Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

thebureau.news

Post reply on HN
Print view View original

201–210 of 417 posts

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

#201

Post by throwaway894345 »

Archelaos wrote: post #137
nimbius wrote: post #123

Earlier quoted context omitted.

>most Canadians want a house somewhere in the woods instead of doing something meaningful with their lives or try and innovate to build something. to be fair most Canadians were promised this as part of their countries stratospheric growth under neoliberalist policies. that they are not capable of it is no fault of their own. that they want this is at all is not a bane. > Where US got the best talent from India, Cana…

> dividing immigrants into "good ones" and "bad ones" is pretty vile Isn't that the case everywhere where immigration is restricted?

It seems the parent is trying to imply that the grandparent is arguing that some immigrant races are good and others bad (hence his reference to US hispanics, asians, europeans, etc) even though the grandparent is very explicitly arguing that the best immigrants from India and China respectively go to the USA while the mediocre immigrants from those countries go to Canada (I'm not arguing for or against that claim, but I can understand how it is different than what the parent alleges).

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

#202

Post by avidiax »

beiller wrote: post #105
ABCLAW wrote: post #86

Earlier quoted context omitted.

> We should be seeing many people holding mortgages at HSBC not able to pay. Not really. Lying about the source of cashflow doesn't mean the cashflow isn't real. The end objective for a lot of these frauds isn't to sink the bank with fake loans. It's to launder money.

Makes sense I wasn't thinking about the full on laundering aspects. But even so, if the real estate is used in laundering, it will eventually have to be sold to get back clean money. This should still run up prices at the start, and run them down in the end. So I think the majority of the point still stands: there should be an uptick in sales (which there is not). They could be speculating on top of laundering, in wh…

They can get clean money from the start if they structure things right.

Have other mules or partners purchase crappy properties at a low price. "Flip" the properties, having another mule purchase at a greatly increased price and service the mortgage with more laundered money.

So you get the capital gains immediately, and they are apparently completely clean. If the crappy house continues to appreciate naturally, that's also a bonus, but if not, you can eventually default the mortgage or short-sale.

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

#203

Post by uLogMicheal »

jeffbee wrote: post #155
uLogMicheal wrote: post #142

Earlier quoted context omitted.

It's not a matter of if they get paid, it's the unfair advantage this gives in an already competitive market. 2/3 of these properties are probably rented out at inflated prices and the two probably pay the mortgage of the third owners live in. This is a free money glitch, aka fraud.

If the market will bear the rent, why does changing the nationality of the owner improve anything?

This has nothing to do with nationality and everything to do with fraud. If other nations are doing this, it should stop too. Telling lies to acquire loans is illegal and inflates prices for everyone working legitimately.

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

#204

Post by user3939382 »

mikeyouse wrote: post #114
user3939382 wrote: post #82

Earlier quoted context omitted.

I'd be very surprised if the $880M was the extent of the crime. The government not jailing anyone involved in the scheme is completely inexcusable and in my view makes the government complicit in the crime, in which case my trust that the public information about this case is accurate is 0.

The "scheme" was bank tellers in Mexico, working for a recently acquired local bank, accepting boxes full of cash and lying about the origin. HSBC was fined for looking the other way and having shitty controls about suspect funds -- their AML teams were understaffed and they didn't do any real due diligence on the Mexican banking firm they had purchased. The entire executive team was forced out, they clawed back bonu…

This isn’t accurate. HSBC management trained their employees on how to encode transfers for the cartel organizations to evade the government’s detection mechanisms (by inserting punctuation). So there was more to this scheme than you’re describing.

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

#205

Post by maxglute »

topspin wrote: post #156
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...

> if both the lender and borrower are willing participants Eventually this behavior goes overboard and everything crashes. In the meantime, law-abiding people are screwed by the bubble. Then they are made to pay for the clean up. Fraud is costly, and rationalizing it contributes to the problem.

But the "fraud" is slowing the bubble. Without capita controls, PRC buyers would operate like any other international buyer, except there would be a shit load more of them who would do more cash purchases and outbit everyone else. This fraud to circumvent capital controls is why wealthy PRC buyers who liquidated their extra multi million dollar tier1 units only bought 1 house in Canada instead of 3.

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

#206

Post by canadiantim »

m3kw9 wrote: post #140
ilrwbwrkhv wrote: post #108

I have said this over and over again: Canada is the most overrated of all the developed countries. The whole country is a gigantic house of cards propped up by real estate, with horrible service quality, terrible healthcare, no jobs, ZERO innovation, risk taking and entrepreneurship. Having lived and travelled extensively, most Canadians want a house somewhere in the woods instead of doing something meaningful with t…

Despite what you have “heard” the heath care system is quite nice

I’d like to strongly disagree with you. Parts of the health care system are quite nice, but other parts have completely collapsed causing multi year delays for basic healthcare services or even finding a family doctor, which is not quite so nice.

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

#207

Post by timr »

avidiax wrote: post #195
timr wrote: post #80

Earlier quoted context omitted.

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?

> 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?

The article explicitly says that the purpose is laundering via professional operators -- see the flowchart diagram toward the bottom of the piece.

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

#208

Post by jeffbee »

uLogMicheal wrote: post #203
jeffbee wrote: post #155

Earlier quoted context omitted.

If the market will bear the rent, why does changing the nationality of the owner improve anything?

This has nothing to do with nationality and everything to do with fraud. If other nations are doing this, it should stop too. Telling lies to acquire loans is illegal and inflates prices for everyone working legitimately.

Yeah but you seem to be suggested that without this yellow peril, the tenants would be, for some reason, getting a better deal. As if the problem is actually that Chinese people are better at price finding.

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

#209

Post by vizzier »

ysofunny wrote: post #154
ilrwbwrkhv wrote: post #108

I have said this over and over again: Canada is the most overrated of all the developed countries. The whole country is a gigantic house of cards propped up by real estate, with horrible service quality, terrible healthcare, no jobs, ZERO innovation, risk taking and entrepreneurship. Having lived and travelled extensively, most Canadians want a house somewhere in the woods instead of doing something meaningful with t…

at least now that the king of england has cancer they can somehow negotiate their way out of having to reprint all their money? that should be more cost effective than exiting the commonwealth? ahahah

Why would they need to reprint money, old monarch's faces are still perfectly valid currency.

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

#210

Post by cm2187 »

silent_cal wrote: post #103
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.

It's still fraud

I won't throw a stone at anyone trying to circumvent chinese capital controls. Though Canada isn't the place I would go to escape financial repression.
Post reply on HN