In the first quarter of 2025, mortgage delinquencies on one-to-four-unit residential properties increased to a seasonally adjusted rate of 4.04%, marking a 10 basis point rise from the same period in 2024. This data, reported by the Mortgage Bankers Association’s (MBA) and, the National Delinquency Survey, highlights the growing financial pressure on homeowners due to rising insurance premiums and property taxes. For lenders, this climate raises the risk of loan defaults and, inevitably, repurchase demands.
Whether you’re looking to strengthen your quality control processes or need help responding to a repurchase request, targeted repurchase investigations offer timely and strategic support to manage mortgage repurchase risk.
The Economic Landscape: A Perfect Storm for Defaults
1. Rising Insurance Premiums
Homeowners nationwide are seeing insurance costs jump sharply. In California, for example, State Farm secured approval for a 17% emergency rate hike, which pushes annual premiums higher. These hikes stretch household budgets and increase the likelihood that borrowers fall behind on payments.
2. Escalating Property Taxes
Property-tax bills also continue to climb. When combined with higher insurance, these bills tighten homeowner finances further and boost delinquency risk—along with repurchase concerns for lenders.
3. Impact on Mortgage Delinquencies
With both costs rising, mortgage delinquencies keep trending upward. The Q1 2025 rate of 4.04% confirms that more borrowers struggle to stay current, and that ripple effect raises mortgage repurchase risk.
Understanding Targeted Repurchase Investigations
At Frasco Mortgage Risk Mitigation, our team steps in after a lender receives a defect notice or repurchase demand from investors such as Fannie Mae, Freddie Mac, FHA, VA, or USDA. Our review verifies or challenges the notice, then helps lenders choose their next steps.
Instead of screening loans long before trouble appears, we focus on resolving problems once they surface. We re-examine loan files, validate data, and, when needed, interview borrowers to give lenders a full picture.
When Are They Necessary?
- After a Repurchase Demand: We step in when lenders need help evaluating or responding to an official defect notice.
- To Resolve Defects: Our team helps gather facts, correct misunderstandings, and strengthen the lender’s case when pushing back on repurchase demands.
Key Components:
- Forensic Loan Review: We dig deep into the paperwork to uncover any issues or verify compliance.
- Borrower Interviews: If needed, we contact borrowers to confirm details and catch inconsistencies.
- Document Re-Verification: We recheck records to ensure everything holds up under scrutiny.
Benefits of Targeted Repurchase Investigations
When lenders receive a repurchase notice, time and clarity are everything. That’s where our targeted investigations come in. At Frasco, we focus on actionable insights to help lenders manage or avoid the financial fallout.
Lower Risk of Buybacks
Our investigations help clarify whether the repurchase is justified. By uncovering facts and addressing concerns, we reduce the chance of lenders having to buy the loan back.
Ensure Compliance
We make sure responses align with regulatory and investor requirements—helping lenders stay in good standing.
Confidence to Act
The insights we provide help lenders decide whether to contest or accept the demand, giving them a clear path forward.
The Value of Targeted Repurchase Investigations
i. Protect Against Financial Loss
When a GSE or investor flags a defect, lenders must act fast. Our team assesses the case quickly, tests root cause, and collects proof that supports a rebuttal or resolves the issue—often avoiding costly buybacks.
ii. Reduce Operational Burden
Repurchase reviews often fall outside a lender’s core duties. By bringing in specialized support, lenders keep in-house staff focused while trained experts manage file analysis, borrower outreach, and document recovery.
iii. Support Regulatory and Investor Compliance
By thoroughly investigating flagged loan attributes (such as misrepresented occupancy or missing documentation), lenders can ensure responses are accurate, defensible, and audit-ready – aligning with investor expectations and minimizing downstream risk. This level of preparedness helps lenders demonstrate compliance, restore investor confidence, and minimize the risk of buyback – even after a defect is identified.
Proactive Repurchase Risk Strategies:
- Issue-Specific Reviews: Deep-dive into flagged loan elements – whether occupancy misrepresentation, income inconsistencies, or documentation defects.
- Forensic Loan Analysis: Go beyond surface-level checks to uncover patterns and verify data integrity.
- Third-Party Document Recovery:Field or desktop outreach fills loan-file gaps and strengthens rebuttals.
- Staff Enablement: Ensure QC and post-closing teams know how to identify, escalate, and respond to repurchase risk signals early.
- Process Integration: Use tech-enabled workflows and external partnerships to manage investigations without derailing operations.
Conclusion
Rising insurance costs, taxes, and borrower stress drive up mortgage delinquencies, and repurchase demands grow more common—and costly. When a GSE or investor flags a defect, lenders must investigate quickly to avoid buyback.
That’s where targeted repurchase investigations come in.
Whether the issue involves occupancy misrepresentation, missing documentation, or loan file inconsistencies, lenders often need specialized support to conduct a deep-dive review, recover key evidence, or prepare a strong rebuttal.
When internal resources are stretched – or the issue goes beyond standard QC – partnering with an experienced investigation team can make all the difference.
Contact Us Today
Frasco® Mortgage Risk Mitigation delivers ethical and efficient solutions tailored to your needs. Have questions or want to discuss your investigative needs further? Schedule a call with one of our experts today to find the answers you’re looking for.
Disclaimer: This blog post is for informational purposes only and should not be considered legal advice. Please consult your general counsel for specific legal guidance. Frasco investigators are licensed, and our operations comply with US industry, federal, state, and local laws.