The federal agency overseeing Fannie Mae and Freddie Mac announced Tuesday new rules governing mortgage put-backs that could help head off the type of protracted battle that the mortgage giants have had with banks like Bank of America.
One of the biggest provisions is that the government-sponsored entities would no longer make repurchase demands on loans where the borrower had made 36 months of "consecutive, on-time payments," according to a statement.
Mortgage putbacks occur after a bank sells a mortgage to another party. If the buyer thinks that the bank that originated the mortgage misrepresented its quality, the buyer can try to force the bank to buy it back. They're often called rep and warranty claims.
- For HARP loans, putbacks end after 12 months of payments.
- Fannie and Freddie will review loans within 30 to 120 days of purchase, not when it goes into default.