Canadian based Home Equity Income Trust (HOMEQ) announced that its originations grew by 10% to a quarterly record of $38 million compared to Q3 2007, and trailing fourth quarter originations grew to $139 million in comparison to $118 million during the period ended Q3 2007.

HOMEQ is an unincorporated open-end investment trust created to serve as a long-term funding vehicle for the reverse mortgage business developed by Canadian Home Income Plan Corporation (CHIP). CHIP is a financial services company exclusively dedicated to reverse mortgages in Canada and has been the main underwriter of reverse mortgages since 1986.   

According to the press release, the aggregate of new mortgage originations and accrued interest is outpacing repayments, resulting in acceleration in the rate of growth of the mortgage portfolio. During the trailing four quarters ended September 30, 2008 the portfolio grew 18% or $120 million to $798 million.

"As a result of conservative underwriting policies, our portfolio currently has an average loan-to-value of 36%, and less than 1% of the portfolio has a loan-to-value of over 70%, which would reduce the impact of a drop in residential real estate, should that occur. Over the last several years we have refined our underwriting inputs to reduce risk in the event of future property depreciation, and are constantly assessing residential real estate trends across the country", said Steven Ranson, President and CEO.

The statement from HOMEQ said they have revised its underwriting assumptions to reduce the average mortgage amount for new clients by 5-15% due to the uncertainty of financial markets across the globe. 

Home Equity Income Trust