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MoFo Reenforcement The Enforcement Blog

Secured Overnight Financing Rate and the Future of the Mortgage Market

Posted in Mortgage, Regulatory Developments

On July 11, Fannie Mae and Freddie Mac (the GSEs) announced their plans to develop new adjustable rate mortgage products that would rely on the Secured Overnight Financing Rate (SOFR) instead of LIBOR. Given the GSEs’ dominance in the mortgage market, their re-designed ARMs will undoubtedly have a significant impact on hybrid ARMs of the future. While the GSEs provided no details about the new products, both pledged to rely on a framework provided in the Alternative Reference Rate Committee’s (the ARRC) whitepaper entitled “Options for Using SOFR in Adjustable Rate Mortgages.”

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