> “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 study doesn’t say that Canadian banks knowingly issued fake-income mortgages to Chinese diaspora buyers in Toronto. But in an interview, D.M. said banking staff are trained to guard against fraud, and the loan application packages he reviewed in Aurora beggared belief.
> The Bureau’s review of HSBC Canada emails and D.M.’s text messages, shows he came to believe numerous employees at the Aurora branch had direct knowledge of faked Chinese income mortgages, and a veteran manager with oversight of more than 10 Greater Toronto branches knew about broad and questionable mortgage lending for Chinese diaspora clients.
> Pointing to specific examples, D.M. claimed that another branch colleague had admitted processing numerous loan applications without meeting his clients, because a branch manager delivered her subordinates foreign income client applications so “they did not have to get sales themselves.”
> “She said yes, she knows specially in Mainland China there is a team who would even answer emails and phone calls verifying [Chinese income] but it’s a sophisticated and well organised scam,” D.M. 's email to HSBC Canada managers says. [...] “When I asked for such a serious issue if she raised a HSBC confidential [complaint] or not she evaded my question,” D.M. wrote. “Now we all love numbers, but I don't think the bank will like these kinds of numbers achieved through this way.”
Sounds like that branch is compromised
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 Canadian institution (out of laziness I just was added to my wife's accounts as a signer and cardholder when I moved). They accepted copies of my American credit history and bank statements, but had no real way to verify their truth. In the US, I don't think that (relatively) wealthy immigrants wanting a home loan are nearly as common. Richmond, BC is a great example of this: avg home price is 1.5mm and 60% of the residents are immigrants.
2. Canadian mortgages are refinanced every five years, traditionally (it is possible to get a longer term, but very uncommon). Combine this with the fact that Canadian real estate has ALWAYS gone up (until now), and financing a home really wasn't a risky thing. If a bank didn't like a customer, they could refuse to refinance after 5 years. If a bank foreclosed, they were basically guaranteed to be made whole.
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!
I guess a more accurate way to put it is that there is almost no one working in banking or any mortgages currently written where a major correction has happened. Canada wasn't whacked in 2008 nearly as bad as the US, and the early 1990s property corrections were much more regionally focused (Toronto got the worst of it), in Edmonton, 1989 and 1990 prices increased more than 20%. Basically there is no one with first hand experience in managing an upside-down housing portfolio.
Basically, for most property markets in Canada, plowing your money into property has been a historically better bet than the TSX.