More than three years after the mortgage crisis began, some lenders are still selling loans to Fannie Mae and Freddie Mac without properly verifying borrowers' ability to pay.

While most mortgage sellers today are providing documentation of borrowers' incomes, executives from the GSEs said that there are cases where the information in the loan file does not match the debt-to-income calculation, the lender made in qualifying the applicant.

"It's spotty, depending on the lender," James Cotton, a vice president at Freddie Mac, said Wednesday.

Speaking at a California Mortgage Bankers Association secondary marketing conference in San Francisco, Cotton said he is seeing problems with "documentation in the file and whether it supports the income," though there has been some improvement with loans sold to Freddie this year.

Marianne Sullivan, a senior vice president at Fannie, told the lenders in attendance they can expect additional guidelines from the GSE that require some proof of a borrower's ability to pay their mortgage.

"There has been a renewed focus on borrower sustainability and making sure they can stay and pay going forward," Sullivan said.

Fannie Mae and Freddie Mac have increasingly been forcing sellers to buy back mortgages that the GSEs determined did not meet their guidelines. Lenders repurchased $3.1 billion of defective loans from the two enterprises combined in the first quarter, 64% more than a year earlier, according to Securities and Exchange Commission filings.

In March, Sullivan announced a "loan quality initiative" to help lenders follow guidelines so they can avoid having to buy back loans from Fannie.

At the conference, she also emphasized that credit changes made during the downturn are not going away. Borrowers now will have to make a minimum 5% down payment, have decent credit and show an ability to pay even during tough economic times, she said.

"The pendulum has swung back to full documentation, and that pendulum is going to stay," Sullivan said. "The regulatory environment will reinforce that as well."

Though the Home Valuation Code of Conduct, which bans loan officers and mortgage brokers from selecting appraisers, officially expires on Nov. 1, the policies that Fannie and Freddie have in their underwriting guidelines "do not sunset," she added.

Last week Fannie announced several changes aimed at improving the quality of appraisals, including requiring lenders to use only experienced appraisers and to include interior photos of the home in the appraisal report.

Beginning next year, lenders will have to electronically submit appraisal data to the two enterprises under an initiative led by the GSEs' regulator and conservator, the Federal Housing Finance Agency.

"The lender will continue to control the appraisals but as an investor [in the mortgages] I want more visibility into that," Sullivan said Wednesday.

Cotton said that while he is optimistic the home-purchase market will recover this fall, there remain significant concerns about the strength of a housing recovery.

"We expect the job market to be slow so the recovery will be slow," Cotton said.

Over time, Sullivan said, "the real challenge is going to be as memories fade" and the industry is tempted to revert to the practices that caused the crisis.

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