http://www.bloomberg.com/news/2010-12-01/bank-of-america-s-sloppy-prime-mortgages-increase-pressure-for-buybacks.html Pending putback claims rose to $12.9 billion by Sept. 30 from $7.7 billion at the end of 2009, Bank of America said. Requests from Fannie Mae and Freddie Mac on loans created in 2007, at the peak of home prices, fueled much of the rise as those mortgages had higher delinquency rates, the bank said. Prime loans made up 28 percent of outstanding claims at Sept. 30, compared with 19 percent at the end of 2009, according to the Bank of America filing. Demands tied to loans that were deemed Alt-A, a designation in between prime and subprime, climbed 74 percent to $3.5 billion. Claims on home-equity loans rose 50 percent to $3.4 billion, while demands linked to “pay option” loans, in which borrowers can typically choose to make smaller initial payments than with fixed-rate mortgages, expanded 24 percent to $1.4 billion. In addition to the $4.4 billion already reserved, Bank of America has said it expects to set aside about $500 million each quarter to cover valid claims for the next few years. The industry probably will be fully reserved for putbacks by the end of 2012, JPMorgan Chase & Co. analysts led by Kian Abouhossein said in a Nov. 12 note. bis jetzt hat BAC 4 Millarden reserve für unerwartete Kosten und jede Qurtal kommt noch 500 millionen extra dazu. Countrywide’s Role More than half of the claims at Bank of America stem from mortgages created by Countrywide Financial Corp., acquired in 2008, said Jerry Dubrowski, a spokesman for the bank. The demands are mostly tied to loans made from 2004 to 2008, when the industry’s underwriting standards were more lax, he said. Pacific Investment Management Co., BlackRock Inc. and the Federal Reserve Bank of New York are seeking to force Bank of America to repurchase soured mortgages packaged into about $47 billion of bonds by Countrywide, people familiar with the matter have said. Bond insurers including MBIA Inc. have turned to lawsuits to seek recovery from lenders. Congressional Pressure In an August letter to President Barack Obama, Representative Barney Frank, the Massachusetts Democrat who leads the House Financial Services Committee, said the battle to get refunds “should be fought with every tool.” The industry’s losses from putbacks may total about $52 billion and will be borne mostly by Bank of America, JPMorgan Chase, Wells Fargo & Co. and Citigroup Inc., according to a Nov. 16 report from the Congressional Oversight Panel. The four banks have already booked $11.4 billion in costs and reserved a total of about $10 billion for coming expenses, the panel said. Systemic Risk Rising defaults and their potential to create more putbacks caught the attention of the Congressional Oversight Panel, which said in its report that Bank of America could suffer “disabling damage” to its capital if reserves are inadequate. Bank of America got $45 billion in U.S. bailouts during the financial crisis, which has since been repaid, |