If you go to apply for a mortgage, you will suddenly encounter the REAL hunt for money. My sister just bought a house and to get the mortgage she had to explain every deposit and cash withdrawal in her account going back 5 years. My mother had simply written her a check for $400 to reimburse her for picking up some medicine. They wanted her to explain why my mother gave her $400.
Another friend who lived with a girlfriend for 5 years and shared an apartment encountered the full fury of the government’s hunt for spare change. His girlfriend had written him checks for half the rent for 5 years. Every one of those checks had to be explained before they would get a mortgage to buy a home together.
This is completely illegal, yet banks are complying. This is all under the pretense of TERRORISM whereby they have to know where every penny goes. This is not applying a new law with notice that from this date forward you have to keep track of everything you do with anyone else as in East Germany Stasi, this is being applied retroactively. The banks then report that info to the IRS and if you lie somewhere they will convert that to perjury and threaten you with 5 years in jail. My sister would withdraw $2,000 in cash every few months for my mother for incidental purchases. Every one of those cash withdrawals had to be explained. This is between family member – there is no pretense of TERRORISM. We are watching all our privacy and right vanish before our eyes.
It is no longer good enough that you pay your taxes. Now they want to know to whom you are giving any money right down to $50. As a matter of law, if I pay a lawyer for work, I must issue a 1099 to document I pay him any fees. They are tracing every dime.
This sort of red tape will come into play seriously capping real estate in the housing market. We should expect prices to peak out in general for this asset class is being hunted. It may be that the high end holds up better. But the low end that needs a mortgage to transact, will find it increasingly more difficult as the economy turns down, rates move higher, and banks back away from long-term loans.
Cash is rushing into the short-end. The long-end is starting to falter. This should be the same for most real estate markets. This is a 26 year high in Switzerland as well and the rush for condos in Toronto and NYC should top out on this wave where prices depend upon mortgages. Expect the core real estate to peak out with this wave that requires mortgages. This type of unconstitutional tracking of money will eventually discourage people from getting mortgages and as buyers are discouraged in the USA, they will move elsewhere. Caution is advisable.
…more from Martin:
The End of Bonds? Look Out Below 2015.75
