The jump in refinance business, and a shift from cash-out to rate-term transactions, changed the credit-risk profile for Fannie and Freddie in the fourth quarter.
The quality control team at Fannie Mae identified “red flags” that could indicate borrowers have mischaracterized whether they’re seeking a mortgage for a primary residence or for a second home or investment property.
Six of the top 10 significant defects in loans acquired by Fannie Mae in the first quarter of this year weren’t on the list in the last quarter of 2023. Income calculation, though remained at the top of the list.