The UK Financial Conduct Authority, which regulates the London Interbank Offered Rate (LIBOR), will cease publication of the one-week and two-month LIBOR indices after December 31, 2021 and for all remaining LIBOR contracts after June 30, 2023.
Details were announced today in a press release published by the Alternative Reference Rates Committee, which was formed by the New York Federal Reserve to manage the LIBOR transition in the United States.
While this is welcome news, NRMLA is still dependent on the Federal Housing Administration to adopt these same timelines for existing HECM loans tied to LIBOR.
“The end of this long transition road is clear. We now know when a representative USD LIBOR will end and what its associated spread adjustments will be in no uncertain terms,” said Tom Wipf, AARC Chairman and Vice Chairman of Institutional Securities at Morgan Stanley. “As the ARRC continues driving the transition to SOFR forward, we have a straightforward plan for how this will work; with no new USD LIBOR contracts by the end of this year and further time for many legacy contracts to wind-down.”
AARC established a Consumer Products Working Group that has met on several occasions to discuss the transition for HECM and private-label reverse mortgages tied to LIBOR. NRMLA staff and the association’s leadership have participated in these discussions.
Separately, NRMLA has formed a working group of subject matter experts across multiple committees to begin working on the industry’s transition away from LIBOR and to coordinate with FHA and Ginnie Mae on these efforts. .
NRMLA will keep members apprised of our progress throughout the year.