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Shadow Lending Growing as Canadians Chase Housing Dream

  • New rules will make it harder to get a mortgage at a bank
  • Borrowers turning to unregulated lenders to help fill the gap
Homes under construction in Brampton, Ontario.
Photographer: James MacDonald/Bloomberg
Updated on

Mortgage broker Samantha Brookes is trying to figure out how to get one of her clients out of a housing-fueled debt hole.

The couple, a 59-year-old Toronto city worker and her husband, 58, have so much debt that they stopped making payments on the C$410,000 ($318,000) mortgage for their suburban home. They wanted to refinance but regulations imposed last year will disqualify them. In a few weeks, they won’t even qualify for an uninsured loan at an alternative lender as more rules come into effect.