F&M Bank is providing information about a future change to your ARM mortgage loan.

You Have an Adjustable-Rate Mortgage

Your ARM loan features a fixed interest rate for a period of time and then the interest rate adjusts periodically to reflect a new interest rate.  The interest rate for ARMs adjusts using an index and a margin.

The index is published by third parties, and is a broad measure or “benchmark” of interest rates.  LIBOR is an index used by many mortgage lenders.  The margin is an amount added to the index to determine the interest rate on the loan.  The original index and the amount of the margin were specified in the documents signed at loan closing.

What You Need to Know

The London Interbank Offered Rate (LIBOR), the index used to adjust the interest rate on your adjustable-rate mortgage, will be discontinued or become unavailable during the term of your loan.  When this happens, we will need to transition to a different index. 

F&M Bank is sharing what you need to know about LIBOR and any potential changes that could impact your loan.

The LIBOR index used to determine the interest rate for your ARM will be replaced by a new index.

• Currently, the interest rate on your ARM consists of the LIBOR index and a margin.
• Due to factors outside our control, LIBOR will be discontinued or deemed unsuitable for industry use after June 30, 2023.

Replacement index options are being considered.

As described in your loan documents, when LIBOR is no longer available, an alternative published index to replace LIBOR will be selected for your ARM, consistent with the terms of your ARM.

• We will transition your ARM loan to the new index in order to determine the periodic interest rate adjustment.
• Once the LIBOR index is replaced by a new index, the other terms of your ARM loan, such as the maximum interest rate you may pay during the term of the ARM, or the timing of any interest rate adjustments, will not change.
• The replacement of LIBOR to the new index will not change other terms of your ARM, such as the maximum interest rate you may pay during the term of the ARM or the timing of any interest rate resets.

We will notify you when the replacement index takes effect and about any changes to your payments.

• Before a replacement index is put in place, you will be notified with the details of any changes affecting your ARM.
• Until further notice, your ARM will continue to be based on LIBOR.

What You Need to Do

• No action is needed on your part.
• You may refer to your account statement for the current interest rate on your ARM.

We’re Here for You

F&M Bank realizes your mortgage is a substantial investment.  We want to help you understand the terms of your ARM and any changes related to the index replacement.  If you have questions or concerns about your ARM and the possible index change, please contact us for further assistance.

Mail:     Farmers and Merchants Bank of Long Beach

              ATTN: Residential Lending - Servicing

              12515 Seal Beach Blvd.

               Seal Beach, CA 90740-2712

Phone: (866) 649-3863

Consumer Resources

For information regarding the LIBOR transition, see the Consumer Financial Protection Bureau website available at FAQs and the consumer advice Blog.

For general information on adjustable-rate mortgages, see the Consumer Handbook on Adjustable-Rate Mortgages, which is maintained by the Consumer Financial Protection Bureau and is available at: https://files.consumerfinance.gov/f/documents/cfpb_charm_booklet.pdf.