Home › Forums › Financial Markets/Economics › The plot thickens….Confirmed.. Fed Reserve Strongarmed BofA …
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October 1, 2009 at 11:14 AM #463433October 1, 2009 at 6:03 PM #462688
ucodegen
ParticipantCountrywide – even with the servicing business – had negative value.
Incorrect, use DCF and you’ll see it. Also remember that BofA paid the like of $0.02 for $1.00 worth of SFR mortgages.. so guess how low the foreclosure price of the property could go before BofA really loses money? A discount of 50% on the price of the property will not bother BofA that much, since their price that they paid was an 80% discount.
As far as MAC clauses are concerned, if you do proper due diligence in the first place – which wasn’t done in either case – then the MAC clause is irrelevant.
This is also incorrect. You are not necessarily allowed to see and audit the books of a company before you start acquisition. It is considered proprietary and inside info. There is a phase during acquisition that an independent auditor goes through the books after declaring the intent to acquire… a relative of mine used to do that type of auditing until about 4 years ago.
October 1, 2009 at 6:03 PM #462882ParticipantCountrywide – even with the servicing business – had negative value.
Incorrect, use DCF and you’ll see it. Also remember that BofA paid the like of $0.02 for $1.00 worth of SFR mortgages.. so guess how low the foreclosure price of the property could go before BofA really loses money? A discount of 50% on the price of the property will not bother BofA that much, since their price that they paid was an 80% discount.
As far as MAC clauses are concerned, if you do proper due diligence in the first place – which wasn’t done in either case – then the MAC clause is irrelevant.
This is also incorrect. You are not necessarily allowed to see and audit the books of a company before you start acquisition. It is considered proprietary and inside info. There is a phase during acquisition that an independent auditor goes through the books after declaring the intent to acquire… a relative of mine used to do that type of auditing until about 4 years ago.
October 1, 2009 at 6:03 PM #463226ParticipantCountrywide – even with the servicing business – had negative value.
Incorrect, use DCF and you’ll see it. Also remember that BofA paid the like of $0.02 for $1.00 worth of SFR mortgages.. so guess how low the foreclosure price of the property could go before BofA really loses money? A discount of 50% on the price of the property will not bother BofA that much, since their price that they paid was an 80% discount.
As far as MAC clauses are concerned, if you do proper due diligence in the first place – which wasn’t done in either case – then the MAC clause is irrelevant.
This is also incorrect. You are not necessarily allowed to see and audit the books of a company before you start acquisition. It is considered proprietary and inside info. There is a phase during acquisition that an independent auditor goes through the books after declaring the intent to acquire… a relative of mine used to do that type of auditing until about 4 years ago.
October 1, 2009 at 6:03 PM #463299ParticipantCountrywide – even with the servicing business – had negative value.
Incorrect, use DCF and you’ll see it. Also remember that BofA paid the like of $0.02 for $1.00 worth of SFR mortgages.. so guess how low the foreclosure price of the property could go before BofA really loses money? A discount of 50% on the price of the property will not bother BofA that much, since their price that they paid was an 80% discount.
As far as MAC clauses are concerned, if you do proper due diligence in the first place – which wasn’t done in either case – then the MAC clause is irrelevant.
This is also incorrect. You are not necessarily allowed to see and audit the books of a company before you start acquisition. It is considered proprietary and inside info. There is a phase during acquisition that an independent auditor goes through the books after declaring the intent to acquire… a relative of mine used to do that type of auditing until about 4 years ago.
October 1, 2009 at 6:03 PM #463503ParticipantCountrywide – even with the servicing business – had negative value.
Incorrect, use DCF and you’ll see it. Also remember that BofA paid the like of $0.02 for $1.00 worth of SFR mortgages.. so guess how low the foreclosure price of the property could go before BofA really loses money? A discount of 50% on the price of the property will not bother BofA that much, since their price that they paid was an 80% discount.
As far as MAC clauses are concerned, if you do proper due diligence in the first place – which wasn’t done in either case – then the MAC clause is irrelevant.
This is also incorrect. You are not necessarily allowed to see and audit the books of a company before you start acquisition. It is considered proprietary and inside info. There is a phase during acquisition that an independent auditor goes through the books after declaring the intent to acquire… a relative of mine used to do that type of auditing until about 4 years ago.
October 1, 2009 at 6:24 PM #462698ParticipantThe market is efficient in the long term, but inefficient in the short term. In times of great uncertainty, the market value of an investment will be much different than the actual value of the investment.
Bonds and MBS(s) were being severely undervalued because no-one knew where the toxic waste was and just how toxic it was. Countrywide didn’t have the most toxic junk. Wachovia does. They continued funding these until the last second.. Washington Mutual was not too far behind.
October 1, 2009 at 6:24 PM #462892ParticipantThe market is efficient in the long term, but inefficient in the short term. In times of great uncertainty, the market value of an investment will be much different than the actual value of the investment.
Bonds and MBS(s) were being severely undervalued because no-one knew where the toxic waste was and just how toxic it was. Countrywide didn’t have the most toxic junk. Wachovia does. They continued funding these until the last second.. Washington Mutual was not too far behind.
October 1, 2009 at 6:24 PM #463236ParticipantThe market is efficient in the long term, but inefficient in the short term. In times of great uncertainty, the market value of an investment will be much different than the actual value of the investment.
Bonds and MBS(s) were being severely undervalued because no-one knew where the toxic waste was and just how toxic it was. Countrywide didn’t have the most toxic junk. Wachovia does. They continued funding these until the last second.. Washington Mutual was not too far behind.
October 1, 2009 at 6:24 PM #463308ParticipantThe market is efficient in the long term, but inefficient in the short term. In times of great uncertainty, the market value of an investment will be much different than the actual value of the investment.
Bonds and MBS(s) were being severely undervalued because no-one knew where the toxic waste was and just how toxic it was. Countrywide didn’t have the most toxic junk. Wachovia does. They continued funding these until the last second.. Washington Mutual was not too far behind.
October 1, 2009 at 6:24 PM #463514ParticipantThe market is efficient in the long term, but inefficient in the short term. In times of great uncertainty, the market value of an investment will be much different than the actual value of the investment.
Bonds and MBS(s) were being severely undervalued because no-one knew where the toxic waste was and just how toxic it was. Countrywide didn’t have the most toxic junk. Wachovia does. They continued funding these until the last second.. Washington Mutual was not too far behind.
October 1, 2009 at 6:39 PM #462703patientrenter
Participant[quote=ucodegen]….remember that BofA paid the like of $0.02 for $1.00 worth of SFR mortgages.. so guess how low the foreclosure price of the property could go before BofA really loses money? A discount of 50% on the price of the property will not bother BofA that much, since their price that they paid was an 80% discount…..[/quote]
Well, I own BoA shares, and I know that the C’wide and Merrill purchases destroyed value. I was aghast when I first heard the announcement that BoA was buying C’wide.
Where did you get the $0.02 per $1 figure from? Is that for serviced mtges? If so, the revenue is just the servicing fees, not the amount of the loan plus interest, less loan losses. The problem with C’wide is the loans they own, not the servicing portfolio. Loan losses will be huge, and will wipe out the net capital BoA got when they bought them. (Yes, BoA actually paid for C’wide.)
October 1, 2009 at 6:39 PM #462897Participant[quote=ucodegen]….remember that BofA paid the like of $0.02 for $1.00 worth of SFR mortgages.. so guess how low the foreclosure price of the property could go before BofA really loses money? A discount of 50% on the price of the property will not bother BofA that much, since their price that they paid was an 80% discount…..[/quote]
Well, I own BoA shares, and I know that the C’wide and Merrill purchases destroyed value. I was aghast when I first heard the announcement that BoA was buying C’wide.
Where did you get the $0.02 per $1 figure from? Is that for serviced mtges? If so, the revenue is just the servicing fees, not the amount of the loan plus interest, less loan losses. The problem with C’wide is the loans they own, not the servicing portfolio. Loan losses will be huge, and will wipe out the net capital BoA got when they bought them. (Yes, BoA actually paid for C’wide.)
October 1, 2009 at 6:39 PM #463241Participant[quote=ucodegen]….remember that BofA paid the like of $0.02 for $1.00 worth of SFR mortgages.. so guess how low the foreclosure price of the property could go before BofA really loses money? A discount of 50% on the price of the property will not bother BofA that much, since their price that they paid was an 80% discount…..[/quote]
Well, I own BoA shares, and I know that the C’wide and Merrill purchases destroyed value. I was aghast when I first heard the announcement that BoA was buying C’wide.
Where did you get the $0.02 per $1 figure from? Is that for serviced mtges? If so, the revenue is just the servicing fees, not the amount of the loan plus interest, less loan losses. The problem with C’wide is the loans they own, not the servicing portfolio. Loan losses will be huge, and will wipe out the net capital BoA got when they bought them. (Yes, BoA actually paid for C’wide.)
October 1, 2009 at 6:39 PM #463313Participant[quote=ucodegen]….remember that BofA paid the like of $0.02 for $1.00 worth of SFR mortgages.. so guess how low the foreclosure price of the property could go before BofA really loses money? A discount of 50% on the price of the property will not bother BofA that much, since their price that they paid was an 80% discount…..[/quote]
Well, I own BoA shares, and I know that the C’wide and Merrill purchases destroyed value. I was aghast when I first heard the announcement that BoA was buying C’wide.
Where did you get the $0.02 per $1 figure from? Is that for serviced mtges? If so, the revenue is just the servicing fees, not the amount of the loan plus interest, less loan losses. The problem with C’wide is the loans they own, not the servicing portfolio. Loan losses will be huge, and will wipe out the net capital BoA got when they bought them. (Yes, BoA actually paid for C’wide.)
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