If the borrower exercises the conversion option for an ARM that is in an MBS pool, the servicer must repurchase the mortgage loan from the pool in the month preceding the month the mortgage loan begins to accrue interest at the new fixed rate. The servicer must have received all executed conversion documents before it repurchases the mortgage loan.
After the servicer repurchases the converted mortgage loan from the MBS pool, it must determine whether it is able to redeliver the converted mortgage loan to Fannie Mae using the post-conversion disposition option specified at delivery.
The servicer must follow the procedures in Repurchasing Converted MBS Mortgage Loans and Redelivering Them to Fannie Mae in F-1-01, Servicing ARM Loans for detailed instructions.
For more information please see: C-2.3-03, Repurchasing Converted MBS Mortgage Loans and Redelivering Them to Fannie Mae