Introduction
This topic contains the following:
- Overview
- Determining Eligibility Criteria for Converting a First Lien ARM to a Fixed Rate Mortgage Loan
- Completing the Conversion
Overview
This topic provides requirements for processing ARM loan conversions to fixed rate mortgage loans.
The servicer must also follow the procedures in F-1-01, Servicing ARM Loans in order to complete the conversion of an ARM loan to a fixed rate mortgage loan.
Determining Eligibility Criteria for Converting a First Lien ARM to a Fixed Rate Mortgage Loan
To be eligible for conversion to a fixed rate mortgage loan, the servicer must confirm that an ARM loan
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is current (or must be brought current by the conversion date),
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has an LTV ratio of 95% or less, and
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satisfies any other conditions specified under a negotiated contract.
If the mortgage loan has negatively amortized, the servicer must obtain a new appraisal to determine
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the current LTV of the property, and
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whether the borrower will have to pay any funds to reduce the UPB to the amount required to achieve an LTV ratio equal to 95% of the current value of the property.
Completing the Conversion
The following table provides a list of all items required before the servicer can complete the conversion of an ARM to a fixed rate mortgage loan.
✓ | The servicer must have... |
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Received any required appraisal report. |
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Received from the borrower
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Sent a document custodian the original agreement, if Fannie Mae is holding the original note as a custody document. |
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Performed any other actions as specified in the negotiated contract. |
Recent Related Announcements
The table below provides references to recently issued Announcements that are related to this topic.
Announcements | Issue Date |
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Announcement SVC-2019-03 | May 15, 2019 |