Six Month + Delinquent Mortgages Amount To More Than Half Of Bank of America's Market Cap

Tyler Durden's picture


For those curious why many people are scratching their heads how the market cap of Bank of America has nearly doubled in the past year, here it is: "Bank of America Corp. has amassed $64 billion of mortgages that are at least six months delinquent and have yet to enter foreclosure, more than twice the amount held by its four largest competitors combined." $64 billion is more than half the market cap of Bank of America as of this moment. 

This number in the context of the BAC market cap:

In other words, by keeping tens of billions of mortgages off the market, Bank of America is hoping to limit the supply of houses in the market, creating an artificial shortage, in the process pushing up the prices of all other house higher, and only then to start dumping its pre-foreclosure inventory to a witless housing market.

And of course, this number excludes any of the tens of billions of mortgages that are in process of discharge and full write off, as well as the tens of billions in associated Reps and Warranties legal fees, which will go from accrued to paid out status as soon as Bank of America loses the MBIA litigation.

Also, recall "Foreclosure Stuffing" aka the most obvious housing subsidy in the past 4 years? There you have it. And there are those who wonder why we are experiencing merely the fourth dead cat bounce in the housing market.

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Wed, 12/19/2012 - 09:05 | 3078018 GetZeeGold
GetZeeGold's picture's on like donkey kong.

Wed, 12/19/2012 - 09:11 | 3078034 Harrison
Harrison's picture

Or the donkey show. Washington Mutual anyone?

Wed, 12/19/2012 - 09:32 | 3078098 trav777
trav777's picture

how can they call those mortgages worth $64B??  Fantasy marks?  They're probably worth closer to 0.

Wed, 12/19/2012 - 09:43 | 3078122 Pegasus Muse
Pegasus Muse's picture

No wonder BAC Censors banned ZH.  The truth hurts employee morale.

Wed, 12/19/2012 - 10:04 | 3078179 fourchan
fourchan's picture

just imagine how tall that bar would be if mark to market wasnt just a memory.

Wed, 12/19/2012 - 10:09 | 3078216 Life of Illusion
Wed, 12/19/2012 - 11:36 | 3078670 Manthong
Manthong's picture

How do you spell "Bank Fraud"?

Wed, 12/19/2012 - 13:08 | 3079103 strannick
strannick's picture

BAC Employees cant handle the truth

Wed, 12/19/2012 - 10:17 | 3078253 Chief KnocAHoma
Chief KnocAHoma's picture

Well fuck me running!!! I am in the process of trying to handle several short sales for owners with BOA mortgages. The asset managers insist the the properties are worth about 95% of top of the market value.

This ass whelp manager that lives in another area of the country says he has an appraisal that justifies this price. Of course I have recent sales that justify a valuation of around 60% of peak value which he choses to ignore.

I was never one of those bank hating, blame the fed and money changer types until I noticed that these slime balls refuse to accept any blame, refuse to grace the home owner any discount, and will ultimate win by foreclosing, collecting on their CDS, then reselling the home for the value I propose.

Oh and by the way, they are using our fucking money to stay afloat long enough to clear the last scraps from the table.

Bastards all!

Wed, 12/19/2012 - 11:59 | 3078782 Piranhanoia
Piranhanoia's picture

You are being too kind Chief.  Tell us what it is really going down.   Do any of the clients have proof from BoA that the loan exists?  wasn't paid off?,  couldn't be delinquent ever?

Wed, 12/19/2012 - 12:08 | 3078809 Almost Solvent
Almost Solvent's picture

these slime balls refuse to accept any blame, refuse to grace the home owner any discount, and will ultimate win by foreclosing, collecting on their CDS, then reselling the home for the value I propose.

Not that I ever would advise it, but it's hard to resell for much when the interior walls are ripped out along with all the copper. Also, in northern states, this time of year really is not good for pipes with the heat turned off. Finally, no one wants to live in a mold infested home, which tends to happen if the water is left running in every room that has a faucet.

Wed, 12/19/2012 - 12:11 | 3078835 Freddie
Freddie's picture

I talked to a guy in the business the other day.  He said the banks are creating valuations on homes owned that are much higher than comparables.   They are selling homes/mortgages like they sell cars.  Find out what the sucker can pay each month and price the house higher.   So if the real value is $150,000 but they can bundle it so the suckers can pay $1,500 a month and they can sell it for $190,000 then it's a "good" deal.

Wed, 12/19/2012 - 10:13 | 3078237 GMadScientist
GMadScientist's picture

Fantasy Assessment Standards Body


Wed, 12/19/2012 - 10:28 | 3078331 CPL
CPL's picture

Trav777, There's no mark to market anymore remember?  It's been gone for four years on the FAS ruling.


They can do car loans and keep the original retail value as the value now no matter the age of the matter the condition of the matter the condition of real finances.


Even the loss on an equity doesn't need to be shown anymore as long as you have a finance component to your business. It's why all the auto makers are "banks" now.

Wed, 12/19/2012 - 10:29 | 3078333 Chief KnocAHoma
Chief KnocAHoma's picture

But they are backed by CDS and the underlying asset of the home, which is worth maybe 50% of the outstanding loan. 

A true mark to market might push the value of those loans UP in value because these evil fuckers, made loans - secured loans, then bet against them.

Wed, 12/19/2012 - 10:54 | 3078487 The trend is yo...
The trend is your friend's picture

Doesn't even a 20-30% defualt on that size technically make the bank insolvent?  anyone have the numbers?

Wed, 12/19/2012 - 11:47 | 3078717 CPL
CPL's picture

I'll say it again.










SO their losses don't count, that was passed into law four years ago to save the banks.  So not only are the banks holding assets that they'll never sell, they are holding trillions in credit they can never offer, or assets that they can never write down.  until Mark to Market is consider that the deck is already loaded and all prices urrently in the housing market are complete fiction.  Without the govt stepping in you wouldn't be able to give away a picture of a house, let alone a real one right now.


Catch 22 situation.  There is no reality in any housing figures.  What you should be asking is what the real housing inventory is because currently you could put every American family in a mcmansion right now and still have alot of inventory left over even with the bulldozing.

Wed, 12/19/2012 - 09:08 | 3078025 Harrison
Harrison's picture

No wonder they blocked their employees from accessing ZH. :-)

Wed, 12/19/2012 - 09:08 | 3078026 Roandavid
Roandavid's picture

They'd be on to this over there at BoA if only they'd unblock Zero Hedge.

Wed, 12/19/2012 - 09:08 | 3078027 Roandavid
Roandavid's picture

Blast ... second

Wed, 12/19/2012 - 09:10 | 3078031 zilverreiger
zilverreiger's picture

Is your government sleeping? How can they allow this?

Wed, 12/19/2012 - 09:13 | 3078042 EmmittFitzhume
EmmittFitzhume's picture

They are not sleeping, they are complicit

Wed, 12/19/2012 - 10:14 | 3078241 mick_richfield
mick_richfield's picture

Well, the government is doing its job.

It's just not the job that you thought it should be doing.

They aren't working for us anymore.

Democracy and fiat currency cannot long coexist.

If some men are empowered to create money in any amount, they will shortly own 'your' government regardless of its design.

Either that, or they are angels.  And if they are angels they will shortly be replaced by men who are not angels.

Such power, by its mere existence, corrupts all who know of it.

Wed, 12/19/2012 - 09:15 | 3078048 wonderatitall
wonderatitall's picture

obama is the bankers dick tater...question what?

Wed, 12/19/2012 - 09:16 | 3078051 Sheeple Shepard
Sheeple Shepard's picture

DUDE! They're running market.

Wed, 12/19/2012 - 09:58 | 3078166 sessinpo
sessinpo's picture

Agreed, up arrow for you. If zilverzinger had a clue, he would know that the government allowed this with full knowledge. Oh no zilverzinger, another TBTF, we need another bailout. We need more stimulus and more printing.

I can only HOPE zilverzinger was being sarcastic (which he should have noted in his post). Otherwise I have to wonder what it will take to wake some people up. You slap them in the face and they still don't get it.

At some point you have to give up and let them suffer the consequences. What do you tell a person with 2 black eyes? Nothing, you already told them twice.

Wed, 12/19/2012 - 10:35 | 3078349 Sheeple Shepard
Sheeple Shepard's picture

When the student is ready the teacher will appear.

Wed, 12/19/2012 - 11:55 | 3078759 Nobody For President
Nobody For President's picture

Dude! They're ruining the market.


There, fixed it for yah.

Wed, 12/19/2012 - 09:28 | 3078090 unrulian
unrulian's picture

Because they have the drones and Hollow-points

Wed, 12/19/2012 - 09:10 | 3078032 Sheeple Shepard
Sheeple Shepard's picture

That cats definitely going to be a closed casket.

Wed, 12/19/2012 - 09:11 | 3078033 Al Gorerhythm
Al Gorerhythm's picture

Hammer them, Tyler.

Wed, 12/19/2012 - 09:11 | 3078035 pepperspray
pepperspray's picture

I fucking hate Bank of America

Wed, 12/19/2012 - 09:14 | 3078046 HowardBeale
HowardBeale's picture

I Bank-of-America fucking hate.

Wed, 12/19/2012 - 09:26 | 3078078 unrulian
unrulian's picture

Hate Bank of America more i could not

Wed, 12/19/2012 - 09:46 | 3078127 flattrader
flattrader's picture

It will be a pleasure watching them choke to death on these delinquent mortgages as a principal in the whole mortgage origination fraud.

Wed, 12/19/2012 - 10:01 | 3078172 Karlus
Karlus's picture

Gubmint wont let them choke, they need someone to help the voters.

In case you dont know how this story ends, the .gov is going to pay BAC for the service of helping voters. The marketcap is not meaningful

Wed, 12/19/2012 - 09:27 | 3078083 flacon
flacon's picture

That's ok. They fucking hate you (all of us) too. 

Wed, 12/19/2012 - 10:25 | 3078317 1eyedman
1eyedman's picture

i wanna be a money wrencher....   

Wed, 12/19/2012 - 09:12 | 3078041 Nostradamus
Nostradamus's picture

How is this a good business decision by BOA?  They are losing money every month on these homes from borrowers not making their mortgage payments.  Furthermore, there is certainly no shortage of homes on the market in America, and won't be anytime in the next decade or more.  All the big homebuilders are still in business and are building new communities all the time.  BOA stays above water only because of FED intervention in the mortgage market.

Wed, 12/19/2012 - 09:25 | 3078075 Cursive
Cursive's picture


I agree with everything you said, but kinda chuckled when I read, "How is this a good business decision by BOA?"  I mean, in a rational, non-keynesian, non-centrally planned world your question makes sense.  But we are living in non of that.

Wed, 12/19/2012 - 09:27 | 3078076 edb5s
edb5s's picture

A TBTF bank having to worry about making "good" business decisions?  Ha!

Wed, 12/19/2012 - 09:26 | 3078080 edb5s
edb5s's picture

Cursive beat me to it...

Wed, 12/19/2012 - 10:42 | 3078401 Shell Game
Shell Game's picture

Cute, wasn't it?


In many BOA toilet stalls, there eminates the glow of smart phone screens (yes,a stench eminates too), 


and the murmur:



'fuck me.....'

Wed, 12/19/2012 - 10:00 | 3078167 Diplodicus Rex
Diplodicus Rex's picture

"They are losing money every month on these homes from borrowers not making their mortgage payments."


That's not how I understand it. First of all we don't know how much BoA paid for them. It likely paid pennies in the pound for them. Secondly, the loan servicers are currently taking the hit for the non-payment of mortgage premiums. They are chosing to do this because admitting to the food chain higher up that they are delinquent would set off a chain of events which would end very badly for them. Therefore, the servicers are still providing the originators or the MBS holders with monthly income even although the house owners have stopped paying. This may not be as bad a deal for BoA as it first looks. That is, until the tsunami hits. Then they will attain their true value. Zero. Until then they are picking up pennies in front of the steam roller as the saying goes.

Wed, 12/19/2012 - 09:13 | 3078043 mckee
mckee's picture

You couldn't make this shit up!

Wed, 12/19/2012 - 10:03 | 3078176 sessinpo
sessinpo's picture

Yes you could.

You have to graduate from an Ivy League school and get an MBA (Making Bullshit Allowed) in finance.

Wed, 12/19/2012 - 09:13 | 3078044 LongSoupLine
LongSoupLine's picture

Fuck Bank of America.

Break it the fuck up and burn it, crush it and send that crooked fucking piece of shit wealth stealing company through the fucking wood chipper.

Fuck you BOA.

Wed, 12/19/2012 - 09:23 | 3078070 cossack55
cossack55's picture

Can't. when the bitch Blythe invented/marketed derivitives all the big boyz signed on and overflowed to use as extortion tool to block any rule of law shit from hitting them.  "Don't prosecute or else we collapse the economy"

Paging Mr. Hitler.

Wed, 12/19/2012 - 09:13 | 3078045 earnulf
earnulf's picture

BofA recently sold all it's area operations to Arvest Bank (Sw Missouri).   Guess the Walton Clan has more money than BofA.   Wonder if all those homes in this area will now foreclose?

Wed, 12/19/2012 - 09:15 | 3078049 EmmittFitzhume
EmmittFitzhume's picture

Can't Bernanke just send a month's worth of QE their way and wipe it all out?

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