The company got in trouble when security commission of Ontario accused many of the
company officials for breaking the laws and sharing false information
... [Show More] to the shareholders of the
company in the management of around two years old issue that involves fabricating paperwork
for a number of leases. The troubles began in July 2015, when the company announced it had
severed relations with 45 mortgage brokers following an internal probe that indicated
borrowers' income and job information had been misrepresented in order to secure loans. The
accusation on the company were not surprising because the security commission in February
had said that the business completely failed to disclose its obligations in 2014 and 15. OSC staf
mentioned that the two officials of the company Soloway and Mortan have signed financial
statements about which the two executives of company doesn’t know. Staf also told that they
both have made statements on 2015 conference call that were false and misleading. The home
capitals opinion on it was that the allegations put on them are totally false and they have
disclosed general requirements. These were the main internal reasons due to which the
company was in trouble and the external factors were the result of these unlawful acts
performed by the directors. Investors have removed money from a critical source of funding for
Home Capital, putting the company's ability to operate in jeopardy. Even a $2 billion financial
lifeline negotiated by the corporation in late April hasn't been enough to calm fears of a
bankruptcy. The alternative lender is a little player in the $1.4 trillion residential mortgage
industry, contributing for less than 1% of the total, and it isn't well-known. However, there are
valid reasons for all Canadians to be concerned about the Home Capital fiasco.
One of the problems of this failure followed some worst practices of mortgage industry,
inadequate controls, Sketchy lending practice and alleged management practices. They provided
loans to low credit rating customers at higher interest rate but even the documentation and
processes were not followed as should be. For example, in one case, the broker is alleged to
have submitted altered Canada Revenue Agency documents to show a borrower was a selfemployed fish “trader” with an annual income of more than $75,000. In fact, the borrower
worked as a fish filleter and earned just $30,000 per year. Home capital internal systems was
not so sound that they can check the integrity of brokers.
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