Where does the $1,000,000,000 Wells Fargo fine go

It's funny, several people have asked me where the fines levied against large corporations (specifically the recent $1,000,000 fine against Wells Fargo for their very recent actions in the mortgage market... Spoiler alert:  They were ripping people off) and to be frank, I didn't have a good answer.  I knew that nobody who was victimized ever got a dime, but I also didn't think that the money went back, at the very least, to the treasury.  There is obviously leakage when it comes to that much money, but billions can't just leak.  So where DID that money go?  

Dick Morris knows.   

As he mentioned on his daily lunch alert (which I have been trying to embed here but that won't work for some reason) the answer is a slush fund.  Apparently many "Victim's Advocacy Organizations" were established, but not many victims (I can't say "none" because I don't know) every received anything.  Essentially those are slush funds that provide money to political organizations, obviously those favorable to the politician who allowed the transfer in the first place. 

So basically an involuntary re-election campaign contribution.  Wonderful.  And totally legal I'm sure. 

 

 

Feds No Longer Require an Appraisal on Commercial Under $500,000

Here is the article from Reuters.  But I don't understand it.  So the Federal government will no longer require banks to have a commercial appraisal done to finance commercial properties  under $500,000.  Fine.  But what lender in their right mind is ever going to lend $500,000 on any property without at least an idea of it's worth?  I think this is going to be an overlay situation; meaning the lender has requirements above and beyond the government mandated minimums. 

Unless, of course, you found a lender that really had an intrinsic ability to accurately estimate the value of a property.  That might work.  Maybe.  I would still want an appraisal. 

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New federal regulations mean fewer commercial real estate-related loans will require an independent, certified appraiser to weigh in on a property’s value before a bank can lend against it.

An inter-agency group of regulators decided on Monday to raise the threshold for commercial real estate deals that need approval from a state-certified appraiser from $250,000 to $500,000, Reuters reported.

Now, financial institutions can utilize the less stringent evaluation process instead of a certified appraisal for deals below the threshold. Evaluations also provide a market value estimate but do not have to comply with federal standards.

Raising the threshold “will materially reduce regulatory burden,” according to a joint press release from the Federal Reserve, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation, adding that upping the limit “will not pose a threat to the safety and soundness of financial institutions.”

The $250,000 limit was established in 1994. Regulators originally proposed raising the limit to $400,000 to keep it in line with inflation, but decided to raise the limit higher after considering comments from appraisers, financial institutions, and trade organizations received during a comment period last year. [Reuters] – Dennis Lynch

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Weekend (and every day) Motivation

Recently I printed out the text below and framed it.  It now sits comfortably just beneath the two monitors on my desk so I can’t help but look at it several times a minute. 

 

I Am Your Competition.

Every minute you are late for work puts me one minute ahead of you.

Every phone call you decide not to make places me one call ahead of you.

The fewer customers you see the more I have.

The more time you take off, the more time I have to contact your customers.

If you’re unprepared for a meeting, I never will be.

Every excuse you have for a failure makes me stronger.

When you fail to improve your skills, I improve mine.

When you start your day without objectives, I’m busy achieving mine. 

Whenever you hesitate, I execute. 

 

Every day I am determined to beat you. 

Tax Considerations for Investment Properties

I understand that this may be a “little day-late, dollar-short” considering what can or cannot be written off was solidified at the end of 2017; but perhaps this can be a helpful guide for your 2018 taxes. 

Interestingly, as I write this I am brought to the painful realization that the year is well progressing.  It’s already mid-March, and that scares me simply because there is still so much to do for 2018.

Please keep this handy.  It will serve you well with any investment real estate acquisition.    

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Inflation of US Consumer Goods and Services.

Huh... the things the government regulates to make “more fair” have gotten ridiculously more expensive in 20 years, while those dominated by the free market got less expensive. I’m sure that’s just a coincidence.

Germane to Housing, although yes, more expensive than 10 years ago; the nationwide index is keeping pace slightly above inflation.  That is a good thing, and since this is a 20 year average and we have to take into effect the boom then crash from 2005-2010, housing is exactly where it should be. 

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Mortgage Hype.

I have been seeing all these ads from mortgage marketing bots, or mortgage company employees that just copy and paste; hysterical about the market sell off, (which has already started gaining again) going nuts about "falling rates". Here's what is really going to happen:

Regarding interest rates; they are like gas prices. Quick to go up, very slow to come down. I expect a less than a tenth of a percent dip in treasuries and that might translate into maybe a .125 dip, but it will recover quickly.

Today would be good to lock, but by next week it will be as if it never happened.

What goes up...

A quick word to preempt the people who will soon begin to scream about "the market".

The market is doing exactly what healthy markets should do: They go up... they are going to come down a little as people take profits. Then they go back up again.

The only time this didn't happen was when the government manipulated the natural state of things in the early 2000s and remember what happened then?