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58 | M R EP O RT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST GOVERNMENT FHFA Addresses GSEs' Transition From LIBOR The agency says moving Fannie Mae, Freddie Mac away from benchmark is a "important milestone." T he Federal Housing Fi- nance Agency announced more steps that Fannie Mae and Freddie Mac are taking as they transition from the London Interbank Offered Rate (LIBOR)—the most widely used interest rate benchmark. New language will be re- quired for single-family Uniform Adjustable Rate Mortgage (ARM) instruments closed on, or after, June 1, 2020. Also, all LIBOR-based single-family and multifamily ARMs must have loan application dates on or before September 30, 2020, to be eligible and acquisitions of single-family and multifamily LIBOR ARMs will stop on or before December 31, 2020. "These steps represent important milestones in the Enterprises' tran- sition away from LIBOR to a more robust reference rate. We will continue to monitor exposure to LIBOR and ensure the Enterprises manage the risks associated with the transition in a safe and sound manner," FHFA Director Dr. Mark Calabria said. The FHFA states that the GSEs serve as members of the Alternative Reference Rates Committee (ARRC) established by the Federal Reserve Board and the Federal Reserve Bank of New York to facilitate the move from LIBOR to Secured Overnight Financing Rate. According to the release, the ARRC published the final lan- guage on November 15, 2019, for new closed-end, residential ARMs. "The fallback language provides clear direction on the selection of a replacement index in the event an index is no longer available," the memo from the FHFA to Fannie Mae on LIBOR transition states. Discussion regarding moving away from LIBOR between Ginnie Mae and the Department of Housing and Urban Development (HUD) can be traced to May 2019. Michael Drayne, SVP of the Office of the President of Ginnie Mae, presented this topic at the National Reverse Mortgage Lenders Association (NRMLA) Eastern Regional Meeting in New York last year. The report states that interna- tional investigations found LIBOR was vulnerable to manipulation efforts identified between 2003 and 2012, and global regulators started actively advising financial institu- tions to move away from the LIBOR standard by 2021. The Federal Reserve Bank of New York in, 2014, convened the Alternative Reference Rates Committee (ARRC) to identify best practices for alternate rates, while also developing an imple- mentation plan. California's Housing Reform Bill Fails in the Senate Legislation that would have increased housing density comes up three votes short. C alifornia Senate Bill 50, which aimed to increase housing den- sity and supply across the state, failed to receive the 21 necessary votes on Wednesday to reach the State Assembly, ac- cording to the Los Angeles Times. This is the third consecutive year this legislation stalled on the Senate floor. Senate Bill failed passage by three votes. The bill hit a roadblock late last year, when Sen. Anthony Portantini, the Chairman of the Senate Appropriations Committee came out against SB 50 earlier this year. He said the measure would have trumped zoning rules that are "exclusively under the control" of cities and counties. The Times reported last year that California Gov. Gavin Newsom signed multiple bills into law recently that allowing property owners to build a backyard home of at least 800-square-feet. The bill would have allowed homeowners to convert a garage, office, or spare room into living quarters. The new legislation also had a provision for allowing three homes on land previously zoned for single-family. "We're on the precipice of single-family zoning functionally not existing," said Ben Metcalf, former Director of the state's Department of Housing and Community Development. Nine Los Angeles-area senators voted no or abstained. The bill's author, Sen. Scott Wiener (D-San Francisco) said he planned to try and bring the bill back for another vote. According to the report, Sen. Bob Hertzberg (D-Van Nuys) said SB 50 could increase development across Los Angeles, but noted it wrongfully targets local govern- ment officials and single-family homeowners in an attempt to alleviate the state's housing woes. " There may be some merit to this notion in limited cir- cumstances, [but] this sweeping generalization both oversimplifies the problem and unnecessarily demeans people who have done nothing more than make homes for themselves, raise a family and play by the rules," Hertzberg said. In a further attempt to allow more affordable housing, voters in San Francisco will cast their ballot in March on Proposition E, which would cap office development if affordable housing standards are not met. San Francisco currently has a cap of 875,000-square-feet of office development annually, due to 1986's Proposition M. However, if San Francisco misses affordable housing targets by 10% annually, the existing office-space cap would fall 10% the next year.