LIBOR Underwriting References and ARM 5/5 Loan Renewals

Guide Update 21-08

: LIBOR Underwriting References and ARM 5/5 Loan Renewals

Effective: 07/01/21

Associated Documents:

Summary of Changes:

HIGHLIGHTS
Effective July 1, 2021, the Guide was updated to remove LIBOR references from Part III, and add a new ARM 5/5 Optional 5-Year Adjustable Rate Term Renewal Section to Part IV.

HIGHLIGHTS

Effective July 1, 2021, the Guide was updated to

remove LIBOR references from Part III, and
add a new ARM 5/5 Optional 5-Year Adjustable Rate Term Renewal Section to Part IV.

Primary Changes

Removed all references to the LIBOR index in Part III since LIBOR-based Mortgage Loans are no longer eligible for Delivery per Guide Update 20-07: Secured Overnight Financing Rate (SOFR). References were removed from:
- Part III, Chapter 11: Adjustable Rate Mortgage (ARM) Loans;
- Part III, Chapter 12: Structured Adjustable Rate Mortgage (SARM) Loans; and
- Part III, Chapter 13: Hybrid Adjustable Rate Mortgage (Hybrid ARM) Loans.
For Part IV, Chapter 7:
- Renamed the Chapter
  - from Variable Rate to Fixed Rate Conversions,
  - to Variable Rate Conversions and Renewals.
- Added Section:
  - 704: ARM 5/5 Optional 5-Year Adjustable Rate Term Renewal;
  - 704.01: Eligibility; and
  - 704.02: Underwriting.
- Moved the previously published ARM 5/5 Loan Prepayment Terms Section
  - from Part III, Chapter 11: Adjustable Rate Mortgage (ARM) Loans, Section 1104.02: Prepayment Terms,
  - to Part IV, Chapter 7: Variable Rate Conversions and Renewals, Section 704.03: Prepayment Terms.

Questions

Please contact the Fannie Mae Deal Team with any questions.