Canadian based HOMEQ Corporation reported a net loss of $1.8 million or $0.13 per share last year, compared to net income of $29.5 million ($2.10 per share) in 2008. While its reverse mortgage portfolio grew by 6% to $866 million in 2009, overall originations fell by 15% to $110 million. However, during the 4Q, originations grew by 77% to $43 million.

Fiscal 2009 marks a significant turning point for HOMEQ in which major changes were successfully implemented to its structure and operations in order to better position it for the future said the company in a statement.

On October 13, 2009, HOMEQ announced that its operating subsidiary, Canadian Home Income Plan Corporation, became a Schedule I bank to be known as HomEquity Bank. As a result, HOMEQ has gained access to funding from retail deposits which will be used to supplement the existing wholesale funding strategy. This will directly enhance HOMEQ’s ability to offer competitively positioned products and services to meet client needs and grow the business.

Although reverse mortgage rates were at a historic low, to attract new customers, HOMEQ lowered the rates to as low as 3.75%. The positive impact on origination volume was immediate and significant said the company.

The record $43 million origination volume in the fourth quarter of 2009 was an increase of 11% over the previous record in the second quarter of 2008. This growth attests to the transition of a formerly niche product to one with more widespread acceptance said HOMEQ.

“We are extremely gratified with our achievements during the year, and Canadian seniors will benefit from lower interest rates on reverse mortgages as a result of HomEquity Bank’s diversified sources of funding and lower cost of borrowing. We believe that the new pricing structure will benefit HOMEQ in the long term by making the reverse mortgage a mainstream product, growing the size of the mortgage portfolio and pre-empting competition,” said President and Chief Executive Officer, Mr. Steven Ranson.

“Over the last two years we have proven the soundness of our business model and have been able to withstand the effects of extremely uncertain economic conditions well beyond our control,” continued Mr. Ranson. “The future looks bright. It’s based on an exciting intersection of demographics, product and expertise. Canada’s seniors’ market is the fastest growing segment of the population and is estimated to grow by 20% in the next six years. Increasingly, seniors will rely on HomEquity Bank for flexible and innovative solutions to meet their retirement needs. Our achievements and milestones over the last two years attest to our business model and its development and implementation by our highly trained professionals.”

HOMEQ’s goal is to continue to be Canada’s leading provider of reverse mortgages. Market awareness of both HOMEQ and its product has increased, and sources of referral cover a widening array of financial institutions. With the bank deposit funding structure now in place, and the recent introduction of lower interest rates on reverse mortgages, HOMEQ’s goal is to return new mortgage origination growth and portfolio growth to the growth rates experienced prior to 2009.

Annual Financial Results