The nation's big banks could see billions in increased costs if the Federal Housing Administration issues fines on insurance claims that result from soured mortgages, FBR Capital Markets said this week. Analysts at the investment management unit of FBR Inc. (FBRC) said the federal agency could seek indemnification -- or some type of financial penalty -- from lenders or servicers due to issues related to the underwriting or securitization of loans. In a phone interview with HousingWire, FBR Capital said FHA cannot outright deny claims, but they can seek some type of indemnity. Still, FBR Capital said early feedback suggests this scenario is rather unlikely. In a note to clients, Paul Miller of FBR Capital said fines tied to claims could lead to $13.5 billion in losses if servicer claims are denied and $11.5 billion if lenders' claims are not accepted. Such a move would impact all of the largest banks, including Wells Fargo (WFC), Bank of America (BAC), and JPMorgan Chase (JPM), FBR Capital said. Miller said the FHA "can go in and audit the claims. If they find a problem, they indemnify or fine them for inadequate processes." FHA functions as a type of insurance provider for certain mortgages. When a home goes into foreclosure, a lender submits a claim to get reimbursement for the value of the loan. "In the past, claim denials were unusual and policies were paid out almost automatically," Miller said. "Today, due to the state of the FHA's financial position and the possibility of further home price declines, the agency is motivated to take a closer look at the life of a loan before paying out claims to conserve cash." FBR Capital said such a scenario would be the equivalent of another shoe dropping on the housing economy, but for now it's a headline risk as opposed to an immediate capital concern. And Miller said several questions remain about whether the FHA will cover claims in its financial state. FBR said the risk lies with the servicers, and if the FHA is looking to assess a penalty on a claim, "the servicing process is an easy target." "Given the spike in FHA loans and market participants in recent years, we believe that, should the agency want to deny claims over procedural issues, it has ample opportunity," Miller said. "The servicing of FHA loans comes with highly technical regulatory mandated procedures, which include offering loan modifications and contacting the borrower within 45 days of delinquency. As a result, the agency's narrowly proscribed requirements make it more likely for the servicers, not the originators, to be tripped up," according to Miller. Write to Kerri Panchuk.