Wells Fargo mortgage buybacks could top $1.8 billion

CHARLOTTE, N.C. ― Wells Fargo & Co may have to buy back an additional $1.8 billion in toxic mortgages from outside investors on top of claims it already received, the fourth-largest U.S. bank by assets said in a securities filing on Friday.

The San Francisco-based company said its possible mortgage repurchase claims could exceed their established reserves under a worst-case estimate.

The lender becomes the latest large U.S. bank to project what its worst-case losses might be, if it were required to buy back billions in toxic mortgages.

Outside investors can require a bank to buy back loans if the original mortgage did not comply with guarantees it made about its quality ― known as representations and warranties ― when sold.

Wells Fargo’s repurchase claims have declined for four consecutive quarters, since the second quarter of 2010.

Second quarter 2011 claims were for roughly 10,000 loans whose original balances totaled $2.24 billion, down from $4.31 billion a year earlier.