Thursday, November 18, 2010

Bank of America headed for Trouble ... or are they???

Oct. 19, 2010 - Because of the Credit Card and Debit Card rules sponsored by Senator Durbin, Bank of America Corp. reported today a loss of $7.6 billion in the third quarter, as it took a writedown of more than $10 billion to prepare for new legislation that it says could virtually wipe out its debit card revenue. 
Bank of America currently makes about $2.9 billion annually in debit-card revenue, and says it expects to have to shed up to 80 percent, or about $2.3 billion. The $10.4 billion writedown is an accounting charge that reduces the goodwill value of the card services unit. BUT keep in mind, the Merchant's Payments Coalition pointed the finger at BofA stating that it was only trying to divert attention away from its foreclosure problems.  Interestingly, the mortgage unit lost $344 million this year, as opposed to the $1.6 BILLION that it lost last year. 

But what's putting some pressure here at home to not provide loan modifications in my opinion is the new capital requirements that banks are having to meet wherein they must maintain higher liquidity and capital levels under the Basel III international regulations.  So in order to meet those requirements. . . FORECLOSURE FORECLOSURE FORECOSURE!  Makes more capital available and increased liquidity!

But tell me something readers. . . .  Bloomberg Business Week writers Dawn Kopecki and Michael J. Moore writing on October 28, 2010 that it's going to be the worst decade for banks since the Great Depression....

YET:  On November 5, 2010, David Frank from Forex said that Bank of America's stocks are UP almost 2 percentage points since the Federal Reserve Board announced that the banks could increase dividend payments. 

HOW is it possible that Bank of America on one hand is posting devastating losses and on the brink of needing bail out funds from the federal government. . . yet there is a plan to pay dividends to its investors.  Someone had to lobby for that change with the Federal Reserve Board. 

If I were a betting lawyer, I would say that with the foreclosures that Bank of America have been snatching up in a race to beat congress from taking action to stop their foreclosure frenzy.  The properties they seize for themselves end up building a portfolio that when sold create liquidity for the bank.  But if you ever have attended a foreclosure auction, there are plenty of cash rich investors coming in and creating bidding wars.  They are not getting "DEALS" on these homes as much as you would expect.

My advice, if you have money, hold on to it.  The roller coaster ride is not over yet, we have not hit bottom.  From an investment point of view, Bank of America attracts more investors as it gets troubled assets off the books.  The losses posted in the mortgage department that I referenced in this article, reflect, that Bank of America took its losses up front.  Took it's tax deductions for the losses up front.  Now that they show fewer losses this year, sadly wealthy investors will flock to Bank of America seeing the dramatic drop in losses.

Like my good friend Melody always says. . . I'm just saying. . . .

Friday, November 12, 2010

HELP from FANNIE MAE coming to LOS ANGELES - Even if you have already been turned down!

Dear Readers: 

If you are struggling to get your loan modified and your loan is owned by Fannie Mae help for you may have arrived if you live in the Los Angeles Area.  Go to this link to find out if Fannie Mae has your loan: The Greater Los Angeles Mortgage Help Center will be offering foreclosure avoidance assistance in both English and Spanish.  The counseling is free!  Call (866) 442-8576 or email to schedule your appointment.

Even if you have already been turned down for a loan modification it is worth it to keep applying.  Because the economy is not recovering as quickly as investors were wanting, they are reconsidering their previous decision not to modify loans, and re-thinking their strategy.  So please don't give up!  However, if you have already received a Notice of Sale, don't wait to until the last minute.  Consult a bankruptcy attorney for free explore options to save your home in bankruptcy, or review your case to fully understand and know your rights.  We are here to help.