBOR-indexed MF ARMs, Floating-Rate Loans and securities following the cessation of LIBOR. This 

decision aligns with the Board-selected benchmark replacements for cash transactions that are FHFAregulated-entity contracts and is applicable to MF ARMs/Floating-Rate Loans and MBS/PCs/K-Deals for 

which the GSEs are responsible for selecting the benchmark replacement. The following section will 

help you understand:

• Key milestone dates for transitioning LIBOR-indexed MF ARMs, Floating-Rate Loans, and 

securities

• Guidance on when LIBOR-indexed MF ARMs and Floating-Rate Loans will convert to SOFRindexed MF ARMs and Floating-Rate Loans

• Guidance on benchmark replacements and associated spread adjustments

• High-level considerations for transitioning legacy LIBOR-indexed ARMs and Floating-Rate 

Loans

• Guidance on servicing legacy LIBOR-indexed MF ARMs and Floating-Rate Loans

• Guidance on legacy securities

More information on the legacy transition can be found on Fannie Mae’s LIBOR Transition website and 

Freddie Mac’s Reference Rates Transition website.

3.2 Transition milestones

The GSEs defined key dates related to the transition of legacy LIBOR-indexed MF ARMs, Floating-Rate 

Loans and securities. Milestones will continue to be updated as necessary. Figure 3-1 identifies these key 

transition milestones. Unlike Single-Family, Multifamily cessation does not include a 12-month

transitional period.

Figure 3-1: Multifamily LIBOR transition milestone
23

3.3 Replacement rate determination and spread methodology

❖ Benchmark replacement determination

The LIBOR Act required the Board to publish regulations identifying a Board-selected benchmark 

replacement based on SOFR. On December 16, 2022, the Board published its final rulemaking 

confirming the LIBOR benchmark replacements. MF ARMs/Floating-Rate Loans and MBS/PCs/K-Deals

will fall back to 30-day Average SOFR with a fixed tenor spread adjustment as defined in the LIBOR Act.

❖ SOFR replacement index and spread adjustment methodology

Under the LIBOR Act, a pre-determined fixed tenor spread adjustment will be added to NY Fed-published 

30-day Average SOFR following the cessation of LIBOR to determine replacement rates. The following 

fixed tenor spread adjustments were affirmed by the Board’s final rulemaking and will not change:

• 1-month LIBOR replacement – 0.11448%

• 3-month spread adjustment – 0.26161%

• 6-month LIBOR replacement – 0.42826%

• 12-month LIBOR replacement – 0.71513%

These tenor spread adjustments align with the ISDA fallback spread adjustments that were set on 

March 5, 2021. 

Figure 3-2 depicts the LIBOR benchmark replacements and spread adjustment methodology for MF 

ARMs/Floating-Rate Loans and MBS/PCs/K-Deals.

Figure 3-2: Benchmark replacement guidance for MF LIBOR ARMs/Floating-Rate Loans and 

MBS/PCs/K-Deals

Board Final 

Rule 

Category

Current LIBOR 

Index

Spread-adjusted SOFR 

Replacement Index All-In Replacement Rate Calculation

FHFARegulatedEntity 

Contract

1M LIBOR 30-Day Average SOFR + 1-

Month Spread Adjustment 30-Day Average SOFR + 0.11448 (percent)

6M LIBOR 30-Day Average SOFR + 6-

Month Spread Adjustment 30-Day Average SOFR + 0.42826 (percent)

1Y LIBOR 30-Day Average SOFR + 12-

Month Spread Adjustment 30-Day Average SOFR + 0.71513 (percent)
24

It should be noted that 30-day Average SOFR will be the only SOFR average used as part of the GSE 

contract replacements for the 1-, 3-, 6- and 12-month tenors of LIBOR. The GSEs will not use the 90-

and 180-day averages published by the NY Fed for these purposes.

It should also be noted that the fixed tenor spread adjustment applied to 30-day Average SOFR will

match the tenor of the original LIBOR index. There will not be additional adjustment factors 

accounting for changes in tenor between the original LIBOR rate and the replacement index. For 

example, when a security originally indexed to 6-month LIBOR transitions to SOFR, it will convert from 

6-month LIBOR to 30-day Average SOFR plus the fixed tenor spread adjustment for 6-month LIBOR 

(0.42826%), with no further adjustments incorporated. Similarly, a security originally indexed to 12-

month LIBOR will transition to 30-day Average SOFR plus the fixed tenor spread adjustment for 12-

month LIBOR (0.71513%).

For updates on regulatory and industry efforts to advance the legacy transition, refer to the Board's 

final rulemaking and ARRC’s website.

❖ SOFR Interest Rate Calculations and Timelines

As mentioned above, the SOFR-based rate replacing LIBOR on legacy Multifamily LIBOR-based loans 

and securities consists of 30-day Average SOFR plus the applicable fixed tenor spread adjustment. The 

LIBOR replacement rates for loans and securities can be calculated by pulling the 30-Day Average 

SOFR rate as of the loan or security’s Determination Date from the NY Fed’s website and adding the 

applicable fixed tenor spread adjustment. The 30-Day Average SOFR rate that appears as of 3:00 p.m.

ET should be used for calculations. Please refer to the loan documents for the applicable loan for the 

margin and any instructions regarding rounding. 

The SOFR Determination Date for Multifamily loans and securities is determined by the applicable 

reset date and lookback period. Refer to your loan or securities documents for more information. The 

conventions are generally unchanged from the current LIBOR and SOFR interest accrual practices, as 

shown in the illustrations below.

Figure 3-3: Fannie Mae SARM post-LIBOR Transition loan and bond interest accrual timeline

Jun 30, 2023

Last 1-month term 

LIBOR rate published

Rate reset 

date

1-day lookback will refer to 

1-month term LIBOR

1-month term LIBOR will not 

be available on August 1, 

2023

1-day loan rate lookback period

Jun 30 Jul 3

1 Jul 31 Aug 1

2023

Transition to SOFR 

30-day Average + Tenor 

Spread Adjustment

1-day loan rate lookback period

1Jul 3 (Monday) is the first business day occurring after Jun 30
25

Figure 3-4: Fannie Mae ARM 7-6TM post-LIBOR Transition loan and bond interest accrual timeline

Figure 3-5: Fannie Mae Hybrid ARM post-LIBOR Transition loan and bond interest accrual timeline

Figure 3-6: Freddie Mac MBS/PCs/K-Deals post-LIBOR Transition loan and bond interest accrual 

timeline*

*This timeline is specific to the substantial majority of legacy LIBOR-indexed K, Q, SB, and ML securities; Multi PCs®; and the 

loans collateralizing them.

3.4 Servicing legacy LIBOR-indexed MF ARMs and Floating-Rate Loans

MF ARMs and Floating-Rate Loans indexed to LIBOR will transition to the benchmark replacement, 

requiring borrower communications and updated payment calculations. 

❖ Non-standard notes

If servicers identify any additional LIBOR ARM or LIBOR Floating-Rate Loan non-standard notes in their 

respective GSE servicing books, they are expected to contact the applicable GSE as soon as possible to 

discern if any specific accommodations are necessary. Servicers have been encouraged to initially 

Jun 30, 2023

Last 12-month term 

LIBOR rate published

Rate reset 

date

15-day lookback will refer 

to 1-month term LIBOR 1-month term LIBOR will not 

be available on August 1, 

2023

15-day loan rate lookback period

Jun 16 Jul 3

2 Jul 17 Aug 1

2023

Transition to SOFR 

30-day Average + 

Tenor Spread 

Adjustment

1Similar timing for the ARM 7-4 product; 2Jul 3 (Monday) is the first business day occurring after Jun 30

15-day loan rate lookback period
26

focus their reviews on older vintages of loans, loans originated by Sellers no longer in business, and 

any loans originated under policies and procedures that are known to not require use of Fannie 

Mae/Freddie Mac uniform instruments. Identified non-standard loans may require a change to 

mortgage margin or designation to a specific benchmark replacement once LIBOR is no longer in 

effect.

❖ SOFR ARM index source

Figure 3-7 shows the changes in the description of MF ARM indices for Fannie Mae servicing and Figure 

3.8 shows the changes in the description for Freddie Mac Floating-Rate Loan indices.

Figure 3-7: Updated index descriptions for active Fannie Mae MF ARM indices

Pre-cessation index descriptions Post-cessation index descriptions 

1 MONTH BRITISH BANKERS LIBOR - DAILY 

30-Day Average SOFR + 1-Month Spread 

Adjustment

6 MONTH WALL STREET JOURNAL LIBOR RATE

30-Day Average SOFR + 6-Month Spread 

Adjustment

6 MONTH WALL STREET JOURNAL LIBOR

30-Day Average SOFR + 6-Month Spread 

Adjustment

6 MONTH BRITISH BANKERS LIBOR – DAILY

30-Day Average SOFR + 6-Month Spread 

Adjustment

Figure 3-8: Updated index descriptions for active Freddie Mac MF Floating-Rate Loan indices

Pre-cessation index descriptions Post-cessation index descriptions 

Intercontinental Exchange (ICE) Rate for the 1 

Month London Interbank Offered Rate for US 

Dollars

30-Day Average SOFR + 1-Month Spread 

Adjustment

Intercontinental Exchange (ICE) Rate for the 6

Month London Interbank Offered Rate for US 

Dollars

30-Day Average SOFR + 6-Month Spread 

Adjustment

12 Month LIBOR as published by the Wall Street 

Journal

30-Day Average SOFR + 12-Month Spread 

Adjustment

❖ Actions to consider

Servicers will need to incorporate the benchmark replacements into calculations and reconciliations 

for borrower payments. The calculations will need to be updated on an individual loan basis based on 

the terms of the ARM which include:

• Payment adjustment frequency

• Rate adjustment frequency

• Loan payment lookback period

• Loan rate lookback period

• Initial/next payment reset date

• Initial/next interest rate reset date
27

Figure 3-9: Actions to consider when servicing MF ARMs and Floating-Rate Loans

Focus areas Actions to consider

Borrower 

communications

▪ Provide timely notice of the change in the index to borrowers consistent 

with loan documents, applicable law and regulations, including those 

governing payment change notices

▪ Retain a copy of the notice in the servicing file

Legal documentation 

▪ Provide a copy of the note to the appropriate GSE if there are any variations 

to the ARM/Floating-Rate Loan note’s replacement language that was used 

just prior to recent revisions and request instructions on how to proceed 

Use of a new index in 

rate and payment 

calculations

▪ Update and test systems, reporting and other processes or activities related 

to interest rate adjustment calculations to incorporate the replacement 

index's product parameters 

▪ Adjust interest accrual calculations for changes in the underlying index

Transfer of servicing ▪ Ensure that servicing transferees have the capability to service loans 

indexed to the benchmark replacement

Interest rate 

calculation and 

rounding

▪ The interest rate calculation method set forth in the related Multifamily 

Note must be followed. In most cases, the Multifamily Notes provide that 

the variable interest rate calculated for each interest period is equal to the 

Index Rate for such interest period plus the Margin. The Index Rate for a 

legacy LIBOR loan is equal to the sum of the applicable LIBOR replacement 

index (the 30-day Average SOFR rate) plus the applicable spread 

adjustment. Any rounding convention to be applied should be determined 

pursuant to the terms of the Multifamily Note or otherwise be consistent 

with Freddie Mac servicing practices.

❖ Existing third-party caps

Consult your interest rate cap agreements for specific language on the transition to a new index (e.g., 

SOFR). Fannie Mae and Freddie Mac expect that each interest rate cap provider will select a 

benchmark replacement. The borrower’s obligation to purchase replacement interest rate caps as 

required by the loan documents for existing LIBOR-indexed ARMs and Floating-Rate Loans is 

unaffected.

For updates on industry efforts to advance the legacy transition, refer to the ARRC website. Additional 

details will be released as the timeline is finalized.

3.5 Administering Legacy LIBOR-indexed MBS/PCs/K-Deals

The LIBOR transition impacts MBS/PCs/K-Deals consisting of pools of LIBOR-indexed ARMs and LIBORindexed Floating-Rate Loans. Unless terminated at or prior to the time of the LIBOR transition, those 

outstanding MBS/PCs/K-Deals will also transition to 30-day Average SOFR with a fixed tenor spread 
28

adjustment as defined in the LIBOR Act.

It is important to note that the applicable LIBOR index is all that is changing. Upon LIBOR cessation, 

the applicable LIBOR index will transition to the applicable spread-adjusted 30-day Average SOFR

replacement index. Securities mechanics will not change from those currently in practice on 

outstanding Multifamily LIBOR-based securities, and bond payments will continue to be made on the 

25th day of the month or the succeeding business day.

Please also note that Fannie Mae and Freddie Mac Multifamily will refrain from taking any steps that 

would result in the conversion of any existing SOFR-indexed ARMs and securities from 30-Day Average 

SOFR to Term SOFR based on any provision that calls for such conversion when operationally, 

administratively, and technically feasible.

❖ Determining Person

The fallback language in all legacy Freddie Mac and Fannie Mae LIBOR-based securities documents 

identifies a Determining Person who is responsible for deciding what the replacement index will be. 

The Determining Person may be Fannie Mae or Freddie Mac (or Freddie Mac’s trustee or certificate 

administrator with Freddie Mac’s consent). In all cases where Fannie Mae or Freddie Mac is the 

Determining Person or Freddie Mac has consent rights, LIBOR will transition to the applicable spreadadjusted 30-day Average SOFR. In all cases where the Trustee/Certificate Administrator is the 

Determining Person, we expect the applicable Trustee/Certificate Administrator to select the 

applicable spread-adjusted 30-day Average SOFR index as the replacement index consistent with the 

Board’s final rulemaking.

❖ Actions to consider 

Investors and vendors will need to maintain awareness of index and calculation changes. MF MBS 

subtypes and index codes will not change, however, index descriptions associated with subtypes and 

index codes will be updated in Fannie Mae and Freddie Mac applications and disclosure reporting. 

Figure 3-10: Actions to consider when administering MF MBS/PCs

Focus areas Actions to consider

Investor awareness ▪ Maintain awareness of the updates to impacted pools 

Use of a new index in 

rate and payment 

calculations

▪ Update and test systems, reporting and other processes or activities related 

to interest rate adjustment calculations to incorporate the benchmark 

replacements’ product parameters

❖ Additional Considerations for Freddie Mac MBS/PCs/K-Deals

The following dates are the critical transition dates for Freddie Mac MBS/PCs/K-Deals*:

• June 30: The last day LIBOR will be published and the final index Determination Date where 

LIBOR will be used for legacy LIBOR loans and securities
29

• July 31: First index Determination Date where SOFR will be used for legacy LIBOR loans and 

securities 

• September 1: First loan payment date with interest accrual indexed to SOFR

• September 25: First securities Distribution Date with interest accrual indexed to SOFR

*These dates are specific to the substantial majority of legacy LIBOR-indexed K, Q, SB, and ML securities; Multi PCs®; and the loans 

collateralizing them.

Freddie Mac Multifamily securities will all transition to a spread-adjusted 30-Day Average SOFR rate.

For additional nuances to consider, please refer to section 12.7 of the appendix.
30

4. CRT Transactions

4.1 Introduction

On December 22, 2022, the GSEs announced their selection of 30-day Average SOFR plus a fixed tenor

spread adjustment as the benchmark replacement for their LIBOR-indexed CRTs following the 

cessation of LIBOR. This decision aligns with the Board-selected benchmark replacements for cash 

transactions that are FHFA-regulated-entity contracts and is applicable to CRTs for which the GSEs are 

responsible for selecting the benchmark replacement. 

Certain CRT deals issued following March 2020 may include contractual language indicating a 

benchmark replacement of Term SOFR. Please note that Fannie Mae and Freddie Mac will refrain from 

taking any steps that would result in the conversion of any existing SOFR-indexed CRTs from 30-Day 

Average SOFR to term SOFR based on any provision that calls for such conversion when operationally, 

administratively, and technically feasible.

Legacy transition considerations are not applicable to Freddie Mac MF CRTs due to their fixed rate 

nature. Freddie Mac MF does not plan to issue any LIBOR-indexed CRT deals in the future.

The following section will help you understand:

• Key milestone dates for transitioning LIBOR-indexed CRTs

• Guidance on benchmark replacements and associated spread adjustments

• High-level considerations for transitioning legacy LIBOR-indexed CRTs 

• Guidance on legacy LIBOR-indexed CRTs

For more information on legacy transition can be found on Fannie Mae’s LIBOR Transition website.

4.2 Transition milestones

The GSEs defined key dates related to the transition of legacy LIBOR-indexed CRTs. Milestones will 

continue to be updated as necessary. Figure 4-1 identifies key transition milestones for CRTs.

Figure 4-1: CRT transition timeline

4.3 Replacement rate determination and spread methodology

❖ Benchmark replacement determination

The LIBOR Act required the Board to publish regulations identifying a Board-selected benchmark 

replacement based on SOFR. On December 16, 2022, the Board published its final rulemaking 

confirming the LIBOR benchmark replacements. Based on this, the GSEs will transition from 1-month 
31

LIBOR to the 30-day Average SOFR rate published by the NY Fed, plus an applicable tenor spread 

adjustment (0.11448% for one-month tenor). 30-day Average SOFR for an Index Determination Date 

will be the applicable compounded average of SOFR for 30 days published for such Index 

Determination Date as such rate appears on the NY Fed's Website at 3:00 p.m. ET.

The first date on which spread-adjusted 30-day Average SOFR rate will be used as the replacement 

index for LIBOR-indexed CRT transactions will be July 21, 2023. The replacement index will be used for 

calculating accrued interest during the July 25 – August 24, 2023 Accrual Period, and the payments 

will be made to bondholders on the August 25, 2023 Payment Date.

❖ SOFR spread adjustment methodology

Under the LIBOR Act, a pre-determined fixed tenor spread adjustment will be applied to the 

benchmark replacement immediately following the cessation of LIBOR. The spread adjustment will be 

0.11448% for the 1-month tenor, meaning the spread adjustment will be fixed at 0.11448% for legacy 

CRT transactions after June 30, 2023. Figure 4-2 depicts the LIBOR benchmark replacements and 

spread adjustment methodology for SF and MF CRTs (for Fannie Mae) as defined by the LIBOR Act.

For updates on regulatory and industry efforts to advance the legacy transition, refer to the Board's 

final rulemaking and ARRC’s website.

Figure 4-2: Benchmark replacement guidance for CRTs

Board Final 

Rule Category

Current 

LIBOR Index

Spread-adjusted SOFR Replacement 

Index All-In Replacement Rate Calculation

FHFARegulatedEntity Contract

1M LIBOR 30-Day Average SOFR + 1-Month Spread 

Adjustment 30-Day Average SOFR + 0.11448 (percent)

4.4 Administering legacy LIBOR-indexed CRTs

❖ Actions to consider

Investors and vendors will need to maintain awareness of potential impacts of the LIBOR transition 

including index and calculation changes. The GSEs will transition from 1-month LIBOR to the 30-day 

Average SOFR rate published by the NY Fed, plus an applicable tenor spread adjustment (0.11448% for 

one month-tenor) as defined in the LIBOR Act.

Figure 4-3: Actions to consider when administering CRTs

Focus areas Actions to consider

Investor awareness ▪ Maintain awareness of the updates to impacted CRTs 

Use of a new index in 

rate and payment 

calculations

▪ Update and test systems, reporting and other processes or activities related 

to interest rate adjustment calculations to incorporate the benchmark 

replacement’s product parameters
32

5. CMOs

5.1 Introduction

On December 22, 2022, the GSEs announced their selection of 30-day Average SOFR plus a fixed tenor 

spread adjustment as the benchmark replacement for their LIBOR-indexed CMOs following the 

cessation of LIBOR. This decision aligns with the Board-selected benchmark replacement for cash 

transactions that are FHFA-regulated-entity contracts and is applicable to CMOs for which the GSEs 

are responsible for selecting the benchmark replacement.

Certain CMOs issued following July 2020 may include contractual language indicating a benchmark 

replacement of Term SOFR. Please note that Fannie Mae and Freddie Mac will refrain from taking any 

steps that would result in the conversion of any existing SOFR-indexed CMOs from 30-Day Average 

SOFR to term SOFR based on any provision that calls for such conversion when operationally, 

administratively, and technically feasible.

The following section will help you understand:

• Key milestone dates for transitioning LIBOR-indexed CMOs

• Guidance on benchmark replacements and associated spread adjustments

• High-level considerations for transitioning legacy LIBOR-indexed CMOs

• Guidance on legacy LIBOR-indexed CMOs 

More information on the legacy transition can be found on Fannie Mae’s LIBOR Transition website and 

Freddie Mac’s Reference Rates Transition website.

5.2 Transition milestones

The GSEs defined key dates related to the transition of legacy LIBOR-indexed CMOs. Milestones will 

continue to be updated as necessary. Figure 5-1 identifies key transition milestones for CMOs.

Figure 5-1: CMO transition timeline

5.3 Replacement rate determination and spread methodology

❖ Benchmark replacement determination

The LIBOR Act required the Board to publish regulations identifying a Board-selected benchmark 

replacement based on SOFR. On December 16, 2022, the Board published its final rulemaking 

confirming the LIBOR replacement. Based on this, the GSEs will transition from 1-month LIBOR to the 

30-day Average SOFR rate published by the NY Fed, plus an applicable tenor spread adjustment
33

(0.11448% for one month-tenor). 30-Day Average SOFR is published daily on the NY Fed’s website, 

and the all-in replacement rate can be calculated by pulling the applicable 30-Day Average SOFR rate 

and adding the 0.11448% tenor spread adjustment. The 30-Day Average SOFR rate that is available as 

of 3:00 p.m. ET should be used for calculations. 

The first date on which spread-adjusted 30-day Average SOFR rate will be used as the replacement 

index for Fannie Mae legacy CMO transactions will be July 21, 2023. The replacement index will be 

used for calculating accrued interest during July 25 – August 24, 2023 Accrual Period, and the 

payments will be made to bondholders on the August 25, 2023 Payment Date.

The first date on which spread-adjusted 30-day Average SOFR rate will be used as the replacement 

index for Freddie Mac CMO transactions will be July 13, 2023. The replacement index will be used for 

calculating accrued interest during the July 15 – August 14, 2023 Accrual Period, and the payments 

will be made to bondholders on the August 15, 2023 Payment Dat.

SOFR spread adjustment methodology

Under the LIBOR Act, a pre-determined fixed tenor spread adjustment will be applied to the 

benchmark replacement immediately following the cessation of LIBOR. Figure 5-2 depicts the LIBOR 

benchmark replacements and spread adjustment methodology for SF and MF CMOs as defined by the 

LIBOR Act.

For updates on regulatory and industry efforts to advance the legacy transition, refer to the Board's 

final rulemaking and ARRC’s website.

Figure 5-2: Benchmark replacement guidance for CMOs

Board Final 

Rule 

Category

Current 

LIBOR Index

Spread-adjusted SOFR 

Replacement Index

All-In Replacement Rate 

Calculation

FHFARegulatedEntity 

Contract

1M LIBOR 30-Day Average SOFR + 1-Month

Spread Adjustment

30-Day Average SOFR + 0.11448 

(percent)

5.4 Administering legacy LIBOR-indexed CMOs

❖ Actions to consider

Investors and vendors will need to maintain awareness of potential impacts of the LIBOR transition 

including index and calculation changes. The GSEs will transition from 1-month LIBOR to the 30-day 

Average SOFR rate published by the NY Fed, plus an applicable tenor spread adjustment (0.11448% for 

one month-tenor).

Fannie Mae has a few Collateralized Mortgage Obligations (CMOs) with interest rate caps or swaps that 

have corresponding derivatives. The corresponding derivatives for Single-Family and Multifamily CMO 

CUSIPs transitioned to the ISDA-recommended LIBOR replacement rate (this rate was also selected by 

the Federal Reserve Board as the replacement rate for derivatives transactions in its final rules), the 
34

30-day Average SOFR calculated in arrears of the interest rate period.

As a result, there may be a mismatch between payments owed on the Fannie Mae CMOs and the 

derivatives beginning with the August 25, 2023 payment. Under certain circumstances, such a 

mismatch could result in lower payments on the derivative. Under those circumstances, this could 

result in lower or delayed payments on the CMO certificates. As specified in the relevant prospectus 

supplement, the guaranty from Fannie Mae does not apply to amounts owing on the derivative.

Figure 5-3: Actions to consider when Administering CMOs

Focus areas Actions to consider

Investor awareness ▪ Investors should maintain awareness of the updates to impacted CMOs

Use of a new index 

in rate and 

payment 

calculations

▪ Upon evaluation, update and test systems, reporting and other processes or 

activities related to interest rate adjustment calculations to incorporate the 

benchmark replacement as necessary
35

6. Appendix: Introduction to SOFR based new products

6.1 Introduction

To assist stakeholders in preparing for the transition from LIBOR to alternative reference rates 

(“ARRs”), information and guidance related to the issuance of new contracts have been consolidated 

into the following appendix sections. The following sections are targeted at readers who need 

information about the following products:

• Single-Family (“SF”) Adjustable-rate Mortgages (“ARMs”) and securities, i.e., Mortgage-backed 

Securities (“MBS”) and Participation Certificates (“PCs”)

• SF Credit Risk Transfer (“CRT”) transactions

• Collateralized Mortgage Obligations (“CMOs”)

• Fannie Mae Multifamily (“MF”) ARMs and MBS

• Freddie Mac MF Floating-Rate Loans and securities

• MF CRT transactions

The following sections describe key transition milestones and recommended actions for stakeholders 

to consider as they manage the upcoming transition from LIBOR. The following sections serve as a 

tool to help plan and adapt business policies, procedures, and processes to support products linked 

to ARRs and prepare for discontinuing the use of LIBOR as an index. 

Under the guidance of FHFA, the GSEs have been working together on several aspects of the LIBOR 

transition. Where appropriate, the GSEs have aligned policies and milestones. However, each GSE’s 

timelines and product details may differ. Readers should take note of these differences, which are 

further explained in each chapter of this document.

For more details and FAQs on each GSE’s transition, refer to LIBOR transition webpages for Fannie 

Mae and Freddie Mac, respectively.

Please direct any additional questions to your Fannie Mae or Freddie Mac account management teams.

6.2 SOFR-indexed key milestones

The GSEs have established milestones leading to the transition from LIBOR, including timelines for 

beginning acquisition and issuance of SOFR-indexed products and ceasing acquisition and issuance of 

LIBOR-indexed products.

Transition timelines are defined for major products offered by the GSEs based on timing for finalizing 

transition strategies and external market dependencies. Milestones will continue to be updated as 

necessary. For more detailed timelines, refer to the individual chapters for each product.
36

Figure 6-1: Key transition milestones

Product

Fannie Mae Freddie Mac

Offer SOFR 

products

Cease LIBOR 

offering Offer SOFR products Cease LIBOR offering

SF ARMs and 

MBS/PCs1 Aug. 2020 Dec. 20202 Nov. 2020

▪ Dec. 2020: Last LIBOR ARM 

Guarantor PC Issue Date

▪ Dec. 20202: Last LIBOR ARM 

Settlement Date

SF CRT

transactions Oct. 2021 Dec. 2020 Oct. 2020 Oct. 2020

CMOs Jul. 2020 Oct. 20203 Jul. 2020 Oct. 20203

Fannie Mae 

MF ARMs and 

MBS1

Sep. 2020 Dec. 2020 N/A N/A

Freddie Mac 

MF FloatingRate Loans

and securities

N/A N/A

▪ Dec. 20, 2019: K-deals

▪ Sep. 1, 2020: Floating-Rate 

Loans

▪ Dec. 17, 2020: K-deals 

backed only by SOFRindexed Floating-Rate 

Loans

▪ Dec. 2020: Ceased purchase 

of LIBOR-indexed FloatingRate Loans and hybrid loans

▪ End of Q2 2021: Ceased 

issuance of LIBOR-indexed 

securities

MF CRT

transactions TBD Dec. 2020 Jan. 2021 Dec. 2020

1 The underlying mortgages needed to have an application date no later than September 30, 2020. Effective June 

30, 2022, the GSEs will no longer resecuritize LIBOR-indexed MBS/PCs and Megas/Giants into new issuance 

LIBOR-indexed bonds

2 The GSEs stopped accepting LIBOR-indexed pool deliveries after this date. 

3 The GSEs will no longer issue resecuritizations of previously issued LIBOR-indexed certificates (whether CMO or 

ARM certificates) into new LIBOR-indexed bonds that settle after June 30, 2022. 
37

7. Appendix: Single-Family ARMs

7.1 Introduction

The GSEs have taken the following steps, under FHFA’s guidance, to prepare for the transition from 

LIBOR for SF ARMs:

• Updated existing uniform ARM notes and riders to include fallback and trigger language as 

recommended by the ARRC

• Designed (in conjunction with the ARRC) new SF ARMs that use the NY Fed’s 30-day compound 

average of SOFR (“30-day Average SOFR”) as the underlying index

o Fannie Mae began accepting delivery of SOFR-indexed ARMs on August 3, 2020, and 

Freddie Mac began underwriting SOFR-indexed ARMs on October 1, 2020 and accepting 

delivery of SOFR-indexed ARMs on November 9, 2020

• Stopped accepting delivery of LIBOR-indexed ARM MBS/Guarantor PCs (with the last issue 

date being December 1, 2020)

• Stopped cash/whole loan purchase of LIBOR-indexed ARMs after December 31, 2020 

• Started discussing strategies for the transition of existing LIBOR-indexed ARMs 

The following section will help you understand:

• Key milestones for the SF ARM LIBOR transition

• Differences and similarities between LIBOR-indexed and SOFR-indexed ARMs

• How to prepare for the origination, selling, servicing and securitization of SOFR-indexed ARMs

• High-level considerations for transitioning existing LIBOR-indexed ARMs 

7.2 Transition milestones

The GSEs defined and met key dates related to the origination, commitment, pricing and delivery 

processes for SOFR-indexed ARMs, as well as dates for the cessation of LIBOR-indexed ARM and 

MBS/PCs purchases. Additional details and milestones for existing loans will be provided as they 

become available. Figure 7-1 identifies key transition milestones for SF ARMs.

Figure 7-1: SF ARMs transition timeline

7.3 SOFR-indexed ARM characteristics

❖ Comparing LIBOR and SOFR ARMs

The GSEs designed SF SOFR-indexed ARM products in conjunction with other members of the ARRC 
38

Consumer Products Working Group. These products are based on 30-day Average SOFR, as published 

by the NY Fed. Sellers and Servicers are instructed to use the final/revised values of the index which 

should be available no later than 3:00 p.m. ET.

The primary features of SOFR-indexed ARMs and MBS/PCs that differ from LIBOR-indexed ARMs and 

MBS/PCs are:

• Interest rate index: 30-day Average SOFR

• Initial fixed period: varies, with a minimum initial fixed period of 3 years for SOFR- indexed 

ARMs

• Interest rate adjustment period: 6 months

• Interest rate adjustment cap: +/-1 percentage point (“%”) per subsequent adjustment period

• Margin: will likely differ due to basis and other market-based adjustments

• New ARM plans: introduced for SOFR (Fannie Mae)

• New Cash Contract and Guarantor Pooling Products: introduced to support SOFR- indexed 

ARMs (Freddie Mac)

Figure 7-2 summarizes key product features for both SOFR and LIBOR ARMs.

Figure 7-2: Key product features of LIBOR and SOFR ARMs

Product Features LIBOR ARMs SOFR ARMs

Interest rate index 1-Year WSJ LIBOR 30-day Average SOFR

Initial fixed period 1, 3, 5, 7 or 10 years 3, 5, 7 or 10 years

(no 1-year initial fixed period)

Interest rate 

adjustment period

Changes every 1 year after initial

fixed period

Changes every 6 months after initial fixed 

period

Lookback period New rate determined 45 days in advance No change

Cap at first adjustment +/-2% for 3- and 5-year ARMs

+/-5% for 7- and 10-year ARMs No change

Cap at subsequent 

adjustments +/-2% +/-1%

Life cap Up to 5% for Fannie Mae

Up to 5% for Freddie Mac

No change for Fannie Mae

5% for Freddie Mac

Margin (lender 

discretion)

2.25% for Fannie Mae

Defined on Execution for Freddie Mac Minimum 1%; Maximum 3% 

Fannie Mae has updated ARM plans and a Special Feature code (“SFC”) in support of the transition to 

SOFR, as detailed in Figure 7-3.
39

Figure 7-3: ARM plans and special feature codes for LIBOR and SOFR ARMs

Plans and Codes LIBOR ARMs SOFR ARMs

ARM plans submitted 

to Desktop 

Underwriter® (“DU”)

Import

GEN3

GEN5

GEN7

GEN10

DU User Interface

FM GENERIC, 3 YR

FM GENERIC, 5 YR

FM GENERIC, 7 YR

FM GENERIC, 10 YR

No change

ARM plans submitted 

to Loan Delivery 2720-2729, 2737, 3252 4926, 4927, 4928, 4929

SFC for notes with 

fallback language 785 None: all SOFR-indexed ARM notes will contain fallback language

Freddie Mac has updated Cash Contract Products, Guarantor Security Products, Guarantor Product 

Types and an Investor Feature Identifier (“IFI”) in support of the transition to SOFR, as detailed in 

Figure 7-4.

Figure 7-4: Additional guarantor and investor features for LIBOR and SOFR ARMs

Feature LIBOR ARMs SOFR ARMs

Loan Product

Advisor® No product information is submitted No changes

Contract products for 

Take Out ARM Cash 

Contract

1/1 1Y LIBOR ARM 2/2/6

3/1 1Y LIBOR ARM 2/2/5 or 6

5/1 1Y LIBOR ARM 2/2/5 or 6

7/1 1Y LIBOR ARM 5/2/5

10/1 1Y LIBOR ARM 5/2/5

3Y 6M 30D Avg. SOFR ARM 2/1/5

5Y 6M 30D Avg. SOFR ARM 2/1/5 

7Y 6M 30D Avg. SOFR ARM 5/1/5 

10Y 6M 30D Avg. SOFR ARM 5/1/5

Security Products for 

Take Out ARM 

Guarantor Contract

NonCnvrt 1/1 1Y LIBOR ARM 2/2/2-6

NonCnvrt 3/1 1Y LIBOR ARM 2/2/2-6

NonCnvrt 5/1 1Y LIBOR ARM 2/2/2-6

NonCnvrt 7/1 1Y LIBOR ARM 2/2/2-6

NonCnvrt 7/1 1Y LIBOR ARM 5/2/5-6

NonCnvrt 10/1 1Y LIBOR ARM2/2/2-6

NonCnvrt 10/1 1Y LIBOR ARM5/2/5-6

NonCnvrt 3Y 6M 30D Avg. SOFR ARM 2/1/5

NonCnvrt 5Y 6M 30D Avg. SOFR ARM 2/1/5 

NonCnvrt 7Y 6M 30D Avg. SOFR ARM 5/1/5 

NonCnvrt 10Y 6M 30D Avg. SOFR ARM 5/1/5

Product types for Take 

Out ARM Guarantor 

Contract

1/1 ARM LIBOR

3/1 ARM LIBOR

5/1 ARM LIBOR

7/1 ARM LIBOR

10/1 ARM LIBOR

3/6 SOFR ARM

5/6 SOFR ARM

7/6 SOFR ARM

10/6 SOFR ARM

IFI for notes with 

fallback

language

J23 None: all SOFR-indexed ARM notes will 

contain fallback language

For more background on how the new SOFR-indexed ARM was developed, refer to Options for Using 

SOFR in Adjustable Rate Mortgages, published by the NY Fed in July 2019.
40

❖ SOFR ARM index calculation

SOFR-indexed ARMs are based on 30-day Average SOFR, as published by the NY Fed, which is a 

compounded average of overnight SOFR over the preceding 30 calendar days.

❖ SOFR ARM index source

The NY Fed publishes the 30-, 90- and 180-day compounded SOFR averages daily.

❖ SOFR ARM interest rate calculation

There is no change as to how the borrower interest rate will be calculated when using 30-day Average 

SOFR.

7.4 Preparation for SF SOFR ARMs

❖ Originating and underwriting SF SOFR ARMs

Generally, the processes for originating and underwriting SOFR ARMs are like the existing processes 

used to originate and underwrite ARMs tied to any other index, and all existing conventional ARM 

requirements apply to SOFR ARMs.

❖ Key concepts

The GSEs have made multiple specification updates in the latest versions of their automated 

underwriting systems (“AUS”) in support of SOFR ARMs, including adding a new enumeration to 

represent the use of 30-day Average SOFR.

Fannie Mae has applied the specification updates noted below to DU Specification MISMO 3.4 (DU 

Spec), while Freddie Mac applied specification updates to Loan Product Advisor specifications v5.0.06. 

Other existing data requirements (e.g., for margin and index value) will still be required unless 

otherwise noted.

Lenders should note the AUS updates in Figure 7-5 when preparing for the origination and 

underwriting of SOFR-indexed loans.

Figure 7-5: GSE automated underwriting systems supporting SOFR ARMs

Requirements Fannie Mae SOFR ARMs Freddie Mac SOFR ARMs

Update timeline Specification updates complete Loan Product Advisor v5.0.06 

AUS version DU Specification MISMO 3.4 (DU Spec)4 LPA v5.0.06

4 Fannie Mae’s EarlyCheck system also uses the DU input file. The guidance provided for DU submissions is also 

applicable to EarlyCheck.
41

Requirements Fannie Mae SOFR ARMs Freddie Mac SOFR ARMs

Enumerations

▪ “30DayAverageSOFR” added for 

IndexSourceTypeDescription

▪ Note: Use of enumeration is optional, as 

DU does not require identification of a 

specific ARM index for underwriting 

evaluation

“30DayAverageSOFR” added for 

IndexSourceTypeDescription

ARM index

▪ Populate IndexSourceType using 

“Other” in DU

▪ Users have the option to populate 

IndexSourceTypeOtherDescription with

“30DayAverageSOFR”

▪ Lenders to use the followingdata points 

in Loan Product Advisor:

▪ IndexSourceType = “Other”

▪ IndexSourceTypeOtherDescription

▪ = “30DayAverageSOFR”

▪ The data point IndexSourceType will 

continue to be required for all ARMs

ARM plan data

▪ Users are still required to submit ARM 

plans in DU for underwriting evaluation

▪ Submit generic ARM plans using the 

InvestorProductPlanIdentifierfield

▪ Do not submit lender ARM plandata or 

SOFR ARM plan numbers

N/A

In addition, Lenders should note the following with respect to Uniform MortgageData Program 

(“UMDP”) requirements:

• No updates are necessary for the Uniform Loan Application Dataset (“ULAD”), since ARM 

indexes are not displayed on the Uniform Residential Loan Application(“URLA”)

• There are no planned updates for the Uniform Closing Dataset (“UCD”)

• The new SOFR index will be delivered using IndexType = “Other” and 

IndexTypeOtherDescription = SOFR

• Data point names for each GSE’s AUS are different from the UCD

For more information on existing SOFR impacts on UMDP requirements, refer to the GSEs' 

announcements on UMDP updates.
42

Figure 7-6: Necessary actions for originating and underwriting SF SOFR ARMs

Focus area Necessary actions

Documentation

▪ Update FAQs and borrower ARM disclosure documentation

▪ Update closing instructions and/or train closing agents, escrow agents and closing

attorneys

▪ Review differences in updated procedures for printed notes and eNotes

▪ Test printing of all updated documents (e.g., notes, riders, Closing Disclosure, other

disclosures)

▪ Update training manuals for origination staff including originators, processors, 

underwriters, closers, post-closers, andQC

▪ Update broker and correspondent lending training manuals, policies and 

documentation

Lender systems, 

processes and training

▪ Maintain awareness of new field options for standard ARM enumerations (e.g., index 

type and rate reset period)

▪ Update Loan Origination System (“LOS”)/vendor systems with new SOFR ARMrelated enumerations

▪ Update LOS product, eligibility and pricing rules

▪ Develop and implement pricing, hedging and execution strategies

▪ Provide training for staff, including originators, processors, underwriters, closers, 

post-closers and QC

o SOFR adjusts every six months, not every year

o The minimum initial fixed period for SOFR loans is three years

▪ Provide communications and/or training for brokers, correspondents, eNote vaults, 

electronic registries, Document Preparation (“Doc Prep”) and other third-party

vendors

GSE systems

▪ Directly integrated lenders, LOS and other third-party vendors should be 

coordinating with each GSE to update their interfaces to accommodate new SOFR 

ARM products

Document custodian

▪ Remember that as part of the note certification process, the GSEs require that the 

Custodian verify, for ARM notes with the revision date “(rev. 2/20)”, the lifetime floor 

is equal to the ARM’s margin as stated in the note; if it does not, the discrepancy will 

be reported as a documentation issue and the note will not be certified for sale

o This information is reflected in Fannie Mae’s ARM plans, and an annual update of 

Freddie Mac’s Document Custody Procedures Handbook will reflect this 

requirement

❖ Helpful links

For more information on origination and underwriting, refer to the following resources:

Fannie Mae

• ARM Plan Matrix

• ARM Note Riders and Addenda
43

• Legal Documents

Freddie Mac

• Single-Family Seller/Servicer Guide, Chapter 4401

• Single-Family Uniform Instruments

❖ Selling and delivering SOFR ARMs

Generally, the processes for selling and delivering SOFR ARMs is the same as the existing processes 

used to sell and deliver ARMs tied to any other index. Sellers will see additional dropdown options 

available in GSE systems to reflect the addition of new SOFR offerings, as applicable.

All existing, conventional ARM requirements apply to SOFR ARMs, including existing Uniform Loan 

Delivery Dataset (“ULDD”) requirements. For more information on existing UMDP requirements as well 

as updates to support the transition to the SOFR ARM index, refer to the GSEs' announcements on 

ULDD updates. 

❖ Key concepts

The GSEs have updated their respective ULDD specifications in support of SOFR ARMs, similar to the 

updates made for AUS specifications. Users should note the updates outlined in Figure 7-7 when 

preparing to sell SOFR-indexed loans to the GSEs.

Figure 7-7: Updates for selling and delivering SOFR-indexed loans to the GSEs

Requirements Fannie Mae SOFR-indexed ARMs Freddie Mac SOFR-indexed ARMs

Update timeline ▪ Loan Delivery system updates were 

made available August 3, 2020

▪ Loan Selling Advisor system updates 

were made available November 9, 2020

Enumerations ▪ “30DayAverageSOFR” added to 

IndexSourceTypeDescription

▪ “Other” added to IndexSourceType

▪ “30DayAverageSOFR” added to 

IndexSourceTypeDescription

ARM Index Data

▪ The new index will be delivered using 

IndexSourceType = “Other”

▪ IndexSourceTypeOtherDescription = 

“30DayAverageSOFR”

▪ IndexSourceTypeDescription added as a 

data point

▪ The new index will be delivered using 

IndexSourceType = “Other” plus 

IndexSourceTypeOtherDescription = 

“30DayAverageSOFR”

ARM plan data

▪ Sellers should submit one of the 

published SOFR ARM plan numbers in 

the ULDD sent to Loan Delivery and/or 

EarlyCheck; do not submit “Lender ARM 

Plan” or DU generic ARMplans

N/A

The GSEs have also updated reference product labels, ARM plans, subtypes and pool prefixes as 

applicable for new SOFR-indexed MBS/PCs. Refer to the “Securitization of SF SOFR ARMs” section 

below for more detail.
44

Figure 7-8: Necessary actions for selling and delivering SOFR ARMs

Focus areas Necessary actions

Seller systems, 

processes and training

▪ Train Capital Markets/Secondary Marketing staff to use new pricing screens 

available for SOFR ARM whole loan commitments, including guaranty fee amounts 

(“G-fee” amounts for Fannie Mae and Credit Fee in Yield amounts for Freddie Mac)

▪ Identify source for current SOFR rates and update internal systemfeeds

▪ Ensure SOFR-indexed ARM interest rates are distributed via all existing methods to 

all channels

▪ Update LOS product, eligibility and pricing rules

▪ Develop and implement pricing, hedging and executionstrategies

▪ Provide training for staff (e.g., capital markets/secondary, post-closers, shippers 

and investor relations) on all aspects of newproducts

▪ Provide communications and/or training for brokers, correspondents, document 

custodians, warehouselenders, disbursement agents, eNote vaults, electronic 

registries, document file preparers and other third-party vendors

▪ GSEs’ loan delivery UIs are available for manual data entry, ifneeded

GSE systems

▪ Maintain awareness of how SOFR ARM characteristics are reflected in existing 

pricing, execution, committing and delivery applications:

o Pricing menu options for cash execution

o G-fee pricing menu options for MBS execution

o Additional options for enumerations and ARM plans for SOFR-indexed ARMs 

(Fannie Mae)

o Additional Cash Contract Products, Guarantor Security Products and Guarantor 

Product Types for SOFR-indexed ARMs (Freddie Mac)

❖ Helpful links

For more information on LIBOR transition impacts to selling and delivering SOFR ARMs, refer to the 

following resources:

Fannie Mae

• Selling Guide

• Single-Family Servicing Guide

Freddie Mac

• Single-Family Seller/Servicer Guide

❖ Securitization of SF SOFR ARMs

The GSEs developed new pool prefixes, subtypes (Fannie Mae), and documentation language to 

support the securitization of SOFR-indexed ARMs. Impacted parties should be ready to operationalize 

these changes when involved in the purchase, trading or investor reporting of SOFR MBS/PCs and 

Megas/Giants.
45

❖ Key concepts

The GSEs introduced new prefixes and subtypes for MBS/Megas and PCs/Giants, as outlined in Figure 

7-9.

Figure 7-9: New prefixes and subtypes for GSE MBS/Megas and PCs/Giants

Fannie Mae Freddie Mac

Product Prefix ARM plan 

number

ARM 

subtype Prefix Pool number range

3-Year SO 4926 85A 8A 8A0001-8A9999

5-Year SO 4927 85B 8B 8B0001-8B9999

7-Year SO 4928 85C 8C 8C0001-8C9999

10-Year SO 4929 85D 8D 8D0001-8D9999

Freddie Mac is using the existing pool prefix for 30-day Average SOFR ARM Giant PCs.

Figure 7-10: Existing Freddie Mac pool prefix for 30-day Average SOFR ARM Giant PCs

Product description Prefix Pool number range

Various indices, WAC ARM Giant 84 840001-849999

In addition, 30-day Average SOFR Hybrid ARM index codes were created by each GSE for MBS/PCs and 

Mega/Giants disclosure purposes.

• Fannie Mae introduced a new index code (061) and new subtypes for 30-day Average SOFR, 

which is reflected in its existing MBS disclosure files and referenced in its Single-Family MBS 

Disclosures Guide and Subtype webpage

• Freddie Mac added index code 61 for 30-day Average SOFR. This index code will be disclosed 

via the existing disclosure field for loan level (ID L-046) and security level (ID S-51). Refer to the

Single-Family Disclosure Guide for disclosure filedetails

SF legal documentation, including MBS Disclosures, Prospectus and Prospectus Supplements have 

been updated to include SOFR as an index.

❖ Eligible collateral for Freddie Mac new issue ARM Giant PCs

The 45-day Fixed-rate and 75-day ARM Giant Collateral Prefix Eligibility Chart has been updated to 

include 30-day Average SOFR-indexed ARMs. In addition, the existing ARM Giant PC pooling rules are 

available on Freddie Mac’s MBS website. Effective June 30, 2022, the GSEs stopped resecuritizing 

existing LIBOR-indexed CMOs (both Single-Family and Multifamily) and MBS/PCs into new LIBORindexed securities. The resecuritization of LIBOR-indexed CMOs and MBS/PCs into appropriately 

structured new-issue SOFR indexed bonds will continue to be permitted.
46

Figure 7-11: Necessary actions for updates to eligible collateral for ARM Giant PC

Focus areas Necessary actions 

Documentation Note updates to base language in prospectus documents, including new index codes

GSE systems Note the inclusion of a new pool prefix, subtypes and index code to represent new 

SOFR ARM characteristics

❖ Helpful links

For more information on LIBOR transition impacts on securitization of SOFR ARMs, refer to the 

following resources:

Fannie Mae

• Pool Prefix Glossary

• ARM MBS Subtypes

• Updated MBS Prospectus language

Freddie Mac

• Prefix Library

❖ Servicing SF SOFR ARMs

While a new underlying index will be used to calculate borrower payments, the calculations 

themselves will not change.

❖ Key concepts

• Servicers will need to incorporate the new SOFR index into calculations and reconciliations for 

borrower payments; however, the calculations are not changing

• Servicers will need to incorporate the SOFR index into their current rate and payment 

adjustment processes

Figure 7-12: Necessary actions for servicing SOFR ARMs

Focus areas Necessary actions

Use of a new index in 

rate and payment 

calculations

Update and test systems, reporting and other processes or activities related to 

interest rate adjustment calculations to incorporate SOFR into product parameters. 

These include initial fixed period, current index value, margin, lookback period and 

rounding method, plus the initial, subsequent and lifetime caps/ceilings and floors, 

underlying index, resetperiods and subsequent caps

Transfer of servicing▪ Ensure that servicing transferees have the capability to service SOFR loans
47

❖ Helpful links

For more information on LIBOR transition impacts on servicing of SOFR ARMs, refer to the following 

resources:

Fannie Mae

• Single-Family Servicing Guide

Freddie Mac

• Single-Family Seller/Servicer Guide

❖ Cessation of purchase of SF LIBOR ARMs

As of December 31, 2020, the GSEs stopped purchasing LIBOR-indexed ARMs. Lenders, servicers and 

other relevant parties should have taken the necessary steps from a systems, process and training 

perspective to discontinue the origination and delivery of LIBOR ARMs.

❖ Key concepts

• The GSEs no longer purchase LIBOR ARMs as whole loans for cash or in exchange for securities 

provided the related MBS/PC pools.

• Fannie Mae has instructed sellers to deliver SFC 785 for any non-SOFR-indexed ARMs with a 

note and rider containing new fallback language.

❖ Helpful links

For more information on LIBOR transition impacts on the ability to sell and deliver LIBOR ARMs, refer 

to the following resources:

Fannie Mae

• Selling Guide

Freddie Mac

• Single Family Seller/Servicer Guide
48

8. Appendix: Single-Family CRTs

8.1 Introduction

The purpose of this chapter is to provide market participants guidance on new SOFR-indexed SF CRT 

issuances and the transition of legacy LIBOR-indexed SF CRT transactions in the future.

8.2 SOFR-indexed SF CRT new issuance and market developments

❖ Objectives

Freddie Mac discontinued issuing LIBOR-indexed SF CRT deals and began issuing SOFR-indexed SF 

CRT deals in October 2020. Fannie Mae discontinued issuing LIBOR-indexed SF CRT deals in December 

2020 and began issuing SOFR-indexed SF CRT deals in October 2021.

Since there is a well-defined SOFR index to determine the coupon payments due on the notes, the 

move to SOFR-indexed SF CRT issuances has been relatively simple from an operational perspective.

❖ SOFR indices

• The GSEs currently are structuring SOFR-indexed CRT transactions so that they use 30-day 

Average SOFR (published by the NY Fed) as the reference rate, with a Determination Date of 

two business days (“2BD”) prior to the beginning of the accrual period for CRT securities

Certain CRT deals issued following March 2020 may include contractual language indicating a 

benchmark replacement of Term SOFR. Please note that Fannie Mae and Freddie Mac will refrain from 

taking any steps that would result in the conversion of any existing SOFR-indexed CRTs from 30-Day 

Average SOFR to term SOFR based on any provision that calls for such conversion when operationally, 

administratively, and technically feasible.

8.3 Timelines and milestones 

❖ Related SOFR market development

• SOFR market conventions: On March 2, 2020, the NY Fed began publishing a SOFR index and a 

calculator for computing compound averages of SOFR

• Development of SOFR derivatives market: The move to SOFR-indexed discounting by CME/LCH 

has helped improve the liquidity of the SOFR derivatives market 

❖ GSE alignment

The GSEs are aligned on the choice of SOFR indexes that will be utilized for future SF CRT securities. 

This alignment will ensure the SF CRT transitions are consistent between the GSEs and will minimize 

potential disruptions to the SF CRT market. Specifically, Fannie Mae’s CAS program and Freddie Mac’s 

STACR program will be aligned on the following:

• Selection of SOFR as the index for new issuances of SF CRT deals

• SOFR index and methodology (i.e., 30-day Average SOFR)

• Fallback triggers and waterfall for new SOFR issuances

❖ Actions market participants should consider

The GSEs encourage all SF CRT market participants to conduct an internal operational readiness 

assessment and start any operational build needed to participate in SOFR-indexed SF CRT 
49

transactions as early as practicable. Investment guidelines and other key governance documentation 

should be reviewed to ensure that they can transact in SOFR. Please refer to Section 1.3, “Actions 

market participants should consider,” for FAQs and other resources related to the SF CRT LIBOR 

transition.
50

9. Appendix: CMOs

9.1 Introduction

The ARRC endorsed SOFR as its recommended benchmark replacement to LIBOR in anticipation of the 

cessation of LIBOR.

To prepare for the cessation of LIBOR, the GSEs adopted a modified version of the ARRC securitization 

waterfall for new-issue LIBOR-indexed CMOs. The GSEs started offering SOFR-indexed CMOs for 

settlement in July 2020. Additionally, under the guidance of FHFA, Freddie Mac and Fannie Mae 

ceased offering new LIBOR-indexed CMOs for issuance. This includes resecuritizations of existing 

LIBOR-indexed CMOs (both Single-Family and Multifamily) and MBS/PCs into new-issuance LIBORindexed bonds effective June 30, 2022. The resecuritization of LIBOR-indexed CMOs and MBS/PCs into 

appropriately structured new-issue SOFR bonds will continue to be permitted.

9.2 Overview

The GSEs have structured new-issue Delay and Non-Delay SOFR-indexed CMOs that use 30-day 

Average SOFR published by the NY Fed as the reference rate, with a Determination Date of 2 Business 

Days (2BD) prior to the beginning of the accrual period for 45-, 55- and 75-day Delay and Non-Delay 

securities (same as current LIBOR-indexed CMOs).

Certain CMOs issued following July 2020 may include contractual language indicating a benchmark 

replacement of Term SOFR. Please note that Freddie Mac and Fannie Mae will refrain from taking any 

steps that would result in the conversion of any existing SOFR-indexed CMOs from 30-Day Average 

SOFR to Term SOFR based on any provision that calls for such conversion when operationally, 

administratively, and technically feasible.

9.3 Eligible collateral

For new-issue SOFR-indexed CMOs, the GSEs will accept all collateral that is currently acceptable for 

LIBOR-indexed structures at each respective entity. For more information on how collateral may be 

affected by the transition, refer to “Securitization of SOFR ARMs” in section 2.4, “Preparation for SF 

SOFR ARMs.”

9.4 Issuance

❖ Delay and Non-Delay (30-day Average SOFR)

The Determination Date for 45-, 55- and 75-day Delay and Non-Delay securities based on 30-day 

Average SOFR is 2BD prior to the beginning of the accrual period. This is the same as the practice that 

was used for LIBOR-indexed securities.

9.5 Administration

❖ Key updates for 45-day, 55-day and 75-day Delay CMOs

For 45-, 55- and 75-day Delay CMOs based on 30-day Average SOFR (or “Compounded SOFR” per the 

subsequent timelines), the Determination Date will be 2BD prior to the beginning of the accrual 

period. This is the same as for LIBOR-indexed CMOs, which also have a Determination Date of 2BD 

prior to the accrual period (prior month). The graphics on the subsequent pages display the timing.
51

Figure 9-1: 45-day Delay CMOs

Figure 9-2: 55-day Delay CMOs
52

Figure 9-3: 75-day Delay CMOs

❖ Key updates for 45-day, 55-day and 75-day Non-Delay CMOs

For 45-, 55- and 75-day Non-Delay CMOs based on 30-day Average SOFR, the Determination Date will 

be 2BD prior to the beginning of the accrual period. This is the same as for LIBOR-indexed CMOs, 

which have a Determination Date of 2BD prior to their respective accrual periods (the 13th for 45-day, 

or the 23rd for 55-day) of the month preceding payment, or the 13th (75-day) of the second month 

preceding payment. The graphics on the subsequent pages display the timing.

Figure 9-4: 45-day Non-Delay CMOs
53

Figure 9-5: 55-day Non-Delay CMOs

Figure 9-6: 75-day Non-Delay CMOs

9.6 Disclosure changes

❖ Key updates

Index rate disclosure files now contain a new column titled “Current Month Payment Indicator” which 

contains a “Y” if the rate applies to the current month’s payment factor calculation and an “N” if it 

does not.

CSS will publish index rate files on the first business day of the month (for all Delay securities), on the 
54

15th of the month minus two business days (for Non-Delay 45- and 75-day securities), and on the 25th of 

the month minus two business days (for Non-Delay 55-day securities) at 6:30 p.m. ET; the previous 

schedule had the posting of files at 4:30 p.m. ET for Freddie Mac.

❖ Actions to consider

Discuss changes to disclosures with your disclosure vendor to ensure that your system can correctly 

apply the new “Current Month Payment Indicator” value.
55

10. Appendix: Multifamily ARMs (Fannie Mae)

10.1 Introduction

The Multifamily borrower community relies on a wide range of variable rate financing options from 

Fannie Mae. To ensure stability across all product lines, Fannie Mae has developed SOFR-indexed 

offerings for the Structured ARM (“SARM”), 7/6 ARM and Hybrid ARM products. In addition, Fannie Mae 

has developed a second capped SOFR-indexed ARM structure to ensure a broad range of financing 

solutions.

More product information can be found on Fannie Mae’s Multifamily website.

❖ Transition preparation

To prepare for the transition from LIBOR for MF ARMs, Fannie Mae has:

• Stopped accepting MBS deliveries (the last eligible MBS pool issue date for LIBOR-indexed 

ARM pools was December 1, 2020)

• Stopped cash/whole loan purchase of LIBOR-indexed ARMs after December 31, 2020

• Stopped accepting LIBOR loans with commitment dates after September 30, 2020

• Developed SOFR-indexed offerings using existing product structures (i.e., SARM, ARM 7/6 and 

Hybrid ARM products)

• Designed a MF capped ARM product that uses 30-day Average SOFR as the underlying index

• Started developing a comprehensive plan for the transition of existing LIBOR-indexed ARMs on 

Fannie Mae’s book once LIBOR is no longer available

• Continued providing information and training to ensure a smooth transition

10.2 Transition Milestones

Fannie Mae began purchasing SOFR-indexed ARMs on September 1, 2020 and stopped purchasing and 

securitizing LIBOR-indexed ARMs at the end of 2020. By doing this, Fannie Mae has met demand for 

variable rate loans without disruption.

Fannie Mae has developed a coordinated strategy, in advance of LIBOR cessation, with the ARRC, 

FHFA and industry stakeholders to transition legacy LIBOR-indexed instruments.

Figure 10-1: Multifamily LIBOR transition milestones

Timeline Milestone

September 1, 2020

▪ MF released a new SOFR-indexed capped ARM product and began offering SOFRindexed SARMs, 7/6 ARMs and Hybrid ARMs

▪ System capabilities are in place for lenders to deliver SOFR-indexed ARMs with an 

embedded cap and SOFR-indexed uncapped ARMs (see below for notes on the 

external cap market)

▪ Investors can invest in Fannie Mae-issued MBS based on a capped SOFR-indexed 

ARM

October 1, 2020 ▪ Commitments for LIBOR-indexed ARMs are no longer accepted (i.e., must have been 

designated as “Committed” in DUS Gateway® on or before September 30, 2020)
56

Timeline Milestone

January 1, 2021

▪ Multifamily no longer purchases LIBOR-indexed ARMs (i.e., had to be purchased on 

or before December 31, 2020 as a Cash Mortgage Loan or MBS Mortgage Loan with 

an Issue Date on or before December 1, 2020)

June 30, 2023 ▪ Legacy LIBOR-indexed ARM products will be converted to a SOFR index at MF’s 

discretion upon LIBOR no longer being representative or available 

10.3 SOFR-indexed characteristics

❖ Product conventions

In accordance with the transition timeline, specific product features were made available on Fannie 

Mae’s Multifamily website, as well as during external training sessions that took place through 

September 2020 and will be made available on an ongoing basis as needed. Product conventions are 

described at a high level in Figure 10-2.

Figure 10-2: Product conventions

Convention LIBOR ARMs SOFR ARMs

Rate determination Survey of interbank lending Treasury collateralized repo market

Floating-rate index 1-, 3- or 6-month LIBOR 30-Day Average SOFR

Cap requirement Embedded or third-party caps available Embedded or third-party caps available

The underlying index for MF SOFR-indexed ARMs, 30-day Average SOFR, is published by the NY Fed.

The 30-Day Average SOFR rate that is available as of 3:00 p.m. ET should be used for calculations. 

ET. The new index is also available from third-party vendors (e.g., Bloomberg and LSEG).

❖ Interest rate calculation

Fannie Mae’s MF SOFR-indexed products accrue interest based on the same calendar-month accrual 

periods that exist for LIBOR-indexed ARMs.

On each interest rate change date, the interest rate is adjusted to equal the sum of the mortgage 

margin plus the latest index value available as of the date that precedes the interest rate change date 

by the number of days set forth in the mortgage note (one business day for all MF SOFR-indexed ARM 

loans). Figure 10-3 exhibits how the interest rate is determined for a January accrual month.

Figure 10-3: Example interest rate timeline
57

❖ External cap market

The availability of third-party SOFR interest rate caps is necessary for offering and acquiring uncapped 

MF SOFR-indexed ARMs. At this time, several cap providers are prepared to issue SOFR-indexed 

interest rate caps. Multifamily is actively engaging with third-party interest rate cap providers to 

prepare for and understand developments in the market for third-party interest rate caps.

For more information on the transition of existing LIBOR-indexed caps, refer to section 5.5,

“Transitioning existing MF LIBOR-indexed ARMs.”

❖ MBS features

Fannie Mae has created new ARM plans and subtypes to support SOFR-indexed ARM MBS. These new 

ARM features have been updated on Fannie Mae’s website. Fannie Mae has also created new pool 

prefixes, which have been added to the Pool Prefix glossary and are described in Figure 10-4.

Figure 10-4: Additional MBS pool prefixes

Prefix Description

HF Conventional Adjustable-Rate Mortgages, Secured Overnight Financing Rate, Actual/360 

interest day basis calculation; Multifamily

MF Conventional Adjustable-Rate Mortgages, Secured Overnight Financing Rate, 30/360 interest 

day basis calculation; Multifamily

HW Conventional Adjustable-Rate Supplemental Lien Mortgages, Secured Overnight Financing 

Rate, Actual/360 interest day basis calculation; Multifamily

XF Adjustable-Rate Mega backed by Conventional Adjustable-Rate Mortgages indexed to the 

Secured Overnight Financing Rate; Actual/360 interest day basis calculation; Multifamily

YF Adjustable-Rate Mega backed by Conventional Adjustable-Rate Mortgages indexed to the 

Secured Overnight Financing Rate; 30/360 interest day basis calculation; Multifamily

XW

Adjustable-Rate Mega backed by Conventional Adjustable-Rate Supplemental Lien Mortgages 

indexed to the Secured Overnight Financing Rate; Actual/360 interest day basis calculation; 

Multifamily

HC

Conventional Hybrid Adjustable-Rate Mortgages; initial Fixed-Rate period followed by an 

Adjustable-Rate period for the remaining term; Secured Overnight Financing Rate, Actual/360 

interest day basis calculation; Multifamily

MC

Conventional Hybrid Adjustable-Rate Mortgages; initial Fixed-Rate period followed by an 

Adjustable-Rate period for the remaining term; Secured Overnight Financing Rate, 30/360 

interest day basis calculation; Multifamily

HU

Conventional Hybrid Adjustable-Rate Supplemental Lien Mortgages; initial Fixed-Rate period 

followed by an Adjustable-Rate period for the remaining term; Secured Overnight Financing 

Rate, Actual/360 interest day basis calculation; Multifamily
58

10.4 Preparation for MF SOFR-indexed ARMs

❖ Originating and underwriting MF SOFR-indexed ARMs

Originators and underwriters are impacted by the change in index as well as new terms that arise from 

SOFR-indexed ARM loan products. Originators also play a central role in educating Multifamily 

borrowers on Fannie Mae ARM products and impacts resulting from the transition from LIBOR. 

Specific product terms have been publicly announced and are available on Fannie Mae’s website.

❖ Key updates

• Index publication source

• Floating-rate adjustment period

• Cap structure

• Product terms of SOFR-indexed ARMs

Figure 10-5: Necessary actions for origination and underwriting MF SOFR-indexed ARMs

Focus area Necessary actions

Borrower 

communications

▪ Work with Fannie Mae to develop communication plans to explain changes resulting 

from the LIBOR transition and availability of SOFR-indexed ARMs to Multifamily

borrowers

System identification 

and update

▪ Conduct an inventory of impacted processes and systems

▪ Update origination processes and underwriting systems to accommodate MF SOFRindexed ARMs

Information

▪ Follow industry developments and announcements and determine impacts to 

origination and underwriting that may arise

▪ Read Multifamily communications and attend product trainings related to MF SOFRindexed ARMs

❖ Helpful links

The Multifamily Guide has been updated to reflect MF SOFR-indexed ARMs. For more information on 

LIBOR transition impacts to origination and underwriting, refer to the following resources:

• ARRC website

• Multifamily Guide

❖ Selling and delivering MF SOFR-indexed ARMs

The process for selling and delivering SOFR-indexed ARMs does not vary substantially from the 

previous process for LIBOR-indexed ARMs. Updates to Fannie Mae systems have been made to align 

with the availability of SOFR-indexed ARMs.

Lenders should reach out to Fannie Mae to address any issues that may arise from selling and 

delivering a SOFR-indexed ARM.
59

❖ Key updates

• LIBOR-indexed ARMs can no longer be purchased at Fannie Mae

• Fannie Mae systems reflect options and dropdowns for SOFR-indexed ARMs

• Options and dropdowns for LIBOR-indexed loan products are no longer available in the 

systems

Figure 10-6: Necessary actions for selling and delivering MF SOFR-indexed ARMs

Focus areas Necessary actions

System identification 

and update

▪ Conduct an inventory of impacted processes and systems

▪ Update selling and delivery systems and processes to accommodate SOFR-indexed 

ARMs

▪ LIBOR-indexed ARM fields and forms should be removed from selling and delivery 

systems

Information ▪ Attend trainings and read FAQs and job aids released by Fannie Mae providing 

details related to selling and delivering SOFR-indexed ARMs

❖ Helpful links

For more information on selling and delivering, refer to the following resource:

• Multifamily Learning Center

❖ Securitization of MF SOFR-indexed ARMs

SOFR-indexed MBS issued by Fannie Mae include new attributes to facilitate securitization and 

accurate disclosure in the capital markets. The process mirrors the issuance of LIBOR-indexed 

securities. Investors should understand the differences between LIBOR- and SOFR-indexed ARMs that 

underpin the MBS they invest in.

❖ Key updates

• As detailed in previous sections, new MF ARM plans have been created and added to 

Multifamily systems to represent SOFR-indexed ARMs

• Pool prefixes have been created to detail security characteristics

• Legal documentation has been updated to note the inclusion of SOFR as a valid underlying 

index

Figure 10-7: Necessary actions for securitizing MF SOFR-indexed ARMs

Focus areas Necessary actions

Investor awareness ▪ Investors should maintain awareness of market developments and impacts that a 

new underlying index may have when investing in SOFR-indexed MBS

Legal documentation ▪ Review updates to base prospectus documents

Security characteristics ▪ Note the inclusion of pool prefixes and subtypes to represent new SOFR-indexed 

ARM characteristics
60

❖ Helpful links

For more information on LIBOR transition impacts to securitization of MF SOFR-indexed ARMs, refer to 

the following resource:

• DUS Disclose

❖ Servicing MF SOFR-indexed ARMs

Servicers are required to manage ARM payments throughout the life of newly originated SOFRindexed loans. Servicing systems require updates to manage calculations and reconciliations for 

borrower payments using the new index rate. If a servicing transfer is necessary, the existing servicer 

must also be aware of the ability for new servicers to conduct activities using a new index.

❖ Key updates

• Interest payments calculated based on SOFR

• New index location

• Relevant systems and processes require updates to reflect the new index and adjustment

period

Figure 10-8: Necessary actions for servicing MF SOFR-indexed ARMs

Focus areas Necessary actions

Interest payment 

calculations

▪ Update and test systems, reporting and other processes or activities so that they

may:

o Process/incorporate the SOFR index

o Adjust interest accrual calculations for changes in the underlying index, reset 

periods and subsequent caps

Transfer of servicing ▪ Ensure that potential servicing transferees have the capability to service SOFRindexed ARMs

System updates ▪ Catalogue impacted systems and execute system updates forthe delivery of SOFRindexed ARMs

❖ Helpful links

For more information on LIBOR transition impacts to servicing SOFR-indexed ARMs, refer to the 

following resources:

• Practical Implementation Checklist for SOFR Adoption

• CRE Finance Council LIBOR Transition Updates

• Multifamily Learning Center

• DUS Guide
61

11. Appendix: Multifamily CRTs

11.1 Introduction

The purpose of this chapter is to provide market participants guidance on new SOFR-indexed MF CRT 

issuances, which are known as Multifamily Structured Credit Risk Notes (“Multifamily SCR Notes” or 

“MSCR Notes”) for Freddie Mac and Multifamily Connecticut Avenue Securities (MCAS) for Fannie Mae. 

11.2 SOFR-indexed CRT new issuance

❖ Objectives

Fannie Mae achieved operational readiness to issue MF SOFR-indexed CRT deals in 2021. Freddie Mac 

completed its first SOFR-indexed MF CRT issuance, MSCR 2021-MN1, in January 2021. Prior to its first 

SOFR issuance, Freddie Mac issued three Multifamily SCR Notes, all of which were fixed-rate notes, 

between 2016 and 2017, so there are no Legacy MF CRT LIBOR securities to transition to a benchmark 

replacement. Fannie Mae has not yet issued its first SOFR-indexed MF CRT issuance but is 

operationally ready to do so. Please refer to Section 4.4 Legacy LIBOR-indexed CRTs for more 

information on Fannie Mae Legacy MF CRT issuances. 

❖ SOFR indices

Fannie Mae plans to structure SOFR-indexed MF CRT transactions utilizing the same SOFR based 

terms and parameters defined in SF’s executed CRT transactions and will remain in line with SF CRT 

ongoing. Please refer to Appendix 8.2 SOFR-indexed SF CRT new issuance and market developments 

for more information on SOFR-indexed CRTs. 

11.3 Alignment with SF CRT

The GSEs, with the support of FHFA, intend to align to the SF CRT offering and minimize potential 

disruptions to the CRT market. In addition, Freddie Mac’s STACR program and MSCR programs and 

Fannie Mae’s MCAS program will be aligned to the following:

• Selection of the index as the replacement of LIBOR for new issuance CRT deals

• Benchmark replacement and methodology

• Fallback triggers and waterfall

Freddie Mac’s Multifamily SCR Notes program is looking to attract large investors from STACR. Thus, 

alignment with SF CRT is essential to ensure broad market acceptance.
62

12. Appendix: Multifamily Floating-Rate Loans and Securities

(Freddie Mac)

12.1 Introduction

Floating-rate and Hybrid loans are a key component of all Multifamily lines of business: Conventional, 

Seniors Housing, Targeted Affordable Housing (“TAH”) and Small Balance Loans (“SBL”). Freddie Mac 

recognizes the importance of offering financing solutions with diverse loan structures and intends to 

preserve all existing floating-rate products throughout the transition to SOFR. 

Product information is available on Freddie Mac’s website.

12.2 Product modifications

Transitioning to SOFR is a complex undertaking, so our objective is to mitigate the complexity by 

avoiding non-essential product modifications. The summary below includes critical product 

modifications that support our shared mission to adopt SOFR.

❖ Conventional, Seniors Housing, and TAH

For our Conventional, Seniors Housing, and TAH business lines, SOFR-indexed loans are indexed to a 

compound average of SOFR. The compound average rate is 30-day Average SOFR (published by the NY 

Fed), which will then be applied to the upcoming interest accrual period (“SOFR Index”). 

Certain SOFR-indexed loans and related securities may include contractual language indicating a 

benchmark replacement of Term SOFR. Please note that Freddie Mac will refrain from taking any steps 

that would result in the conversion of any existing SOFR-indexed Floating-Rate Loans and related 

securities from 30-Day Average SOFR to Term SOFR based on any provision that calls for such 

conversion when operationally, administratively, and technically feasible. 

The NY Fed publishes 30-, 90- and 180-day SOFR averages on their website, along with index values for 

use in calculating the SOFR average of alternative day counts. 

Freddie Mac will use the NY Fed's published rates on its website for index determination.

Similar to its LIBOR-indexed loan products, Freddie Mac’s SOFR-indexed loans continue to feature 

calendar-month interest accrual periods. LIBOR is determined on the business day preceding the 

beginning of the interest accrual period and 30-day Average SOFR is determined after 3:00 p.m. ET on 

the business day preceding the beginning of the interest accrual period.

Note that even though the SOFR index is determined based on a 30-day “lookback,” the rate is applied 

“in advance” of the applicable interest accrual period. For example, for a January accrual period, the 

SOFR index will be determined based on the daily SOFR rates from the 30 days preceding the last 

business day of December.

That index will be applied to calculate interest throughout January, which will then be payable on 

February 1.

Freddie Mac generally requires all floating-rate loan borrowers to obtain third-party interest rate caps. 

For existing and new SOFR-indexed, Floating-Rate Loans, these caps will be indexed to SOFR. For 

existing LIBOR-indexed Floating-Rate Loans, these caps will be indexed to LIBOR and willtransition to

a SOFR index only in accordance with their governing documents and the loan documents. To address 
63

the possibility that LIBOR-indexed caps will not be available at any point after December 31, 2021, we

asked primary servicers in mid-2021 to encourage borrowers to replace existing LIBOR-indexed caps 

before that date with LIBOR-indexed caps that expire on or after LIBOR cessation in June 2023. Doing 

so would ensure that the affected loans and caps are indexed to the same rate prior to LIBOR 

cessation. If LIBOR-indexed caps are not available for borrowers with maturing LIBOR-indexed caps, 

those borrowers may purchase SOFR-indexed replacement caps.

As of January 15, 2021, SOFR-indexed, floating-rate loan borrowers were no longer permitted to 

purchase initial LIBOR-indexed cap agreements. Instead, only SOFR-indexed cap agreements are 

permitted. 

❖ SBL Hybrid Floating-Rate Loans

Unlike other Multifamily lines of business, Small Balance Loans offer delegated quoting. SOFR-related 

modifications to the SBL Hybrid loans origination are minor, however, any changes deemed necessary 

have been tailored to the delegated quote process. Details on the SOFR-indexed SBL Hybrid loan 

structure have been included below:

SOFR-indexed SBL Hybrids will be indexed to 30-day Average SOFR during the floating-rate period. 

Freddie Mac will use the NY Fed’s published rates on its website for index determination. 

It is important to note that the rate reset frequency will remain unchanged and will continue to reset 

every six months during the floating-rate period. Similarly, interest rate protection will remain 

unchanged and will continue to have an embedded structure.

If any aspect of the SOFR-indexed SBL Hybrid loan structure is not mentioned in this playbook, no 

change is currently planned relative to the existing loan structure for SBL Hybrids with a floating-rate 

period indexed to LIBOR.

12.3 Selling and delivering MF SOFR Floating-Rate Loans

❖ What’s changing?

Loan Documents have been revised to reflect the SOFR index.

❖ What’s not changing?

The Delivery process will remain unchanged. SOFR will impact the index language in the legal 

documents and the Purchase team will review to ensure the appropriate index is referenced as agreed 

to in the Commitment.

12.4 MF floating-rate securities indexed to SOFR

As part of Freddie Mac’s broader LIBOR transition efforts, floating-rate K-Deals now include at least 

one bond class with a coupon indexed to SOFR. The SOFR-indexed bonds are collateralized by loans 

indexed to either LIBOR or SOFR.

❖ KF SOFR bonds with LIBOR-indexed collateral (“LIBOR-SOFR Bonds”)

Freddie Mac Multifamily priced its first floating-rate K-Deal (KF73) with bonds indexed to SOFR and 

collateralized by LIBOR-indexed loans in December 2019. The intent was to provide support to the 

SOFR bond market ahead of a SOFR loan offering, create liquidity, and provide proof of concept, thus 

easing the ultimate transition to SOFR. KF73 provided such proof of concept.
64

The classes of securities issued are similar to prior LIBOR floating-rate K-Deals with a couple of 

changes. First, Class A certificates are split into two pro-rata classes of securities:

• LIBOR-indexed Class AL

• SOFR-indexed Class AS

Second, Class X Interest calculation has also been updated. Class X (formerly split into Class XI and 

Class XP) certificate holders receive interest-only payments indexed to LIBOR. Solely for the purpose 

of determining the interest amount payable to the Class X certificate holders, Class AS is calculated as 

a LIBOR-indexed bond (not a SOFR-indexed bond).

The Class X Certificates:

1.) Receive interest-only payments indexed to LIBOR and notional to Classes AL, AS, B, and C

2.) are entitled to Static Prepayment Premiums

Class AL is paid pro rata with Class AS. The Class AL and AS Principal Balances are sized based on 

investor demand.

Figure 12-1: LIBOR-SOFR bond structure5

5 For illustrative purposes only. Class sizes do not reflect actual bond offering.
65

❖ Basis risk guarantee

Should SOFR exceed LIBOR, an additional Freddie Mac guarantee covers any basis mismatch between 

the SOFR-indexed bonds and the LIBOR-indexed loans:

• Freddie Mac is providing a Basis Risk Guarantee that is in addition to the standard K- Deal 

Credit Guarantee

• The Credit Guarantee continues to cover credit losses while the Basis Risk Guarantee covers 

any cash flow shortfalls to the LIBOR-SOFR bonds due to the mismatch between amounts 

collected on the LIBOR-indexed loans and amounts due on the SOFR-indexed bonds

• Figure 12-2 illustrates what happens in the event SOFR is greater than LIBOR. LIBOR is 

assumed to be 2.00%, and SOFR is assumed to be 2.05%. In this example, there is not enough 

interest on the LIBOR loans to pay the SOFR bond coupon creating an interest shortfall. The 

2.00% LIBOR loan interest is passed through to certificate holders, and Freddie Mac provides a 

Basis Risk Guarantee Cap Payment to cover the shortfall of 0.05%

Figure 12-2: Payment Example 1: SOFR is greater than LIBOR

• Interest income received by the Trust from the underlying LIBOR-indexed loans (assumed to

be 2.00% for illustrative purposes)

• Interest due to Class AS certificate holders calculated using monthly SOFR (assumed to be 

2.05% for illustrative purposes)

• Freddie Mac provides a Guarantee Cap Payment to the Trust to cover the interest shortfall 

caused by the mismatch between LIBOR loan inflows and SOFR bond outflows due to Class AS

certificate holders (0.05%)

Figure 12-3 illustrates the case where LIBOR is greater than SOFR creating an interest excess. LIBOR is 

assumed to be 2.05%, and SOFR is assumed to be 2.00%. 2.00% of the 2.05% LIBOR loan interest is 

passed through to certificate holders, and Freddie Mac receives the 0.05% interest excess in the form 

of a Basis Risk Guarantee Fee.
66

Figure 12-3: Payment Example 2: LIBOR is greater than SOFR

• Interest income received by the Trust from the underlying LIBOR-indexed loans (assumed to

be 2.05% for illustrative purposes)

• Interest due to Class AS certificate holders calculated using monthly SOFR (assumed to be 

2.00% for illustrative purposes)

• Freddie Mac receives a Basis Risk Guarantee Fee equal to the interest surplus caused by the

mismatch between LIBOR loan inflows and SOFR bond outflows due to Class AS certificate 

holders (0.05%)

. See Section 12.7 for details on how the LIBOR indexed loans and bonds will convert at LIBOR 

cessation.

❖ LIBOR-SOFR bond index

The NY Fed publishes 30-, 90- and 180-day SOFR averages on their website along with index values for 

use in calculating the SOFR average of alternative day counts. Interest due to LIBOR-SOFR Bond 

classes will be calculated “in advance” of interest being due.

K-F73 through K-F76

Freddie Mac calculates the SOFR rate based on a calendar month compound average using the NY 

Fed’s published index. Said differently, Freddie Mac built a SOFR calculator based on the calculation 

methodology published by the NY Fed/ARRC on November 4, 2019. Freddie Mac discloses the 

calculated rates on its website (See “Vendor Readiness” section below for instructions).

K-F77 through K-F94

The applicable SOFR rate is 30-day Average SOFR, which is published by the NY Fed. The 30-Day 

Average SOFR rate that is available as of 3:00 p.m. ET should be used for calculations. 
67

❖ LIBOR-SOFR bond index determination

K-F73 through K-F76

The LIBOR-SOFR bond has a SOFR Determination Date on the first business day of the Loan Interest 

Accrual Period. LIBOR-indexed bonds and LIBOR-indexed loans have a LIBOR Determination Date on 

the last business day of the month prior to the Loan Interest Accrual Period.

As always, bond payments are made on the 25th day of the calendar month (or the succeeding 

business day) in which the Loan Payment Date occurs. Figure 12-4 illustrates the loan interest accrual 

and the bond interest accrualtimelines.

Figure 12-4: LIBOR-SOFR loan and bond interest accrual timelines (K-F73 through K-F76)

The current LIBOR-indexed bonds have a LIBOR Determination Date the business day prior to the Loan 

Interest Accrual Period. Since SOFR is published one business day after its effective date, SOFRindexed bonds have a SOFR Determination Date on the first business day of the Loan Interest Accrual

Period.

As with LIBOR-indexed bonds, the SOFR index applicable to the LIBOR-SOFR bonds in K-F73 through 

K-F94 cannot be less than zero.

K-F77 through K-F94

Similar to LIBOR, the SOFR Determination Date is the business day prior to the Loan Interest Accrual 

Period.

As always, bond payments are made on the 25th day of the calendar month (or the succeeding 

business day) in which the Loan Payment Date occurs. Figure 12-5 illustrates the loan interest accrual 

and the bond interest accrualtimelines.
68

Figure 12-5: LIBOR-SOFR loan and bond interest accrual timelines (K-F77 through K-F94)

The current LIBOR-indexed bonds have a LIBOR Determination Date the business day prior to the Loan 

Interest Accrual Period. The SOFR-indexed bonds have a SOFR Determination Date that is also the 

business day prior to the Loan Interest Accrual Period.

In Figure 12-6, the following assumptions are made for illustrative purposes:

• 30-Day Average SOFR is -1.00%, -0.75% and -0.50%, respectively

• Class AS Margin is 0.25%, 0.50% and 0.75%, respectively

Since the LIBOR-SOFR Bond in K-F77 through K-F94 cannot have a pass-through rate less than zero, 

the Class AS Pass-Through Rates in Scenarios 1 and 2 are floored at 0.00%. LIBOR-SOFR bonds in KF77 through K-F94 will in no event have a pass-through rate less than zero.

Figure 12-6: Class AS LIBOR pass-through rate floor (K-F77 through K-F94)

❖ KF SOFR bonds with SOFR-indexed collateral (“SOFR-SOFR Bonds”)

Freddie Mac Multifamily began offering SOFR-indexed loans on September 1, 2020 and stopped 

purchasing LIBOR-indexed loans after December 31, 2020. K-F95 was the first floating-rate K-Deal with 

bonds indexed to SOFR and collateralized by SOFR-indexed loans.

The current bond structure of the securities issued is similar to existing LIBOR floating-rate K-Deals 

with the principal variance being that the SOFR-SOFR Bonds (Classes AS, BS, CS, and XS) and their 

SOFR loan collateral is indexed to the 30-day Average SOFR rate.

Freddie Mac Multifamily may or may not offer LIBOR bonds (Classes AL, BL, CL, and XL) collateralized 

by LIBOR-indexed loans in the same KF transaction in which SOFR-SOFR bonds are offered. If LIBOR 

bonds are offered, underlying mortgage loans are group directed such that:

• LIBOR bonds are collateralized exclusively by LIBOR-indexed loans

Class AS Margin

[0.25%]2

30-Day Avg. SOFR Rate

[-1.00%]1

Class AS Margin

[0.50%]2

30-Day Avg. SOFR Rate

[-0.75%]1

Class AS Margin

[0.75%]2

30-Day Avg. SOFR Rate

[-0.50%]1

0.00%

0.00%

0.00%

Class AS Pass-Through Rate

[0.00%]3

Class AS Pass-Through Rate

[0.00%]3

Class AS Pass-Through Rate

[0.25%]

Scenario 1

Scenario 2

Scenario 3
69

• SOFR-SOFR bonds are collateralized exclusively by SOFR-indexed loans

Figure 12-7 demonstrates the following characteristics of SOFR-SOFR bond classes:

• The Class XL Certificates 1) receive interest-only payments indexed to LIBOR and notional to 

Classes AL, BL, and CL, and 2) are entitled to Static Prepayment Premiums

• The Class XS Certificates 1) receive interest-only payments indexed to SOFR and notional to 

Classes AS, BS, and CS, and 2) are entitled to Static Prepayment Premiums

• MF may not offer Class BL or BS Classes. If Class BL and BS are not offered, Classes AL and AS 

may extend to the 7.5% credit enhancement level

Figure 12-7: SOFR-SOFR bond structure6

❖ SOFR-SOFR bond index

Interest due to SOFR-SOFR bond classes will be calculated “in advance” of interest being due.

The applicable SOFR rate is 30-day Average SOFR, which is published by the NY Fed. The 30-Day 

Average SOFR rate that is available as of 3:00 p.m. ET should be used for calculations. 

❖ SOFR-SOFR bond index determination

Similar to LIBOR bonds, the SOFR Determination Date is the business day prior to the loan interest 

accrual period.

As always, bond payments are made on the 25th day of the calendar month (or the succeeding 

business day) in which the Loan Payment Date occurs. Figure 12-8 illustrates the loan interest accrual 

and the bond interest accrualtimelines.

6 For illustrative purposes only. Class sizes to not reflect actual bond offerings.

Coupon

XL1

100.0% 10.0% 7.5% 0.0%

CS

$37.53

BS

$12.53,4

AL

LIBOR + [ ]%

$4503

XP1

AS

SOFR + [ ]%

$4503

100.0% 10.0% 7.5% 0.0%

Guaranteed Classes Non-Guaranteed Classes

CL

$37.53

BL

$12.53,4

XS2
70
71

Figure 12-8: SOFR-SOFR loan and bond interest accrual timeline

Current LIBOR-indexed bonds have a LIBOR Determination Date the business day prior to the Loan 

Interest Accrual Period. SOFR-SOFR bonds have a SOFR Determination Date that is also the business 

day prior to the Loan Interest Accrual Period.

Similar to LIBOR bonds, the SOFR index applicable to SOFR-SOFR bonds cannot be less than zero. The 

following assumptions are made in Figure 12-9 for illustrative purposes:

• Interest income received by the Trust from underlying SOFR based loans is 2.00%

• Interest due to SOFR-SOFR (class AS, BS, CS, or XS) bondholders calculated is 2.00%

Figure 12-9: SOFR pass-through rate floor (K-F95+)

❖ Vendor readiness

The NY Fed publishes 30-day Average SOFR on its website on or about 2:30 p.m. ET. The 30-Day 

Average SOFR rate that is available as of 3:00 p.m. ET should be used for calculations. Freddie Mac 

discloses the calculated rate on its website via the monthly SOFR rate disclosure. The instructions to 

retrieve the calculated rate from Freddie Mac’s website are below.

1. Access Freddie Mac’s datafiles via its website

2. In the top right corner, click “Login” to get started. An account must be created prior to 

accessing the calculated rate

3. After logging in, click the blue dot in the top right corner. From the drop-down menu, select 

"Data Files and Reports"

4. Using the menu on the left side of the page, select “Reset” from the options below "MultiClass”

5. Select “Report” at the top of the page (in blue) and then select "Off-Platform Deal Indices"

Pass-Through Loan 

Interest

[2.00%]

Final Payment to SOFRSOFR bondholders

[2.00%]

SOFR Loan Inflows1

[2.00%]

SOFR-SOFR Bond 

Outflows2

[2.00%]
72

6. Click "Year" and select "2023"

7. Click “Month” and select the appropriate month

8. Select the desired file name and save it as a text file

9. For example, for January 2020 the title of the data can be found on the far right of the file 

10. Copy all of the text in the string. Paste the test string into an Excel as "Text." This will allow the 

contents to be sorted into appropriate columns, which will make the file functional

❖ PC securities

On account of its pass-through nature, SOFR-indexed Multi PCs will only be issued if the underlying 

loan for a PC is SOFR-indexed. Freddie Mac cannot issue a SOFR-indexed Multi PC with an underlying 

loan indexed to LIBOR. Since a Multi PC is a pass-through, the SOFR index on a PC will be the same as 

the SOFR index on the underlying loan; index determination will be in sync with the index 

determination on the underlying loan. SOFR-indexed Multi PCs will have the same accrual period and 

method as the underlying SOFR-indexed loan with a 55-day delay convention.

Freddie Mac has only issued floating-rate Multi PCs indexed to LIBOR in the past. The transition of 

such LIBOR-indexed Multi PCs will be addressed to be consistent with other legacy MF LIBOR loan and 

bond approaches.

12.5 Servicing MF SOFR Floating-Rate Loans

This section focuses on Floating-Rate Loans that have been tied to a SOFR index since origination and 

will not require conversion upon LIBOR cessation.

❖ Reporting and remitting

Generally, servicing of a SOFR-indexed floating-rate loan is not expected to be materially different from 

the servicing of a LIBOR-indexed loan. In particular, Freddie Mac does not anticipate there will be any 

impact to the following:

• Floating-rate calculation

• Servicer reporting and remittance deadlines

• Systems and processes used to report to Freddie Mac

• Data reported to Freddie Mac

• Interest day basis and accrual periods

• Custodial accounts tied to underlying loans

A SOFR-indexed loan does present some fundamental differences compared to a LIBOR- indexed loan, 

including in the following areas:

• Published source of the index value

• Index value availability timing

• Index determination methodology

❖ Master servicing

The servicing impact for SOFR loans is becoming operationally prepared to calculate a SOFR- based 

interest rate. This occurs at the primary servicing level. Master servicers will need to become familiar 

with SOFR index calculation protocols and ensure that their primary servicers are equally capable of 

processing rate changes under the new SOFR index environment.
73

❖ Transfer of servicing

Similar to any servicing transfer, it is the responsibility of the transferor to ensure the transferee, as 

the receiving servicer, is aware and able to support SOFR loans without interruption. Particular 

attention should be taken to confirm transferees know the published source of indices, timing of 

availability, and calculations.

❖ What actions may servicers take to be ready?

Readiness for SOFR requires an assessment of internal processes and systems prior to 

implementation. There are a number of industry resources that provide guidance on actions and best 

practices for the implementation of SOFR, including the following:

• CRE Finance Council (“CREFC”) produces updates and guidance associated with SOFR

• The ARRC published “Practical Implementation Checklist for SOFR Adoption” in September 

2019

Additionally, the following considerations apply to servicers:

• Servicers should anticipate that more than one SOFR index may be offered (e.g., 30- day, 90-

day, calendar month, etc.)

• Servicers should understand how the applicable index is determined and calculated and know 

the officially published sources for the index

• Servicers will need to determine if their systems are operationally able to process the monthly 

recalculation of the SOFR index

• Servicers will need to determine if this recalculation can be done automatically or manually to 

correctly have the entire accrual period calculated using the new floating-rate

12.6 Discontinuation of originating and selling MF LIBOR Floating-Rate 

Loans

❖ Timeline leading up to the cessation of purchasing LIBOR Floating-Rate Loans

Below are the milestones that have passed relating to our transition of our new products from LIBOR 

to SOFR. 

• September 1, 2020: Freddie Mac ceased issuing quotes for LIBOR-indexed loans; all new 

floating-rate quotes are for SOFR-indexed loans. For SBL, Optigo® lenders can no longer issue 

applications for SBL hybrid loans with a floating-rate period indexed to LIBOR; all new hybrid 

loan applications issued are SOFR-indexed

• November 9, 2020: The last day for submission of underwriting package for LIBOR-indexed

floating-rate and hybrid loans to Freddie Mac

• December 11, 2020: Last day for submission of final delivery package for LIBOR-indexed

floating-rate and hybrid loans to Freddie Mac

• December 31, 2020: Last day for Freddie Mac to purchase LIBOR-indexed floating-rate and 

hybrid loans, regardless of the loan application or the date of the note

❖ What’s not changing?

The Delivery process will remain unchanged. The Purchase team will review to ensure the appropriate 
74

index is referenced as agreed to in the Commitment. As loans are designated for securitization, the 

Loan Sales team will package the applicable mortgage and servicing files and forward them to the 

Trustees and Master Servicers.

12.7 Multifamily Legacy LIBOR Transition 

❖ Freddie Mac Multifamily securities will all transition to a spread-adjusted 30-Day Average SOFR 

rate with some nuances to consider:

1. Legacy Floating-Rate K-Deals through KF72, Floating-Rate Multi PCs® and Q008 – These deals 

only include certificates and underlying loans indexed to 1MO LIBOR. All certificates and 

bonds will convert to the 30-day Average SOFR plus the 1MO Adjustment Factor upon LIBOR 

cessation. Please note that the loans collateralizing Q008 are Hybrid ARMs that have all 

converted to floating-rate and are currently indexed to 1MO LIBOR.

2. KSKY and Floating-Rate KL, KJ, KS (excluding KS09 and KS19) and SASB K-Deals – These 

esoteric deals may contain both fixed and floating-rate certificates. The floating-rate 

certificates and their underlying loan collateral are indexed to 1MO LIBOR and will convert to 

30-day Average SOFR plus the 1MO Adjustment Factor upon LIBOR cessation. Please note that 

KSKY is collateralized by taxable and tax-exempt municipal housing bonds issued by the New 

York State Housing Finance Agency (“NYSFHA”). Pursuant to the underlying municipal 

housing bond documents, Bank of New York Mellon, in its role as Bond Trustee, selects the 

fallback rate upon LIBOR cessation with the consent of Freddie Mac. No basis mismatch is 

expected to exist between the underlying municipal housing bonds and the KSKY certificates.

3. KF73-KF76 – The Class AS certificates are indexed to the calendar month compounded 

average of published SOFR rates calculated and published by Freddie Mac and will continue to 

be for the life of each deal. The Class AL and subordinate certificates and all of the underlying 

loans are indexed to 1MO LIBOR and will convert to 30-Day Average SOFR plus the 1MO 

Adjustment Factor similar to the legacy LIBOR deals discussed above. The Basis Risk 

Guarantee for these Class AS certificates will apply for the life of each deal. Any excess interest 

will flow to the Basis Risk Guarantee Fee paid to Freddie Mac.

4. KF77-KF94 and KS14 - The Class AS certificates are indexed to 30-day Average SOFR. The Class 

AL and subordinate certificates and all of the underlying loans are indexed to 1MO LIBOR and 

will convert to the 30-day Average SOFR plus the 1MO Adjustment Factor similar to the legacy 

LIBOR deals discussed above. The Basis Risk Guarantee for the Class AS certificates will apply 

for the life of each deal. Any excess interest resulting from the Adjustment Factor that will be 

added to the fallback index on the loans will flow to the Basis Risk Guarantee Fee paid to 

Freddie Mac.

5. KF95-KF98 and KF100 - The Class AS certificates and their underlying loans are indexed to 30-

day Average SOFR. The Class AL certificates and their underlying loans are indexed to 1MO 

LIBOR and will convert to 30-day Average SOFR plus the 1MO Adjustment Factor similar to the

legacy LIBOR deals discussed above. The subordinate certificates are WAC capped meaning 

they interest paid to investors will not exceed the weighted-average coupon (“WAC”) of the 

underlying loans.

6. Legacy Small Balance FRESB Deals through SB82 (excluding SB3) – These transactions contain 

Hybrid certificates at different tenors (5-, 7-, and 10-yr) that pay a fixed-rate until the last 

underlying Hybrid ARM loan in each related Hybrid ARM loan group converts to a floating-rate 
75

indexed to 6MO LIBOR, at which point, the related, guaranteed Hybrid bonds will convert to 

1MO LIBOR. All guaranteed Hybrid bonds and Hybrid ARM loans that have converted to either 

1MO or 6MO LIBOR will transition to 30-day Average SOFR plus either the 1MO or 6MO 

Adjustment Factor as applicable upon LIBOR cessation. Otherwise, the guaranteed Hybrid 

bonds and Hybrid ARM loans still paying a fixed-rate as of the LIBOR Cessation Date will 

convert to 30-day Average SOFR plus either the 1MO or 6MO Adjustment Factor as applicable 

on their respective conversion dates. The Hybrid bonds will continue to be WAC 

capped. Please note that the FRESB subordinate Class B certificates will receive a fixed-rate 

from each loan group until the related Hybrid certificates convert to floating-rate indexed to 

1MO LIBOR, at which point the rate contributed to the Class B certificates from the related 

Hybrid ARM loan groups will convert to a floating-rate indexed to 6MO LIBOR. Upon LIBOR 

cessation, the rate contributed to the Class B certificates from the related Hybrid ARM loan 

groups will be indexed to 30-day Average SOFR plus the 6MO Adjustment Factor. Any excess 

interest will flow to the IO bonds.

7. SB83-SB92 – These transactions do not include floating-rate certificates indexed to LIBOR. 

That said, they do contain Hybrid certificates at different tenors (5-, 7-, and 10-yr) that pay a 

fixed-rate until the last underlying Hybrid ARM loan in each related Hybrid ARM loan group 

converts to a floating-rate, which may be indexed to either 6MO LIBOR or 30-day Average 

SOFR. All Hybrid ARM loans indexed to 6MO LIBOR will convert to 30-day Average SOFR plus 

the 6MO Adjustment Factor on their respective conversion dates, all of which occur after the 

LIBOR Cessation Date. All Hybrid ARM loans indexed to 30-day Average SOFR will transition to 

30-day Average SOFR on their respective conversion dates. The related guaranteed Hybrid 

Certificates will convert to a floating-rate indexed to 30-day Average SOFR once the last 

underlying Hybrid ARM loan in each related Hybrid ARM loan group converts to its respective 

floating rate and will be WAC capped. Please note that the subordinate Class B certificates will 

receive a fixed-rate from each loan group until the related Hybrid certificates convert to 

floating-rate, at which point, the rate contributed to the Class B certificates from the related 

Hybrid ARM loan groups will convert to a floating-rate indexed to 30-day Average SOFR. Any 

excess interest will flow to the IO bonds.

8. SB3 - This 3rd-party transaction contains Hybrid certificates at different tenors (3-, 5-, 7-, and 

10-yr) that pay a fixed-rate until the last underlying Hybrid ARM loan in each related Hybrid 

ARM loan group converts to a floating-rate indexed to 12MO LIBOR, at which point the related 

Hybrid certificates will convert to a floating-rate indexed to 1MO LIBOR and are WAC 

capped. All existing Hybrid certificates and Hybrid ARM loans that have converted to LIBOR 

will transition to 30-day Average SOFR plus the applicable 1MO or 12MO Adjustment Factor 

upon LIBOR cessation. Otherwise, the existing Hybrid certificates and Hybrid ARM loans still 

paying a fixed-rate as of the LIBOR Cessation Date will convert to 30-day Average SOFR plus 

the applicable 1MO or 12MO Adjustment Factor on their respective conversion dates. The 

Hybrid bonds will continue to be WAC capped. Please note that the FRESB subordinate Class 

B certificates will receive a fixed-rate from each loan group until the related Hybrid certificates 

convert to floating-rate, at which point, the rate contributed to the Class B certificates from 

the related Hybrid ARM loan groups will convert to a floating-rate indexed to 6MO 

LIBOR. Upon LIBOR cessation, the rate contributed to the Class B certificates from the related 

Hybrid ARM loan groups will be indexed to 30-day Average SOFR plus the 6MO Adjustment 

Factor.
76

9. ML01-ML04, KS09 and KW04 – These deals include floating-rate Class A certificates indexed to 

1MO LIBOR. The underlying loans are fixed-rate. The certificates will transition to 30-day 

Average SOFR plus the 1MO Adjustment Factor upon LIBOR cessation. The Basis Risk 

Guarantee for the floating-rate Class A certificates will apply for the life of each deal.

10. Q003, Q007, Q010, Q011, Q013 – Each class of certificates pays a floating-rate based on the WAC 

of the related loan group collateralizing each class of certificates. The underlying 3rd-party 

Hybrid ARM loan collateral in each related loan group converts to a floating-rate indexed to

either 12MO LIBOR or 6MO LIBOR. All existing Hybrid ARM loans that have converted to either 

12MO LIBOR or 6MO LIBOR will transition to 30-day Average SOFR plus the applicable 12MO 

Adjustment Factor or 6MO Adjustment Factor upon LIBOR cessation. Otherwise, the existing 

Hybrid ARM loans still paying a fixed-rate as of the LIBOR Cessation Date will convert to 30-day 

Average SOFR plus the applicable 12MO Adjustment Factor or 6MO Adjustment Factor on their 

respective conversion dates. The Hybrid bonds will continue to be based on the WAC of the 

related loan group.

Figure 12-10: Summary of Freddie Mac Multifamily Securities replacement indices
77

13. Appendix: Multifamily Credit Risk Transfer Transactions

(Freddie Mac)

13.1 Introduction

The purpose of this chapter is to provide market participants guidance on transitioning LIBOR-based

MF CRT, which are known as Multifamily Structured Credit Risk Notes (“Multifamily SCR Notes” or 

“MSCR Notes”), to SOFR-indexed indices.

Freddie Mac completed its first SOFR-indexed MF CRT issuance, MSCR 2021-MN1, in January 2021. 

Prior to its first SOFR issuance, Freddie Mac issued three Multifamily SCR Notes, all of which were 

fixed-rate notes, between 2016 and 2017, so there are no Legacy MF CRT LIBOR securities to transition 

to a benchmark replacement.
78

14.Summary of Prior Changes

Section Summary of changes

June 2020

1.2 LIBOR transition 

milestones

▪ Updated the date of the first SOFR-indexed CMO issuance from June 2020 to 

July 2020

4. Collateralized 

Mortgage Obligations

▪ Updated the date of the first SOFR-indexed CMO issuance from June 2020 to 

July 2020

▪ Changed the “Determination Date” to 2 Business Days (2BD) prior to the 

beginning of the accrual period

▪ Updated graphics to reflect a Determination Date of 2 BD prior to the beginning 

of the accrual period for 45-day, 55-day and 75-day delay and Non-Delay 

Compounded SOFR-indexed securities (per investor deck)

July 2020

3. Single-Family 

Credit Risk Transfer 

transactions

▪ Specified that the Determination Date will be 2 Business Days (2BD) prior to the 

beginning of the accrual period for CRT securities

5. Fannie Mae 

Multifamily 

Adjustable-Rate 

Mortgages and 

Mortgage-Backed 

Securities

▪ Clarified that Fannie Mae is currently designing a new MF SOFR-indexed 

“capped” ARM

▪ Specified that MF SOFR-indexed product terms will be publicly announced in 

the third quarter of 2020

7. Fannie Mae 

Multifamily Credit 

Risk Transfer 

transactions

▪ Specified that the Determination Date will be 2 Business Days (2BD) prior to the 

beginning of the accrual period for CRT securities

August 2020

1. Overview ▪ Freddie Mac Multifamily – Updated LIBOR product dates

2. Single-Family 

Adjustable-Rate 

Mortgages and 

Securities

▪ Updated language to reflect that Fannie Mae is now accepting delivery of 

SOFR-indexed ARMs

4. Collateralized 

Mortgage Obligations

▪ Updated language to reflect that Fannie Mae and Freddie Mac are now issuing 

SOFR-indexed CMOs

6. Freddie Mac 

Multifamily FloatingRate Loans and 

Securities

▪ Updated SOFR-indexed loan offering details, including loan structure, interest 

rate protection, and origination and underwriting process changes

September 2020
79

1. Overview

▪ Updated the date to offer SF ARMs and securities products for Freddie Mac 

from Nov. 16, 2020 to Nov. 9, 2020

▪ Updated Freddie Mac cessation of SF LIBOR ARMs and securities to include the 

last LIBOR ARM settlement on Dec. 31, 2020 and the last LIBOR ARM Guarantor 

PC issue date on Dec. 1, 2020

2. Single-Family 

Adjustable-Rate 

Mortgages and 

Securities

▪ Updated the announcement regarding the last MBS/Guarantor PC issue date to 

indicate that it would be for LIBOR ARMs with a latest settlement date of Dec. 

31, 2020

▪ Changed date from Nov. 16, 2020 to Nov. 9, 2020 for Loan Selling Advisor 

system updates and made a minor word change (i.e., “similar to” to “like”)

▪ Inserted language and dates regarding Loan Product Advisor’s availability

▪ Deleted “Fannie Mae only” and “Freddie Mac only” language under actions to 

consider in GSE systems for preparation for SF SOFR ARMs section

▪ Made a minor word change (i.e., “accept” to “purchase”) in Cessation of 

Purchase of SF LIBOR ARMs section

4. Collateralized 

Mortgage Obligations

▪ Updated to indicate that the cessation will not apply to RCR/MACR exchange or 

resecuritizations of previously issued LIBOR-indexed certificates (whether CMO 

or ARM certificates) as long as such resecuritizations do not increase the 

exposure of LIBOR-indexed certificates

5. Fannie Mae 

Multifamily 

Adjustable-Rate 

Mortgages and 

Mortgage-Backed 

Securities

▪ Updated to indicate that Fannie Mae has developed the Structured ARM, 7/6 

ARM, Hybrid ARM and a new MF capped ARM product and released them on 

Sep. 1, 2020

▪ Updated to indicate that Fannie Mae has the capability to purchase SOFRindexed ARMs beginning Sep. 1, 2020

▪ Specified that product-specific features were made available on Fannie Mae’s 

Multifamily website as well as during external training sessions

▪ Noted that at this time, at least one cap provider is prepared to issue SOFRindexed interest rate caps

▪ Removed margin resulting from change in index from key update in originating 

and underwriting MF SOFR-indexed ARMs

▪ Specified that the Multifamily Guide has been updated

▪ Updated that Fannie Mae systems reflect options and dropdowns for SOFRindexed ARMs

▪ Specified that servicers are required to manage ARM payments throughout the 

life of newly originated SOFR-indexed loans

▪ Specified that servicing systems require updates to manage calculations and 

reconciliation for borrower payments using the new rate

6. Freddie Mac 

Multifamily FloatingRate Loans and 

Securities

▪ Updated Interest rate protection section with details on availability and 

interest rate caps. Also updated Small Balance Loan Hybrid Floating-Rate 

Loans section

▪ Deleted details regarding overlap period in the Conventional, Seniors Housing, 

TAH section. Updated link for “Refinance Test”

▪ Updated to indicate that as of Sep. 1, 2020, Freddie Mac ceased issuing quotes 

for LIBOR-indexed loans

▪ Made grammatical and tense changes to the section 6
80

October 2020

1.2 LIBOR transition 

timelines

▪ Added a footnote to clarify that the GSEs will no longer accept LIBOR-indexed 

pool deliveries after December 31, 2020. However, the GSEs may continue to 

issue LIBOR-indexed MBS products after December 31, 2020 using cash loans 

with application dates of September 30, 2020 or earlier in its portfolio

▪ Revised footnote 3 to reflect GSE’s continued issuance of resecuritizations of 

previously issued LIBOR-indexed certificates and include details of total 

unpaid balance of LIBOR-indexed certificates. 

2. Single-Family 

Adjustable-Rate 

Mortgages and 

Securities

▪ Updated language to clarify that December 1, 2020 is the last issue date for 

LIBOR-indexed ARM MBS/Guarantor PCs to be delivered to the GSEs with a 

latest LIBOR-indexed ARM settlement date of December 31, 2020

▪ Updated language to indicate that the GSEs have stopped accepting LIBOR 

ARMs with Application Received Dates after September 30, 2020

▪ Updated the transition timeline graph to clarify the milestone description for 

December 31, 2020

▪ Removed language calling out specific plan that the GSEs will stop purchasing 

after December 31, 2020

4. Collateralized 

Mortgage Obligations

▪ Updated language to indicate that Freddie Mac and Fannie Mae have ceased 

offering new LIBOR-indexed CMOs for issuance

▪ Updated the graphs in the administration section to indicate that LIBOR is no 

longer the current state and Compounded SOFR is no longer a hypothetical 

implementation

4.7 Approach for 

transitioning legacy 

CMOs

▪ Updated language to reflect next steps for legacy LIBOR-indexed CMOs

5. Fannie Mae 

Multifamily 

Adjustable-Rate 

Mortgages and 

Mortgage-Backed 

Securities

▪ Updated language to reflect that Fannie Mae now has new SOFR-indexed 

product offerings available

6. Freddie Mac MF 

Credit Risk Transfer 

Transactions

▪ Removed “In the event that Freddie Mac believes it is necessary to issue new 

SCR Notes again prior to market readiness and interest in MF CRT FloatingRate securities based on an ARR, Freddie Mac expects the SCR Notes will be a 

LIBOR Floating-Rate CRT issuance and will be structured in alignment with the 

STACR program.”

November 2020

1. Overview

▪ Updated dates and details around SOFR and LIBOR product offerings for 

Fannie Mae MF ARMs and MBS

▪ Removed references to specific ARRs for existing contracts from the overview 

section and added them to the product-specific sections

2. Single-Family 

Adjustable-Rate 

Mortgages and 

Securities

▪ Updated the transition timeline graph to clarify delivery milestones in 

December 2020 and updated the transition of existing LIBOR ARM loans to TBD
81

3. Single-Family 

Credit Risk Transfer 

transactions

▪ Updated language to indicate Fannie will have the capability to issue SOFRindexed CRT deals in Q1 2021

▪ Updated outstanding SF CRT notes that are indexed to one-month LIBOR as of 

September 30, 2020 at Fannie Mae ($25.6 billion) and at Freddie Mac ($27.5 

billion)

▪ Updated the language and SF CRT timeline to indicate the issuance of Freddie 

Mac’s SOFR-indexed CRT

4. Collateralized 

Mortgage Obligations

▪ Added language on SOFR-indexed CMOs, transitioning from 30-day Average 

SOFR to Term SOFR, when Term SOFR becomes available

5. Fannie Mae 

Multifamily 

Adjustable-Rate 

Mortgages and 

Mortgage-Backed 

Securities

▪ Updated language to indicate that Fannie Mae has stopped accepting LIBOR 

loans with commitment dates after September 30, 2020

▪ Updated language to indicate that Fannie Mae has stopped issuing LIBORindexed ARM pools with MBS pool issue dates after December 1, 2020

▪ Updated transition milestone timeline to indicate that timeline for the legacy 

conversion to an ARR at MF’s discretion is TBD

▪ Updated language to clarify that Fannie Mae will purchase both LIBOR- and 

SOFR-indexed ARMs through the end of 2020

6. Freddie Mac 

Multifamily FloatingRate Loans and 

Securities

▪ Updated language to include SOFR-indexed bonds

▪ Added details on K-F-73, K-F76, K-F77, K-F94, SOFR-SOFR bonds

▪ Updated verbiage and added explanation of remaining key dates

7. Fannie Mae 

Multifamily Credit Risk 

Transfer transactions

▪ Updated the “as of date” for the $0.9 billion outstanding CRT notes indexed to 

one-month LIBOR from June 30, 2020 to September 30, 2020 (exposure 

remained the same since June)

March 2021

1. Overview ▪ Incorporated updates related to recent industry announcements regarding 

LIBOR cessation

2. Single-Family 

Adjustable-Rate 

Mortgages and 

Securities

▪ Updated transition timelines to reflect latest market announcements and 

consultations

▪ Updated and removed language to reflect the GSEs no longer purchasing SF 

LIBOR-indexed ARMs

3. Single-Family Credit 

Risk Transfer

▪ Updated figures to reflect the GSEs’ current outstanding legacy SF CRT notes

▪ Updated language around the discontinuation of LIBOR-indexed SF CRT deals 

at the end of Q4 2020 and current structure of SOFR-indexed CRT transactions

5. Fannie Mae 

Multifamily 

Adjustable-Rate 

Mortgages and 

Mortgage-Backed 

Securities

▪ Updated and removed language to reflect Fannie Mae no longer purchasing MF 

LIBOR-indexed ARMs

▪ Updated language around legacy LIBOR-indexed ARM product conversion

▪ Included new actions to consider for selling and delivering MF SOFR-indexed 

ARMs
82

6. Freddie Mac 

Multifamily FloatingRate Loans & 

Securities

▪ Updated language to address termination of LIBOR Cap option; removed 

requirements for purchasing a LIBOR-indexed Cap

▪ Modified tenses to reflect what has been done and what is still to be done

▪ Updated language to indicate that the SOFR-SOFR bond structure that started 

in K-F95 is the current structure in use

▪ Removed various subsections that contained outdated information

▪ Removed pipeline management, communications, and borrower outreach best 

practices from section 6.6

7. Fannie Mae 

Multifamily Credit Risk 

Transfer

▪ Updated figures to reflect Fannie Mae’s current outstanding legacy MF CRT 

notes

8. Freddie Mac MF CRT 

Transactions

▪ Updated content to reflect completion of Freddie Mac’s first SOFR-indexed MF 

CRT issuance

▪ Removed “Timeline and milestones” section

▪ Updated Legacy CRT transition section to reflect the plan to not issue any LIBOR 

based CRT deals in the future

October 2021

All Sections ▪ Updated formatting throughout document

1. Overview

▪ Updated the cessation date of key LIBOR tenors; added the ARRC’s 

endorsement of the CME Term SOFR Rates to the list of SOFR milestones with a 

link to the original announcement

2. Single-Family 

Adjustable-Rate 

Mortgages and 

Securities

▪ Figure 2-1: Added a milestone for the ARRC’s selection of Refinitiv as the vendor 

for benchmark replacements and updated language in timeline 

▪ 2.4 Preparation for SF SOFR ARMs: Updated Freddie Mac’s Loan Product 

Advisor timelines; updated language around 30-day Average SOFR Hybrid ARM 

Index codes and the SF MBS Disclosures Guide; removed Freddie Mac’s 

guidance to sellers on IFI J23 for non-SOFR-indexed ARMs

▪ 2.5 Transition Existing SF LIBOR ARMs: Added a statement for servicers about 

non-standard notes

3. Single-Family 

Credit Risk Transfer

▪ 3.2 SOFR-indexed CRT new issuance: Updated language to reflect the 

availability of Term SOFR, the issuance of SOFR-indexed CRT transactions, and 

added language about the determination of the administrative feasibility of 

Term SOFR

▪ Figure 3-1: Updated timeline to reflect Fannie Mae’s operational readiness for 

SOFR-indexed SF CRT issuance

▪ 3.3 Timeline and milestones: updates to reflect availability of Term SOFR

▪ 3.4 Legacy SF CRT transition: Updated estimates of outstanding SF CRT notes 

indexed to one-month LIBOR

4. Collateralized 

Mortgage Obligations

▪ 4.2 Overview: Updated information related to Term SOFR; added language 

about the determination of the administrative feasibility of Term SOFR

▪ 4.7 Approach for transition legacy CMOs: Added language about the 

determination of the administrative feasibility of Term SOFR
83

5. Fannie Mae 

Multifamily 

Adjustable-Rate 

Mortgages and 

Mortgage-Backed 

Securities

▪ Figure 5-1: Updated the conversion date for LIBOR-indexed MF ARMs

▪ 5.4 Preparation for MF SOFR-indexed ARMs: Updated index publication source 

language to show there have not been any recent updates

6. Freddie Mac 

Multifamily FloatingRate Loans and 

Securities

▪ 6.2 Planned product modifications: Added language about the use of Term 

SOFR and the determination of its administrative feasibility; added a statement 

about the availability of LIBOR-indexed interest rate caps

▪ Figure 6-1: Moved clarification from figure to footnotes

▪ 6.4 MF Floating-Rate securities indexed to SOFR: Removed an outdated 

statement about the conversion of LIBOR-indexed loans and bonds

▪ Figure 6-7: Moved clarification from figure to footnotes

7. Fannie Mae 

Multifamily Credit 

Risk Transfer

▪ 7-2 SOFR-indexed CRT new issuance: Provided updates related to Term SOFR; 

added language about the determination of the administrative feasibility of 

Term SOFR

▪ Figure 7-1: Updated timeline to reflect Fannie Mae’s operational readiness for 

SOFR-indexed MF CRT issuance

▪ 7-3 Legacy CRT transition: updated the “as of” date for estimated outstanding 

CRT notes indexed to one-month LIBOR

June 2022

All Sections

▪ Updated formatting, diction, and abbreviations throughout for consistency

▪ Updated language to reflect the Adjustable Interest Rate (LIBOR) Act 

▪ Updated language across all products to reflect the GSEs’ plan to make an 

official announcement on their final transition strategies

1. Overview

▪ Updated titles and links to key resources

▪ Updated footnotes to reflect the cessation of resecuritizing existing LIBORindexed Single-Family and Multifamily CMOs and MBS/PCs into new-issuance 

LIBOR-indexed bonds

2. Single-Family 

Adjustable-Rate 

Mortgages and 

Securities

▪ Removed language about final LIBOR-indexed SF ARM settlement date

▪ Added milestones for the Board’s proposed and final rulemaking and the 

rulemaking to the SF timeline

▪ Updated timeline to include year 2022 and tentative plans for a legacy 

transition announcement

▪ Updated margin features for Fannie Mae SF SOFR ARMs

3. Single-Family 

Credit Risk Transfers

▪ Updated to reflect Fannie Mae beginning to issue SF SOFR-indexed CRTs

▪ Updated timeline to include year 2022 and tentative plans for a final legacy 

transition strategy announcement

4. Collateralized 

Mortgage Obligations

▪ Updated language to reflect the cessation of resecuritizing existing LIBORindexed Single-Family and Multifamily CMOs and MBS/PCs into new-issuance 

LIBOR-indexed bonds

7. Fannie Mae 

Multifamily Credit 

Risk Transfer

▪ Shortened section to emphasize similarities to Section 3, “Single-Family Credit 

Risk Transfers,” and align with the structure of Section 8, “Freddie Mac 

Multifamily Credit Risk Transfer Transactions”
84

January 2023

All Sections

▪ Updated formatting, diction, and abbreviations throughout for consistency

▪ Updated language to reflect implementation of the Adjustable Interest Rate 

(LIBOR) Act

▪ Updated all sections to add details related to the legacy transition for each 

product

▪ Prior sections of the playbook focused on new products have been moved to 

the appendix

1. Overview

▪ Updated titles and links to key resources

▪ Added section defining the LIBOR Act

▪ Added new section on key industry and regulatory milestones

▪ Updated LIBOR transition timeline view

2. Single-Family

Adjustable-Rate 

Mortgages and 

Securities

▪ Updated introduction to reflect GSE announcement of CME Term SOFR 

selection

▪ Updated transition milestones timeline

▪ Updated sections 2.3-2.6 to focus on legacy LIBOR-indexed SF products

▪ Updated milestones for the Board’s final rulemaking on the SF timeline

3. MF ARMs and 

Securities

▪ Combined Fannie Mae and Freddie Mac MF ARMs and Securities information 

into one section

▪ Added consolidated transition milestone timeline

▪ Updated content throughout to describe the replacement rate determination 

and other details related to the transition of LIBOR-indexed MF products

4. CRT Transactions

▪ Consolidated Fannie Mae and Freddie Mac details for SF and MF CRTs into one 

section

▪ Added consolidated transition milestone timeline

▪ Updated content throughout to describe the replacement rate determination 

and other details related to the transition of LIBOR-indexed CRTs

▪ Clarified plan to keep all SOFR-indexed CRTs indexed to 30-Day Average SOFR

5. CMOs

▪ Moved CMO details to section 5

▪ Added consolidated transition milestone timeline

▪ Updated content throughout to describe the replacement rate determination 

and other details related to the transition of LIBOR-indexed CMOs

▪ Clarified plan to keep all SOFR-indexed CMOs indexed to 30-Day Average SOFR

April 2023

All Sections

▪ Updated Replacement rate determination sections to include finalized 

replacement index names, Refinitiv Instrument Codes (for SF) and all-in 

replacement rate calculations

1. Overview

▪ Added Replacement rate determination summary section, providing a 

consolidated view of benchmark replacement rate information for all products

▪ Adjusted all instances of “static spread” to “fixed tenor spread” to clarify the 

application of spread adjustments to replacement rates
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2. SF ARMs and 

MBS/PCs

▪ Updated index description and all-in replacement rate calculation information 

in Section 2.3

3. MF ARMs and 

Securities

▪ Updated section 3 to reflect naming conventions for Freddie Mac Multifamily 

Floating Rate Loans

▪ Updated index description and all-in replacement rate calculation information 

in Section 3.3

▪ Updated and restructured Section 3.4 to include additional illustrations of the 

impact of the transition on Fannie Mae Multifamily MBS products

4. CRT Transactions

▪ Updated 4.3 with additional clarity on spread adjustment to align with updates 

made to the FAQs

▪ Updated index description and all-in replacement rate calculation information 

in Section 4.3

3. CMOs ▪ Updated index description and all-in replacement rate calculation information 

in Section 5.3

June 2023

1. SF ARMs and 

MBS/PCs 

▪ Updated scenarios illustrating the conversion of legacy LIBOR-indexed ARMs in 

Section 2.4

▪ Updated servicing index descriptions for SF ARMs/MBS in Section 2.5

▪ Updated index descriptions for SF/MBS disclosures in Section 2.6 3. Multifamily 

ARMs, Floating-Rate Loans, and Securities

▪ Updated loan and bond interest accrual timeline illustrations in Section 3.3

2. Multifamily 

ARMs, 

Floating-Rate 

Loans, and 

Securities

▪ Updated loan and bond interest accrual timeline illustrations in Section 3.3