On April 1, 2020, Fannie Mae announced in SEL-2020-02, and Freddie Mac announced in Bulletin 2020-9, the requirements for the new Secured Overnight Financing Rate (SOFR)-indexed ARM products and the availability of the new ARM notes and riders that are to be used for the new SOFR-indexed ARM program.
Fannie Mae’s SEL-2020-02 indicates that they will begin to accept SOFR-indexed ARMs from lenders beginning on August 3, 2020. Additionally, Fannie Mae’s Standard ARM Plan Matrix has been updated to include information about the SOFR index, the new ARM Plan numbers, and individual plan specifications.
Freddie Mac’s Bulletin 2020-9 indicates that lenders may immediately begin to underwrite borrowers for the SOFR programs, and beginning on October 1, 2020, lenders may submit SOFR-indexed ARMs to Freddie Mac’s Loan Product Advisor® (when certain conditions are met). Lenders will be able to “take out” 30-day Average SOFR contracts in Freddie Mac’s Loan Selling Advisor® beginning November 16, 2020.
Fannie Mae’s and Freddie Mac’s respective selling guides have been updated to reflect the eligibility, underwriting, and delivery requirements for SOFR-indexed ARMs.
Freddie Mac’s announcement also provides details about the future retirement of both the LIBOR-indexed ARM programs (effective January 1, 2021) and the CMT-indexed ARM programs (targeted for 2021).