GSE Repurchase Framework Enhanced

The Federal Housing Finance Agency previously directed Fannie Mae and Freddie Mac to enhance their selling representations and warranties framework.

The pair of secondary lenders first launched the new framework in September 2012 with the intent of easing lender uncertainty, improving loan quality and increasing access to credit for homeowners.

On Monday, Fannie announced a number of significant additional enhancements.

The updates were outlined in Selling Guide Announcement SEL-2014-05.

Fannie said that the acceptable payment history requirement for determining when a mortgage loan is eligible for relief from certain selling representations and warranties is being relaxed.

Under the original version of the framework, no 30-day lates were allowed for relief within 36 months, and 60 months were required if there was a delinquency. The latest iteration allows up to two 30-day lates as long as the loan isn’t past-due on the 36th payment.

On Refi Plus and DU Refi Plus mortgages, the borrower could re-establish an acceptable payment history as of the 60th monthly payment under the original version. Now, only 36 payments are required as long as the last one isn’t late.

In addition, sellers can obtain relief through two alternative paths. The first is through an acceptable payment history, and the second is with a satisfactory conclusion of a quality control loan file review of the mortgage.

The Washington, D.C.-based company said it will be providing lenders with written notice when loans are eligible for relief. This will begin in the coming months.

Fannie also said that repurchase requests will no longer be automatic in the event that mortgage insurance is rescinded. Instead, the lender can pay Fannie for the full mortgage insurance claim amount that would have been payable under the original M.I. policy if the loan liquidates.