As long as real estate prices continue to rise, you won't see large scale missed payments because they will be able to sell the assets, refinance the loan, or even successfully rent it out.
We've seen this dynamic in 2008 and in the S&L crisis before. Bad loans drive the bubble, the expanding bubble hides the bad loans, but when the bubble stops, there is a massive large scale loan failure.
Someone wants to get $large_sum out of China. They can't do this without raising lots of flags in both countries. So they set up an army of fake borrowers, have them take out fraudulent mortgages on real properties in Canada, pay down the mortgages, and sell the property to obtain clean money on the other end.
All the better if the property rises in value in the meantime due to enormous fraud.
Not really. Lying about the source of cashflow doesn't mean the cashflow isn't real.
The end objective for a lot of these frauds isn't to sink the bank with fake loans. It's to launder money.
Canadians are certainly paying for social services used by folks who earn income abroad and pay little to no income tax in Canada, and folks who want to buy their first house are harmed by inflated housing prices.
My currently overseas landlord for some reason needed to travel to Canada to give birth, and was very eager to get their health card / banking documents sent to our rental despite it being rented out for several years prior to us arriving...
Have other mules or partners purchase crappy properties at a low price. "Flip" the properties, having another mule purchase at a greatly increased price and service the mortgage with more laundered money.
So you get the capital gains immediately, and they are apparently completely clean. If the crappy house continues to appreciate naturally, that's also a bonus, but if not, you can eventually default the mortgage or short-sale.
The article explicitly says that the purpose is laundering via professional operators -- see the flowchart diagram toward the bottom of the piece.