Subprime lending ‘business as usual’

As Canadian card issuer Home Trust resumes its normal lending practice since the economic crisis began, the migration to EMV (Chip and PIN) with a view to combating fraud is its new focus.

Subprime lending is back to business as usual
according to Martin Reid, president of Canadian specialist
lender Home Trust.

He said the business scaled back lending in
2008 and 2009, but is now originating loans at a similar rate to
before the crisis.

“We lend out to people in a very conservative
way and have a low loan-to-value rate,” Reid told Cards
International.

“We coped excellently during the financial
crisis. When the downturn started we become a lot more conservative
and defensive and started to reduce our loans. But by the end of
2009 and the beginning of this year we became a lot more
comfortable and resumed normal practice. I would say we are back to
how we were pre-crisis.”

Home Trust, founded in in 1987, has
continued to focus on consumers who typically do not meet all the
lending criteria of traditional financial institutions.

The three main areas of client base Home Trust
target are those with a blemished credit history, new immigrants
into Canada and self employed individuals.

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The business is the latest of a number of
Canadian credit card issuers shifting to to EMV (chip and PIN),
teaming up with digital security specialist Gemalto. Home Trust is
currently in the process of issuing 20,000 new credit cards
complete with the EMV technology.

Its EMV pilot scheme was in operation for
nearly two years and tested internally through its expense cards.
Raymond St Aubin, director of Visa Operations for Home
Trust, added cross border transactions have also been
tested.

St Aubin said Canadians are already chip and
PIN friendly as a result of the national payment network Interac’s
debit cards, which migrated to the electronic payment technology in
2008.

“The feedback from our customers has been
positive,” he said.

“People will feel a lot more comfortable
having their high value credit cards protected by a PIN rather than
a signature. We are sure it will be a seamless transition into
EMV.”