A whistleblower at CIBC is raising concerns about how they handle mortgages. First, the loan/value ratios on many mortgages are too high because they’ve been approving too many lines of credit. Second, the bank hasn’t been transparent with investors on the losses the bank is talking on mortgages.

First, CIBC has been approving lines of credit that put the loan/value ratio on houses too high. A quarter of mortgages examined had that issue:

The mortgage underwriting lapses at CIBC involve thousands of clients, many of whom had lines of credit that were secured against their homes. When these lines were combined with a CIBC mortgage, the total credit available sometimes exceeded allowed regulatory limits.

The regulator noticed that, and the bank has been told to fix it, but the C-suite is allegedly

drawing out the remediation process

The second problem is

CIBC was pricing some mortgages at negative margins for several months. Home loans priced with negative net interest margins – the difference between what it earns on loans and pays for funding – totalled tens of billions of dollars over a one-year span, the letter alleges, citing information presented to senior bank staff.