More rep and warrant relief coming for loans made to the self-employed

A deeper integration of Freddie Mac and LoanBeam’s technologies will be followed by an expansion of the representation and warranty relief available to mortgage lenders originating loans to self-employed borrowers.

The expanded relief on tax income data will become accessible this fall, according to a press release LoanBeam issued this week during Freddie Mac’s Connect client conference.

The new integration provides an early verification of income directly from the Internal Revenue Service in conjunction with calculations LoanBeam provides for lenders. Freddie Mac will offer the relief if the data can be verified. Loan Beam will charge an additional fee for the verification.

“This bounces the data that we’ve extracted from the tax returns against the IRS tax data, and validates it,” said Roby Robertson, a senior vice president at LoanBeam.

The move comes two years after Freddie Mac initially launched an integration with LoanBeam that gave mortgage lenders selling loans to the government-sponsored enterprise access to rep and warrant relief on income calculations. The vendor runs those income calculations after extracting data from documents using optical character recognition.

Mortgage lenders are eager to obtain more relief from their responsibility to rep and warrant that the data points on home loans they submit to Freddie Mac and Fannie Mae are accurate.

That is particularly true now, because Fannie Mae and Freddie Mac tend to issue more requests to mortgage lenders to buy back loans based on flawed data when there is a relatively higher level of performance risk in the market.