Servicing Guide

Published July 15, 2020

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What information must be included in the interest rate change notice when the servicer gives the borrower an option of limiting their payment increase?

If the servicer gives the borrower an option of limiting the payment increase, the notice must also include all of the details listed in the following table.

Notice of the option to limit the payment increase
 

An explanation of why the offer is being made.

 

The method used to determine the limited payment amount.

 

The amount of negative amortization that will occur if the borrower chooses to limit the payment increase.

 

The limited payment amount and the date on which it will become effective.

 

The date by which the borrower must notify the servicer if he or she chooses to pay the limited payment amount.

 

A request that the borrower indicate his or her acceptance of the offer by signing and returning the notice to the servicer for inclusion in its permanent records.

 

The date the next payment change will occur if the borrower chooses the limited payment amount.

See below for related Q&A’s:

What are the general requirements for notifying the borrower of ARM change notices?

What action must the servicer take when notifying the borrower regarding interest rate and/or payment changes specific to plans with payment caps?

What information must be included in the notice for an interest rate change for ARM plan in which the interest rate changes more frequently than the payment?

What information must be included in the Arm payment change notification when the monthly payment changes more frequently than the interest rate?

For more information please see: C-2.1-02: Notifying the Borrower Regarding Interest Rate and/or Payment Changes.

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What action must the servicer take when notifying the borrower regarding interest rate and/or payment changes specific to plans with payment caps?

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