Section 704
| 704.01 | |
|
|
|
Operating Procedures
To renew an ARM 5/5 Loan for a second 5-year adjustable rate term:
| Timing before the initial Maturity Date | You must... |
|---|---|
| At least 180 days |
|
| At least 30 days |
Provide Multifamily Asset ManagementMultifamily Asset ManagementTeam that can be contacted at [email protected]. with:
|
| 704.02 | |
|
|
|
Requirements
If an ARM 5/5 Loan is renewed for an additional 5 years, you must:
- Use the same Guaranty FeeGuaranty FeeFee retained by Fannie Mae for credit enhancing a Mortgage Loan or assuming credit risk on a Mortgage Loan, and which may be expressed as a percentage. and Servicing FeeServicing FeeFee a Servicer receives for collecting payments, managing operational procedures, and assuming your portion of credit risk for a Mortgage Loan, and which may be expressed as a percentage. as the first 5-year adjustable rate term.
- Adjust the InvestorInvestorMBS Investor for an MBS Mortgage Loan, or Fannie Mae for a Cash Mortgage Loan. spread for the second 5-year adjustable rate term based on current market conditions.
- Adjust the monthly Replacement ReserveReplacement ReserveCustodial Account the Borrower funds during the Mortgage Loan term for Replacements. deposit to include required capital improvements during Loan YearsLoan YearsPeriod beginning on the date of the Note and ending on the last day of the month that is 12 full months after the date of the Note, and each successive 12-month period thereafter. 6 through 10, plus 2 additional years, per the original PCA ReportPCA ReportProperty Condition Assessment Report documenting the findings of a PCA. .
- Not charge a Prepayment PremiumPrepayment PremiumFor a Mortgage Loan prepayment, amount the Borrower must pay in addition to the prepaid principal and accrued interest per the Loan Documents. .
| 704.03 | |
|
|
|
Requirements
If an ARM 5/5 Loan is renewed for an additional 5 years:
- no voluntary prepayment will be permitted during the 6th Loan YearLoan YearPeriod beginning on the date of the Note and ending on the last day of the month that is 12 full months after the date of the Note, and each successive 12-month period thereafter. (i.e., the 1st Loan YearLoan YearPeriod beginning on the date of the Note and ending on the last day of the month that is 12 full months after the date of the Note, and each successive 12-month period thereafter. of the second 5-year adjustable rate term); and
- the ARM LoanARM LoanMortgage Loan with an interest rate that periodically adjusts based on an Index per the Note or Loan Documents.
may be prepaid after the 6th Loan YearLoan YearPeriod beginning on the date of the Note and ending on the last day of the month that is 12 full months after the date of the Note, and each successive 12-month period thereafter.
with a 1% Prepayment PremiumPrepayment PremiumFor a Mortgage Loan prepayment, amount the Borrower must pay in addition to the prepaid principal and accrued interest per the Loan Documents.
, but no Prepayment PremiumPrepayment PremiumFor a Mortgage Loan prepayment, amount the Borrower must pay in addition to the prepaid principal and accrued interest per the Loan Documents.
is due
- during the last 3 months of the loan term, or
- if the ARM LoanARM LoanMortgage Loan with an interest rate that periodically adjusts based on an Index per the Note or Loan Documents. converts to a fixed rate Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or a mortgage debt obligation with a Fannie Mae credit enhancement. .
The following table describes various situations and the applicable prepayment provisions for the second 5-year adjustable rate term for an ARM 5/5 Loan; see Part V, Chapter 2: Reporting and Remitting, Section 213: Prepayment Premium Sharing for Prepayment PremiumPrepayment PremiumFor a Mortgage Loan prepayment, amount the Borrower must pay in addition to the prepaid principal and accrued interest per the Loan Documents. calculations and sharing between you and Fannie Mae.
| Situation | Prepayment Provisions |
|---|---|
| ARM 5/5 Loan is renewed for a second 5-year adjustable rate term. | BorrowerBorrowerPerson who is the obligor per the Note. does not owe a Prepayment PremiumPrepayment PremiumFor a Mortgage Loan prepayment, amount the Borrower must pay in addition to the prepaid principal and accrued interest per the Loan Documents. . |
| Borrower attempts to make a voluntary prepayment during the 6th Loan Year. | BorrowerBorrowerPerson who is the obligor per the Note. may not make a voluntary prepayment during the 6th Loan YearLoan YearPeriod beginning on the date of the Note and ending on the last day of the month that is 12 full months after the date of the Note, and each successive 12-month period thereafter. (i.e., a voluntary prepayment is locked out). |
| ARM 5/5 Loan converts to a fixed rate Mortgage Loan after the 6th Loan Year. | BorrowerBorrowerPerson who is the obligor per the Note. does not owe a Prepayment PremiumPrepayment PremiumFor a Mortgage Loan prepayment, amount the Borrower must pay in addition to the prepaid principal and accrued interest per the Loan Documents. . |
| Borrower makes a voluntary prepayment after the 6th Loan Year and before the 3 months prior to the extended Maturity Date for any reason other than a casualty or condemnation. | BorrowerBorrowerPerson who is the obligor per the Note. owes a Prepayment PremiumPrepayment PremiumFor a Mortgage Loan prepayment, amount the Borrower must pay in addition to the prepaid principal and accrued interest per the Loan Documents. . |