Reducing the home mortgage interest deduction: enough with the crocodile tears

 

homemortgageinterest

A Christie’s International Real Estate warning.

The tax bill just passed by the Senate would let new homeowners continue to claim a deduction for the interest they pay on mortgage debt of up to $1 million. Under the House bill, existing homeowners could continue writing off interest paid on mortgage debt up to $1 million, but new mortgages would be subject to a $500,000 cap.

The House provision would be calamitous, tragic, disastrous, critics argue.

Reducing or eliminating the mortgage interest deduction “will hurt millions of hard-working American families and marginalize homeownership,” said Granger McDonald, Chairman of the National Association of Realtors.

Slicing the home mortgage interest deduction could lead to a housing recession, said Jerry Howard, CEO of the National Association of Home Builders.

Let’s get real here.

The change proposed by the House wouldn’t really mean much to many taxpayers. You have to itemize deductions to claim the deduction on your tax return now. Only about one-third of taxpayers now itemize and only three-quarters of those claim a mortgage interest deduction, according to the Urban-Brookings Tax Policy Center.

But that would change because the tax bill would almost double the standard deduction, from $12,700 to $24,000 for married couples and from $6,350 to $12,000 for single filers. With this change, fewer taxpayers would benefit from the mortgage interest deduction. The Tax Policy Center figures the share of households claiming the home mortgage interest deduction would drop to 4 percent. That’s right. Just 4 percent.

That drop would also reflect the fact that, despite a lot of high cost homes in the Portland Metro Area, it’s pretty easy to buy a home for less than $500,000 in most of the rest of Oregon and the nation.

For example, the median home value is $251,100 in Tillamook, $336,600 in Corvallis and $162,300 in Pendleton.

According to the Mortgage Bankers Association, Americans who applied for a mortgage to buy a home in January 2017 were looking for a loan sized at an average of $309,200. The median home value in the United States is only $203,400, according to Zillow.

 

State Home Values

NAME MEDIAN Zillow Home Value Index
California $469,300
New York $267,100
Florida $192,600
Illinois $163,100
Texas $159,000
Pennsylvania $155,000

 

Georgia $149,300
Michigan $126,100
Ohio $122,400

Only 5.4% of all loans originated in 2017 have been for more than $500,000, according to ATTOM Data Solutions. That’s just 325,000 loans, most of which went to the wealthy.

Want to know the median list price by city, state, zip code, and neighborhood? Zillow’s Home Value tool provides that data.

The three states with the highest percentage of home mortgage loans over $500,000 in 2017 have been Washington, D.C. (35.1%), Hawaii (15%) and California (11.5%), followed by Delaware, Massachusetts and Washington state at about 9%.

They’re the ones who would see their ox gored under the House bill, and it’s the members of Congress from these states in the forefront of wanting to preserve the $1 million level.

In Democrat-dominated California, the pain would be noticeable. In the San Jose metropolitan area, 75% of new mortgage loans as of early November 2017 were for more than $500,000 and the median home price was more than $1 million, according to an analysis by CoreLogic Inc. In the San Francisco metro area, 60% of new loans were for more than $500,000.

“I think that harming the ability for Americans to own their home is like attacking motherhood and apple pie,” Rep. Judy Chu (D-Monterey Park), who represents an area that includes Pasadena and much of the San Gabriel Valley, told the Los Angeles Times.

So what the Senate is doing is defending a tax break that mostly benefits a small number of affluent homeowners and distorts the housing market?

The distortion occurs because the tax reduction increases the price of housing. Well-off buyers are willing to pay more because they anticipate deducting their mortgage interest, effectively lowering their monthly house payments.

”… there’s good evidence that cutting back the mortgage-interest deduction would lower prices in high-cost areas, where newcomers find it difficult to move nowadays,” asserts Howard Husock, vice president for research and publications at the Manhattan Institute.

So enough with the weeping and wailing. Reducing the home mortgage interest deduction would be a good thing.

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Wells Fargo: Rotten to the Core  

Bruce Plante Cartoon: Wells Fargo Bank

In April 2017, Wells Fargo launched a new campaign, “Building Better Every Day,”  to reset its public image after apologizing profusely about cheating some customers and agreeing to pay restitution.

It looks like the bank needed more than an expensive rebranding effort.

According to the Wall St. Journal, the federal Office of the Comptroller of the Currency (OCC) sent a letter to Wells Fargo in November saying it is weighing a formal enforcement action against the bank over improprieties in its auto-insurance and mortgage operations.

The letter said the bank repeatedly failed to correct problems in a broad range of areas.

The letter came after other allegations against the bank. According to NASDAQ, some of Well’s Fargo’s business customers were cheated when an internal review found that out of approximately 300 fee agreements for foreign exchange trades, only about 35 business clients were charged the actual price they had been quoted by Wells Fargo bankers for the trades. Some of the bank’s foreign exchange bankers were motivated by the fact that, unlike at other big banks, they were paid bonuses based solely on how much revenue they brought in.

Wells Fargo has fired four foreign-exchange bankers, while federal investigators have opened their own investigation of the operation.

In august 2017, Warren Buffet, Chief Executive Officer and Chairman of Berkshire Hathaway, a large investor in Wells Fargo, said he expected bad news to keep coming from the bank. “There’s never just one cockroach in the kitchen,” he told CNBC on Squawk Alley, a CNBC news program.

He was right.

Wells Fargo has a history of malfeasance.

In 2015, the Department of Justice’s U.S. Trustee Program entered into a national settlement agreement with Wells Fargo Bank N.A. (Wells Fargo) requiring that the bank pay $81.6 million for its repeated failure to provide 68,000 homeowners with legally required notices related to mortgage payments. Wells Fargo’s actions violated federal bankruptcy rules, thereby denying homeowners the opportunity to challenge the accuracy of mortgage payment increases.

“When creditors fail to comply with the bankruptcy laws and rules, they compromise the integrity of the bankruptcy system and must be held accountable.,” said a Department of Justice release on the settlement.

In the summer of 2016, Wells Fargo admitted to the OCC that it improperly charged customers for collateral-protection insurance on their cars financed through the bank.

In July 2017, the bank said it had found 800,000 customers potentially affected by the improper charges, with 274,000 of them forced into delinquency on their car loans as a result and 25,000 cars wrongly repossessed. Wells Fargo said it would refund customers about $80 million in charges.

In Sept. 2016, Wells Fargo settled for $24.1 million with the Justice Department and the OCC over the improper repossession of cars owned by members of the U.S military.

The Servicemembers Civil Relief Act requires a court order to repossess a vehicle if a service member took out a loan and made a payment before entering military service.

“We all have an obligation to ensure that the women and men who serve our country in the armed forces are afforded all of the rights they are due,” U.S. Attorney Eileen M. Decker of the Central District of California told the Los Angeles Times. “Wells Fargo failed in that obligation.”

That same month, Wells Fargo agreed to pay $185 million to settle lawsuits related to the bank’s creation of customer accounts without the customers being aware of the activity. The sham accounts were created by employees under pressure to perform or be fired.

Wells Fargo said initially that the practice involved the creation by employees of up to 2.1 million sham accounts. In Aug. 2017, Wells Fargo said it found 1.4 million more sham bank and credit card accounts, bringing the total up to 3.5 million.

As Bloomberg’s Matt Levine put it, “…the Wells Fargo scandal took a lot of coordinated nefarious effort.”

Wells Fargo also found that thousands of customers were enrolled in online bill pay programs without their authorization. Wells Fargo said it found 528,000 potentially unauthorized online bill pay enrollments. Wells Fargo employees set up the accounts to meet product sales goals. In this case, the bank said it would return $910,000 to people enrolled in those accounts without their permission.

With all this, there’s no question that Wells Fargo is guilty of a gross betrayal of its customers’ trust.

 

 

 

 

 

 

 

 

Harvey Weinstein’s not the only one spying on reporters

Whoever would overthrow the liberty of a nation must begin by subduing the freeness of speech. – Benjamin Franklin

 

spy

Harvey Weinstein had no qualms about spying on journalists to protect himself, or even using journalists to acquire information he could use against his accusers.

He used Dylan Howard, the chief content officer of American Media Inc., publisher of the National Enquirer, who passed on information about Weinstein’s accusers gleaned by his reporters.

Then there was the freelance writer hired by Black Cube, a private intelligence agency, who passed on information about women with allegations against Weinstein.

Sounds creepy. But Weinstein’s not the only one spying on reporters and he’s not the only one trying to undermine and disparage journalists.

ropetreejournalist

Walmart just removed a t-shirt like the one above from its website, following a complaint from a journalist advocacy group.
The shirt was listed on Walmart’s website through a third-party seller, Teespring, which allows people to post their own designs for sale.

The Columbia Journalism Review just reported that Attorney General Jeff Sessions has said criminal investigations into the sources of journalists are up 800 percent and he’s vowed to “revisit” the Justice Department’s media guidelines that restrict how the US government can conduct surveillance on reporters.

Then there’s Breitbart chairman Steve Bannon who sent two reporters to Alabama to dig up dirt on reporting done by the Washington Post about Alabama Republican Roy Moore. Breitbart’s goa, according to Axios, is to undermine the work of Post reporters Stephanie McCrummen, Beth Reinhard, and Alice Crites.

How about when the Koch brothers allegedly hired private investigators to dig into Jane Mayer’s past while she was working on her book, “Dark Money,” which accuses the Kochs and other wealthy plutocrats of hijacking American democracy.

At one point, Mayer heard that she was going to be accused of plagiarizing other writers. According to the New York Times, a dossier of her supposed plagiarism had been provided to The New York Post and The Daily Caller. The writers insisted there had been no plagiarism, causing the smear to collapse.

Three years later Mayer said she traced the plagiarism accusation to a firm involving several people who have worked closely with Koch business concerns. The firm was Vigilant Resources International, whose founder and chairman, Howard Safir, had been New York City’s police commissioner under former New York City Mayor Rudolph Giuliani.

“Smearing Mayer is reflective of Safir’s contempt for reporters and the media in general when he was police commissioner,” said a Newsday reporter.

In June of this year the New York Post reported that the Trump administration was spying on journalists who have been handed leaked information.

The Post said the Justice Department has obtained a legal warrant from the US Foreign Intelligence Surveillance Court to conduct electronic surveillance on reporters who were known to have published articles based on leaked information.

The surveillance was reported to be part of the Trump administration’s attempts to clamp down on leaks from within the White House and government departments.

In some respects, there’s nothing new about all this.

In 2013, the Justice Department advised the Associated Press (AP) that Federal investigators had secretly seized two months of phone records for reporters and editors of the AP. The government had obtained the records for more than 20 telephone lines of its offices and journalists, including their home phones and cellphones.

Gary Pruitt, the president and chief executive of AP, sent a letter to Attorney General Eric H. Holder Jr. calling the seizure, a “massive and unprecedented intrusion” into its news gathering activities.

There’s so much concern within the journalism community about government spying that the Knight First Amendment Institute at Columbia University and Freedom of the Press Foundation are teaming up to find out what’s going on.

On Nov. 29, they filed a Freedom of Information Act lawsuit against the Justice Department and several intelligence agencies, demanding records revealing how the government collects information on journalists and targets them with surveillance.