Interest Rate Conversion Date
Requirements
The conversion of the interest rate from fixed to adjustable is mandatory and automatic. After Fannie Mae confirms the CommitmentCommitmentContractual agreement between you and Fannie Mae where Fannie Mae agrees to buy a Mortgage Loan at a future date in exchange for an MBS, or at a specific price for a Cash Mortgage Loan, and you agree to Deliver that Mortgage Loan. for the Hybrid ARM LoanHybrid ARM LoanMortgage Loan with a total term of 30 years, comprised of an initial term when interest accrues at a fixed rate, and which automatically converts to a term where interest accrues at an adjustable rate. , it may not be modified.
After the Hybrid ARM Conversion DateHybrid ARM Conversion DateDate when the UPB of a Hybrid ARM Loan automatically converts from accruing at a fixed interest rate to accruing at an adjustable interest rate. , interest will accrue at the applicable adjustable rate, up to and including the Maturity DateMaturity DateDate all Mortgage Loan amounts become fully due and payable per the Loan Documents. .
As an example of the conversion to adjustable rate date calculation in Part III, Chapter 13: Hybrid Adjustable Rate Mortgage (Hybrid ARM) Loans, Section 1301: Description:
- If the effective date of the Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. is July 1, 2019, and the fixed rate term is 7 years, then the Hybrid ARM Conversion DateHybrid ARM Conversion DateDate when the UPB of a Hybrid ARM Loan automatically converts from accruing at a fixed interest rate to accruing at an adjustable interest rate. would be July 1, 2026.
- If the fixed rate term is 7 years and the effective date is any other date in July 2019, then the Hybrid ARM Conversion DateHybrid ARM Conversion DateDate when the UPB of a Hybrid ARM Loan automatically converts from accruing at a fixed interest rate to accruing at an adjustable interest rate. would be August 1, 2026.