Home Capital denies delays

Brokers report slowdown at troubled mortgage lender

Home Capital Group Inc. is losing touch with a constituency crucial to its survival: brokers who feed the book of business at Canada’s embattled mortgage lender.

Samantha Brookes, founder of Mortgages of Canada, sent in at least three clients’ applications since April 26, the day Home Capital announced a $2-billion rescue loan and warned it may miss financial targets. She hasn’t heard back. True North Mortgage and Butler Mortgage are exploring options with other banks and some brokers say loans have been delayed.

“When you can’t place a file, you send it to Home Trust — and we don’t even know if they’ll be able to do deals going forward,” Brookes said by phone from her office in northeast Toronto, referring to Home Capital’s operating unit. “I’m concerned. If I can’t close deals I don’t get paid. And if you can’t send it to Home Capital, the consumer may need a second mortgage, or to pay a higher interest rate.”

The disconnect with brokers may signal the company is reluctant to take on new business as it faces a run on deposits and soaring borrowing costs from the credit line from Healthcare of Ontario Pension Plan. More than a third of Brookes’s business goes to Home Capital and it’s the same for many alternative brokers, who call Home Capital a “lender of last resort.”

Home Capital denies that business is slow. “Home continues to conduct business,” Pino Decina, an executive vice-president, said in an emailed reply. “We have been funding every day.”

This echoes emails to brokers, seen by Bloomberg, where Decina last week said nothing has changed despite “news reports” about the company.