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London Interbank Offered Rate (LIBOR)-Indexed ARMs
Greater variety and flexibility with Freddie Mac LIBOR-indexed ARMs

Related Products

As you seek new ARM products to increase your origination volume, Freddie Mac’s London Interbank Offered Rate (LIBOR)-indexed ARMs deliver an attractive alternative for your borrowers looking for lower initial rates and mortgage payments. Freddie Mac LIBOR-indexed ARM product variations, including convertible and non-convertible options, are geared to meet your needs and enhance your competitive position in any market environment.

We purchase a full variety of LIBOR-indexed ARMs, including 6-month, 1-year, 3/6-month, 5/6-month, 7/6-month, 10/6-month, 3/1, 5/1, 7/1 and 10/1 LIBOR-indexed ARMs.

Feature Requirements
Property Type
  • 1- to 4-unit primary residences, including condos, PUDs and manufactured homes.
  • Second homes
  • 1- to 4-unit investment properties
Eligible Mortgage Products
  • 6-month and 1-year LIBOR-indexed ARMs
  • 3/6-month, 5/6-month, 7/6-month and 10/6-month ARMs
  • 3/1, 5/1, 7/1 and 10/1 LIBOR-indexed ARMs
  • Originate with Home Possible Mortgages (5/1, 7/1 and 10/1 ARMs only), Initial Interest ARMs, Streamlined Purchase for Homeowners, Financed Permanent Buydown (5/6-month, 7/6-month, 10/6-month, 5/1, 7/1 and 10/1 ARMs only), Alternative Stated Income, Streamlined Refinance and A-minus Mortgages, Mortgages for Newly Constructed Homes and mortgages secured by manufactured homes (7/1 and 10/1 ARMs only).
  • ARMs secured by investment properties are eligible for sale if the borrower owns only one financed investment property. If the borrower owns more than one financed investment property, the investment property mortgage sold to Freddie Mac must be a 7/6-month, 10/6-month, 7/1 or 10/1 ARM.
  • 6-month, 3/6-month, 1-year, 3/1, and 3-year ARMs with loan application dates on and after September 13, 2007 and margins of 400 basis points or more are not eligible for sale under flow purchase paths.
Transaction Type
  • Purchase
  • No cash-out refinance
  • Cash-out refinance
  • Streamlined refinance
Maximum LTV Ratios (without secondary financing)
  • Maximum LTV ratios must comply with Single-Family Seller/Servicer Guide (Guide) Section 23.4.
Down Payment or Closing Costs
  • Secondary financing
  • Shared equity plans
  • Temporary subsidy buydowns
Execution Options
  • WAC ARM Cash (nonconvertible only through the selling system)
  • WAC ARM Guarantor (nonconvertible only through the selling system)
Delivery Fees
  • Postsettlement delivery fees may apply based on the individual characteristics of the mortgage. See Guide Exhibit 19 [PDF 380K ] for details on applicable fees.
Special Delivery Requirements
  • You must deliver all mortgage data required by Form 13SF including Mandatory SCCs, Indicator Score, Index Source Code, Index Lookback Days, First Rate Adjustment Minimum Rate and First Rate Adjustment Maximum Rate.
Single-Family Seller/Servicer Guide
  • Refer to GuideChapter 30.

 

Download a LIBOR-indexed ARMs fact sheet [PDF 149K ] for more details.

Lender Benefits

LIBOR-indexed ARMs help you:

  • Increase your origination volume and meet the needs of more homebuyers.
  • Take advantage of the benefits of a cash or securities execution, based on your individual balance sheet and risk-based capital needs.
  • Enhance your ARM product line with a competitive option to CMT-indexed ARMs.
  • Commingle ARMs with different assumability periods to increase your competitive execution.

Benefits for Your Borrowers

LIBOR-indexed ARMs help your borrowers:

  • Obtain flexible options for your financially savvy borrowers who plan to move before the initial period ends.
  • Leverage financial savings for your first time homebuyers looking for lower initial rates and monthly payments, and who understand that their rate will increase.
  • Choose from more financing alternatives for your refinance or move-up borrowers.

For More Information

Training Opportunities

Visit The Learning Center for live and recorded web conferences, access to classroom-style workshops and self-study tools – all designed to help you stay competitive, serve more borrowers and make it easier to do business with us.


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