LIBOR Transition at Leading Mortgage Financial Institution

Secured Overnight Financing Rate (SOFR) is a measure of borrowing cost that the majority of financial services participants selected as the new transaction reference rate to stand in for the mandated retirement of the longstanding London Interbank Overnight Rate (LIBOR). Oakleaf’s Client has hundreds of thousands of loans based on LIBOR for which they must accurately calculate interest rates each month using the old index. The Client also produces these calculations based on various tenors, which must also be changed and expanded upon to reflect the market and the Client’s pivot to SOFR. The company is accountable for making sure the calculation of interest based on that SOFR index is accurate on a monthly basis.


The client enlisted Oakleaf to assist with what is effectively a massive conversion project, the “LIBOR Transition Project” to update legacy loan databases and various corresponding systems. The focus of this project concerned the comprehensive examination and transformation of business processes to facilitate the Client’s transition away from the LIBOR index to SOFR via an enterprise-wide examination of the impact of this transformation on systems and processes associated with structured finance in mortgage securitization.

Our Approach

To assist with this colossal undertaking, Oakleaf provided business analysis, education, and requirements documentation expertise blended with in-depth understanding of the Client’s securitization processes — from pricing through disclosures and general business practices. Oakleaf performed impact assessments for over 70 stakeholder groups. The first challenge associated with this task was ensuring that stakeholder groups fully understood the nuances involved in converting systems and transactions for a transition in reference rate that had never been previously contemplated. Unlike most traditional information-gathering processes, this process required that Oakleaf ensure the full understanding of the impact on their business before proceeding to the solution.


The Oakleaf consultant also worked with the Client’s Systems Readiness Group to ensure the adequate documentation of system changes and adherence to SDLC requirements. We prepared strategic and business process impact vision documents with detailed steps to ensure the new SOFR rate can be consumed by the various systems. Oakleaf learned and worked within the Client’s change management processes and software and provided upstream/downstream impact analysis for stakeholders via production of visual aids to delineate all involved system interfaces. Oakleaf worked directly with the coders and provided requirements traceability back to code level and design of adequate test cases to support regulatory due diligence.


Oakleaf’s analysis resulted in the identification of payment errors and the payments that would be necessary to correct the errors. Oakleaf’s clients used this evidence and testimony in a Trust Instruction Proceeding (ongoing as of July 2021) to recover their funds.

Oakleaf’s analysis provided detailed and well-documented identification of errors, including:

  • Oakleaf supported the Client’s successful achievement of objectives by providing expertise with deep knowledge of bond administration, experience calculating principal and interest for the client’s REMIC tranches, and use of the LIBOR reference rate, as well as knowledge of the Client’s business, systems, and products, and the ability to translate this into an understanding of how market changes will play out on a micro and macro level.
  • The expertise provided by Oakleaf ensured that the Client received cross-functional continuity and depth of support across its various business functions, systems, and applications.
  • The Client’s databases and systems now have the ability to consume SOFR from Bloomberg Terminal.
  • The traceability matrices that Oakleaf provided ensure that the requirements ultimately trace back to the appropriate code and support associated test cases.
  • The documentation that Oakleaf developed facilitates the Client’s ability to support compliance with its Regulator’s expectations.
  • Successful collaboration – both in terms of the effectiveness and accuracy of the LIBOR transition project – between Oakleaf and the Client reduces the risk of disruption to markets and investors upon the latter’s transition to SOFR.

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