So how much has the foreclosure fiasco cost the top banks so far?

There are many ways that bad mortgages and the fallout have generated costs, and Bloomberg has done us a favor by tallying them up and concluding that the top five have so far lost $65.7 billion. Bank of America has lost $39.1 billion since the start of 2007, JP Morgan Chase  has lost $16.3 billion, Wells Fargo has lost $5.09 billion, Ally lost $3.28 billion and Citigroup lost just $1.9 billion.

The tally comprises costs from "provisions and expenses attributable to repurchases, foreclosure errors and abuses; payments to reimburse investors for lost value on faulty mortgages, legal settlements and litigation expenses; writedowns of assets, such as mortgage servicing rights, when the company attributed the loss in value to problems in mortgage underwriting or foreclosures; and the costs of remedies."

These figures may of course go higher, depending on the outcomes of various legal proceedings. For example, the Federal Housing Finance Agency's lawsuit against 17 firms cites possible defects in $196 billion of mortgage securities bought by the top two GSEs. There are lots of other suits out there. So the issue is what kind of reserving action will be forthcoming.

We've seen some impressive moves to release more reserves set aside for credit losses. But those releases maybe more than offset by rising legal cost reserves. Something to look for in the third quarter numbers

For more:
- here's the article

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