Home Capital Group Inc. comments on confirmation of regulatory capital treatment for Home Trust's mortgage securitization

Home Capital Group Inc. comments on confirmation of regulatory capital 
treatment for Home Trust's mortgage securitization transactions 
TORONTO, Aug. 6, 2013 /CNW/ - Home Trust Company, a wholly owned subsidiary of 
Home Capital Group Inc. (TSX: HCG) learned today that Home Trust's regulator, 
the Office of the Superintendent of Financial Institutions Canada (OSFI), has 
confirmed the regulatory asset-to-capital multiple (leverage ratio) treatment 
associated with the sale of certain residual interests arising from 
transactions related to mortgage securitizations. 
Home Trust originates and securitizes insured residential mortgages through 
the CMHC-sponsored mortgage-backed security program. Home Trust administers 
the securitized mortgages and retains certain interests in the prepayment 
risks associated with the underlying mortgages. Prior to the adoption of 
International Financial Reporting Standards (IFRS), the underlying mortgages 
were removed from Home Trust's balance sheet (both for financial reporting 
purposes and for the regulatory leverage measure). However, on adoption of 
IFRS in January 2011, these securitized mortgage pools were brought back on to 
Home Trust's balance sheet (both from a financial reporting and regulatory 
leverage perspective), effectively reducing Home Trust's total lending 
Home Trust has sold the benefit of the retained interests in some securitized 
mortgage pools. The result of these transactions under IFRS is the removal 
of the related mortgage pools from Home Trust's balance sheet and recognition 
of gains and losses on the related overall securitization transactions. Home 
Trust received confirmation from OSFI that the regulatory asset-to-capital 
multiple or leverage treatment of these transactions will follow the 
accounting treatment subject to specific conditions being met. When this 
accounting is applied to the measurement of regulatory assets and capital, the 
ratio of regulatory assets to capital is generally reduced, which is 
favourable to the lending capacity of Home Trust. This is similar to the 
regulatory leverage (capital) treatment for these assets prior to the adoption 
of IFRS. 
"With this confirmation, but subject to additional limits that CMHC may impose 
on the issuance of NHA MBS in future, Home Trust expects to gradually increase 
its origination and securitization of insured residential mortgages and sales 
of retained interests in the securitized mortgage pools", said Gerald M. 
Soloway, CEO, Home Capital. "This is expected to result in increased 
penetration of the mortgage broker channel and will reinforce Home Trust's 
one-stop mortgage provider strategy." 
About Home Capital and Home Trust
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 deposit, 
residential and non-residential mortgage lending, securitization of insured 
residential first mortgage products, consumer lending, Visa and payment card 
services. Licensed to conduct business across Canada, Home Trust has offices 
in Ontario, Alberta, British Columbia, Nova Scotia, Quebec and Manitoba. 
Gerald M. Soloway, CEO, or Martin Reid, President 416-360-4663 
SOURCE: Home Capital Group Inc. 
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CO: Home Capital Group Inc.
ST: Ontario
-0- Aug/06/2013 21:00 GMT
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