Fannie Mae Updates Life Floor Disclosures on Adjustable-Rate Mortgage Pools

March 22, 2017

Beginning with April 2017 Adjustable-Rate Mortgage (ARM) pool issuances, Fannie Mae will be disclosing the mortgage loan’s Mortgage Margin as the Life Floor whenever the lifetime interest rate floor is not specified. This enhancement corresponds to the Fannie Mae Selling Guide and the standard Fannie Mae/Freddie Mac ARM mortgage documents, which stipulate that the lifetime interest rate floor for an ARM loan may never be less than the applicable mortgage margin.  Corresponding MBS disclosure attributes, such as the Net Life Floor, Weighted-Averages, and Quartiles, will be updated accordingly.  The changes will be reflected in Fannie Mae’s at-issuance and ongoing disclosure files.

For newly-issued Megas, the underlying collateral may be comprised of securities where the related pool statistics reflect the Life Floor as the Mortgage Margin, as well as securities where the related pool statistics list the Life Floor as zero. The Life Floor for the mortgage loans in such securities is also equal to the Mortgage Margin, notwithstanding the appearance of a Life Floor value of zero.  In this situation, a Life Floor value of zero will be included in all corresponding disclosure calculations (e.g., weighted averages and quartiles), which may result in values less than the mortgage margin.  Investors are encouraged to review the disclosures of the underlying securities to determine the applicable issue date and disclosure values.

Inquiries regarding this Announcement should be directed to the Fannie Mae Fixed-Income Securities Helpline at (800) 232-6643, Option 2 or via email.