patrick.net

Nomograph says

Thomas Wong is wrong about most things. He once even tried to convince people he is German.

Now thats even more funnier... and your not a person but some measuring equipment... nice!

tatupu70 says

Of course companies have reserves against bad debt. My point was that your 90 day rule doesn’t exist.

And the reserve is offset against the PL on balances past 90s days.
So it already is in sense 'written off' the books and has hit the earnings.

To crow about banks holding back on foreclosures, cause they dont want to take a hit to earnings is bogus.

If its not 90s days, than how many 180 240, 365 ?

thomas.wong1986 says

And the reserve is offset against the PL on balances past 90s days.
So it already is in sense ‘written off’ the books and has hit the earnings.
To crow about banks holding back on foreclosures, cause they dont want to take a hit to earnings is bogus.
If its not 90s days, than how many 180 240, 365 ?

Thomas--

Reserves are offset against possible bad debts. Each company has the freedom to decide which debts it considers "bad". The days past due is part of that determination, no doubt, but there is no hard and fast rule that states after so many days, you must reserve x amount against it.

Further, I don't think you understand that a bad mortgage loan differs somewhat from a bad debt. A bad debt has a definite value. Someone owes x amount of money. A bad mortgage is backed with an asset. The value of that asset is not known precisely so the bank has some freedom to set the valuation. Therefore, even when the bank accepts that the loan is bad, it can still set the valuation to the purchase price of the last loan--no matter how fictitious it might be...

Tenouncetrout says

Ken Lay died on the Cross so the Sub prime fiasco could happen.

$500M was Enrons errors and fraud... Fannie Mae who had regulators screaming bloody murder at Congress with FM officiers making millions in bonus walked away without a scratch.

But all you heard was Enron. Chicken feed compared to the $90 BILLION in hidden losses and fraud not to mention Tax Payers keeping the entites afloat today.

tatupu70 says

Reserves are offset against possible bad debts. Each company has the freedom to decide which debts it considers “bad”. The days past due is part of that determination, no doubt, but there is no hard and fast rule that states after so many days, you must reserve x amount against it

OH yes there is!

thomas.wong1986 says

tatupu70 says

Reserves are offset against possible bad debts. Each company has the freedom to decide which debts it considers “bad”. The days past due is part of that determination, no doubt, but there is no hard and fast rule that states after so many days, you must reserve x amount against it

OH yes there is!

Please share then.

tatupu70 says

Please share then.

Go to the Banks 10K and look it up... learn something instead of being a Real Estate shill.

So the house that my friends still "Own" because the bank hasn't forclosed in over two years of no payment is.

recorded as a loss each year by the bank?

or

It just pretends the house never existed? I may not have this even remotly correct but wouldn't this be better if you're cooking the books anyways,...just make it disappear,..right? what debt ?? anyone?

I may have this ass backwards?

thomas.wong1986 says

tatupu70 says

Please share then.

Go to the Banks 10K and look it up… learn something instead of being a Real Estate shill.

Thomas--

If there were a rule detailing exactly what % of bad loans or bad debts must be reserved against or how many days old they must be before reserving, it wouldn't be found in a company's 10-K. It would be in GAAP.

I would think you would know that...

@Katy Perry

>So the house that my friends still “Own” because the bank hasn’t forclosed in over two years of no payment is.

Someone correct me if I am wrong, but I think the banks hold the asset listed as nonperforming, but valued on the books at bubble prices, Not "mark to market".

MarkInSF says

You don’t get it. There is no such thing as a “bank”.
There are people that work as executives at banks that are working in their own best interest And that means keeping the stock valuation of the companies they work for as high as possible long enough to cash out their incentive stock grants. If it all crashes and burns after that, fine. Their interests are not in alignment with the “bank”.
This conflict has been recorded over, and over, and over, and over, and over, and over in history, and amazingly people still don’t get it. Even Mr. Greenspan was dumbstruck but finally got it.

I think this is a very profound point, and a very difficult one to deal with. Almost any incentive-driven compensation system can be gamed in some ways, but executive compensation really needs to include a long-term component, with clawbacks and such - but I don't know of any way to actually do this.

All the rules have changed in the last couple of months. Lending banks are now being held accountable for the trap they set, borrowing money they didn't themselves have, while using loose and illegal practices in the process. The massive lawsuit against Wells Fargo / Wachovia, Indymac / OneWest bank, Citibank, Bank of America, JP Morgan Chase, GMAC..............can actually, not only put a stop to your foreclosure, but also pause your house payments with no loss to you............
https://sites.google.com/site/sueyourlendernow/home

robertoaribas says

In banking, the traditional logic was always, “the first loss is the best loss” ie move ahead, and dispose of non performing assets as best as possible.
today, banks seemed to have reversed this, and may pay some huge prices for it.

1. unpaid taxes add up.

2. non paying owners are unlikely to invest in the home; New roof? screw it let it leak…, dripping sink on the second floor? its not that bad, pool motor out? let it turn green as a duck pond… after all it will be the bank’s problem eventually.

3. theft from abandoned homes. You’d be shocked how many lender owned homes end up missing dishwashers, microwaves, and especially air conditioners.

4. an owner who has left, may rent the home to any kind of crack head renters, since they know they aren’t going to have to deal with it later anyways, the bank will.

Thats our neighborhood.