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  #1  
Old 04-24-2009, 08:20 AM
moh malekpour moh malekpour is offline
 
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Default Fannie Mae Creates Housing Mirage With Bum Loans:

http://www.bloomberg.com/apps/news?p...d=aColIYAe.RaU
Quote:
The big game of kick the can strikes at a deep-seated fear among many investors -- that banks and others faced with mounting housing losses are finding all manner of dubious ways to push a day of reckoning into the future.

If that’s the case, any improvement in the housing outlook might be a mirage obscuring even greater pressures building in the financial system. That would eventually counter better-than- expected first-quarter results from many banks.

Investor angst was made worse by the knowledge that the government is leaning hard on banks to modify troubled loans any way they can. Prevent foreclosures and worry about the consequences later is the mantra of the day.

In a perverse way, there is some logic to such maneuvers. Today’s troubled borrower may be in better shape if given time to wait for fractured markets to heal. Or, if today’s losses can’t be cured, the company facing them may be better able to deal with them at a less-stressed future date.

Big Gamble

Still, that’s a big gamble. Markets may not rebound as quickly as some investors expect, meaning time might not heal the wounds of borrowers who can’t meet payments today. That would leave them in even worse shape in the future. And by failing to deal with problems now, financial institutions may cause them to grow even bigger.

That’s sure to lead to nasty surprises down the road at individual banks. It also promises to lengthen the economic slump by preventing markets from finding natural bottoms that allow excess inventory to be sold.

Fannie’s program shows how potentially big losses are still festering within the system, unbeknownst to investors.

Known as the “HomeSaver Advance” plan, Fannie used the program to provide “foreclosure prevention assistance to distressed borrowers,” according to its 2008 securities filing.

The plan entailed Fannie funding loans to help distressed borrowers get current on their mortgage payments. Fannie said there were about 71,000 advances made in 2008 with an average value of $6,500.

Really Thinking

Fannie funded $462 million in such loans during 2008. The company tells investors in notes to its financial statements, though, what it thinks the loans are actually worth.

Based on market prices, Fannie said the loans had a value of just $8 million. That’s right, the loans, which are in many cases just months old, were worth 1.7 cents on the dollar.
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Old 04-24-2009, 08:51 AM
Randolph Kinney Randolph Kinney is offline
 
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Default

So now that there is reason to believe the accounting is suspect, and this goes past both GSE right into the heart of the financial system for the same reason, the public cannot trust or believe what the companies are reporting for financial performance.

I wonder how much force was used by the federal reserve and the Treasury to get Fannie to do what they are doing? Or was this an organic idea born within?
  #3  
Old 04-24-2009, 09:22 AM
Mary Tiernan Mary Tiernan is offline
 
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I thought I heard recently that they removed the requirement for mark to market valuations of assets, too.

If this is true, perhaps this is why some banks are showing stronger earnings?
  #4  
Old 04-24-2009, 09:37 AM
Lloyd Bonafide's Avatar
Lloyd Bonafide Lloyd Bonafide is offline
 
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Default

Quote:
Originally Posted by Mary Tiernan View Post
I thought I heard recently that they removed the requirement for mark to market valuations of assets, too.

If this is true, perhaps this is why some banks are showing stronger earnings?

You've got it - it's being called "mark to fantasy" now, though.

http://jessescrossroadscafe.blogspot...gs-report.html


Quote:
That smoke you feel being blown up your backside is nothing more than legalized accounting fraud being presented to the world in the form of Wells Fargo's 1st Qtr 2009 earnings release. As suspected, the infamous "record profits" preannounced 2 weeks ago by Wells Fargo are nothing more than a result of our Wall Street-financed Governmnet, including our President, forcing the FASB to change the way big banks account for toxic assets.
Quote:
Essentially, what WFC did was post $5.2 billion mark to fantasy gains, which were then added into its revenues, by reversing out previous charges expensed against their securities and loans held for sale. Without this gain, Wells Fargo loses a couple billion.
  #5  
Old 04-24-2009, 09:45 AM
David R. Stevenson's Avatar
David R. Stevenson David R. Stevenson is online now
 
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Default Mark to fantasy .

Much of ground level americans are quite willing to believe in mark to fantasy ......

.... it seems they will believe anything up to there next fill up at the gas station ......

.... its the majical wand belief that if enough people believe in something ... then it it is true and will transcend all known mathematical laws of the universe ....

... sort of the same kind of belief structure that allowed for the manufacturing of things called ..... default swaps ....

.... clown math ....
  #6  
Old 04-24-2009, 10:44 PM
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Workbox Workbox is offline
 
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Default

Some radio financial talk host are hinting that outside forces are pushing them to talk or promote the positive not the negative, but always end with "do your homework", "calculate your risk", "forced markets", "look out for the pitfalls" , etc. The big boys are really trying to force a steady market down our throats.

I get a laugh when the TV monkeys quote a stock "...better than expected...". Imaginge your spouse telling you that after sex.
  #7  
Old 04-24-2009, 11:13 PM
Terrel L. Shields's Avatar
Terrel L. Shields Terrel L. Shields is offline
 
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Quote:
Based on market prices, Fannie said the loans had a value of just $8 million. That’s right, the loans, which are in many cases just months old, were worth 1.7 cents on the dollar.
When you have Uncle Sam at your back...i bet you still make money.... Taxpayers are endless cash cows
__________________
At our age, you can't win, lose as slowly as possible.-R.Green
  #8  
Old 04-25-2009, 07:25 AM
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Greg Bell Greg Bell is offline
 
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Does it disturb anyone that appraisers are regulated by a Bankrupt corporation running on taxpayer dollars and loosing billions every month...anything wrong with this picture..
  #9  
Old 04-25-2009, 07:37 AM
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George Ellerman George Ellerman is offline
 
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Quote:
Originally Posted by Greg Bell View Post
Does it disturb anyone that appraisers are regulated by a Bankrupt corporation running on taxpayer dollars and loosing billions every month...anything wrong with this picture..
Kinda gives you that final Thelma and Louise feeling doesn't it ?

Geronimo!!!!!!!

012733a59897be14.jpg
  #10  
Old 04-25-2009, 07:54 AM
Greg Bell's Avatar
Greg Bell Greg Bell is offline
 
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Quote:
Originally Posted by George Ellerman View Post
Kinda gives you that final Thelma and Louise feeling doesn't it ?

Geronimo!!!!!!!

Attachment 17475
Great movie.I understand Thelma and Louise and have been looking into a purchase of a 1966 Thunderbird convertible and a trip to the grand canyon.. , what a ride..
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