Fannie Mae, Freddie Mac and their conservator, the Federal Housing Finance Agency, have taken steps over the past two and a half years to give greater clarity to lenders about mortgage repurchase requests.

According to the Urban Institute, these actions were motivated by the belief that lenders are not lending to the full extent of the credit box largely because they lack certainty about mortgage repurchase requests and that as a result mortgage credit remains too tight.

Here’s what the Urban Institute found:

We used data released by the GSEs to examine the history of repurchase activity and determine if these efforts at clarity had an impact. We find three significant changes that should lead to greater lender clarity.

  • Earlier due diligence. The GSEs are identifying loans with manufacturing defects much earlier in the process. ?
  • Substantial clean up of legacy loans. Fannie Mae appears to have completed most of its repurchase requests for loans originated before 2009. ?
  • Greater GSE consistency. Freddie Mac and Fannie Mae's repurchase requests for post-2009 loans are now more consistent, though there is still room for improvement. ?

 To read the full study, click here.