A routine OSFI audit found multiple violations of underwriting and indebtedness rules, according to reports
Canadian Imperial Bank of Commerce (CIBC) has been under remediation orders from the Office of the Superintendent of Financial Institutions (OSFI) for over a year now, after a routine audit found multiple violations of underwriting and indebtedness rules, according to a report by The Globe and Mail.
Violations included combined mortgages and lines of credit that had total available credit values exceeding regulations, involving as much as thousands of CIBC clients, the Globe cited sources as saying.
Many consumers who already held home-equity loans or other lines of credit (either with CIBC or another lender) managed to secure mortgages at CIBC, the sources said.
While CIBC did its job in informing the consumers that they will have to close their prior loans or credit lines, in many cases it did not perform the necessary follow-up to verify the closure of said accounts, the sources said.
No fraud was reportedly involved in the problems uncovered by the OSFI audit.
The Globe and Mail report said that following the discovery of the violations, CIBC worked with Deloitte consultants to analyze the bank’s mortgages over the last few decades.
CIBC also tapped the consultants to shore up the bank’s processes to avert similar problems in the future. However, the bank is still finding a considerable number of problematic mortgages in its portfolio, the sources said.
Still, the anomalies are not expected to have any real impact on the bank’s loan loss projections.
The publication declined to identify the sources, saying that they do not have clearance to discuss confidential regulatory matters.
Neither CIBC nor OSFI provided comment to The Globe and Mail, with the latter citing confidentiality rules when it comes to regulatory discussions with Canadian banks.
