Speakers: Lenders Have Rights Vis-a-vis Repos

Mortgage lenders do have rights when investors demand that they repurchase loans, according to speakers at the SourceMedia Fraud and Risk Conference in Las Vegas.Chris Stimac, enterprise recovery and repurchase manager at Irwin Financial Corp., told the conference that investors are required to give timely notice of a potentially defective loan. Timely notice is not three years later and after a foreclosure sale, he said. Lenders also must be given an opportunity to cure the defect in the loan, when possible, and conduct loss mitigation. Andrew Liput, senior vice president and general counsel at U.S. Mortgage Corp., added that they also have the "absolute right" to demand to see any evidence the investor has in making its claim to repurchase the loan. In many cases, lenders are in error under the agreements to demand a repurchase. Mr. Stimac said some first payment or early payment defaults are really servicing issues. Some alleged misrepresentations are sloppy work by auditors who are looking for anything to support a repurchase demand, he said. Repurchase demands are not permitted on performing loans. There is "nitpicking going on out there" on some loans, Mr. Stimac said.