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Paul Tracy

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Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers. While there, Paul authored and edited thousands of financial research briefs, was published on Nasdaq. com, Yahoo Finance, and dozens of other prominent media outlets, and appeared as a guest expert at prominent radio shows and i...

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Updated January 16, 2021

What is a Mortgage Putback?

A mortgage putback is a mandatory buyback of a mortgage by its original lender.

How Does a Mortgage Putback Work?

Once a lender completes a mortgage, the lender often sells it to another investor in the secondary mortgage market. Under certain circumstances, questions may arise regarding the borrower's application and the possibility of fraud. If the mortgage needs to be investigated, the mortgage buyer may force a mortgage putback, forcing the original lender to repurchase the mortgage from the current owner.

Why Does a Mortgage Putback Matter?

Mortgage putback clauses protect investors from the possibility that the original lender had careless lending protocols and/or was unknowingly defrauded by borrowers. Because the subsequent owners have the right to force the original lender to repurchase the mortgage, in theory the original owners will be more diligent about who they are lending to.

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Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers.

If you have a question about Mortgage Putback, then please ask Paul.

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