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"Fake Chinese income" mortgages fuel Toronto real estate bubble: HSBC bank leaks

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Re: "Fake Chinese income" mortgages fuel Toronto real estate bubble: HSBC bank leaks

#191

Post by quink »

robocat wrote: post #161
guidedlight wrote: post #129

Earlier quoted context omitted.

Everything you write is also true if you replace Canada with Australia.

New Zealander here: much the same. New Zealanders definitely hate entrepreneurship - one political party wanted to introduce a wealth tax if you had more than $1 million equity. Median house price in Auckland is just over $1 million! Auckland has about 30% of the population, and house affordability (price compared to income) is similar as bad as Sydney or San Francisco. I have done okay for myself founding a software…

Guardian, December 2023:

> The wealth tax contemplated by New Zealand Labour would have required couples to pay an annual levy of 1.5% on any assets they held over a $10m threshold. The estimated $3.8bn in revenue would have funded income-tax cuts for the vast majority of Kiwis. Labour’s potential coalition partners, the Greens and the indigenous-led Te Pāti Māori, ran on similar platforms.

> Plus the relentless attack on my hard earned savings by a grifter government.

$150,000 a year if you own $20 million, $0 if they somehow attacked you all the way to a pitiful $10 million, and in return tax cuts for those doing worse than you, and they did not get elected.

I’m not seeing the problem.

Re: "Fake Chinese income" mortgages fuel Toronto real estate bubble: HSBC bank leaks

#192

Post by dghlsakjg »

radicaldreamer wrote: post #128
ThisIsMyAltAcct wrote: post #25

> The whistleblower, whom The Bureau is calling D.M., immigrated to Canada as an international student from India, making him a minority among mostly Chinese-Canadian co-workers at the Aurora branch. > “I am going to reveal potential mortgage fraud at HSBC Bank Canada and possibly some employees benefited from the fraud, financially pocketing thousands of dollars, which I call the proceeds of crime.” > FINTRAC’s stud…

Are US banks just a lot more strict about source of income than Canadian banks?

Total conjecture: 1. US banks do not face nearly as diverse a set of applicants, and 2. are only required to hold the loan for 5 years.

1. It is very common in Canada for a person with wealth acquired outside the country to apply for a home loan. At the time I was approved as a guarantor for a home loan for over half a million CAD, I had only been in the country for 2 years, and had no credit history with any Canadian institution (out of laziness I just was added to my wife's accounts as a signer and cardholder when I moved). They accepted copies of my American credit history and bank statements, but had no real way to verify their truth. In the US, I don't think that (relatively) wealthy immigrants wanting a home loan are nearly as common. Richmond, BC is a great example of this: avg home price is 1.5mm and 60% of the residents are immigrants.

2. Canadian mortgages are refinanced every five years, traditionally (it is possible to get a longer term, but very uncommon). Combine this with the fact that Canadian real estate has ALWAYS gone up (until now), and financing a home really wasn't a risky thing. If a bank didn't like a customer, they could refuse to refinance after 5 years. If a bank foreclosed, they were basically guaranteed to be made whole.

Re: "Fake Chinese income" mortgages fuel Toronto real estate bubble: HSBC bank leaks

#193

Post by avidiax »

SunlightEdge wrote: post #100

To maybe offer a different perspective: I think the Canadian mortgages linked to Chinese accounts will likely all be paid. What may be happening is that there is a lot of underground chinese financial activity that is not recorded in Canada and part of this 'network' is utilized to get money out of china.

> I think the Canadian mortgages linked to Chinese accounts will likely all be paid.

This is a "heads, I win", "tails, you lose" type of scam. The mortgage holders are all judgement proof. They have no income or assets to go after. So if the housing market crashes, the banks have no recourse.

It's the same as taking out a mortgage and instead of buying a house, you go to the casino and bet double or nothing. Sure, the intention to pay back is there. But it is contingent on the investment performing, and the bank is taking on unknown risks.

Re: "Fake Chinese income" mortgages fuel Toronto real estate bubble: HSBC bank leaks

#194

Post by cloudedcordial »

The issue is not new. I am of East Asian heritage and live in Canada. Several people asked me causally why I went to school and had a regular job. They explained that with the "Chinese money" I should not compete for jobs with folks who really needed the money.

Smh...

Re: "Fake Chinese income" mortgages fuel Toronto real estate bubble: HSBC bank leaks

#195

Post by avidiax »

timr wrote: post #80
beiller wrote: post #62

All sounds very plausible, but where are the effects of this? We should be seeing many people holding mortgages at HSBC not able to pay. Are there no public stats showing how many lack of payments being made to HSBC? Is HSBC going to hold on to these properties taking massive losses? For how long? It has definitely helped the run up of prices here. It will also help the collapse of prices as well, either that or the…

The article suggests this is money laundering. It would make sense to have fake borrowers with fake incomes as part of a layering operation. Someone wants to get $large_sum out of China. They can't do this without raising lots of flags in both countries. So they set up an army of fake borrowers, have them take out fraudulent mortgages on real properties in Canada, pay down the mortgages, and sell the property to obta…

The article doesn't seem to suggest that the mortgage holders are actually straw purchasers, but the facts seem to suggest this is at least sometimes true. How can a hairdresser service several mortgages without "income" from China?

Re: "Fake Chinese income" mortgages fuel Toronto real estate bubble: HSBC bank leaks

#196

Post by alchemist1e9 »

causi wrote: post #150
alchemist1e9 wrote: post #41

Earlier quoted context omitted.

> Vacant homes are a problem for anyone who needs housing. But they pay taxes without demanding any services and the seller assessed they had better use of the capital, they could buy or build a more suitable home. If I lived in a location with 50% vacant homes all paying property taxes then wouldn’t my schools and streets and all local government services be extremely well funded?

Kind of by definition you can't pay more in taxes than you contribute to the economy, therefore unoccupied housing is a drain on the local economy.

Your assertion flips economic principles on their head. Vacant homes paying taxes without drawing on local services represent a net gain, not a drain. Taxes paid on these properties directly fund public services, enhancing the community’s infrastructure without additional burden. Furthermore, the investment in property contributes to the economy through construction, maintenance, and property management industries. To claim that unoccupied housing harms the local economy is not logical.

Austrian economics teaches us that restricting foreign investment misinterprets how markets work. Vacant homes signal opportunities for builders, not losses for workers. Investment flows where it’s valued, stimulating demand and construction, not stifling growth. Misallocating housing due to artificial constraints only distorts the market, harming those you aim to help. Let’s not forget, economic growth comes from creating value, not redistributing scarcity.

Re: "Fake Chinese income" mortgages fuel Toronto real estate bubble: HSBC bank leaks

#197

Post by jabbany »

JumpCrisscross wrote: post #175
jabbany wrote: post #106

Earlier quoted context omitted.

You can label it however you want, if both the lender and borrower are willing participants, it will be difficult to prevent this from happening. Like mentioned in the article, often times the material is very obviously suspicious and banks probably know this and still turn a blind eye to it because these borrowers are low risk and much less sensitive to the high/rising interest rates of today...

> You can label it however you want, if both the lender and borrower are willing participants, it will be difficult to prevent this from happening These aren't purely private transactions. If HSBC Canada fails, Ottawa is on the hook. The defrauded party here is the public. (And possibly the bank's lenders and shareholders.)

This is somewhat counterintuitive but... the fraudulent mortgages are not more risky, they are often times more stable than other local borrowers.

I think what many people are imagining is the subprime mortgage situation of yore. But in this case, a lot of the "fraud" is the result of knock on effects from capital controls in the PRC. Many (new and aspiring immigrants) have capital from sales of their property in China, but due to capital controls, cannot get it out quickly. They have to do it in $50k/year chunks.

Usually a loan or mortgage is the solution for this, but those depend on _income_ rather than _wealth_, so normally these people can't take out as much as they need to, even though they could easily back actual value of the mortgage. So there's a little collusion between banks and mortgage brokers to get in on this market gap (probably more so now that interest rates are high, which these borrowers are much less sensitive to).

Of course, there are risks, but those risks are tied to more geopolitical circumstances and less market-driven, and apparently banks are more willing to take their chances on that.

Re: "Fake Chinese income" mortgages fuel Toronto real estate bubble: HSBC bank leaks

#198

Post by cycrutchfield »

ysofunny wrote: post #157
hnarn wrote: post #121

Earlier quoted context omitted.

> The whole country is a gigantic house of cards propped up by real estate That’s quite the statement, I assume you have quite the source for it. The price-to-rent ratio isn’t that far off from the US, for example.

there's a tiktoker that compares real states prices in Canada and in various parts of Europe it's funny to see dozens of examples of european castles (buildings with tens of rooms and bathrooms, plus huge gardens) whose cost is in the same ballpark as 2 or 3 bedroom houses in random (but well [sub]urbanized) parts of Canada

Wait until you see the maintenance and heating costs for those castles, or any old building in general. The sticker price isn’t the whole story.

Re: "Fake Chinese income" mortgages fuel Toronto real estate bubble: HSBC bank leaks

#199

Post by [deleted] »

JumpCrisscross wrote: post #173
SunlightEdge wrote: post #100

To maybe offer a different perspective: I think the Canadian mortgages linked to Chinese accounts will likely all be paid. What may be happening is that there is a lot of underground chinese financial activity that is not recorded in Canada and part of this 'network' is utilized to get money out of china.

> think the Canadian mortgages linked to Chinese accounts will likely all be paid Out of curiosity, why? China's stock market is melting down in the midst of persistent deflation. A lot of people who thought they had liquidity may not anymore. Beijing could open the taps, but then that puts pressure on the currency.

[deleted]

Re: "Fake Chinese income" mortgages fuel Toronto real estate bubble: HSBC bank leaks

#200

Post by edgyquant »

gspetr wrote: post #180
JumpCrisscross wrote: post #160

Earlier quoted context omitted.

> Canada is the most overrated of all the developed countries You're also a politically stable energy and resource exporter bang next to a global economic superpower and security guarantor. Oh, and access to two oceans and soon a third. Canada has plenty of problems. But it's also tremendously blessed.

What's funny is that if we substitute Canada with Russia in your comment, every word of it still holds true. I suppose "stable" and "stagnant" are two sides of the same coin.

Yeah, Russia is Chinas Canada
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