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Letter to the Editor: What the Average Joe Competes with When Buying or Renting a Home, and One Thing You Can Do to Help


Welcome to our letters to the editor/opinion section. To submit yours for consideration, please send to Please consider including an image to be used–either a photograph of you or something applicable to the letter. However, an image is not necessary for publication.

Remember opinions expressed do not necessarily reflect that of MendoFever nor have we checked the letters for accuracy.

[Art created and provided by Lynn Harrington]

This is a little bit complex so I’d suggest grabbing a good cup of coffee or tea before reading. For those more visually inclined, one of the sources for this article is a documentary video called “Who can still afford to live in the city?” which outlines some of these complex processes world wide in far easier way to digest than I can;

First some background. The Pandora and Panama Papers leaks opened up a treasure trove of information on large scale global money laundering in real estate. Some of the money laundered is from the theft of government funds by leaders of various countries such as Russia, Nigeria and Jordan, international organized crime and Chinese capital flight. Chinese capital flight is any citizen’s money valued over approximately $50K USD leaving China. This is illegal and stopped whenever possible but large amounts do leave the country much to the government’s chagrin. Some of the money is also from private billionaires or mega corporations which seek to avoid taxes, and some of that money is privately owned by owners of those companies- not corporately held, which is a very fuzzy area. Much of all of this money combined is hidden in anonymous offshore shell companies. The Paris-based Organization for Economic Cooperation and Development estimates $11.2 trillion in privately held wealth from all countries including China and the US is held in these shell companies10. They are based in small island countries, provinces and states that are known as tax havens and the shells are managed by firms which guarantee anonymity. The total amount is larger than the GDPs of many countries combined.

The part of this money that is invested in US real estate is one of the major competitors that ordinary people in the US are up against when bidding on a home. Currently, US citizens are subject to proving where their funds came from when buying a property while foreign and opaque shell companies are not. This acts as an open invitation to global money launderers looking to park their money in single family homes, apartment buildings, condos, land and even trailer parks. Not only that, as prices rise because of this enhanced competition it increases rents to the point that even workers must often move away from their communities or face homelessness. It destabilizes the fabric of communities.

The United States is one of the favorite targets for real estate acquisition with this offshore money. Global Financial Integrity recently came out with a study which finds more than US$2.3 billion was laundered through U.S. real estate over a  five-year period 1. Looking at the data available for total offshore money this amount seems severely underestimated perhaps because of the methodology or data sources used. All data on this money is estimated by one way or another- no one knows exactly how much is offshore or how much is invested in the US. However, the Paris-based Organization for Economic Cooperation and Development is probably in one of the best positions to estimate this as they state they directly compare raw data between countries, banks and  financial institutions. The GFI did find some other interesting things. According to their information; over 50 percent of the reported cases in the U.S. involved politically exposed persons, the use of anonymous shell companies and complex corporate structures continues to be the number one money laundering method, and that the U.S. remains the only G7 country that does not require real estate professionals to comply with anti-money laundering laws and regulations. Except when it involves it’s own ordinary citizens, internally, by way of the IRS.

Some of this enormous amount of floating money hidden in shell companies is often transferred to other shell companies within the US and registered in a state such as Nevada, Delaware or Wyoming which does not require full information on who the owners of that company really are. Another way of hiding ownership and funding is to have a family member or friend who is a US resident pose as a “straw buyer” who may then buy up dozens of properties. Then each property can be re-registered as it’s own shell company if needed for trades. This method can also reduce taxes on these now domestic LLCs. To make a long story short, when a house bought with an offshore shell company’s money is sold or traded, that money is now laundered.

A large portion of this money is used to purchase properties in popular cities. There is no firm data on this and again the funds floating around are very large indeed so it is reasonable to assume the range of most estimates given are low. However, when averaging several not backed-by-firm-data estimates we arrive at a 6.5% market share. Even half of that  figure nation wide would be enormous when considering how few houses have been built in the past decades. In a city of 30,000  6.5% would be 1,950 or almost 2,000 housing units. This is far more than almost any city’s plan for building affordable housing. When a city’s market becomes saturated with these buyers prices rise dramatically and locals are forced out. Locals then buy or rent properties in more distant areas. This creates a domino effect where the locals in more distant areas are also pressured out of their communities. The accumulative effect may also be greater; when these “investment” homes are taken off the market they are frequently lost to the market. When or if they change hands they commonly are traded between companies rather than going back on the local MLS. Overlapping and in addition to this are properties turned into Air BnBs by US companies and families large and small and those that are eventually bought by huge rental corporations.

When all property values rise it most often does not benefit people who own one single home. In some places in this country rising values equals rising property taxes which the original population can not afford. Anyone selling their home to move to another will find the value relative; the new home will cost much more as well which negates any gain in home value. Taxes may increase.

Another complication is that many of these “investment homes” remain empty and unmaintained. They are not rented, lived in or even vacationed in. It’s more common to see this in large cities and resort towns but as the properties are acquired there shell investors along with displaced residents start to move to more rural areas. As one woman explained “”One way of putting it, is this is not at all about housing. The buildings, they function as assets. You want those houses to be empty and unused. Because then you can play with them”12. It is unconscionable that working US citizens become homeless or have to migrate away from their jobs because foreign and hidden interests want to park their money in an empty rotting house! Others are rented at higher prices but not maintained, a quick example here; “In Cleveland, Ohio, a recently sanctioned Ukrainian billionaire Ihor Kolomoisky and his associates have become the biggest commercial real estate holders in the city. However, their negligence as landlords has contributed to the economic plight of Cleveland and other cities in Middle America”8. Apartment buildings are considered commercial real estate. There is no absentee landlord so distant to local communities as one who lives in another country.

Just as an aside, a common misunderstanding is that home owners were the overwhelming reason for foreclosures in the 2008 Great Financial Crisis. This not true as investors’ properties were far more likely to be foreclosed on. In a study of the crisis by the University of Pittsburgh the author Stefania Albanesi finds “The investor share of mortgage balances roughly doubled between 2004 and 2007 reaching a peak of approximately 30% and accounted for close to 50% of all foreclosures at the height of the crisis, even though their share in the borrower population peaked at 14%”3”. Following the crisis it was companies such as Blackstone and Invitation Homes which gobbled up huge amounts of foreclosed homes, both directly and from companies which bought and traded them. Blackstone alone is estimated to have spent $10 billion on its foreclosed-home-to-rental business5. It now raises money on the global stock market and there are few controls on where that money comes from. Another complication for home buyers was that in many areas all foreclosed homes were virtually unavailable for most ordinary people to buy as they required all cash sales. This was another huge advantage for offshore money as well as domestic giants.

Getting back to the original subject, in 2016 The US Treasury dept became more concerned with global money laundering. The branch of the Treasury called The Financial Crimes Enforcement Network or FinCEN created a pilot test program to collect real ownership (AKA “Beneficial Ownership”) information on real estate bought with offshore and opaque shell company money. FinCEN imposed temporary reporting requirements on title companies in New York City and Miami. It was later expanded to include all-cash sales in certain parts of Boston, Chicago, Dallas-Fort Worth, Honolulu, Las Vegas, Los Angeles, Miami, New York City, San Antonio, San Diego, San Francisco and Seattle areas.

They found that all cash sales in these areas went down, sometimes drastically when the real owners of properties were required to be reported6. According to a study by the University of Miami; “After anonymity is no longer freely available to domestic and foreign investors, all-cash purchases by corporations fall by approximately 70%, indicating the share of anonymity-seeking investors using LLCs as “shell corporations.”7. Granted, both Miami and NYC have reputations as having 2 of the most corrupted real estate markets in the US, but the entire US housing stock is prone to rapidly rising prices in good part from these opaque interests.

and one small thing you can do..

Currently the Treasury Dept, through FinCEN is looking for public feedback on it’s pilot programs which will most likely become permanent throughout the US. There are a few problem areas that effect ordinary home buyers that FinCEN wishes help in defining. One, the most important, is the cap on value that it now imposes.

Presently any properties sold for under $300,000 are exempt from reporting their Beneficial Ownership information, thus keeping ownership of those properties anonymous. If this exemption is kept then much money laundered by offshore companies- billions or even trillions of dollars- will be channeled into buying lower end properties in order to hide money. This would cause another rapid increase in prices of the sort of properties that most working families might just barely be able to afford as it is. It would also cause another increase in rents. Many Mom and Pop local landlords would also be cut out of the market by ever increasing prices.

Another problematic area is that while the target is opaque shell companies, the indicator looked for presently is only all cash sales. If that did not change then it is predictable that these companies would then take measures to bypass that red flag. Yet another area of contention which may not sit well with some is that certain members of congress prefer that any information on Beneficial Ownership remain within the Treasury dept and not become publicly accessible9.

As of now most comments seem to be formal letters from politicians or financial institutions and their lobbyists. But they can also be informal statements from the public. Polite well thought out statements will have a much better reception even if you disagree with some aspects. Quality may count more than quantity. You can look over some of the previous statements when they asked for comments on May 5th 2021. They will accept comments until February 7th, 2022.

To comment on the proposed regulations the Treasury Dept is asking people to go here;  You can upload your letter to them from within the form. The most common format seems to be PDF. Adobe has a free online PDF converter here;

All comments need to be marked; Re: FINCEN-2021-0005-0217 and RIN 1506-AB49.
or write to;

Re: comments FINCEN-2021-0005-0217 and RIN 1506-AB49
Financial Crimes Enforcement Network
P.O. Box 39
Vienna, VA 22183

The full proposal and comment request as it now stands is here;

Homes should be lived in, not seen mainly as investment and laundering assets to be used by the entire world’s ultra wealthy. We can not ever build enough housing in any form to satisfy that demand. No corporation or foreign interest should come before our own peoples’ need for shelter. This is one small thing you can do. Perhaps you can think of more that should be done and let your representatives know whether they are local, state or federal. A personal letter or phone call often counts more than anything else.

-Lynn Harrington

1  Acres of Money Laundering: Why U.S. Real Estate is a Kleptocrat’s Dream, August 2, 2021,
2 3rd paragraph
3  Real Estate Investors and the 2007-2009 Crisis* Stefania Albanesi University of Pittsburgh, NBER and CEPR March 13, 2018—real-estate-investors-and-the-2007-2009-crisis.pdf ” This paper studies the role of real estate investors in the 2001-2006 housing boom and in the 2007-2009 foreclosure crisis.
4  “There were a lot of middle-class families taking their savings out, figuring they could make more money in the real estate market than on the stock market.”
5  Blackstone Profits from the Foreclosure Crisis
6  How dirty is Miami real estate? Secret home deals dried up when feds started watching
7 “After anonymity is no longer freely available to domestic and foreign investors, all-cash purchases by corporations fall by approximately 70%, indicating the share of anonymity-seeking investors using LLCs as “shell corporations.” “
8 NOTE, although Biden is credited for this here, this anti-laundering program actually started in 2016.
9  see document referred here; comment to Janet Yellen re;  by the US house of representatives Committee on Financial Services
10  Governments sharing bank details uncover $11 trillion in offshore assets
12 “Who can still afford to live in the city?”



  1. Briefly, in other words, America not only (at present) has an illegal immigrant problem, it also has an an illegal, predatory capital invasion that is disastrously impacting the ability to buy a home by American families. Great opinion piece. Thank you very much, Lynn. Solution: fortify and regulate our country’s border against the current illegal human and capital invasion.

    • Ummm I’m not seeing anything stated about illegal immigration in this opinion piece Michael and how that affects the housing costs. However I am grateful to Ms. Harrington to put this out as I was not aware of a lot of this information. The affordable housing in this country is a real issue. These loopholes need to be reformed. I will be looking into sending a letter.

    • I’m not for illegal immigration in any way, however your assumption Michael is inaccurate. If it’s conservative talking points you’re looking for maybe focus more on Chinese capital flight. Screaming “illegals, illegals!” when that’s clearly not the issue at hand makes you look like a troll.

      • Get it now? It’s as simple as Biden’ position on the border: open, porous, open. Why are progressives so closed minded?

      • I don’t think you get it…and don’t make assumptions about my political affiliation because you’re inaccurate yet again. Why are fools so delusional?


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Matt LaFever
Matt LaFever
Educator🔸Reporter for KMUD/ Redheaded Blackbelt/Founder of Cold Case Mendocino🔹Local News Junkie

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