Chilliwack man says his life was ruined by predatory lending

Unemployed senior on disability says he was convinced to buy mutual funds with home equity loan

When Cliff Forrest bought his Chilliwack home 13 years ago, he was as vulnerable as a homeowner as anyone could be.

With no assets, unemployed, suffering with chronic depression and anxiety, the then 57-year-old purchased the Coote Street house for $210,000 in a cash deal thanks to an inheritance from his deceased mother.

The house was all he had.

Then came a knock on the door that would eventually lead to financial ruin and send him on a decade-long battle against what some call predatory lenders.

That knock was from John Vriend, a Toronto-Dominion Canada Trust loans officer who knew Forrest was house-rich and cash-poor. That’s because Vriend had been the broker for a previous $25,000 mortgage on the home to give Forrest enough money to pay the bills.

Vriend approached Forrest — an unsophisticated investor with no assets, living on disability — with a scheme to get a home equity loan to invest in mutual funds. He had never made any investments in his life and based on his financial position he had zero tolerance for risk.

“This is the first thing I’ve ever done,” he said. “I didn’t hear any down side and I didn’t really realize how bad it was. A guy that works at Coast Capital [later] said ‘Didn’t they tell you how dangerous leveraging is?’ He was horrified. Someone at Van City said the same thing.”

Forrest eventual lost his home in foreclosure and is now suing Vriend, TD Bank, as well as Manulife Securities and mutual fund salesperson Daryl Martz.

Vriend’s plan was that Forrest should purchase mutual funds from his friend Martz. These funds, so went the pitch, would provide enough income for him to live and cover the interest on the loan.

RELATED: Investing vs. paying down a mortgage

In a statement of claim filed in BC Supreme Court, Forrest claims Martz met with him and took information about his spotty employment history and his dire financial circumstances. Despite gathering that information as any financial advisor is supposed to do, following the so-called know your customer (KYC) policies, Martz recommended Forrest purchase $100,000 in mutual funds leveraging the money from his home.

Forrest further alleges that Vriend manipulated numbers on the home equity line of credit (HELOC) application stating, among other things, that the unemployed man earned $75,000 a year and had a $100,000 life insurance policy.

In the end, the leveraging scheme didn’t work, the mutual funds tanked, and on July 12, 2012 TD commenced foreclosure proceedings, something Forrest said exacerbated his chronic depression.

RELATED: Feds target housing market speculators

The now 70-year-old has spent the last five years living hand to mouth, barely able to get by.

“To function I need five pills a day,” he said. “Four for depression and the other for anxiety and sleep.”

Forrest lives in a small in-law suite on a property on Fairfield Island. All he ever does is ride his bike the short distance to a hobby farm to care for his horse, Mr. Mulliner.

“[Most] of the time I’m isolated in this suite and really don’t want to go out at all. I sit silently for much of the day. That can become a vicious circle quickly. The more I isolate the more time I spend brooding and the dark hole just gets deeper.”

Before the loan crushed him, and despite the diagnosis and a failed attempt to run a cleaning business, Forrest got funding to go back to school. He attended the agricultural program at the University of the Fraser Valley (then the University College of the Fraser Valley) and things were looking up.

“I was really looking forward to a great career in that field and was thinking it would be lab work or insect pest control,” he said.

But after graduating in 2007 he was again unable to work, crippled by depression and anxiety made worse over the inability to make loan payments.

“What Vriend and Martz and the lawyers have done has killed me,” he said. “The body still walks but there are no signs of real life happening inside it.”

Both TD and Manulife responded to Forrest’s claims denying any wrongdoing, saying he chose to take out the home equity loan and neither Vriend nor Martz did anything wrong.

A trial date has been set for next spring, but Forrest said he hopes a settlement might be in the works, maybe putting an end to this chapter in his life.

“I often wonder if things will change much after a settlement,” he said. “Will I just continue isolating with the only difference being some cash in my Van City account?”


@PeeJayAitch
paul.henderson@theprogress.com

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