HOMEQ Corporation to Issue $175 Million of Medium Term Notes

TORONTO, Jan. 26 /CNW/ - HOMEQ Corporation (TSX: HEQ) ("HOMEQ" or the "Company") today announced that its subsidiary, CHIP Mortgage Trust ("CMT"), has arranged the sale of $175 million of senior medium term notes (the "Notes"). The dealer syndicate for the sale was led by RBC Capital Markets and included Scotia Capital Inc. and CIBC World Markets Inc. The Notes have a coupon of 3.97%, are provisionally rated AAA (sf) by DBRS Limited and have an expected final payment date of February 1, 2016. They are unconditionally guaranteed by HOMEQ. The sale is expected to close on or about February 1, 2011.

CMT will use the proceeds of this issue to redeem the remaining $136.8 million of Series 2008-1 medium term notes prior to the expected final payment date of May 16, 2011. Previously in the quarter CMT redeemed $25 million of these notes. The balance of the proceeds of the issue will be used to repay a portion of the Series 2007-3 on May 2, 2011.

"We are very satisfied with this transaction" said Gary Krikler, Senior Vice President and Chief Financial Officer. "Demand for the Notes was particularly strong and came from a broad investor base. Medium term notes are an important source of funding, and the decrease in cost of this issue further enhances our profit potential. Our access to a variety of sources of capital has increased the robustness and agility of our business".

The Notes have been swapped to a cost of 138 basis points over the corresponding banker's acceptance rate. The weighted average rate on the Series 2008-1 and Series 2007-3 notes was 186 basis points over the corresponding banker's acceptance rate representing a savings of 48 basis points.

In connection with the offering of the Notes, CMT will file with the securities commissions and other similar regulatory authorities in each of the provinces of Canada a pricing supplement to the short form base shelf prospectus of CMT dated June 1, 2010. Under the prospectus, CMT may issue up to a total of $750 million of medium term notes from time to time over the 25 months following the date of the prospectus. Through its subsidiaries, HOMEQ finances its portfolio of reverse mortgages through a combination of equity, senior and subordinated medium term notes and term deposits.

Forward Looking Statements

HOMEQ Corporation from time to time makes written and verbal forward-looking statements about business objectives, operations, performance, and financial condition, including the likelihood of HOMEQ's success in developing and expanding its business. These may be included in HOMEQ's and its predecessor's annual reports, regulatory filings, reports to shareholders, press releases, presentations and other communications. These forward-looking statements are based upon a number of assumptions and estimates that are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of HOMEQ. Actual results may differ materially from those expressed or implied by such forward-looking statements. HOMEQ does not undertake to update any forward-looking statement, whether written or verbal, that may be made from time to time.

About HOMEQ Corporation

HOMEQ's wholly owned subsidiary, HomEquity Bank is the only national provider of reverse mortgages to homeowners aged 60 and over, Canada's fastest growing demographic segment. HomEquity Bank originates and administers Canada's largest portfolio of reverse mortgages under the CHIP Home Income Plan brand. As of December 31, 2010, the mortgage portfolio comprised approximately 8,000 reverse mortgages with an accrued value of $1.0 billion, secured by residential properties across Canada worth approximately $2.8 billion. HomEquity Bank has been the main underwriter of reverse mortgages in Canada since its predecessor, Canadian Home Income Plan, pioneered the concept in 1986.

HOMEQ's shares trade on the Toronto Stock Exchange under the symbol HEQ. Additional information, including annual and quarterly reports can be viewed at www.homeq.ca.

SOURCE HOMEQ Corporation

For further information: Gary Krikler, Senior Vice President and Chief Financial Officer, (416) 413-4679, or Scott Cameron, Vice President, Finance, (416) 413-6605

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HOMEQ Corporation

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