TORONTO, Oct. 5, 2016 /CNW/ - Home Capital Group Inc.
(TSX: HCG) ("Home Capital" or "the Company") and its federally
regulated lending subsidiary, Home Trust Company ("Home Trust"),
today made the following statement to clarify Home Trust's
relationship with Brookstreet MIC Inc. ("Brookstreet"). This
follows a recent report published on an investing web site that
erroneously characterized that relationship.
Brookstreet is one of a number of second mortgage lenders to
which Home Trust, in the normal course of its business, refers
borrowers who are seeking to arrange a second mortgage. Home Trust
refers borrowers when they require a loan at a higher loan-to-value
than Home Trust will provide based on its underwriting parameters.
All referrals are conducted at arm's length, at market terms, and
the second mortgage lenders independently underwrite whether to
issue a second mortgage to the borrowers.
Brookstreet is an independent company whose owners include two
adult children of Home Capital founder and director Gerald Soloway.
Home Capital considers Brookstreet to be a related party, and as
such, considers the referral of second mortgages to Brookstreet to
be a related party transaction. However, the Company does not
consider these related party transactions to be material for the
purpose of financial disclosure. Second mortgages referred to
Brookstreet over the past five years totaled less than $10 million in principal value.
"While these referrals are not considered material related party
transactions, we believe that providing full transparency is in the
best interest of all stakeholders," said Martin Reid, President and Chief Executive
Officer of Home Capital.
As stated on August 24, 2016, Home
Trust, in the normal course of its business, from time to time
sells loans to third parties when loans require work-outs or
restructurings. All loans sold to third parties are accounted for,
with any losses reflected in write-offs for the related period.
Home Trust has not sold any loans requiring work-outs or
restructurings to any third party since September 2015. Brookstreet is not and has never
been one of these third parties. Home Trust has never sought to
engage in the sale or transfer of a loan requiring work-out or
restructuring to Brookstreet, directly or indirectly.
Home Capital Group Inc. is a public company, traded on the
Toronto Stock Exchange (HCG), operating through its principal
subsidiary, Home Trust Company. Home Trust is a federally regulated
trust company offering residential and non-residential mortgage
lending, securitization of insured residential first mortgage
products, consumer lending and credit card services. In addition,
Home Trust offers deposits via brokers and financial planners, and
through its direct to consumer deposit brand, Oaken Financial. Home
Trust also conducts business through its wholly owned subsidiary,
Home Bank. Licensed to conduct business across Canada, Home Trust has offices in Ontario, Alberta, British
Columbia, Nova Scotia,
Quebec and Manitoba.
SOURCE Home Capital Group Inc.