A lender discovers an error in a loan file after selling it to Fannie Mae. The loan was missing required income documentation. What is Fannie Mae's most likely response?
Correct Answer
B) Require the lender to repurchase the defective loan
When loans sold to Fannie Mae are found to have material defects or missing required documentation, Fannie Mae typically requires the originating lender to repurchase the loan. This protects Fannie Mae from losses due to improperly underwritten loans.
Why This Is the Correct Answer
When loans sold to Fannie Mae are found to have material defects or missing required documentation, Fannie Mae typically requires the originating lender to repurchase the loan. This protects Fannie Mae from losses due to improperly underwritten loans.
More Mortgage Knowledge Questions
A borrower is comparing two loan offers: Loan A has no points and 4.5% interest rate, Loan B has 2 points and 4.0% interest rate. The loan amount is $400,000. How much will the borrower pay upfront for the points on Loan B?
A lender charges a 1% origination fee on all loans. For a borrower obtaining a $250,000 mortgage, what is the maximum origination fee that can be charged without violating the points and fees test under the ATR/QM rule for a first-lien mortgage?
Under what circumstances can a Qualified Mortgage include a prepayment penalty?
A borrower is considering paying discount points to reduce their interest rate. Each point costs 1% of the loan amount and reduces the rate by 0.25%. On a $300,000 loan, how much would the borrower pay for 2 discount points?
A borrower asks about the difference between discount points and origination fees. What is the most accurate explanation?
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