Credit Suisse expects mortgage repurchase demands to remain strong throughout the remainder of the year, but believes the worst of it might be over when 2010 ends.

"The bulk of repurchases are from the 2006 and 2007 vintages which represent the highest loss content vintages and the GSEs should be through these vintages by the end of the year," writes Credit Suisse analyst Moshe Orenbuch in a new research note. "We would expect reps/warranty expense to moderate in 2011 given that the quality of industry originations strengthened during 2008."

Some analysts expect the GSEs to ask for upwards of $20 billion worth of repurchases this year, a record.

Banks have been setting aside reserves to handle the claims. "We would expect repurchase demands to continue to remain elevated in 2010 as defaults remain high and investor reviews continue, particularly among the GSEs," Orenbuch wrote.

Credit Suisse analysts  reported that requests by the GSEs for loan documentation are increasing and "severity appears to be worsening."

Large banks have $8.5 billion of repurchase reserves set aside. "Given that repurchase demands historically occur within 24 to 36 months of origination, we think demands will wane and severity lessen on 2008 and prospective vintages," Credit Suisse said.

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