Zain Martin 
Four years after the financial crisis, mortgage putback demand is on the rise. Some investors say this is a response to Moody’s recent debt downgrade. But a mortgage putback could also result from a defective mortgage. The financial crisis led to the government-sponsored enterprises, or GSEs, being put under conservatorship in September 2008. And several of the nation’s largest lenders are taking their time to resolve putbacks.
The mortgage putback is a repurchase of a previously approved loan. A mortgage putback is a common practice among investors after the subprime housing crisis of the 2007-2008 real estate market collapse. It is a method of making a quick profit on a loan that is likely to default. The putback investor receives a portion of the payments on the mortgage. This way, the lender avoids paying interest on the loan that they were unable to sell.
A mortgage putback occurs when an investor thinks that a mortgage has a problem and will affect the cash flow of the borrower. A mortgage putback can also result in a default. In such a case, the investor asks the lender to repurchase the mortgage and remove the risk for them. Mortgage putbacks became widespread following the housing market crash and the financial crisis in the United States in 2008. Since mortgages had become so widely distributed after these events, the validity of many mortgages was in doubt.
A mortgage putback works in a similar way to putting things back in a store. The lender buys back the mortgage from the current owner. The putback protects both the mortgage owner and investors in the mortgage. However, a putback is not always a good idea. If your mortgage buyer decides to force you to sell your mortgage, you may be able to get the original lender to buy back the mortgage. This way, you can protect both yourself and your lenders.
The mortgage putback process can also be used to dispose of non-payment-due or toxic mortgages. Typically, a mortgage putback includes all current and past-due mortgages. This may be a viable option for investors. However, some mortgage-backed security structures may require that all mortgages are included in the putback request. So, the key is to learn how to navigate this process. It will save you money and time in the long run.
