Fannie Demands Immediate Notification on MI Rescissions

Fannie Mae recently told its seller/servicers that all mortgage insurance rescissions, cancellations and claim denials tied to loans it bought must be reported to the agency immediately.

The edict became effective October 1, and was mentioned in a recent Securities and Exchange Commission filing by Bank of America, one of the GSE’s largest/seller servicers.

B of A notes in the filing that Fannie’s announcement confirms the GSE’s view that an MI company’s rescission or cancellation or claim denial “constitutes” a breach of a seller/servicer’s representations and warranties which would trigger a buyback claim.

Fannie told its mortgage banking customers that it doesn’t matter whether the lender is contesting the MI rescission.

Over the past three years Fannie and its sister company, Freddie Mac, have instituted billions of dollars worth of buyback claims against B of A, Wells Fargo, JPMorgan Chase, and other top originators.

The GSE — a ward of the Federal Housing Finance Agency — also recently instituted a ban on bulk settlements with MIs that provide for loss sharing in lieu of rescission.

Daily Briefing | Friday, December 9, 2011

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Article source: http://www.nationalmortgagenews.com/dailybriefing/2010_493/fannie-mae-mortgage-insurance-rescissions-1027803-1.html

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