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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

#31

Post by caseysoftware »

causi wrote: post #3

It's quite bizarre any jurisdiction would allow someone to buy housing there when they can't legally live in it.

In the US, banks issue mortgages to illegal immigrants all the time. Last fall, the Biden Administration went as far as threatening banks who had refused.

> “This guidance reminds lenders that denying someone access to credit based solely on their actual or perceived immigrant status may violate federal law.”

Ref: https://www.justice.gov/opa/pr/justice-department-and-consum...

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

#32

Post by bdcravens »

soggybread wrote: post #20
alchemist1e9 wrote: post #9

Earlier quoted context omitted.

Why? Should we restrict other investments with similar logic? For example should non-residents not be allowed to purchase vacation properties and lease them? The impulse to enlist the government to regulate private property and investments is not productive and results in endless encroachment of individual liberties and rights to governments.

>For example should non-residents not be allowed to purchase vacation properties and lease them? AirB&B has been a terrible experience, so many people buying up houses just to lease them out for a weekend has definitely contributed to rising housing costs and over-all cost of living

That's an issue absolutely, but it doesn't answer the question of whether non-residents should be allowed to do what residents can.

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

#33

Post by bdcravens »

gsk22 wrote: post #26
stormfather wrote: post #15

Earlier quoted context omitted.

Something drastic has to be done about the cost of housing if we're to leave a functional society to the next generation.

Sure, but the high cost of housing has little to do with non-resident investors, and everything to do with lack of supply.

Resident investors are a big part of the problem, however.

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

#34

Post by seanmcdirmid »

maxglute wrote: post #21

>The whistleblower, whomThe 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 mean it's real Chinese income backed by fake paperwork. There's PRC capital controls, rich PRC national who buy RE abroad are going to do it via laundering services and has been for decade+. Banks are fine with this and…

It could be real Chinese income backed by fake paper work (money laundering) or fake income backed by fake paper work (fraud). You can take out $50k per year, a lot more via exemptions, so you don’t need money laundering to get money out of china into the USA (I had to move a few hundred K before, all the paper work was legit).

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

#35

Post by mytailorisrich »

causi wrote: post #3

It's quite bizarre any jurisdiction would allow someone to buy housing there when they can't legally live in it.

Most governments would do anything for foreign direct investment.

From many points of view, having foreign investors buy property without immigrating is a best case scenario for governments.

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

#36

Post by alchemist1e9 »

stormfather wrote: post #15
alchemist1e9 wrote: post #9

Earlier quoted context omitted.

Why? Should we restrict other investments with similar logic? For example should non-residents not be allowed to purchase vacation properties and lease them? The impulse to enlist the government to regulate private property and investments is not productive and results in endless encroachment of individual liberties and rights to governments.

Something drastic has to be done about the cost of housing if we're to leave a functional society to the next generation.

Blaming foreign investors for a housing crisis is a smokescreen. It's not the demand from investors that's the issue; it's the government's stifling regulations that choke new construction. The mess is because of state failure, not market failure. When sellers freely sell their homes to foreign buyers, they're making choices that benefit them. Why should we deny them that right? The real absurdity is ignoring the elephant in the room: a bureaucratic quagmire that prevents building enough homes to meet demand. Instead of scapegoating investors, slash the red tape and let the market work.

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

#37

Post by JumpCrisscross »

bdcravens wrote: post #32
soggybread wrote: post #20

Earlier quoted context omitted.

>For example should non-residents not be allowed to purchase vacation properties and lease them? AirB&B has been a terrible experience, so many people buying up houses just to lease them out for a weekend has definitely contributed to rising housing costs and over-all cost of living

That's an issue absolutely, but it doesn't answer the question of whether non-residents should be allowed to do what residents can.

> it doesn't answer the question of whether non-residents should be allowed to do what residents can

Raise that fence too high and you turn landlords into the community's gatekeepers. (How else could a non-resident become a resident?)

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

#38

Post by Terr_ »

seanmcdirmid wrote: post #28
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…

A lot of it doesn’t even sound like money laundering, just fraud. You say you have a job paying you lots of money from China, verification is loose, you get the loans, and then try to make mortgage payments via Airbnb. The risk is mostly with the bank, and if it doesn’t blow up you make all the money.

While that may happen too, the article alleges the mortgage payments are being made with funds wired from China.

If the borrowers are making the mortgage via rent/Airbnb of the properties... then they are somehow keeping it secret within Canada and also sending it on an international round-trip, which seems like a strange stretch for any small-time "lie on the loan application" crook.

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

#40

Post by koolba »

seanmcdirmid wrote: post #28
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…

A lot of it doesn’t even sound like money laundering, just fraud. You say you have a job paying you lots of money from China, verification is loose, you get the loans, and then try to make mortgage payments via Airbnb. The risk is mostly with the bank, and if it doesn’t blow up you make all the money.

There used to be a thing called a “down payment” that was supposed to cover things like this. It would force you to have a modicum of equity in the house and give the bank a 20% buffer on the price to break even after a short sale.
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