Finally A Bit Of Sanity—Help May Be On The Horizon For The Financial Crisis
By Jay Williams, Mortgage Loan Officer - Getting You The Right Loan
One of the major culprits of the current financial crisis, in my opinion, has been a complex and little understood accounting principle. This accounting principle is called “mark to market”. I am no accountant and will be the first to admit I don’t fully understand this hideously complex financial accounting standard. So I have to think of it in terms I understand. For the purpose of this prose let’s suppose you live in a sub-division. You bought your home for $250,000. Your current mortgage balance is $200,000. You are paying your mortgage payments on time and you have no intention of selling your home. However, the terms of your mortgage is such that every three months the value of your home and your outstanding mortgage balance is subject to “mark to market” accounting. Durin...