All ARC Reductions are communicated in basis points. Gfee reductions decrease the amount of Required Spread (Gfee), as specified in your Master Commitment, by the amount of basis points indicated in the ARC Gfee Reduction tables.
For example, you're committing a 3/1 Treasury-indexed ARM with a Required Spread of 30.0 basis points and select the Accelerated Remittance Cycle. The applicable ARC g-fee reduction in the current contract month is 0.8 basis points. To calculate your ARC-adjusted Required Spread, use the following formula:
Required Spread – ARC g-fee Reduction = ARC-adjusted Required Spread
Using the example above, you calculate the ARC-adjusted Required Spread as follows:
30.0 bps (Required Spread) – 0.8 bps (posted ARC G-fee Reduction) = 29.2 bps (the ARC-adjusted Required Spread