Freddie Mac issued Bulletin 2022-2 (Bulletin), announcing the replacement index for Freddie Mac-owned loans indexed to LIBOR that do not contain the replacement index language recommended by the Alternative Reference Rates Committee (ARRC). Per the Bulletin, the replacement index is a spread-adjusted term Secured Overnight Financing Rate (SOFR) administered by the CME Group Benchmark Administration, LTD and published by Refinitiv Limited. The Bulletin includes the replacement index for consumer loans with 1-month, 6-month and 1-year LIBOR indices. Servicers must use the all-in, no floor rate (which includes the applicable tenor spread adjustment). In addition, the Bulletin includes a mandate that servicers provide affected borrowers with written notice identifying the replacement index and indicating where the replacement index is posted on or before the date of the borrower’s next interest rate adjustment based on the replacement index (in accordance with the Note and applicable law). Servicers must use the replacement index for LIBOR ARMs with interest rate adjustments based on a lookback date on or after July 1, 2023.
Click to view the Freddie Mac Guide Bulletin 2023-2: https://www.tenaco.com/wp-content/uploads/2023/01/Freddie-Mac-Guide-Bulletin-2023-2-01-25-23.pdf
