Fannie Mae and Freddie Mac can require a mortgage lender to buy back a loan if it defaults within how many months?

Fannie Mae and Freddie Mac have specific guidelines regarding the buyback of loans in the event of default. The standard timeframe within which they can require a mortgage lender to repurchase a loan is 12 months from the date of default. This policy is in place to ensure that loans meet the standards set by these government-sponsored enterprises (GSEs). If a loan defaults within this 12-month period, the originating lender may be obligated to buy back the loan, which protects the GSEs from losses due to poor underwriting or criteria not being met.

This timeframe serves as a safeguard for Fannie Mae and Freddie Mac as they manage risk in their portfolios and maintain the stability of the housing market. Understanding this policy is crucial for mortgage lenders, as it impacts their underwriting practices and financial liabilities.