Section 1101 | |
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Requirements
An ARM LoanARM LoanMortgage Loan with an interest rate that periodically adjusts based on an Index per the Note or Loan Documents. has
- an interest rate that is adjusted periodically based on a specified IndexIndexBasis for determining the Gross Note Rate of an ARM Loan. , and
- payments that are adjusted to repay the UPBUPBUnpaid Principal Balance in substantially equal payments over the remaining amortization period.
Product Description |
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Plan Number |
02255 |
Terms |
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Index |
1-month LIBORLIBORLondon Interbank Offered Rate is the benchmark interest rate banks quote to lend funds to one another in the international interbank market for short-term loans, or as replaced by an alternative Index determined by Fannie Mae. |
Interest Rate Floor |
Must not be less than the combined
|
Rate Change Date |
Date the interest rate changes based on changes in the IndexIndexBasis for determining the Gross Note Rate of an ARM Loan. . |
Prepayment Availability |
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Maturity |
Matures on the 5th, 7th, or 10th anniversary of the 1st day of the month:
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Payments |
Scheduled monthly payments are due on the 1st day of each month. |
Interest Rate Change Frequency |
Monthly |
Maximum Interest Rate Change |
Plus or minus 1% of the then-current interest rate. |
Maximum Lifetime Interest Rate Limit |
For ARM 7/6, the
|
Index Look-Back Period |
15 days before the Rate Change Date. |
Interest Accrual Method |
Actual/360 |
Interest Rate Cap |
Not required; interest rate adjustments are subject to an embedded cap. |
Conversion to Fixed Rate |
Permitted between the 1st day of the 2nd 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. and the last day of the:
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Section 1102 | |
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Requirements
You must Rate LockRate LockAgreement between the Lender and the Investor containing the terms of the Lender-Arranged Sale or Multifamily Trading Desk trade of the Mortgage Loan and the MBS terms and conditions relating to the underlying MBS, if applicable, which may be documented via a recorded telephone conversation. the ARM LoanARM LoanMortgage Loan with an interest rate that periodically adjusts based on an Index per the Note or Loan Documents. with the Multifamily Trading DeskMultifamily Trading DeskTeam that quotes interest rate pricing for a Mortgage Loan and can be contacted at (888) 889-1118. (MBSMBSMortgage-Backed Security or cash).
You must ensure that the maximum ARM LoanARM LoanMortgage Loan with an interest rate that periodically adjusts based on an Index per the Note or Loan Documents. amount is the lowest of the amount:
- calculated applying the applicable minimum DSCRDSCROn an annual basis or any specified period, the ratio of Net Cash Flow to the total of: principal, interest, and required Mezzanine Financing or Hard Preferred Equity payments.
per Form 4660Form 4660Multifamily Underwriting Standards identifying Pre-Review Mortgage Loans and containing the minimum underwriting requirements (e.g., debt service coverage ratio, loan to value ratio, interest only, underwriting floors, etc.) for all Mortgage Loans.
for both the
- maximum lifetime interest rate limit, and
- Fixed Rate Test per Form 4660Form 4660Multifamily Underwriting Standards identifying Pre-Review Mortgage Loans and containing the minimum underwriting requirements (e.g., debt service coverage ratio, loan to value ratio, interest only, underwriting floors, etc.) for all Mortgage Loans. ;
- calculated using the applicable maximum LTVLTVRatio of the actual aggregate UPB of the Mortgage Loan, plus any Pre-Existing Mortgage Loans, plus any Hard Preferred Equity, plus any Mezzanine Financing, to the value of the Property, expressed as a percentage. per Form 4660Form 4660Multifamily Underwriting Standards identifying Pre-Review Mortgage Loans and containing the minimum underwriting requirements (e.g., debt service coverage ratio, loan to value ratio, interest only, underwriting floors, etc.) for all Mortgage Loans. ; and
- you determined is appropriate.
You must use the Fixed Rate Test interest rate to determine the UPBUPBUnpaid Principal Balance for the refinance risk analysis per Part II, Chapter 2: Valuation and Income, Section 203: Refinance Risk Analysis.
Section 1103 | |
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1103.01 | |
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Requirements
The following table describes various situations and the applicable prepayment provisions; see Part V, Chapter 2: Reporting and Remitting, Section 213: Prepayment Premium Sharing for Prepayment PremiumPrepayment PremiumWhen a Mortgage Loan prepayment is made, amount required to be paid by the Borrower in addition to the principal amount being prepaid and accrued interest per the related Loan Documents. calculations and sharing between you and Fannie Mae.
Situation |
Prepayment Provisions |
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Borrower attempts to make a voluntary prepayment during the 1st Loan Year. |
Borrower may not make a voluntary prepayment during the 1st Loan Year (i.e., a voluntary prepayment is “locked out”). |
ARM Loan is accelerated during the prepayment lockout period. |
BorrowerBorrowerPerson who is the obligor under the Note. owes a 5% Prepayment PremiumPrepayment PremiumWhen a Mortgage Loan prepayment is made, amount required to be paid by the Borrower in addition to the principal amount being prepaid and accrued interest per the related Loan Documents. . |
Borrower makes a prepayment after the 1st Loan Year and before the 3 months prior to the Maturity Date for any reason other than a casualty or condemnation. |
BorrowerBorrowerPerson who is the obligor under the Note. owes a Prepayment PremiumPrepayment PremiumWhen a Mortgage Loan prepayment is made, amount required to be paid by the Borrower in addition to the principal amount being prepaid and accrued interest per the related Loan Documents. . |
ARM Loan converts to a fixed rate Mortgage Loan. |
BorrowerBorrowerPerson who is the obligor under the Note. does not owe a Prepayment PremiumPrepayment PremiumWhen a Mortgage Loan prepayment is made, amount required to be paid by the Borrower in addition to the principal amount being prepaid and accrued interest per the related Loan Documents. . |
Borrower makes a prepayment during the 3 months before the Maturity Date. |
BorrowerBorrowerPerson who is the obligor under the Note. does not owe a Prepayment PremiumPrepayment PremiumWhen a Mortgage Loan prepayment is made, amount required to be paid by the Borrower in addition to the principal amount being prepaid and accrued interest per the related Loan Documents. . |
Borrower makes a prepayment due to casualty or condemnation. |
BorrowerBorrowerPerson who is the obligor under the Note. does not owe a Prepayment PremiumPrepayment PremiumWhen a Mortgage Loan prepayment is made, amount required to be paid by the Borrower in addition to the principal amount being prepaid and accrued interest per the related Loan Documents. . |
1103.02 | |
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Requirements
After 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. , the Prepayment PremiumPrepayment PremiumWhen a Mortgage Loan prepayment is made, amount required to be paid by the Borrower in addition to the principal amount being prepaid and accrued interest per the related Loan Documents. will be 1% for any reason other than a casualty or condemnation.
Loan Year |
5-Year Term |
7-Year Term |
10-Year Term |
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1 (Locked Out)1 |
N/A |
N/A |
N/A |
2 |
1% |
1% |
1% |
3 |
1% |
1% |
1% |
4 |
1% |
1% |
1% |
5 |
1% |
1% |
1% |
6 |
N/A |
1% |
1% |
7 |
N/A |
1% |
1% |
8 |
N/A |
N/A |
1% |
9 |
N/A |
N/A |
1% |
10 |
N/A |
N/A |
1% |
1 During the lockout period, the Borrower may not voluntarily prepay the ARM Loan. If the ARM Loan is accelerated during the lockout period, the Borrower owes a 5% Prepayment Premium. |