Mortgage Putback

See: Mortgage.

Remember being a kid and finding something super awesome on the shelf at the store (like an economy-sized box of M&Ms or a BB gun), but then being frowned at and told to put it back when we tried to sneak it into the cart? Well, a “mortgage putback” is kind of the same thing. It’s a mortgage that has to be repurchased, or put back. In other words, the originator of the loan has to buy it back from the current mortgage owner. Mortgage putbacks exist not only to protect the mortgage owner, but also to protect investors in mortgages and mortgage-backed securities.

When putbacks happen, it usually means that something about the mortgage just...isn’t quite right. For the most part, the “not quite right” part usually has to do with negligence or fraudulent practices on the part of the original lender. This was especially prevalent leading up to the 2008 subprime mortgage crisis. Lenders were issuing mortgages all over the place, sometimes without confirming the income, assets, etc. of the potential borrowers, and sometimes without bothering to adhere to their own laws and rules. Since then, of course, there have been plenty of regulations put into place to address the early aughts’ lawless wasteland of mortgage lending. But in the meantime, if we suspect any of the mortgages in our lives of not being up to legal or regulatory snuff, the mortgage putback avenue might be one worth exploring.