LIBOR Cessation: RMBS Market Prepares for the End

LIBOR Cessation

The move away from the London Interbank Offered Rate (LIBOR) has been aptly described as “landmark transition”. This LIBOR cessation has the financial industry mobilizing ahead of a looming deadline.[1]

The one-week and two-month US dollar LIBOR will cease permanently on December 31, 2021 and the publication of the overnight and 12-month US Dollar LIBOR setting will cease permanently on June 30, 2023.  While the markets have received clarity regarding the timing of the discontinuance of the use of the US dollar based LIBOR, the uncertainty and risks associated with the ramifications of this change continue to be a cause of concern.

In an article recently published by the CFPB, “CFPB Joins Other Financial Regulatory Agencies in Issuing Statement on Discontinuation of LIBOR” the risks surrounding LIBOR cessation are highlighted, as well as specific actions needed to minimize the financial, legal, operational, and consumer protection risks associated with this change.

The Oakleaf Group has extensive expertise in analyzing RMBS trusts performance and in-depth knowledge of the underlying governing documents. We have developed an in-house database which houses extracts of language relating to specific terms from several governing agreements. This database permits us to analyze the underlying agreements associated with a pool of RMBS in an efficient and automated manner.

Depending on the LIBOR alternative, The Oakleaf Group is equipped with expertise to assist in the understanding of the potential investment and legal risk, associated with this transition. Please reach out to Maclean Amlalo if you are interested in learning more about how this could impact your portfolio.

[1] Leaving LIBOR: A Landmark TransitionJ.P. Morgan, 1 October 2021.

Oakleaf at a Glance

The Oakleaf Group is a Washington DC-based, management consulting firm focused exclusively on the financial services, banking, and mortgage industry. Our team consists of industry subject matter experts, risk management professionals, and technologists who work together to help solve our clients’ toughest problems. Oakleaf strives to enhance the financial and regulatory industry with data-driven, model-informed, analytics-enabled, and operationally rigorous services and solutions.

See Who We Are  |  Meet Our Leadership Team

Join The Oakleaf Team

Oakleaf is the trusted advisor and services provider to many of the some of of the most notable mortgage businesses, federal agencies, and financial institutions in the world. We look for exceptional people from a variety of fields and professions to help solve our clients most challenging issues.

Join Oakleaf and put your talents and skills to work with our leading financial, banking, and mortgage client organizations.

See The Work We Do

As a mortgage and financial services consulting firm, we assist companies throughout the mortgage and financial services industry, including banks and non-bank mortgage firms, GSEs, regulators, government agencies, law firms, insurance companies, asset managers, hedge funds, and other financial clients. We work closely with management to identify and prioritize challenges, and we apply deep industry expertise that drives performance, resulting in performance transformation across the organization.

See how we support our clients and their teams in tackling their most complex matters. Or contact us if you want to discuss anything further.