Servicing Guide

Published November 10, 2020

For best results, pose your search like a question.

Guide Resources

For a comprehensive list of resources such as forms, announcements, lender letters, notices and more.

Visit Selling and Servicing Guide Communications and Forms

Customers Recommend Ask Poli

AskPoli

If you have additional questions, Fannie Mae customers can visit Ask Poli to get information from other Fannie Mae published sources.

Launch Ask Poli  

Download PDF Guide

You can also download the printable ~800 page PDF, which include links.

Download Now

How is Fannie Mae's required net yield for Convertible ARM plans with a periodic Conversion Option determined?

The required net yield is the yield in effect for

  • 60-day mandatory commitments for comparable term conventional fixed-rate first lien mortgage loans,
  • accounted for under the actual/actual remittance type, and
  • at the time Fannie Mae’s Pricing and Sales Desk opened on the first business day of the month in which the borrower requested the conversion.

If the ARM loan is part of an MBS pool, the definition of required net yield depends on the post-conversion disposition option designated by the seller when it delivered the MBS pool to Fannie Mae. The following table provides the required net yield information for each post-conversion disposition option.

Some plans apply the limit on the amount by which the interest rate can change over the life of the mortgage loan to the new rate established for the fixed-rate mortgage loan at the time of the conversion. Therefore, the servicer must compare the newly calculated interest rate to the original note rate. If the new interest rate exceeds the original note rate by more than the specified percentage, the new interest rate will be the rate determined by adding that percentage to the original note rate.

Seller selected disposition option The required net yield is…

Market rate post-conversion option

the posted 60-day mandatory delivery actual/actual commitment yield for 30-year conventional fixed-rate mortgage loans (or the yield for 15-year mortgage loans, if the term of the ARM was 15 years or less) that was in effect on a specific date (as specified at the time of mortgage loan origination) that falls during the month that is two months before the date on which interest will begin to accrue at the new fixed rate.

Take-out post-conversion option

the yield that Fannie Mae has posted for the actual/actual remittance type when Fannie Mae’s Pricing and Sales Desk opens on the first business day of the second month before the date on which interest begins to accrue at the new fixed interest rate. The new interest rate becomes effective on the conversion date.

For more information please see F-1-01, Servicing ARM Loans

Have You Tried Ask Poli?

Poli knows. Just ask.

Ask Poli features exclusive Q&As and
more—plus official Selling & Servicing
Guide
content.

Try Ask Poli

Related Articles


AskPoli

Customers Recommend Ask Poli

If you have additional questions, Fannie Mae customers can visit Ask Poli to get information from other Fannie Mae published sources.

Guide Resources

For a comprehensive list of resources such as access forms, announcements, lender letters, notices and more.

Visit Selling and Servicing Guide Communications and Forms

X
Having Issues with Seeing this Page Correctly?

Use Firefox or Chrome   How to do a hard refresh in Internet Explorer
We recommend that you use the latest version of FireFox or Chrome.

Download Firefox
Download Chrome
  A hard refresh will clear the browsers cache for a specific page and force the most recent version of a page.
    Hold the Ctrl key and press the F5 key.
     

Email Us
If you still have Technical Support questions, feel free to emailAsk_Poli@fanniemae.com.