Buybacks and Indemnifications: The New Dangers
Recorded July 31, 2014
Fannie Mae and Freddie Mac wrapped up their buyback reviews on legacy business in late 2013, resulting in first-quarter 2014 buybacks being the lowest since 2008. But the risk from repurchases remains high enough that most banks aren’t releasing their reserves.
Meanwhile, the FHA has dramatically stepped up its indemnification requests, increasing both the number and areas of violations it is pursuing. The impact of the FHA’s amped-up activity may be even more pronounced for credit unions and mid-size banks that will get a larger share of the FHA’s attention than they might have gotten in the past from the GSEs.
The concerns about continuing repurchase exposure come on many fronts. The recent buyback relief offered by the GSEs, while considered a step in the right direction, is viewed as a relatively small change by many. The sunset allowed for perfect payment in the first 36 months may not be the right approach to cover first-time homebuyers and others who take some time to get in the habit of making timely payments. And the relief offered by passing the GSEs’ quality-control system applies only to the 2 percent of loans that are sent through the QC system.
Those selling loans to the GSEs are also confronted with “life of loan” issues, stemming from data omission, misrepresentation and other causes, that currently have no buyback risk sunset. The GSEs and the Federal Housing Finance Agency are on the record that they want to find a mechanism to ease these issues in order to relax overlays and widen the credit box, but how—and how well—they will do so is still unknown.
Learn more about the continuing repurchase and indemnification risk and how you can shield your company in the recorded webinar “Buybacks and Indemnifications: The New Dangers.”
The expert panel includes:
Karen Garner, Managing Director, The Collingwood Group
Amanda Raines, Partner, BuckleySandler
Philip Stein, Partner, Bilzin Sumberg
During the 90-minute discussion, you’ll learn more about:
What buyback risks exist for GSE seller/servicers and how serious they are;
What violations the FHA is requesting indemnification on that previously would not have triggered a demand;
How you can minimize your buyback and indemnification risk for future loans;
How to respond if a repurchase or indemnification demand is made;
You will be able to immediately download a file containing an MP3 audio recording and a PDF version of the manual from this page when you have completed your purchase. You will also be able to download the event as a WMV video file.