Crashing Canadian Mortgage Lender Bailed-Out By 321,000 Retired Ontario Healthcare Workers

Tyler Durden's picture

With Canada's housing bubble popping amid the collapse of the country's largest mortgage lender, it was no surprise that a bailout had been orchestrated, and now we know the source of the $1.5 billion 'loan' - 321,000 retired healthcare workers in Ontario.

As we noted yesterday, the stock of Home Capital Group cratered by over 60%, its biggest drop on record, after the company disclosed that it struck an emergency liquidity arrangement for a C$2 billion ($1.5 billion) credit line to counter evaporating deposits at terms that will leave the alternative mortgage lender unable to meet financial targets, and worse, may leave it insolvent in very short notice.

As part of this inevitable outcome, one which presages the company's eventual disintegration and likely liquidation, Bloomberg reported that the non-binding rescue loan with an unnamed counterparty will be secured by a portfolio of mortgage loans originated by Home Trust, the Toronto-based firm said in a statement Wednesday. Home Capital shares dropped by 61% in Toronto to the lowest since 2003, dragging down other home lenders.

 

And now we know the source.

As Bloomberg reports, the Healthcare of Ontario Pension Plan (HOOPP) is the lender behind Home Capital Group's C$2 billion loan ($1.5 billion) to shore up liquidity, citing people familiar with the matter.

The Toronto-based pension plan is said to have given the struggling Canadian mortgage lender the loan to shore up liquidity as it faces a run on deposits amid a probe by the provincial securities regulator. Home Capital has retained RBC Capital Markets and BMO Capital Markets to advise on “strategic options” after it secured the loan, according to a statement Thursday. Home Capital didn’t identify the lender.

 

HOOPP, which represents more than 321,000 healthcare workers in Ontario, was not immediately available to comment. HOOPP President and Chief Executive Officer Jim Keohane sits on Home Capital’s board and is a shareholder. Home Capital’s external spokesman Boyd Erman declined to comment.

 

The one-year credit line has a 10 percent interest rate on outstanding balances and a 2.5 percent rate on undrawn amounts, the Toronto-based lender said. The finalized agreement follows an announcement early Wednesday that Home Capital had reached a non-binding agreement in principle with an institutional investor for the loan.

And in case you are one of the 321,000 retirees who are nervous about your pension managers' actions, don't worry: The loan is secured by a pool of mortgages originated by Home Trust, and as everyone knows, in Canada home prices never go down.

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hedgeless_horseman's picture

 

HOOPP President and Chief Executive Officer Jim Keohane sits on Home Capital’s board and is a shareholder. Home Capital’s external spokesman Boyd Erman declined to comment.

Instant classic.

Reminds me of this...


The week after his State of the Union speech, Bush downplayed the importance of the Trust Fund:

 

Some in our country think that Social Security is a trust fund – in other words, there's a pile of money being accumulated. That's just simply not true. The money – payroll taxes going into the Social Security are spent. They're spent on benefits and they're spent on government programs. There is no trust.

29.5 hours's picture

The plunder continues—and they don't bother with the figleaf of morality anymore...

29.5 hours's picture

Thanks. I have always wondered how a flagrant scumbag smiles honestly. Such a nice, honest smile...

29.5 hours's picture

Aaaand...it's my favorite explanation of modern banking.

Haus-Targaryen's picture

They (the pensioners) wouldn't have seen the cash anyways.  

moimeme's picture

Forget what he looks like. It's what he did. Destroy lives.

stizazz's picture

"non-binding rescue loan with an unnamed counterparty"

Non-binding?

Seriously?

hedgeless_horseman's picture

 

Non-binding?

Sure.

Why not?

What's a couple of billion between friends?

I wonder if our old buddy and Canadian pension expert, Leo Kolivakis, helped negotiate this deal over some Ouzo.

PrayingMantis's picture

 

... a thing of booty is a joy to plunder ...

 

;)

barndoor's picture

This is NOT Canada's largest mortgage lender - it's Canada's largest NON-BANK mortgage lender.  This is a TINY piece of the Canadian mortgage market.  

Another disingenuous ZH headline. 

JRobby's picture

Seems to me that $1.5 billion does not come under the heading of "disingenuous" but you may have a different interpretation of the word?

Shemp 4 Victory's picture

 

This is NOT Canada's largest mortgage lender - it's Canada's largest NON-BANK mortgage lender.

This statement might make sense in a world where money wasn't borrowed into existence and strict financial laws were enforced, and enforced uniformly I might add.

Come on, folks, the clues are all there. What are we presented with?

1) Canada's housing bubble popping

2) Collapse of Canada's largest mortgage lender

3) Bailout of Canada's largest mortgage lender

4) What has happened to Canada's internet and phone service? Countrywide outage

Go back a decade or so. In the US, the country's largest mortgage lender, financing 20% of all US mortgages, was a non-bank lender. When the US housing bubble was popping, this lender collapsed, and was then bailed out.

The name of the lender was, of course, Countrywide.

I assess, with confidence higher than that of seventeen agencies of the Intelligence Community®, that this is the work of none other than Angelo Mozilo, the original Agent Orange.

Is-Be's picture

This is NOT Canada's largest mortgage lender 

Therefore we must feel no outrage? 

swmnguy's picture

I'm sure Leo would have mixed in some of his Chinese Solar stocks to balance out the risk.  In what direction, who knows.

Blano's picture

There's a name I haven't heard in a while. 

Whatever happened to him? 

Buck Johnson's picture

Exactly, that alone should scare anyone to loan money to that bank.  But since the pension fund is quasi or all the way govt. control they told him to make out a loan to that bank.  That bank knows it doesn't have the money to repay that loan.

 

 

Is-Be's picture

Never forget that the Zionists are monotheists.

Turn your back on them. They are all tarred with the same brush.

BennyBoy's picture

 

Classic: Throwing good money after bad.

CPL's picture

Yup.

They weren't planning on letting anyone have their pension anyways because they busted the till a while ago.  Just a point of fact that all pyramid schemes have the same issues.  They are all flawed by being numerically designed to take advantage of the greater fool and game 'infinite' numbers with finite resources.  The fact is that the given of all high yield investment programs have the following, ALWAYS:

  1. Lousy math.  The underlying realities versus the theoretical math will destroy them anyways, they run out workers to supply the funds, or have less workers contributing...game's over.  The outflow is much larger than the new investors, it implodes.
  2. Corruption.  The people running this crap know it's a scam and they tend to overlook the thievery that goes along with understanding it will end so you might as well grab what you can.  It attracts thieves like flies to garbage.  Most of these high yield investment programs (aka pyramid schemes, all pensions in general, ) are robbed blind LONG in advance of hitting the math problem of finite suckers/idiots.

They are going to just keep looting the shit out of all the pensions. AND they'll keep all the PM prices very, very, very low to squeeze the entire population slowly like a sponge. 

Only thing they can't fuck with is BTC because they don't understand it (they like shiny rocks, they aren't very smart).  That sliding decimal point to the left by 9 digits completely fucks with them trying to short it along with the fact it is very hard to make a bitcoin.  Can't print it out of thin air.  Need tonnes of coordination to make one, which they lack.  A very specialized skill set that they don't have, MyGuyver basement hacker hobbyist's.

Lore's picture

If you like your BTC, you can keep your BTC.

Seriously, if I was one of the pensioners, I would be shitting myself right now. It's like the CPP buying American shopping malls: WTF?!?

ATM's picture

They would have seen it just like the US Social Security recipients will see every penny they are due.

The way the government will handle that is by simply conjuring the money from thin air and handing it out.

Worthless "money" used to pay real obligations is the scam. You'll get your pension/SSI but it won't buy a thing. Everyone will have tons of money but there will be no goods to purchase, just like Venezuela.

Then government will blame everyone and everything for the problems but themselves. Happens every time.

BaBaBouy's picture

Canadian Home prices Like 30% OFF, when you factor in the CHEAP CAD $ ...

ATM's picture

I'm shopping for a boat in Canada right now. I need an accident.

wanderer9641's picture

Usually you have your accident after you have the boat - metals to the bottom of the lake.

Abbie Normal's picture

It's only 30% off if you're paying in U$, and even then it's still way overpriced.  If you earn CAD$, get ready to BOHICA.

. . . _ _ _ . . .'s picture

"By each according to their ability (to pay,) for each according to their work."

Reminds me of when the UN said that the work unemployed housewives do should count, but opposite.

In this case, "son travail" is not defined, and is poorly accounted for.

One could work 60 hrs/week volunteering, and by this definition, not be considered to have contributed to the wealth of the nation.

'Travail' (work/job) is not the same as contribution, but it should be.

It should read: "De chacun selon sa capacité, à chacun selon sa contribution."

But what about the disabled?

Maybe it should read: "De chacun selon sa capacité, à chacun selon son besoin." [besoin = need]

Manthong's picture

..as they would say in mont real…

Sucker Blue !

Manthong's picture

Oops…

Par done em wa…

I meant to say "suck me blue".

 

PT's picture

What's the problem?  When it is time for the retirees to get their money, they can sell the paper to another pension fund, preferably one full of twenty-year-old employees (20 yo "employees"?  Damn!  There's a flaw in my plan already.)  Then, just before those workers retire, they can sell the paper to another pension fund for the next lot of 20 yo workers, and then when they need to retire, they can sell the paper to ...

I'm quite sure this exercise explains the origin of the story about Pandora's Box.  "We're all rich!  Just don't look inside that box, damn you!"

Manthong's picture

It seems to me that if you are under 55 years of age that you should not expect to retire unless you are French, German or a dark north African muslim.

Caucasians should welcome the expiration of life as a greeter at Wal-Mart.

oh.. oops.. also the Brussellian Belch folks deserve a comphy, wealthy old age.

 

 

 

AGuy's picture

"It seems to me that if you are under 55 years of age that you should not expect to retire unless you are French, German or a dark north African muslim."

Or six feet under! No body under 55 is going to be able to retire.

Funny (odd way) I had a discussion with a co-worker, who is 40 and expects to collect Social Security. I brought up the $20T in Federal debt, $1T budget deficit and the demographics cliff (boomers) and he quickly began telling something about a river in Egypt, the "de-nile" river, that solve the issue.

Dizzy Malscience's picture

 

Look at the bright side..

Only 10,000 boomers newly claim SS each day but we have 30 million or so illegals, migrants, refugees and dreamers to  make up the difference.

 

https://www.youtube.com/watch?v=L2Wx230gYJw

Manthong's picture

..but the best news is that the youngster's social security is going to migrants and vagrants.

AKA democrat voters.

 

. . . _ _ _ . . .'s picture

Or, "Suck me dry and call me Dusty."

old naughty's picture

same old same old,
as WB would say (in another thread) :
nut tin new here (also)

Bunga Bunga's picture

It's the perfect explanation of cleptocracy. The CEOs can just gamble with other peoples pension. Don't be the next victim. Get your pension out before it is too late.

jal's picture

This is just another way of legally stealing money from the only generation that still has some money.

This is part of the intergenerational transfer of wealth.

Everybody has a way to scam the uneducated, wealthy seniors that are mentally challenged and over medicated.

jus_lite_reading's picture

Yup, this is modern ponzi SOCIALISM folks -- private profits, socialized losses. Don't be fooled by the sound of free shit for all! It's a TRAP. Why?? 

"The problem with socialism is that eventually you run out of OTHER PEOPLE'S MONEY..."

 


swmnguy's picture

When corporate and State power are merged to the benefit of corporate interests, it's an "-ism" alright, but it isn't "Socialism."

Terminus C's picture

I think its motto was, "of the state, by the state, for the state".

Or am I mixing that one up with another...?

aliens is here's picture

How do you insert photos in the comments? TY.

NoDebt's picture

You can't.  Only HH and a small handfull of others, like WB7, that have already been vetted by the Tylers can.  

hedgeless_horseman's picture

 

 ...vetted by the Tylers... 

That was supposed to be kept secret!

And I was drunk.

Manthong's picture

Hopefully you had a few rabbit pinchitos to chase it down.