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Fisv5526 Financial Reporting Control Discussion Final

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Running Head: FINANCIAL REPORTING AND CONTROL DISCUSSION 1
Financial Reporting and Control Discussion
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FINANCIAL REPORTING AND CONTROL DISCUSSION 2
Financial Reporting and Control Discussion
Article One: Goldman Sachs Goes on Buying Binge for Delinquent Mortgages
The article concentrates on Goldman Sachs, an investment bank and financial services
bank which went on a buying spree for delinquent mortgages and other loans. Delinquent
mortgages are those where the borrower has failed to pay the money needed to settle the
mortgage. Once a borrower fails to settle the debt, their home can be foreclosed by the bank.
Foreclosure is when the bank seizes the house and sells it to the highest bidder to reclaim the
money used to repay the loan. Foreclosure is the worst thing that can happen to a homeowner, so
most are often advised to sell their delinquent mortgages to investment firms that often purchase
these loans.
When an investment firm purchases a delinquent mortgage, they do not become
homeowners, but it does imply that the investment firm has an investment interest if the
homeowner defaults on the loan. In this case, the investment firm repays the mortgage loan to the
bank and gets the promissory note. The homeowner is then forced to repay the loan to the
investment firm for the settled loan amount with interest instead of the bank. If the homeowner
defaults, the investment bank can seize and sell the property. The positive thing about selling
delinquent mortgages is that the homeowner reduces the risk of losing their property.
In the article, the government seems to have agreed with Goldman to help struggling
homeowners by purchasing the delinquent mortgages. Purchasing the delinquent mortgages was
the company’s way of filling its terms with the government and profit from selling these loans.
Goldman mainly bought severely delinquent mortgages from Fanny Mae, a company that offers
home loans. Goldman bought nearly two-thirds of the mortgages. The mortgages bought totaled
to US9.5 billion. When selling these loans, the company turned them into bonds and then sold

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Running Head: FINANCIAL REPORTING AND CONTROL DISCUSSION Financial Reporting and Control Discussion Student’s Name Institution Date 1 FINANCIAL REPORTING AND CONTROL DISCUSSION 2 Financial Reporting and Control Discussion Article One: Goldman Sachs Goes on Buying Binge for Delinquent Mortgages The article concentrates on Goldman Sachs, an investment bank and financial services bank which went on a buying spree for delinquent mortgages and other loans. Delinquent mortgages are those where the borrower has failed to pay the money needed to settle the mortgage. Once a borrower fails to settle the debt, their home can be foreclosed by the bank. Foreclosure is when the bank seizes the house and sells it to the highest bidder to reclaim the money used to repay the loan. Foreclosure is the worst thing that can happen to a homeowner, so most are often advised to sell their delinquent mortgages to investment firms that often purchase these loans. When an investment firm purchases a delinquent mortgage, they do not become homeowners, but it does imply that the investment firm has an investment interest if the homeowner defaults on the loan. In this case, the investment firm repays the mortgage loan to the bank and gets the promissory note. The homeowner is then forced to repay the loan to the investment firm for the settled loan amount with interest instead of the bank. If the homeowner defaults, the investment bank can seize and sell the property. The positive thing about sell ...
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