Laurentian Bank of Canada (LB.TO) fell after reporting it found customer misrepresentations on some mortgage loans it sold to another firm, echoing problems that almost sunk alternative-lender Home Capital Group Inc. earlier this year.

An audit “identified documentation issues and client misrepresentations" with some mortgages sold to a third-party firm by its B2B Bank unit, the Montreal-based lender said Tuesday in its annual report. Laurentian said it will repurchase about $89 million of the mortgages in the first quarter, or 4.9 per cent of such loans sold to the firm.

“The bank intends to perform an in-depth review of the mortgages originated in its branch network that have been sold to the third-party purchaser and to work with such purchaser to resolve any issues it identifies," Laurentian said.

The disclosure pushed the bank’s shares down 4.7 per cent to $57.96 at 2:40 p.m. in Toronto, the most intraday since Feb. 28, after touching an earlier high of $62.92 at 11:24 a.m.

The B2B unit offers non-prime mortgages through advisers and competes with alternative lenders such as Home Capital. Toronto-based Home Capital’s shares plunged in April after the Ontario Securities Commission alleged the company misled investors over the extent of fraudulent mortgage applications brought in by outside brokers. The revelations accelerated a run on deposits at the bank that was stemmed when Warren Buffett’s Berkshire Hathaway Inc. stepped in to buy a stake and extend a loan in June.

Laurentian also disclosed that $91 million of mortgages were “inadvertently sold" to the third-party firm and will be repurchased in the first quarter.