Selection and Future Use of Replacement Index and Margin Adjustment When the Fannie Mae 30-Year Required Net Yield (“RNY”) Is No Longer Available
You are receiving this change-in-terms notice because, under the terms of your Home Equity Line of Credit (“HELOC”) account agreement (“KEO Agreement”), the index used to determine the Finance Charge for the Fixed Rate Option(s) is equal to Fannie Mae’s 30-Year RNY for 30-year fixed-rate mortgages covered by applicable 30-day mandatory delivery commitments (the “Current Index”), which is published in the Wall Street Journal (“WSJ”) “Money Rates” table. The WSJ Money Rates table publishes the Current Index as “Fannie Mae 30-year Mortgage Yields” (30 day).
On June 3, 2024, Fannie Mae will stop posting the 30-Year RNY. As such, the data necessary to produce the Current Index will no longer be available after June 3, 2024. As a result, the index currently used to calculate the Finance Charge for the Fixed Rate Option(s) will need to be replaced later this year.
We now write to provide you advanced notice that we are selecting the Freddie Mac Primary Mortgage Market Survey (“PMMS”) (30-Yr FRM) (“the Replacement Index”), as published by Freddie Mac, as the index to be used to determine the Finance Charge for the Fixed Rate Option(s), when necessary, after the Current Index is no longer available. We have independently determined that the Replacement Index is also readily available and verifiable by you and is beyond our control. Please note that, as permitted by your KEO Agreement, we are also changing your margin. On and after the date the Replacement Index becomes effective, the Margin for Options between 12 months and 60 months will be decreased by .47%, the Margin for Options of more than 60 months to 120 months will be decreased by .47%, and the Margin for Options of more than 120 months to 180 months will be decreased by .47%.
THERE IS NOTHING YOU NEED TO DO TO EXECUTE THE TRANSITION TO THE REPLACEMENT INDEX ONCE THE CURRENT INDEX IS NO LONGER AVAILABLE. YOUR ANNUAL PERCENTAGE RATE (APR) WILL NOT CHANGE UNTIL THE NEXT CHANGE DATE IN CONJUNCTION WITH OUR USE OF THE REPLACEMENT INDEX.
You should expect future communications and any applicable legal disclosures to reference and use the Replacement Index, when necessary, after the Current Index ceases to be published.
This Replacement Index is can currently be found on the WSJ “Money Rates” table, under the Weekly Survey section, as “Freddie Mac” (30-year fixed). It is also currently listed as Bloomberg ticker: NMCMFR30.
