Question

Breathtaking': Fake mortgage broker case reveals widespread problems In a real estate market saturated with stories about money laundering, offshore conniving and even murder-related property depreciation — it's easy for allegations against one unlicensed mortgage broker to get lost in the fray. After all, British Columbia is used to stunning examples of greed and deception. But the activity outlined in last week's cease and desist order against Jay Kanth Chaudhary is something different entirely. Not just because Chaudhary is accused of using fake financial documents to dupe lenders into giving out half a billion dollars worth of loans. But because an entire network of licensed professionals are being investigated for helping. And because hundreds of customers were allegedly willing to turn a blind eye if it helped them get a mortgage. "I guess to me what's remarkable is the widespread apparent — there's no word for it really other than 'corruption' — of licensed people," says Ron Usher, a professor of property law at Simon Fraser University.1 … 1 Source: CBC News Online, June 4, 2019: https://www.cbc.ca/news/canada/british-columbia/mortgage-fraud-realestate-corruption-1.5160842

Read the news story above by clicking on the link above. Answer the following questions: 1. Explain what is happening in this news story. Give a brief summary. 2. What is wrong with the system used in this story to help people borrow money? 3. Accurate Information: a. Is it true that the system of financial institutions must have accurate information in order for the system to work? b. Why does it matter that the institutions have accurate information? 4. Regulation: a. Is regulation of financial institutions still important in Canada? b. Why or why not?

Answer 1

1. The news article looks into the case of Jay Kanth Chaudhary, an unlicensed broker who generated huge sums of money luring people who did not have the financial capacity to get these mortgage loans through licensed brokers and serving as a case of shadow brokers.

2. The system used is illegal, as the tax documents were forged to get the mortgage loans for people who didnt earn enough to make the mortagage periodical payments.

3. Yes, the system of financial institutions should have the accurate information in order for systems to work as the inaccurate information or the one which is not disclosed makes it difficult for the fin institutions to have a track on payments and it results in lack of credibility for them as these act as bad loans or the ones which are not honored by the loan recievers

4. Yes, regulation of financial institutions is important in Canada where the federal govt is responsible for supervision of commercial banks, institutions providing loan, this is done to protect the financial sysytem from such cases of money laundering and so that unlicensed brokers like chaudhary dont find a loophole into the system which they feel fit to exploit.