Brief Sunset Provisions on Reps and Warrants: Can They be More Flexible While Still Protecting the GSEs?
Laurie Goodman, Ellen Seidman, Jun Zhu
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Loans sold to investors must meet certain quality standards, and lenders who sell loans to the government-sponsored entities (GSEs) promise that they are delivering loans that meet specific underwriting and eligibility requirements. These lender representations and warranties are a contract, and when breached, entitle the GSEs to pursue specific actions, such as a loan repurchase or put-back, whereby the seller must buy back the poor-quality loans. Increasingly, lenders cite uncertainty about potential exposure to GSE repurchase requests for the tight credit box.
Research Areas Housing finance Housing
Tags Federal housing programs and policies Housing markets
Policy Centers Housing Finance Policy Center