Bank of America forecloure alternative: famlies can rent the home
At first I was appalled when I finished reading this article. This action is something that I have considered “could happen” down the road when the collapse was in full swing. Now, after contemplating the idea of this happening, I think there could be some value with the right approach. “If”, they keep the rental rates stable and competitive. This is a much better option than having displaced homeowners hit their local existing rental markets, sucking up all the excess rental unit capacity thus making rents rise due too the increased demand.
Outside of any legal improprieties, this could be good if more rental units can come to market so rental rates can decline. For middle and lower income earners, this increases their discretionary cash. This is a good thing and results in a higher standard of living. This is good. I might add, the property owners that are now gasping because the have to service debt at a higher assumed rental rate. Well don’t worry. The banks should be compelled to re-finance these properties so we can lock-up the new rental rates. The problems you see is when relief is only given to one set of parties when there is always at least two parties (even if its yourself).
There is some substance in this proposal if it was expanded and given across the board. The logically at some point down the road maybe a “lease to own” program could be established to get home purchases to be made at the proper market price. There are areas where you allow the market to determine the outcome and then and only then, you create programs to give the assistance where it is needed to prevent having major breakdowns. Balance is the goal and difficult to find when you are dealing with various parties, I do not doubt this.
CNN - Bank of America has announced a program that will let homeowners facing foreclosures stay in their homes as renters. The “Mortgage to Lease” program will start as a limited pilot program for up to 1,000 homeowners in Arizona, Nevada and New York selected by the bank.
Popularity: 1%
Bank of America swings To profit amid heavy one-time items
This may be a turn-around story in the making. The faster they write-off the bad loans and give more disclosure on any contractual and legal liabilities, the better. It looks like they are getting serious about reforming the BofA bank and brand so lets hope so.
WSJ - Bank of America Corp. (BAC) closed out the turbulent 2011 year with better-than-expected revenue in the final three months, driving the bank to a fourth-quarter profit compared with the prior year’s loss.
Popularity: 1%
Is Bank of America preparing for a Chapter 11?
This Reuters story about Bank of America moving derivative contracts from their Merrill Lynch acquisition that is uninsured by the FDIC, to a main banking unit at B of A is only going to get more attention and scrutiny. I don’t see why this would be allowed. These are huge credit risks that Merrill agreed too or are relying on another party for that now are in a unit that would be made whole if it failed. Bank of America has been beat up pretty bad lately, their stock hovers around $6-7 dollars a share.
One of the loose ends for B of A is the “robo-signing” problem where many key mortgage & disclosure documents were not filed as prescribed. They are involved in lawsuit that revolve around this issue. Some analysts have even discussed that some of these documents would of halted some of these transactions because the disclosure information was damning.
The valuations on U.S. real estate in 2007 and before, it begs to ask how we got that much capital to come into the real estate market. It points in the direction that there was some serious rule-bending and likely law-breaking. What is true, is that the courts will sort this out in the end.
Reuters (Christopher Whalen):
Bank of America has managed to step into the kimchee several times over the past couple of months, an achievement that only warms the hearts of crisis communications professionals. First came the abortive settlement of $10 billion or so in put-back claims by some large investors. The State of New York and anyone else paying attention intervened. Settlement is now mostly muerto in political terms, although the big investors are still paying the big lawyers to soldier on in hope of forcing a settlement on all parties. Only in New York are such things possible.
Popularity: 1%
Merrill Lynch moving derivatives to BofA FDIC insured bank unit
Utter garbage. How can we sit back and let a bank move a massive load of liabilities to a banking unit that has deposits and is backed by the U.S. taxpayers via the FDIC? No surprise the Federal Reserve didn’t see a problem because they would not be first in line to make that banking unit whole again if something went wrong and trigger the CDS and whatever, other exotic contracts Merrill Lynch may have. We are just increasing the risk on this massive institution.
We need to quit using this line of global uncompetitiveness as a reason why our deposit institutions need to act like investment banks and take those type of risks. If it is that important to Bank of America or any other bank (not to single them out), they just need to make BofA Investments or whatever so they can run that operation off their own capital and investors so they can take that risk so try and increase profits. Our banks just need to be competitive in our home market, America.
If other countries allow their “safest” banks jump off a cliff, should we compete to let ours? Even William K. Black is mentioned in the article and he thinks we should have tight runs against this type of practice. Just so people know, I am not against banks or banking, personally I find them fascinating companies and I love their history, but what we have these days is nothing like the old days. When I say that, I mean the sense of duty and prudence is not their and that is a loss for the industry as a whole.
Bloomberg (Bob Ivry, Hugh Son and Christine Harper): Bank of America Corp. (BAC), hit by a credit downgrade last month, has moved derivatives from its Merrill Lynch unit to a subsidiary flush with insured deposits, according to people with direct knowledge of the situation.
Popularity: 1%
Wikileaks next document drop may target Bank of America
This could spell bad news for Bank of America. Confidence in the bank is waning over the “foreclosure-gate”, Merrill Lynch and all the toxic assets. If there is really damning evidence in those files that knocks the already tattered reputation, investors could pull their money from the company and force it into a very uncomfortable position. I am looking forward to getting my hands on this once it becomes available and do some of my own analysis and write some articles for you to digest.
Business Insider - Is the target of the Wikileaks “Big Bank” exposé going to be Bank of America?
As the Huffington Post points out, Julian Assange talked about BofA last year in an interview with Computer World, claiming “he had acquired a large cache of information from Bank of America.”
Popularity: 1%
Bank of America edges closer to tipping point?
Jonathan Weil wrote a solid piece discussing BofA and their current valuation, discussing some of the concerns people have with their balance-sheet. It would be unfortunate if BofA needs another bailout. We could see that snowball into more uncertainty in the financial sector and that may start a major correction in our markets. We are still not seeing a meaningful recovery and it is still fresh in many minds of the financial crisis we are going through but is not so pronounced.
There is still plenty of bad debt in the system that needs to either be paid off or defaulted on and many of our large commercial banks have this on their books and we are not sure to the extent of the problem because each day even prime loans are going bad because of the lack in employment to many people who have mortgages that are in these assets. Only time will tell.
Bloomberg - It was only last April that Bank of America Corp. was making fools out of the doomsayers who had called for its nationalization a year earlier. Taxpayers had gotten their bailout cash back. Investors who bought its shares at the bottom were making a killing. Government leaders lauded the company’s rescues, both of them, as a great success.
Popularity: 1%
Bombshell – Large investors want Bank of America to repurchase mortgage bonds
This mortgage mess is spreading and getting worst. With light being brought that many of these mortgage backed securities were packaged purposely with known bad loans and sold to many investors that included some of the biggest funds and wealth managers in the country.
In the letter sent to BofA, they mention that there was breeches of contract and warranties that were broken. Under those claims, they feel Bank of America has the obligation to re-purchase those bonds back that contains the mis-represented loans. Currently they are asking a repurchase of $47 billion dollars of bonds. The markets did not like this news and sent BofA shares down by almost 5% at the time of this writing.
This could set the precedent that could have many investors coming to other banks forcing them to repurchase bonds because of these mis-represented claims. We should take this as healthy, we have many bad debts in the system that need to be dealt with. This is the rule of law in effect and this should set the proper precedent for future generations. What we need to stand-up against and not allow to happen is any bailouts to the banks if they become insolvent due to any legal actions that force them to be under-capitalized. This is natural market forces and if some of these large banks need to be sold off and broken apart, then so be it.
No more corporate welfare or socialization of losses to the public. These banks took risks and only the smart and prudent should survive. That creates strength in our financial system. I have nothing against banks and I read history on banks and monetary history, it is very fascinating. But when I read about an older time period and see how we handle things now, we have lost the most important aspect in our banking world, trust and confidence. Yes there is pain when a bank fails but in the ashes we come through stronger and wiser. Lets try and continue that tradition.
The Street - Some high-profile mortgage-bond investors reportedly want their money back from Bank of America as pressure intensifies on large mortgage servicers to take back loans that are going bad.
Popularity: 1%