zlacker

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.

>>seanmc+(OP)
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.

>>seanmc+(OP)
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.

>>Terr_+n2
The article states more cases than that. One of the examples the mortgage payments aren’t being made via Chinese wires, they are being paid locally and the Chinese income doesn’t exist at all.

They could be making round trips with Chinese banks but I don’t see why. You can transfer funds from China into your account before your monthly mortgage was due, the mortgage provider would never know. You can also put dollars into a Chinese bank account and do wires in demand, since it isn’t R!B there are no controls on it.

>>seanmc+(OP)
How could you lose money? RE prices only go up... as long as there's a greater fool... oh, wait?!

>>seanmc+(OP)
Banks these days often don’t hold on to those mortgages though. They can repackage them as securities like MBS and sell them to entities like pension funds. This type of thing is exactly how the GFC started

>>opport+E6
Except that the losses are rarely passed on to investors. The issuer (the bank) typically retains first loss (that changed after the 2008 crisis). So it's typically more a tool to get cheap funding than selling mortgages.