9
procedure.
2
An ARRC Fallback includes any option or variant provided in the contract
language identified in sections 3.01(2)(i) through (ix) of this revenue procedure and
excludes any option or variant not provided in the contract language identified in
sections 3.01(2)(i) through (ix) of this revenue procedure, even if that option or variant is
recommended elsewhere by the ARRC. As of October 9, 2020, the ARRC Fallbacks
consist of recommended contract language for adjustable rate mortgages, bilateral
business loans, floating rate notes, securitizations, syndicated loans, and variable-rate
private student loans and are publicly available at
https://www.newyorkfed.org/arrc/fallbacks-contract-language.
(2) Identification of contract language. The contract language contained in each of
the following materials is identified in this section 3.01(2)—
(i) Part II: Fallback Language for New Closed-End, Residential Adjustable Rate
Mortgages of the document entitled ARRC Recommendations Regarding More Robust
LIBOR Fallback Contract Language for New Closed-End, Residential Adjustable
Mortgages, dated November 15, 2019;
(ii) The section entitled “Hardwired Approach” Fallback Language of Part II:
Fallback Language for New Originations of LIBOR Bilateral Business Loans of the
document entitled ARRC Recommendations Regarding More Robust Fallback
Language for New Originations of LIBOR Bilateral Business Loans, dated May 30,
2
The ARRC Fallbacks do not include the amendment approach that the ARRC once recommended for
bilateral business loans and syndicated loans. Rather than the more formulaic approach used by the
ARRC in the ARRC Fallbacks, the fallback rate under the amendment approach is effectively determined
by negotiation of the parties to the contract. As a result, the Treasury Department and the IRS have
concluded that the addition and operation of the fallback provisions in the amendment approach should
be evaluated under the standards provided in either the Proposed Regulations or, when published, the
final regulations.