Walker & Dunlop has fired members of its banking staff for not adhering to its loan origination process and failing to catch fraudulent behavior from borrowers.

The company made the move after an internal investigation found that roughly $134M in Freddie Mac loans across three portfolios were impacted by some level of fraud. That fraud led the company to record a $29M loss expense, according to Walker & Dunlop's fourth-quarter earnings.

The company said it let go of "a banking team," but it wasn't clear which specific staff were affected by the decision or how many were let go. Walker & Dunlop didn't respond to Bisnow's request for comment.

With the review process, the company did further diligence on roughly 266 other loans originated by the team. It found there was one additional portfolio totaling $34M that was misrepresented by the borrower.

"First, not a single employee at Walker & Dunlop had knowledge of or participated in the borrowers' fraudulent flip transactions," Walker & Dunlop CEO Willy Walker said Thursday on the company's Q4 earnings call. "However, while investigating the loans, it was determined that a Walker & Dunlop banking team had not adhered to our loan origination policies and procedures."

The company brought its findings to Freddie Mac in January, offering to make up for the $134M loss, Walker said.

Walker & Dunlop originates loans and sells them to Freddie Mac and Fannie Mae. It is the largest Fannie Mae multifamily lender, with $18.3B in transactions in the fourth quarter and $54.8B in transactions throughout 2025.

In the case of fraud, the originator is usually responsible for covering the agencies' legal costs or repurchasing the loans.

Walker & Dunlop executed a forbearance and repayment agreement with Freddie Mac over one of the portfolios totaling $50.7M, delaying the repurchase of the loans until Q4 2027. The company is in negotiations with Freddie Mac over the other two portfolios totaling $83.6M.

Although it typically operates and repositions any repurchased or indemnified loans, Walker & Dunlop said in its earnings statement that it is looking to sell these assets.

Freddie Mac asked Walker & Dunlop to investigate two loan portfolios totaling $100M last year after determining the borrower had committed fraud, The Real Deal reported in December.

The Federal Housing Finance Agency, which oversees Freddie Mac and Fannie Mae, has been helping federal prosecutors ramp up fraud detection.

Fannie Mae tightened its pre-review of all agency-backed loans that involve brokers in 2023. This came after Freddie Mac conducted an investigation into the country's largest mortgage broker, Meridian Capital Group, over alleged irregularities in loan submissions. Freddie Mac also rolled out policies aimed at fraud detection and mitigating the risks of fraud in April 2024.