Whistleblower: Wall Street Has Engaged in Widespread Tampering of Mortgage Funds
Wait until Propublica learns that lenders are underwriting based on pro-forma forward Adjusted EBITDA net leverage, not past EBITDA leverage.The whole idea of Adjusted EBITDA is insane to me. We add back "one-time," expenses and other items, but the underlying business ends up seeing similar "one-time," costs every year.The result is that companies often borrow at a leverage ratio that looks 30% smaller than it actually is. This year we are doing "COVID-19," addbacks. What the fuck? You lost money because of COVID, so add it back to EBITDA so that you are still meeting your loan covenants? Lenders are in on it too, because they don't want to see their clients default and deal with bankruptcy or taking control of the assets.