WASHINGTON, D.C. – Today, Ginnie Mae announced the transition of all outstanding London Interbank Offered Rate (LIBOR) mortgage-backed securities (MBS) to the Chicago Mercantile Exchange (CME) Group’s Term Secured Overnight Financing Rate (SOFR) (CME Term SOFR) with the publication of APMs 23-06 and 23-07. The applicable spread adjustments will also transition in accordance with all Adjustable Interest Rate (LIBOR) Act-related regulations and Mortgagee Letter 2023-09 issued by the Federal Housing Administration. MBS will begin transitioning following the retirement of LIBOR on June 30, 2023.
As of April 21, the Alternative Reference Rates Committee (ARRC) recommends using the Refinitiv USD IBOR Cash Fallbacks based on the CME Term SOFR, plus applicable spread adjustments for legacy LIBOR adjustable-rate mortgages and 30-day average SOFR for new originations. Ginnie Mae follows the recommendation of the ARRC.
Ginnie Mae is slated to launch a new SOFR-based pool for annually adjusting Home Equity Conversion Mortgages (HECM) on July 1, 2023. Single-family mortgages remain based on the Constant Maturity Treasury (CMT) index.
The Eligible Index Types table outlines the old and new indexes for legacy Single-Family Forward Adjustable-Rate Mortgages (ARMs), Adjustable-Rate Home Equity Conversion Mortgages (HECM ARMs) and changes to new Annual HECM ARMs.
Eligible Index Types |
Single-Family Forward
Adjustable-Rate Mortgages (ARMs) |
Adjustable-Rate Types | Initial Note Rate and Periodic
Adjustments |
Legacy LIBOR-based Hybrid ARMs | 12-month CME Term SOFR* |
CMT-based Hybrid ARMs | 1-year CMT |
Adjustable-Rate Home Equity
Conversion Mortgages (HECM ARMs) |
Adjustable-Rate Type | Initial Note Rate and Periodic
Adjustments | Expected Average Interest Rate |
Legacy LIBOR-based monthly HECM ARMs | 1-month CME Term SOFR* | 10-year CMT |
Legacy LIBOR-based Annual HECM ARMs | 12-month CME Term SOFR* | 10-year CMT |
New Monthly HECM ARMs | 1-year CMT | 10-year CMT |
New Annual HECM ARMs | 30-day average SOFR** | 10-year CMT |
1-year CMT |
*The Refinitiv USD IBOR Cash Fallbacks based on the CME Term SOFR and applicable spread adjustment.
https://www.refinitiv.com/en/financial-data/financial-benchmarks/usd-ibor-cash-fallbacks **The compounded average of the SOFR over a rolling 30-day period, as administered and published daily by the Federal Reserve Bank of New York (30-day average SOFR).
https://www.newyorkfed.org/markets/reference-rates/sofr-averages-and-index
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About Ginnie Mae
Ginnie Mae is an entirely government-owned corporation that attracts global capital into the housing finance system to support homeownership for veterans and millions of homeowners throughout the country. Ginnie Mae mortgage-backed security (MBS) programs directly support housing finance programs administered by the Federal Housing Administration, the U.S. Department of Veterans Affairs, the U.S. Department of Housing and Urban Development’s Office of Public and Indian Housing, and the U.S. Department of Agriculture’s Rural Housing Service. Ginnie Mae is the only MBS to carry the explicit full faith and credit of the United States Government.