GSEs To Launch New Rep And Warranty Framework

12366_0acalculator GSEs To Launch New Rep And Warranty Framework The Federal Housing Finance Agency (FHFA) has announced that the government-sponsored enterprises (GSEs) are launching a new representation and warranty (rep and warranty) framework for conventional loans sold or delivered on or after Jan. 1, 2013. The new rep and warranty approach is part of a broader series of strategic FHFA initiatives called seller-servicer contract harmonization, which aims to clarify lenders' repurchase exposure and liability on future deliveries.

With this new framework, lenders will be relieved of certain repurchase obligations for loans that meet specific payment requirements – for example, rep and warranty relief will be provided for loans with 36-months of consecutive, on-time payments. Furthermore, Home Affordable Refinance Program loans will be eligible for rep and warranty relief after an acceptable payment history of only 12 months following the acquisition date. The new rep and warranty approach does not affect loans sold to Fannie Mae or Freddie Mac prior to Jan. 1, 2013.

‘Ultimately, better quality loan originations and underwriting, along with consistent quality control, help maintain liquidity in the mortgage market while protecting Fannie Mae and Freddie Mac from loans not underwritten to prescribed standards,’ says Edward DeMarco, acting director of FHFA. ‘These efforts contribute to a firm foundation for a new, sustainable housing finance system for the future.’


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