On April 1, 2020, Fannie Mae and Freddie Mac (the “GSEs”) issued additional guidance regarding the transition from LIBOR to SOFR ARM loans including eligibility, underwriting and delivery requirements. New Secured Overnight Financing Rate (“SOFR”) ARM products will use the 30-day average SOFR index published by the Federal Reserve Bank of New York.
In Selling Guide Announcement SEL-2020-02 Fannie Mae provides details about SOFR ARM products and advises that it will begin accepting Single-Family SOFR ARMS on August 3, 2020.
The Fannie Mae Selling Guide and Standard ARM Plan Matrix have been updated to include information regarding the SOFR 30-day Index and new SOFR ARM plan numbers. All other existing Fannie Mae guidelines for conventional ARMs will apply to SOFR ARMs, such as LTV, occupancy, and property type requirements.
Freddie Mac announced in Guide Bulletin 2020-09 that effective November 16, 2020, SOFR ARM loans will be eligible for purchase under ARM Cash and WAC ARM Guarantor programs.
New SOFR ARM products include the following: 3/6-month ARM; 5/6-month ARM; 7/6-month ARM; and 10/6-month ARM.
Additionally, Fannie Mae and Freddie Mac have both published new SOFR ARM notes and riders as Uniform Instruments on their websites:
Form 3441 Multistate Adjustable Rate 30-day Average SOFR Index Note
Form 3141 Multistate Adjustable Rate 30-day Average SOFR Index Rider
Form 3442 Multistate Fixed_Adjustable Rate 30-day Average SOFR Index Note
Form 3142 Multistate Fixed_Adjustable Rate 30-day Average SOFR Index Rider
DocMagic will continue to provide updates regarding the GSEs transition from LIBOR to SOFR ARMs as it becomes available.
DocMagic will have new SOFR ARM notes and riders available in July 2020. More information regarding release dates and new DocMagic SOFR ARM loan programs will be provided in a future announcement.
If you have any questions regarding this article, please contact DocMagic’s Compliance Department.