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Repurchase Losses at Biggest Banks Could Exceed $30 Billion

Repurchase Losses at Biggest Banks Could Exceed $30 Billion

Estimates based on BofA settlement

July 27, 2011

By staff


The country’s largest financial institutions could wind up eating more than $30 billion in repurchase expense on private-label mortgage-backed securities.

That assessment came Wednesday from Fitch Ratings.

According to the New York-based ratings agency, the largest banks have between $28.5 billion and $33.0 billion in potential lifetime losses from representations and warranty claims on non-agency MBS.

Fitch revised earlier estimates based on economics from the Bank of America Corp. settlement.

“Fitch believes that the recent uptick in litigation and settlement activity could potentially increase the incentive for the largest banks to settle private-label rep & warranty claims,” Fitch said.

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