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August 03, 2020

SOFR Loan Documents Published and New LIBOR Dates Announced

In anticipation of our upcoming SOFR loan offerings, we have published for your information Multifamily loan documents to be used on SOFR-indexed floating-rate loans and Small Balance Loan (SBL) hybrid loans.

Highlights of the loan documents include:

  • The SOFR index will initially be a compounded average of SOFR over a rolling 30 calendar day period, as published on the website of The Federal Reserve Bank of New York (FRBNY). As with our LIBOR loans, the rate will be determined on the first business day preceding each interest accrual period and be applied “in advance” to such interest accrual period. For SBL hybrid loans, the interest rate will continue to reset every six months.
  • The SOFR index will, by its terms, transition to a one-month term SOFR rate endorsed by the Alternative Reference Rates Committee (ARRC) on the date that Freddie Mac determines that the transition is operationally, technically and administratively feasible.
  • For Conventional and Targeted Affordable Housing (TAH) floating-rate loans, the loan document provisions governing the rate cap and the rate cap reserve reflect the option to use a LIBOR rate cap with a SOFR-indexed loan, consistent with our July 24 announcement.
  • For SBL, the Conventional and TAH rate caps and rate cap reserve are not applicable.

Please also note the key dates below relating to our transition from LIBOR to SOFR, including new timing requirements for underwriting and final delivery package submissions for LIBOR-indexed loans:

Date Transition from LIBOR to SOFR
September 1, 2020 Freddie Mac will no longer issue quotes for LIBOR-indexed loans; all new floating-rate quotes will be for SOFR-indexed loans.

For SBL, Optigo® lenders will no longer issue applications for SBL hybrid loans with a floating-rate period indexed to LIBOR; all new hybrid loan applications issued will be SOFR-based.

September 30, 2020

Last day for LIBOR-indexed floating-rate loans to go under loan application
November 9, 2020* Last day for submission of underwriting packages for LIBOR-indexed floating-rate loans and SBL hybrid loans to Freddie Mac
December 11, 2020* Last day for submission of final delivery packages for LIBOR-indexed floating-rate loans and SBL hybrid loans to Freddie Mac
December 31, 2020 Last day for Freddie Mac to purchase LIBOR-indexed floating-rate loans and SBL hybrid loans, regardless of the loan application date or the date of the note.

*Note: these dates are outside dates; a specific LIBOR-indexed loan may be subject to earlier deadlines.

If you have questions, or feedback, please send us an email to MFLIBOR@freddiemac.com.

We appreciate your partnership and look forward to a smooth transition.

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