MBA Applauds Efforts to Improve Loan Repurchase Requests; Calls for Better Alignment at the GSEs
MBA President and CEO Bob Broeksmit, CMB, issued the following statement regarding recent moves by Fannie Mae and Freddie Mac to address loan repurchase requests:
“MBA has led the industry over the past two years in a constructive engagement with the Federal Housing Finance Agency and the GSEs to develop more effective alternatives to a repurchase request when dealing with loan defects on performing loans.”
“Specifically, we appreciate the effort Freddie Mac has put into its pilot program to rethink the process and lower the incidence of repurchases on performing loans – including for small lenders – as well as other steps it has taken to improve its Quality Control process,” Broeksmit said.
Freddie Mac recently announced a pilot program that could replace the current approach to seeking repurchases for performing loans with origination defects. The Freddie Mac pilot program will use a fee-based structure that could be more efficient and transparent and that would reward lenders that deliver well-manufactured loans. The program should also mitigate the need for protracted research and negotiation on a loan-by-loan basis.
This fee structure began in Q4 2023 with a limited rollout with 12-15 pilot participants representing a cross section of small, medium and large lenders.
More recently, Fannie Mae reintroduced the Notice of Potential Defect form, following a process similar to a previous method of addressing potential loan defects. “We appreciate this move, which aligns with MBA’s recommendations and will provide more time for lender feedback, but there is further work Fannie Mae can undertake – including exploring a similar pilot program to Freddie Mac’s – to improve the loan repurchase process and substantially reduce or eliminate repurchases on performing loans,” Broeksmit said.
Broeksmit noted MBA will remain engaged with the GSEs and FHFA to ensure high-quality underwriting and an appropriate rep and warranty framework and appreciate their collaboration on this important issue for members.
