Bank of America reported that losses could be more than $6 billion over what the bank allocated to cover the repurchase of questionable home loans from Countrywide Financial, Bloomberg reported Oct. 17.
The new disclosure covered a range of potential losses for both private investors and claims from the government-sponsored enterprises. Losses on private claims alone were estimated to surpass accruals by $5 billion as of June 30, Bank of America noted.
“Based on discussions and where we are, we do have enough information to estimate a range of possible loss, not just for excluding the GSEs, but also including the GSEs,” Bruce Thompson, Bank of America’s chief financial officer, told Bloomberg. “We still have certain disagreements and haven’t resolved anything with Fannie Mae, but we do have information to provide what we have.”
Analysts had pressured Bank of America Chief Executive Officer Brian T. Moynihan for further disclosures on mortgage losses. The bank already has incurred more than $40 billion in costs connected to Countrywide, whose allegedly loose lending standards exacerbated the housing bubble.
Bank of America continues to disagree with Fannie Mae “about what constitutes a valid repurchase request, standards for rescission of repurchase requests and resolution processes,” Bloomberg reported.
Unresolved demands that the bank has been asked to repurchase increased 12 percent to $25.5 billion as of Sept. 30, due in large part to disputes with Fannie Mae and private investors, according to the bank, Bloomberg reported. The bank’s liability for representations and warranties was $16.3 billion as of Sept. 30, an increase of nearly $300 million from three months prior.
Previously, Bank of America claimed it could not project how much more money it would need in order to resolve disagreements with Fannie Mae because the GSEs’ demands, “remain inconsistent with our interpretation of our contractual obligations,” the bank stated, Bloomberg reported.