Canada’s sub-prime mortgage lenders are increasingly teaming with unregulated Mortgage Investment Corporations (MICs) to avoid rules designed to outlaw risky lending practices.

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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