I know I keep harping on this, but it's important.

I keep getting copies of various evidence that the banks are not properly handling defaulted mortgages. The instance I present here is a mortgage - a "conventional" loan - that has been reported as "120 days past due" to the credit bureaus for THIRTEEN CONSECUTIVE MONTHS.

What the hell sort of game is this? 

Note that it was also reported 60 late twice too, but that's reasonably possible - it went late, went 60 late, the debtor made one attempt to pay it down but still was 60 late, then gave up.

This person has been living in their house without making a mortgage payment for nearly a year and a half, and the bank - it's one of the "Big Three" - HAS NOT FORECLOSED.

This crap has to stop folks.  Yeah, this is an anecdote, but I have to ask whether the auditors have looked into this.  A loan that has this "payment history" ought to be carried at recovery value, but that would mean it would be "marked to the market", and we know the banks all got permission to mark 'em to "model" back in the early part of 2009.

This sort of BS game is too damn prevalent.  There is no reason other than cooking of the books that institutions would hold paper like this in a perpetual "not paying and not gonna pay either" state rather than foreclose and take the hit - except to present a view of their financial status that is less than completely honest.

"Extend and Pretend" may have been made legal but that doesn't make you solvent - it just means that the government made legal what formerly was called accounting fraud, and the inescapable reality is that eventually the cash flow will get you anyway.

To the banks: CUT IT OUT!

To the regulators: STEP ON SOME NECKS!

To Congress and "The Cops": STOP THE LOOTING AND START PROSECUTING!