Bank of America said it is receiving more buyback requests for older vintages of loans from Fannie Mae and plans to contest some of these claims regarding breaches of representations and warranties.
"They have thrown over the wall some vintages that are older than what we have seen," a BofA executive told investors and analysts during an earnings conference call Tuesday morning.
The bank reported that it received $3.8 billion of new buybacks requests in 3Q11 with 87% of these claims coming from Fannie Mae and Freddie Mac.
The claims include a 50% quarter-over-quarter increase in buybacks of 2005 vintage loans for $668 million, and a 20% increase in 2006 loans worth $925 million. New claims on pre-2005 loans fell 54% to $95 million.
But the bank says that unlike other seller/servicers, it has certain provisions in its contract with Fannie that should shield it from some of these claims.
"We will obviously process and push through those that we think were due, and fight those that we don't think are due based on the contract we have with them," the BofA executive said.
Most of BofA's buyback exposure is with Fannie not Freddie – chiefly because the loans were written by Countrywide Financial Corp. (CFC), which the bank bought three years ago. CFC was Fannie's biggest customer.
The difference in claims is also due to details in earlier settlements with the GSEs. In December 2010 BofA reached a $1.35 billion settlement with Freddie to settle all existing repurchase claims on CFC loans – but also future claims (with limited exceptions).
The bank inked a $1.52 billion settlement with Fannie involving past and present repurchase claims, but not future claims on Countrywide loans.