Home Capital Group Profile
Home Capital Group Inc., through its subsidiary, Home Trust Company (Home Trust), provides residential and nonresidential mortgage lending, securitization of residential mortgage products, consumer lending, and credit card services in Canada.
In addition, the company offers deposits via brokers and financial planners, and through a direct-to-consumer brand, Oaken Financial. The company also conducts business through its wholly owned subsidiary, Home Bank. Licensed to conduct business across Canada, the company has offices in Ontario, Alberta, British Columbia, Nova Scotia, Quebec and Manitoba.
Mortgage Lending
Classic Single-Family Residential Lending
The uninsured single-family residential portfolio is the company’s ‘Classic’ mortgage portfolio, which primarily includes uninsured mortgages with loan to value of 80% or less, serving selected segments of the Canadian financial services marketplace that traditionally have not been the focus of the major financial institutions. These mortgages are funded by the company’s deposits and financing activities.
Insured Residential Lending
Insured residential lending includes the company’s insured single-family Accelerator mortgages and insured securitized multi-unit residential mortgages. These mortgages are funded through Canada Mortgage and Housing Corporation (CMHC) sponsored mortgage-backed security (MBS) and Canada Mortgage Bond (CMB) securitization programs. The company remains responsible for the administration of these mortgages and includes them in loans under administration.
Residential Commercial Lending (including Loans Held for Sale)
This portfolio includes insured and uninsured residential commercial lending, which includes commercial mortgages that are secured by residential property, such as non-securitized multi-unit residential mortgages and builders’ inventory. Insured multi-unit residential mortgages are included in this portfolio until they are securitized. These loans are funded by deposits.
Non-Residential Commercial Lending
Non-residential commercial lending includes store and apartment mortgages and commercial mortgages. These loans are funded by deposits.
Consumer Lending
Credit Card and Line of Credit Lending
The company’s Equityline Visa product, which is a home equity line of credit secured by residential property, represents approximately 90% of balances receivable for the credit card loans and lines of credit. The company also offers cash-secured and unsecured credit card products. Credit card loans and lines of credit are funded by deposits.
Other Consumer Retail Lending
This portfolio primarily includes consumer retail lending for durable household goods, such as water heaters and larger-ticket home improvement items. Consumer loans are supported by holdbacks or guarantees from the distributors of such items and/or collateral charges on real property. Consumer loans are both originated directly and as cash flow payment streams via other loans and rental contract originators. Consumer loans are funded with deposits.
Deposits
The company’s uninsured assets are largely funded by its deposit activities. Home Trust and Home Bank deposits are offered through both brokers and Oaken Financial. Home Trust and Home Bank are both members of the Canada Deposit Insurance Corporation (CDIC) and their retail deposits are eligible for CDIC coverage, up to the applicable limits.
Other Activities
In addition to its lending portfolios, the company manages a treasury portfolio to support liquidity requirements and invest excess capital. In addition, Home Bank offers deposits and mortgages.
Regulation
As Home Trust is regulated under the Trust and Loan Companies Act (Canada) (TLCA) and Home Bank is regulated under the Bank Act (Canada), Home Trust’s ability to accept deposits is limited primarily by its permitted Leverage ratio. In addition, the declaration and payment of dividends by Home Trust to the company are subject to restrictions under the TLCA. The company periodically pools and securitizes insured mortgages under CMHC National Housing Act MBS program and sells the securities to investors or uses the securities as collateral for participation in CMHC’s CMB program.
