2012-08-08 — nasdaq.com
Mortgage repurchase claims could prove to be costly for Wells Fargo & Co. ( WFC ). According to its quarterly filing with the Securities and Exchange Commission, its losses might exceed the recorded mortgage repurchase liability by as much as $2.6 billion, up 13% from the prior quarter. However, the company said that this loss estimate is reasonably possible but does not represent a probable loss.
As a matter fact, Wells Fargo is experiencing increasing demand for mortgage repurchases from government sponsored entities (GSEs) Fannie Mae and Freddie Mac, related to loans made from 2006 to 2008.
Notably, Wells Fargo's total reserves for mortgage repurchase requests stood at $1.8 billion at the end of June. This represents an increase from $1.4 billion recorded at the end of March. The company has made provisions of $669 million in the second quarter of 2012, up 56% sequentially and significantly ahead of the provisions of $242 million recorded a year ago.
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