LIBOR
(London Interbank Offered Rate) – Information About Upcoming Changes¹

For more than 40 years LIBOR was a global key benchmark for setting the interest rates charged on adjustable rate loans. Regulators have determined that LIBOR has become unreliable. Banks, financial institutions and governments throughout the world have been working to identify options for replacing LIBOR.

ARRC is a group of private market participants created by the Federal Reserve to help ensure a successful transition from LIBOR. You can learn more about ARRC from their website: https://www.newyorkfed.org/arrc.

We will keep you informed of all changes to your loan, including the replacement index.  A spread adjusted index based on 12-Month CME Term SOFR (Secured Overnight Financing Rate) will replace 12-Month LIBOR for most loans with adjustable rates.  Spread adjusted CME Term SOFR is the replacement rate recommended by the ARRC and federal regulatory agencies to limit rate and pricing volatility for the approximately $1.3 trillion in consumer loans transitioning to replacement indices.   For further information and to review prototype spread adjusted replacement rate samples based on CME Term SOFR see https://www.refinitiv.com/en/financial-data/financial-benchmarks/usd-ibor-cash-fallbacks/usd-ibor-consumer-cash-fallbacks-sofr-compound-in-advance-summary.

The replacement index used to determine your interest rate will change when your loan has its regular interest rate adjustment after June 30, 2023. Until then, your interest rate will continue to be based on the LIBOR index.

Consumer ARM rate change notice regulations require that we provide advanced notice based on the best information available at the time the notice is provided.   Until the transition from LIBOR to a replacement index occurs our rate change notices will continue to reference LIBOR.

All other terms and details of your loan will remain the same.

Your original loan documents (specifically the mortgage note), allow for the index of an adjustable rate mortgage to change if the index is no longer available.

The change in index alone won’t necessarily increase your monthly payment.  With any ARM loan, the interest rate (and therefore the payment) can increase whenever you have a scheduled interest rate adjustment regardless of the index.

If you’re experiencing financial hardship, contact us for assistance.  If you’re concerned about your ability to make your payment and are interested in a new mortgage loan, learn about mortgage options:

It may be a good time to determine if your mortgage still meets your financial needs.  If your financial goals have changed, you’re looking for a stable payment amount or you can benefit from a lower interest rate, consider refinancing.

To learn more visit the Consumer Financial Protection Bureau’s (CFPB) website at LIBOR and adjustable-rate loans. | Consumer Financial Protection Bureau (consumerfinance.gov)