The Federal Housing Finance Agency this week announced its intention to clarify its position on what triggers a loan buyback request, a move that might bring some relief to seller/servicers, according to a research note put out by Fitch Ratings.
Fitch said it believes the clarification of the rules around putback requests could be “positive for the U.S. housing market if it encourages lending beyond the current pristine borrower profile.”
Lenders of all different sizes continue to receive buyback requests from Fannie Mae and Freddie Mac—sometimes on loans that are upwards of five years old.
In some cases the putbacks are on mortgages that are still current, lenders have told National Mortgage News. This has fed the creation of a secondary market for “oops” loans where buyers will pay 90 cents on the dollar or even less for current paper.
“Lenders are still working through a significant inventory of repurchase demands as well as related litigation,” Fitch said.
In response, mortgage bankers “have tightened guidelines dramatically post-crisis and focused largely on the highest quality borrowers, those deemed to have very low default and repurchase risk. However, this has also resulted in reduced mortgage credit availability and has weighed on the housing recovery.”
