Wells Fargo 2011 Annual Report Download - page 175
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The following table summarizes the changes in our liability for
mortgage loan repurchase losses. This liability is in “Accrued
expenses and other liabilities” in our consolidated financial
statements and the provision for repurchase losses reduces net
gains on mortgage loan origination/sales activities. Because the
level of mortgage loan repurchase losses depends upon economic
factors, investor demand strategies and other external
conditions that may change over the life of the underlying loans,
the level of the liability for mortgage loan repurchase losses is
difficult to estimate and requires considerable management
judgment. We maintain regular contact with the GSEs and other
significant investors to monitor and address their repurchase
demand practices and concerns. Because of the uncertainty in
the various estimates underlying the mortgage repurchase
liability, there is a range of losses in excess of the recorded
mortgage repurchase liability that are reasonably possible. The
estimate of the range of possible loss for representations and
warranties does not represent a probable loss, and is based on
currently available information, significant judgment, and a
number of assumptions that are subject to change. The high end
of this range of reasonably possible losses in excess of our
recorded liability was $2.1 billion at December 31, 2011, and was
determined based upon modifying the assumptions utilized in
our best estimate of probable loss to reflect what we believe to be
the high end of reasonably possible adverse assumptions.
Year ended December 31,
(in millions)
2011
2010
2009
Balance, beginning of year
$
1,289
1,033
589
Wachovia acquisition (1)
-
-
31
Provision for repurchase losses:
Loan sales
101
144
302
Change in estimate (2)
1,184
1,474
625
Total additions
1,285
1,618
958
Losses
(1,248)
(1,362)
(514)
Balance, end of year
$
1,326
1,289
1,033
(1) The 2009 amount is refinement to initial December 31, 2008, Wachovia
purchase accounting adjustments.
(2) Results from such factors as credit deterioration, changes in investor demand
and mortgage insurer practices, and changes in the financial stability of
correspondent lenders.
173