HELOC Terms Update and FAQs
Beginning June 3, 2024, Fannie Mae will stop posting its 30-Year Required Net Yield (RNY). Under the terms of your HELOC agreement, the index used to determine the finance charge for the fixed rate options (FRO) is equal to the Fannie Mae RNY for certain 30-year fixed-rate mortgages.
Quick Facts About the Terms Update
- The Freddie Mac Primary Mortgage Market Survey (PMMS) (30-Yr FRM) will be the index that replaces the current Fannie Mae RNY index, when determining the finance charge for new fixed rate option(s).
- This change will result in a decrease of the margin used to determine the finance charge for new fixed rate option(s).
- There are no steps you need to take.
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.
Frequently Asked Questions
Generally, the RNY, specifically Fannie Mae’s 30-Year RNY for 30-year fixed-rate mortgages covered by applicable 30-day mandatory delivery commitments, is an index that is used by many HELOC accounts to calculate the interest rate and payment amount for the Fixed-Rate Option (FRO) portion of their HELOCs. The RNY index is posted by Fannie Mae and published in the Wall Street Journal Money Rates table as “Fannie Mae 30-year Mortgage Yields” (30 day). RNY is scheduled to cease being published on June 3, 2024.
An FRO is the option to lock in a fixed rate for a portion of your existing HELOC balance over a specific period of time. This provides a fixed payment for that period of time.
The Freddie Mac Primary Mortgage Market Survey (PMMS) (30-Yr FRM) will replace the RNY. In accordance with the terms of your HELOC (as generally found in your HELOC agreement), KeyBank, as noteholder, has selected the PMMS as the index to be used to calculate your interest rate and determine payments for new FROs after RNY is no longer available.
If your KeyBank HELOC currently has an existing FRO, the interest rate applied to your FRO will not change.
Yes. In accordance with the terms of your HELOC (as generally found in your HELOC agreement), the margin that is used to calculate the interest rate and determine payments for the FRO portion of your KeyBank HELOC will decrease by .47% because of RNY no longer being available and KeyBank’s selection of the PMMS as the replacement for RNY.
The retiring of the RNY will not impact you if your KeyBank HELOC does not use RNY or your KeyBank HELOC does not offer an FRO as part of its terms.
The HELOC Agreement used by KeyBank allows for a suitable replacement index to be used in the event the RNY index is no longer available. KeyBank analyzed potential replacement indexes and found that, along with a reduction in FRO margins, the Freddie Mac PMMS index (Bloomberg ticker: NMCMFR30) was a suitable replacement rate for the Fannie Mae RNY index, based on historical similarities between the two indexes. Additionally, the Freddie Mac PMMS index was chosen as the replacement because it is readily available and verifiable by our clients.
Your FRO margin will decrease by .47%. In accordance with the terms of your HELOC (as generally found in your HELOC agreement), the margin that is used to calculate the interest rate and determine payments for the FRO portion of your KeyBank HELOC will decrease by .47% because of RNY no longer being available and KeyBank’s selection of the PMMS as the replacement for RNY.
The PMMS will be published at freddiemac.com/pmms
The PMMS can also be found on the WSJ “Money Rates” table, under the Weekly Survey section, as “Freddie Mac” (30-year fixed). It is also listed as Bloomberg ticker: NMCMFR30.
Freddie Mac is the administrator and publisher of the PMMS. At this time, the PMMS is published at freddiemac.com/pmms
The PMMS can also be found on the WSJ “Money Rates” table, under the Weekly Survey section, as “Freddie Mac” (30-year fixed). It is also listed as Bloomberg ticker: NMCMFR30.
No. For KeyBank HELOCs that offer a FRO as part of its terms, there is nothing you need to do regarding this transition. The retiring of the RNY and the selection of PMMS as its replacement will not impact any existing FRO(s) you may have and will not impact any other portion of your HELOC.
For existing KeyBank HELOCs that offer a FRO as part of its terms, the PMMS will be used beginning on June 1, 2024.
No. The retiring of the RNY and the selection of PMMS as its replacement will not impact any existing FRO(s) you may have as part of your HELOC and will not impact any other portion of your HELOC. The PMMS is only applicable to new FROs, on existing KeyBank HELOCs (which offer FROs), beginning on June 1, 2024.
No. The only terms of your HELOC that are changing are the FRO index and its related margins.
You received a notice from KeyBank early in 2024 to explain the RNY retirement. Generally, the notice states that the RNY is an index that is used by many HELOC accounts to calculate the interest rate and payment amount for the FRO portion of your HELOC, and that on June 3, 2024, Fannie Mae will no longer post the RNY. The notice states that the PMMS is the replacement for RNY and that the margin used to calculate the Finance Charge for a new FRO is being adjusted lower to account for the new index. It also states that you need to take no action regarding this change and to contact us with any questions you may have.
We’re here and happy to help. Call Mortgage Customer Services at 1-800-422-2442 (Monday – Friday from 8:30 a.m. – 8:00 p.m. ET). For clients using a TDD/TTY device, call 1-800-539-8336.