AKM Mortgages, Inc.

Posted: 15 Jul 2013

See all articles by Sanjian Bill Zhang

Sanjian Bill Zhang

California State University Long Beach

Jack W. Paul

Lehigh University - College of Business

Xuan Huang

California State University, Long Beach

Date Written: April 3, 2013

Abstract

This case uses a real mortgage company that was once the 10th largest mortgage loan originator in the U.S. The case sheds light on shadow banking system, important accounting issues in the mortgage bank industry and industry-specific business risks. Students are required to read AKM’s financial statements, identify business risks associated with its business practices, find red flags from the multiple-period cash flow statements, and, finally, comment on its accounting of mortgage loans held for sale, mortgage loans held for investment, and securities. This financial statement analysis case can help senior-year accounting majors or graduate-level accounting or finance students to understand related accounting standards for the mortgage industry and probable earnings misstatements at mortgage banks. It also can serve as timely reading for students who are interested in the recent credit crisis, mortgage-backed securities and CDOs.

Keywords: Alt-A mortgage, mortgage bank, repurchase reserve, mortgage valuation allowance, securitization, credit crisis, collateralized debt obligations, repurchase agreement

JEL Classification: G32, M41

Suggested Citation

Zhang, Sanjian and Paul, John and Huang, Xuan, AKM Mortgages, Inc. (April 3, 2013). Issues in Accounting Education, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2293361

Sanjian Zhang (Contact Author)

California State University Long Beach ( email )

1250 Bellflower Blvd.
Long Beach, CA 90840
United States

John Paul

Lehigh University - College of Business ( email )

Bethlehem, PA 18015
United States

Xuan Huang

California State University, Long Beach ( email )

1250 Bellflower Blvd
Long Beach, CA 90064
United States

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