Bank of America, which earlier this month agreed to pay over $2.8 billion to Fannie Mae and Freddie Mac to settle claims about faulty mortgages, says it could spend another $10 billion to address outstanding claims. The company says the number is the “upper range” of its estimated housing bubble liabilities.

Bloomberg reports that BofA chief financial officer Charles Noski warned analysts about the possible $10 billion hit in a conference call:

Bank of America, the biggest U.S. bank by assets, has been battling accusations that mortgage investors were duped into buying loans issued with overstated property values and inflated borrowers’ incomes. Noski said the size of the provision was appropriate after Betsy Graseck, an analyst at Morgan Stanley, asked why the company didn’t set aside more for reserves, given the forecast range.

“This is a possible range, not a probable range,” Noski said. The future loss “could be as low as zero, theoretically, up to a high end of the range that we think could be $7 billion to $10 billion, based upon an array of different assumptions.”

Bank of America’s mortgage woes pushed the company into a loss for the fourth quarter of 2010, and addressing all claims will be “a protracted process which could take years to conclude,” according to Noski.

BofA Says $10 Billion Is Top of Forecast for More Buyback Costs [Bloomberg]

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