Walker & Dunlop said Thursday that Fannie Mae has finished its borrower-fraud review, following Freddie Mac’s conclusion in the second quarter, leaving the commercial real estate lender to sell assets accumulated during the investigations.
The company received Fannie’s notice during the third quarter. Chairman and CEO Willy Walker said management does not expect additional buybacks or indemnifications tied to the reviews. That expectation is the company’s assessment, rather than a finding announced directly by either agency. Walker & Dunlop’s third-quarter release
The remaining work is financial as well as operational. Walker & Dunlop’s investor presentation calls for most disposals to close before year-end, with the rest expected in early 2027. It says roughly one-third of the assets’ carrying value is covered by letters of intent, with the balance being marketed. Those milestones remain targets, not completed sales. November 5 investor presentation
An expensive exit
Walker & Dunlop recorded $56 million in valuation adjustments on its remaining repurchased-loan portfolio and $7 million in operating costs during the quarter. It reported a $37.3 million net loss.
The portfolio’s carrying value was $76.9 million on September 30. About $25 million was under a letter of intent by November 5. The company warned that subsequent valuation changes would depend on sale prices relative to its estimates. Third-quarter financial results, pages 1 and 5
The sequence matters for investors: finishing a loan review can narrow uncertainty about additional repurchase demands, while selling the affected loans and properties determines how much money is ultimately recovered. The presentation’s forward-looking disclosures explicitly retain the risk of losses connected with the accelerated liquidation. Investor presentation, pages 2 and 4
A cleanup already underway
The latest disclosure follows months of efforts to contain the exposure. In its fourth-quarter 2025 report, Walker & Dunlop said an internal investigation completed in early 2026 had identified fraudulent borrower activity involving three Freddie Mac loan portfolios associated with separate borrowers. Together, the portfolios carried $134.3 million in unpaid principal.
For one $50.7 million portfolio, the company had reached an agreement delaying repurchase until late 2027 while covering Freddie Mac’s losses in the meantime. It also described a change in strategy for older repurchased or indemnified assets: selling sooner instead of operating and repositioning them to recover losses. Those were the company’s earlier disclosures, not newly announced transactions. Fourth-quarter 2025 report
By its August update, Walker & Dunlop was reporting $23.2 million in second-quarter operating and credit-related charges. It attributed most credit losses on repurchased loans to a small group of sponsors identified in the investigation and said the charges did not signal expanding exposure across the broader portfolio.
That update had already disclosed the conclusion of Freddie Mac’s review. The new development in Thursday’s announcement is the completion of Fannie Mae’s review, alongside the accelerated disposal plan. Second-quarter 2026 report
Why lender exposure persists
Fannie Mae’s multifamily lending model helps explain why an originator remains financially involved after selling a mortgage. Under its Delegated Underwriting and Servicing program, lenders underwrite and deliver loans while typically retaining one-third of the credit risk. Ordinary risk-sharing is a continuing feature of the business, separate from the outcome of a particular fraud review. Fannie Mae’s description of DUS
The agency also distinguishes warning signs from established fraud. Its fraud-prevention guidance lists inconsistencies in appraisals, financial statements and rent rolls as reasons for further scrutiny, while cautioning that a red flag does not necessarily establish fraudulent intent. Fannie Mae’s fraud-prevention guidance
For Walker & Dunlop, the next measurable test is whether the announced sales close on schedule and at values that support its revised estimates. The review milestones have been reported; the final recovery proceeds have yet to be established.
Published by The Basis. Research dates, source references and illustrative assumptions are retained from the original article.
