Fannie Mae late Friday finally had something to say about Bank of America's announcement that it would no longer sell new purchase money loans to the GSE: it hopes to resolve the buyback disputes between the two parties.
“Fannie Mae has broad dealings with Bank of America,” said spokeswoman Kelli Parsons. “In this matter, Fannie Mae remains committed to working with BofA to resolve their repurchase issues with us and in doing so, to fulfill its contractual obligations. Fannie Mae will continue its efforts in the best interests of the company and the taxpayers."
On Thursday the bank said it would stop selling new purchase production and would only offer the GSE HARP refinancings. Its reason: the buyback problems it's been having with Fannie.
In its third quarter earnings release BofA first provided new details about its problem with Fannie, noting that it had been receiving more buyback requests for older vintages of loans from the GSE and planned to contest some of these claims regarding breaches of representations and warranties.
The bank reported that it received $3.8 billion in new buybacks requests in the third quarter and 87% of these claims came from the GSEs -- Fannie and Freddie Mac.
These claims include a 50% quarter-over-quarter increase in buybacks of 2005 vintage loans totaling $668 million and a 20% increase in 2006 loans totaling $925 million. New claims on pre-2005 loans fell 54% to $95 million.
Unlike many other seller/servicers, BofAa says it has a certain provision in its contract with Fannie that should shield it from some of these claims and the GSE's "evolving" behavior on buyback requests.
"We will obviously process and push through those that we think were due and fight those that we don't think are due based on the contract we have with them," a BofA executive said.
Most of BofA's buyback exposure is with Fannie not Freddie. A large majority of it stems from loans originated by Countrywide Financial Corp., the mortgage banking giant that the bank bought in August 2008.