since the "GSEs continue to pursue claims aggressively," FBR analyst Paul Miller on Friday raised his "estimate for industrywide losses for GSE and private-label reps and warrants claims to $130 billion from $110 billion" with detailed loss exposure estimates for four major servicers.
Miller said that Bank of America "is currently not paying claims from the GSEs per our sources," with the dispute centering on "whether the agencies can push back loans if the borrower remained current for two-plus years" before defaulting. While FBR believes "Bank of America has a strong argument that defaults after the initial 24-month period are generally more economically driven than affected by underwriting standards," Miller raised his total mortgage putback loss estimate from the company to $53.267 billion from $42 billion, adding that Bank of America "still has exposure to a number of private-label putbacks, including a pending $8.5 billion settlement for a portion of these loans."
The analyst estimates that Bank of America has already realized $31.704 billion in mortgage putback losses.
Miller estimates that JPMorgan Chase faces total mortgage repurchase loss exposure of $16.604 billion, having already realized $9.901 billion in losses.For Wells Fargo, Miller estimates total mortgage putback exposure of $$8.485 billion, with $3.436 billion in losses already realized. The analyst estimates that Citigroup is looking at potential mortgage repurchase exposure of $5.669 billion, having realized $4.235 billion in losses to date. For SunTrust, Miller estimates total putback exposure of $3.995 billion, with $2.421 billion having already been realized. Miller said that "ultimately, repurchase losses from private [residential mortgage backed securities] should be manageable, but recent suits could pose a negative headwind for the industry." -- Written by Philip van Doorn in Jupiter, Fla. >Contact by Email. Follow @PhilipvanDoorn
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV