Pursuits
In Home Capital’s Mortgage Mess, Blame the ‘Unlucky’ Brokers
- Mortgage brokers fudging figures draw parallels to U.S. crash
- Inflated incomes allow borrowers to enter soaring home market
In Home Capital's Mortgage Mess, Blame 'Unlucky' Brokers
This article is for subscribers only.
Home Capital’s troubles started with “unlucky” brokers. That’s what Canadian banks and insurers call the mortgage merchants who get caught submitting fraudulent loan documents.
Home Capital Group Inc. disclosed that 45 independent brokers submitted loan applications that misstated borrowers’ income and other details. A securities regulator accused the company 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 haven’t been prosecuted for fraud. Unlucky doesn’t necessarily mean unemployed.