LIBOR (London Interbank Offered Rate) is set to expire in June 2023. In preparation for the date, please do not board any new lines or loans using the LIBOR index effective June 1, 2022.

Why is Cenlar discontinuing the LIBOR index?
The index, once widely used to set rates for a wide range of adjustable-rate consumer credit products, is being phased out by the financial industry and federal government agencies as it is perceived as vulnerable to manipulation.

What will Cenlar use in place of LIBOR?
Cenlar is continuing to monitor industry and government agencies to identify an appropriate replacement index. In keeping with government-sponsored enterprises (GSEs) and most other financial institutions and regulators, Cenlar is closely watching the potential use of the Secured Overnight Financing Rate (SOFR) for HELOCs and ARMs. Unlike LIBOR, which relies on the subjective judgment of a panel of banks, SOFR is based on objective market data – the cost of transactions in the market for overnight Treasury repurchase agreements.

Next Steps for Loans We Currently Service
Unless you notify Cenlar about specific direction on a replacement index for loans tied to the LIBOR index, we will make a formal decision to use the SOFR index as a replacement for all ARM loans that we currently service before Q4 2022. You can expect to hear from us again at that time.