On April 13th, 2020, the Alternative Reference Rates Committee (ARRC) welcomed Fannie Mae and Freddie Mac’s announcements giving additional details on their new adjustable-rate mortgage (ARM) products, which are indexed to the 30-day Average Secured Overnight Financing Rate (SOFR), the ARRC’s recommended alternative to U.S. Dollar (USD) LIBOR.1

What this means

These developments by Fannie Mae and Freddie Mac build on the announcement by the Federal Housing Finance Agency’s (FHFA) announcement in February 2020 that the agencies would stop accepting ARMs indexed to LIBOR by the end of this year, and that they would adopt the ARRC’s fallback language to facilitate a smooth transition away from LIBOR.2 In their announcements Fannie Mae and Freddie Mac confirmed eligibility, underwriting and delivery requirements for residential SOFR-based ARMs to provide clarity to all participants in the consumer loan market.3 These actions are expected to result in an outcome where consumers are less exposed to the risks inherent in the process of the cessation of LIBOR.  


Tom Wipf, ARRC chair, commended both agencies for the “significant progress” they have made in transitioning the consumer loan market toward SOFR.4 He stated“We hope that Fannie Mae and Freddie Mac’s leadership in establishing the first major consumer loan product based on SOFR will encourage other institutions to accelerate their transition toward SOFR-based products as the end of 2021, when LIBOR is no longer guaranteed, rapidly approaches.”5 


  1. ARRC Commends Fannie Mae and Freddie Mac’s Progress on the First SOFR-Based Consumer Loan Products [open in new window] https://www.newyorkfed.org/medialibrary/Microsites/arrc/files/2020/arrc-press-release-fannie-mae-freddie-mac-sofr-arms-4-13-2020. 
  2. Ibid. 
  3. Ibid.  
  4. Ibid. 
  5. Ibid. 

Newsletter Author: Venetia Woo; Mairi Bryan

Newsletter Contact Person: Venetia Woo 


This blog is intended for general informational purposes only, does not take into account the reader’s specific circumstances, may not reflect the most current developments, and is not intended to provide advice on specific circumstances. Accenture disclaims, to the fullest extent permitted by applicable law, all liability for the accuracy and completeness of the information in this blog and for any acts or omissions made based on such information. Accenture does not provide legal, regulatory, audit or tax advice. Readers are responsible for obtaining such advice from their own legal counsel or other licensed professional. 

About Accenture 

Accenture is a leading global professional services company, providing a broad range of services in strategy and consulting, interactive, technology and operations, with digital capabilities across all of these services. We combine unmatched experience and specialized capabilities across more than 40 industries – powered by the world’s largest network of Advanced Technology and Intelligent Operations centers. With 509,000 people serving clients in more than 120 countries, Accenture brings continuous innovation to help clients improve their performance and create lasting value across their enterprises. Visit us at: https://www.accenture.com/us-en  

Copyright © 2020 Accenture. All rights reserved. 
Accenture, its logo, and New Applied Now are trademarks of Accenture. This document is produced by Accenture as general information on the subject. It is not intended to provide advice on your specific circumstances. 

If you require advice or further details on any matters referred to, please contact your Accenture representative. 

Submit a Comment

Your email address will not be published.