Equifax is teaming up with Arthur J. Gallagher & Co. to offer insurance coverage for lenders that have been stung by loan repurchase requests where hidden debts were involved.
According to one study, one in three loans originated in 2009 that eventually became seriously delinquent had undisclosed debts on them at the time of origination.
Steve Meirink, an Equifax executive, said the vendor's customers have been asking for help to manage buyback risk on such loans.
Fannie Mae, in particular, is going after lenders where a borrower's debts or liabilities were not disclosed in the original credit report or included in the final application.
The insurance policy offered by Equifax/AJG will cover losses, and should reduce severity rates and reserve requirements.
