Why Anemic Income Statements Anticipated.The fallout from the foreclosure debacle will lie heavily on the banks, who will be forced to take back more and more faulty loans. A Federal Reserve official, Chris Whalen, was quoted as saying this could cost the biggest banks upwards of $50 billion to buy backs of problem loans.
Fannie Mae and Freddie Mac who guarantee 90% of the mortgage loans in the Unites States, will have no choice but to exercise their right to force loan originators to repurchase erroneous or fraudulent loans. Income statements for mortgage underwriters are not going to be a pretty sight for the next 2 quarters, particularly the 4th quarter . It will be interesting to who will push the limits of creative accounting in order to spread out the bad news over time, to avoid the possible ramifications of reporting larger than anticipated losses
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K. Reilly
Cohn-Reilly Report / News Flash
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