One reason Canadian cities can never have a housing bubble like they had in the US is that our lenders are much more diligent and properly manage risk. At least that’s what I heard, so you can imagine my surprise when I read this article where two different Canadian banks gave mortgages to a grow op owner with no proof of income:
Alarm bells should have gone off the moment Hai Le walked into the Bank of Montreal and asked to refinance the mortgage on his million-dollar home in Vancouver’s up-and-coming Marpole area.
His alleged inability to provide proof he had the means to make the hefty monthly payments of about $4,000 should have been reason enough to crumple up and toss the application into the nearest trash can.
Le, a “sales manager,” was also asking the bank to mortgage the property for its full value, a strategy that authorities say marijuana growers often use to minimize their losses should and when they get busted.
Yet despite these blatant red flags, the bank approved Le’s application for a $976,000 mortgage on Oct. 22, 2008, some 15 months after he’d bought the house from a Viet Van Truong for $980,000.
Ten months after the purchase, in August 2009, Vancouver police raided Le’s West 63rd Avenue home and uncovered a massive grow-op. Two days later, Le sought and received a $70,000 mortgage from the Royal Bank of Canada.
The Forefeiture Office is now seeking to have the mortgage proceeds seized from the bank. Read the full mind-boggling article in the province. Thanks to Jimmy for the link!