BMO suing over huge mortgage fraud

The CBC is reporting that the Bank of Montreal is suing hundreds of people in Alberta over alleged mortgage fraud that falsely inflated the value of many properties. They’re suing lawyers, mortgage brokers and four of their own employees and claiming a loss of up to 30 million dollars.

Other banks don’t appear to be as aggressive in their approach, even though documents indicate they may have been targeted too. Bank of Montreal investigators found documents that showed one Calgary management company had 150 suspect mortgages from 16 different financial institutions.

Rosen said this alleged fraud illustrates how weak and ineffective the controls are in our banking system.

“To me the most exasperating part of our business is we are not doing what we are supposed to be doing,” he said. “We are kidding ourselves that we have good systems, because we don’t.”

A number of these fraud cases showed up in the US as prices declined, funny how they didn’t seem to show up as prices were rising.  Read the full article over at the CBC.

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interested observer
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interested observer

we don't have subprime

we don't have fraud

we are not like the Americans

it is different here……

Pinocchio
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Pinocchio

This is an alleged irregularity, nothing proven yet.

I am sure it’s just a mistake.

Bankers, lawyers, realtors, appraisers in Canada adhere to a strict code of conduct; they do so because they are trying to meet the same criteria as highly trained mortgage brokers.

The code is so rigid, it’s impossible to allow for fraud.

Our banking system is the envy of the world for good reason.

It's not the banks themselves who bestow such an honour to themselves, and it's not because they compare themselves to third world war lord run banana republics.

Anonymous
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Anonymous

Whho would have thought BMO would have fallen prey to such schemes? Guess their "fog a mirror, get a loan" campaign has a downside.

XXX
Guest
XXX

Thank god it only happened it Calgary.

canhome
Member
canhome

Increased listings flooding the market over the past few months. Updated interactive charts “Greater Vancouver Monthly Real Estate Statistics 2006 – 2010 ” :

http://canadabubble.com/charts/634-greater-vancou

rf
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rf

There is never only one cockroach.

jesse
Member

Here's the 30 million dollar question… why Alberta? Or is that by coincidence?

Fandango
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Fandango

@jesse: Well thank goodness it happened in Alberta, and not here in Canada where we have a banking system that is the envy of the world.

Oh, and no housing bubble at all! No-sir!

Debt Merchant
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Debt Merchant

During its investigation, bank investigators seized records that showed millions of dollars from the alleged scheme have been transferred to such countries as Lebanon, India, Saudi Arabia, the United Arab Emirates and Pakistan.

So the obvious question is:

Why does the government of Canada support a housing market policy that provides money for terrorism?

AACI
Member
AACI

You have got to laugh at the clever bank underwriters who chose to cut expenses by using AVM's (Automated Valuation Models) instead of commissioning actual appraisals. I wonder if they had this little "output" built into their model lol.

Although it is conceivable that residential appraisers could have been corrupted by the lure of easy dough in this scam, a properly structured system of sourcing physical appraisals to reputable firms would have made this fraud infinitely more difficult to pull off.

Greedy gets you caught.. in a fraud, in a banking business and sooner or later, in a Vancouver real estate bubble.

boomingVancouver
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boomingVancouver

Bear get all up in arms over mortgage fraud that bank fall victim too. You forenting loser never complain about all the landlords get scammed by renter. Double standard bear. Why you always blame the victim?

Leaving
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Leaving
Does anyone else ever feel as though they're the only honest, hard working person left in this Country? I go to work every day, make a good wage and for what? Gordon Campbell and his HST are stealing from me. Stephen Harper and his CMHC, "emergency low interest rates" and army of real estate agents, bankers and mortgage brokers are stealing from me. Moderately trained Nurses, Cops and Garbage men are making $100,000 of public money every year, and now foreigners can come into my country and steal from me too, run up housing and default on federally insured mortgages so they can drive around in expensive cars and fund terrorism while I take public transit to work every day and try to scrimp and save so that I can afford something that I can take pride in, only to… Read more »
XXX
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XXX

Leaving

I know exactly how you feel. Chin up. I firmly believe good things happen to good people – you're time will come.

VHB
Member
VHB

OT: 5-yr yields have dropped by over 25 bps in the past week or so. link.

Will the banks drop their mortgage rates?

paulb
Member
Raincouver
Member
Raincouver

Housing market to cool, prices to drop: TD Bank

OTTAWA — The TD Bank says home sales will be significantly lower in the second half of this year and next — and prices are dropping too.

The new outlook is in accord with previous expectations, with the exception that TD now believes the slowdown from the current hot housing market to be sharper.
http://www.ctv.ca/servlet/ArticleNews/story/CTVNe

Falling house prices? Fraudulent practices? Poor Banks. Not.

Raincouver
Member
Raincouver

@paulb:

Looks like we're reading the same news. 🙂

VHB
Member
VHB

@paulb: Hey Paul if you have a chance, let us know when we're over 17K. I want to continue the party!!

mustardman
Member
mustardman

My guess is that this is only the tip of the iceberg. The banks are probably too scared of what it might do to their cash cow to make most of it public. At least for now. I would be very surprised if it was isolated to Alberta. BC would be too tempting for them to resist.

shikko
Member
boomingVancouver says: Bear get all up in arms over mortgage fraud that bank fall victim too. You forenting loser never complain about all the landlords get scammed by renter. Double standard bear. Why you always blame the victim? In the event that you aren't just trolling, but actually think this, I'll take a stab at an answer: the CMHC does not use our tax money to insure landlords against deadbeat tenants. If they did, we'd be just as pissed at bad tenants as we are at stupid buyers. As an aside, what does "landlords get scammed by renter" even mean? How can a tenant scam a landlord? How would that scam be executed? Can you compare that to how mortgage fraud works? Do you know how mortgage fraud works? It is actually much easier to swindle money from a renter… Read more »
Devore
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Devore

That's what happens when you're playing with other people's money. If the bank had to put its own money on the line lending to these people, they'd be far more conservative, and may actually send a person to look at the property like in the bad old days.

VRENGD
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VRENGD

Checklist for a housing collapse:

Listings explosion: Check

Rising mortgage rates: Check

Tighter lending: Check

Falling Prices month over month: Check*

*Yesterday's RBGV stats showed price declines in most categories in most municipalities, including Van West, Van East, Richmond.

It is here. Welcome to the Vancouver Housing Collapse Act 2.

Debtors, start looking for a bankruptcy lawyer.

Gordon C.
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Gordon C.
When Vancouver has such a high median income to house price, it would be difficult not to believe that mortgage fraud is a substantial factor in prices. CMHC created a valuation program to replace appraisers. Appraisers were slowing down and getting in the way of doing fast, fast approvals. Due diligence became non existent as speed became the primary motivator. A tweak of the program here, a nudge there and a wink at the applicant's income soon become normal business practice. A clear case of the Fox guarding the hen house as the brokers' income and the loan officers' performance was directly related to what they inputted into the program. We have had the largest increase in prices and possibly fraud in our history which directly corresponds to the removal of the checks and balances in the system.
Anonymous
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Anonymous

@VHB: Mish has been noting on his blog of late how whenever the market gets into a panic like the 200 point drops that have hit the Dow when people start worrying about Greece, that pretty much everything goes down except the US dollar and gold. Could these drops in bonds be related to that? (Serious quest. I wasn't an econ student at school, so I'm not really sure how bonds work in the grand scheme of things.)

Treesme
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Treesme
Excerpts from the Globe and Mail article: "House prices will fall in 2011, TD Bank said Wednesday as it revised its outlook for the Canadian real estate sector." "Ontario and British Columbia are expected to bear the brunt of the decline, seeing their markets drop 3.4 per cent and 3 per cent respectively." "The forecast is slightly more pessimistic than that put forward by the Canadian Real Estate Association, which has said since the beginning of the year that prices would like fall by 1.5 per cent in 2011 as more supply enters the market and rising values price many would-be owners out of the market." You've got to be kidding me. I wonder if anyone has a archive of all these articles regarding RE to refer back to – we can see just how credible these organizations are, especially… Read more »