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To: Michael Burry who wrote (2735)	12/10/1997 7:04:00 PM
From: Michael Burry	Read Replies (2) \| Respond to of 78596

Just an observation: I've never lost so much money as when I began investing in companies I'd actually heard of. Mike

To: Michael Burry who wrote (2735)	12/10/1997 7:16:00 PM
From: Thomas Haegin	Respond to of 78596

Re: GNT accounting In the WSJ of 12/10 there were articles about accounting in these outfits and that they may change these aggressive methods which are non-cash and projections of future cash-flows only. Hope this helps a bit. Thomas

To: Michael Burry who wrote (2735)	12/10/1997 7:29:00 PM
From: Thomas Haegin	Read Replies (1) \| Respond to of 78596

Re: GNT - WSJ article of 12/10 repost -------Start--------- Dow Jones Newswires -- December 10, 1997 Finance Cos. Fall On Concerns Over Accounting Technique By Gaston F. Ceron NEW YORK (Dow Jones)--Shares of specialty finance companies fell Wednesday, and an analyst attributed the drop to concerns over the use of an accounting technique that some charge inflates earnings projections. Among finance houses, Green Tree Financial Corp. (GNT) closed down 2 1/8, or 7.3%, to 27. IMC Mortgage Co. (IMCC) fell 1 1/4, or 8.8%, to 13. Delta Financial Corp. (DFC) ended down 3/4, or 4.6%, to 15 9/16. First Alliance Corp. (FACO) dropped 7/8, or 4.3%, to finish at 19 1/2. Robert Napoli, an analyst at ABN AMRO Chicago Corp., said the stocks retreated due to investors questioning the use of gain-on-sale accounting, a method that allows lenders to immediately record expected future profit from loans they sell. He said Green Tree, IMC Mortgage, Delta Financial and First Alliance all use gain-on-sale. As reported, critics have said the technique gives management too much leeway when making assumptions about future interest rates, prepayments and defaults. Gain-on-sale accounting is said to artificially inflate a company's earnings prospects. Worries have mounted since Firstplus Financial Group Inc. (FPFG) said it may eliminate its use of gain-on-sale, casting doubt on the companies that continue to utilize it. Napoli said many lenders may stop using gain-on-sale, or at least use it with assumptions that are conservative enough to appease Wall Street. Green Tree, IMC Mortgage and Delta Financial officials did not immediately return phone calls seeking comment. Mark Mason, First Alliance's chief financial officer, said he feels comfortable with the assumptions his company makes when using gain-on-sale. First Alliance has been conservative when making its assumptions and has good cushion against performance not being what the company expected, he said. -Gaston F. Ceron; 201-938-5174 --------End---------

To: Michael Burry who wrote (2735)	12/11/1997 10:35:00 AM
From: bananawind	Read Replies (2) \| Respond to of 78596

Mike, re GNT's accounting. I'm not sure if this accounting is standard throughout the securitized lending business. However, based on the info in the WSJ article referred to by another poster, that looks to be the case. My info/understanding of the technique arose when researching the manufactured housing companies, some of whom also originate and securitize mortgages. In that group Oakwood Homes (OH) used the most conservative accounting at the time of my review. Others were quite agressive. It is an important distinction when comparing these companies since the more conservative treatment has either understated their earnings or created an asset (an annuity- like stream of future earnings) that is unrecorded. To the degree this is misunderstood or underappreciated by the street there is a good chance for mispricing the stocks. Disclosure-- I hold a sizeable position in Oakwood Homes. -JLF