On Oct. 7, Fannie Mae and Freddie Mac announced they have released a new uniform policy framework to provide added clarity and alternative remedies to requiring lenders to buy back loans sold to the two companies.
In a press release announcing its repurchase policy clarifications, Washington, D.C.-based Fannie Mae said the updates to its repurchase practices and procedures includes a list of potential alternatives to repurchasing a loan that Fannie Mae could offer in instances where it finds underwriting defects.
The new guidance includes specific guidance on what kinds of loan defects could lead to a repurchase request or an alternative remedy, the company said. The announcement came based on feedback from a working group of lenders.
Commenting on the announcement, Andrew Bon Salle, executive vice president, single-family business at Fannie Mae, said, "Lenders consistently tell us that concerns about repurchases limit their willingness to lend, so we're trying to put those concerns to rest." He added, "By pursuing repurchase alternatives and providing clarity on significant defects, we aim to help lenders serve the market confidently, efficiently and profitably."
Fannie Mae's new guidance can be found in its Selling Guide and will be effective for loans delivered to Fannie Mae starting Jan. 1, 2016.
On Oct. 7, Freddie Mac, McLean, Virginia, also issued a press release on the new uniform representation and warranties remedy framework adopted by both of the government-sponsored enterprises (GSEs).
Donna Corley, senior vice president-division chief risk office of the Single-Family Division at Freddie Mac, said the new framework comes at the direction of the Federal Housing Finance Agency (FHFA). Corley said, "The new framework reflects Freddie Mac's long-standing commitment to partner with lenders to improve loan manufacturing--a goal we share with all of our customers. The framework announced today will not affect our customers' operations or our full-file quality-control reviews for performing and non-performing loans."
She added, "The enhanced framework is intended to provide more clarity and transparency to lenders who do business with Freddie Mac on identifying and correcting origination defects, and the remedies that are available to them."
In his speech to the Mortgage Bankers Association's (MBA's) annual convention in San Diego in October, FHFA Director Mel Watt commented on the work that is being done to provide lenders with greater...