In a session about brokers’ influence on national policy during AIME Fuse 2023 in Las Vegas on Friday, trade group representatives and wholesale executives said that loan repurchases can be “catastrophic” for some lenders, which will ultimately affect brokers.
This is a “survivability conversation,” said Katie Sweeney, chairman and CEO of the Association of Independent Mortgage Experts (AIME).
According to Sweeney, small, midsize and large lenders have all been affected by the uptick in loan buybacks. Even large IMBs “are being put in a position where they may not make it in the next six months because of this increase,” she said.
And it directly affects brokers as fewer lenders in the market means fewer options to offer to borrowers, Sweeney added.
To illustrate the problem, Brendan McKay, president of advocacy at AIME, said loan buybacks were up 759% in the first quarter of 2023 compared to the same period of 2020.
“From the lenders’ perspective, loans are 60 basis points more expensive to originate in the first quarter of this year compared to 2020 [correlated to loan repurchases]. That’s not sustainable. It’s a major problem.”
As HousingWire previously reported, in 2020, Fannie Mae reported $1.1 billion in repurchases on $1.4 trillion in single-family loan-acquisition volume, resulting in an eight basis-point repurchase rate. In Q1 2023, the GSE had $459 million in repurchases on about $68 billion in loan-acquisition volume, or a 68 basis-point repurchase rate, according to research from Sterling Point Advisors.
Phil Shoemaker, CEO of The Loan Store, said the problem “doesn’t hit everyone at the same time,” but can be “financially catastrophic.”
“They [GSEs] are making billions, and lenders are barely scraping by, but they continue to make them buy back loans for small reasons here, little things that happened on a loan that maybe are not impacting the borrower’s success in that loan,” Ishbia said.