# Real Estate & Money Laundering



## Berubeland (Sep 6, 2009)

I know a few members are Vancouverites any thoughts?

http://www.cknw.com/2016/07/08/201079/


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## Rusty O'Toole (Feb 1, 2012)

Money laundering? Did he just figure that out?

Later... listened to the whole thing and it sounds like he is talking his book. I don't know how you short Vancouver housing but I bet he found a way.


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## twa2w (Mar 5, 2016)

Yup, he is seriously shorting the stock of one or more mortgage providers in Canada. 
These would be classified as b lenders and he, in another interview, expressed serious concerns about their lending practices, mortgage fraud but in that interview did not mention money laundering.
He claims the situation is so bad he came out of retirement to take advantage of it.


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## Berubeland (Sep 6, 2009)

Of course he's shorting Home Capital Group, and probably Canadian banks, but what about what he's saying? 

If you're one of the first people to notice it's raining and you set up an umbrella stand to profit from the water falling on people, you didn't cause the rain.

Home Capital Group for instance found about 2 billion in questionable loans, and fired a bunch of mortgage brokers after being criticized by Mr Cohodes and other short sellers but he never forced them to make those those loans.


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## twa2w (Mar 5, 2016)

Well he is not the first person to say its raining.
Common knowledge in banking and government circles that underwriting quality has deteriorated.
The gov has to take some credit for that. First they loosened lending requirements when they really should have tightened them. This encouraged banks to be more aggressive. 
Mr Carney didnt help either. He should have raised rates after the last crisis settled done and rates should be 1-2% higher today.
CMHC relaxed their debt servicing and credit quality guidelines for high volume lenders like TD and RBC.
All of this lead to aggressive lending at banks which forced b lenders like home capital and others to really drop quality to maintain market share.
By the time the gov got around to tightening lending guidelines( which was when they should have relaxed them if they had tightened earlier) the die was cast and looser lending was the norm.
In terms of fraud, this has been an ongoing battle for the last 20 years. The banks and cmhc have pretty good systems in place to identify and stop it but the b lenders are prime targets due to lax policies. Mind you the banks don't always help themselves here with things like automated appraisals etc.
As far as money laundering, I am not so sure he is right.
First the non- residents would have to get the money into Canada and into a bank to buy the property. This movement of money would be tracked by fintrac and other agencies.
Lawyers cannot take cash deposits, and if someone wanted to bring in small amounts it would take a lot of trips to accumulate even the down pymts on some of these properties.
I think this is more a matter of money fleeing whereever to a safe haven and into a tangible asset than it is proceeds of crime. May be the result of the taking advantage of child labour, poor working conditions sub par material etc but not criminal proceeds.

I do think he is right it is going to crash at some point but there is a crap load of liquid money in the world and we are a safe country. A boom or frenzy can last a lot longer than most people would think. It could be another 5 years but could you remain shorted that long before you lost your nerve? :-o


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## ja2345 (Jan 1, 2017)

It's somewhat naive to think that Fintrac would be on top of this and closely monitoring transactions. I think there's another shoe to drop in relation to the contribution of "dirty money" to real estate increases in BC.


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## scorpion_ca (Nov 3, 2014)

twa2w said:


> As far as money laundering, I am not so sure he is right.
> First the non- residents would have to get the money into Canada and into a bank to buy the property. This movement of money would be tracked by fintrac and other agencies.


You find someone in oversees and give money to their family/relatives/account and you get the CAD here.

Another way is to bring cash...http://www.theglobeandmail.com/news...couver-international-airport/article31787802/


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## sags (May 15, 2010)

When you have students owning several multi-million dollar homes, and buzzing around in exotic cars and unlimited cash......but can't quite remember exactly what their parents do for a living, it makes you wonder.


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## bgc_fan (Apr 5, 2009)

Related to this is the fact that China is moving to increase the restrictions on money outflows. This will probably have more of an impact on BC real estate than the new taxes.

IIRC while the house sales have decreased, the average selling price hasn't changed. Probably due to the fact that people just hold onto their properties if they can't get the offer they want.


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