Freddie Mac, in a recently published Single-Family Update, has reminded everyone that it has now been three years since they implemented the Selling Representation and Warranty Framework which provides lenders (or sellers) with relief from certain selling representations and warranties for loans that demonstrate an acceptable payment history.
What does this mean to lenders? It is anticipated that many loans delivered to Freddie Mac in 2013 will officially meet the 36-month borrower payment requirement and will be eligible for rep and warranty relief.
Freddie Mac estimates that as many as 1.4 million loans will receive rep and warranty relief by the end of 2016. As a result, these loans will not be subjected to any “remedies” (including repurchase requests) even if breeches to a lender’s rep and warranty obligations are discovered later.
This is obviously good news for lenders and this date on the calendar has been eagerly awaited by many in the industry – probably as much as or more than St. Patrick’s Day and the beginning of the NCAA Basketball tournament is for me.
If you are interested in obtaining case specific information on the relief status of loans in your firm’s portfolio, Freddie Mac has created a free application that calculates and tracks the rep and warranty relief status of each of your loans.
This application (Loan Coverage Advisor) is available at this link (Note: you must first sign up with Freddie Mac to access this report): Loan Coverage Advisor®
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Freddie Mac has also just announced in Bulletin 2016-04 Bulletin 2016-4 that it has released its revised Single-Family Seller/Servicer Guide. Although no new policies or procedures were implemented upon release of this revised Guide, it has a whole new format and contains up-to-date requirements. Underwriters should certainly begin to become familiar with this Selling Guide as soon as possible.
Wishing you all a Happy St. Patrick’s day & hope that the Villanova Wildcats go far in the Big Dance this year!