Mortgage Daily Logo

GSEs Improve Repurchase Policies

Mortgage News

Changes to repurchase policies at Fannie Mae and Freddie Mac are expected to ease lender uncertainty, improve loan quality and increase access to credit for homeowners.

The two secondary lenders are launching a new representation and warranty framework, according to a notice Tuesday from the Federal Housing Finance Agency.

The revisions are part of a broader series of strategic initiatives dubbed “seller-servicer contract harmonization” and are intended to clarify lenders’ repurchase exposure and liability on future deliveries.

Earnings reports from the nation’s biggest residential lenders indicate that most of the repurchase demands being issued are from Fannie and Freddie on loans originated during the few years leading up to the housing collapse. Sellers have complained that the repurchase process has been inconsistent — leading Bank of America Corp. to stop doing business entirely with Fannie.

Acting FHFA Director Edward J. DeMarco acknowledged in a speech Monday at the American Mortgage Conference that repurchase liability has made lenders more skittish about extending credit.

FHFA said that the changes are expected to improve access to mortgage financing.

“We have listened to lenders and heard their concerns about the repurchase process,” the regulator stated.

After 36 months of consecutive on-time payments, lenders will be relieved of certain repurchase obligations. The three-year term is expected to enable Fannie and Freddie enough time to conduct sampling and analyses needed to confirm the eligibility of the mortgage loans acquired as well as determine the borrower’s ability to repay the loan.

On loans closed through the Home Affordable Refinance Program, Fannie’s Refi Plus/DU Refi Plus, or Freddie’s Relief Refinance, only 12 months of on-time payments will be required.

FHFA noted that information about exclusions to the relief like violations of laws and regulations are detailed in Lender Letter LL-2012-05 and Selling Guide Announcement SEL-2012-08 from Fannie and an industry letter and Bulletin No. 2012-18 from Freddie.

With the changes, the focus of quality control reviews will be moved from the point of default to sometime between 30 and 120 days after loan purchase — resulting in more reviews on performing loans. By moving up such reviews, losses at the pair of government-controlled enterprises are expected to be cut.


sketch of Edward J. DeMarco
by Stephen McConnell

Another enhancement will be to make the repurchase appeals process more transparent.

But loan file evaluation will be more comprehensive, and the focus will be on identifying significant deficiencies.

“In adopting the new selling representation and warranty framework for future deliveries, it is important to note that we are not modifying the representations and warranties currently required,” the FHFA’s notice stated. “Sellers continue to be responsible for underwriting and delivering investment-quality mortgages according to the requirements of Fannie Mae’s selling guide and lender contract and Freddie Mac’s purchase documents.”

The new policy applies to loans that are sold or delivered beginning next year.

“Ultimately, better quality loan originations and underwriting, along with consistent quality control, help maintain liquidity in the mortgage market while protecting Fannie Mae and Freddie Mac from loans not underwritten to prescribed standards,” DeMarco said in the notice. “These efforts contribute to a firm foundation for a new, sustainable housing finance system for the future.”

Related Posts

NewDay USA CEO Rob Posner Expects 10% Increase in 2019 Mortgage Loan Volume

There is No Such Thing as a Free House …

Over the past several years, those who service loans in the State of Washington(1) have seen a dramatic rise in the number of lawsuits in which delinquent borrowers seek to quiet title to their homes on the grounds that lenders are barred from foreclosing based on...

NewDay USA CEO Rob Posner Expects 10% Increase in 2019 Mortgage Loan Volume

The Mortgage Graveyard 2018 Archives

The Mortgage Graveyard 2018 Archives Failed, Struggling and Acquired Mortgage-Related Companies Non-Bank Closures 3 Bank Failures (FDIC) 0 Credit Union Failures 0 Total Mortgage-Related Failures 3  

NewDay USA CEO Rob Posner Expects 10% Increase in 2019 Mortgage Loan Volume

MBS Statistics

MBS Statistics Non-Agency Issuance 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 Private Label RMBS Issuance (S&P) $80 billion to $100 billion (est) $70 billion $34...

NewDay USA CEO Rob Posner Expects 10% Increase in 2019 Mortgage Loan Volume

Sample E-Mail

Sample E-Mail   Covering the Real Estate Finance Since 1999  Mortgage Industry News free news content | view headlines online  Advertorial Text Ad This ad includes a linked bold headline of up to 50 characters and up to 100 words of text. The ad can be...

Popular posts

How Long Does It Take to Refinance a Mortgage
How Long Does It Take to Refinance a Mortgage

So, you’re interested in refinancing your mortgage. Maybe you want some extra capital to do that home project you’ve always dreamed of, interest rates are nearing record lows, or you want to start consolidating debt. Regardless of the motivation behind the refinance,...

How Does Refinancing a Mortgage Work
How Does Refinancing a Mortgage Work

A home purchase is considered an investment, and a robust one at that. Savvy owners are constantly looking for new ways to reduce debt, save money, pay less in interest, and ultimately build equity. Refinancing is one way to leverage your investment and do just that....

What Does It Mean to Refinance Your Home
What Does It Mean to Refinance Your Home

You can think of refinancing your mortgage as a debt redo. Essentially, you’ll swap out the existing loan for a new one - ideally with better terms and conditions. Only this time it could help you save money on high mortgage payments, rather than just borrow it....

Setting up the Utilities in My New House
Setting up the Utilities in My New House

All the tedious, time-consuming home closing documents have been signed, sealed, and delivered. Your belongings are packed into what seems like a million boxes and you have a solid plan to haul all your existing furniture to the new place. Just as your boxes and...

When Is My First Mortgage Payment Due?
When Is My First Mortgage Payment Due?

Navigating your way through a brand new mortgage loan can be a difficult task, especially for first time homeowners. After handing over a large sum of money for the down payment and closing costs, it’s important to pay attention to the timing of your first mortgage...

Newsletter

Don’t worry, we don’t spam

calculate your monthly mortgage payment

Related Topics

Helpful Links

Daily mortgage rate trends

Best mortgage lenders

First-time homebuyers programs by state

Loan limits by state

Types of mortgages

APR vs interest rate

Understanding PMI