Toxic debt continues to be a problem for many large banks. Mortgage loan defaults continue to rise, and mortgage lenders continue to work at their learning curve for loan modification as part of loss mitigation efforts.

Of course, it’s not just mortgage loan defaults that are sending big banks down. Losses on securities that the banks own are also rising. Since the beginning of 2007, it is estimated that losses to banks have been around $1.04 trillion. The Street reports on this large number, and what’s to come:

The $1.04 trillion loss figure is based on Reuters research and company annual reports and regulatory filings. International Monetary Fund estimates predict a surge to $2.5 trillion by the end of 2010, roughly split between losses on securities and loans, Reuters reports.

It appears that working losses through the system may take a little bit longer than anticipated. This is part of the expected slow economic recovery expected by the Federal Reserve.