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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: E_K_S who wrote (43398)	7/18/2011 4:03:16 PM
From: Spekulatius	Read Replies (2) \| Respond to of 78634

>>This company is still overvalued. Once they mark-to-market their foreclosed and shadow inventory loans adjust their loans refinanced after 2006 (especially those that did cash out financing), I figure tangible book is overstated by at least 60%. If you assume that these loans are overstated by $75K on average and they refinanced a total of 500K loans during this period (remember they also carry the CountryWide inventory) that's 37.5B in more write offs.<< How to you get this numbers? Most of these mortgages are not on BAC books any more. Some have deficient paperwork and can be put back (if indeed they went bad.), but the total amount is going to be a small fraction of the nominal value. The amount for putbacks/quarters has started to decrease for the Y2006 vintage (and of course for the vintages before). Y2007 is still rising and in Y2008 the mortgage market and Countrywide already collapsed so there are much less mortgages that can possible be bad. My thinking is that we are close to the peak in terms of mortgage putbacks and they are bound to fall, simply because the amount of mortgages that can still go bad is limited. A few other things - BAC has 5.3B$ in reserves against mortgage specifically claims and a total of 40B$ in reserves against losses that are not accounted for in equity. Also, you should not extrapolate findings from the worst bubble markets like Las Vegas or Phoenix to the entire pool of mortgages, imo.