Bank of America, Chase, the 'Buyback' Kings of 1Q

The loan buyback plague continued on unabated in the first quarter with three seller/servicers, accounting for about three-fourths of the industry's repurchases, according to an analysis done by National Mortgage News. Bank of America repurchased more loans than any other originator with $4.4 billion, followed by Chase ($2.4 billion) and Citigroup ($1.4 billion). Although the figures are large, B of A and Citigroup actually had significant declines in buybacks compared to the fourth quarter. B of A's repurchases fell by 56%, Citi's by 70%. Chase's declined by 11%. All three have special teams that work on fighting buybacks. One source close to Chase said much of the lender's current buyback requests come from "legacy" loans that were originated by Washington Mutual, which JPMorgan Chase bought in the fall of 2008. "It's a disaster," said the source, requesting his name not be used. "A lot of it is payment-option ARMs." A Chase spokesman declined to comment on specifics, but acknowledged, "We have a lot of people working on it (buybacks)." In a recent SEC filing JPM disclosed, "In 4Q09 approximately 14%, 58% and 20% of repurchase demands, respectively, came from 2006, 2007 and 2008 vintages."