Forum

Broker news forum is the place for positive industry interaction and welcomes your professional and informed opinion.

Notify me of new replies via email
Mortgage Broker News | 19 May 2017, 07:40 AM Agree 0
Analysts say that the Home Capital situation bears similarities with that of a U.S.-based subprime lender prior to the 2008 crisis
  • Jim D | 19 May 2017, 10:31 AM Agree 0
    I don't agree with these "observers" who are comparing Home Capital with the US Sub Prime Crisis.

    The Sub Prime Crisis arose from mortgages that were structured to fail. Mortgages were granted with 18 month "teaser" rates to unqualified borrowers. To compound the matter, the sub prime paper was hidden in a bundle with good debt and rated as AAA to al the institutions. When the teaser rates expired, and defaults skyrocketed, the whole scam was exposed.

    My experience with Home Capital is that they are very conservative with appraised values particularly in equity takeout and refinance situations.

    What is their default rate? Losses from default??
    I think this crisis of confidence stems from regulators discovering some sloppy underwriting practices.
    Not an actual massive default A La Us Sub Prime.
    The fact that other banks are willing to buy their book of business shows the underlying strength of their portfolio.
    Jim D
  • Fed Up Ontario Broker | 19 May 2017, 01:37 PM Agree 0
    Please, stop giving Cohodes any legitimacy, or a soap-box, when he and the OSC are the real criminals wiping out shareholder value for what was really not a material impact to Home Trust's operations. He's a self-interested short-seller, with a shady background, and he's not highly regarded in many circles. Do some actual research.

    Also, claiming that their deposits "declined by around $600 million so far this month (from approximately $13.5 billion at the end of April 2017)" is poor reporting designed to create a sensationalist illusion comparing two completely unrelated numbers with each other because of the huge gap between them. A better comparison would be "down to $12.9 billion from $13.5 billion at the end of April," but I guess that doesn't create good enough click-bait for you, and doesn't sound nearly as bad as the way you phrased it.

    I sincerely hope that, if there is any kind of mortgage or real estate market collapse as a result of excessive government interference and irresponsible distorted journalism, that all the so-called journalists and bureaucrats would actually suffer economic hardship. But that will never happen, since journalists and bureaucrats have no concept of what it is like to take the entrepreneurial risks or work in a job where actual performance is rewarded commensurately.
  • Phil | 21 May 2017, 12:09 PM Agree 0
    What people are not seeing is camouflaged,,,this lender had a run on deposits/GICs, so you need at least 10 percent on deposit to loan out 10 times the amount,or have 10 percent on reserve....the people withdrew to BUY properties!!!! and went to a different lender because the people needed a downstroke.....now do you see why
Post a reply