Fannie Mae has not changed its policies regarding purchases of loans from MBS pools as outlined in the MBS Prospectus, dated February 1, 2012. Should changes occur, Fannie Mae will strive to inform market participants.
As stated in the MBS Prospectus, dated February 1, 2012, Fannie Mae has the option or, in some instances, the obligation to purchase loans from its MBS pools in its capacity as either issuer or guarantor.
Among other repurchase rights and obligations, Fannie Mae has the option to repurchase loans from MBS pools when a loan is delinquent for four or more consecutive monthly payments or for a breach of representation and warranty. For a full list and description of our ability and obligations to purchase loans from MBS pools, market participants should consult the MBS Prospectus, dated February 1, 2012.
In deciding whether and when to purchase a loan from a pool in our capacity as issuer or guarantor, we consider a variety of factors, including our legal ability or obligation to purchase loans under the terms of the trust documents; our mission and public policy; our loss mitigation strategies and the exposure to credit losses we face under our guaranty; our cost of funds; the impact on our results of operations; relevant market yields; the accounting impact; the administrative costs associated with purchasing and holding the loans; counterparty exposure to lenders that have agreed to cover losses associated with delinquent loans; general market conditions; our statutory obligations under our Charter Act; and other legal obligations, including those established by consumer finance laws. The weight we give to these factors changes depending on market circumstances and other factors.
Market participants should note that Fannie Mae has offered lenders representation and warranty relief on the original loan since the HARP program was announced in March 2009. Such relief was expanded effective December 2011 with the roll out of HARP 2.0. These changes eliminated most of the lender representations and warranties on the original loan, some of which would otherwise have carried through to the new loan. Additionally, all new Refi Plus loans, including HARP, are subject to limited representations and warranties contained in our Selling Guide and lender contracts.
Market participants may contact our Fixed-Income Securities Helpline at 1-800-BEST-MBS (1-800-237-8627) if they have questions about this announcement.
Page originally published: 05/24/12