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

291–300 of 417 posts

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

#291

Post by shutupnerd0000 »

jeffbee wrote: post #255
rybosworld wrote: post #241

Earlier quoted context omitted.

The market's not bearing rent so much as existing property owners are colluding to prevent new construction. If new construction wasn't so aggressively blocked in some major cities (San Francisco, Boston, all of Canada it seems), then the rents would not be nearly as high as they are. Wealthy property owners are behaving a lot like a cartel in many places.

Exactly. The discourse about foreign buyers of homes in Canada is centered on the morally bankrupt notion that it is only wrong if that race exploits the system. If a good old white guy exploits the same system it is not worth mentioning. What I am saying, and you seem to concur, is that the system itself is the problem. The identity of the person exploiting it is irrelevant unless you are a racist.

You're the only one fixated on race here. The distinction between foreign and local buyers is important to the discussion.

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

#292

Post by Rehanzo »

bonestamp2 wrote: post #221
topspin wrote: post #186

Earlier quoted context omitted.

> Sounds like that branch is compromised "Since 2015, the whistleblower concluded, more than 10 Toronto-area HSBC branches had issued at least $500-million" It's not a branch. It's the whole bank. And you can safely infer it's not the only bank.

Don't get me wrong, it's definitely a problem, and something needs to be done, but lets also try to keep it in perspective... $500 million could well be 500 mortgages in Toronto. That would be about 0.02% of the private dwellings in Toronto.

It says "at least". It's also looking at specific branches of one single bank. Who knows the true extent if all banks and branches are considered.

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

#293

Post by [deleted] »

dddddaviddddd wrote: post #281
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. If Canadian banks agree with this risk assessment, they have little incentive to actually verify income in these cases.

[deleted]

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

#294

Post by dajt »

__loam wrote: post #250
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…

> Having lived and travelled extensively, most Canadians want a house somewhere in the woods instead of doing something meaningful with their lives or try and innovate to build something. Do you ever think about what you're writing and think "I'm an ass hole"?

Well, we are on HN. We have to make allowances.

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

#295

Post by jeffbee »

shutupnerd0000 wrote: post #291
jeffbee wrote: post #255

Earlier quoted context omitted.

Exactly. The discourse about foreign buyers of homes in Canada is centered on the morally bankrupt notion that it is only wrong if that race exploits the system. If a good old white guy exploits the same system it is not worth mentioning. What I am saying, and you seem to concur, is that the system itself is the problem. The identity of the person exploiting it is irrelevant unless you are a racist.

You're the only one fixated on race here. The distinction between foreign and local buyers is important to the discussion.

In what way?

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

#296

Post by gruez »

jeffbee wrote: post #295
shutupnerd0000 wrote: post #291

Earlier quoted context omitted.

You're the only one fixated on race here. The distinction between foreign and local buyers is important to the discussion.

In what way?

racism might be canceled these days, but nativism is alive and well.

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

#297

Post by DeRock »

Terr_ wrote: post #2

IANAFinancialInvestigator, but skimming through it sounds like: 1. Fraudulent applicants come to the bank with crazy stories to ask for enormous loans/mortgages toward a Toronto house, allegedly to turn hyper-suspicious big piles of cash into a more reputable-looking asset. 2. HSBC goes along with that because they want to suckle on the sweet regular payments of suspicious cash, even though they ought to damn well kn…

This doesn't necessarily even need to have a laundering angle. I have a different take:

1. They come with some money, enough for whatever minimum down payment is required (but notably, the issuing bank will also lower down payment requirements for clients with high income or assets, which are faked anyway)

2. HSBC is incentivized to issue mortgages, yes, that's their business. But the actual fraud here sounds more like cash kickbacks from the fraud buyer to the issuing agent themselves.

3. Home prices are made on the marginal sale, so a small amount of this activity can have a large upward pressure on prices. This leads to typical bubble scenarios, and you can keep rolling over or refinancing mortgages as prices keep rising (or even just sell). To get a sense of this, over the past few years, the average Canadian house gained in price something like double the average Canadian income.

So in summary, a lot of this could be explain by plain fraud, enabling foreign buyers to both perpetuate, and participate, in a giant housing bubble. If that's true, and it all comes crashing down, then god help us all.

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

#298

Post by lxgr »

alchemist1e9 wrote: post #172
denton-scratch wrote: post #112

Earlier quoted context omitted.

> treating homes purely as shelter ignores the reality that property is also an investment But that's the problem, isn't it? The basic necessities of life shouldn't become a vehicle for speculation. FTR, all of my wealth is in two homes.

Asserting that housing—or any basic necessity—shouldn’t be an investment is a dangerously naive stance that flies in the face of economic reality and human history. Consider food, water, healthcare—all necessities, yet all benefit from private investment and innovation. The collectivist dream to strip away the investment aspect of housing is a recipe for disaster, leading to shortages, degradation, and inefficiency.…

Ah yes, who would want to trade the flourishing real estate utopia of, say, San Francisco for the collectivist hellscapes of New York (some rent stabilization and public housing), Vienna (>50% public housing, consistently scores top in overall quality of life globally), or Singapore (>70% public housing)?

Free markets are great, until they start incentivizing weird behaviors (NIMBYism, bubbles) instead of investments (construction, renovations) and efficient allocation.

Successful cities have walked the balance successfully and stepped in (only) when necessary.

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

#299

Post by simmerup »

bonestamp2 wrote: post #221
topspin wrote: post #186

Earlier quoted context omitted.

> Sounds like that branch is compromised "Since 2015, the whistleblower concluded, more than 10 Toronto-area HSBC branches had issued at least $500-million" It's not a branch. It's the whole bank. And you can safely infer it's not the only bank.

Don't get me wrong, it's definitely a problem, and something needs to be done, but lets also try to keep it in perspective... $500 million could well be 500 mortgages in Toronto. That would be about 0.02% of the private dwellings in Toronto.

Remember this is $500 million awarded to people out competing honest Canadians looking for housing who aren't lying about their incomes.

If 10 people bid for a house, it's the guy in China lying about their income setting the house price when they win, by what HSBC is doing. This will have an outsized effect on the market.

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

#300

Post by rconti »

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?

TFA says: "The official noted that other nations require tax agencies to verify incomes for mortgages, which isn’t the case in Canada."

I don't know if it's a legal requirement, but I sure know I had to hand over all of _our_tax information to the bank to validate income when getting a mortgage in the US. You have to sign a form saying the bank is allowed to pul your data from the IRS; you're not just handing over paperwork and promising that it's legit.

Post reply on HN