What We're Hearing

Readers of National Mortgage News know that we've been covering the loan buyback crisis extensively. Most of the 'mega' lenders that have been on the receiving end of buyback requests from Fannie Mae and Freddie Mac have not been saying much about the issue but they've been kind enough (sometimes) to disclose the dollar volume of their buyback requests. One executive at a top ranked lender recently told me that mortgage insurance companies, to some degree, are driving buybacks. He explained the situation like this: "MIs aren't paying on nearly all they insured and instead are finding any creative way to back out." He explained that this suddenly leaves a GSE-purchased loan without a mortgage insurance policy which is a charter violation for both Fannie and Freddie. He noted that this instantly turns a loan into a buyback candidate...