If you are dealing with a short sale situation involving Freddie Mac (and I suspect Fannie Mae as well) and it is dragging on forever then heads up…it might be in this buy back loop.
Until Freddie decides what if anything is going to happen to a loan in default it might take some real firepower to break your deal loose. Call us today if your short sale with Freddie or Fannie is going nowhere or if your homeowner is facing an imminent foreclosure situation.
– The Bank Slayer
A recent article in The American Banker (focused on an unpleasant fact for Freddie Mac: when it pushes loan sellers to buy back loans, some of them tell Uncle Freddie to “take your loan and shove it, we ain’t buyin’ back no more.”
The GSE said some big-bank customers aren’t honoring its loan repurchase requests “in a timely manner.” A total of $4 billion in loan repurchase requests were unfulfilled as of Dec. 31, up by about a third from a year earlier. Nearly 30% of those requests had been outstanding for more than three months. And though some servicers had financial difficulties, three of the GSE’s “larger, higher credit quality” servicers had more than 30% of their repurchase obligations outstanding that long.
“It’s more like the movie ‘Network,’ where the star says, ‘I’m mad as hell, and I’m not going to take it anymore,’ ” said Larry Platt, a partner in the financial services group at K&L Gates LLP in Washington. “The dollars are too much.”
Fannie Mae recently launched a “Quality Control Initiative” to support its contention that its repurchase requests aren’t the result of nitpicking nor a desire to recoup the massive losses that it (and Freddie Mac) have been taking since they started operating as part of the US Government’s bottomless pit of public money that is being used to support residential mortgage markets without having to appear as part of the wildly widening US government’s deficit, but are, instead, a result of lenders being dumber than a stump. It’s apparent that such public relations ploys aren’t impressing the troops.
Lenders have complained that the GSEs are being too picky, pushing back loans for minor oversights.
“I think why you see resistance is there is this overcorrection going on, in terms of everything being pushed back,” said Paul Anastos, president of Mortgage Master Inc., a Walpole, Mass., lender. (He said he sells loans to Freddie, which has never asked him to buy any back.)
“If they focused in on really what was the problem, they’d gain more traction. I think they’d have more cooperation.”
Observers note that neither side can afford to push the other side to the brink. Fannie and Freddie are the only game in town when it comes to loan purchases, while the GSEs need big loan originators like Wells Fargo, Bank of America, and JP Morgan Chase, so it can’t afford to financially damage them or honk them off to the point that they get really creative and find a way to bypass Fannie and Freddie or simply say “screw it” and focus on something more profitable and less likely to involve the US Government changing the deal on them (again) after the fact. Sooner or later, they’ll have to reach a compromise.
In the meantime, the spat will provide plenty of fodder for chit-chat among those of us who saw this buy-back Armageddon coming years ago.
Fannie and Freddie are doing the right thing. This is the taxpayers money. If a lender pushed through loans with fraudulent or fake information, then resells the loans and makes a profit. Shame on them. They have to buy back the loans. This shouldn’t even be a topic for discussion.
Wait until the insurers, like MGIC Investment, MBIA and Genworth start refusing to pay all these bogus claims.
What’s next? Should we allow drug dealers to keep their luxury car? And houses?