Freddie Mac expands repurchase alternative technology

Freddie Mac has updated its online platform to provide more transparency into a new and immediate way to resolve responsibilities for certain loan information covered by lender representations and warranties when that data is flawed.

"Loan Coverage Advisor users will be able to see a new selling R&W relief reason, 'Remedy Closed – Fee Only,' for loans eligible for fee remedy through various types of loan searches," Freddie recently reported. 

The move further establishes and increases the visibility of a repurchase alternative the government-sponsored enterprise piloted last year, which it set for a full rollout in 2025 prior to changes in federal leadership.

In 2022, Republicans who now dominate in Washington had been critical of the process generally used for pilots at Freddie and Fannie Mae, saying it lacked sufficient transparency. 

This has raised questions about how various pilot concepts might fare under the second Trump administration. Federal Housing Finance Agency Director Bill Pulte has said he welcomes innovation and has asked the industry to share ideas with him.

Freddie's repurchase alternative fee pilot was a response to lender requests for other ways to handle what otherwise were expensive demands to buy back loans when there are flaws in data, particularly on occasions when the error is minor and loans perform.

Fannie also has made moves in the past year to address the mortgage industry's call for a wider range of more flexible tools to manage buybacks, such as adding a new type of notice around "potential" defects that could provide opportunities for resolution.

FHFA Director Bill Pulte has said he wants to look into ways to "recall loans" when there is fraud, which could mean buybacks. But his context and industry use of the term "recall" suggests this could refer to making borrowers pay back loans if they misrepresent data.

Pulte has said he views managing fraud as the key to ensuring the kind of housing crash that forced Fannie and Freddie into government conservatorship does not recur, and he has established a tipline to that end.