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

361–370 of 417 posts

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

#361

Post by randomdata »

dghlsakjg wrote: post #192
radicaldreamer wrote: post #128

Earlier quoted context omitted.

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 Canadia…

> Canadian real estate has ALWAYS gone up (until now)

Have always gone up expect for when they haven't. Nationally, real estate prices dropped precipitously in the early 1980s. And the Toronto housing crash of 1989 was a complete meltdown. It took until the 2010s for prices to finally return to where they were in 1989!

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

#362

Post by maxglute »

FireBeyond wrote: post #344
maxglute wrote: post #205

Earlier quoted context omitted.

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.

The article discusses how they're not just buying one home outright. Far more profitable to put downpayments on 3 or 4 homes and just push that money to pay those mortgages while AirBnBing and renting a couple of them.

The article discusses one incident of person with Canadian tax residency with multiple mortgages, where the leaker allege is typical, when number of net worth assessments in low double digit per year suggest it's not typical. Not with 30k new Chinese Canadian immigrants per year, or 150k home sales in Ontario. From my experience (I know many people who facilitate this process in ON/BC) PRC buyers typically are not renters / airbnbers, they either live in their units part time / full time (or their kids) or leave it empty. Renting/slumlording/airbnbing is largely Chinese _Canadian_ affair, emphasis on Canadian, i.e. not wealthy, middle class who needs to make their capital work to cover costs. They speak mandarin and can insert themselves into the machine. Generally PRC buyers / big bidders aren't playing the RE game in Canada to play landlord. They just want to hide some of their assets abroad. The allegation kind of skips over that distinction, are these "diaspora" PRC individuals or Chinese-Canadians with access to PRC RE networks doing ponzi mortgages to try to get wealthy off Canadian RE. In my experience, it's the Chinese Canadians, because the PRC buyers were busy speculating off much more profitable (at the time) PRC RE, especially if whistleblower is talking about 2015-now time period.

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

#363

Post by danielscrubs »

FireBeyond wrote: post #342
pchristensen wrote: post #282

Earlier quoted context omitted.

Bellevue's population is ~14% Chinese, over 21,000 people, and mostly high income tech salaries. It would be bad business not to have Chinese speakers on staff.

> 14% Chinese, over 21,000 people, and mostly high income tech salaries. It would be bad business not to have Chinese speakers on staff. What language do these Chinese tech workers speak at their jobs?

You can have a tech vocabulary but not know what a secured property is for example. Maybe a non native would know the word secure and the word property and make an erroneous assumption.

It’s probably the biggest purchase in your life so it makes sense you want to know all details.

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

#364

Post by maxglute »

fennecbutt wrote: post #337
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.

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…

>profits then returned to China

Are those profits returning to China? If they wanted profit they would invest in Chine RE which (until recently) was much more profitable and speculative than western RE. Western RE investment was for capital flight to bring wealth abroad. Very few want to bring money INTO PRC.

Baby formula actually great example, at least from what I know in AU market. Yeah you had the occasional tourists bringing back a few cans to savec money, but the sellers getting 30 tins and doing weekly shippments to regular customers in PRC were getting paid in AUD. $60 per tin into AU economy flipping milk powder. It's a good gig, it's no real estate money though. You can argue it's net bad for society because some gain at society loss, but that's how it be in capitalism. Some interests profit at the cost of others. And the interests who profit from PRC money, arguably the establishment, wants to keep profitting.

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

#365

Post by donavanm »

contingencies wrote: post #11

Not only Canada. In Australia this became pervasive across all banks for the last 25 years. It got to the point where, around 5-10 years ago, new national rules were mandated that foreign income could only be assessed at some minor percentage of its evidenced volume under the epithet "loan serviceability criteria". At the face of it, these rules appear to have the public's best interests at heart. But in reality, the…

A “fun fact” for another Australian. As of this month at least one if the big four is doing serviceability assessments based on the PAYG gross income.

WRT your other foreign income/asset comments its much less nefarious. The local banks are focused on AU income and assets because it is directly tied to serviceability and recovery. You can do loans based on foreign income/assets but youll pay a few percentage points for the risk and conversion problems. The international loan outfits are usually smaller, though HSBC is a big one IIRC.

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

#366

Post by denton-scratch »

alchemist1e9 wrote: post #274
denton-scratch wrote: post #218

Earlier quoted context omitted.

> Consider food, water, healthcare—all necessities, yet all benefit from private investment and innovation. I live beside the river Thames, which private "investment" has transformed into a sewer. My access to food has shrunk; I used to have access to butchers, greengrocers and so on. Now all my food comes from supermarkets. The health system I depend on has been gradually privatized, and it is now at breaking point.…

Blaming private investment for pollution and housing issues ignores the core role of government in regulating externalities and protecting property rights. The Thames’ state isn’t due to market failure but government inaction, a prime example of state failure. Moreover, the economic decline witnessed in the UK isn’t caused by capitalism but by anti-market policies stifling competitiveness. The real issue is the colle…

> The Thames’ state isn’t due to market failure but government inaction

> The real issue is the collectivist delusion that more state control is the solution

My head hurts.

> The collectivist dismissal of history as "squishy"

Firstly, I am not a collectivist. Secondly, I don't dismiss history; I think it's very important and illuminating. Thirdly, Karl Marx, the arch-collectivist, hardly dismissed history; his entire theory was based on historical analysis. History is not a list of facts; what real historians do is largely interpretation. History is almost completely unlike maths. Expressions like "history tells us that ..." are rather stultifying; history tends to tell us what we want to hear.

Your comment seems to be a catalogue of free-marketeer articles of faith, expressed as bald assertions, as if only a fool could fail to see their obvious truth. Well, we've had free-marketeers in charge here for 15 years now; everyone knows that things have got worse.

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

#367

Post by jacquesm »

hiatus wrote: post #260
neom wrote: post #96

Earlier quoted context omitted.

I've been using HSBC in Canada and the USA for 15 years, they're great for exactly the reasons they shouldn't be. Their tooling basically lets you do whatever you want with no oversight. It's kinda weird, but I liked it. Sad they sold their Canadian business to RBC (even though they sold their USA business to Citizen Bank, they allowed high net worths to stay but the Canadian arm did not, wondering if this news is th…

> Their tooling basically lets you do whatever you want with no oversight What do you mean by this? Maybe some examples would help to clarify.

I can give you one: one guy I met while I lived in Canada had a scheme going where they got people to sign up for a service using a credit card and then they also signed them up for a bunch of unrelated very low monthly fee services that automatically renewed and/or unrelated one time charges marked as 'donation to some charity'. HSBC was happy to shield the company from VISA and MC for the longest time because they made money on it. This was pretty much a clear case of theft and without HSBC cooperating I really doubt it would have worked.

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

#369

Post by hoseja »

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…

>Sounds like that branch is compromised

By all accounts it seems the whole country is.

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

#370

Post by AllegedAlec »

cyanydeez wrote: post #306
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.

yes, remember it's capitalism doing this, not Chinese, Indian, Canadian or American. hail free market.

> capitalism is whatever I feel is bad about it > bad actors define capitalism

Sure thing bud.

Post reply on HN