# How to respond to an agency QC repurchase demand

Updated September 26, 2026

Start by reading how the agency classified the defect: a finding or a price-adjusted loan can't be pushed to repurchase. For a significant defect, correct it or appeal within the applicable deadline. The usual first-appeal period is 60 days from receipt for Fannie Mae and from the demand date for Freddie Mac. Follow each agency's escalation steps and deadline start events; missing a deadline can end your right to challenge.

## Key numbers

- **30 days** to send a requested loan file, unless the agency sets another period (D2-1-02; 3401.1(a)(v))
- **60 days** for a first appeal: from receipt of Fannie's demand or the date of Freddie's demand, unless another period is specified (A2-3.2-03; 3602.4(b))
- **15 days** to take each later step: second appeal, impasse, management escalation, IDR (A2-3.2-03; 3602.4(b))
- **$500** maximum de minimis correction, unless a higher amount is agreed (D2-1-04; 3401.1(a)(i))

## Send the file on time

Both agencies want a requested loan file within 30 days, unless they set a different period. Fannie counts from its notice, Freddie from its request (D2-1-02; 3401.1(a)(v)).

## Check how the defect was classified

After a full-file review, each agency puts every defect in one of three categories (D2-1-03, D2-1-04; 3401.1(a)):

- A finding changes neither price nor eligibility. No correction or remedy is required, though the agency may ask for a data update.
- A price-adjusted loan (PAL) would have been eligible if the correct data had been delivered and the right fee paid. You pay the loan-level price adjustment (Fannie) or Credit Fees (Freddie). Neither agency may demand repurchase of a PAL, and you may not voluntarily repurchase one.
- A significant defect would have changed the purchase price or made the loan unacceptable for purchase had the facts been known. The agency will require repurchase or may offer a repurchase alternative.

A significant defect also has to fall into a listed category: borrower creditworthiness, capacity or eligibility; property or project eligibility, the appraisal or property condition; loan or product terms; a life-of-loan representation and warranty; requirements in force at purchase; required insurance or guaranty; or the form and execution of required documents (D2-1-03; 3401.1(a)(i)).

A common mistake is arguing the underlying error when the stronger argument is the category. Showing that the issue is a finding or a PAL rather than a significant defect changes the outcome, even if the error is real.

## See whether you can correct it

A correction is lender action, usually new documentation, showing the significant defect did not exist at purchase or has been cured in the required manner (D2-1-04; 3401.1(a)(i)). At both agencies:

- You can submit a correction at any time during the appeal and impasse stages.
- The documentation "must be based on information or data that either was available at the time of underwriting (and no later than the note date), or covers the time of underwriting," and it must meet the Guide's documentation standards.
- Property, flood and mortgage insurance defects can be corrected during appeals.
- A de minimis correction is a payment of no more than $500 (or a higher agreed amount) that cures the defect. It can't be used when it would leave a required minimum borrower contribution unmet, or to fix a Charter violation.

If you correct some significant defects but others remain, the agency reaffirms the demand. If you correct them all but the loan is now a PAL, you pay the price adjustment (D2-1-04; 3401.1(a)(vi)).

You can also propose a repurchase alternative at any point during the appeals process, and the agency will consider it "in good faith." The options include recourse, indemnification (with or without collateral), a mortgage insurance stand-in, a make-whole payment, a split loss and loss reimbursement. Whether one is offered depends partly on your counterparty status (A2-3.2-03; 3401.1(a)(i)).

## File the first appeal within 60 days

The written first appeal is due within 60 days of receiving Fannie Mae's demand, or within 60 days from the date of Freddie Mac's demand, unless the agency specifies another period. A Freddie demand received after its issue date does not restart the clock. The agency must respond within 60 days of receiving the appeal. Freddie spells out the contents. Send it to the Freddie Mac office that requested the repurchase, containing (3602.4(b)(i)):

1. a statement of all relevant facts about the mortgage,
2. an explanation of why those facts were not disclosed in the file at origination,
3. a statement of why Freddie Mac's decision should be reversed, and
4. all available supporting documentation.

The Fannie Mae Selling Guide requires a written appeal and points to a separate Fannie Mae document, [*Appeal and Independent Dispute Resolution Processes*](https://singlefamily.fanniemae.com/media/document/pdf/appeal-and-independent-dispute-resolution-processes), incorporated by reference, for the detailed requirements of each step (A2-3.2-03). Only the responsible party can use the appeal, impasse, management escalation and IDR processes. It can't assign that right to anyone else, such as an insurer.

If you don't appeal, you pay. Fannie expects payment within 60 days of receiving the demand for loans acquired on or after January 1, 2013 (A2-3.2-01). Freddie expects repurchase within 60 days of the request (3602.2(a)(iii)).

## Climb the ladder only as far as the facts carry you

| Step | Fannie Mae (A2-3.2-03) | Freddie Mac (3602.4(b)) |
|---|---|---|
| Second appeal | Within 15 days of receiving the first denial, with additional material information | Within 15 days from the date of the first denial letter, only with new material information not available before |
| Impasse | Start within 15 days of receiving an appeal denial. 30-day resolution period unless both agree to extend | Start within 15 days from the date of the denial letter. 30-day impasse period |
| Management escalation | Start within 15 days of the end of impasse. 30-day period with an officer outside QC | Same: 15 days, 30-day period, officer outside Freddie Mac QC |
| IDR | Lender starts it within 15 days by submitting an executed Retainer Agreement. Fannie may start it within 6 months | Lender starts it within 15 days. Freddie may start it within six months. Tolling agreement within 7 days |

A second appeal is not a do-over. Freddie requires "new material documentation or information that was not previously available" (3602.4(b)(ii)). Without new information, go straight to impasse.

In impasse, one representative from each side tries to resolve the dispute. At Freddie Mac, anything you want considered must be in by the end of the impasse period, because nothing new is accepted in management escalation or IDR (3602.4(b)(iii)–(v)).

For management escalation, Freddie requires you to name your officer contact. In IDR, a neutral decides whether the alleged breach existed, and the decision binds both sides (3401.1(a)(ii)).

At Fannie Mae, IDR isn't available to lenders that have been suspended, disqualified or terminated, or that have received a formal notice of default, and it covers selling-breach demands on loans with pool issue dates on or after January 1, 2016. At Freddie Mac, impasse and management escalation apply to loans with Settlement Dates on or after January 1, 2016.

Missed deadlines are final. At Freddie Mac, no first appeal within 60 days means "no further right to challenge" the demand. If a first appeal is denied and you neither file a second appeal nor start impasse, you must comply within 15 days of the denial letter. At Fannie Mae, if the Retainer Agreement isn't received within 15 days after management escalation ends, you lose the right to pursue IDR and must comply with the demand.

## A timeline, worked through

The numbers here are illustrative. A lender receives a repurchase demand on day 0, the same day it is dated, for an income calculation defect. By day 60 it appeals with a written verification of employment dated before the note date, showing overtime the file did not document. That is a correction offered under the timing rule. The denial is dated and received on day 100. These matching issue and receipt dates are assumptions for this example, not interchangeable deadline rules. With no new material information, the lender starts impasse by day 115, and the impasse period runs to day 145, when every remaining document must be in at Freddie Mac. If the demand is reaffirmed, management escalation starts within 15 days, and IDR within 15 days after that period ends without agreement.

The response and the appeal stay with the lender.

## FAQ

**How long do I have to appeal a Fannie Mae or Freddie Mac repurchase demand?**
Normally 60 days from receipt of Fannie Mae's demand, or from the date of Freddie Mac's demand. Use any different period specified by the agency (A2-3.2-03; 3602.4(b)).

**Can a lender fix a defect instead of repurchasing?**
Yes. Submit a correction during the appeal and impasse stages, using documentation from, or covering, the time of underwriting.

**Can the agency demand repurchase of a price-adjusted loan?**
No. You pay the price adjustment or Credit Fee instead.

## Sources

- Fannie Mae Appeal and Independent Dispute Resolution Processes (08/17/2016), incorporated by reference: https://singlefamily.fanniemae.com/media/document/pdf/appeal-and-independent-dispute-resolution-processes

- Fannie Mae Selling Guide (published September 2, 2026): https://selling-guide.fanniemae.com/
- A2-3.2-01, Loan Repurchases and Make Whole Payments Requested by Fannie Mae (08/29/2017): https://selling-guide.fanniemae.com/sel/a2-3.2-01/loan-repurchases-and-make-whole-payments-requested-fannie-mae
- A2-3.2-03, Remedies Framework (08/30/2016): https://selling-guide.fanniemae.com/sel/a2-3.2-03/remedies-framework
- D2-1-02, Fannie Mae QC File Request and Submission Requirements (03/06/2024): https://selling-guide.fanniemae.com/sel/d2-1-02/fannie-mae-qc-file-request-and-submission-requirements
- D2-1-03, Outcomes of Fannie Mae QC Reviews (11/03/2015): https://selling-guide.fanniemae.com/sel/d2-1-03/outcomes-fannie-mae-qc-reviews
- D2-1-04, Identifying and Remedying Origination Defects Under the Remedies Framework (08/30/2016): https://selling-guide.fanniemae.com/sel/d2-1-04/identifying-and-remedying-origination-defects-under-remedies-framework
- Freddie Mac Seller/Servicer Guide Section 3401.1, Postfunding quality control processes (effective 12/17/2025): https://guide.freddiemac.com/app/guide/section/3401.1
- Freddie Mac Seller/Servicer Guide Section 3602.2, Repurchase requirements and alternatives (effective 11/19/2025): https://guide.freddiemac.com/app/guide/section/3602.2
- Freddie Mac Seller/Servicer Guide Section 3602.4, Appeal and dispute resolution processes (effective 11/19/2025): https://guide.freddiemac.com/app/guide/section/3602.4

This guide summarizes agency requirements as of the date above. It is not legal advice.