Freddie Mac reported that as of March 31, its outstanding mortgage loan repurchase requests -- based on unpaid principal balances (UPB) -- totaled $3.229 billion, increasing from $2.716 billion at the end of 2011. That's a 19% increase over just three months. Large mortgage lenders have traditionally preferred to sell newly originated mortgage loans conforming to GSE guidelines as quickly as possible, aiming for a quick profit, while retaining servicing, for which they have been paid an ongoing servicing fee by the GSEs. Freddie reported that as of March 31, Wells Fargo Bank N.A. (the main subsidiary of Wells Fargo ( WFC)) serviced 26% of the GSE's single-family mortgage loans, while JPMorgan Chase Bank, N.A. (held by JPMorgan Chase ( JPM)) serviced 12% and Bank of America N.A. (the main banking subsidiary of Bank of America ( BAC)) serviced 11% of the single-family loans. Freddie said that "as measured by UPB, approximately 38%... of the repurchase requests outstanding at March 31, 2012... were outstanding for four months or more since issuance of the initial request," which includes repurchase requests for which appeals are pending. The servicers often appeal the repurchase requests and see them cancelled once the GSE receives sufficient documentation to determine that the lender, or the seller/servicer, properly underwrote and serviced the loan. Freddie also said that as of March 31, $155.8 billion, or 9% of its total single-family mortgage loans were covered by agreements with the seller/servicers, releasing the servicers from "certain repurchase obligations in exchange for one-time cash payments." The Federal Housing Finance Agency, which regulates Freddie and Fannie, in September suspended announced it had "certain future repurchase agreements with seller/servicers concerning their repurchase obligations pending the outcome" of Freddie Mac's review of its loan sampling methodology. Freddie entered no further agreements to release servicer's repurchase obligations through the first quarter.
Fannie Mae reported that as of March 31, its total mortgage loan repurchase requests by outstanding balance increased to $12.153 billion from $10.400 billion at the end of 2011, for a 17% increase during the first quarter. Of the new total, $4.259 billion in requests had been outstanding for over 120 days.
- Fannie's repurchase demands to Bank of America, N.A. totaled $7.057 billion as of March 31, increasing from 30% from $5.449 billion as of Dec. 31.
- Demands for JPMorgan Chase Bank, N.A. to repurchase mortgages increased to $1.251 billion from $1.136 billion.
- Demands for CitiMortgage (a subsidiary of Citigroup (C)) to repurchase mortgage loans from Fannie increased to $955 million as of March 31, from $917 million as of Dec. 31.
- Fannie's outstanding repurchase demands to Wells Fargo Bank, N.A. declined to $797 million, from $830 million.
- Fannie's demands for SunTrust Bank, Inc. (the main banking subsidiary of SunTrust (STI)), to repurchase mortgage loans declined to $380 million as of March 31, from $430 million as of Dec. 31. SunTrust
- Fannie Mae's outstanding mortgage purchase demands totaled $$1.713 billion as of March 31, increasing from $1.638 billion as of Dec. 31.