It seems I stirred up a tempest with my blog this morning. My position is that applying generally accepted accounting principles and the accounting standards promulgated by the FASB, you must accept that Servicer advances are either a third party payment that reduces the account receivable of the creditor, or the advances are without effect because of the agency relationship between the investor and the Servicer. You will notice that the Banks are not arguing the agency relationship because if they did that, they would be arguing for applying to the account receivable of the investor the insurance payments, credit default swaps, or sales of mortgage bonds to the Federal Reserve. The fact is that the underwriting banks received a lot of money betting against the mortgage bonds they were selling. If that is applied because it is all one big venture in a cloud, then the net receivable is zero. Then you go further and argue that the amounts received in excess of the loan should be refunded to the borrower to the extent of the borrower’s payments.
Filed under: CDO, CORRUPTION, evidence, foreclosure, GARFIELD GWALTNEY KELLEY AND WHITE, investment banking, Investor, Mortgage, Pleading, Servicer | Tagged: account payable, account receivable, FASB, gaap, generally accepted accounting principles, investors, Servicer advances |