Last year, Freddie Macadopted SOFR and phase out LIBOR, and the move is triggering atrend throughout the lending community. More and more lenders arereferencing SOFR in their loan documents, following Freddie Mac'slead to shift away from LIBOR.

"Freddie Mac's Multifamily Division has indicated that it willbegin purchasing floating-rate loans that use an index based onSOFR by November 1, 2020 at the latest, and that it will ceasepurchasing LIBOR-indexed floating-rate loans after December 31,2020," Jennifer Bojorquez, a partner atTroutman Sanders, tells GlobeSt.com. "In December2019, it priced a new offering of Structured Pass-ThroughCertificates, which included a class of floating rate bonds indexedto SOFR."

As a result, other lenders are also adopting SOFR and adjustingloan language to include SOFR. "Until recently, many lenders usedgeneric alternate rate language in their loan documents withoutreference to any particular alternate interest rate benchmark,"says Bojorquez. "We now see lenders referencing SOFR as thespecific alternate rate or the primary alternate rate—first in thewaterfall of other alternatives—in the event LIBOR is no longerpublished."