Addressing Repurchases in the New Rep and Warrant Model

This article provides practical guidance for mortgage loan sellers and originators evaluating, responding to, and negotiating repurchase demands. It outlines steps sellers can take to respond without waiving any rights under a loan purchase agreement.

Sellers of residential mortgage loans face serious financial risks if they sign purchase agreements without careful review. Key provisions on fraud, defaults, materiality, and survival periods can create unlimited liability well beyond any profit earned.

One would think that, as we approach 2021, litigation related to residential mortgage loans originated and sold well over a decade ago would be ancient history. Nevertheless, some suits filed years ago remain active, and, even more surprisingly (and disturbingly), new lawsuits related to loans sold ...