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Wednesday, September 12, 2012

ABA Applauds New Fannie, Freddie Loan Framework

In related news, ABA yesterday welcomed the FHFA’s initiative to bring more clarity to the exposure of loans sold to Fannie Mae and Freddie Mac. The new framework for representation and warranty (rep and warranty) for conventional loans will clarify lenders’ repurchase exposure and liability on future deliveries. ABA President and CEO Frank Keating commented:
ABA looks forward to working with the FHFA as the framework is implemented... Increasing [the review process’s] transparency... and relieving lenders of certain repurchase obligations for loans that meet specified payment requirements will increase business certainty, reduce operating costs and ultimately lower credit costs to borrowers.

Under the new framework, lenders will be relieved of certain repurchase obligations for loans that meet specific payment requirements, the FHFA said. For example, rep and warranty relief will be provided for loans with 36 months of consecutive, on-time payments.

Read more about the framework.
Read Keating’s statement.

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