TORONTO – Shares in mortgage lender Home Capital Group Inc. were up more than 10 per cent a day after it said it has suspended its relationships with 45 mortgage brokers over allegations they falsified information about borrowers’ incomes.
The stock, which has been beat down in recent weeks, was up $3.54 or 12.5 per cent at $31.94 on Thursday.
Out of the 45 brokers that the company has cut ties with, 18 were independent brokers while the remainder came from two separate brokerages.
Home Capital provided details about the suspensions and its investigation in a news release after markets closed Wednesday. The Ontario Securities Commission had requested the information be released.
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The company says it is actively monitoring the mortgages in question and that it is unlikely the loans will result in credit losses. Home Capital says it launched the investigation after it received a tip from an external source.
The suspensions occurred between September of last year and March. The company says it has also conducted a broader investigation and determined that income falsification is not a widespread issue across its portfolio of mortgage loans.
Home Capital said in a statement that although the suspensions have led to a reduced volume of mortgage originations, the measures taken were “essential to the long-term health” of its business.
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