General

An acceptable Interest Rate Hedge Interest Rate HedgeInterest rate agreement between the Borrower and a provider for which the Borrower receives payments at the end of each period when the interest rate exceeds the Cap Strike Rate.  The Interest Rate Cap provides a ceiling (or cap) on the Borrower's Mortgage Loan interest payments. must be in place and maintained at all times for:

• variable rate Credit Enhancement Mortgage Loans Credit Enhancement Mortgage LoansMortgage Loan financed by a Bond issuance where Fannie Mae provides credit enhancement by a Credit Enhancement Instrument, or an MBS for Bonds. ;
• Structured ARM Loans; and
• any Mortgage Loan Mortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 where (i) the Borrower BorrowerPerson who is the obligor per the Note. executed the Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!!  Interest Rate Cap Reserve and Security Agreement ( Form 6442 series ), or a similar agreement, allowing for a “springing” Interest Rate Cap Interest Rate CapInterest rate agreement between the Borrower and a provider for which the Borrower receives payments at the end of each period when the interest rate exceeds the Cap Strike Rate.  The Interest Rate Cap provides a ceiling (or cap) on the Borrower's Mortgage Loan interest payments. under certain circumstances, and (ii) the requirement of the Borrower BorrowerPerson who is the obligor per the Note. to acquire and pledge to the Lender LenderPerson Fannie Mae approved to sell or service Mortgage Loans. an Interest Rate Cap Interest Rate CapInterest rate agreement between the Borrower and a provider for which the Borrower receives payments at the end of each period when the interest rate exceeds the Cap Strike Rate.  The Interest Rate Cap provides a ceiling (or cap) on the Borrower's Mortgage Loan interest payments. has been triggered under the agreement.

The Interest Rate Hedge Interest Rate HedgeInterest rate agreement between the Borrower and a provider for which the Borrower receives payments at the end of each period when the interest rate exceeds the Cap Strike Rate.  The Interest Rate Cap provides a ceiling (or cap) on the Borrower's Mortgage Loan interest payments. may be either an Interest Rate Cap Interest Rate CapInterest rate agreement between the Borrower and a provider for which the Borrower receives payments at the end of each period when the interest rate exceeds the Cap Strike Rate.  The Interest Rate Cap provides a ceiling (or cap) on the Borrower's Mortgage Loan interest payments. or Interest Rate Swap Interest Rate SwapInterest rate agreement between the Borrower and a provider for which the Borrower receives payments at the end of each period when the interest rate exceeds the Cap Strike Rate.  The Interest Rate Cap provides a ceiling (or cap) on the Borrower's Mortgage Loan interest payments. , although the prior approval of Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! is required before the Borrower BorrowerPerson who is the obligor per the Note. may enter into an Interest Rate Swap Interest Rate SwapInterest rate agreement between the Borrower and a provider for which the Borrower receives payments at the end of each period when the interest rate exceeds the Cap Strike Rate.  The Interest Rate Cap provides a ceiling (or cap) on the Borrower's Mortgage Loan interest payments. .

Each Interest Rate Hedge Agreement Interest Rate Hedge AgreementContract setting forth the terms and conditions of an Interest Rate Cap, Hedge, or Swap. and its collateral assignment must meet the requirements of  Part III, Chapter 11: Structured Adjustable Rate Mortgage (SARM) Loans .

Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! outside counsel must be engaged, at Borrower’s Borrower’sPerson who is the obligor per the Note. cost, to review the hedge bid package and documents, and prepare the amended Loan Documents Loan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. for each hedge renewal.  The Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must submit a completed Counsel Designation Request for Interest Rate Hedge Transactions ( Form 4625.A ).