As residential defaults and delinquencies continue to rise across the country, loan originators and securitization sponsors are being forced to buy back more of their loans, federal officials reported this week. The FDIC said insured-deposit banks repurchased $1.9 billion in defaulted mortgages in the second quarter of 2009, after investors put additional pressure on them to accelerate buybacks. Mortgage trustees and government–sponsored investors in the secondary mortgage market, like troubled firms Fannie Mae and Freddie Mac, can force lenders to repurchase loans that default when they are found non-compliant with the GSEs’ underwriting standards.

Usually, non-compliance is established by reviewing loan-origination documentation to determine if it was incomplete or falsified, which would mean the loan violates representations or warranties in the sales agreement. Still, the latest numbers aren’t as bad as they were in the previous half year. Banks repurchased $6.7 billion in mortgages overall since the second quarter of fiscal 2008, FDIC call reports showed. Leading the pack in second-quarter single-family mortgage buybacks were JPMorgan Chase, with $380 million, and Bank of America with $252 million. That’s still a far cry from the numbers in the first quarter of this fiscal year, when JPMorgan repurchased $2.2 billion in loans, and BoA bought back $299 million. The two banks’ positions are unsurprising, since their portfolios added a load of bad loans when they bought failing national lenders — Bank of America owns Countrywide Mortgage, while JPMorgan took on Washington Mutual. Hays Ellison, who practices securitization law for the firm Katten Muchin Rosenman, told reporters at the beginning of the buyback cycle last year that it would get worse before it got better. “There’s been more scrutiny of representations and warranties that have been made,” he said. “It’s a reflection of the continuing housing and credit crisis.”