How are people planning on handling the move from LIBOR to SOFR? I've seen general Agency details on the proposed changes, but I have not seen much from a Compliance perspective on how industry plans to handle loan pipelines.

Does anyone plan on handling the change via a COC?

Does anyone think it is a valid COC?

What about a Counter-Offer from a LIBOR to SOFR, what would the reason for the declination be?

If anyone has seen any solid guidance around the subject I would be grateful if you could add a link.

A change to the interest rate alone is not a changed circumstance. You could disclose the use of the different index on the next disclosure issued.

Thanks Randy, we were looking at that initially, but in reviewing the structure of this adjustable rate product, the adjustments after the initial fixed period are a 6 months, there are changes to the margin, and caps and while a lot of that information is not tied to a tolerance, I am concerned with giving a customer an LE/CD with a different product from what they initially applied for.

I think I need to do more digging on this!

Well, since that would trigger a whole new early ARM disclosure, delivering an informational LE at the same times would not be much of a stretch and may be required by any investor.

Correct, the initial ARM Disclosure would have to be reissued based on the structure of the product.

The other concern is that our secondary dept have indicated that the pricing structure will be different with the SOFR indexed product; a customer could be locked into a 3/1 LIBOR with a start rate of 3.5%, but that changing to the SOFR would impact the initial rate to the customer.


Again, we are information gathering and looking to determine the compliant path through this.