Justin Hilley, Housing Wire

Wells Fargo ($33.91 1.06%) strengthened its mortgage repurchase loss reserves in the second quarter after witnessing what it said are behavioral changes from the Fannie Mae and Freddie Mac and after holding conversations with the agencies late in the quarter.

Wells Fargo added $239 million worth of provisions to its mortgage repurchase loss reserve in the second quarter, raising its reserve total to $669 million — 56% more than its first-quarter provision of $430 million. “We believe the additional reserve is appropriate to cover losses associated with these higher expected demands,” Wells Fargo Chief Financial Officer Tim Sloan said on a conference call Friday.

A year ago, mortgage repurchase liability reserves sat at $242 million.

The nation’s largest mortgage lender reported that losses from repurchases expanded $37 million to $349 million in the second quarter from the first. That left its ending balance of reserves for buybacks at $1.76 billion on June 30.

JPMorgan Chase ($36.07 2.03%), on the other hand, narrowed losses in the second quarter to roughly $10 million from buying back faulty mortgages from investors. The bank lowered its expected future liability for repurchases $216 million to less than $3.3 billion as of March 31.

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