How can the borrower benefit requirement be met?
The borrower benefit requirement has two distinct standards based on the borrower’s payment change: If the borrower’s payment is decreasing, the borrower benefit provisions are met. The borrower could extend their amortization term – e.g., from 15 years to 30 years – or move from a fixed-rate mortgage to an adjustable-rate mortgage. If the borrower’s payment is staying the same or increasing, the borrower must be moving to a more stable mortgage product. The borrower may not extend their amortization period (although a shorter amortization period is considered to comply with this standard), or move from a fixed-rate mortgage to an adjustable-rate mortgage. As a reminder, Fannie Mae encourages lenders to provide a fixed-rate mortgage whenever possible to further ensure long-term stability. Q20. How can lenders meet the requirement to represent and warrant that the borrower has a reasonable ability to repay the loan, based on the information stated by the borrower on the new mortgage loa
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