What do you do when your mortgage lender now has to pay a higher interest rate to their own lender on the money they loaned to you?
Home Trust in crisis!
“Home Trust would be required to pay a non-refundable commitment fee of $100 million and make an initial draw of $1 billion. The interest rate on outstanding balances would be 10 per cent, and the standby fee on undrawn funds would be 2.5 per cent, Home Capital added.
Gloyn said this translates to an effective interest rate of 22.5 per cent on the first $1 billion, declining to 15 per cent if fully utilized.”
“Home Capital Group Inc. said Wednesday its subsidiary, Home Trust, has seen deposits drop by nearly $600 million in recent weeks and it is seeking a $2 billion credit line to mitigate the impact, which it expects to accelerate.
This comes just days after Home Capital announced an executive and board shuffle in an effort to reassure investors after the Ontario Securities Commission accused the mortgage lender of misleading disclosure after uncovering falsified income information on some loan applications and cut ties with dozens of brokers in 2014.”