To be eligible for conversion to a fixed rate mortgage loan, the servicer must confirm that an ARM loan
is current (or must be brought current by the conversion date),
has an LTV ratio of 95% or less, and
satisfies any other conditions specified under a negotiated contract.
If the mortgage loan has negatively amortized, the servicer must obtain a new appraisal to determine
the current LTV of the property, and
whether the borrower will have to pay any funds to reduce the UPB to the amount required to achieve an LTV ratio equal to 95% of the current value of the property.
See below for related Q&A:
For more information please see: C-2.3-01 Processing Arm Conversions to Fixed Rate Mortgage Loans.