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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Purp1
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Purp1

I don't April 19th will have as much impact as hoped. The reality is that rates are still very low and there is still a sizable pool of buyers why are trying to take advantage of pre-approvals.

Royce McCutcheon
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Royce McCutcheon

@Debt Merchant:

Thanks for the link. Interesting days ahead.

XXX
Guest
XXX

Net new listings is still tracking at 170. A month of that would get us above 20k.

As for sales I suspect it's all the purchases that were booked pre April 19th with subjects being removed. The banker I talked to implied they had some wiggle room.

patriotz
Member

@jesse:

Here’s the 30 million dollar question… why Alberta?

Note that the bank claims to have started seeing problems in 2006, but is only suing now. Alberta saw a 20% bust from mid-2007 to the end of 2008, only partially reversed. That's what probably got the big guns at BMO worried. Lenders don't worry about fraud when prices are going up – as seen south of the border and now here – so they don't bother doing tough appraisals. Just wait for this stuff to start coming out when the bust gets under way here – we'll make Alberta look like the little league.

"When the tide goes out you find out who's been swimming naked"

– Buffett

Inventory
Guest
Inventory

April (Units sold)

1995 = 1712

1996 = 2715

1997 = 2987

1998 = 1788

1999 = 2101

2000 = 1813

2001 = 2314

2002 = 3877

2003 = 3192

2004 = 4215

2005 = 4174

2006 = 3434

2007 = 3407

2008 = 3308

2009 = 3002

2010 = 3574

Raguz
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Raguz

@anon Perhaps an influx of greater fool is inexhaustible here, who knows?

anon
Guest
anon

The continuing strong sales is a little worrying indeed.. was hoping to see them fall off sooner.

ulsterman
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ulsterman

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…..stats.html

The months of inventory still stuck in the "5" region is a worrying sign. Sure inventory is rocketing but so are the sales. When will the buying stop and enable the MOI number to reach the dizzy heights of 20 – the level it reached back in 2008?

Dan in Calgary
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Dan in Calgary

@Frank, regarding "No one HAS to own. they can rent, they can move, they can commute", A lot of people don't think about the "move" idea, in context of owning a home. "Owning" ties you down. And when times get tough and the economy tanks and homeowners lose their jobs, they face huge challenges moving to another city where there might be employment, 'cuz that will force them to sell in a deflated market and deal with the painful consequence of being upside-down on their mortgage. Many likely learned this the hard way during the U.S. housing bust, and we're about to learn it here. If you need to be highly leveraged to buy, don't. Rent instead! If you have lots of cash and CAN buy, don't. Rent instead! Renting is the new wisdom. Be smug if you're a renter.

sluggo
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sluggo

Hey superboomtime (aka Thompson)

you're on your own here….no Johnny Horton to back you up.

superboomtime
Guest
superboomtime

@Nero: I told you bear that as inventory rises so does sales because supply feed demand. Just like oil exploration bear. You get more oil and you want more of it. Key to investing in it is to get it while you can bear.

stagnate
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stagnate

policing and nursing is much more demanding than it used to be. police now do a lot of what judges should be doing and nurses do a lot of what doctors used to do. i have no issue with their renumeration. firefighting is a joke job, in most societies it is a volunteer job. goons have been fighting fire for potential glory and empathy instinct since caveman days. teachers have too much time off for what they are paid. as time goes on i seem to know less and less nine to five regular jobbers. seems everyone in this town works either odd hours, contract work, off and on, on some sort of government compo, or flat out too wealthy to work.

Nero
Guest
Nero

@paulb:

Wow, a lot of sales? Any reason why so many sales?

I'm just assuming prices aren't very sticky and sellers are motivated? Then we should be seeing a lot of reductions?

What % of asking price are the sale prices?

Junius
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Junius

Inventory,

I appreciate your lists but I remain deeply troubled by the weak out of town numbers. LOL

paulb
Member

New Listings 390

Price Changes 150

Sold Listings 224

Best place on meth
Member
Best place on meth

Turns out yesterdays numbers were absolute monsters.

Today, a little tamer.

Dailies – List | Sold

Vancouver East & West*

New Listings – 59

Back On Market Listings – 2

Price Changes – 32

Sold Listings – 50

Vancouver All Areas*

New Listings – 265

Back On Market Listings – 14

Price Changes – 120

Sold Listings – 151

Yesterday's Totals

Vancouver East & West*

New Listings – 218

Back On Market Listings – 5

Price Changes – 112

Sold Listings – 111

Vancouver All Areas*

New Listings – 716

Back On Market Listings – 34

Price Changes – 355

Sold Listings – 334

*Attached & Detached @ 05/05/2010 @ 17:45 PST YatterMatters.com:

Inventory
Guest
Inventory

************* 1/1/2010 / 5/5/2010 / % change

Bowen Isld 46 / 106 / 130.43%

_Bby East 68 / 162 / 138.24%

_Bby North 345 / 731 / 111.88%

Bby South 362 / 751 / 107.46%

Coquitlam 531 / 1144 / 115.44%

Van.&Gulf 215 / 266 / 23.72%

___Ladner 65 / 151 / 132.31%

MapleRidge 575 / 1027 / 78.61%

_New West 262 / 583 / 122.52%

_North Van. 412 / 983 / 138.59%

OutofTown 105 / 69 / -34.29%

_Pitt Mead 121 / 189 / 56.20%

_Port Coq. 237 / 468 / 97.47%

PortMoody 213 / 442 / 107.51%

_Richmond 893 / 1894 / 112.09%

_Squamish 402 / 506 / 25.87%

Sunshine C. 656 / 1082 / 64.94%

_Tsawssen 98 / 201 / 105.10%

__Van East 767 / 1484 / 93.48%

_Van West 1396 / 3380 / 142.12%

_West Van 386 / 708 / 83.42%

__Whistler 569 / 757 / 33.04%

_____Total 8724 / 17084 / 95.83%

jesse
Member

Starving Artist has some wonderful graphs from past years showing sales month by month. What does a "normal" May look like for sales?

4200 sales has been typical of the boom years, which is an average of 210 per working day. My data show sales as low as 2000 a decade ago. If sales average 150 per day, that puts us at 3000 sales for the month which is what May '08 sales were. That would be a decidedly bearish signal given how fast inventory is increasing. Rising inventory and low sales happen at the same time for a reason!

Watch those daily sales data from Paul. They are the keyhole through which to view the rest of 2010.

Anonymous
Guest
Anonymous

@Debt Merchant: Gee, a corrupt MP huh? Looks like we've got an answer to the question of what government intervention is still left to keep prices from dropping.

Frank
Guest
Frank

BTW Vandan you sound like you feel society owes you the right to buy a home.

Isn't that what got us into this mess in the first place.

No one HAS to own. they can rent, they can move, they can commute.

Phunnybunny
Guest
Phunnybunny

I have farted out several smarter sounding things than that you moron!

MORON!

Phunnybunny
Guest
Phunnybunny

Your an UGLY blob of snot.

Debt Merchant
Guest
Debt Merchant

@Royce McCutcheon: Here's a CBC article with more info on the 'strawbuyer' scam and how it works for all those that say 'how does the bank lose money if they still have the mortgage paid?'. In that article they mention a US estimate of 4 to 6 billion in mortgage fraud losses each year, with 80% of that involving insiders, the rest being organized crime.

Speaking of insiders, they are now reporting one of the people charged in this BMO fraud is conservative MP Devinder Shory. He's alleged to have acted as a lawyer in at least 5 of the fraud cases and have run 3.7 million through an account connected with the fraud.

Phunnybunny
Guest
Phunnybunny

Stick your nose up my ass you loser!

Phunnybunny
Guest
Phunnybunny

Suck an Egg you crackpot