Robert Lenzner at Forbes writes US Banks Reporting Phantom Income on $1.4 Trillion Delinquent Mortgages
The giant US banks have been bailed out again from huge potential writeoffs by loosey-goosey accounting accepted by the accounting profession and the regulators. They are allowed to accrue interest on non-performing mortgages ” until the actual foreclosure takes place, which on average takes about 16 months.
All the phantom interest that is not actually collected is booked as income until the actual act of foreclosure. As a result, many bank financial statements actually look much better than they actually are. At foreclosure all the phantom income comes off the books of the banks.
This means that Bank of America, Citigroup, JP Morgan and Wells Fargo, among hundreds of other smaller institutions, can report interest due them, but not paid, on an estimated $1.4 trillion of face value mortgages on the 7 million homes that are in the process of being foreclosed.
Ultimately, these banks face a potential loss of $1 trillion on nonperforming loans, suggests Madeleine Schnapp, director of macro-economic research at Trim-Tabs, an economic consulting firm 24.5% owned by Goldman Sachs.
Purposeful Delays to Inflate Earnings?Some people accuse banks of purposely delaying foreclosures for profit. The idea is complete silliness.
Might banks take advantage of ludicrous accounting rules during the foreclosure process? Sure, on that score we can expect them to. It is one of many reasons bank earnings estimates are not believable. In turn, S&P 500 earnings estimates are hugely overstated as well, with obvious implications on the already rich valuation of the US stock market.
However, taking advantage of accounting rules and purposeful delays are two different things. Delays cost banks money and they know it. It's even worse now that home prices are falling again.
Ironically, the same set of do-gooders who accuse banks of delaying foreclosures are doing everything they can to throw wrenches in the foreclosure process with "show me the note" and other delay tactics. They cheer every court case that delays foreclosures for any reason.
In contrast, I think the faster we work through foreclosures, the quicker housing bottoms.
States that force a workout process contribute to the delays, ultimately adding to bank losses, while not necessarily doing anything good for the "winner" of a loan modification. Most end up defaulting anyway. How can that possibly be a good thing, for either the lenders or those getting loan modifications?
I am all in favor of workouts if lenders feel it is in their best interest to do so. When lenders voluntarily agree to workouts, it is probably in everyone's best interest for the simple reason that a conscious decision based on facts and likely probabilities is better than mandated nonsense.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List How about this:
Milan (AsiaNews) – Italy’s financial police (Guardia italiana di Finanza) has seized US bonds worth US 134.5 billion from two Japanese nationals at Chiasso (40 km from Milan) on the border between Italy and Switzerland. They include 249 US Federal Reserve bonds worth US$ 500 million each, plus ten Kennedy bonds and other US government securities worth a billion dollar each. Italian authorities have not yet determined whether they are real or fake, but if they are real the attempt to take them into Switzerland would be the largest financial smuggling operation in history; if they are fake, the matter would be even more mind-boggling because the quality of the counterfeit work is such that the fake bonds are undistinguishable from the real ones.
What caught the policemen’s attention were the billion dollar securities. Such a large denomination is not available in regular financial and banking markets. Only states handle such amounts of money.
The question now is who could or would counterfeit or smuggle these non-negotiable bonds.
In order to stop money laundering Italian law sets a ceiling of 10,000 euros per person for importing or exporting money without declaring it. The penalty for violating the law is 40 per cent of the money seized.
If the certificates were real, for Italy it would be like hitting the jackpot. The fine alone would amount to US$ 38 billion, five times the estimated cost of rebuilding quake-devastated Abruzzi region. It would help Italy’s eliminate its public deficit.
If the certificates are fakes the two Japanese nationals could get a very lengthy jail sentence for fraud.
As soon as the seizure was made the US Embassy in Rome was informed. Italian and US secret services were called in to assist the Italian financial police.
Some important international financial newspapers had already reported on the existence of “funny money” circulating on parallel, i.e. unofficial, financial markets.
For AsiaNews a few points need considering:
1. When it comes to Italy the world press has tended to focus on Italian Prime Minister Berlusconi’s personal problems rather than on stories like the bonds smuggling affair which has been front page on Italian newspapers.
2. The fear of counterfeit bonds and securities has spread across Asia with the result that real securities are also considered with suspicion.
3. During the Second World War several countries at war printed and put in circulation perfectly counterfeit enemy money. It is also historically established that some central banks, like the Bank of Italy 65 years ago, issued the same securities twice (identical registered number and code). This way they could print more money with legal tender than they officially declared. The main difference though is that 65 years ago the world was involved in a bloody war, which is not the case today.
benchcraft company portland orThere's a free Google Mobile App that I found in the iPod/iPhone app store that I decided to give a try. On loading it for the first time, I immediately.
The most beautiful article I ever read on Arab News. Indeed Jeddawis are known for their hospitality. In 26th Jan 2011 floods, I have seen many people rescuing victims,they did whatever they could do, but police was busy in their jeeps ...
Given that some economists still debate the root causes of the Great Depression, little wonder that a multitude of competing stories still vies for affirmation as explanation for the financial crisis of 2008.
bench craft company reviews Robert Lenzner at Forbes writes US Banks Reporting Phantom Income on $1.4 Trillion Delinquent Mortgages
The giant US banks have been bailed out again from huge potential writeoffs by loosey-goosey accounting accepted by the accounting profession and the regulators. They are allowed to accrue interest on non-performing mortgages ” until the actual foreclosure takes place, which on average takes about 16 months.
All the phantom interest that is not actually collected is booked as income until the actual act of foreclosure. As a result, many bank financial statements actually look much better than they actually are. At foreclosure all the phantom income comes off the books of the banks.
This means that Bank of America, Citigroup, JP Morgan and Wells Fargo, among hundreds of other smaller institutions, can report interest due them, but not paid, on an estimated $1.4 trillion of face value mortgages on the 7 million homes that are in the process of being foreclosed.
Ultimately, these banks face a potential loss of $1 trillion on nonperforming loans, suggests Madeleine Schnapp, director of macro-economic research at Trim-Tabs, an economic consulting firm 24.5% owned by Goldman Sachs.
Purposeful Delays to Inflate Earnings?Some people accuse banks of purposely delaying foreclosures for profit. The idea is complete silliness.
Might banks take advantage of ludicrous accounting rules during the foreclosure process? Sure, on that score we can expect them to. It is one of many reasons bank earnings estimates are not believable. In turn, S&P 500 earnings estimates are hugely overstated as well, with obvious implications on the already rich valuation of the US stock market.
However, taking advantage of accounting rules and purposeful delays are two different things. Delays cost banks money and they know it. It's even worse now that home prices are falling again.
Ironically, the same set of do-gooders who accuse banks of delaying foreclosures are doing everything they can to throw wrenches in the foreclosure process with "show me the note" and other delay tactics. They cheer every court case that delays foreclosures for any reason.
In contrast, I think the faster we work through foreclosures, the quicker housing bottoms.
States that force a workout process contribute to the delays, ultimately adding to bank losses, while not necessarily doing anything good for the "winner" of a loan modification. Most end up defaulting anyway. How can that possibly be a good thing, for either the lenders or those getting loan modifications?
I am all in favor of workouts if lenders feel it is in their best interest to do so. When lenders voluntarily agree to workouts, it is probably in everyone's best interest for the simple reason that a conscious decision based on facts and likely probabilities is better than mandated nonsense.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List How about this:
Milan (AsiaNews) – Italy’s financial police (Guardia italiana di Finanza) has seized US bonds worth US 134.5 billion from two Japanese nationals at Chiasso (40 km from Milan) on the border between Italy and Switzerland. They include 249 US Federal Reserve bonds worth US$ 500 million each, plus ten Kennedy bonds and other US government securities worth a billion dollar each. Italian authorities have not yet determined whether they are real or fake, but if they are real the attempt to take them into Switzerland would be the largest financial smuggling operation in history; if they are fake, the matter would be even more mind-boggling because the quality of the counterfeit work is such that the fake bonds are undistinguishable from the real ones.
What caught the policemen’s attention were the billion dollar securities. Such a large denomination is not available in regular financial and banking markets. Only states handle such amounts of money.
The question now is who could or would counterfeit or smuggle these non-negotiable bonds.
In order to stop money laundering Italian law sets a ceiling of 10,000 euros per person for importing or exporting money without declaring it. The penalty for violating the law is 40 per cent of the money seized.
If the certificates were real, for Italy it would be like hitting the jackpot. The fine alone would amount to US$ 38 billion, five times the estimated cost of rebuilding quake-devastated Abruzzi region. It would help Italy’s eliminate its public deficit.
If the certificates are fakes the two Japanese nationals could get a very lengthy jail sentence for fraud.
As soon as the seizure was made the US Embassy in Rome was informed. Italian and US secret services were called in to assist the Italian financial police.
Some important international financial newspapers had already reported on the existence of “funny money” circulating on parallel, i.e. unofficial, financial markets.
For AsiaNews a few points need considering:
1. When it comes to Italy the world press has tended to focus on Italian Prime Minister Berlusconi’s personal problems rather than on stories like the bonds smuggling affair which has been front page on Italian newspapers.
2. The fear of counterfeit bonds and securities has spread across Asia with the result that real securities are also considered with suspicion.
3. During the Second World War several countries at war printed and put in circulation perfectly counterfeit enemy money. It is also historically established that some central banks, like the Bank of Italy 65 years ago, issued the same securities twice (identical registered number and code). This way they could print more money with legal tender than they officially declared. The main difference though is that 65 years ago the world was involved in a bloody war, which is not the case today.
bench craft company reviewsThere's a free Google Mobile App that I found in the iPod/iPhone app store that I decided to give a try. On loading it for the first time, I immediately.
The most beautiful article I ever read on Arab News. Indeed Jeddawis are known for their hospitality. In 26th Jan 2011 floods, I have seen many people rescuing victims,they did whatever they could do, but police was busy in their jeeps ...
Given that some economists still debate the root causes of the Great Depression, little wonder that a multitude of competing stories still vies for affirmation as explanation for the financial crisis of 2008.
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bench craft company reviews
benchcraft company scamThere's a free Google Mobile App that I found in the iPod/iPhone app store that I decided to give a try. On loading it for the first time, I immediately.
The most beautiful article I ever read on Arab News. Indeed Jeddawis are known for their hospitality. In 26th Jan 2011 floods, I have seen many people rescuing victims,they did whatever they could do, but police was busy in their jeeps ...
Given that some economists still debate the root causes of the Great Depression, little wonder that a multitude of competing stories still vies for affirmation as explanation for the financial crisis of 2008.
benchcraft company portland orRobert Lenzner at Forbes writes US Banks Reporting Phantom Income on $1.4 Trillion Delinquent Mortgages
The giant US banks have been bailed out again from huge potential writeoffs by loosey-goosey accounting accepted by the accounting profession and the regulators. They are allowed to accrue interest on non-performing mortgages ” until the actual foreclosure takes place, which on average takes about 16 months.
All the phantom interest that is not actually collected is booked as income until the actual act of foreclosure. As a result, many bank financial statements actually look much better than they actually are. At foreclosure all the phantom income comes off the books of the banks.
This means that Bank of America, Citigroup, JP Morgan and Wells Fargo, among hundreds of other smaller institutions, can report interest due them, but not paid, on an estimated $1.4 trillion of face value mortgages on the 7 million homes that are in the process of being foreclosed.
Ultimately, these banks face a potential loss of $1 trillion on nonperforming loans, suggests Madeleine Schnapp, director of macro-economic research at Trim-Tabs, an economic consulting firm 24.5% owned by Goldman Sachs.
Purposeful Delays to Inflate Earnings?Some people accuse banks of purposely delaying foreclosures for profit. The idea is complete silliness.
Might banks take advantage of ludicrous accounting rules during the foreclosure process? Sure, on that score we can expect them to. It is one of many reasons bank earnings estimates are not believable. In turn, S&P 500 earnings estimates are hugely overstated as well, with obvious implications on the already rich valuation of the US stock market.
However, taking advantage of accounting rules and purposeful delays are two different things. Delays cost banks money and they know it. It's even worse now that home prices are falling again.
Ironically, the same set of do-gooders who accuse banks of delaying foreclosures are doing everything they can to throw wrenches in the foreclosure process with "show me the note" and other delay tactics. They cheer every court case that delays foreclosures for any reason.
In contrast, I think the faster we work through foreclosures, the quicker housing bottoms.
States that force a workout process contribute to the delays, ultimately adding to bank losses, while not necessarily doing anything good for the "winner" of a loan modification. Most end up defaulting anyway. How can that possibly be a good thing, for either the lenders or those getting loan modifications?
I am all in favor of workouts if lenders feel it is in their best interest to do so. When lenders voluntarily agree to workouts, it is probably in everyone's best interest for the simple reason that a conscious decision based on facts and likely probabilities is better than mandated nonsense.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List How about this:
Milan (AsiaNews) – Italy’s financial police (Guardia italiana di Finanza) has seized US bonds worth US 134.5 billion from two Japanese nationals at Chiasso (40 km from Milan) on the border between Italy and Switzerland. They include 249 US Federal Reserve bonds worth US$ 500 million each, plus ten Kennedy bonds and other US government securities worth a billion dollar each. Italian authorities have not yet determined whether they are real or fake, but if they are real the attempt to take them into Switzerland would be the largest financial smuggling operation in history; if they are fake, the matter would be even more mind-boggling because the quality of the counterfeit work is such that the fake bonds are undistinguishable from the real ones.
What caught the policemen’s attention were the billion dollar securities. Such a large denomination is not available in regular financial and banking markets. Only states handle such amounts of money.
The question now is who could or would counterfeit or smuggle these non-negotiable bonds.
In order to stop money laundering Italian law sets a ceiling of 10,000 euros per person for importing or exporting money without declaring it. The penalty for violating the law is 40 per cent of the money seized.
If the certificates were real, for Italy it would be like hitting the jackpot. The fine alone would amount to US$ 38 billion, five times the estimated cost of rebuilding quake-devastated Abruzzi region. It would help Italy’s eliminate its public deficit.
If the certificates are fakes the two Japanese nationals could get a very lengthy jail sentence for fraud.
As soon as the seizure was made the US Embassy in Rome was informed. Italian and US secret services were called in to assist the Italian financial police.
Some important international financial newspapers had already reported on the existence of “funny money” circulating on parallel, i.e. unofficial, financial markets.
For AsiaNews a few points need considering:
1. When it comes to Italy the world press has tended to focus on Italian Prime Minister Berlusconi’s personal problems rather than on stories like the bonds smuggling affair which has been front page on Italian newspapers.
2. The fear of counterfeit bonds and securities has spread across Asia with the result that real securities are also considered with suspicion.
3. During the Second World War several countries at war printed and put in circulation perfectly counterfeit enemy money. It is also historically established that some central banks, like the Bank of Italy 65 years ago, issued the same securities twice (identical registered number and code). This way they could print more money with legal tender than they officially declared. The main difference though is that 65 years ago the world was involved in a bloody war, which is not the case today.
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benchcraft company scamThere's a free Google Mobile App that I found in the iPod/iPhone app store that I decided to give a try. On loading it for the first time, I immediately.
The most beautiful article I ever read on Arab News. Indeed Jeddawis are known for their hospitality. In 26th Jan 2011 floods, I have seen many people rescuing victims,they did whatever they could do, but police was busy in their jeeps ...
Given that some economists still debate the root causes of the Great Depression, little wonder that a multitude of competing stories still vies for affirmation as explanation for the financial crisis of 2008.
bench craft company reviews
bench craft company reviewsThere's a free Google Mobile App that I found in the iPod/iPhone app store that I decided to give a try. On loading it for the first time, I immediately.
The most beautiful article I ever read on Arab News. Indeed Jeddawis are known for their hospitality. In 26th Jan 2011 floods, I have seen many people rescuing victims,they did whatever they could do, but police was busy in their jeeps ...
Given that some economists still debate the root causes of the Great Depression, little wonder that a multitude of competing stories still vies for affirmation as explanation for the financial crisis of 2008.
bench craft company reviewsThere's a free Google Mobile App that I found in the iPod/iPhone app store that I decided to give a try. On loading it for the first time, I immediately.
The most beautiful article I ever read on Arab News. Indeed Jeddawis are known for their hospitality. In 26th Jan 2011 floods, I have seen many people rescuing victims,they did whatever they could do, but police was busy in their jeeps ...
Given that some economists still debate the root causes of the Great Depression, little wonder that a multitude of competing stories still vies for affirmation as explanation for the financial crisis of 2008.
benchcraft company portland orThere's a free Google Mobile App that I found in the iPod/iPhone app store that I decided to give a try. On loading it for the first time, I immediately.
The most beautiful article I ever read on Arab News. Indeed Jeddawis are known for their hospitality. In 26th Jan 2011 floods, I have seen many people rescuing victims,they did whatever they could do, but police was busy in their jeeps ...
Given that some economists still debate the root causes of the Great Depression, little wonder that a multitude of competing stories still vies for affirmation as explanation for the financial crisis of 2008.
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The most beautiful article I ever read on Arab News. Indeed Jeddawis are known for their hospitality. In 26th Jan 2011 floods, I have seen many people rescuing victims,they did whatever they could do, but police was busy in their jeeps ...
Given that some economists still debate the root causes of the Great Depression, little wonder that a multitude of competing stories still vies for affirmation as explanation for the financial crisis of 2008.
benchcraft company portland or Almost everyone gets into financial trouble at some point in life. The reasons can be many, but when it comes to your mortgage payment, we learned that lenders do not care about the reasons - the ONLY organization that cared about our situation was the one that GUARANTEED our loan: The United States Veterans Administration. Yes, it's true. In fact, there are numerous foreclosure prevention options available through The Federal Housing Administration (FHA) and The Veterans Administration (VA) guaranteed home loan programs that were not offered through our lender until the VA intervened in the loss mitigation process. We saved our home from foreclosure with help from the VA office. Below is our story and resource information that will hopefully save you money in the end.
START WITH THE PEOPLE WHO REALLY CARE
Millions of homeowners have loans that are guaranteed by FHA or VA. FHA became part of the Department of Housing and Urban Development (HUD) in 1965. If you are not sure whether you have a guaranteed loan program, check the folder you received from your title company when you purchased your home or ask a realtor to look at the papers. Even if your mortgage is not guaranteed, HUD, FHA, and VA resources have housing counseling agencies, legitimate refinancing agencies who do not engage in unlawful predatory lending practices, debt relief scams, and information about consumer rights for lending. You may even be eligible for relief from natural disasters or if you are or your spouse is active duty military.
In addition to contacting your mortgage lender, please contact a HUD Counselor or the FHA or the VA as soon as you know you are in trouble. Don't wait until the bank contacts them with threats of foreclosure - you might save the $4000 we were charged in extra interest and penalties while waiting for our bank to help.
CRY ME A RIVER
Here is my experience with loss mitigation - in the end, I realized all the bank cared about was the extra money they could make off me while trying to settle. I hope the resources provided in this article will save you from paying thousands of dollars of extra interest and penalties while trying to catch up on payments.
In our case, we had a business that got in trouble when a supplier went bankrupt. We tried for two years to save it - we borrowed money from relatives, we got small bank loans, and we wrote all our creditors to ask for temporary relief. My husband found a job to help cover our personal expenses and keep from going under while I continued to work at the business. It was the American Dream gone bad! We had no legal recourse against the supplier while the bankruptcy courts were sorting out their reorganization. What we did have was legal responsibility to maintain regulatory requirements and maintenance of THEIR equipment located on our property. After three years, their bankruptcy was still in the courts, our bank accounts were sucked dry, we borrowed all we could, and we were in trouble!
IF YOU WASTE YOUR TIME, THEY WILL WASTE YOUR MONEY
I began writing my home mortgage company 6 months prior to missing any payments. I explained the financial difficulties we were having and pleaded for reduced interest rates, interest-only payments, refinancing, an equity loan, or any option that would help us from losing our home until we could get back on our feet. After three months of no response, we decided to sell our house and rent to help get out from under all the expenses of home maintenance, insurance, and high utility bills. I wrote again explaining that we were selling our home and asked for help until we could sell.
Here are some obstacles we faced with the very large national bank that bought our mortgage note (they were not the original lender):
·
Nobody responded to my phone calls, emails, or certified letters until we missed 3 mortgage payments - but they continued to add hundreds of dollars of interest and penalties each month.
·
When they did call us - we asked where to send a partial payment that we had saved. We were told that it was against the bank policy to accept partial payments - but they continued to add penalties and extra interest on the unpaid balance.
·
The loss mitigation representative wanted us to short sell our house - they would send an appraiser right over. She said this would stop foreclosure. Good for the bank - bad for us: if we short sold for less than we owed, we would owe the difference to the VA and I would lose any further VA home loan benefit for defaulting. This is a very risky option for the homeowner - if your lender suggests this, please do some research or get legal assistance to determine if this is best for you. It may sound great, but can still leave you with a high debt and a bad credit report.
·
We asked for a repayment plan to catch up on payments. They said they would mail one out - after two weeks, I never received it. I left repeated messages to the loan mitigation specialist to inquire about the plan and I wrote another certified letter. She never responded. This went on for another month - and they continued to add hundreds of dollars of interest and penalties to the balance of the loan.
·
The lender reported us late to all the credit reporting agencies after 30 days, 60 days, and 90 days, despite our communications explaining our situation and our intention to get current.
After months of trying to resolve this with the loss mitigation department of the bank, we received a phone call from a VA officer who said our lender reported us as delinquent and the bank was getting ready to foreclose! I spent almost an hour explaining everything I had done to try to save the house from foreclosure. He very politely replied that they have several more options available to save the loan and they would contact the bank after we decided on an option that was good for us. Within two days, I had an loan repayment agreement letter from our bank with the terms that the VA presented.
We were able to sell our home and our businesses and move on. While the lesson was costly, we learned from it and want to encourage everyone else to seek help from the VA, the FHA, or HUD early in your loss mitigation process.
big seminar 14There's a free Google Mobile App that I found in the iPod/iPhone app store that I decided to give a try. On loading it for the first time, I immediately.
The most beautiful article I ever read on Arab News. Indeed Jeddawis are known for their hospitality. In 26th Jan 2011 floods, I have seen many people rescuing victims,they did whatever they could do, but police was busy in their jeeps ...
Given that some economists still debate the root causes of the Great Depression, little wonder that a multitude of competing stories still vies for affirmation as explanation for the financial crisis of 2008.
big seminar 14There's a free Google Mobile App that I found in the iPod/iPhone app store that I decided to give a try. On loading it for the first time, I immediately.
The most beautiful article I ever read on Arab News. Indeed Jeddawis are known for their hospitality. In 26th Jan 2011 floods, I have seen many people rescuing victims,they did whatever they could do, but police was busy in their jeeps ...
Given that some economists still debate the root causes of the Great Depression, little wonder that a multitude of competing stories still vies for affirmation as explanation for the financial crisis of 2008.
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