Home Capital’s troubles started with “unlucky” brokers – or what Canadian banks and insurers call the mortgage merchants who get caught submitting fraudulent loans documents.
The holding company disclosed that 45 independent brokers submitted loan applications that misstated borrowers’ income and other details. A securities regulator accused Home Capital of misleading investors about the fraud, and that sparked a run on deposits at the lender.
Yet the brokers, whose names are now on databases maintained by lenders and mortgage insurers, can still win business since they have’t been prosecuted for fraud.
Read more at Financial Post