The rating of formerly troubled alternative lender Home Capital Group Inc. (HCG) is being upgraded by DBRS Ltd., thanks to the firm’s success at rebuilding its business and recovering market share.

DBRS upgraded its rating on HCG to BB (low) from B; upgraded HCG’s primary operating subsidiary, Home Trust Co., to BB; and revised the ratings trends to positive from stable.

“The rating actions and positive trends reflect DBRS’s recognition of the speed of the progress made by HCG in restoring market confidence, stabilizing its performance and regaining its position in the mortgage finance industry,” DBRS says in a new report.

In particular, it notes that HCG has repaired its relationships with mortgage brokers and recaptured some of the market share it lost after suffering a breakdown in investor confidence amid concerns about broker fraud.

Additionally, the company has reduced its funding costs and secured “more traditional sources of liquidity,” DBRS says. These improvements have enabled the company to return to profitability on a full year basis.

Looking ahead, DBRS says, continued improvements in HCG’s funding arrangements could lead to positive rating actions. “Regaining market share in originations while improving profitability and maintaining sound asset quality would be viewed positively.”

The rating agency adds, however, that Home Capital, “could be more susceptible to a real estate market correction than its large bank peers that have a more diversified business model.”