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The story Canada has been telling itself about its economy is starting to sound like wishful thinking.

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Here’s a look at the company, its role in the Canadian mortgage landscape and how the discovery of fraud among its brokers two years ago continues to have ripple effects today.





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It’s too early for the meltdown at Home Capital Group Inc. to show up in the data — and, with just 1 per cent of the national market, the mortgage lender may be too small to do so anyway. But it’s already had a big impact on how investors and analysts are weighing the country’s weaknesses against its strengths.

Boom-times in Vancouver and Toronto look increasingly like the spillovers from debt-fuelled housing bubbles, the kind that wrought havoc in so many Western countries last decade. A banking system long considered among the world’s soundest got hit by a Moody’s downgrade this week. The government has touted a transition away from commodity-dependence and toward hi-tech smarts; Canadians are waking up to the possibility that their economy got hooked on real-estate instead.