Update on Mortgage Buybacks: Banks May Have to Pay $106 Billion

By Kyle Chezum Updated on 11/29/2010

11/29/2010

Paul Miller of FBR Capital Markets, an industry analyst, estimates that banks such as J.P. Morgan Chase and Bank of America may end up shelling out up to $106 billion to pay for mortgage buybacks demanded by investment firms.  The number could come in as low as $54 billion, but Miller estimates that it will likely be higher.

Fannie Mae and Freddie Mac are leading the charge to force banks into submission, but private investors are also making buyback claims.  “Ultimately, we do not believe that losses will be as severe as many investors expect, and repurchase losses should be manageable even in our worst-case scenario,” Miller wrote.  Still, $106 billion is a lot for the banking industry to suffer at this point.

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