Lender risk sharing could exacerbate housing downturn: fed draft report

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http://img.s-msn.com/tenant/amp/entityid/AA63syc.img?h=100&w=100&m=6&q=60&o=f&l=f&x=472&y=578TORONTO - A federal proposal to have lenders shoulder more of the risk for potential mortgage defaults could dampen lending or intensify a decline in house prices, according to internal documents from the Department of Finance. Proponents of lender risk sharing say it would encourage banks to be more cautious when lending to high-risk borrowers, thereby mitigating the impact of a correction in property prices. But a draft report, obtained by The ...

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