Home Capital, the country’s largest non-traditional mortgage lender, continues to face overwhelming hurdles and could face creditor protection as investors flee the company in droves.
The company is financed by issuing GICs and high-interest savings accounts, and problems first came to light when it was accused by regulators of misleading shareholders.
Officials allege the company knew there was fraud in its mortgage broker channel months before it made public announcements about the problems in July of 2015.
Allegations that the brokers fudged information on mortgage applications in order to get the mortgages approved have set off a run on the company as investors flee, forcing Home Capital to attain expensive outside financing.
The upset does not reflect credit problems in the banking industry, but has put pressure on and negatively affected Canadian bank shares since April 25.
Now, the Ontario Security Commission starts the onerous task of reviewing both the corporation and its executives.