Daily Archives: March 25, 2014

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Unemployed, and heading toward foreclosure

Unemployed, and heading toward foreclosure

DISTRICT HEIGHTS, Md.—Renee Brooks thought she had found her peace on Wild Rose Court.

Earning a decent salary as a welfare-to-work case manager, she landed a deal on a townhouse in a cul-de-sac on the outskirts of Washington. When she moved in with her young daughter in 2010, she simply felt relieved to be out of the noisy apartment complex down the road.

“You could hear everything, you could smell everything that people did,” says Brooks, 46, recalling her neighbors’ cigarette smoke wafting up into her old apartment. “Here, I don’t hear nobody talking. After nine, ten o’clock, you don’t hear a pin drop.”

Suddenly, in July 2013, Brooks lost her job. Six months later, Congress cut off her unemployment checks. Now she could lose her home, too. “When my unemployment stopped, I stopped paying my mortgage,” she says.

Brooks is now among the millions of unemployed homeowners who risk default, foreclosure, and huge debt loads—even if they manage to find a job again.

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Companies must pay taxes on severance payments: U.S. high court

Companies must pay taxes on severance payments: U.S. high court

The U.S. Supreme Court ruled on Tuesday that taxes are due for Social Security and Medicare on severance packages paid to workers who are laid off involuntarily, overturning a lower court ruling that could have led to a wave of payroll tax refund requests from U.S. businesses.

In a win for the Obama administration and the U.S. Internal Revenue Service, the court voted 8-0 that Quality Stores Inc., a defunct retailer, and its employees are not entitled to tax refunds totaling about $1 million.

The tax refund at issue was small, but the IRS said the stakes in the case were huge because, if Quality Stores had won, thousands more refund claims could have resulted, possibly totaling as much as $1 billion.

If Quality Stores had won, many companies were ready to file for tax refunds, said Ruth Wimer, a partner at the law firm McDermott Will & Emery LLP, calling the decision “bad news” for employers and employees.

The dispute centered on whether severance paid to involuntarily terminated workers was taxable under the Federal Insurance Contributions Act tax, or FICA, which helps pay for Social Security pensions and Medicare health insurance for the aged. FICA tax is paid by a company and its employees.

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U.S. banks enjoy ‘too-big-to-fail’ advantage: Fed study

U.S. banks enjoy ‘too-big-to-fail’ advantage: Fed study

A landmark study by Federal Reserve economists found that large U.S. banks enjoy a “too-big-to-fail” advantage in financial markets, joining a heated debate that could influence regulators that are implementing tough new rules for Wall Street.

The series of research papers, published on Tuesday by the U.S. central bank’s influential New York branch, suggests the biggest banks benefited even after the financial crisis from lower funding and operating costs compared with smaller ones. The researchers used data through 2009, which did not reflect post-crisis reforms.

Fed economists also found that the biggest banks can take bigger risks than their smaller peers.

While the study did not pinpoint the reason big banks can borrow more cheaply, Wall Street critics say it is because investors believe the U.S. government would again rescue them in a panic.

The new research shows “it is improper to ask the taxpayer to underwrite the non-commercial banking operations of a complex bank holding company,” Dallas Fed President Richard Fisher, a long-time critic of big banks, said in an interview.

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Who will lead JPMorgan Chase next?

Who will lead JPMorgan Chase next?

According to The Wall Street Journal, now that JPMorgan Chase (JPM) executive Michael Cavanagh is no longer at the bank, Matt Zames, the bank’s chief operating officer, is considered to be a potential favorite to take over when CEO Jamie Dimon finally decides to step down.

Since the financial crisis, Zames has climbed from relative obscurity to apparent front-runner partly thanks to a series of shake-ups in the wake of the “London Whale” trading debacle. While he has long been on the list of potential successors to Dimon, his case keeps getting stronger as other candidates depart and Zames continues a meteoric rise through the bank’s executive ranks.

He’s been one of Dimon’s go-to guys since at least 2008, when he was called upon to head to Bear Stearns headquarters late on a Thursday night after Bear CEO Alan Schwartz dialed up Dimon looking for help.

Source: WSJ
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IG Report: Fannie, Freddie foreclosure inspectors did terrible job

IG Report: Fannie, Freddie foreclosure inspectors did terrible job

A newly released report says that pre-foreclosure inspections for Fannie Mae and Freddie Mac have serious quality control issues, and may contain fraudulent or manipulated data.

A report from the Office of Inspector General for theFederal Housing Finance Agency says that Fannie Mae and Freddie Mac “do not have quality controls in place to obtain reasonable assurance that pre-foreclosure property inspection information is accurate, consistent, and complete.”

The report also states that, “While the Enterprises (Fannie Mae and Freddie Mac) paid in excess of $91.2 million for pre-foreclosure property inspections during 2011 and 2012, there is limited assurance that either Enterprise had effective controls in place to ensure the quality of inspections conducted or that inspectors submit reports consistent with the existing requirements.”

The report found that in some cases:

  • Property inspection reports contain inaccurate information which conflicts with corresponding photographs
  • Property inspection reports include missing, manipulated, and blurry photographs
  • Property inspectors conduct inspections outside of gated communities instead of waiting to obtain access to restricted properties
  • Servicers neither consistently conduct oversight procedures to evaluate vendors’ property inspection performance, nor validate inspection reports to ensure the information is accurate, complete, and consistent
  • Property inspection reports do not include the names or signatures of those who conducted the inspections
  • Servicers inconsistently adopted requirements for inspectors to complete and pass criminal background checks
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Wealthy couple with yacht, luxury lake home, $3 million the bank charged with welfare fraud

Wealthy couple with yacht, luxury lake home, $3 million the bank charged with welfare fraud

Unbelievable.. Ripping off the system…

Deephaven couple allegedly got benefits even though they had a yacht and $3 million in the bank.

Andrea and Colin Chisholm struggled financially for a decade, depending on welfare checks to pay for food and medical bills and for job training. They and their young son were forced to live with Andrea’s mother in south Minneapolis, and at one point had as little as $80 to their name.

At least, that’s what they led benefit workers to believe. In reality, authorities say, the Chisholms were living the lifestyle of the rich and famous.

On public assistance forms they filled out yearly, they forgot to mention their $1.2 million yacht docked in Florida, Hennepin County Attorney Mike Freeman said Friday as he announced welfare fraud charges against the couple. Or the $1.6 million house they rented on Lake Minnetonka. And that Cavalier King Charles Spaniel pedigree breeding business that produced an award-winning dog at the Westminster dog show.

Oh, and the Chisholms also had about $3 million tucked away in various bank accounts, the charges say. They even took to passing themselves off as Scottish royalty — “Downton Abbey,” Minnesota style.

“These were rich folks ripping off the system,” said Freeman, whose tone moved from humor to anger during Friday’s news conference. “I will make sure they do hard time.”

That’s if the police can find them. The Chisholms have been on the lam for six weeks, and Freeman hinted that they may be out of state and someplace warm.

Andrea Lynne Chisholm, 54, and Colin A.J. Chisholm III, 62, are accused of making $167,420 in fraudulent medical and food-stamp claims from 2005 to 2012.

 

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Citigroup : Judge Orders House Arrest of Oceanografia CEO

Citigroup : Judge Orders House Arrest of Oceanografia CEO

MEXICO CITY–Mexican authorities said Monday that a federal judge has ordered a 40-day house arrest against the chief executive of an oil-services firm at the center of an alleged multimillion-dollar fraud against the Mexican unit of Citigroup Inc.

Attorney General Jesús Murillo Karam said at a news conference that prosecutors have yet to determine what charge or charges they might pursue against Oceanografía chief executive Amado Yañez Osuna. Mr. Yañez voluntarily appeared Saturday to give a statement after authorities called him in for questioning.

Prosecutors then asked a judge to order Mr. Yañez restricted to his home while they gather evidence.