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Old 31.08.2012, 10:15
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ZKB refusing to renew mortages for US citizens

Announced in the Tages Anzeiger today; claims only 70 customers effected if I understood the article correctly.
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Old 31.08.2012, 10:29
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Re: ZKB refusing to renew mortages for US citizens

Yes mortages will not be renewed if you have any connections to the US. The article deals with Swiss citizens living in the US. They now have a problem because not many banks will take the mortage over. As long as they are "only" Swiss they can go to the Postfinance but if they have dual nationality (like the person mentionned in the article) then they Postfinance won't take them. They suggested Raiffeisen in the article but the mortage has not yet been renewed so those persons might be in for a nasty surprise.

Frankly at the moment I would not want to be sent to the US for work reasons. I think I would declinse simply because of those problems...
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Old 31.08.2012, 10:45
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Re: ZKB refusing to renew mortages for US citizens

To be more precise, the refusal is for US citizens who reside in the USA, not those residing in Switzerland. Big difference.
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Old 31.08.2012, 10:49
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Re: ZKB refusing to renew mortages for US citizens

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To be more precise, the refusal is for US citizens who reside in the USA, not those residing in Switzerland. Big difference.
If they have a mortgage here then they have a residence here?
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Old 31.08.2012, 10:59
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Re: ZKB refusing to renew mortages for US citizens

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If they have a mortgage here then they have a residence here?
The IRS have a "physical presence" criteria to determine where they consider you officially reside.

You are only considered a foreign-residence if you reside outside the USA for at least 330 days per year. Anything less, and you are considered a US residence. And yes, they ask for proof.
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Old 31.08.2012, 11:02
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Re: ZKB refusing to renew mortages for US citizens

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If they have a mortgage here then they have a residence here?
Not necessarily, some just have second homes here.

Tom
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Old 31.08.2012, 13:04
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Re: ZKB refusing to renew mortages for US citizens

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To be more precise, the refusal is for US citizens who reside in the USA, not those residing in Switzerland. Big difference.
Based on my reading of the article, any US Person's mortgage at ZKB, irrespective of his/ her residence, is considered non-renewable based on the following sentences (translated):

"ZKB spokeswoman Evelyne Brönnimann confirmed: "Fixed or Libor mortgages of US Persons are not renewed in principle at the end of the term and can therefore be considered terminated." US Persons are not only citizens of the United States, but also dual citizens or Swiss, residing in the U.S...."

"ZKB-Sprecherin Evelyne Brönnimann bestätigt: «Die Fest- oder Liborhypothek einer US-Person wird zum Ende der Laufzeit grundsätzlich nicht erneuert und ist somit quasi gekündigt.» Als US-Personen gelten nicht nur Bürger der Vereinigten Staaten, sondern auch Doppelbürger oder Schweizer, die ihren Wohnsitz in den USA haben ...."
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Old 31.08.2012, 13:41
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Re: ZKB refusing to renew mortages for US citizens

I agree with Curt, the article states that in addition to US citizens, it is also dual citizens or Swiss that live in the US who are considered US persons.

At least that guy has his current mortgage until 2015. I wonder what will happen to us next year when ours runs out? Maybe it will have to have just my husband's name on it (he is German). I am afraid to ask
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Old 31.08.2012, 13:57
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Re: ZKB refusing to renew mortages for US citizens

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Maybe it will have to have just my husband's name on it (he is German). I am afraid to ask
Might not be so simple, going through something similar at the moment. I think you would have to sign title of the house over to your husband and get a notaire involved at a minimum.
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Old 31.08.2012, 14:10
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Re: ZKB refusing to renew mortages for US citizens

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The IRS have a "physical presence" criteria to determine where they consider you officially reside.

You are only considered a foreign-residence if you reside outside the USA for at least 330 days per year. Anything less, and you are considered a US residence. And yes, they ask for proof.
& are ZKB using the IRS definition or another one?
I assume all this is linked to the new US tax declaration stuff that the non-US banks have to comply with so ZKB will be forced to use the IRS one?
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Old 31.08.2012, 14:21
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Re: ZKB refusing to renew mortages for US citizens

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& are ZKB using the IRS definition or another one?
I assume it is the "us person" definition per FATCA, which there has been some discussions elsewhere that it does not meet any other US definition of "us person".
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Old 31.08.2012, 15:39
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Re: ZKB refusing to renew mortages for US citizens

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Might not be so simple, going through something similar at the moment. I think you would have to sign title of the house over to your husband and get a notaire involved at a minimum.

ay yai yai. maybe I should start looking into getting German citizenship...although I can't imagine doing that, seems like taking away part of my identity.

Are all banks making problems with mortgage accounts - as you owe the bank money and aren't hiding money? I thought those wouldn't be a problem, where savings accounts would be? This is really getting annoying. Glad it is a Friday at least
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Old 31.08.2012, 15:45
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Re: ZKB refusing to renew mortages for US citizens

I think all the banks apart from Credit Suisse, PostFinance and UBS will be looking at getting rid of anything "American". Some have already told (ex)customers to move their accounts and mortgages will probably be next.
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Old 31.08.2012, 15:49
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Re: ZKB refusing to renew mortages for US citizens

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Are all banks making problems with mortgage accounts - as you owe the bank money and aren't hiding money? I thought those wouldn't be a problem, where savings accounts would be?
There seems to be a universal treament of swiss mortgages as bank accounts although I do agree to some extent. However, if it works like mine, we technically do have 'an account' and it retains a small balance, and the bank then deducts the principal and interest parts at a latter part of the month. So there is an account that always has a small amount in it.

yes, TGIF
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Old 31.08.2012, 19:05
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Re: ZKB refusing to renew mortages for US citizens

One of FATCA's architects, Richard Harvey, says that Swiss banks have misunderstand FATCA and therefore are cancelling US Persons' mortgages. Here's what he wrote in an article called "FATCA - A Report from the Front Lines", published on August 6, 2012. An excerpt follows and the full article link is below. Perhaps someone should give ZKB, Raiffeisen, GE Moneybank, NAB, AKB and all the other banks that no longer offer mortgages to US Persons and suggest that they read this article (sarcasm intended):

Excerpt:
"Thus, my question is: Why are some Swiss FIs terminating the mortgages of U.S. citizens?9 There are several possibilities. The most benign is that the Swiss FIs and their advisers do not understand that FATCA reporting applies only to investment accounts; it does not apply to a liability owed by a U.S. person to a Swiss FI. If that is the case, my hope is that Swiss FIs can be educated quickly about any misunderstanding.
A more technical explanation might be that a mortgage escrow account often could be linked to a mortgage account. It is therefore possible that Swiss FIs are worried that those escrow accounts may not qualify for the $50,000 depository account exception in section 1471(d)(1)(B). An escrow account may not qualify because some may not view it as a depository account. Alternatively, it is possible the escrow account could be greater than $50,000."

http://papers.ssrn.com/sol3/papers.c...act_id=2122491
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Old 31.08.2012, 19:47
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Re: ZKB refusing to renew mortages for US citizens

Answer is actually very simple - what goes around comes around!

The US authorities have shown a tough line at a number of swiss FIs they are returning the favour or rather they are taking a simple risk mitigation strategy. FATCA and the trends of US applying their jurisdiction means the swiss FIs are taken an approach of not having any customers in the risk categories meaning US.

While this may seem unfair if younare a citizen of these locations but from the FIs perspective the downside of huge regulatory issues is much easier managed by avoidance.

While you can analyse the right or wrong of defining the applicability it is simply the institutions taking the approach of not knowing what is coming next so getting rid of such risks is much easier strategy.

Nothing more nothing less just simple risk management
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Old 31.08.2012, 20:03
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Re: ZKB refusing to renew mortages for US citizens

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One of FATCA's architects, Richard Harvey, says that Swiss banks have misunderstand FATCA and therefore are cancelling US Persons' mortgages. Here's what he wrote in an article called "FATCA - A Report from the Front Lines", published on August 6, 2012. An excerpt follows and the full article link is below. Perhaps someone should give ZKB, Raiffeisen, GE Moneybank, NAB, AKB and all the other banks that no longer offer mortgages to US Persons and suggest that they read this article (sarcasm intended):

Excerpt:
"Thus, my question is: Why are some Swiss FIs terminating the mortgages of U.S. citizens?9 There are several possibilities. The most benign is that the Swiss FIs and their advisers do not understand that FATCA reporting applies only to investment accounts; it does not apply to a liability owed by a U.S. person to a Swiss FI. If that is the case, my hope is that Swiss FIs can be educated quickly about any misunderstanding.
A more technical explanation might be that a mortgage escrow account often could be linked to a mortgage account. It is therefore possible that Swiss FIs are worried that those escrow accounts may not qualify for the $50,000 depository account exception in section 1471(d)(1)(B). An escrow account may not qualify because some may not view it as a depository account. Alternatively, it is possible the escrow account could be greater than $50,000."

http://papers.ssrn.com/sol3/papers.c...act_id=2122491
Well, my mortgage account is called a savings account by UBS, pure and simple. I put a set amount in each month and they take a set amount out each month. That might be why they're being wary. Also the pension plan account is a Fisca one and that might cause banks problems too.
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Old 31.08.2012, 20:06
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Re: ZKB refusing to renew mortages for US citizens

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One of FATCA's architects, Richard Harvey, says that Swiss banks have misunderstand FATCA and therefore are cancelling US Persons' mortgages. Here's what he wrote in an article called "FATCA - A Report from the Front Lines", published on August 6, 2012. An excerpt follows and the full article link is below. Perhaps someone should give ZKB, Raiffeisen, GE Moneybank, NAB, AKB and all the other banks that no longer offer mortgages to US Persons and suggest that they read this article (sarcasm intended):

Excerpt:
"Thus, my question is: Why are some Swiss FIs terminating the mortgages of U.S. citizens?9 There are several possibilities. The most benign is that the Swiss FIs and their advisers do not understand that FATCA reporting applies only to investment accounts; it does not apply to a liability owed by a U.S. person to a Swiss FI. If that is the case, my hope is that Swiss FIs can be educated quickly about any misunderstanding.
A more technical explanation might be that a mortgage escrow account often could be linked to a mortgage account. It is therefore possible that Swiss FIs are worried that those escrow accounts may not qualify for the $50,000 depository account exception in section 1471(d)(1)(B). An escrow account may not qualify because some may not view it as a depository account. Alternatively, it is possible the escrow account could be greater than $50,000."

http://papers.ssrn.com/sol3/papers.c...act_id=2122491
I think most Swiss financial institutions' response will be:

"We have better things to do than read the various whims of section 1471(d)(1)(B) of any other country's tax code, and better things to do than pick up the mess if we misread them and get punished. It's no longer worth the risk."
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Old 31.08.2012, 20:17
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Re: ZKB refusing to renew mortages for US citizens

The below was posted on IsaacBrockSociety.ca today by someone in Switzerland. He/she renounced US citizenship due to 1) banking issues and 2) US tax complexity.

"As a Swiss National and (now former) US Citizen living in Switzerland, I made the decision to relinquish out of fear of losing my bank due to FATCA. That plus all the IRS confusion (I could cry just trying to figure out the forms and their language!)
I heard there was a 1.5 year waiting list in Bern for the process. I e-mailed the Embassy and received a reply immediately, including a copy of the Oath plus a Questionare, just like the one mentioned earlier in this thread. I called the Embassy the next day and to my extreme surprise they offered me an appointment for three weeks later. Apparently there are so many Swiss-US Citizens renouncing that they had to hire extra people! The entire process took exactly one hour from arrival to leaving. I paid the 450 US Dollars/Swiss Francs and then I sat and waited for half an hour to be processed. The Consular was a very nice lady. When she read the renounciation, we both got a small lump in our throats and that was it. I asked her if it was hard for her and she said it was. She told me that she does four renounciations a day. The Swiss Embassy is causing a back log in Washington she told me.
For those who are considering this process, be assured that it is simple. While it can be a little emotional, it is freeing at the same time. I was also quite angry that the IRS and the US Government has put so much pressure on the Swiss Banks that it has come to this extreme. A friend of my 18 year old who lives in the US, is Swiss and goes to college there. When he was in Switzerland during the summer, his Swiss Bank dropped him as a client because he has a student VISA and lives in the US. I do not blame the Swiss Banks. They find that persons with ties to the US are too much of a risk. For me, I am intersted to see what it will be like entering the US as an alien. Anyone have experience?"
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Old 01.09.2012, 09:52
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Re: ZKB refusing to renew mortages for US citizens

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One of FATCA's architects, Richard Harvey, says that Swiss banks have misunderstand FATCA and therefore are cancelling US Persons' mortgages. Here's what he wrote in an article called "FATCA - A Report from the Front Lines", published on August 6, 2012. An excerpt follows and the full article link is below. Perhaps someone should give ZKB, Raiffeisen, GE Moneybank, NAB, AKB and all the other banks that no longer offer mortgages to US Persons and suggest that they read this article (sarcasm intended):

Excerpt:
"Thus, my question is: Why are some Swiss FIs terminating the mortgages of U.S. citizens?9 There are several possibilities. The most benign is that the Swiss FIs and their advisers do not understand that FATCA reporting applies only to investment accounts; it does not apply to a liability owed by a U.S. person to a Swiss FI. If that is the case, my hope is that Swiss FIs can be educated quickly about any misunderstanding.
A more technical explanation might be that a mortgage escrow account often could be linked to a mortgage account. It is therefore possible that Swiss FIs are worried that those escrow accounts may not qualify for the $50,000 depository account exception in section 1471(d)(1)(B). An escrow account may not qualify because some may not view it as a depository account. Alternatively, it is possible the escrow account could be greater than $50,000."

http://papers.ssrn.com/sol3/papers.c...act_id=2122491

This is very interesting. Why did the US government not inform Switzerland that the US government would be guilty of a federal crime if Americans were denied mortgages due to their national origin, as a result of US policy? The US government is now guilty of being a federal criminal and attempts to justify such failures by pointing the finger of blame at others?
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