Topic: How To Invest

The Successful Investor Hotline – Friday, May 12, 2017

Article Excerpt

HOME CAPITAL GROUP INC., $9.14, symbol HCG on Toronto, is a mortgage lender serving borrowers who fail to meet the stricter standards of Canada’s big banks and other larger, traditional lenders. The Ontario Securities Commission (OSC) recently charged the company with failing to disclose material information in a timely manner and making false and misleading statements. The charges relate to Home Capital’s July 2015 announcement that it cut ties with 45 independent mortgage brokers after they allegedly submitted loan applications with falsified income statements. The company has since reviewed all of the loans in question, and found them to be sound. In response to the OSC charges, depositors continue to remove their cash from Home Trust (Home Capital’s wholly owned banking subsidiary). Balances have declined over 90%, to $125 million as of May 12, 2017, from $1.4 billion on March 28. The company needs those deposits to fund its lending activities. Another important source of funding—Home Trust’s GIC (Guaranteed Investment Certificates) balances—total…