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

To: Spekulatius who wrote (44666)	9/28/2011 11:58:31 PM
From: Jurgis Bekepuris	Read Replies (1) \| Respond to of 78673

So you think C would be best bank investment?

To: Spekulatius who wrote (44666)	9/29/2011 3:19:27 PM
From: E_K_S	Read Replies (2) \| Respond to of 78673

RE: BAC & non performing loans It looks like those loans that were/are modified have a 20% of going sour again. How does the bank quantify (ie value) a non performing asset when setting amounts in reserve. Is the value based on a percentage of the "original" appraised value? Remember those appraisals are 40%-50% over stated if marked to market. I think their actual "loss" number is higher, perhaps $10B more than they have set aside in reserves. Add that to all the potential loans that could be "Put" back to the bank from Fannie & Freddie. On the positive, a possible entry point for a value purchase is getting close. BAC does have an incredible franchise "if it is not broken up". The FCF they generate is huge especially with these new monthly debit card fees announced today. If the stocks breaks into the $5's, I may begin to nibble. It's the surprise dilution announcement that is the big land mine to avoid. Also, their Merrill Lynch Broker Unit is worth a lot especially if it is spun off. There is always the possibility that their Countrywide subsidiary could go into bankruptcy to avoid all the potential liability from the fraudulent loans sold to Fannie and Freddie. That would be another $3-$5 Billion write down for shareholders to absorb. 1 in 5 Modified Loans Default Again: Comptroller By John Gittelsohn - Sep 29, 2011 bloomberg.com From the article:"...One in five homeowners whose mortgages were modified under a program aimed at reducing foreclosures defaulted again within a year after their payments were cut, the U.S. Comptroller of the Currency reported today. Twenty percent of modified loans were at least 90 days delinquent within a year in the second quarter, according to the Comptroller’s “Mortgage Metrics Report.” Delinquencies for loans 30 to 59 days late increased 0.4 percentage points to 3 percent from the previous quarter...". Bank of America to charge $5 for debit card use Date: Thursday, September 29, 2011 bizjournals.com From the article:"...BofA will charge the $5 monthly fee to debit card holders that use the card to make purchases. It won’t be charged if the card is used only at ATMs or not used at all, the WSJ reports...." EKS