We recently reviewed an account of Bank of America's continuing struggles and the byzantine accounting methods they use to describe the value of the company. As a business owner, I know how hard it can be characterize the true value of a company. What is confusing to me is that for banks, it seems as if there tangible assets, ie real estate and houses, and seen as a liability.
Bank of America acquired Countrywide Financial in 2008 for ~4 billion, despite the fact that they viewed it actual worth at less than zero. They made up the difference by adding a 4.4 billion line item of 'Goodwill'. I am not sure how goodwill is really valued, but that is a lot. I read this to mean that they viewed the long-term value of their purchase as higher than the to date market value.
At the time we moved into our house, we had just recently started consulting full time. As a result, we did not have the employment history required to get a mortgage. Our family graciously took on the mortgage itself, which we pay each month. The mortgage was sold back and forth between Wells Fargo, Countrywide, and another group I can't recall now - ultimately falling under the BofA umbrella I believe. It is strange to have the ownership of our home be tied to such large groups who treat individual mortgages the way they do.
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