The Ontario Securities Commission has set June 2 as the date for the next Home Capital Group hearing, after alleging the lender falsely disclosed financial information.

OSC staff said Thursday, at a hearing mainly devoted to setting future dates, that they believe the Hearing on the Merits can begin July 14.  But, a lawyer for Home Capital called that "showboating" and said much more information needs to be exchanged between the involved parties before the case can proceed.  

On April 19 the OSC made allegations that the lender and three of its executives misled investors regarding  disclosures surrounding mortgage originations and falsified loan applications in 2015.

The embattled lender had its debt rating slashed again on Wednesday by rating agency DBRS, citing Home Capital’s delay in announcing its earnings as the main reason.

“DBRS considers this delay in announcing results as a negative, especially given that the initial Ontario Securities Commission’s (OSC) hearing regarding the Statement of Allegations made against three former members of HCG’s senior management is scheduled for May 4, 2017. These events are likely to continue to draw unfavourable attention to the Group.”

DBRS downgraded the lender’s debt rating to CCC from BB and its short-term instruments rating to R-5 from R-4.

Shares of the company have plummeted over the past week after the company announced it had secured a $2-billion loan from the Ontario Pension Plan to help offset withdrawals from its high-interest savings accounts. Home Capital’s balances in these accounts have fallen to $391 million as of May 1, 2017, down from $1.4 billion just a month earlier. Home Capital shares were down almost more than nine per cent Thursday as of 2:56 p.m. ET.

In light of the turmoil, the company said it would postpone its earnings announcement that was originally scheduled for May 3 until May 11. The company said in a statement Tuesday that "this timing change allows the MD&A to be updated for events that have occurred since the close of the first quarter."  

The delay in its earnings announcement wasn’t well-received by some.

The recent crisis at Home Capital has led brokers to loosen ties with Home Capital, some telling BNN they have stopped referring clients to the embattled lender.

“We have stopped sending business to Home Trust,” Dan Eisner, founder and CEO of True North Mortgage said via email. “We must put our client’s needs first. Even if there is a small chance Home Trust will not be able to fund a mortgage at closing, we need to take that risk seriously. Failing to fund a mortgage could put our clients in breach of a purchase agreement which would cost our clients thousands.”

Jim Harrison, president and broker at Mortgages.ca, said he hasn’t been referring business to the company since the recent news, although he hopes they can work with Home Capital again in the future.

“I am waiting to see how things develop.  I would hate to lose an alternative lender like Home Trust as they are very valuable to both mortgage brokers and to those clients who do not qualify with tradition lending guidelines,” he told BNN. “We look out for the clients best interest first and foremost.  Losing one of our lending options is not a good thing for all.”

Samantha Brookes, founder and CEO of Mortgages of Canada, told BNN they are sending their business elsewhere for the time being.

“It does seem to be taking a longer time for HC to respond to emails and pick up the files from our recent experience,” she said via email. “Not sure where they will end up but if brokers like myself are looking for alternative options for b-side lending and HCs volumes go down, they will be in a lot of trouble.”

Home Capital says it is currently looking for a buyer, but one money manager says Home Capital Group Is unlikely to survive the current crisis.  

“When you’ve lost the trust and confidence of your deposit holders in a financial institution it is very hard to recover from that,” Alex Lane, vice president and portfolio manager at Dynamic Funds told BNN in an interview. “The existing Home Capital firm is not going to survive in its current form – it doesn’t have a viable business model because it doesn’t have a viable funding mechanism.”