Mortgage Loan Repurchase Facilities: A Brief Overview of a Frequently Used Financing Structure
May 04, 2023
A mortgage loan repurchase facility (more casually referred to as a “repo”) is a financing structure commonly utilized to finance mortgage loans. These facilities are utilized by both residential and commercial mortgage loan originators and aggregators to finance mortgage loans that they originate or acquire. The structure is favored by liquidity providers in the mortgage loan finance arena due to its preferential “safe harbor” treatment under the United States Bankruptcy Code (the “Bankruptcy Code”), as further described below. While exact figures are difficult to pinpoint because repurchase facilities are private transactions, based on our experience representing some of the largest players in this space, we estimate the aggregate residential and commercial mortgage loan repurchase facility capacity in the United States exceeds several hundred billion dollars
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