It's time for mortgage originators to draw a line in the sand when it comes to being forced to buy back loans from investors, an industry veteran said at the Mortgage Bankers Association's annual convention in Atlanta.
"The industry's got to stand up and say enough is enough," former MBA Chairman Ron McCord said during the meeting's opening session. "We're going to have to bring this to a head," he said, drawing an ovation from an audience at the Georgia World Congress Center. More than 3,000 people are attending the conference.
Buy-backs will be the main topic for discussion when the group's Residential Board of Governors meets later today. But McCord, the MBA's leader in 1997 who now heads the First Mortgage Co., Oklahoma City, gave the issue early prominence when he said many buy-back requests are "frivolous."
McCord said his company is usually successful in beating back buy-back requests: "We probably prevail in 60-70% of the time," he noted, but his company has "to spend a lot of capital and time" to do so.
Another panelist, William Emerson, chief executive officer at Quicken Loans, also said he'd like the business to take a "more united" approach with it comes to repurchase requests, which he called "an annoyance."
"We all signed up for reps and warrants, but (we didn't sign up) as insurance companies," Emerson said.
E. Todd Chamberlain, executive vice president of retail lender Regions Financial Corp., said the only way to handle buy-back requests is on a loan-by-loan basis, and that can be expensive. But Daniel Arrigoni, president of U.S. Bank Home Mortgage, said repurchases are inevitable and will "be a way of life going forward."
U.S. Bank Home Mortgage has had more buy-back requests than ever, Arrigoni said. But the number is "still manageable."
"We go over those loans with a fine-tooth comb, and have been successful in getting investors to rethink a few repurchase requests," he said. "But overall, most requests are probably fair."
