{"id":10560,"date":"2015-07-31T06:52:58","date_gmt":"2015-07-31T11:52:58","guid":{"rendered":"http:\/\/olduvai.ca\/?p=10560"},"modified":"2015-07-31T06:52:58","modified_gmt":"2015-07-31T11:52:58","slug":"liar-loans-pop-up-in-canadas-magnificent-housing-bubble","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=10560","title":{"rendered":"Liar Loans Pop up in Canada\u2019s Magnificent Housing Bubble"},"content":{"rendered":"

Liar Loans Pop up in Canada\u2019s Magnificent Housing Bubble<\/a><\/h3>\n

For a long time, the conservative mortgage lending standards in Canada, including a slew of new ones since 2008, have been touted as one of the reasons why Canada\u2019s magnificent housing bubble, when it implodes, will not take down the financial system, unlike the US housing bubble, which terminated in the Financial Crisis.<\/p>\n

Canada is different. Regulators are on top of it. There are strict down payment requirements. Mortgages are full-recourse, so strung-out borrowers couldn\u2019t just mail in their keys and walk away, as they did in the US. And yada-yada-yada.<\/p>\n

But Wednesday afterhours, Home Capital Group, Canada\u2019s largest non-bank mortgage lender, threw a monkey wrench into this theory.<\/p>\n

Through its subsidiary, Home Trust, the company focuses on \u201calternative\u201d mortgages: high-profit mortgages to risky borrowers with dented credit or unreliable incomes who don\u2019t qualify for mortgage insurance and were turned down by the banks. They include subprime borrowers.<\/p>\n

So it disclosed, upon the urging of the Ontario Securities Commission, the results of an investigation that had been going on secretly since September: \u201cfalsification of income information.\u201d Liar loans.<\/p>\n

Liar loans had been the scourge of the US housing bust. Lenders were either actively involved or blissfully closed their eyes. And everyone made a ton of money.<\/p>\n

So Home Capital\u00a0revealed<\/a>\u00a0that it has suspended \u201cduring the period of September 2014 to March 2015, its relationship with 18 independent mortgage brokers and 2 brokerages, for a total of approximately 45 individual mortgage brokers,\u201d who\u2019d together originated nearly C$1 billion in single-family residential mortgages in 2014. That\u2019s 5.3% of the company\u2019s total outstanding loan assets, and 12.5% of its total single-family mortgage originations in 2014.<\/p>\n

That\u2019s a big chunk. The company, however,\u00a0didn\u2019t disclose why it took so long to disclose this.<\/p>\n

It said an \u201cexternal source\u201d had warned it about income falsification on mortgage applications submitted by a number of brokers. Its investigation did not find any evidence of falsified credit scores or property values, it said.<\/span><\/p>\n

 <\/p>\n

…click on the above link to read the rest of the article…<\/p>\n","protected":false},"excerpt":{"rendered":"

Liar Loans Pop up in Canada\u2019s Magnificent Housing Bubble For a long time, the conservative mortgage lending standards in Canada, including a slew of new ones since 2008, have been touted as one of the reasons why Canada\u2019s magnificent housing bubble, when it implodes, will not take down the financial system, unlike the US housing […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[103,312,7287,7686,406,2340,7685,7687,4254,4255],"class_list":["post-10560","post","type-post","status-publish","format-standard","hentry","category-economics","tag-canada","tag-financial-crisis","tag-home-capital-group","tag-home-trust","tag-housing-bubble","tag-housing-market","tag-liar-loans","tag-ontario-securities-commission","tag-wolf-richter","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/10560","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=10560"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/10560\/revisions"}],"predecessor-version":[{"id":10561,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/10560\/revisions\/10561"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=10560"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=10560"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=10560"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}