Mortgage investors conducting mortgage audit reviews turn up potential red flags such as undisclosed debt, income and employment misrepresentation, occupancy fraud and appraisal issues which are many of the focus findings discovered during the mortgage audit that will prosecute a repurchase claim. As mortgage bankers defend against a mortgage repurchase, some consistent patterns appear that may help mortgage bankers to prevent mortgage repurchase claim.
As a result of data in Mortgage Analysis Review Software (MARS) and the experts audit analysis can provide timely results in repurchase defense or mortgage buy back claims. There are many mortgage bankers that have been successful in defending against mortgage put back, loan buy backs, and mortgage repurchases. The repurchase analysis will provide a clear rebuttal to the repurchase claim in order to help mortgage bankers cure the loans. Once the repurchase audit is completed many lenders were able to result the buyback claim by simply providing missing documentation.
The repurchase analyst can point out in the repurchase claims that the underwriting decision in question was in fact sound at the time the loan was originated. Repurchase auditors are trained to showing that the deficiencies cited either did not exist or were not the cause of the default. Also, the repurchase defense will include a reasonable argument for a cause of the default like an unfortunate change with the borrower’s life or the loan was correctly underwritten at the time of funding and the borrower’s decision to walk away from the loan has no bearing on the underwriting decision.
As part of repurchase defense the analyst collect information by re-verifying loan data to ensure that you have a complete and accurate file, enabling them to assess the cause(s) of the repurchase claim writing a solid defense.
Expert Repurchase Defender
Underwriting decisions can be somewhat subjective, like appraisals. Sometime an investor who issues a buyback claim has not properly prepared their repurchase claim because of massive loan volumes, in experienced contract vendors, and desperate insignificant findings, culminating with the lack of a thorough analysis and investigations. As a result many investors send the repurchase demand based on preliminary indicators or red flags that there may be a question regarding the way the loan was originated and underwritten. Repurchase analysis find and exploit the investor lack of information with tangible rebuttals and debate.
Repurchase defense specialist begin by articulating through narratives form revealing the flaws of requestor’s claims. The repurchase defense specialist identify critical elements of the claim is voiced as an opinion rather than fact. It is also imperative to analyze data about the borrower in order to build a case for change of unfortunate events or a strategic default.
Actions in Repurchase Defense
When faced with a repurchase demand, it is important to correct documentation deficiencies in order to bring the file current with all of the available information to support the underwriting decision. For example, if a repurchase claim says the reason for the repurchase is the result of undisclosed liabilities, you can quickly correct the deficiency by simply providing verification that the debt was paid prior to funding or that the liability did not belong to the borrower.
Some lenders may hired contract in-house investigators to handle retrospective verification, while others use outside verification vendors to verify or validate the necessary documentation or information. Either way, it is important to conduct post closing quality control and audits of loan file to ensure success repurchase defense.
In the case of defaults, repurchase defense specialist build arguments for an alternative cause of default by verifying and documenting the borrower’s credit standing, estimate of property value, assets and employment at the time the loan met the investor’s criteria for underwriting. The repurchase defense specialist explains the information to support that the default was a result of the borrower’s walking from their mortgage obligation or an unfortunate change as job loss, divorce or illness.
Repurchase Rebuttals
It is vital to respond specifically to each repurchase claim. Repurchase rebuttals are explained fully, in narrative form, with documentation to support your rebuttal defense. The repurchase defense specialists are timely because we understand the response window is generally thirty days. However, the time repurchase defense specialist spends collecting information and developing a rebuttal defense is the kind of diligence that goes a long way in clearing the repurchase claim.
Your investors want to continue to do business with you, and want to clear the repurchase claims quickly. When an investor suspects a problem with a loan, the investor must take action; but many repurchase claims are cleared through the appeal process which forces the lender to appeal. Investment in repurchase defense specialist and quality control analyst makes the cost worth it.
Sometime the repurchase appeal is not as strong as others and both parties may agree to disagree which reduces in the loss ratio by improved or prompting the negotiation of an alternative resolution that is mutually agreeable.
When it comes to an effective approach to treating a headache caused by a repurchase demand, allow a repurchase defense specialist build a convincing rebuttal and defense supported by well-documented facts and information. Because underwriting may be subjective, repurchase defense specialist are more successful in rebutting repurchase and buyback claims because of interpretation and negotiation.
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