SUPERSEDED — prior version (Selling Guide edition published May 6, 2026) — Fannie Mae Selling Guide C3-5-02 — Calculating the Weighted-Average Pool Accrual Rates for ARM Flex Pools Using a Fixed MBS Margin
SUPERSEDED — this is the PRIOR text of Fannie Mae Selling Guide C3-5-02 (Calculating the Weighted-Average Pool Accrual Rates for ARM Flex Pools Using a Fixed MBS Margin), dated 04/01/2009, as published in the Selling Guide edition of May 6, 2026. Fannie Mae changed this topic: the edition published September 2, 2026 carries a revised text. Retained because a loan or exam period governed by the earlier text needs the version in force at the time.
Superseded — retained for reference. The operative requirements have moved to the current rule (see the description above).
Verbatim regulatory text
Verbatim provisions from SUPERSEDED — prior version (Selling Guide edition published May 6, 2026) — Fannie Mae Selling Guide C3-5-02 — Calculating the Weighted-Average Pool Accrual Rates for ARM Flex Pools Using a Fixed MBS Margin — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.
Fannie Mae Single Family Selling Guide C3-5-02
(04/01/2009) 997 C3-5-03, Calculating the Weighted-Average Pool Accrual Rates for ARM Flex Pools Using a Weighted-Average XII MBS Margin (04/01/2009) 1001
Fannie Mae Single Family Selling Guide C3-5-02
Calculating the Weighted-Average Pool Accrual Rates for ARM Flex Pools Using a Weighted-Average
Fannie Mae Single Family Selling Guide C3-5-02
, 2026 XII MBS Margin (04/01/2009) 1001 .........................................................................................................
[SUPERSEDED] Fannie Mae Selling Guide C3-5-02 — Calculating the Weighted-Average Pool Accrual Rates for ARM Flex Pools Using a Fixed MBS Margin
C3-5-02, Calculating the Weighted-Average Pool Accrual Rates for ARM Flex Pools Using a Fixed MBS Margin (04/01/2009) Introduction This topic contains information on calculating the weighted-average pool accrual rates for ARM Flex pools using a fixed MBS margin. How to Determine the Weighted-Average Pool Accrual Rate(s) for ARM Flex Pools Using a Fixed MBS Margin (based on Pool-Level MBS Margin and Loan-Level Servicing Fee) Step One: Step Two: Step Three: Step Four: Step Five: Step Six: How to Determine the Weighted-Average Pool Accrual Rate(s) for ARM Flex Pools Using a Fixed MBS Margin (based on Pool-Level MBS Margin and Loan-Level Servicing Fee) In the following example, assume that the lender wants to place the following three ARM Plan 57 ARMs into a weighted-average ARM Flex MBS pool with a standard remittance cycle. All of the mortgages in the pool will be serviced under the special servicing option and will have a guaranty fee of 0.35%. All of the mortgages have borrower-purchased mortgage insurance. Category Loan A Loan B Loan C Mortgage Interest Rate 9.00% 9.50% 10.00% Mortgage Margin 2.25% 2.50% 2.50% Mortgage Ceiling 15.00% 15.50% 16.00% UPB $70,000 $50,000 $60,000 Interest Rate Change Date 1–Jun 1–Jul 1–Aug To develop a fixed MBS margin, the lender must first derive a loan-level servicing fee by reducing the mortgage margin for each mortgage to be included in the pool by the desired fixed MBS margin and then by the applicable guaranty fee percentage and, if applicable, by the periodic renewal premium for lender-purchased mortgage insurance. The differences in the servicing fees for the mortgages in the pool will be exactly equal to the differences in their mortgage margins. The weighted-average pool accrual rate is then determined by first reducing each individual mortgage interest rate by the servicing spread for the mortgage (the sum of the guaranty fee and the calculated loan-level servicing fee and, if applicable, the periodic renewal premium for lender-purchased mortgage insurance) and then developing a weighted-average of the net mortgage interest rates. This same procedure also is used to establish the maximum weighted-average pool accrual rate (and any applicable minimum weighted-average pool accrual rate), using the weighted-average of the net mortgage interest rate ceilings (or floors) of the mortgages in the pool. Step One: Determine the loan-level servicing fee, using a 1.50% pool-level MBS margin. Category Loan A Loan B Loan C Mortgage Margin 2.25% 2.50% 2.75% MBS Margin 1.50% 1.50% 1.50% Guaranty Fee 0.35% 0.35% 0.35% Servicing Fee 0.40% 0.65% 0.90% Step Two: Determine the net mortgage interest rate. Category Loan A Loan B Loan C Mortgage Interest Rate 9.00% 9.50% 10.00% Guaranty Fee 0.35% 0.35% 0.35% Servicing Fee 0.40% 0.65% 0.90% Net Mortgage Interest Rate 8.25% 8.50% 8.75% Step Three: Determine the weighted-average pool accrual rate. Loan ID Net Mortgage Interest Rate UPB Product Loan A 8.25% $70,000 5,775.00 Loan B 8.50% $50,000 4,250.00 Loan C 8.75% $60,000 5,250.00 $180,000 15,275.00 15,275/180,000 = 8.486%, rounded to three decimal places. Step Four: Determine the net mortgage interest rate ceiling. Category Loan A Loan B Loan C Mortgage Interest Rate Ceiling 15.00% 15.50% 16.00% Guaranty Fee 0.35% 0.35% 0.35% Servicing Fee 0.40% 0.65% 0.90% Net Mortgage Interest Rate Ceiling 14.25% 14.50% 14.75% Step Five: Determine the maximum weighted-average pool accrual rate. Loan ID Net Mortgage Interest Rate UPB Product Loan A 14.25% $70,000 9,975.00 Loan B 14.50% $50,000 7,250.00 Loan ID Net Mortgage Interest Rate UPB Product Loan C 14.75% $60,000 8,850.00 $180,000 26,075.00 26,075.00/180,0000 = 14.486%, rounded to three decimal places. Step Six: Determine the minimum weighted-average pool accrual rate (if the mortgages have an interest rate floor). Since the mortgages in this example do not have an interest rate floor, this step is not necessary. It is shown for illustration purposes only. First, find the net mortgage interest rate floor by following Step Four, substituting the mortgage interest rate floor for the ceiling. Then, follow Step Five to find the minimum weighted-average pool accrual rate, using the net mortgage interest rate floor just calculated for each mortgage instead of the mortgage interest rate ceilings.
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