Wholesale mortgage lenders recently voiced their criticism regarding the rising volume of loan buybacks from Fannie Mae and Freddie Mac, two Government-sponsored Enterprises (GSEs). In recent months, amid a contracting mortgage market, these GSEs have increased their buyback demands of morgages from wholesale lenders.

Wholesale lenders have expressed frustration with the buyback process, which drove them to incur additional expenses, particularly due to the need to review loan documents thoroughly, analyze them, and then respond to the GSEs Buyback demands. Furthermore, the GSEs’ inconsistent demands for compensations that do not correlate with actual losses, making it difficult to set aside sufficient reserves coupled with lack of timely decisions about Buyback requests by the GSEs have added further to the overall strife of wholesale lenders.

Consequently, these issues have created a number of significant challenges for wholesale lenders including:

• Increased Time and Expenses: Lenders have had to incur additional time and expenses associated with studying loan documents, analyzing documents for Buyback requests, and then responding to the Buyback demands in order to rectify the situation.

• Inconsistent Demands: GSEs have been non-uniform in their demands for recompense from lenders, with fees not always corresponding to actual losses, which makes it hard for lenders to set aside ample reserves.

• Delayed Responses: GSEs have been slow to give responses to Buyback requests and inquiries from wholesales lenders, leading to uncertainty and additional time spent by lenders in resolving the issue.

You can read this full article at: https://www.housingwire.com/articles/gse-loan-buybacks-catastrophic-for-some-lenders-frustrated-wholesale-leaders-say/(subscription required)

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