Reuters reports that tighter lending standards have led to growth in the practice of pairing primary mortgages with secondary loans from the MICs. Borrowers can obtain a home loan with a 10 per cent downpayment, half that of either CMHC or privately-insured mortgages.
Ottawa’s finance department told Reuters that it was monitoring co-lending but did not comment on whether tighter mortgage rules had increased the practice.
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Canada’s sub-prime mortgage lenders are increasingly teaming with unregulated Mortgage Investment Corporations (MICs) to avoid rules designed to outlaw risky lending practices.