The way TBW sold their loans to Freddie

Posted: Wed Dec 16, 2009 5:09 pm

Could be special pricing or special recourse. Open access is again, to curtail FHLMC liability and not to benefit the borrower.

You have me curious now. I'll do some checking.

Flash in the pan Joined: 05 Aug 2009 Posts: 39

I wonder if the "credit enhancement" was due to the loan being approved by TBW with DU findings (you mention "approve/eligible") rather than LP findings?

Posted: Wed Dec 16, 2009 11:16 pm

XpressOH wrote:

I wonder if the "credit enhancement" was due to the loan being approved by TBW with DU findings (you mention "approve/eligible") rather than LP findings?

And there you have it. Good eye Xpress.

Flash in the pan Joined: 05 Aug 2009 Posts: 39

yikes...that is NOT good news. I have several potential LP open access customers that were approved by TBW with DU ...sucks to find out they are not eligible!

Flash in the pan Joined: 05 Aug 2009 Posts: 39

actually, the more I think about it, the less sense that makes.

If the whole purpose of "open access" is to help freddie minimize risk of loss on existing loans, why deny these files from participating?

Freddie is currently on the hook. Even if the "credit enhancement" meant that, for example, TBW would have been required to buyback in the event of default, it's not like TBW is around anymore to buy anything back- so, freddie is stuck with it.

You'd think the risk would be lower if the file gets an accept through LP Open access, same loan amount but a 1-2% lower rate (and corresponding payment).

Posted: Thu Dec 17, 2009 4:05 am

XpressOH wrote:

actually, the more I think about it, the less sense that makes.

If the whole purpose of "open access" is to help freddie minimize risk of loss on existing loans, why deny these files from participating?

Freddie is currently on the hook. Even if the "credit enhancement" meant that, for example, TBW would have been required to buyback in the event of default, it's not like TBW is around anymore to buy anything back- so, freddie is stuck with it.

You'd think the risk would be lower if the file gets an accept through LP Open access, same loan amount but a 1-2% lower rate (and corresponding payment).

Who ever said FHLMC was the brightest bulb on the Christmas Tree? May be issues in determining a successor in interest.

Until the loans default, the loans are still assets and are on some balance sheet somewhere (or will be eventually).

DU underwriting on the original loans could negate special reps and warranties.

Flash in the pan Joined: 05 Aug 2009 Posts: 39

I never really did understand why Freddie would do that-

TBW was cut off from Fannie years ago. Actually, I believe Interfirst was too, back in the day.

Why does Freddie even purchase loans that don't generate an LP Accept, but that DO generate DU approve/eligible. I could see if the loan approved through both engines, but why buy a loan that is underwritten to someone ELSE'S standards?