Getting Ready for LIBOR’s End

first_img Servicers Navigate the Post-Pandemic World 2 days ago  Print This Post Getting Ready for LIBOR’s End Data Provider Black Knight to Acquire Top of Mind 2 days ago Governmental Measures Target Expanded Access to Affordable Housing 2 days ago LIBOR, the London Inter-Bank Offered Rate, is expected to discontinue sometime after 2021, but as the index used to set many adjustable mortgage rates, what will happen next?Jacqueline Doty, Executive, Product Management, Collateral Risk Solutions at CoreLogic, explained that the end of LIBOR will impact $1.2 trillion dollars in adjustable-rate mortgages.”It means that lenders with loans or lines of credit based on the LIBOR index will need to identify and review the terms of all of their LIBOR loans,” said Doty. “A portfolio of loans likely contains a wide variety of terms regarding LIBOR, and this will need to be assessed.”LIBOR’s end is likely to impact more than lenders and borrowers. According to Fitch Ratings, U.S. RMBS servicers showed an improved awareness of difficulties and implications tied to the anticipated expiration of LIBOR at the end of 2021.To help facilitate the likely transition away from LIBOR, Doty notes that the Federal Reserve convened a working group called the Alternative Reference Rates Committee. The ARRC has recommended an alternative to the LIBOR index called the Secured Overnight Financing Rate (SOFR) and has started promoting its use on a voluntary basis.Lenders may need to face modification. Between now and the end of LIBOR, there’s a good possibility that many loans will need to be modified because the fallback provisions are either nonexistent, unclear or impractical.”For example, in some cases, the margin cannot be adjusted and it is either too high or too low when added to the new alternate index,” Doty said.But there’s no need to panic just yet,” she adds. “The good news is there’s still time to successfully manage a smooth and efficient transition. Now is a good time for lenders to start auditing their loan data and documents and planning for fulfillment of amendments or borrower notifications.” LIBOR mortgage 2020-02-17 Seth Welborn Servicers Navigate the Post-Pandemic World 2 days ago Demand Propels Home Prices Upward 2 days ago Home / Daily Dose / Getting Ready for LIBOR’s End Data Provider Black Knight to Acquire Top of Mind 2 days ago Share Save The Best Markets For Residential Property Investors 2 days ago The Week Ahead: Nearing the Forbearance Exit 2 days agocenter_img Governmental Measures Target Expanded Access to Affordable Housing 2 days ago About Author: Seth Welborn February 17, 2020 2,046 Views in Daily Dose, Featured, Investment, News Related Articles Tagged with: LIBOR mortgage The Best Markets For Residential Property Investors 2 days ago Seth Welborn is a Reporter for DS News and MReport. A graduate of Harding University, he has covered numerous topics across the real estate and default servicing industries. Additionally, he has written B2B marketing copy for Dallas-based companies such as AT&T. An East Texas Native, he also works part-time as a photographer. Demand Propels Home Prices Upward 2 days ago Previous: Fannie and Freddie Preventing Foreclosures Next: SingleSource Launches Deed in Lieu Title Product Sign up for DS News Daily Subscribelast_img read more