Canadian Home Income Plan Corp. has received government approval to continue as a federally regulated Schedule I bank effective immediately, corporate parent HOMEQ Corp. said Tuesday.

Canada’s newest chartered bank is called HomEquity Bank. As a chartered bank, HomEquity Bank will have immediate access to retail deposits sourced through deposit brokers.

HomEquity Bank’s predecessor, Canadian Home Income Plan Corporation, has been the main underwriter of reverse mortgages in Canada for more than 20 years. HomEquity Bank will continue to provide reverse mortgages to Canadian homeowners aged 60 or older under the CHIP Home Income Plan brand.

As of June 30, 2009, the mortgage portfolio comprised approximately 7,000 reverse mortgages with an accrued value of $833 million, secured by residential properties across Canada worth approximately $2.3 billion.

“The continuance as a bank is part of a strategic initiative that allows access to additional cost-effective and reliable sources of funding, which will directly enhance our ability to offer competitively positioned products and services to meet client needs and grow our business overall,” says Steven Ranson, President and CEO.

HOMEQ says Canadian seniors will benefit from lower interest rates on reverse mortgages through HomEquity Bank’s ability to access retail deposits, diversifying the bank’s sources of funding and lowering its cost of borrowing. With reverse mortgage interest rates already at an all-time low, in anticipation of becoming a bank, rates were recently further reduced by up to one% to as low as 4.95%.

“Reverse mortgages have no income, credit or health qualifications. Unlike traditional loans, borrowers don’t have to service the interest or repay the principal for as long as they own their home and are living in it. This makes reverse mortgages appealing to seniors who have a large portion of their equity tied up in their homes,” says Greg Bandler, senior vice president.

HomEquity Bank will continue to evaluate additional features, options and products with the objective of providing Canada’s seniors with an ever greater number of home equity borrowing options.

“The seniors market is the fastest growing segment of the population and we will use our accumulated experience and understanding of Canadian seniors and their financial needs to provide even more flexible solutions,” adds Bandler.

HomEquity Bank will continue to partner with Canada’s national chartered banks, mortgage brokers and financial planning organizations to offer its reverse mortgage solution to Canadians aged 60 and over.