Wells Fargo could lose more on mortgage repurchases: filing
(Reuters) - Wells Fargo & Co (WFC.N) said in a filing on Tuesday that it could lose $2.6 billion in addition to the reserves it has already set aside for investor requests to buy back soured mortgage loans, a 13 percent increase from three months ago.
The fourth-largest U.S. bank had previously said that it increased its reserves in the second quarter for so-called repurchase requests because of rising demands from Fannie Mae and Freddie Mac for losses tied to loans made from 2006 to 2008.
At the end of June, the bank had total reserves for repurchase requests of $1.8 billion, up from $1.4 billion at the end of March. The estimate of possible losses on top of those reserves is "reasonably possible" but does not represent a "probable loss," the bank said in its quarterly filing.
Wells Fargo is among a number of banks that said in second-quarter earnings conference calls that they were facing increased requests by Fannie and Freddie to buy back mortgages originally sold off during the housing boom. The two entities, which are in government conservatorship, have said they are trying to diminish losses for U.S. taxpayers.
Bank of America Corp (BAC.N) faces the biggest threat from repurchase requests because it bought subprime lending giant Countrywide Financial in 2008. The second-largest U.S. bank has set aside $15.9 billion in reserves for repurchase requests and has said it could lose an additional $5 billion.
Wells Fargo shares fell .12 percent to $33.96 on Tuesday.
(Reporting By Rick Rothacker in Charlotte, North Carolina; Editing by Bernard Orr; Editing by Leslie Gevirtz)
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