Archive | Banksters

Zombie condos and cratering condo HOAs

Foreclosure sign

Nationwide, an appalling 75% of condo developments don’t meet new FHA rules. This makes getting a mortgage on such units more difficult and thus harder to sell. Compounding the problems, banks are reluctant to foreclose on condos., so the condos become zombies, especially when their value is less than the loan balance.

Owners who can’t pay the mortgage generally can’t pay HOA fees either. Fees in some troubled condo complexes are rising sharply due to deferred maintenance costs. Some modest condos now have monthly HOA fees of $600 or more, which may actually be more than their mortgage. So they stop paying, especially if they are in foreclosure. This puts even more financial pressure on condo HOAs, so they close pools and tennis courts, making their condos ever harder to sell. The downward spiral continues. The housing market in general has recovered quite a lot since the 2008 crash. Condos, not so much,

Part of the problem is banks and mortgage brokers gave loans to buyers who couldn’t really afford them, especially when HOA fees are added in. And if the HOA was in dicey condition to begin with, then monthly fees were almost sure to rise.

We live in a house in Vegas that is part of a tiny HOA. Sue is a CPA and read their financials before we bought the house. Always do this  before buying property in a HOA. Our fees are tiny, just $35 a month. There was a board vacancy when we bought so I volunteered, just in case the board might be up to something. (It’s not. Our meetings are friendly and take 45 minutes.)

Do not rent a condo in a troubled HOA if you even suspect the owner might be in foreclosure or is behind on payments. It probably won’t end well.

Before 2008, the FHA approved prospective condo buyers based on their individual financial stability. The new rules required that an entire community meet a minimum level of solvency.

The agency will not provide loans for condo communities if at least 15 percent of current owners are 60 days or more behind on their monthly fees. The FHA also requires that a community’s cash reserves be equal to at least 10 percent of its annual budget.

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Apple’s tax dodge in Ireland and those uppity Europeans

How dare the European Union interfere with Apple parking billions in Ireland and paying practically no tax on it? Why you’d think Ireland was part of the EU and that the EU had a right to say what their member nations do. US Treasury Secretary Jack Lew thinks that’s pretty darned presumptuous of the EU to claim jurisdiction over what US corporations do in their countries.

Let’s review the facts. Ireland supports itself by being a tax haven. Big corporations can sluice money in from wherever to Ireland, where it pays a little bitty tax. Apple’s Ireland office has no employees and does no business there. The money is transferred in from elsewhere. Sooner of later, Ireland will be forced to stop being a tax haven and then will have generate revenue like other countries. It will genuinely be rough for them.

Our government has screamed at Apple for years to repatriate the $181 billion or so it has stashed overseas, so it would be taxable here. But now that EU says Apple must pay Ireland $14.5 billion in back taxes, our government has a hissy fit. Is this because they fear lost revenue or because how dare another country tell our corporations what to do. Either way, the infant United Sates and Apple CEO Tim Cook are banging their rattle on the high chair.

Whenever Brussels makes noises about getting tough with large U.S.-based firms, top U.S. politicians, business executives and commentators tend to fall into a reflexive response pattern and turn into crybabies. They immediately criticize the European Commission as an overbearing bureaucracy, hostile to innovation (and the United States per se), creating uncertainty, pursuing backward-oriented industrial policy, undermining investment in the EU and acting in an unfair manner.

Offshore Profit Shifting and the U.S. Tax Code, IRS testimony (PDF)

As to specific repatriation strategies being challenged by the IRS, these often involve foreign affiliates entering into various transactions with their U.S. parent that result in the parent receiving cash, notes or other property from the affiliates. Taxpayers assert that these transactions do not result in a dividend or gain to the U.S. parent corporation under various corporate non-recognition provisions. Examples of these transactions include so-called “Killer B” transactions, “Deadly D” transactions, zero-basis structures, and outbound F reorganizations. While these types of transactions have been addressed by new regulations, for pre-effective date periods the IRS has challenged many of them under common law doctrines and will continue to do so.

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Online drug sales, money laundering, prepaid cards

People's Drug Store 8/15/16

People’s Drug Store 8/15/16

Dark Net drugs sales have tripled since 2013 when Silk Road was closed. While still a tiny part of overall drug sales, the anonymous nature of the transactions makes it ideal for using dirty money. The Dark Net is accessible only by the Tor browser. Everything is encrypted and routed through anonymous relays. Payments are made in cryptocurrency.

Buyers are purchasing in wholesale quantities, presumably for offline distribution.

There is evidence that drugs sold on cryptomarkets are fueling offline drug markets, with buyers sourcing stock for offline distribution. Twenty five per cent of total drug transactions on cryptomarkets during January 2016 were greater than $1,000.

In related news, credit card companies continue to resist regulations on hugely profitable prepaid cards, even as they are clearly used for money laundering. Some U.S. big box stores will cheerfully, and without questions, convert multiple prepaid cards into other prepaid cards (or cash) because they get a cut.

In 2011, Kumar Kibble, then Deputy Director at U.S. Immigration and Customs Enforcement testified in Congress that authorities had found hundreds of the cards hidden “in a compartment similar to those used to conceal cash, drugs and other contraband.”

John Tobon, deputy special agent in charge of Homeland Security Investigations in Miami, said the cards can be used to pay couriers smuggling money, drugs or other merchandise as large cash transactions come under greater scrutiny.

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Obama still pushing to pass odious TPP

Stop TPP

The Trans-Pacific Partnership is deceptively billed as a free-trade agreement. It’s real purpose is quite different from that and is genuinely evil. TPP says corporations have rights and powers that are above that of nations. Under TPP, corporations can force countries to rescind laws they don’t like and can also sue for damages. This isn’t free-trade at all. This is giving unparalleled, unrestricted power to big business. And Obama continues to push to get TPP passed in the upcoming lame duck session of Congress.

Fortunately, chance of passage is slim. Many Republicans oppose it, as does Sanders and Clinton (even as her support may be soft.) Obama apparently doesn’t care that TPP would hurt US workers. Cynics among us might opine Obama wants to ensure big speaking fees and well-paying “consulting” work after leaving the White House.

“Right now, I’m president, and I’m for it,” Obama said. “And I think I’ve got the better argument.”

In a clear reference to Clinton, the president’s preferred successor, Obama said he respects those who warn the deal undercuts U.S. workers and their wages. Yet he pointedly asserted that none of the deal’s opponents had effectively argued that TPP would be worse for labor and the environment than no deal at all.

Yes, it’s evil.

All of these concerns about the TPP stem from what seems to be its central endeavor—a dramatic expansion of the rights of corporations in trade partner countries.

Government watchdog group Public Citizen writes on their website that the agreement would “elevate individual foreign firms to equal status with sovereign nations,” allowing them to directly sue governments for any domestic laws that might “diminish their expected future profits.”

Essentially, federal governments could be encouraged to strike environmental and health regulations from the books, or else to pay corporations because of them.

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Pesky feds interfering with money laundering real estate deals

money laundering

Curse our noxious interfering U.S. government! When will we be done with their intrusive rules and instead, usher in a libertarian paradise where infernal regulations to prevent money laundering are a relic of our commie socialist freedom-hating past?

The Treasury Department’s Financial Crimes Enforcement Network is expanding their noxious program requiring all-cash purchases of real estate above certain values be investigated to determine who the real buyer is. This misguided program has already hurt real estate prices in major metro areas and now will create further carnage. Where is the outrage? We must stand with Chinese sneaking money into the US and drug lords making dirty money clean. And please, shed a tear for the poor real estate agents whose commissions will drop because of this. Even if they knew full well what was going on.

The expanded program will “temporarily require US title insurance companies to identify the natural persons behind shell companies used to pay ‘all cash’ for high-end residential real estate in six major metropolitan areas,” up from the two areas designated in January, Manhattan and Miami, among the biggest destinations of global wealth:

Real estate purchases in the US have been a perfectly good way to launder large amounts of money, no questions asked. Brokers and banks and other industry professionals have played along. Everyone in the world knew it. And they came to launder their cash.

These folks don’t mind paying a little extra. So as an industry-pleasing side effect of this influx of opaque money, luxury home prices soared, from where they trickled down to the rest of the market.

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