For­mer Home Cap­i­tal bro­kers pe­nal­ized by reg­u­la­tor

The Hamilton Spectator - - BUSINESS - KA­TIA DMITRIEVA Bloomberg

TORONTO — A fi­nan­cial ser­vices reg­u­la­tor said it dis­ci­plined two mort­gage bro­kers who fun­nelled busi­ness to Home Cap­i­tal Group, mark­ing the first dis­clo­sure of ac­tion taken against dealers who sub­mit­ted fraud­u­lent loan ap­pli­ca­tions to the em­bat­tled mort­gage lender.

The Fi­nan­cial Ser­vices Com­mis­sion of On­tario con­ducted its own re­view into Home Cap­i­tal in re­la­tion to the com­pany sev­er­ing ties in 2015 with 45 bro­kers who used fal­si­fied client in­come on ap­pli­ca­tions. The agency found that bro­ker Ga­gan­deep Dug­gal and agent Za­heer Mo­ham­mad weren’t com­ply­ing with the rules, ac­cord­ing to a spokesper­son. Home Cap­i­tal and the reg­u­la­tor hadn’t dis­closed the names of any dealers sanc­tioned un­til now.

“FSCO takes al­le­ga­tions of fraud very se­ri­ously, and is com­mit­ted to pro­tect­ing con­sumers in the mort­gage bro­ker­ing sec­tor,” said spokesper­son Malon Ed­wards.

He said most of the bro­kers and agents that were part of its Home Cap­i­tal re­view con­tinue to be li­censed. The level of proof is higher for a reg­u­la­tor to dis­ci­pline a bro­ker than for a com­pany to cut ties with mort­gage dealers, he added.

A Home Cap­i­tal spokesper­son de­clined to com­ment. Dug­gal didn’t re­spond to mes­sages left with his firm, Mort­gage Al­liance, or to a voice-mail mes­sage left on a phone num­ber as­so­ci­ated with his name.

John Gabriel, di­rec­tor of com­pli­ance at the bro­ker­age, said he “had no knowl­edge” of Dug­gal be­ing charged by FSCO and that Dug­gal, who still works at the bro­ker­age, was hired on Feb. 22, af­ter the in­ves­ti­ga­tion took place. FSCO doesn’t pro­vide the in­dus­try with his­tor­i­cal employment of bro­kers, he said.

Mo­ham­mad was ter­mi­nated from bro­ker­age Mort­gage Ar­chi­tects af­ter FSCO re­leased its find­ings last year, ac­cord­ing to pres­i­dent Dong Lee.

Man­age­ment didn’t pro­vide his con­tact de­tails and he didn’t re­spond to a LinkedIn mes­sage.

“We take fraud very se­ri­ously,” Lee said. “At the con­clu­sion of the in­ves­ti­ga­tion, FSCO found no fault of Mort­gage Ar­chi­tects.”

Home Cap­i­tal’s stock has plunged by al­most 60 per cent and it lost more than $3.5 bil­lion in de­posits af­ter the On­tario Se­cu­ri­ties Com­mis­sion last month ac­cused the bank of mis­lead­ing in­vestors about its probe of the 45 out­side bro­kers. The cash crunch has forced the com­pany to take out an emer­gency credit line with a pen­sion fund, and con­cerns about con­ta­gion from the lender have con­trib­uted to a slow­down in Toronto’s hous­ing mar­ket.

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