Lenders Comfortable with New Reps and Warranty Process, Concerned About Quality Control Reviews

Fannie Mae recently canvased a few ofrnits lenders to gather reactions to the new representation and warrantyrnframework it recently put into operation.  Karen Nielsen, writing on the Fannie Mae’s Housing Industry Forum reports that, on the whole, thernresponse has been positive. </p

Nielsen said that the biggest concern</bexpressed by those lenders contacted was no longer with the framework – about whichrnmany apparently had a lot of early trepidation, but about what will happen whenrnFannie Mae steps up quality control reviews. rnThe new framework, under which lenders have been delivering loans sincernJanuary 1, releases lenders from most liabilities after 36 months of consecutivernon-time payments have been made or 12 months in the case of refinances donernthrough the Home Affordable Refinance Program (HARP).  </p

Sullivan said that Fannie Mae doesrnnot advise lenders on their loss reserves but noted that that the three-year<bsunset is real and the only exceptions relate to lifetime exclusions clearly definedrnin the company’s Selling Guide. </p

Nielsen say what has lenders’rnattention is Fannie Mae’s stated its intention to request more files forrnreview and a wider sampling of performing loans, usually in the first fewrnmonths after loan purchase. Sullivan said larger lenders are familiar with regularrnfile requests, which find errors in about 3 percent of newly acquired loansrnsubmitted for review, but somernsmaller lenders have never received a file request may need to brush up on thernguidelines. If help is needed Fannie Mae has resources available to helprnlenders train staff on how to properly underwrite loans for sale to the company.

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