Magazine article Mortgage Banking

FHFA Announces Third-Party Dispute-Resolution Program for Buybacks

Magazine article Mortgage Banking

FHFA Announces Third-Party Dispute-Resolution Program for Buybacks

Article excerpt

A major final step in helping to resolve disputes over repurchase demands was announced on Feb. 2 by the Federal Housing Finance Agency (FHFA) and the government-sponsored enterprises (GSEs). An independent dispute-resolution (IDR) process for lenders seeking to argue their case over disputed demands to buy back loans sold to the GSEs was put in place as the final piece of relief promised to the lending industry.

FHFA said that the IDR process is the final piece of a new representation and warranty framework to guide lenders through their options when the GSEs seek repurchases of loans they deem defective. The framework has been a priority outlined in the GSE conservatorship scorecards since 2012, according to the FHFA.

The IDR program enables lenders to submit disputed buyback demands to a neutral third-party arbitrator once other options, including appeal and escalation processes, have been exhausted.

FHFA Director Mel Watt said, "The IDR process provides the enterprises and lenders a mechanism for resolving a repurchase dispute and avoiding the possibility that a dispute might languish unresolved for an extended period of time, as has often occurred in the past. …

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