Mortgage mess on move

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Non-prime home lenders hit by trouble securing financing; new opportunities for big banks

The effects of the U.S. subprime crisis are showing up on the fringe of the Canadian mortgage business, even though mainstream lending and the housing market are on solid ground.

Lenders catering to riskier borrowers, most of whom took advantage of new financing techniques and a wave of liquidity to enter the market in the past few years, are struggling to fund their operations.

The result is a slow retrenchment in a sector that held about 5 per cent of the Canadian mortgage market before the credit crunch spread from the United States in August.

Some offices have been closed, employees have been let go, and fewer so-called alternative products are being offered to borrowers who do not qualify for regular loans.

Toronto-based Xceed Mortgage Corp. yesterday suspended its line of uninsured mortgage products, effective immediately.

Mississauga-based lender MoneyConnect Inc., meanwhile, told brokers last week that it’s liquidating a portfolio of mortgages.

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