Wells Fargo & Co. is marketing two pools of troubled mortgage debt estimated at $1.3 billion, including mostly reperforming loans as well as nonperforming loans, according to two people with knowledge of the offering.

The offering on behalf of regional bank clients includes a pool of $630 million in unpaid principal balance, and another of $700 million. The sources asked not to be identified because the sale is private.

A spokeswoman for San Francisco-based Wells Fargo declined comment.

Sales of distressed U.S. property loans are rising as increased demand from hedge funds and private-equity firms push up prices and financial regulations force banks to pledge more capital for some assets they hold.

Government-backed mortgage giant Freddie Mac is adding to the supply, along with the Department of Housing and Urban Development, which has been auctioning loans to stem losses at the Federal Housing Administration.

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