Framework at Year 3: Selling Rep and Warranty Relief for Many Freddie Mac Loans
Investor Update
March 2, 2016
Three years ago, Freddie Mac implemented the Selling Representation and Warranty Framework to provide you with relief from certain selling representations and warranties for loans that demonstrate an acceptable payment history.
This year, many of the loans delivered in 2013 will meet the 36-month borrower payment requirement and will be eligible for rep and warranty relief.
- For February 2016 alone, we expect almost 170,000 loans sold to Freddie Mac to have received relief under the framework, the majority of which is the result of the loans’ acceptable payment history.
- We estimate that the total current gross unpaid principal balance (UPB) of these loans to be over $32 billion.
- We expect over 1.4 million loans will receive rep and warranty relief by the end of 2016.
- Under the framework, loans that receive rep and warranty relief will not be subject to our remedies, including a repurchase request, even if breaches to your rep and warranty obligations are discovered later.
The UPB of loans in your portfolio that have achieved rep and warranty relief can also be considered in your planning for capital requirements.
Are Any of These Loans Yours?
You can easily pull information about the relief status of loans in your portfolio from Freddie Mac Loan Coverage Advisor®, our free application that calculates and tracks the rep and warranty relief status for every loan you sell to us. This will provide you with a clearer view of your exposure to Freddie Mac.
If you already have access to the application, follow these quick steps [pdf]. If you don’t, signing up is easy. Complete this form [pdf] and we’ll get you started.
Life of Loan Representations and Warranties
Remember – there are life-of-loan reps and warranties that aren’t included in the framework and are never relieved. The life-of-loan reps and warranties are described in detail in our Single-Family Seller/Servicer Guide which includes information on how misstatements, misrepresentations, and data inaccuracies are determined.
Review this chart to learn more about the enhancements to the life-of-loan representations and warranties.
For More Information
- Selling Representation and Warranty Framework Web page.
- Loan Coverage Advisor Web page.
- Understanding the Selling Representation and Warranty Relief Date Report. [pdf]
Source: Freddie Mac
