Smaller Lenders May Feel More GSE Putback Pressure

A wave of forced loan repurchases that has resulted from Fannie Mae and Freddie Mac stepping up loan underwriting reviews over the past couple months may hit small lenders harder going forward. Small and mid-sized lenders may not have felt the full impact yet, said Rob Chrisman, the director of capital markets at Residential Pacific Mortgage, Walnut Creek, Calif. The buybacks have been affecting older loans that have been outstanding for up to four years rather than only loans that have been outstanding for up to three years as in the past, according to Joe Garrett, a principal at Garrett, Watts & Co., Berkeley, Calif. Fannie and Freddie said they could not make executives available to discuss the issue. One real estate brokerage mortgage business, the Chantilly, Va.-based Long & Foster, said it has shifted to doing "more than required" to meet investors' guidelines due to these mounting loan quality pressures and has, for example, cut off a large brokerage when one of its brokers submitted two loan documents for one property.