All mortgage loans have a servicing fee that is specified at the time the mortgage loan is purchased or securitized and that generally remains constant over the life of the mortgage loan (although it may change when an ARM is converted to a fixed-rate mortgage loan). Some ARM MBS pools allow variances in the individual servicing fee for a mortgage loan from time to time to achieve a fixed margin for the MBS pool. In addition, some mortgage loans have excess yield because the mortgage loan interest rate is higher than the sum of Fannie Mae's required yield and the minimum required servicing fee. Excess yield is not always guaranteed over the life of the mortgage loan.
To calculate the servicing fee for an ARM in an MBS pool that has a fixed MBS margin, the servicer must use the formula shown in the following table.
To calculate excess yield for any mortgage loan, the servicer must use the calculation shown in the following table.
For more information see Investor Reporting Manual Chapter 5, Formulas and Calculations.