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Mortgage Grapevine

mortgage buybacks

lender has clause that broker may
have to buyback a loan if borrower defaults
or is delinquent up to 6 months.

we said no go;any opinions?
by dblbogey2 January 25, 2013 3:12 PM


U are lucky to have a six months lock out. Most of the lenders wants 12 to 24 months
by mortcloser January 25, 2013 3:31 PM


That is very reasonable.
by the voice of reason January 25, 2013 3:49 PM


Why the concern dblbogey?

Don't you think you should have a little risk for your reward?




by YATI January 25, 2013 5:20 PM


Is that 1x30 in the first 6? Most are 2x30 or 1x60 in the first 12.

I'd be take that if I were you. Follow up with your borrowers for six months to make sure they don't have an emergency.
by BuySide January 25, 2013 9:35 PM


It needs to spell out the terms of the buy back. It really needs to say that you only buy it back in the case of misdeeds
by RICHONE January 26, 2013 8:46 PM


thanks,just checking,owner isn't sure
about proceeding.
by dblbogey2 January 28, 2013 11:41 AM


Richone, Fraud is a buyback anytime it is discovered. OP was talking about Early Payment Defaults (EPD). They come in different flavors but all correspondent contracts contain some version.

All also contain provisions for Early Pay Off (EPO). Usually a prepayment in the first 4-6 months is common. In that case there is a recapture of any premium pricing and the SRP.

bogey: drop me a note if you want to discuss further offline. I can tell you if someone is out of the norm. buyside1 {at} gmail.com


by BuySide January 28, 2013 11:49 AM


Every wholesale contract I have seen contains a buyback provision of some sort. If you haven't seen these before it's because you haven't read your contract, or you have been working in a retail correspondent environment where your company isn't really the originator and is just being paid a referral fee.
by tmortgan January 29, 2013 8:33 AM


"retail correspondent environment where your company isn't really the originator and is just being paid a referral fee."

Huh?

Our definitions of "retail correspondent" must be different. Correspondent contracts have some serious teeth to them.

by YATI January 29, 2013 9:13 AM


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