Ginnie Mae published guidance for issuers on the transition of all outstanding HECM Mortgage-Backed Securities tied to the London Interbank Offered Rate (LIBOR) to the Secured Overnight Financing Rate (SOFR) with the publication of All Participant Memorandum (APM) 23-07.
Ginnie Mae will begin the transition process following the retirement of LIBOR on June 30, 2023.
Ginnie Mae announced in APM 23-07 that it will release a new HMBS pool type “H SA” for annually adjusting HECMs based on SOFR that are originated on or after July 1, 2023. The index will be the 30-day average SOFR, which is the compounded average of the SOFR over a rolling 30-day period, as administered and published daily by the Federal Reserve Bank of New York.
The following chart shows what the new indices will be for legacy loans and new HECMs.