Fannie Mae said Friday that many mortgage lenders are not complying with the most basic underwriting guidelines, such as confirming a borrower's identity or verifying a Social Security number.
Marianne Sullivan, a senior vice president and Fannie's chief risk officer, sent a nine-page letter to lenders announcing a "Loan Quality Initiative" to ensure that loans meet the government-sponsored enterprise's credit and eligibility guidelines.
Sullivan said Fannie analyzed the primary drivers of loan-repurchase requests and has launched the initiative to identify ways to improve compliance with its guidelines. "Many repurchase requests are driven by the fact that the delivered loan does not meet Fannie Mae's eligibility requirements," she wrote.
In the next few months, the government-sponsored enterprise plans to add quality-control policies to monitor and assess the effectiveness of lenders' own quality-control plans.
Lenders now will be required to obtain documentation to confirm the occupancy of a property. They also must determine that a borrower's debts are not only evaluated as part of the qualification for a mortgage but also are disclosed on the final loan application signed by the borrower at the closing table.
Separately, Fannie reported Friday that its net loss narrowed to $16.3 billion in the fourth quarter, from $25.2 billion a year earlier. The GSE also said it requested another $15.3 billion from the Treasury to help eliminate its net worth deficit.
Fannie has not been able to maintain a positive net worth without government assistance since September 2008. The GSE expects to receive the additional funds from the Treasury by the end of March, bringing its total government support to $75.2 billion.