Wells Fargo & Co. (WFC) said after market close on Monday that it will record other-than-temporary impairment and take a non-cash charge to earnings for its investments in perpetual preferred securities issued by Fannie Mae (FNM) and Freddie Mac (FRE). HW reported earlier on Monday that the bank was among major preferred equity shareholders at both GSEs. In a filing with the Securities and Exchange Commission, Wells Fargo said that its "perpetual preferred investments in Fannie Mae and Freddie Mac are included in securities available for sale at a cost of $336 million and $144 million, respectively." The bank said its holdings in both GSEs are currently trading at 5 to 10 percent of par value. The bank holds no common equity positions in either GSE, it said in the filing. See the entire SEC filing. The write-down comes as the Federal Housing Finance Agency and U.S. Treasury moved over the weekend to prop up the ailing GSEs over capital adequacy concerns. Wells Fargo's Q2 earnings beat analyst expectations handily, but the bank avoided a good chunk of credit costs by reclassifying how it handles home equity portfolio charge-offs. Earlier in Q2, the bank extended its charge-off policy from 120 days to 180 days, in an effort to give troubled borrowers more time to reach a loan workout (or to protect earnings, take your pick). Wells has a substantial $84 billion portfolio of home equity loans — and half of those are located in hard hit states like California and Florida; of that total, it has carved out the worst $11 billion for liquidation, with rest remaining as part of its "core" home equity portfolio. Which means that Wells Fargo could get hit with a double whammy in Q3: its lost Fannie, Freddie interests as well as a delayed hit to its home equity portfolio. Disclosure: The author held no relevant positions when this story was published; indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.