Servicing Guide

Published November 10, 2020

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What are the servicer requirements when identifying and Disclosing Adjustment Errors?

The servicer must verify all previous interest rate and payment adjustments were correctly handled for a mortgage loan before it corrects an identified adjustment error.

When the servicer confirms either an individual ARM adjustment error, or the cumulative effect of several ARM adjustment errors, the servicer must make arrangements within 60 days to

  • correct the error(s) in its and Fannie Mae’s records,

  • adjust the borrower’s current interest rate and/or monthly payment without waiting for the next scheduled interest rate and/or monthly payment adjustment date (taking into consideration Fannie Mae’s policy on the applicability of any interest rate or payment caps specified in the mortgage loan documents), and

  • notify the borrower about the effect of the correction.

If the servicer is unable to resolve an ARM adjustment error within 20 days of having received a borrower inquiry concerning the matter, it must send the borrower an interim response.

The servicer must not report the correction of an ARM adjustment error or make an effort to correct an erroneous remittance until it has discussed the specifics of the correction with its Fannie Mae Investor Reporting Representative (see F-4-03, List of Contacts ). The servicer must follow all applicable procedures in Correcting ARM Adjustment Errors in F-1-01, Servicing ARM Loans .

See below for related Q&A’s:

Does the mortgage loan have to be re-amortized once an ARM interest rate correction is identified?

Who determines if the borrower's monthly payment needs to be changed due to an ARM adjustment?

For more information please see: C-2.2-01, Identifying and Disclosing Adjustment Errors.

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