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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

#331

Post by maxglute »

seanmcdirmid wrote: post #134
maxglute wrote: post #102

Earlier quoted context omitted.

Not on Canada's end, it's a bunch of people using legal capital controls to get money into Canada. On PRC end, it's evading capital controls, which depending on your geopolitical alignment, can be illegal activity. But if you're in the west, you want that Chinese money. Free money from competitotrs as good as brain drain from competitors.

Capital controls have bad intentions anyways, I have no qualm with PRC citizens trying to avoid them. Not everyone in the west wants or likes Chinese money. It does lead to them basically exporting their bubble abroad, but Japan did the same in the 80s before their big bust.

Yes, PRC citizens avoiding capital controls end up playing on the same field as other global wealth. I think PRC exporting their bubble is over stated - 10s of millions of tier1 buyers got into the speculation/RE game early in 90s that they'd be millionaires with wealth to enter western RE game regardless where PRC RE market stablizes. And there are just millions of millionaires in China, independant of wealth from RE bubble. Many buyers are simply independantly wealthy from other business ventures ontop of having multiple tier1 units to liquidate to buy western RE. The folks buying million+ dollar properties and 100k cars in the last few years didn't liquidate everything they have in PRC to start new life in Canada. Canada is a retirement plan they bought with change. Sure not everyone wants PRC money, but the sellers certainly do, as do the intermediates who benefits from PRC capital flight.

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

#332

Post by fennecbutt »

simmerup wrote: post #299
bonestamp2 wrote: post #221

Earlier quoted context omitted.

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.

NZ has this problem but with real buyers regardless. Chinese citizens evading laws as much as they can to buy houses and flip them, sometimes hours later.

Laws like "you must live in the house for 1 year before selling" meant they just sent a relative to live there free before selling for higher price.

Like investors and companies chasing ever higher profits, there's a bunch of people that think the house they own should be worth 100000% more by the time they sell it.

Even had a gen x friend be like "Well I pay rates (council services fees) while I own the property so it should be worth more!"

Bruh, getting your rubbish taken away while you live there doesn't add value to the fucking house. Otherwise I could claim paying my electricity bill while I live there does too.

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

#333

Post by fennecbutt »

PeterisP wrote: post #329
simmerup wrote: post #299

Earlier quoted context omitted.

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.

It's $500m that went to "honest Canadians" selling their real estate. The house isn't gone, it's still there, and will probably get sold to Canadians when the bubble pops, possibly much cheaper.

Ahaha, the bubble popping. That'll be the day. All they're doing is increasing house prices for no reason. Houses are now just casino chips for rich people.

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

#334

Post by fennecbutt »

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?

Nationality doesn't matter, but a high % of profits gained leaving the local economy does.

This is why trade with known tax havens should be banned, because no tax havens have large markets to capitalise. It's such a racket.

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

#335

Post by fennecbutt »

jabbany wrote: post #106
silent_cal wrote: post #103

Earlier quoted context omitted.

It's still fraud

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...

Willing participants huh. Was the taxpayer a willing participant when we had to pay for the monumentous fuck up of 2008? Did the banks and investors pay for it, go to prison? Pretty sure it was just one scapegoat and that's it.

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

#336

Post by robocat »

xcrunner529 wrote: post #246
christkv wrote: post #213

Earlier quoted context omitted.

What leads to is no willingness to invest in anything other than bonds to ensure you have enough money to pay the tax.

150k from 20m of assets? Really? Lmao

Every bugger sees a number like 2% and then says '$150000' whoop-de-shit like its some trivial amount. $150k is a lot of money. Its easy to tell other peoples what to do with their money huh?

You've never had a bill you couldn't pay? Major assets are usually tied up in long term investments with breaking costs due to illiquidity or taxation (e.g. sell a house before the bright-line period is up and you may pay a lot extra tax). You are showing your ignorance of the issues. Have you saved enough for your retirement or are you going to live off the backs of other New Zealanders? Good luck to you.

Paying the tax bill can mean selling an investment at a loss or borrowing. Not much different from someone poorer pawning what they own or selling their car because they need the money. It costs me 8.8% at present to borrow on my mortgage - (due to bank conditions I can't borrow cheaper). The same thing can easily occur to wealthy people (managing investment risks sucks).

Many people have already paid tax - their savings are what they have left over after tax. A wealth tax can be a double taxation - another taxes on top of money that was already taxed. Plus the wealthy still often get to pay income tax on any dividends or other gains.

There's a lot of people out there that blow all their money on shit and then put their hand out to the government. I watch friends on low incomes absolutely waste money and don't give a shit about saving. Not all of them, but enough. I've seen friends get big ACC payouts - and a few weeks later its all burnt on nothing. Or inheritances and lose it all. Luckily they live in New Zealand where they can get money from family or get some living expenses from other NZers (the government). Certainly not flash living, but better than most places in the world. Some of those millions come from my tough job earning export income. I get fuck all of the money I bring into the country (after expenses, salaries risk and taxes).

I bet if we met you would have a lot of complaints about how hard done you have been with taxation. It's the same issue.

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

#337

Post by fennecbutt »

maxglute wrote: post #102
jabbany wrote: post #98

Earlier quoted context omitted.

> But even Chinese citizens can also pool those $50k yearly allocations, it doesn’t take a lot of friends and family to do that. So as an observer of this, you will see money coming out of one place, spread to many accounts, wired overseas to different recipients, then re-aggregated... What do you think that looks like...? Surely not money laundering?

Not on Canada's end, it's a bunch of people using legal capital controls to get money into Canada. On PRC end, it's evading capital controls, which depending on your geopolitical alignment, can be illegal activity. But if you're in the west, you want that Chinese money. Free money from competitotrs as good as brain drain from competitors.

It's not free money if house prices are pumped and sold, profits then returned to China.

They used to try to overbuy milk powder in NZ, ignoring supermarket limits imposed bc NZ mothers couldn't find enough formula for their kids. Chinese buyers would sell it back to China to make a tidy profit, after their baby formula scandal drove demand for foreign baby formula (which still exists today). Worked at a supermarket at start of uni, got so fucking sick of being screamed at in mandarin bc I refuse to sell them 30 tins when the limit was 2. Over and over, every damn shift.

Source that isn't me: https://www.nzherald.co.nz/nz/china-buys-up-big-in-nz-baby-m...

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

#338

Post by PeterisP »

fennecbutt wrote: post #333
PeterisP wrote: post #329

Earlier quoted context omitted.

It's $500m that went to "honest Canadians" selling their real estate. The house isn't gone, it's still there, and will probably get sold to Canadians when the bubble pops, possibly much cheaper.

Ahaha, the bubble popping. That'll be the day. All they're doing is increasing house prices for no reason. Houses are now just casino chips for rich people.

On the other hand if it doesn't pop, then it literally doesn't matter if the income documents were fake, as the bank has good collateral and giving the loan turned out not to be a mistake.

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

#339

Post by xyzzy_plugh »

PeterisP wrote: post #338
fennecbutt wrote: post #333

Earlier quoted context omitted.

Ahaha, the bubble popping. That'll be the day. All they're doing is increasing house prices for no reason. Houses are now just casino chips for rich people.

On the other hand if it doesn't pop, then it literally doesn't matter if the income documents were fake, as the bank has good collateral and giving the loan turned out not to be a mistake.

Now you're thinking like a bank.

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

#340

Post by PeterisP »

fennecbutt wrote: post #335
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...

Willing participants huh. Was the taxpayer a willing participant when we had to pay for the monumentous fuck up of 2008? Did the banks and investors pay for it, go to prison? Pretty sure it was just one scapegoat and that's it.

The 2008 bailouts were all loans and taxpayers made a profit on them as they got repaid - see https://money.usnews.com/investing/articles/2017-01-19/finan...
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