source:
  type: guide
  id: fhlmc-8502.1
  authority: Freddie Mac Single-Family Seller/Servicer Guide Section 8502.1 — ARM
    Servicing and reporting
  description: Freddie Mac Single-Family Seller/Servicer Guide Section 8502.1 — ARM
    Servicing and reporting.
  coverage_tier: operative
obligations:
- id: fhlmc-8502.1-full
  canonical_id: fhlmc-8502.1-full
  section: Freddie Mac Single-Family Seller/Servicer Guide Section 8502.1 — ARM Servicing
    and reporting
  type: do
  tags:
  - regulator-direct
  - fhlmc
  - freddie-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Freddie Mac Single-Family Seller/Servicer Guide Section 8502.1 — ARM
      Servicing and reporting
    source_class: fhlmc-guide
    source_url: https://guide.freddiemac.com/ci-guide
    snapshot_id: 5869ee9e606cd4ae
    fetched_at: '2026-05-23T00:27:40Z'
    content_hash: sha256:9a1b23e5024bb369e7a59d36b3702383c11ace68b5d209fdef791bc8f955c637
    paragraph_quote: '8502.1: ARM Servicing and reporting (08/13/25) An ARM has a
      Note Rate that adjusts periodically based on a specified Index. The specific
      features of an ARM vary depending upon the terms of the Note. All ARMs must
      be accounted for and reported under the net yield accounting reporting method,
      as described in Section 8301.2(a), and are reported via the transmission of
      the Loan-Level Transaction. Under this method, Freddie Mac receives its proportionate
      share of principal and interest collected each month including any Negative
      Amortization activity for the period. For purposes of reporting to Freddie Mac,
      interest is computed by multiplying the Ending UPB of the current Accounting
      Cycle of a loan by the Accounting Net Yield (ANY), using a 30-day month/360-day
      year. Note: See Chapters 8301 through 8304 for the accounting and reporting
      requirements for ARMs. See Chapter 8303 for remittance requirements. 8502.2:
      Rate changes on ARMs and notification requirements (07/09/25) This section contains
      requirements related to: ■ Determining the new Note Rate ■ Notifying the Borrower
      ■ Notification of the new Accounting Net Yield (ANY) (a) Determining the new
      Note Rate The Servicer must adjust the Note Rate on an ARM in accordance with
      the provisions set forth in the Note and any applicable Adjustable-Rate Riders.
      The Note will specify the Index on which any adjustments must be based, as well
      as other factors that must be used to determine the new Note Rate. These factors
      include, but are not limited to: ■ The dates on which the Note Rate may change
      (Interest Change Date) ■ The date on which the Index value used to calculate
      the new Note Rate is determined, usually expressed as a number of days (known
      as the Lookback Period) Freddie Mac Single-Family Seller/Servicer Guide Chapter
      8502 As of 08/13/25 Page 8502-2 ■ The Margin, which is the number of percentage
      points that must be added to the current Index value to establish the new Note
      Rate ■ The limitations on the amount that the Note Rate may change at the first
      adjustment, subsequent adjustments and during the life of the Mortgage (Initial
      Cap, Periodic Cap and Life Cap) and any associated rounding rules Upon each
      Note Rate change, the Servicer must calculate a new monthly payment amount based
      on the new Note Rate that is sufficient to fully amortize the UPB of the ARM
      over the remaining term. Prepayments on ARMs will only be accepted if the Index
      is available for the DDLPI reported that corresponds to the prepayment. (b)
      Notifying the Borrower With respect to each ARM serviced for Freddie Mac, the
      Servicer must correctly calculate any and all adjustments to the interest rate
      or the monthly payment and give to the Borrower all notices of adjustment of
      interest rate and monthly payments in strict accordance with the requirements
      of applicable law and with the terms of the Note and the Security Instrument.
      With respect to ARMs, in the notices of adjustment in the interest rate and
      monthly payment provided the Borrower before the effective date of the change,
      the Servicer must inform the Borrower that the Index value used to calculate
      the new interest rate is: ■ For LIBOR-indexed ARMs with interest rate adjustments
      based on a lookback date after July 3, 2023, as applicable and as published
      on the website of Refinitiv Limited (Refinitiv): ❑ FTSE USD IBOR Consumer Cash
      Fallback 1-Month* ❑ FTSE USD IBOR Consumer Cash Fallback 6-Month* or ❑ FTSE
      USD IBOR Consumer Cash Fallback 12-Month* *The following disclaimer has been
      provided by London Stock Exchange Group plc and Freddie Mac takes no responsibility
      for its contents: FTSE USD IBOR Cash Fallbacks are provided by London Stock
      Exchange Group plc (“LSEG”) and its affiliates. LSEG and its affiliates shall
      not be liable for any errors or delays in providing or making available the
      data contained within this service or for any actions taken in reliance on the
      same. FTSE USD IBOR Cash Fallbacks cannot be used for any commercial purpose
      (including redistribution) without a license. Please contact LSEG D&A (formerly
      Refinitiv) if a license is required. FTSE USD IBOR Cash Fallbacks are subject
      to LSEG’s terms of use and disclaimer available at https://www.lseg.com/en/ftse-russell/benchmarks/usd-
      ibor-cash-fallbacks. ■ For SOFR-indexed ARMs, the 30-day Average SOFR as published
      by, or on the website of, the Federal Reserve Bank of New York Freddie Mac Single-Family
      Seller/Servicer Guide Chapter 8502 As of 08/13/25 Page 8502-3 ■ For Constant
      Maturity Treasury (CMT)-indexed ARMs, the 1-year Weekly CMT, 3-Year Weekly CMT,
      and 5-Year Weekly CMT, as applicable, as published on the website of, or otherwise
      made available by, the Board of Governors of the Federal Reserve System (i.e.,
      H.15 Release - Selected Interest Rates) (c) Notification of the new ANY Freddie
      Mac will notify the Servicer via the ARM notification report of the revised
      ANY that the Servicer will be required to send us on an ARM in accordance with
      the product requirements set forth at the time of purchase. The ARM notification
      report will be available through the Freddie Mac Service Loan Level Reporting
      tool (see Exhibit 88, Servicing Tools). The Servicer must verify the rate change
      notification information. If there are any differences or omissions, the Servicer
      must notify Freddie Mac of the discrepancy via the Freddie Mac Servicing Data
      Corrections tool (see Exhibit 88) within the same Accounting Cycle the ARM notification
      report is published in the Freddie Mac Loan Level Reporting tool. Do not return
      the notification if the information on it is correct and complete. The new ANY
      must be used for the Accounting Cycle date indicated in the notification. In
      the month of the Interest Change Date, the Servicer must report the forecasted
      scheduled interest for the next Accounting Cycle based on the new rate. The
      Servicer will be liable for all net yield interest deficiencies that result
      from differences in calculations between the ANY that Freddie Mac provides the
      Servicer and the Servicer’s calculations. Depending on the next Interest Change
      Date at the time of Mortgage delivery, the Servicer may not receive notification
      from Freddie Mac prior to the effective date of the new ANY.'
  judgment: false
