A new study from Reggora and Stratmor Group found that the average mortgage repurchase rate from April 2023 to October 2024 was 0.49%, with each buyback costing lenders an average of $32,288.

Independent mortgage lenders were more likely to face a repurchase over the 18-month period, seeing 26% more buybacks on average than depository institutions.

Loan repurchase requests from the government-sponsored enterprises (GSEs) occur because loans acquired by Fannie Mae and Freddie Mac are found to have significant underwriting defects during quality control reviews.

“Loan repurchases are a persistent challenge for lenders, often carrying significant financial and operational consequences,” said Reggora CEO Brian Zitin. “This study goes beyond just highlighting the problem — it pinpoints the most common issues, like income-related errors, and gives lenders clear insights into where they can make underwriting adjustments to reduce risk and improve loan quality.”

Issues related to appraisals and income were two of the top three repurchase causes, aggregately accounting for 57% of all requests. Misrepresentation or miscalculation of borrower income (such as overstating earnings or failure to verify self-employment income), incomplete or missing income documentation, and failure to meet debt-to-income requirements were some of the most widespread income-related defects that led to repurchase requests.

Notably, Freddie Mac this year announced an expansion to a pilot program offering a fee-based alternative to repurchase requests, with a fee structure based on loan performance. That expansion is slated to begin in the first quarter of 2025.