source:
  type: guide
  id: fnma-svc-c-2.1-02
  authority: Fannie Mae Servicing Guide C-2.1-02 — Notifying the Borrower Regarding
    Interest Rate and/or Payment Changes
  description: Fannie Mae Servicing Guide C-2.1-02 — Notifying the Borrower Regarding
    Interest Rate and/or Payment Changes.
  coverage_tier: operative
obligations:
- id: fnma-svc-c-2.1-02-full
  canonical_id: fnma-svc-c-2.1-02-full
  section: Fannie Mae Servicing Guide C-2.1-02 — Notifying the Borrower Regarding
    Interest Rate and/or Payment Changes
  type: do
  tags:
  - regulator-direct
  - fnma
  - servicing-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Servicing Guide C-2.1-02 — Notifying the Borrower Regarding
      Interest Rate and/or Payment Changes
    source_class: fnma-guide
    source_url: https://singlefamily.fanniemae.com/media/document/pdf/servicing-guide
    snapshot_id: cf63a82bbb4adfba
    fetched_at: '2026-05-22T23:53:19Z'
    content_hash: sha256:89df66c43baad07f8a8dd9d224492fff7d15e8839edba02ad0e74c7e50fe5da3
    paragraph_quote: 'C-2.1-02, Notifying the Borrower Regarding Interest Rate and/or
      Payment Changes (08/13/2025) Introduction This topic contains the following:
      General Requirements for All ARM Change Notices Additional Notice Requirements
      Speciﬁc to Mortgage Loans Subject to a Temporary Interest Rate Buydown Plan
      Additional Notice Requirements Speciﬁc to Plans with Payment Caps When the Interest
      Rate Changes More Frequently Than the Payment When the Payment Changes More
      Frequently Than the Interest Rate Published May 13, 2026 218 General Requirements
      for All ARM Change Notices The servicer of an ARM loan must notify the borrower
      before the eﬀective date of any change to the mortgage loan interest rate or
      monthly payment in accordance with applicable law and the mortgage loan security
      instrument. When the interest rate and the monthly payment change at diﬀerent
      intervals, separate notices are required for each change. All ARM notices must
      comply with the disclosure requirements set forth in the TILA and the individual
      mortgage loan documents. Additional Notice Requirements Speciﬁc to Mortgage
      Loans Subject to a Temporary Interest Rate Buydown Plan The servicer must send
      notiﬁcation detailing the pending interest rate increase of a mortgage loan
      subject to a temporary interest rate buydown plan to the borrower 90 days prior
      to the payment change. Additional Notice Requirements Speciﬁc to Plans with
      Payment Caps In addition to the information noted in General Requirements for
      All ARM Change Notices, notices for ARM plans that have payment change limitations
      must also include all of the information listed in the following table. ✓ Notice
      Requirements The monthly payment required to fully amortize the mortgage loan,
      if diﬀerent from the new monthly payment amount. The diﬀerence between a full
      payment amount and a limited-payment amount. The borrower’s option to choose
      the limited-payment amount, and if applicable: • any limitations on their right
      to exercise this option, • the eﬀect that their failure to exercise this option
      will have on future options, and • the amount of negative amortization that
      will occur if the option is exercised. The date by which the borrower must notify
      the servicer if they choose to pay the limited-payment amount. Note: Notices
      for mortgage loans that have an option to convert to a ﬁxed rate mortgage loan
      must also include an explanation of this option and the requirements for its
      execution. Published May 13, 2026 219 When the Interest Rate Changes More Frequently
      Than the Payment The following table provides a list of additional information
      that must be included in the notice for an interest rate change for ARM plans
      in which the interest rate changes more frequently than the payment. ✓ Notice
      Requirements The method used to determine the full payment amount and why the
      monthly payment will not be changed to that amount (if applicable). The amount
      of any negative amortization that will occur until the next interest change
      date when the monthly payment is not being changed to keep pace with the mortgage
      loan interest rate. If the servicer gives the borrower an option of limiting
      the payment increase, the notice must also include all of the details listed
      in the following table. ✓ Notice of the option to limit the payment increase
      An explanation of why the oﬀer is being made. The method used to determine the
      limited payment amount. The amount of negative amortization that will occur
      if the borrower chooses to limit the payment increase. The limited payment amount
      and the date on which it will become eﬀective. The date by which the borrower
      must notify the servicer if they choose to pay the limited payment amount. A
      request that the borrower indicate their acceptance of the oﬀer by signing and
      returning the notice to the servicer for inclusion in its permanent records.
      The date the next payment change will occur if the borrower chooses the limited
      payment amount. When the Payment Changes More Frequently Than the Interest Rate
      The following table provides a list of additional information that must be included
      in the notice for a payment change when the monthly payment changes more frequently
      than the interest rate. Published May 13, 2026 220 ✓ Notice Requirements The
      amount of any negative amortization that will occur (when the monthly payment
      is not suﬃcient to fully amortize the mortgage loan), until the next payment
      change date. The date the monthly payment will change if the negative amortization
      limit will be reached before the next scheduled payment change. When the notice
      also serves as notiﬁcation of an interest rate change, it must also explain
      the additional details noted in the following table. ✓ Notice of interest rate
      change The diﬀerence between a full payment amount and a graduated-payment amount.
      The borrower’s option to choose the graduated-payment amount if the full payment
      amount represents more than a 7.5% increase over the previous monthly payment
      amount. The amount of negative amortization that will occur if the borrower
      requests a subsequent graduated-payment period. Note: Notices for mortgage loans
      that have an option to convert to a ﬁxed rate mortgage loan must also include
      an explanation of this option and the requirements for its execution. Recent
      Related Announcements The table below provides references to recently issued
      Announcements that are related to this topic. Announcements Issue Date Announcement
      SVC-2025-05 August 13, 2025 Section C-2.2, Processing Corrections to Errors
      Published May 13, 2026 221'
  judgment: false
