More loan repurchases by Freddie Mac are raising eyebrows
Seller buys back from Freddie Mac mortgages rose to $430 million in the second quarter of 2024, up 29.1% from the first quarter, according to a analysis of public filings Within mortgage financing.
In contrast, sellers of loans through a government sponsored enterprise (GSE). Fannie Mae repurchased $268.5 million in non-conforming loans during the same period, a decline of 27.7% from the first quarter of 2024. Overall, repurchases fell 0.8%.
Some lenders feel stung by Freddie’s approach. At the end of June, a top mortgage executive said this HousingWire that the buyback problem with the GSE “has increased tenfold. Our Freddie Mac requests are up 100% month over month. I’ve talked to my colleagues and they all have the same problem with Freddie Mac. I don’t know how a little correspondent survives.”
The same source said Monday that its mortgage business was hit by “a lot of damages and a few buybacks in the third quarter, although most of ours came from the first and second quarters.”
Two mortgage managers told HousingWire that the most common reason for a repurchase request was related to income verification.
Freddie Mac did not immediately respond to a request for comment on Monday. But a spokesperson told HousingWire in June that the agency “heard industry feedback and took it seriously, improving our communications, improving collaboration and providing specific feedback to our lenders. We have also improved our own processes.
“This year we are continuing to address this issue by launching a fee-based alternative pilot program. We are seeing the results of these efforts in fewer repurchases and greater efficiencies for both the sellers and Freddie Mac.”
Freddie launched that pilot program late last year. It is essentially an alternative to a single loan repurchase asset, and it covers the entire unpaid balance of a loan during the quality control process. Lenders with an unacceptable quality rate of more than 2% will be charged a fee, while lenders below that rate will be waived.
