The 11th District COFI was a monthly savings-institution funding-cost index used by adjustable-rate mortgages before publication ended in January 2022.
The 11th District Cost of Funds Index (COFI) was a monthly benchmark measuring the weighted-average funding cost of eligible savings institutions in Arizona, California, and Nevada. It was published by the Federal Home Loan Bank of San Francisco and used mainly as a reference index for adjustable-rate mortgages.
COFI is discontinued. The final monthly 11th District COFI, covering December 2021, was published in January 2022. A remaining COFI-linked mortgage now depends on its contractual fallback, servicing rules, and any applicable replacement-index framework.
Savings institutions fund assets such as mortgages using several liability sources. Historical COFI inputs included:
The index compared interest expense on those funds with the amount of funds outstanding. It therefore represented an average cost of liabilities for the reporting institutions.
COFI did not directly measure:
A simplified annualized relationship is:
The official calculation aggregated eligible institutions before computing the ratio. It was not a simple average of each institution’s rate and not a sum of “interest expense times weight” as some simplified descriptions suggest.
The methodology used monthly accounting data and annualization rules. Historical reproduction therefore requires the applicable FHLBank methodology, reporting population, and observation month.
An institution’s funding base included deposits and borrowings that repriced at different times. When market rates rose, older low-rate liabilities could remain in the portfolio until renewal or maturity. When market rates fell, older high-rate liabilities could also remain.
As a result, COFI often adjusted more gradually than a market rate based on current transactions or securities. That lag could smooth monthly changes, but it did not guarantee lower lifetime borrowing costs.
A slow-moving index can be favorable or unfavorable depending on the rate cycle:
| Market-rate direction | Typical COFI behavior | Possible borrower effect |
|---|---|---|
| Rates rising | COFI may rise with a delay | Initial protection, followed by later increases |
| Rates falling | COFI may fall with a delay | Borrower may wait longer for lower indexed rates |
| Rates volatile | Funding-cost averaging can smooth movement | Payment path differs from faster market indices |
Assume a legacy adjustable-rate mortgage specified:
0.50%2.75%The fully indexed rate would be:
If a periodic cap limited the increase from the prior rate, or a lifetime cap or floor applied, the note rate could differ from 3.25%. A payment cap could also limit the payment change without limiting interest accrual, potentially creating deferred interest under the contract.
This example is historical. A post-cessation reset must use the replacement process required by the loan documents and applicable servicing framework.
When monthly COFI was developed in 1981, more than 200 savings institutions contributed data. Industry consolidation, mergers, and charter changes reduced the eligible reporting population over time.
The Federal Home Loan Bank of San Francisco announced that it would discontinue its cost-of-funds indices because too few eligible institutions remained to support continued publication. The last monthly 11th District COFI publication occurred in January 2022 for the December 2021 observation.
The end of publication does not erase the original mortgage contract. It activates whatever replacement or unavailability language governs the loan.
There was no single universal outcome for every loan.
Depending on the mortgage note, investor, and servicing framework, a COFI-linked loan could use:
Fannie Mae and Freddie Mac developed Enterprise replacement arrangements for affected populations, while some notes expressly directed a different fallback. The original document and current servicer notice are the starting evidence.
| Index type | Main input | Typical response to market changes |
|---|---|---|
| Historical 11th District COFI | Savings-institution funding expense | Generally gradual and lagged |
| Treasury constant-maturity rate | Government-security market quotations and curve | More responsive to current Treasury conditions |
| SOFR-based index | Secured overnight Treasury repo data or compounded form | Transaction-based, with convention-dependent smoothing |
| Prime rate | Bank-published lending base rate | Changes discretely when banks revise prime |
“Less volatile” does not mean “always cheaper.” The margin, caps, floor, adjustment frequency, and index level determine the borrower outcome.
This article provides general mortgage and benchmark education, not individualized borrowing, legal, servicing, or refinancing advice. The mortgage note and current servicer records control a specific reset.