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Hedge fund manager Edward S. Lampert has spent the last 14 years steering Sears as it spun off businesses, took on debt and, this week, filed for bankruptcy protection, the New York Times reported. His hedge fund, ESL Investments, appears to have racked up a much more modest loss than the company’s chapter 11 bankruptcy filing would suggest, according to corporate filings and interviews with analysts and investors. ESL’s nearly 50 percent stake in Sears will probably be wiped out in bankruptcy. But that loss is offset by gains elsewhere. For example, Lampert has collected hundreds of millions of dollars in interest and fees from Sears. He also took stakes in businesses that were spun off from the company, and some of those investments are doing well.

The Treasury Department is poised to outline new rules stemming from the $1.5 trillion tax overhaul last year that are aimed at giving investors confidence to pour billions of dollars into distressed economic areas across the U.S., the New York Times reported. Investment banks, venture capitalists and real estate developers have been eagerly awaiting guidance for so-called opportunity zones, a sort of domestic tax haven that was created under the Republican tax bill that President Trump signed into law in December. The zones are devised to attract capital to urban, suburban and rural areas where investment has lagged after the Great Recession — like broad sections of Detroit and Stockton, Calif. — by allowing investors to avoid some taxes when they fund projects there. Treasury is expected to outline criteria on Friday that would allow a wide variety of projects to qualify for the preferential tax treatment, including seed capital for start-up businesses in areas ultimately identified as opportunity zones.

In the wake of Hurricanes Michael and Florence, lenders can expect a spike in mortgage delinquencies from Virginia to the Florida panhandle, Credit Union Times reported. Two studies released this week found mortgage delinquencies rose significantly this past summer in parts of Texas and Florida hit by hurricanes a year ago. “A decade after poorly underwritten mortgages triggered a housing market crash, it’s clear that the foreclosure risk associated with those problem mortgages has faded,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “The biggest foreclosure risk in today’s housing market comes from natural disaster events such as the twin hurricanes of a year ago,” he said. The ATTOM U.S. Foreclosure Market Report released on Thursday shows forecloses were started on 177,146 U.S. properties in the three months ending Sept. 30, down 6 percent from the previous quarter, down 8 percent from a year ago and reaching the lowest level since the fourth quarter of 2005. The number of starts was 36 percent below pre-recession average of 278,912 properties per quarter. Also the percentage of foreclosure starts tied to mortgages originated from 2004 to 2008 was 44 percent, down from about 75 percent in 2012.

Mortgage rates hit their highest level in more than seven years this week at nearly 5 percent, a level that could deter many home buyers and represents another setback for the slumping housing market, the Wall Street Journal reported. The average rate for a 30-year fixed-rate mortgage rose to 4.9 percent — the largest weekly jump in about two years — according to data released Thursday by mortgage-finance giant Freddie Mac. Lenders and real-estate agents say that, even now, all but the most qualified buyers making large down payments face borrowing rates of 5 percent. A 5 percent mortgage rate isn’t that high by historic standards. During much of the decade before the financial crisis, these rates hovered between 5 and 7 percent.

President Trump participated in dubious tax schemes during the 1990s, including instances of outright fraud, that greatly increased the fortune he received from his parents, according to an investigation by the New York Times. Based on confidential tax returns and financial records, the investigation reveals that Trump received the equivalent today of at least $413 million from his father’s real estate empire, starting when he was a toddler and continuing to this day. Much of this money came to Trump because he helped his parents dodge taxes. He and his siblings set up a sham corporation to disguise millions of dollars in gifts from their parents, records and interviews show. Records indicate that Trump helped his father take improper tax deductions worth millions more. He also helped formulate a strategy to undervalue his parents’ real estate holdings by hundreds of millions of dollars on tax returns, sharply reducing the tax bill when those properties were transferred to him and his siblings. These maneuvers met with little resistance from the Internal Revenue Service, The Times found. The president’s parents, Fred and Mary Trump, transferred well over $1 billion in wealth to their children, which could have produced a tax bill of at least $550 million under the 55 percent tax rate then imposed on gifts and inheritances. The Trumps paid a total of $52.2 million, or about 5 percent, tax records show. Read more. 

In related news, New York state tax authorities have opened an investigation into allegations reported in the New York Times that President Donald Trump and his family created their real estate empire through “instances of outright fraud,” evading taxes on hundreds of millions of dollars, Bloomberg News reported. “The Tax Department is reviewing the allegations in the New York Times article and is vigorously pursuing all appropriate avenues of investigation,” said James Gazzale, spokesman for Department of Taxation and Finance. “The New York Times’ allegations of fraud and tax evasion are 100 percent false,” Charles J. Harder, a lawyer for President Trump, said in a statement. “There was no fraud or tax evasion by anyone. The facts upon which the Times bases its false allegations are extremely inaccurate.” Read more.