FHFA Takes Further Steps to Reduce Loan Repurchase Requests
October 16, 2023
Source: Mortgage Orb
The Federal Housing Finance Agency (FHFA) is taking further action to reduce repurchase requests from Fannie Mae and Freddie Mac, which spiked in 2022 and remained elevated throughout most of 2023.
As part of that effort, the agency is revising its loan repurchase policies for active single-family mortgages for which borrowers elected a COVID-19 forbearance.
Under the updated rep and warrant policies, which take effect on October 31, loans for which borrowers elected a COVID-19 forbearance will be treated similarly to loans for which borrowers obtained forbearance due to a natural disaster.
As a result, loans with a COVID-19 forbearance will remain eligible for certain rep and warrant relief based on the borrower’s payment history over the first 36 months following origination.
“Forbearance was an invaluable tool for borrowers experiencing financial hardship due to the COVID-19 pandemic,” says Sandra L. Thompson, director of FHFA, in a statement. “Servicers went to great lengths to implement forbearance quickly amid a national emergency, and the loans they service should not be subject to greater repurchase risk simply because a borrower was impacted by the pandemic.”
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