A report from the Globe and Mail in Canada. "Satnam Sidhu has been a realtor for almost 40 years and he’s been buying and selling foreclosed houses for the past couple of decades. 'I have never seen more foreclosures on the market than I have in the last six or eight months, especially in areas like West Vancouver and the west side,' Mr. Sidhu says."

"And most of the properties are being sold off by private lenders – a rapidly emerging and largely ignored major player in the B.C. housing market. An obvious reason for the increase in foreclosures is the overall market downturn. But another is the distortion caused by private lending. Private lenders are individuals and mortgage investment corporations (MICs) that fund mortgages, and the number of private lenders in B.C. has exploded in the past few years."

"Because they are taking a greater risk, a private lender is more likely to foreclose on a property as soon as the mortgage payments stop. Since the banks introduced 'stress test' rules on borrowing, property owners have turned to private lenders in droves."

"They use them if they are self-employed and don’t have the necessary credit rating; to borrow first or second mortgages on their homes because they need to pay off Visa bills; to pay their kid’s university fees; for a new car, or any number of reasons."

"Mr. Sidhu says he sees a lot of borrowing to pay off income taxes and to consolidate debt. 'In the past, the bank would say, ‘We will refinance and increase your mortgage from $500,000 to $600,000, and now banks won’t do that – because people were using their homes as ATMs and not always for a good reason, for maybe a car or a motorhome.'"

"'And now, when I look at foreclosures on the market, a good 70 per cent of the properties being foreclosed upon are [backed by] private lenders,' he said."

"Another one of those listings is at 928 Groveland Rd., West Vancouver, which is a 7,767-square-foot mansion, built two years ago and listed at $6.998-million, reduced from $8.898-million. Listing agent Malcolm Hasman says that he knows nothing about the seller, other than it is a private lending company."

"'Of my active 20 listings, I only have two that are under Supreme Court order,' Mr. Hasman says. 'This house [on Groveland] was originally priced two years ago at $10.88-million. Some people might say it’s come down 35 per cent, but the truth is it was probably unrealistically priced when first listed.'"

"Private lending isn’t just a Vancouver phenomenon. John Pasalis of Toronto’s Realosophy released a report last fall with Teranet that showed a major spike in private lending. In the second quarter of 2018, refinancing mortgages from private lenders increased 67 per cent in two years in greater Toronto."

"Due to requests from clients on the hunt for foreclosures, realtor Ian Watt has relaunched his website exclusively devoted to Vancouver homes that are court ordered sales. He has already collected about three dozen listings, including multimillion-dollar houses. Private lenders are behind more than half the listings, he says."

"'The stress test doesn’t mean anything. It just means it’s pushed people into private lending, and private lending is way riskier,' Mr. Watt says. 'It’s riskier because who knows if those guys can keep their boats afloat. What if people start withdrawing their financial support? There is so much money involved and nobody knows where it’s coming from.'"