MarketWatch: Banks have $10 billion mortgage problem

[marmar]

Loan repurchases are a $10 billion problem for big banks
Bank of America, J.P. Morgan and Wells Fargo vie with insurers, Fannie, Freddie

By Alistair Barr, MarketWatch


SAN FRANCISCO (MarketWatch) -- Just when they thought the worst of the mortgage crisis was behind them, billions of dollars in bad loans from the debacle may be rising from the dead and creeping back on the balance sheets of the largest U.S. banks.

Big lenders including Bank of America, J.P. Morgan Chase and Wells Fargo may be forced to repurchase troubled home loans from insurers and mortgage-finance giants like Freddie Mac that had agreed to take on risks associated with those assets during the real estate boom.

The banks are setting aside more reserves to cover the potential costs of such repurchases, cutting into earnings.

The trend is also pitting big lenders, insurers and mortgage-finance institutions against each other. That's a big change from the previous decade, when they worked together to fuel the housing boom by originating, insuring and securitizing mortgages in record amounts.

Christopher Whalen, managing director of research firm Institutional Risk Analytics, offered up a colorful metaphor for the unfolding situation. .............(more)

The complete piece is at: http://www.marketwatch.com/story/banks-10-billion-problem-loan-repurchases-2010-02-03

[aquart]

1. MAY be?

Come on. This isn't new news. Except for it not being on the news on account of the recession being over and all.

[Skink]

2. They pay bonuses and the Government gives them back the bad assets.

Might as well.

[Newsjock]

3. $10 billion? Is that all!?

That's practically petty cash anymore, alas. :(

[notesdev]

5. Yeah seriously

I'd say they have more like a $10 trillion dollar mortgage problem.

If it were just billion they could take that out of their bonuses and barely notice it.

[salin]

4. Good thing they are paying out tons in bonuses to weaken their balance sheets

SARCASM.