TFA says: "The official noted that other nations require tax agencies to verify incomes for mortgages, which isn’t the case in Canada."
I don't know if it's a legal requirement, but I sure know I had to hand over all of _our_tax information to the bank to validate income when getting a mortgage in the US. You have to sign a form saying the bank is allowed to pul your data from the IRS; you're not just handing over paperwork and promising that it's legit.
This - not sure where the sentiment in this thread is coming from, but you have to disclose your tax filings for the last 2/3 years along with all your bank accounts and recent statements.
Total conjecture: 1. US banks do not face nearly as diverse a set of applicants, and 2. are only required to hold the loan for 5 years.
1. It is very common in Canada for a person with wealth acquired outside the country to apply for a home loan. At the time I was approved as a guarantor for a home loan for over half a million CAD, I had only been in the country for 2 years, and had no credit history with any Canadian institution (out of laziness I just was added to my wife's accounts as a signer and cardholder when I moved). They accepted copies of my American credit history and bank statements, but had no real way to verify their truth. In the US, I don't think that (relatively) wealthy immigrants wanting a home loan are nearly as common. Richmond, BC is a great example of this: avg home price is 1.5mm and 60% of the residents are immigrants.
2. Canadian mortgages are refinanced every five years, traditionally (it is possible to get a longer term, but very uncommon). Combine this with the fact that Canadian real estate has ALWAYS gone up (until now), and financing a home really wasn't a risky thing. If a bank didn't like a customer, they could refuse to refinance after 5 years. If a bank foreclosed, they were basically guaranteed to be made whole.
I got the feeling that the HSBC in Bellevue Washington catered primarily to overseas Chinese clients looking to buy homes in the Seattle area. Most of the employees spoke some dialect of Chinese. I have no idea about the loan officers, however.
Bellevue's population is ~14% Chinese, over 21,000 people, and mostly high income tech salaries. It would be bad business not to have Chinese speakers on staff.
You can have a tech vocabulary but not know what a secured property is for example. Maybe a non native would know the word secure and the word property and make an erroneous assumption.
It’s probably the biggest purchase in your life so it makes sense you want to know all details.
Yes. But you know, Bellevue is almost as Indian (12%) as it is Chinese (14%), so HSBC is definitely specializing in this case. Not that I'm complaining. They also have a lot of customers who don't speak much english at all, obviously not techies (but maybe the aging parents of techies).
> They accepted copies of my American credit history and bank statements, but had no real way to verify their truth
I'm skeptical here, given how closely the US and Canada work together, both US and Canadian banks share an incredible amount of info with each other and not solely because of cross-border commerce. There is also a non-trivial number of US citizens living and working in Canada so there are services available to them given their special tax requirements.
If you have information that contradicts what multiple banks have told me I would love to know it, since it would be very nice to have that information available to my Canadian bankers.
In the 3 banks I've worked with in Canada, all were completely unable to access my American credit history.
The governments do share tax data, but AFAIK the banks have no way to link "John Smith SSN:123-45-6789" to "John Smith SIN:098-76-54321". They even have my US SSN number since Canadian banks report to the IRS.
Yes this is accurate. I work at a lender that operated in both Canada and the US and the credit bureau integrations were with totally different companies and had different APIs (even for Equifax on both sides of the border)
It's been a while but I don't even think that a credit score in Canada is comparable to a credit score in the US. Sure, an Equifax terminal in either country spits out a number in the same range but the formula and calculation are probably different, with different legal frameworks regarding the information contained therein.
> Canadian real estate has ALWAYS gone up (until now)
Have always gone up expect for when they haven't. Nationally, real estate prices dropped precipitously in the early 1980s. And the Toronto housing crash of 1989 was a complete meltdown. It took until the 2010s for prices to finally return to where they were in 1989!
I guess a more accurate way to put it is that there is almost no one working in banking or any mortgages currently written where a major correction has happened. Canada wasn't whacked in 2008 nearly as bad as the US, and the early 1990s property corrections were much more regionally focused (Toronto got the worst of it), in Edmonton, 1989 and 1990 prices increased more than 20%. Basically there is no one with first hand experience in managing an upside-down housing portfolio.
Basically, for most property markets in Canada, plowing your money into property has been a historically better bet than the TSX.
There was the crash of 2022, seeing a nearly 30% haircut nationally while at the bottom. For comparison, the US housing crash of the oughts saw a peak decline of 33%. Everyone in banking was surely around to see that major correction happen.
Granted, the market had ramped up so quickly, and then crashed so fast, that the number of underwater mortgages was likely small – and probably haven't come up for renewal yet. So, you're right that there isn't much management experience, and may never be.
If you cherry pick the localized data, even the worst off suburbs of Toronto you see a dip of just over 22% with a pretty quick reversion to the mean. If you look at metro areas, none of the cities in Canada saw greater than 10% drops from 2022 peaks, and they have all recovered from the bottom.
ah. CREA reported a ~30% drop in average sale price across all transactions, true. That is very different than a 30% drop in the value all real estate.
If you break it out into type of home, it shows that the average price drop is about ~10% for any given market. This shows that consumers in 2022 shifted buying preferences from expensive home types to cheaper home types. This makes a lot of sense given the push for multi family housing and rising interest rates.
The value of individual housing didn't change 30%, it was mostly just a market shift towards cheaper housing. If people shift from buying Mercedes to buying Kia, the average transaction price for a car will fall a lot, but that doesn't mean that Mercedes is on sale for cheap.
> Are US banks just a lot more strict about source of income than Canadian banks?
American financial regulators are much more comfortable letting banks fail than their Canadian or European counterparts. (In part this is because of the sheer diversity of banks we have.) Being fined out of existence is a real possibility for an American bank. That shapes behavior.
The irony is the US talks a lot about financial transparency for other countries, but the US itself is the preferred place if you're looking to launder money.
No. I've purchased homes in both countries and from what I've seen, US banks are far less strict. Policies, procedures, and operations are very undisciplined at many US banks (compared to Canadian banks). I have noticed some are starting to become more strict in the past 5 years though.
a non-trivial portion of residential real estate transactions across the USA never apply for a loan. In certain areas it is more so. When real estate retail value rises fast, money appears from everywhere -- hint, not from first time home buyers.
The USA Federal system of mortgage loan gurantees has been gamed seriously, over and over since the 80s. It is a whack-a-mole for enforcement. All the parties close to the transactions have exactly the wrong incentives, most of the time. One of the defendants in a recent "pay cash to get your kid into elite school via fake sports" scandal was a mortgage broker in San Diego County. The Judge after reviewing evidence, reportedly told the man on the record "you are a thief." etc
Yes, but it’s partly the government’s fault. There’s literally no way for mortgage lenders to pull your tax records in order to verify income. There used to be some third party services to connect to the CRA but they got shut down and replaced with… nothing.
