Wondering if the income needed to buy a home in the top 50 metro areas is starting to decline? Hint: Not yet.

Wondering if the income needed to buy a home in the top 50 metro areas is starting to decline? Hint: Not yet.

HSH.com ARM Indexes: FNMA/FHLMC Required Net Yields

ARM Indexes: the Fannie Mae "Index"

Proper Name: Conventional Fixed Rate Actual Actual Yield

(Also available: the Freddie Mac version)

The Federal National Mortgage Association, or "Fannie Mae," describes itself as "a private corporation, federally chartered to provide financial products and services that increase the availability and affordability of housing" for Americans. Simply put, it's a company which purchases mortgages from lenders, freeing up cash so the lenders can make more loans.

Fannie Mae is one of several 'secondary market' companies which perform this function. However, Fannie Mae -- and its brother, "Freddie Mac" -- are known as 'quasi-governmental' companies -- so-called because, while they are not government agencies per se, the securities they issue are understood to have an implicit government guarantee against default. (You can visit the FNMA Web Site at http://www.fanniemae.com for more background).

Technically speaking, the Fannie Mae required net yield (abbreviated RNY) is not an ARM "index" -- at least, not as the term is used in Federal regulations concerning adjustable rate mortgages. The RNY is roughly defined as the minimum yield price that Fannie Mae is willing to accept when it buys a 'closed' (originated) loan from lenders. Think of it as the 'wholesale' price for lenders.

There are several "required net yield" figures available for 30-year fixed rate mortgages (as well as lots of other types & terms). You will need to check your mortgage documents for the precise figure you need, but it is most likely the "60-day delivery" RNY.

Fannie Mae's Required Net Yield

You can obtain Fannie Mae's latest required net yield from the same source as your lender or servicer: via Fannie Mae's website. It is updated usually once per day at about 8:15 AM Eastern time with the day's figures. Click here for the latest 30-year FRM values; figures for the current month-to-date are also displayed.

Freddie Mac's Required Net Yield

Freddie Mac has completely discontinued public publication of RNY. On January 25, 2013, they posted this notice on their website: "Freddie Mac will no longer publish Required Net Yield (RNY) information after January 25, 2013. This includes current RNY, trend line, and historical RNY. If you are a Freddie Mac Seller/Servicer and need this information to reset a balloon or convertible adjustable rate mortgage, please contact 800-FREDDIE."

You will need to consult your ARM contract to see what "margin" would be added to that figure to arrive at your new FRM rate. It's typically 0.625%, but yours may differ.

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