Wells Fargo Boosts Estimate of Extra Mortgage Buyback Cost to $2.1 Billion
Wells Fargo & Co. (WFC), the biggest U.S. home lender, boosted its estimate for the possible additional cost of buying back soured mortgages to as much as $2.1 billion.
The year-end estimate, contained in the San Francisco-based company’s annual report released today, was an increase from $1.9 billion in the third quarter. It represents the lender’s estimate of costs beyond what’s already in reserve and reflects what’s reasonably possible, rather than what’s probable, according to the document.
Investors who buy loans are entitled to ask for refunds or compensation if they find missing or inaccurate data on home values or the borrower’s income. Since the start of 2007, faulty lending and foreclosures have cost the five biggest U.S. home lenders more than $72 billion, with at least $5.98 billion attributed to Wells Fargo, according to data compiled by Bloomberg.
Wells Fargo shares rose 29 cents to $31.32 at 3:02 p.m. in New York, leaving them with a gain of 14 percent for 2012.
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