The following procedure provides instructions for determining the new monthly payment and effective date, in accordance with C-2.3-01, Processing ARM Conversions to Fixed Rate Mortgage Loans.
To calculate the new monthly payment, the servicer must determine the amount required to repay the UPB of the ARM loan
- in substantially equal payments,
- over the remaining term of the mortgage loan, and
- at the new fixed interest rate.
This new monthly payment becomes effective in the month following the month in which the new fixed interest rate goes into effect, either on
- the first day of the month; or
- on the applicable due date, if the mortgage loan has a payment due date other than the first of the month.
For more information please see F-1-01, Servicing ARM Loans