WBK Industry News - Federal Regulatory Developments

Ginnie Mae Updates Multiclass Securities Guide to Include ARRC LIBOR Fallback Recommendations

Ginnie Mae recently issued Multiclass Participant Memorandum 20-01, announcing updates to its Multiclass Securities Guide (the Guide) relating to the possible cessation of the London Interbank Offered Rate (LIBOR) after 2021.    

The Guide updates, which apply to LIBOR classes of Ginnie Mae multiclass securities issued after March 1, 2020, include the adoption of the fallback language for new issuances of LIBOR floating rate securities recommended by the Alternative Reference Rates Committee (ARRC) of the Federal Reserve Board and the Federal Reserve Bank of New York.  For such issuances, subject to the parameters or list of alternatives specified in the ARRC recommendations, Ginnie Mae will determine:

  • If and when a LIBOR transition event occurs;
  • The date LIBOR will be replaced for such issuances; and
  • The applicable replacement benchmark and spread adjustment.

If a replacement benchmark in the ordered list of alternatives is unavailable on a replacement date, but later becomes available, Ginnie Mae may reselect the initially unavailable alternative.  The Guide updates also add the Secured Overnight Financing Rate as an available index for new issuances of floating rate multiclass securities and remove the Cost of Funds Index as an available index for new issuances.