Bear Stearns Cos. said it expects to record a loss in its fiscal fourth quarter after taking a write-down it currently estimates at about $1.2 billion, after hedging and other offsetting gains.

The losses relate to the company’s heavy exposure to rapidly deteriorating residential mortgages, mortgage securities and collateralized debt obligations — a bond-like structure that holds mortgage — and other asset-backed securities.

“Our view on the mortgage market is bearish,” the chief financial officer of Bear Stearns, Samuel Molinaro, said at a conference in New York sponsored by Merrill Lynch. “Fundamentals continue to be very challenging and deteriorating.”

Mr. Molinaro said the $1.2 billion write-down it has taken to date in the fourth quarter potentially could get worse before the quarter ends in two weeks, although Bear Stearns believes its revaluation of its mortgage exposure reflects a “very conservative and aggressive” view of the market.

“We like to hope we have the worst of the mortgage marks behind us,” he said, “but people keep saying that every quarter.”

The fourth-quarter hit follows $700 million of write-downs on mortgages and leveraged buyout loans that Bear took in its third quarter, when its earnings plunged 61% and its return on equity, a key measure of shareholder return, declined to 5.3% from 13.7%. Mr. Molinaro said the market for selling loans that had seized up in the summer is opening up.

Bear Stearns has hedged enough of its portfolio that it now has a net short position in American subprime-mortgage loans and securities, Mr. Molinaro said. Bear Stearns has been an active lender of subprime loans made to borrowers with weak or no credit histories. Until this summer, when borrowers began heavily defaulting on their payments, it and several other Wall Street firms aggressively packaged those loans into securities for sales to investors.