Fannie Mae, the largest US home funding company, believes that failed mortgage lender IndyMac has obligations to repurchase around $1 billion of home mortgages that failed to meet Fannie’s standards, the Wall Street Journal said, citing people familiar with the situation.
Banks that sell loans to Fannie or its smaller rival, Freddie Mac, must make “representations and warranties” that those loans meet certain quality standards, the paper said. If not, the lenders can be forced to buy the loans back, the paper reported on its website late on Thursday.
A spokesman for Fannie told the paper the company is working with the Federal Deposit Insurance Corp (FDIC) to resolve the issue. Fannie could not be immediately reached for comment.
A consortium of private equity and hedge fund firms, including JC Flowers & Co, is close to a deal to buy the assets of IndyMac, a source familiar with the matter told Reuters earlier this week. The FDIC, which took control of IndyMac in July 2008, is seeking a buyer. (Reuters)