Canada grow-ops send home values up in smoke
By Ka Yan Ng
TORONTO (Reuters) - Marijuana grow-ops are a huge industry in parts of Canada, creating health and safety risks and leaving both unknowing home buyers and mortgage lenders vulnerable to fraud, a conference heard on Friday.
Risks include the impact of fertilizers and pesticides used within closed-off spaces, as well dampness that eats away at walls. A buyer might not recognize a cosmetic touch-up job, only to face massive bills on a home that might even have to be torn down.
"You get the sense that it's a pretty huge industry," Len Garis, chief of the Surrey, British Columbia, fire department, told Reuters on the sidelines of a conference about mortgage fraud.
"After it's busted, they walk away from it and the mortgage lender ends up holding the bag on it," he said.
Official figures are in short supply about the number of grow-ops in Canada, but a recent Ontario police report said they had reached "epidemic proportions." A British Columbia study estimated the Pacific Coast province had close to 20,000 grow-ops, many of them in homes carrying mortgages.
Panelists at the conference, which aimed to give lenders information and tips on what to look out for, said grow-ops could be worth hundreds of millions of dollars a year, and were just one of the fraud problems that lenders face.
Aware that that they are unlikely to be jailed for mortgage fraud, growers may simply cease operation to set up another lab, halting mortgage payments.
Mortgage lender AIG United Guaranty estimates that 10 percent of all mortgage applications in Canada contain some element of fraud, which results in more than C$1.5 billion ($1.4 billion) in losses. Continued...