When should the GSEs push back loans?

Freddie Mac and Fannie Mae have been stepping up their repurchase requests since being put into conservatorship by the government in September 2008, as they try to manage the mountain of delinquencies on their books.

But as those requests multiply, it's clear lenders aren't just rolling over. In its quarterly SEC filing, Freddie said about $4 billion of loan repurchase requests were outstanding as of Dec. 31, 2009, up from $3 billion at the end of 2008. Nearly 30% of those requests had been outstanding for more than three months.

Lenders have complained that the GSEs are being too picky, pushing back loans for minor oversights.

In online poll, 35% of readers said Fannie and Freddie are finding any and every excuse to send a loan back, while 42% said the GSEs need to save taxpayers' money and buybacks are a risk mortgage banker sign up for, and another 23% said there was too much going on behind the scenes to make an informed judgement as to whether the companies are too aggressive in pushing loans back.

When should GSEs push loans back to lenders? Post a comment below.

Comments (2)

Buybacks should be limited to loans that are less than two years old. For loans that performed and for which the GSEs received the interest payments, there is something fundamentally unfair to require a buy back years into the transaction.

Posted by Deborah O | Wednesday, February 24 2010 at 5:52PM ET

If fraud occurred, then the government should go after all of those who created the fraud - including the originating lender and the homeowner who lied about his/her income and net worth. I, as an honest taxpaying citizen, should not bail out those who enriched themselves along the way through fradulent transactions.

Posted by doug t | Wednesday, February 24 2010 at 6:18PM ET

Add Your Comments:

You must be registered to post a comment.