The new "notice of potential defect" process Fannie rolled out recently may be helpful because it flags issues earlier, according to the Community Home Lenders of America. 

Fannie said the notifications are similar to the "loan quality defect notice" discontinued in April 2022. From that point until the present, lenders whose loans had one or more "significant" defects after a post-purchase loan review were sent a resolution request, which is the formal start of the remediation timeline. Questions as to why the defect notice had been discontinued went unanswered as of deadline.

"The fact that the word potential is used means Fannie Mae is willing to consider additional information to try to clear something up before moving to a category of repurchase or indemnification," said Rob Zimmer, CHLA's director of external affairs.

The process, which is now part of Fannie's Loan Quality Connect technology, follows in the wake of multiple changes to the repurchase process for flawed loans that Fannie and competing government-sponsored enterprise Freddie Mac have rolled out in response to lender concerns.

The Federal Housing Finance Agency, which oversees the two major government-related mortgage investors, indicated coordination between the two enterprises in this area is one of its new annual scorecard goals for this year.

One of the agency's stated aims for 2024 is to "explore opportunities to harmonize the enterprises' processes supporting the single-family selling representations and warranties framework, including defect identification, remedies, and repurchase alternatives."

Other efforts along these lines planned for this year include a pilot for a Freddie Mac repurchase alternative that would be fee-based and largely exempt lenders from buybacks on performing loans, with charges waived for smaller lenders.