SOFR

Federal Reserve Vice Chair Randal Quarles has made it clear that banks failing to make the transition away from the benchmark rate could face supervisory consequences.

The modifiable templates are a follow-up to a similar notification the organization created in 2019 for lender use.

The heads of the Federal Reserve and Treasury are urging passage of legislation that would replace Libor with the Secured Overnight Financing Rate in certain contracts. That would spare banks litigation over trillions of dollars of contracts when Libor expires in 2023.

The act, yet to be signed by Gov. Cuomo, aims to resolve the difficult problem of how to fairly compensate floating-rate investors in instruments for which the London interbank offered rate is no longer published.

A PIMCO-sponsored HELOC securitzation, as well as a mortgage-insurance linked transaction, are the latest examples of issuers getting a head start on switching to an expected replacement benchmark for Libor.

Progress toward replacement benchmarks, such as the Secured Overnight Financing Rate in the U.S. and the Tokyo Overnight Average Rate in Japan, has been sluggish, and there are hopes Friday’s announcement could accelerate the process.

Public agencies led by the Federal Reserve often stretch the definition of “necessary and proper” to the breaking point when seeking to fulfill public mandates, columnist Chris Whalen argues.

Lenders also increased jumbo product availability as well as rolling out new SOFR-indexed ARMs.

The statement comes after multiple small and midsize institutions earlier this year warned the agencies that the secured overnight financing rate was ill-suited to them.

Four tranches of AAA-rated notes in the $342.2 million JPMorgan Mortgage Trust 2020-8 may utilize a term-SOFR rate should the benchmark improve on the weighted-average coupon of the deal.

The Libor transition is creating huge headaches for the industry; harnessing AI technologies may be the key to tackling it.

While using the 30-day SOFR as its index, Freddie Mac structured the deal so it could shift to a one-month term if and when that rate is approved.

In a critical development in the global shift away from old benchmarks that was triggered by Libor's shortcomings, interest-rate swaps on more than $80 trillion in notional debt will transition this weekend to a new rate for determining their value.

The restrictions on the pooling of loans with any interest term based on Libor will be effective for traditional mortgage-backed securities issued starting Jan. 21, 2021, and earlier for reverse-mortgage securitizations.

Bondholders could see principal losses if, due to the way the documents are worded, the rate is frozen at the last published amount.

This proposed Libor replacement is an imaginary, backward-looking benchmark dreamed up by the economists at the Fed with no discernible market.

The Consumer Financial Protection Bureau seeks to address challenged posed by the sunset of the London interbank offered rate at the end of 2021.

Fannie Mae and Freddie Mac have different timelines for the switch.

Regulators on both sides of the Atlantic have spent the better part of three years trying to kill the London interbank offered rate. Now, they're looking to it once again to underpin hundreds of billions of dollars in loans as they seek to rescue their economies.

Officials from 10 midsize American banks said U.S. regulators' preferred index for replacing the maligned Libor benchmark is ill-suited for them.