Noski attempted to put the large figures in context on Tuesday, pointing out that the current Bank of America franchise - including Countrywide Financial - sold about $1.2 trillion worth of loans to the GSEs from 2004 to 2008. Through September, Bank of America has agreed to buy back just $11.4 billion, resulting in a $2.5 billion loss. However, new claims have piled up in recent quarters and the government
appears to be getting frustrated with banks' refusal to buy back mortgage debt. "One of the drivers of our provision this quarter is an expectation that our repurchase rate with the GSEs will increase," said Noski. He noted that longstanding experience with the GSEs and sorting through $18 billion in requests to-date has helped Bank of America estimate future exposure to GSE buyback demands. Perhaps less certain is BofA's exposure to the monoline and private-investor demands. Roughly $160 billion of mortgage debt - whole and securitized, first-lien and second-lien - had been backed by monoline insurers from 2004 to 2008. Insurers have requested that Bank of America buy back $4.8 billion worth of debt, $550 million of which was approved and $1.5 billion of which is still in review. The other "rep & warranty" claims have been rejected. Two of the largest monoline insurers, MBIA ( MBI) and Ambac ( ABK), are suing Bank of America over thousands of claims, saying the vast majority of mortgages purchased didn't adhere to purported underwriting guidelines. Noski said the litigation has "further constrains a normal business relationship" and has limited communication between the parties. "Without this engagement, we believe it is not possible at at this time to reasonably estimate future repurchase experience and therefore the liability that may exist in connection with these securitizations," said Noski. As far as private investors go, Bank of America sold about $750 billion in mortgage debt to such entities, received $3.9 billion in buyback requests and taken $2.9 billion worth of loans back. Most of the requests have come from whole-loan investors. It's been difficult for the array of counterparties to private-label securitizations to all get on the same page, much less prove that there's a reason to buy back the debt. Noski hinted that the few such claims Bank of America has received have been haphazard and unsustainable. He noted that a judge dismissed one case because the plaintiffs didn't obtain the minimum necessary percentage of bond holders' voting rights to take action. Another group of eight investors have contacted Bank of America over 115 deals, but Noski said management has "a number of questions about its content including whether these investors actually have standing to bring these claims."