Among the tools top banks have been using to identify potential buybacks are ones that check original employment and income information at the point of loan funding.
Equifax service The Work Number, for example, in a press release distributed at the Mortgage Bankers Association’s recent servicing conference, said three of the top five lenders are using a service it introduced last fall to do this.
Its Point in Time service, rolled out last September, is designed to validate and document a borrower’s employment and income at the point of loan funding.
Janet Ford, president of The Work Number, said in the press release that the service helps lenders investigate repurchase requests.
The company said there is for lenders an average cost of $80,000 per repurchased loan in default.
In addition to The Work Number service, other assistance Equifax has provided with identifying potential buybacks has included undisclosed debt monitoring. This service, introduced last year in response to new requirements in the Fannie Mae Loan Quality Initiative, monitors borrowers and notifies lenders of new accounts and borrower activity initiated as loan originations are processed. Unrecorded, this information could open the loan up to repurchase risk.
In addition to Equifax, other vendors that said they are they helping some of the top banks identify risks that could cause repurchases include Visionet Systems.
Visionet, which has been providing one large bank with repurchase and claims management since 2008, said it is now helping two of the top four banks with this. Among other things, it provides repurchase review and defense preparation.
Fitch recently estimated that the top four banks could sustain losses at the lower end of a $17 billion to $42 billion range based on past buyback activity from the troubled 2005 to 2008 vintages—a risk those banks have been striving to avoid or reduce going forward.
