Responding to Lender Buyback Demands with Loss Mitigation Procedures
ByPosted To: The Garrett Watts Report
Not too many years ago I was consulting companies that were plagued with early purchase defaults and repurchase demands from investors. It was during the tail end of the subprime and Alt-A era that mortgage bankers were starting to see a dramatic increase in demands from investors. Between 2005 and 2007 everyone got caught originating products that shouldn’t have been offered to most borrowers. When we asked folks why they were doing it, a common response was, “ I know these products are not high quality, but if I don’t originate them, I’ll be out of business”. Many would add, “All my competitors are originating these loans, so it must be ok.” In the end, these folks and their competitors went out of business anyway. One of the issues I uncovered during…(read more)