11th District COFI Conversion

The 11th District Cost of Funds Index (or the 11th District COFI) is an index that was previously published by the Federal Home Loan Bank of San Francisco. The Federal Home Loan Bank of San Francisco decided to retire and stop publishing the 11th District COFI after January 31, 2022. As a result, due to factors outside of our control, all loans that had interest rates based on the 11th District COFI were required to transition to another index.

For more information on the discontinuation of the 11th District COFI, see this article from the Federal Home Loan Bank of San Francisco, available at:

fhlbsf.com/resources/cofi

For general information on adjustable-rate consumer mortgages, see the Consumer Handbook on Adjustable-Rate Mortgages, maintained by the Consumer Financial Protection Bureau and available at:

CFPB Charm Booklet (PDF)

First Republic Bank clients that were impacted by this change were contacted via mail in the months leading up to the transition.

After careful consideration of available options, First Republic has transitioned 11th District COFI-based loans to Freddie Mac’s Enterprise 11th District COFI Institutional Replacement Index (or the “COFI Institutional Replacement Index”).

The COFI Institutional Replacement Index is based on the Federal Cost of Funds Index (“Federal COFI”) currently published by Freddie Mac, with a spread adjustment. The spread adjustment is equal to the five-year historical median spread between the 11th District COFI and the Federal COFI. The spread adjustment is meant to generally equate the Federal COFI to the 11th District COFI and results in what First Republic believes is a fair, reasonable and comparable substitute index.

We’ve taken the same approach, using the same replacement index, for both consumer and commercial loans.

More information on the creation and methodology of this replacement index can be found in the Fannie Mae and Freddie Mac COFI Transition Playbook.

“Federal COFI” stands for “Federal Cost of Funds Index.” The Federal COFI has been in place for over 30 years. It is calculated by Freddie Mac as the sum of the monthly average interest rates for marketable Treasury bills and for marketable Treasury notes, divided by two, and rounded to three decimal places.

More information and historic data can be found at
freddiemac.com/research/datasets/cofi.page.

Previously, the interest rate on your ARM was determined by adding the value of the 11th District COFI and a margin, as further specified in your promissory note. Now that the 11th District COFI is no longer available, we’ve replaced it with the COFI Institutional Replacement Index to determine the interest rate and payment changes for your ARM. This transition has been made for you and in accordance with the terms of your loan documents. You do not need to take any action.