Servicing Guide

Published September 18, 2018

C-2.1-01: Responsibilities for ARM Loan Servicing (11/12/2014)

The following table provides a list of the servicer’s responsibilities related to servicing ARM loans.

The servicer must...

Enforce each ARM loan according to the terms specifically described in its mortgage loan instrument. These may be modified or supplemented by any additional terms specified in a negotiated contract issued in connection with Fannie Mae’s purchase or securitization of the mortgage loan. See also Fannie Mae’s Balloon Mortgage Loan Servicing Manual.

Use its own funds to satisfy any shortage resulting from untimely interest rate or payment adjustments.

Reimburse Fannie Mae if the servicer makes an error that causes the amount of negative amortization to exceed the maximum allowed and Fannie Mae is adversely affected by this breach of the mortgage loan terms.