I think we are getting sidetracked, the articles in the Globe and Mail, BNN, and other newspapers are primarily focused on wether the real estate in question is illegal and/or exposed to excessive risk. Of course, someone had to raise the racism flag that seems to sidetrack every thread no matter how remote the topic is.
The fact is that in comparison to the US banks, the loans in question would not be allowed, even if you had the cash. US banks would require data on exactly where that 35% and the 1st year in payments are coming from, among other things this prevents the sort of potential money laundering that was reported last week by FinTRAC and Kathy Tomlinson. Furthermore there is also a question of real estate firms violating elements of the money laundering act.
"Federal examiners visited 80 realty offices in the Vancouver area to delve into their paperwork and procedures. In 55 instances – most involving brokerage firms and some focusing just on individual agents – they found practices significantly lacking."
You only have look back a few years to the US real estate crash where many western Canadians took advantage of the low real estate prices to buy properties in Hawaii, California and Arizona. If you were a Canadian looking to finance such a deal, you were certainly not getting it from a US bank, you would have needed to put up the cash or get it from Canadian bank.
So what exactly is going on here? How exposed is the Canadian market to having the plug pulled on this? Those are really the questions that need to be asked.
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