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Alternative lenders in Canada have doubled their share of the residential mortgage market in the past decade, increasing risks in the housing sector where they operate with limited federal government oversight.

These mortgage providers, which fall outside the responsibility of Canada’s main banking regulator, increased their share of the $1.4 trillion mortgage market to about 13 per cent last year from 6.7 per cent in 2007, according to the finance department. The lenders, also known as the shadow or private market, cater to the self-employed, new immigrants and those turned down by regular banks. They include publicly listed companies, investor groups and retirees who borrow against their homes to provide funding.

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“It really is Joe Schmo taking business from the banks,” said Nicholas L’Ecuyer, 36, who works out of a converted church in Barrie, Ontario, a 90-minute drive north of Toronto’s financial center. As one of the top 10 mortgage brokers in Canada by volume, he helped arrange about 430 mortgages worth $120 million last year. Roughly a third of that was from lenders that weren’t regulated by the Office of the Superintendent of Financial Institutions, he said.