As long expected from all the non-growth-oriented gimmickry foisted on the economy by Obamanomics over the course of this calendar year, they got the third quarter GDP number they were shooting for: The economy grew in the third quarter for the……

….in a bottomless pit: If you thought home prices were bottoming out, you may be wrong. They’re expected to head a lot lower. Home values are predicted to drop in 342 out of 381 markets during the next year, according……

As a general rule, unsecured closed-end installment loans that become 120 days contractually past due and unsecured open-end (revolving) loans that become 180 days contractually past due are charged-off. Loans secured with non-real-estate collateral are written down to the estimated value of the collateral, less costs to sell, at 120 days past due. Real-estate secured loans (both open- and closed-end) are written down to the estimated value of the property, less costs to sell, no later than 180 days past due.

In certain Consumer Finance businesses in North America, secured real estate loans are written down to the estimated value of the property, less costs to sell, at the earlier of receipt of title or 12 months in foreclosure (which process must commence when payments are no later than 120 days contractually past due). ……

Allowance for Credit Losses

Allowance for Credit Losses represents management’s estimate of probable losses inherent in the portfolio. Attribution of the allowance is made for analytical purposes only, and the entire allowance is available to absorb probable credit losses inherent in the portfolio, including unfunded commitments. Additions to the allowance are made by means of the provision for credit losses. Credit losses are deducted from the allowance, and subsequent recoveries are added. Securities received in exchange for loan claims in debt restructurings are initially recorded at fair value, with any gain or loss reflected as a recovery or charge-off to the allowance, and are subsequently accounted for as securities available-for-sale.

……
Each portfolio of smaller-balance, homogeneous loans, including consumer mortgage, installment, revolving credit, and most other consumer loans, is collectively evaluated for impairment. The allowance for credit losses attributed to these loans is established via a process that estimates the probable losses inherent in the portfolio, based upon various statistical analyses. These include migration analysis, in which historical delinquency and credit loss experience is applied to the current aging of the portfolio, together with analyses that reflect current trends and conditions. Management also considers overall portfolio indicators including historical credit losses; delinquent, non-performing, and classified loans; trends in volumes and terms of loans; an evaluation of overall credit quality; the credit process, including lending policies and procedures; and economic, geographical, product, and other environmental factors.
…

The solution: Jewish Lightning

UltimateBob on October 21, 2009 at 5:19 PM

That should be a bannable comment.

And this IDIOT governor ONLY has employer incentives for manufacturing jobs. There are NO incentives for office or executive jobs created in this state.

karenhasfreedom on October 21, 2009 at 5:07 PM

Manufacturing jobs are unionized.

–If the banks have already marked those prices down, they have to recognize the losses when they did so. It’s just like you have to recognize losses on your inventory if you decide your net realizable value is less than your cost to produce the inventory.

Jimbo3 on October 21, 2009 at 4:16 PM

The banks don’t have to mark down the prices until the declare the mortgages in forfeiture and try to sell the house. So they continue pretending that mortgages that are 6 months or more in arrears are just “behind”.

Sitting on it gets you nothing. Banks have an interest in moving houses, not sitting on them.

lorien1973 on October 21, 2009 at 4:30 PM

If a bank sells a house for less than the mortgage is worth, the bank has to take a hit to it’s net worth. If the banks sold all the homes they are currently holding, half of all banks would immediatealy go into receivership. The choice is not between less profit and more profit. It’s between less profit and being taken over by the Feds.

Sweet!

We have yet to enter the depths of the “Great Depression V 2.0″

Gird yer loins boys.

Not really , you can have inflation in other goods that more than eats up the house price deflation.

the_nile on October 21, 2009 at 4:25 PM

Except that is not happening. Unadjusted CPI is down 1.3% y/o/y.

Jimbo3 on October 21, 2009 at 6:03 PM

Exactly. That’s what brought down the S&L industry. It wasn’t personal loans.

It was commercial.

My place in DC is barely worth more than I paid for it. This is an outrage.

Real Estate Intervention, anyone?

newton on October 21, 2009 at 5:34 PM

I was thinking more “Million Dollar Listings.” *haha

–You would normally only bother with a reverse stock split if you were a publicly traded company who was violating NYSE or NASDAQ listing standards because your stock price was too low.

(And it may be why the banks have decided they no longer have to dump all the foreclosed houses at once but can sell them in a more leisurely process).

Jimbo3 on October 21, 2009 at 5:33 PM

Interesting. And they are still full of beans.

Those properties are worthless.

All the FASB did was to effectively change the definition of “net realizable value” for mark to market purposes. It used to be whatever the bank could get if it dumped the loan on the market in a fire sale at the end of a quarter. It’s now the value of the loan “in an orderly sale and a more normal market.” That helps the banks considerably, but they still probably had/have to mark the loans down by 15-20%, instead of 40%. (And it may be why the banks have decided they no longer have to dump all the foreclosed houses at once but can sell them in a more leisurely process).

AnninCA, I think Lisa was making a joke

I hope so. You never know.

Then you know we have both false prophets and false profits!

singer on October 21, 2009 at 5:06 PM

Yes, I know. Our company was an inch away from the Feds taking over.

We put rouge on her, propped her up, sold off anything that wasn’t nailed down, and did a reverse stock swap 5-1 that is still probably taught in business schools.

The company was bought by Euro-trash, in short.

BUT…..from the employee standpoint, thank heavens. When you’re taken over by the Feds, there is an automatic end to any severance policies.

But, yes, we were holding a commercial property portfolio that was worth zero. Zero.

There wasn’t a single property that had value.

We have not even yet gotten to peek into the commercial properties in this depression.

Trust me, when we do? Every bank in the country will be, officially, broke.

But I like to remind people, this is still paper profits/losses. Don’t lose sight of that.