Lenders seek Ottawa's aid as thousands risk losing their homes

[CHIMO]

As many as 25,000 Canadian homeowners who consistently met their mortgage payments could lose their homes unless Ottawa or other financial players help supply capital to the struggling subprime lending market.

A loose network of about 12 alternative mortgage lenders began lobbying the Prime Minister's Office and the Department of Finance in January about what they say is a looming problem: An estimated $3-billion to $5-billion worth of subprime mortgages are coming up for renewal over the next four years, and the lenders say they can't renew them because capital has dried up for higher-risk borrowers.

“These are hard-working Canadians who could face foreclosure on their homes if they are unable to renew or find mortgage financing,” said Paul McGill, the CEO of the N-B Group, an alternative mortgage lender that has been spearheading the campaign.

These mortgages were arranged in the headier times of the early 2000s, when investors easily bet money on complex securities backed by mortgages. Many investors were comfortable investing in securities with subprime mortgages because of the higher returns these investments offered. The torrent of money flowing into securitized investments, such as asset-backed commercial paper, allowed a new generation of lenders such as Toronto-based Xceed Mortgage Corp. and U.S.-based Accredited Home Lenders Inc. to offer mortgages to people with credit score blemishes.

http://www.theglobeandmail.com/servlet/story/RTGAM.20090326.wmortgage0326/BNStory/National/home

We don't have a problem. Our banks are lending. So where did these creatures appear from? They want money? Or they want the banks to take over the mortages?

Harper says we don't have this disease.