The servicer must determine whether the borrower’s monthly payment needs to be changed as a result of any ARM adjustment error. If the net effect of correcting an adjustment error is an undercharge, it cannot be collected from the borrower, nor can the UPB of the mortgage loan be changed to offset it.
The servicer must follow the procedures in Calculating the New Monthly Payment After an Adjustment Error and Determining the Amount of an Under- or Overcharge Related to an Adjustment Error in F-1-01, Servicing ARM Loans to calculate the correct monthly payment.
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For more information please see: C-2.2-01, Identifying and Disclosing Adjustment Errors.