Wachovia Corp. said it is hoping to refinance a "significant portion" of its $122 billion portfolio of option adjustable-rate mortgages into conforming loans and loans insured by the Federal Housing Administration.

"We're actively engaged in soliciting a subset of [the] portfolio for the FHA refinance so as to effect a full risk transfer" to the government, Wachovia's chief executive, Robert Steel, said in an investor presentation Tuesday.

The refinance effort is "basically the real effort of the next 30 days," he said. "We're optimistic this will be a significant source of liquidity for a substantial … portion of the portfolio."

During the presentation, the CEO was asked whether the company expects to take losses on the FHA refinancings, since under the foreclosure rescue program created by the housing law enacted in July, holders of the existing mortgages must write their loans down to 85% of home values. Mr. Steel replied: "My hunch, although it's not informed, would be that in some cases the answer will be no, we would not, and in others we might choose to take the loss as part of the strategy. We'd consider the risk and returns."

He stood by the company's forecast that the portfolio, a legacy of the Charlotte company's 2006 purchase of Golden West Financial Corp., would suffer cumulative losses of 12%, or $14.6 billion. The $812.4 billion-asset Wachovia is managing the loans separately from the rest of its mortgage business and is treating them "as if we were a distressed investment manager and [considering] what would we do to extract the greatest value from this portfolio."

Mr. Steel, who left his post as a Treasury Department undersecretary to take the job at Wachovia on July 10, also touted a certificate of deposit campaign that has raised about $20 billion in funding since Wachovia launched it in June. As of Aug. 29 the company had $132.3 billion in consumer CD balances, with an average interest rate of 3.71%.

"The Western franchise has been leading the way" in the campaign "with California, Arizona, and Nevada generating 18% of the CD sales" with only "5% of current facilities," Mr. Steel said. "The 10 leading financial centers for deposit sales are consistently in California and almost all former" Golden West branches.

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