The ratings on Toronto-based Home Capital Group Inc. (Home Capital; TSX: HCG) and Home Trust Co. (Home Trust), a federally regulated trust company and a member of the Canadian Deposit Insurance Corp. (CDIC), reflect the company's strong and defendable niche position in the Canadian residential mortgage sector, strong and uninterrupted growth in earnings over the past decade, adequate asset quality, and strong regulatory capital ratios. These strengths are somewhat offset by the higher risk profile of Home Capital's customer base, limited business diversification given the company's relative size in the Canadian market, dependence on spread income, the firm's increased use of securitization as a funding source, existing book of commercial mortgages, and deteriorating economy and housing markets. Home Capital is
