Canada Housing/Debt: Trust me, I'm a landlord.

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Risky Bisquick: Jan 18, 2008; PLEASE LET ME WRITE YOUR VICTIM IMPACT STATEMENT SO I CAN FURTHER DEMONSTRATE THE CALAMITY THAT IS OUR JUSTICE SYSTEM.; Buglord

PK loving SUBBAN posted:

Casual reminder that the CRA spent most of the last administration investigating environmental and social justice charities instead of real estate.

Investigated for being perceived to be partisan and a NPO, clearly the crime of the century.

# ? Sep 13, 2016 00:48

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# ? Jun 6, 2024 22:37

Femtosecond: Aug 2, 2003

Two days after being embarassed by the Globe and Mail the CRA launches a review of BC Real Estate speculators

quote:

http://www.theglobeandmail.com/news/politics/cra-launches-review-of-bc-real-estate-speculators/article31847258/

The Canada Revenue Agency has launched a review into the actions of B.C. real estate speculators in light of a Globe and Mail report that uncovered possible tax evasion and fraud.

On the weekend, the B.C. government urged the CRA to track down tax cheats and toughen up its rules after a Globe investigation showed a network of speculators flips homes for a profit and evades taxes by classifying them as principal residences even though they never lived there.

�Like all Canadians, I am very concerned over allegations that some wealthy Canadians are not paying their fair share of taxes,� Diane Lebouthillier, the minister responsible for the Canada Revenue Agency, said in statement on Monday. �That is unacceptable and I�ve since asked Canada Revenue Agency officials to look into the specifics of the case that was reported by the Globe and Mail recently.�

Ms. Lebouthillier said the agency had already stepped up audits and investigations in Ontario and British Columbia, and that several real estate files are under review to determine whether a criminal investigation should be launched. The minister�s office declined to provide more details because they cannot comment on specific cases.
...

# ? Sep 13, 2016 05:14

B33rChiller: Aug 18, 2011

Femtosecond posted:

Two days after being embarassed by the Globe and Mail the CRA launches a review of BC Real Estate speculators

Hopefully they're still on that enforcement train when my shithead co-worker decides to cash in his inherited millions in real estate. He's been loudly spouting off about his plans to have his mailing address changed to his other properties for whatever amount of time it takes to classify it as a primary residence before selling it. No plan to actually live in said properties. Openly bragging about his tax evasion plans. While bitching about how his tax dollars get spent. Did I mention we work for the federal government?

Parksvilleboomer9thgradedropout.txt

# ? Sep 13, 2016 06:20

The Gunslinger: Jul 24, 2004; Do not forget the face of your father.; Fun Shoe

After ignoring the issue for years and even having that specific instance reported to them multiple times, its reassuring to know that the CRA is now on the case :sigh:

quote:

Hopefully they're still on that enforcement train when my shithead co-worker decides to cash in his inherited millions in real estate. He's been loudly spouting off about his plans to have his mailing address changed to his other properties for whatever amount of time it takes to classify it as a primary residence before selling it. No plan to actually live in said properties. Openly bragging about his tax evasion plans. While bitching about how his tax dollars get spent. Did I mention we work for the federal government?

The CRA does have an anonymous reporting system for people like this but given their past performance, I'm not sure much would actually be done. If nothing else it might make you feel a bit better.

# ? Sep 13, 2016 16:28

McGavin: Sep 18, 2012

http://www.theglobeandmail.com/glob...rticle31838268/

quote:

More than 700,000 Canadian borrowers could be facing payment shock on their debt obligations if interest rates rise by a quarter point, and that rises to as many as one million people should rates go up by 1 per cent, says a study by credit monitoring firm TransUnion.

In a one-quarter-point increase scenario, 718,000 consumers – about 3 per cent of the population of 26 million credit consumers – would see a $50 or greater hike in their monthly payments, the report released Tuesday found.

An additional 253,000 consumers might be in financial difficulty if the rate were to rise by a full percentage point, the results indicate.

# ? Sep 13, 2016 16:30

yippee cahier: Mar 28, 2005

When there's been a deliberate attempt to commit fraud like that does the CRA kick things into high gear or do they attempt to set up a payment plan for back taxes?

# ? Sep 13, 2016 16:33

Risky Bisquick: Jan 18, 2008; PLEASE LET ME WRITE YOUR VICTIM IMPACT STATEMENT SO I CAN FURTHER DEMONSTRATE THE CALAMITY THAT IS OUR JUSTICE SYSTEM.; Buglord

yippee cahier posted:

When there's been a deliberate attempt to commit fraud like that does the CRA kick things into high gear or do they attempt to set up a payment plan for back taxes?

Ahahahahahahahahahaha aahahaha
ahahaha

They do nothing

# ? Sep 13, 2016 16:34

ocrumsprug: Sep 23, 2010; by LITERALLY AN ADMIN

jm20 posted:

Ahahahahahahahahahaha aahahaha
ahahaha

They do nothing

Even this case where the minister has said there will be action.

Any further questions will be answered that there is an on-going investigation. In three years, the G&M will copy and paste that article and it will still be true.

# ? Sep 13, 2016 16:48

Femtosecond: Aug 2, 2003

B33rChiller posted:

Hopefully they're still on that enforcement train when my shithead co-worker decides to cash in his inherited millions in real estate. He's been loudly spouting off about his plans to have his mailing address changed to his other properties for whatever amount of time it takes to classify it as a primary residence before selling it. No plan to actually live in said properties. Openly bragging about his tax evasion plans. While bitching about how his tax dollars get spent. Did I mention we work for the federal government?

Parksvilleboomer9thgradedropout.txt

Some of these minor fixes would halt these shenanigans. It's really disturbing things are this lax.

quote:

The principal-residence exemption is a fixable piece of the housing puzzle

....

The principal-residence exemption may be the best-loved feature of our country�s income-tax system. It allows owner-occupied condos and houses to be sold without paying any tax on the capital gain (the difference between the sale price and the original cost of buying the residence). It�s a key reason why buying a house can be a great financial investment, along with the security of tenure, social status and psychic benefits that draw many people to home ownership.

The trouble is that it also tempts some � including many full-time Canadian residents � to flip houses in search of a tax-free profit. By law, the principal-residence exemption is not meant to apply to such commercial transactions. But lax enforcement, and some unfortunate grey areas in the law, mean that many such deals are never scrutinized.

When some get away with abusing the exemption, a vicious cycle quickly sets in. Others decide to try the same thing, since it sounds better than paying taxes on the sale of stocks or other investments. As the behaviour spreads, many get the mistaken impression that all gains on housing are automatically tax-free. Others simply play the �audit lottery,� gambling that the Canada Revenue Agency will never catch them. Authorities then face a daunting task to try to catch up through after-the-fact audits.

To break this cycle, the federal government needs to take some decisive, preventive action. Here are some options:

Require all housing sales to be reported on both the vendor�s and the purchaser�s tax returns.

The CRA�s current policy is that a homeowner need not report profits on a sale if they are claiming the principal-residence exemption. This means that in questionable cases that stretch the law, there is no way to flag the return for a second look. Taxpayers need only commit a sin of omission, then sit back and wait to see whether the CRA ever calls. Simply having to disclose the sale on a tax return, with an associated penalty for failing to report, would be enough to get some to play by the rules. Requiring both parties to report would allow cross-checking, one of the most efficient means for the CRA to detect both honest errors and outright cheating.

....

# ? Sep 13, 2016 16:56

DariusLikewise: Oct 4, 2008; You wore that on Halloween?

I'm selling my house and moving to small town Manitoba, gently caress yall.

# ? Sep 13, 2016 17:01

tagesschau: Sep 1, 2006; Can't post for 10 hours!

When the IRS started requiring people to list the Social Security numbers of their claimed dependent children on their tax returns, 7,000,000 dependents disappeared. :iiam:

# ? Sep 13, 2016 17:02

Throatwarbler: Nov 17, 2008; by vyelkin

B33rChiller posted:

Hopefully they're still on that enforcement train when my shithead co-worker decides to cash in his inherited millions in real estate. He's been loudly spouting off about his plans to have his mailing address changed to his other properties for whatever amount of time it takes to classify it as a primary residence before selling it. No plan to actually live in said properties. Openly bragging about his tax evasion plans. While bitching about how his tax dollars get spent. Did I mention we work for the federal government?

Parksvilleboomer9thgradedropout.txt

I don't think it works like that. You don't get to not pay any taxes on a house just because it's a primary residence at the time of sale, you still have to pay the cap gain for the period when it wasn't a primary residence. You can't rent a house out for 40 years and then live in it for year 41 and then sell it and not pay any taxes at all.

# ? Sep 13, 2016 17:08

ocrumsprug: Sep 23, 2010; by LITERALLY AN ADMIN

Throatwarbler posted:

I don't think it works like that. You don't get to not pay any taxes on a house just because it's a primary residence at the time of sale, you still have to pay the cap gain for the period when it wasn't a primary residence. You can't rent a house out for 40 years and then live in it for year 41 and then sell it and not pay any taxes at all.

I think you will find when you are a Canadian tax evader, you can in fact not pay any tax on your properties.

# ? Sep 13, 2016 17:18

The Gunslinger: Jul 24, 2004; Do not forget the face of your father.; Fun Shoe

yippee cahier posted:

When there's been a deliberate attempt to commit fraud like that does the CRA kick things into high gear or do they attempt to set up a payment plan for back taxes?

They don't really do anything, their mandate is to get money and its white collar crime so no one gives a poo poo in Canada. They publish a few cases on their website and make a half-hearted effort to prosecute stuff that gets attention but that's about it. Unlike the IRS who has an entire division staffed with lawyers dedicated to enforcement and deterrence, the CRA basically just wants their cash and is always willing to cut a deal.

I remember a guy around here a few years ago who was filing returns for people with a lot of bullshit claims on them. Claiming massive losses on personal businesses every year, inventing donations and loads of other mickey mouse poo poo. The CRA did some audits and eventually figured things out. You would think they would get really mad about this, its their wheel house after all. The kicker is that the guy himself didn't declare any of his tax prep income which was something like 800k. The result was he got a year of house arrest and had to pay some money/penalties. A year of house arrest for multiple counts of fraud over $5000 and failure to report income. Sadly that sort of result is the norm in my experience.

# ? Sep 13, 2016 17:18

Lexicon: Jul 29, 2003; I had a beer with Stephen Harper once and now I like him.

Shut it down; outsource the whole thing to the IRS. They seem to get poo poo done.

# ? Sep 13, 2016 17:20

B33rChiller: Aug 18, 2011

Throatwarbler posted:

I don't think it works like that. You don't get to not pay any taxes on a house just because it's a primary residence at the time of sale, you still have to pay the cap gain for the period when it wasn't a primary residence. You can't rent a house out for 40 years and then live in it for year 41 and then sell it and not pay any taxes at all.

I would never imply that the guy in question is smart, or well informed. He's a walking grumpy old redneck stereotype, with all the FYGM/bootstraps/git 'er done/ignorance that implies. I'll have to bite my tongue and wait for him to actually do something before reporting. My suggestion that he consider himself lucky, and just pay his loving taxes, considering that's where his paycheque comes from, earned me the stinkeye from the majority of the people in the room.

# ? Sep 13, 2016 17:33

RealityWarCriminal: Aug 10, 2016

Lexicon posted:

Shut it down; outsource the whole thing to the IRS. They seem to get poo poo done.

Haha, nope. The Republicans in congress have been reducing funding to the IRS for years, despite the IRS's enforcement arm being one of the best moneymakers the US government has.

quote:

As a result of cuts, the IRS is conducting fewer audits overall and fewer audits of high-income taxpayers and businesses. In 2010, it audited 1.1 percent of individual returns; in 2015, it audited only 0.8 percent, the lowest level in a decade.[19] The IRS audited 1.2 million taxpayers in 2015 � 13,700 fewer than in 2014 and over 350,000 below 2010.[20] This represents a 22 percent drop. Audits recovered about 30 percent ($30 billion) less in revenue in the past five years than in the prior five years.

Enforcement has suffered in part in spite of evidence that various IRS enforcement efforts save many times what they cost. The Treasury estimates, for example, that every additional $1 invested in IRS tax enforcement beyond current levels would yield $4 in increased revenue.[21] As Commissioner Koskinen summarized, �Essentially, the government is losing billions to achieve budget savings of a few hundred million dollars.�[22]

http://www.cbpp.org/research/federal-tax/irs-funding-cuts-compromise-taxpayer-service-and-weaken-enforcement

RealityWarCriminal fucked around with this message at 19:54 on Sep 13, 2016

# ? Sep 13, 2016 19:52

Juul-Whip: Mar 10, 2008

dicks assassin posted:

Haha, nope. The Republicans in congress have been reducing funding to the IRS for years, BECAUSE the IRS's enforcement arm is one of the best moneymakers the US government has.

Ftfy

# ? Sep 13, 2016 20:02

leftist heap: Feb 28, 2013; Fun Shoe

Good news everyone, the soft landing is here:

http://business.financialpost.com/p...0-national-bank

quote:

Vancouver�s housing market may enter a correction with price declines of at least 10 per cent, according to Stefane Marion, Montreal-based chief economist and strategist at National Bank of Canada.

�There is downside to single family homes in Vancouver,� after policy changes in the last year such as higher down-payment requirements and a provincial tax on foreign buyers, Marion said Tuesday at the Bloomberg Canadian Fixed Income Conference in New York. Price declines will be moderated by the province�s strong job growth, he said. �I don�t think it sends the economy into a tailspin. It�s a healthy correction,� Marion said.

Thank goodness for all that strong job growth.

quote:

Data show the economy struggling to gain direction amid a raft of contradictory signals. While job creation rebounded in August after a slump in July, a slide in hours worked and a rise in the unemployment rate suggest labour-market slack is building. While the economy grew at the fastest pace in three years in June, and exports surged in July, the Bank of Canada said last week that risks to inflation and growth were tilted to the downside.

Weakness in Canada�s non-energy exports is somewhat �inexplicable� in a time where Canada�s dollar should be low enough to provide a boost, said Dawn Desjardins, Toronto-based deputy chief economist at Royal Bank of Canada.

Hmm, getting mixed signals about all this strong job growth here.

# ? Sep 13, 2016 21:17

Professor Shark: May 22, 2012

dicks assassin posted:

Haha, nope. The Republicans in congress have been reducing funding to the IRS for years, despite the IRS's enforcement arm being one of the best moneymakers the US government has.

http://www.cbpp.org/research/federal-tax/irs-funding-cuts-compromise-taxpayer-service-and-weaken-enforcement

Ahahaha

# ? Sep 13, 2016 23:15

UnfortunateSexFart: May 18, 2008; ð» ððð« ð·ððð·
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A very busy gourmet pizza place near me (Il Castelo) has a notice saying they're gonna start closing on Sundays and Mondays due to "lack of skilled labour" in Vancouver. This is near the seabus too.

Meanwhile Alberta announces $15 min wage by 2018...

# ? Sep 14, 2016 05:47

HookShot: Dec 26, 2005

UnfortunateSexFart posted:

A very busy gourmet pizza place near me (Il Castelo) has a notice saying they're gonna start closing on Sundays and Mondays due to "lack of skilled labour" in Vancouver. This is near the seabus too.

Meanwhile Alberta announces $15 min wage by 2018...

This is only going to get worse until housing becomes affordable. You can't walk past a single shop in the village here now that's not looking to hire people, and a few had to close down some days over the super busy summer. Vancouver's just so much bigger that it's taking longer for it to happen there, but believe me, it's not pretty when it does. On busy weeks here (which is probably pretty much equivalent to a normal day in downtown Vancouver) people have to wait up to 2 hours to get a table at a restaurant now.

# ? Sep 14, 2016 06:26

MickeyFinn: May 8, 2007; Biggie Smalls and Junior Mafia some mark ass bitches

HookShot posted:

This is only going to get worse until housing becomes affordable. You can't walk past a single shop in the village here now that's not looking to hire people, and a few had to close down some days over the super busy summer. Vancouver's just so much bigger that it's taking longer for it to happen there, but believe me, it's not pretty when it does. On busy weeks here (which is probably pretty much equivalent to a normal day in downtown Vancouver) people have to wait up to 2 hours to get a table at a restaurant now.

I'm seeing similar in west Los Angeles where a lot of restaurants and smaller shops have help wanted sign but can't/won't pay enough to live in the area. Maybe we can pack people into Mar Vista or something, a good slum would turn this place right around!

# ? Sep 14, 2016 06:30

upgunned shitpost: Jan 21, 2015

One giant favela on the Concord Pacific land by Main Street station. Minimum wage serfs and needle junkies sharing the most beautiful place on earth, together!

# ? Sep 14, 2016 06:53

I would blow Dane Cook: Dec 26, 2008

Los Angeles is a slum though.

# ? Sep 14, 2016 06:59

UnfortunateSexFart: May 18, 2008; ð» ððð« ð·ððð·
ð ð ð ð« ð®ð ð¾ð ð ð¡ððð

HookShot posted:

This is only going to get worse until housing becomes affordable. You can't walk past a single shop in the village here now that's not looking to hire people, and a few had to close down some days over the super busy summer. Vancouver's just so much bigger that it's taking longer for it to happen there, but believe me, it's not pretty when it does. On busy weeks here (which is probably pretty much equivalent to a normal day in downtown Vancouver) people have to wait up to 2 hours to get a table at a restaurant now.

Yeah my first thought was "this is like how everyone working in Whistler has to live in Pemberton now." Only for Vancouver it's what now, Chilliwack?

# ? Sep 14, 2016 07:09

Coolwhoami: Sep 13, 2007

UnfortunateSexFart posted:

Yeah my first thought was "this is like how everyone working in Whistler has to live in Pemberton now." Only for Vancouver it's what now, Chilliwack?

Hope.

# ? Sep 14, 2016 15:36

leftist heap: Feb 28, 2013; Fun Shoe

SV is here to make housing affordable to everyone:

quote:

Most innovations in financial technology have revolved around new modalities � take something we�ve done for decades and just �put it on the internet�. The paper credit card statement begot the web credit card statement, which begot the mobile-app-with-your-statement-in-it.

Technology can enable far more, though, especially if we rethink the way underlying products function. Today I am excited to announce that we are leading the Series A round for Point, which fundamentally rethinks the largest asset class in the United States � owner-occupied residential real estate (> $10 trillion!).

For the longest time, there have been two ways of �living� somewhere:

Renting, in which case you own 0% of your residence
Owning, in which case you own 100% (typically using a bank mortgage as a 30-year crutch to owning all 100%)
But why not own 91% of your house? 95%? 87%? Home ownership rates have been falling, partially because millennials can�t afford to buy homes � and when/if they can, they might find 300% of their net worth concentrated in a single asset class (i.e., the exact opposite of diversification) � their house.

Moreover, unlike the �financial weapons of mass destruction� and shady mortgages that brought down the economy in 2008, this is precisely the opposite. This is the elimination of primary debt, not the creation of it.

Here�s an example � You are buying a $500,000 house, where you put $100,000 down with a $400,000, 30-year mortgage. This is what it might look like without Point:

Or with Point, where 10% of the property ($50,000) is effectively owned by Point and consequently the mortgage goes down to $350,000:

There�s no such thing as a free lunch, and in this case Point�s lunch comes in the form of capital appreciation (more on the historical magnitude of this in a bit). If the house appreciates in value, Point shares in that upside. If the house depreciates in value, Point gets paid back after the bank, but before the homeowner, in the event of a sale. If the property depreciates enough, Point may lose some of its money, without the homeowner being in default; on the flip side, if the house greatly appreciates in value, Point will make far more than a traditional �coupon� from a mortgage. This type of equity-like exposure creates alignment between the homeowner and investor. There�s a terrific article on this subject in this Wharton article, �Don�t Reform Housing Finance � Reinvent It�.

On the opposite side, imagine you�re a big investor looking for capital protection and appreciation. There are few asset classes that have outperformed super-prime real estate in the last 60 years. Consider that the median home in Palo Alto sold for less than $20,000 in 1956, versus $2.5 million today � an appreciation rate of 12,500%. Compare that to an approximate 5000% return for the S&P 500 over the same period (much higher with dividend reinvestment, but you�d need to pay taxes on said dividends, making this calculation challenging).

Of course, for an investor to invest passively not in a single house but in a broad basket of homes would have been challenging, if not impossible. The investor would need to deal with finding and serving tenants, paying annual real estate taxes, and fixing toilets (maintenance) � across many, many properties.

Using technology, Point brings diversification to residential homeowners (diversify out) and investors (diversify in). It�s not like a home equity line of credit (HELOC) or a mortgage with monthly payments; it�s an aligned investment � that is, equity. It�s rethinking the fundamentals of residential real estate ownership � making single-family residential real estate a liquid, tradeable asset class.

a16z led a seed round for Point in 2015, and the team has made tremendous progress since then � taking this from concept to transactions across dozens of properties and millions of dollars in value. We�re thrilled to lead this round alongside many other financial visionaries, including Laurence Tosi, CFO of Airbnb and former CFO of Blackstone; Vikram Pandit, CEO of Orogen and former CEO of Citi; and many others who are as excited about Point as we are.

Wow, look at that innovation.

http://a16z.com/2016/09/13/point/

# ? Sep 14, 2016 15:43

leftist heap: Feb 28, 2013; Fun Shoe

Femtosecond posted:

Some of these minor fixes would halt these shenanigans. It's really disturbing things are this lax.

Why not kill the exemption altogether?

# ? Sep 14, 2016 15:45

Subjunctive: Sep 12, 2006; ✨sparkle and shine✨

leftist heap posted:

SV is here to make housing affordable to everyone:

Wow, look at that innovation.

http://a16z.com/2016/09/13/point/

https://en.wikipedia.org/wiki/Shared_appreciation_mortgage

# ? Sep 14, 2016 16:19

Femtosecond: Aug 2, 2003

Subjunctive posted:

https://en.wikipedia.org/wiki/Shared_appreciation_mortgage

The CoV has mused before about doing this to create affordable homeownership though I think they're now pretty solidly focused on the task of simply creating more purpose built rental and are not worrying about homeownership.

# ? Sep 14, 2016 16:33

Lexicon: Jul 29, 2003; I had a beer with Stephen Harper once and now I like him.

Subjunctive posted:

https://en.wikipedia.org/wiki/Shared_appreciation_mortgage

Seems like it has the potential to be a reasonable arrangement if the parameters are fairly set, and you fully understand the rules from the outset (admittedly neither of which are likely true for your typical customer here).

# ? Sep 14, 2016 17:02

leftist heap: Feb 28, 2013; Fun Shoe

Yes but you see now there's an app for it!!

# ? Sep 14, 2016 17:34

leftist heap: Feb 28, 2013; Fun Shoe

lmao, I guess the Globe at least figured out that their won't someone think of the poor foreign buyers :qq:

narrative really wasn't going anywhere:

http://www.theglobeandmail.com/real-estate/vancouver/canadian-banks-mortgage-guidelines-favour-foreign-home-buyers/article31869946/

quote:

Canadian banks allow foreign clients with no credit history, including students, to qualify for uninsured mortgages without proving the sources of their income � a practice that exempts non-Canadians who have money in the bank from the scrutiny domestic borrowers face when buying a home or an investment property.

Those exceptions to the regular rules are outlined in internal documents from Scotiabank and the Bank of Montreal reviewed by The Globe and Mail. Scotiabank�s guidelines specify that loans officers do not need to verify foreign clients� sources of income if they make down payments of 50 per cent. At BMO, such clients need only 35 per cent down to qualify for mortgages up to $2-million. The criteria from both banks show income verification is also not required for new immigrants who have been in Canada less than five years if they put 35 per cent down.

BMO�s guidelines also require clients, including �foreign students with a valid study permit,� to have the equivalent of one year�s mortgage payments on hand at the time the loan is issued.

The exemptions appear to be designed to attract citizens of foreign countries and newcomers to Canada as clients by making it less onerous for them to obtain and build credit here. Canadian applicants must still prove their sources of income. Critics say that puts locals at an unfair disadvantage and inadvertently encourages real estate speculation by foreigners who have easier access to credit.

The federal regulator chastised the banks in July for inadequate foreign income verification because they can be exposed to more risk if they do not ensure these clients have the means to pay their mortgages in the long term. The regulator also pointed out that banks can be vulnerable to money laundering if they do not verify that a customer�s money was obtained legitimately. The Globe discovered income verification in such cases is still not mandatory at both banks, two months after all lenders were warned to be more diligent.

The revelation stems from a Globe and Mail investigation that showed Vancouver real estate speculator Kenny Gu was able to buy and flip several single-family homes � while prices in the area skyrocketed � using credit from Canadian financial institutions. The case demonstrates how property ownership has become complex and shrouded in secrecy as a network of speculators � local and foreign � park money in Canadian real estate. Ownership and earnings are obscured in private contracts, while the players treat properties as commodities, not homes.

Documents provided to The Globe showed that Mr. Gu�s speculative real estate deals were bankrolled with down payments from his clients � Chinese citizens who come and go from Canada � and mortgages issued to some of those clients by Canadian lenders without income verification. The records show that Mr. Gu had a stake in some of the properties, and his deals relied heavily on bank financing.

In a statement, BMO said it assesses �every customer�s circumstances individually and considers multiple factors.� However, the statement gave no specifics about income verification criteria for newcomers and foreigners. The statement did not address the suggestion it treats people from abroad more favourably than Canadian citizens.

Scotiabank said in a statement that it employs heightened due diligence �in other areas� to compensate, such as full appraisals for all properties. It confirmed that this is an exception from its standard policy for income verification.

�It�s very lenient,� a loans officer from one of the major banks told The Globe. �The foreigners can just get a wire transfer to cover the year�s payments [to qualify] or even borrow money from a friend or a relative to put money in the account temporarily.�

The bank employee � himself an immigrant from China � fears he will be fired if he is named. He said lenders require all domestic mortgage applicants to produce one to two year�s worth of Canadian income tax records and pay stubs. Because that is impossible for foreigners and newcomers, he said, his bank made the changes to attract those clients.

In Vancouver, speculators exploited that, he said, to buy properties they had no intention of living in, hold on to them as demand increased and prices rose and then flip them for a profit.

�I have seen many people doing this, many times. I have customers brag about it in my office � about how small money they put in and how much profit they got,� he said. �I can say it is a very big share of the mortgage market � it�s out of control.�

The Globe surveyed the remaining three big banks, plus HSBC, asking exactly what terms foreigners and new immigrants must meet to qualify for their mortgages. RBC, TD Canada Trust, CIBC and HSBC sent general statements that indicated they are diligent in several areas when approving mortgages, but gave no specific terms for income verification for those applicants.

The federal regulator overseeing Canada�s banks sent The Globe a statement, stressing that banks must attempt to confirm income sources � for all mortgages.

�Whether the borrower is foreign or domestic, OSFI expects that institutions will take reasonable steps to verify income,� said a statement from the Office of the Superintendent of Financial Institutions.

In a strongly worded letter in July, OSFI told banks that rapid rises in the prices of houses in Vancouver and Toronto call for increased diligence because of the risk of defaults if and when �economic conditions deteriorate.�

The regulator made it clear it knows income verification is lacking for non-Canadian clients and it urged lenders to be more thorough.

�Inadequate income verification can adversely affect the assessment of credit risk, anti-money laundering and counter terrorist-financing (AML/CTF) compliance,� it said. �Borrowers relying on income from sources outside of Canada pose a particular challenge ... Income that cannot be verified by reliable well-documented sources should be treated cautiously.�

New Democrat MP Kennedy Stewart, chair of his party�s B.C. caucus, said if a lender does not know exactly how its customers earn their livings, some clients could be able to launder ill-gotten gains through their mortgage payments.

�If that income is being used to secure clean Canadian funds from the banks to pay for a house, it�s a very clever way to clean foreign money. That is what this is,� he said. �It�s almost secret and unexposed � and this is so important.�

Mr. Stewart, who is also an economist, is pushing Ottawa to examine every factor contributing to real estate price increases, including mortgage financing.

�If the banks are helping facilitate foreign demand, we should take action to curb it,� he said. �If this is widespread, Canadians will be outraged.�

Christine Duhaime, a legal expert in money laundering, said banks should be particularly worried about real estate purchases like the ones set up by Mr. Gu, in which the titles and mortgages are in the names of overseas clients but someone else also holds a stake.

�The bank doesn�t understand what the risk is,� Ms. Duhaime said. �If the bank were to start from scratch, the outcome might be different. They might not issue the mortgages.�

The loans officer said his biggest frustration is telling Canadians they cannot qualify for a mortgage because of income requirements, while foreigners with the same down payments and money in the bank get approved.

�If local people � when they go to the bank � say �I want to buy a property. I have 35 per cent to put down and enough to support one year of payment,� I have to say no. I have to verify income before I can say yes,� he said.

�I don�t think it is fair. And it pushed the market prices so much higher, because the people who are buying don�t really care if they can afford it � they just want to get the property and flip it.�

# ? Sep 14, 2016 17:40

leftist heap: Feb 28, 2013; Fun Shoe

I guess CBC has flipped the story now too:

http://www.cbc.ca/news/business/fintrac-real-estate-money-laundering-1.3761343

quote:

Fintrac finds 'very significant' deficiencies at realtors in money laundering probe

Canada's anti-money laundering agency conducted on-site examinations of more than 800 real estate companies over four-and-a-half years and found "significant" or "very significant" deficiencies during 60 per cent of those visits, new data shows.

A document obtained by The Canadian Press through an Access to Information request shows that Fintrac conducted 823 examinations of companies in the real estate sector between 2012 and mid June of this year.

The federal anti-money laundering watchdog found "significant" deficiencies with the anti-money laundering and anti-terrorist financing controls at 468 of those companies, while 28 companies had "very significant" deficiencies.

Meanwhile, 324 companies had only "limited" deficiencies. None of the companies were named in the document.

Well, at least they were caught, right? I'm sure the punishment will dissuade them from ever doing...

quote:

If violations are found during an on-site examination, that could lead to fines of up to $100,000 per violation for individuals and up to $500,000 per violation for companies, depending on severity.

However, the federal watchdog issued monetary penalties only nine times during the almost five-year time span, the document shows.

When asked why more penalties weren't issued, Fintrac said it considers several factors when deciding whether or not to fine a company. Those factors include the business's compliance history, the seriousness of the violation and the extent to which the company has taken steps to correct the problem.
"In the nine cases identified, it was determined that the most appropriate course of action was to issue an administrative monetary penalty," Fintrac spokeswoman Renee Bercier said in an email.

"For the remainder, other enforcement actions were undertaken."

According to the federal agency's website, Pickering, Ont.-based Countrywide Generations Realty was fined $11,440 in July 2015 for six violations including incomplete record keeping and failing to identify clients in some instances.

In another case, Mississauga, Ont.-based ReMax Active Realty was fined $6,770 back in 2013 for four violations, including failing to develop and apply policies and procedures to detect money laundering.

Oh, well.

# ? Sep 14, 2016 17:44

Sundae: Dec 1, 2005

Subjunctive posted:

https://en.wikipedia.org/wiki/Shared_appreciation_mortgage

These are pretty universally awful, so it sounds like par for the course for SV!

# ? Sep 14, 2016 17:59

HookShot: Dec 26, 2005

Heard on the radio just now that Gregor Robertson is implementing a vacant homes tax in Vancouver.

# ? Sep 14, 2016 20:14

Majuju: Dec 30, 2006; I had a beer with Stephen Miller once and now I like him.

HookShot posted:

Heard on the radio just now that Gregor Robertson is implementing a vacant homes tax in Vancouver.

More here, notably:

- self-declaration that your home is empty year-round
- 'primary' residences are exempt either way
- homes awaiting development permits are exempt
- tenancy agreements will potentially count sufficiently to get around the tax

BRB starting a business to sign non-standard tenancy agreements with any interested parties for $500 a pop

# ? Sep 14, 2016 20:29

Reince Penis: Nov 15, 2007; by R. Guyovich

Wow that vacant homes tax should net the city tens of dollars in revenue!

# ? Sep 14, 2016 20:39

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# ? Jun 6, 2024 22:37

Majuju: Dec 30, 2006; I had a beer with Stephen Miller once and now I like him.

PK loving SUBBAN posted:

Wow that vacant homes tax should net the city tens of dollars in revenue!

Gregor admits as much:

quote:

"Almost all Vancouver residents will not pay this tax," he said. "It is focused on the empty homes that are being held as businesses or effectively holding properties."

Robertson said if people choose to pay the tax, the city and renters will still come out ahead because the tax revenue will be used to build affordable housing.

"Some people who can afford it will not want to rent out their properties and they are going to make a generous contribution to affordable housing in Vancouver," said Robertson.

"Certainly part of this is symbolic, but at city hall we are going to use every tool to create more rental housing."

and they figure it'll net ~$2 million~ a year for affordable housing, so, uh, maybe they'll be able to afford keeping a slummy SRO open with the proceeds? Woo!

# ? Sep 14, 2016 20:41

The Something Awful Forums > Discussion > Debate & Discussion > Canada Housing/Debt: Trust me, I'm a landlord.

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