UPDATE 1-Home Capital suspends 45 mortgage broker contracts over falsified data

(Adds details on broker contract suspensions)
July 29 (Reuters) - Canadian mortgage lender Home Capital
Group HCG.TO said it had suspended contracts with 18
independent brokers and two brokerages, or 45 individual
brokers, after an investigation found they had falsified
information about borrowers' incomes.
There was no evidence that these brokers had falsified
credit scores or property values, Home Capital said on
Wednesday, adding that it had released the information after a
request from the Ontario Securities Commission. ID:nCNWJYNhca
The company, which operates through its unit Home Trust Co,
said it conducted an independent investigation after an external
source alerted its board last year to possible discrepancies in
income verification information submitted by certain brokers.
Home Capital suspended the contracts between September and
March. That led to a decline in mortgage originations, but was
unlikely to lead to credit losses, Home Capital said.
The company, which works with nearly 4,000 brokers, said it
did a broader test to ensure that the issue was not widespread
in its portfolio and "is comfortable that it is not".
The 45 brokers originated C$960.4 million ($742 million) of
single-family residential mortgages in 2014, or 5.3 percent of
the outstanding loan assets on Home Capital's balance sheet.
That could be expected to contribute about C$6 million to
net income over a full year, or about 2 percent of 2014's net
income of C$313 million, the company said.
The suspended contracts and subsequent fall in mortgage
originations resulted in Home Capital's net profit slipping 2
percent to C$72.3 million, or C$1.03 per share, in the second
quarter ended June 30. ID:nCNWzSy2ha
The profit, however, was in line with analysts' average
estimate, according to Thomson Reuters I/B/E/S.
Home Capital's stock had fallen more than 43 percent in the
last 12 months through Wednesday's close of C28.40.
($1 = C$1.2943)