The nation's GSE regulator Wednesday voiced his concern about the slow pace of seller/servicers repurchasing problem loans from Fannie Mae and Freddie Mac, singling out the nation's megabanks for their poor performance in this area.
"Many of the lenders with aged, outstanding repurchase requests are among the largest financial institutions in the United States," Federal Housing Finance Agency director Edward Demarco said in prepared testimony before the House subcommittee on GSEs and Capital Markets.
Currently, $11.7 billion in repurchase requests are considered outstanding with Freddie facing the most exposure ($6.7 billion).
FHFA said more than one-third of the buyback requests are late by more than 90 days.
In his prepared testimony, DeMarco did not name the megabanks by name, but it's no secret in the industry that the top three residential lenders in the nation — Wells Fargo, Bank of America, and JPMorgan Chase — all have had major buybacks forced upon them by the GSEs with disputes on representations and warranties aplenty.
In 2009 residential seller/servicers repurchased $8.7 billion in loans from Fannie and Freddie, and FHFA expects that number to increase slightly by the time 2010 ends.
Since being taken over by the government two years ago, Fannie and Freddie have received $155 billion in assistance from the Treasury Department to keep their capital positions in the black.
DeMarco said the agency is working on a forecast of potential, future losses but is not ready to release estimates. He cautioned that when the agency does release its outlook it will not be a forecast or "expected outcomes" but rather "modeled projections in response to" what-if scenarios.
