Phase-Out of LIBOR: Impact on Floating Rate Mortgage Loans; Implementing Alternative Reference Rates

This program is being rescheduled new date TBD

A live 90-minute CLE webinar with interactive Q&A


Tuesday, January 30, 2018 (in 11 days)

1:00pm-2:30pm EST, 10:00am-11:30am PST

or call 1-800-926-7926

This CLE webinar will discuss ramifications of the scheduled phase-out of LIBOR (London Interbank Offered Rate) at the end of 2021 and outline steps real estate lenders and finance counsel must take now to review and consider amendments to existing mortgage loan documents. The panel will discuss potential alternatives to LIBOR and best practices for incorporating alternative rate language into form documents.

Description

On July 27, 2017, the UK’s Financial Conduct Authority announced that it will stop requiring reference banks to quote LIBOR by the end of 2021. LIBOR is used in calculating floating or adjustable rates on trillions of dollars in loans, bonds, derivatives and other financial contracts. Real property finance counsel must contemplate the phase-out when drafting contracts and reviewing existing mortgage loan documents.

Alternative reference rate language varies from transaction to transaction, and real estate finance counsel should review existing loan documents in effect beyond 2021. Counsel must understand the mechanics of how the lender or service may determine and pick among alternative reference rates.

While the choices are narrowing, it remains unclear what index, or combination of indexes, will replace LIBOR. One possibility for U.S. dollars, identified by the U.S. Alternative Reference Rate Committee and the Federal Reserve Bank of New York, is the broad treasuries repo financing rate (BTFR). Questions remain, however, and this rate is not currently quoted and does not provide for terms longer than overnight.

Listen as our authoritative panel discusses the impact of the phase-out of LIBOR on floating rate mortgage loans, as well as on derivatives transactions, and discusses potential options for approaching the uncertainty surrounding these changes.

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Outline

  1. LIBOR—reasons and timeline for phase-out
  2. Impact on existing and new variable rate commercial real estate loans (including securitized loans)
  3. Impact on derivatives
  4. Alternative benchmarks
  5. Form adjustment language pending an industry standard rate

Benefits

The panel will review these and other key issues:

  • What is the timeline, and what kinds of real estate finance transactions will be impacted by the phase-out of LIBOR?
  • What are the issues with alternative rate language currently contained in real estate loan documents?
  • How should floating rate forms be revised to address the phase-out given the current uncertainty as to the substitute rate?
  • What should counsel look for in ISDA agreements to confirm a suitable alternative rate is provided?

Faculty

Aaron, Cheryl
Cheryl I. Aaron

Senior Counsel
Michael Best & Friedrich

Ms. Aaron represents financial institutions, energy companies, and commodity trading firms (including both end-users...  |  Read More

Heimendinger, Mark
Mark Heimendinger

Of Counsel
Lowndes Drosdick Doster Kantor & Reed

Mr. Heimendinger has worked on a variety of financing structures and instruments, with a particular focus on real...  |  Read More

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