Fannie Mae has made significant progress in reviewing its legacy loans for possible repurchase requests and it expects to complete that review by the end of this year, which indicates the last of the legacy buybacks could come to an end by next summer.
“We have completed loan reviews of potential underwriting defects on approximately 89% of the loans we acquired between 2005 and 2008,” the GSE says in its second-quarter securities filing. “We expect to complete our review of the remaining population by the end of 2013,” Fannie says.
Fannie has made purchase requests on 3.25% of the legacy 2005-2008 loans it acquired from lenders, compared to just 0.25% of loans acquired after 2008.
At the start of 2013, Fannie had $16 billion in loan buyback requests outstanding and it issued $12.7 billion in new buyback requests by June 30.
Due to large resolution agreements with Bank of America and
It should be noted that when Fannie sells REO tied to a repurchase request, the lender generally covers the loss to the GSE as opposed to paying the total loan amount.
“As a result, we expect our actual cash receipts relating to these repurchase requests to be significantly lower than the unpaid principal balance of the loan,” Fannie says in its 2Q securities filing.
Freddie Mac had $3.2 billion in repurchase requests outstanding as of June 30. But the GSE did not disclose the progress it’s made in conducting its legacy loan review.
