Powayseller, FNMA buys other originators’ loans and other originators’ MBS and ABS.
Most of these loans were probably bought for the purpose of packaging them into securities. The purchase agreements generally include provisions that require take-backs for loans that default quickly, and there is no time limit for fraud/impropriety. Fraud and impropriety is generally not picked up until first default.
One reason why one originator might buy whole loans or packaging rights on another’s loans is to get a better geographic or terms mix which will be used to reduce the overall calculated risk in the final securitizations and thus enhance the price of the entire package.
MLN also serviced, and they may have retained servicing rights but sold the loans on some of these.
