Brokers disciplined over Home loans
Two falsified mortgage applications
TORONTO The Financial Services Commission of Ontario said it disciplined two mortgage brokers who funnelled business to Home Capital Group Inc., marking the first disclosure of action taken against dealers who submitted fraudulent loan applications to the embattled mortgage lender.
FSCO 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 spokesman. 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,” spokesman Malon Edwards said in an email.
He said that 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 said.
A Home Capital spokesman 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 in an email. “At the conclusion of the investigation, FSCO found no fault of Mortgage Architects.”
The enforcement underscores the difficulty regulators face in keeping fraud out of the mortgage market, and prosecuting individuals who break regulations.
The regulator accused Mohammad of providing false employment documents to Home Capital six times between June and August 2014 for loans that the lender approved. He didn’t respond to FSCO’s charges or report to court, and had his licence revoked in May 2016. FSCO accused Duggal in November of providing false and deceptive information and fined him $5,000, bypassing a court hearing. He remains on FSCO’s online mortgage database.