Calgary NE MP Shory alleged $120 million mortgage fraud.

[ZenOps]

Front page news locally.

$120 million worth of mortgages, $30 million in profits.

Normally - I'd say no harm no foul. Making money by artificially creating demand is allowable, if somewhat totally unethical even under capitalist free market ethos.

But Canada *does* have a slightly more socialist system of mortgages, much like the banking. I don't think they would blink twice in California about something like this.

[dharminder]

Is there anyway to find out who else was named in the law suit

[spike98]

This is the third time someone has posted this story

[Xtrema]

CBC was able to pull the document, there are over 100 defendants and the NE MP has the highest profile among them.

Not surprised at all. I have heard of this "scam" back then from some RE agents. Smell fishy, glad I stay away.

[ZenOps]

Yeah sorry about the repost. No need for links either - there is plenty of coverage out there.

I'm more interested in the political side of this than the money side.

If a politician were to say build a career on doing something illegal, but was fully endorsed by his constituents - would it be illegal?

IE: Technically, by all standards - Quebec seperation is completely illegal under law when they were doing it - but it became law later. The Wildrose is in much the same situation.

Is it possible for one to sue Newfoundlanders for unethical land squatting too? If you throw these people in jail, you do have to look at that as well.

I thought everyone knew about this "scam" easy money - not that I ever did it or felt it was right. Flipping houses of questionable upgrade value is even on TV.

[mr2mike]

Flipping houses of questionable upgrade value is fine. If there's some other party willing to buy the place. However, this is more like insider buy/selling as the people buying, questionably evaluating the property higher than it is worth, selling the property are all linked.

There's also this situation:
Guy is a real estate agent.
Runs for office in MD of Rockyview and wins.
Has real estate and development buddies who put in for development permits, magically they all get approved and the former real estate guy sells the properties and is probably even linked financially to the land development company.
Next election, his slogan is "Help keep B____paw rural!! While he's approving land developments, lining his pocket. Needless to say, he didn't get re elected.
Happens all the time.

[ZenOps]

Ahh, that does make sense.

Its not free market - because the buyer is in cohoots with the seller to screw the banks. No normal off the street buyer in their right mind would pay that price normally.

Ok, so the banks didn't do their due diligence to make sure the appraised value was actually what the house was worth then?

Y'know, governments *cough* California *cough* usually love it when people intentionally overappriase their houses - it lets them raise taxes proportionately. Poor people hate it of course because the high price becomes a barrier to home ownership.

I dunno, this is about as grey area as it gets.

[Integra10]

This is probably a dumb question but if someone can clarify this for me it would be greatly appreciated.

So the "scam" is they get approved for a mortgage by the bank for considerably more than the house's real value. Don't they still have to pay the mortgage back? Thus eliminating all their profit?

[Weapon_R]

Originally posted by Integra10
This is probably a dumb question but if someone can clarify this for me it would be greatly appreciated.

So the "scam" is they get approved for a mortgage by the bank for considerably more than the house's real value. Don't they still have to pay the mortgage back? Thus eliminating all their profit?

The "scam" is that these guys paid for homes for x, inflated their value, and pawned it off on some unsuspecting fool for Y. The person stuck with the mortgage did not know the home was still under their name or did not realize that the price was so inflated.

Either way, a lawyer's duty isn't to the bank, but the client. I find it hard to believe that BMO is going to be successful in this one. Lawyers do not even investigate appraisal values during a typical conveyance.

BMO's lawyers and appraisers and underwriters dropped the ball here, and thats who they should be going after.

[kertejud2]

Am I the only one relieved to see that the NE has upgraded to white collar crime?

[Integra10]

Originally posted by Weapon_R


The "scam" is that these guys paid for homes for x, inflated their value, and pawned it off on some unsuspecting fool for Y. The person stuck with the mortgage did not know the home was still under their name or did not realize that the price was so inflated.

Either way, a lawyer's duty isn't to the bank, but the client. I find it hard to believe that BMO is going to be successful in this one. Lawyers do not even investigate appraisal values during a typical conveyance.

BMO's lawyers and appraisers and underwriters dropped the ball here, and thats who they should be going after.

Ok, I think I understand. So it would be like:

Someone puts their house up for sale for say 1.5 mil. These guys would sucker someone into using their information to buy said house. They would get 3 mil mortgage from the bank. than they would buy said house for 1.5 mil pocket the difference and than leave the person they suckered 3 mil in debt?

[thetransporter]

Originally posted by dharminder
Is there anyway to find out who else was named in the law suit

http://calgaryfinder.com/articles/

[codetrap]

Originally posted by Integra10


Ok, I think I understand. So it would be like:

Someone puts their house up for sale for say 1.5 mil. These guys would sucker someone into using their information to buy said house. They would get 3 mil mortgage from the bank. than they would buy said house for 1.5 mil pocket the difference and than leave the person they suckered 3 mil in debt?

Edit..
Ok.. my wife corrected me. Usually there's multiple people involved. The broker, who approves the purchaser for a home that's beyond their means. The appraiser who overvalues the home. Often there's what's called a straw buyer, who may or may not know what's going on. A straw buyer is paid to use their credit. "You sign these papers, and we'll give you this money". If the straw buyer is innocent, then they don't understand what's going on. If they're not innocent, then they usually split the money that's coming from the bank, and then everyone walks away.

Sometimes they put a renter in the house, and then just don't make any mortgage payments, and collect the money from everyone and run away. Sometimes the straw buyer ends up living there "rent free" as it were.

It all works until the bank forecloses and realizes that the value is wrong, and they've been taken. By then, everyone is gone back to India & China.

She also told me that generally the lawyer or assistant should be on top of it, and should know if something is fishy. If the lawyer is aware, they can hold the money back until the client proves the value of the property. Ultimately the lawyer should not release funds until the bank says "ok", which keeps the lawyer off the hook. The only way they could get Shory, is if he wasn't doing his due diligence and reporting there was excess funds from the mortgage to the client, or not verifying the ID's of the client. Generally it's up to the broker to make sure the assessment matches the value, as banks will only usually fund 80% of the market value.

[benz_890]

I had a broker approach me trying to get me to sign for a house for 5000 cash. Good thing I didn't do it, seemed too good to be true.

[Sugarphreak]

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[Sugarphreak]

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