I spent some “quality” time yesterday at the Philly Fannie Mae office. Alex Saphos puts together an annual meet and greet (and learn) day for members of the local MBA’s to hear about what’s happening at Fannie, meet the people behind the scenes and ask questions. As usual, it was well worth the time.
Fannie reminded everyone that they are rolling out Phase 2 of their ULDD (Uniform Loan Delivery Dataset) in the first quarter 2016. It may seem a little far off but I suggest you go to (ULDD Phase 2) for all the most recent information. It is best to start preparations now rather than wait until the last minute.
In case you hadn’t heard, Fannie is also rolling out a new product soon called Collateral Underwriter (CU Fact Sheet). This will provide lenders with a vehicle to review their appraisals for potential red flags and defects before closing their loans and to avoid delivery and post-closing audit problems. Fannie is working hard to minimize defects and help lenders manufacture a quality product.
I’ve been preaching all along, “Quality is again…Job 1”. In fact, the bulk of the day was spent talking about creating quality loans, Fannie audits, and how to avoid repurchase requests and indemnifications. It seems to be a priority of both Fannie and lenders as well.
Speaking of audits and things, Fannie had previously announced their process for providing rep and warrant relief to lenders (See my newsletter on this topic Relief). One way to get the relief is a satisfactory post-closing audit by Fannie. However, they said they only do these audits on about 10% of the deliveries. So to get relief under this method is somewhat limited.
That leaves the only rep and warrant relief to be the “acceptable payment method”, which allows at least 3 years to catch any problems. It was also brought up that their audits pertain to credit and valuation, not compliance. Fannie does not audit for regulatory compliance, state or federal. This is covered under their exception to the relief.
Under the contract, a lender agrees (reps and warrants) they will originate and close loans in compliance with all the related rules/laws. Otherwise, regardless of acceptable audit or payment record, all bets are off and you may own the loan. The same holds true for fraud, misrepresentation and loan eligibility. Be careful to follow all the rules so that you originate and deliver to Fannie both a quality loan (zero defects) and a loan that is also fully compliant.
Stay tuned there may be more…