AMBA Matters Summer 2013

Matters

AMBA 2013 2013 AMBA CONFERENCE CONFERENCE NAVIGATING THE ENVIRONMENTAL MINEFIELD ALSO INSIDE 2013 AMBA CONFERENCE DETAILS

SUMMER 2013

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Matters

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contents

A SPECIAL THANKS TO OUR ADVERTISERS...

Navigating the Environmental minefield

Romspen �������������������������� 2

PiPPA: the ins and outs of identity theft

Equitable Trust ��������������� 4 Capital Direct ����������������� 7 Alta West Mortgage ������ 9 Paradigm ����������������������� 10 Bridgewater Bank ��������� 11 D+H ������������������������������� 11 LMS ProLink ������������������ 13 RMG ������������������������������� 17 First National ���������������� 21 Cedar Peaks ������������������ 24 Optimum Mortgage ���� 29 Antrim ���������������������������� 33 Fisgard ��������������������������� 35 MCAP ���������������������������� 37 VWR Capital Corp �������� 39 Home Trust ������������������� 40

Matters is a quarterly magazine which provides fundamental information to members of the provincial association, offering an opportunity for the industry members to be educated, updated and entertained.

Toll Free: 1.888.452.2652 Phone: 403.685.9652 Fax: 403.685.9682 Email: info@amba.ca Web: www.amba.ca Suite 200, 1940 9 Ave. SE Calgary, AB T2G 0V2 Photo credit for some photos used within this issue of AMBA Matters ©shutterstock.com

Social centre: how do you measure up?

how to access your amba benefits online

ask the expert: mortgage lending 101

helping brokers and associates sleep at night

2013 amba conference overview

tee up at the links at spruce grove

ante up poker primer

Amba 2013

Board of Directors President Ron McClenaghan Invis

Past President Paul Bojakli Quantus Financial

Treasurer Gord Appel TMG

Events Director Erica Fikkert Equitable Trust

Membership Director (North) Nadeem Jiwa MCAP Service Corporation

Membership Director (South) Adil Mawji Invis

RECA Relations Director Phil McDowell Mortgages Are Marvellous

Consumers Awarness Director Cathy Sehn Verico Brokers for Life Inc.

Education Director Ryan Spence D+H

Ethics Director Kevin Weeks Weeks Law

home insurance 101: what you and your clients need to know

first national marks 25th with thanks

Immediate release: member advisory

Professional Development Director James Kulus Canadiana Financial Corp.

mcap and brokers pay it forward in new orleans

Lionel Lewko Saskatchewan Director

reca proposed real estate act amendments Publication Manager and Editor - Stephanie Weidmann

OTHER FEATURES...

President’s Message 5 Manager’s Report 6 Industry News 29 Member Profile of Adil Mawji 32 Our Office is Your Office 35 AMBA Calendar 39

Return undeliverable Canadian addresses to: Alberta Mortgage Brokers Association Suite 200, 1940 9 Ave. SE Calgary, AB T2G 0V2

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President’s Message Ron McClenaghan AMBA President

Social Club, Social Events, Social Media Over the years, AMBA has been many things to many different people. As the mortgage industry has grown over the past 15 years AMBA, like many other associations, has tried to adjust to the times and satisfy the perceived needs of its membership.

All with good intent, we have witnessed national brokerages holding their own conferences, mortgage insurance companies presenting professional development materials and non-industry companies holding conferences, award events and delivering the news.

We have an industry with a number of associations attempting to work together, yet we also have a national association that feels the need to duplicate what existing provincial associations deliver within their respective provinces.

Here in Alberta, we have the Real Estate Council of Alberta.

(RECA), our regulating body which controls licensing and sets education standards. AMBA works collectively with RECA regarding the delivery of proper education for practitioners and people wishing to enter our industry.

The focus for all of us is advancing an environment of self-regulation and continuous quality education which produces trusted advisors for the mortgage consumer.

RECA has become the driving force behind forming the Mortgage Broker Regulators Council of Canada, a collective group of all provincial regulatory bodies. The mandate of this group appears to be setting standards of regulation, core competencies for education standards and eventual reciprocity across the country. With a heavy emphasis on consumer protection, we can expect an ongoing partnership of collaboration between provincial associations and their regulators.

So exactly what is it AMBA that does? As volunteer representatives to the Board of Directors, we as an association represent all licensed mortgage brokers within the Province of Alberta whether they are members or not. RECA is advocating the highest standards of self-regulation for mortgage brokers, a great deal of dialogue has taken place and will continue for the foreseeable future.

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Consumer protection begins with having our mortgage brokers equipped with the most up to date education, products and services available to professionally represent themselves to their clients.

Reaching out to our member brokerages and to the smaller communities is a recognized need and a valued resource for shaping the future of our association activities. In order to remain on a relevant path on behalf of every mortgage practitioner, Broker of Record meetings were held in both Calgary and Edmonton. These meeting held a dual purpose, for AMBA Executive to inform our broker members all of what the Association has been doing to advance the plans of its membership. Secondly to listen to the brokers about where they want to see the Association concentrate their activities in the future. This proved to be a rewarding experience for everyone.

Our social club reputation must mean that we do get together and talk shop. I’m not sure about anyone else, however I believe it’s a good thing to mingle and hear what others in the mortgage industry are experiencing.

Therefore AMBA provides a number of social and professional development events throughout the year. The feedback is generally always that the attendees get something of value to take away and use within their own business.

Next on the agenda is social media and yes I know everyone is getting inundated with programs being offered to learn about using new methods to reach clients and potential customers. AMBA will be holding our Annual Conference at the Marriott River Cree in Edmonton on September 12th, 2013 and there will be a heavy emphasis on the use of social media and technology in the presentations.

I encourage all members of AMBA to attend this year’s Conference and should you know of any licensed mortgage broker who is currently not a member, bring them with you.

Watch for all the upcoming announcements from AMBA Communications.

In conclusion, I want to assure everyone that we as your Board of Directors are listening and working hard to best represent you and build an Association everyone can be proud to be a member of.

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MANAGER’S REPORT

SUMMER 2013 Deborah Keshen AMBA General Manager

Putting more tools in the toolbox AMBA is the voice for Licensed Mortgage Brokers in the province but we are also a trusted resource that is dedicated to helping our members take care of their business. So, what’s new on the horizon? Plenty.

Working with LMS PROLINK the AMBA Private Lenders Forum has put together a fantastic individual private lender/investor disclosure statement for use by AMBA members. This is a great tool as it ensures all necessary disclosures and steps are covered when arranging mortgages with individual private lenders. The Real Estate Act actually requires brokerages arranging mortgages with private lenders to have a “service agreement” in place with the private lender. The AMBA Disclosure Statement more than satisfies this requirement. The added bonus? Liberty (the insurer) is so impressed, that any member arranging a mortgage with individual private lenders utilizing this statement can reduce their premiums immediately by 10 per cent. If you have another form of your own you can submit it to Liberty to see if it is also eligible for this program.

This is a great example of members working together to create a

best practice with an industry partner that results in a win-win – a lower premium and a risk management tool.

In addition, AMBA is putting the final touches on a Policy and Procedures Manual sample and guide which will be provided free to members as a bonus of membership. Most dedicated brokerages have their own manual but it is a document that is reviewed during an audit so it is worth reviewing to see if you have everything you need covered. This is a tool meant to help you protect your business, ensure professionalism in the office and facilitate a smooth orientation for any new employee.

Finally, AMBA was really pleased to be able to launch a new series of E&O PLUS products this year: legal expense insurance coverage that provides support should you come under a CRA audit or RECA investigation with legal or auditing advice and affordable protection. It is like home insurance, one of those items you hope you don’t need but are really grateful for if you do. Coverage is offered at the brokerage (starting at $150) and individual levels (starting at $60). For anyone that has ever hired a lawyer or auditor you will quickly recognize that without insurance, that $500 an hour cost can quickly escalate to a big number. The insurance coverage provides affordable expertise and another important risk management tool.

AMBA is also introducing Cyber & Privacy Expense insurance. We all know that privacy rules in Canada are stringent and as an industry that often holds a great deal of personal data securing it is very important. But what happens if a Blackberry is stolen or a laptop or a computer?

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The Government of Alberta requires you to notify any client whose information you had stored and who may potentially find themselves dealing with credit issues that result from the privacy breach. Cyber insurance is brand new and protects you from these occurrences and potentially high costs to remedy the situation.

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ALL THE CONFERENCE DETAILS ON

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For most brokers on most days, business as usual does not involve a policy issue, audit, investigation or privacy breach. But the day it does you want to make sure you have the tools you need to deal with the situation. AMBA is working hard with partners like PROLINK and the Private Mortgage Lenders Forum to ensure that our members have what they need to take care of business.

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SUMMER 2013 7 4/16/12 4:17:22 PM

Navigating the environmental minefield What to bear in mind for commercial as well as residential deals Matthew Bradford, Environment The paperwork is primed, the client checks out, and the lender is lined up. It may seem like a done deal, but without a thorough assessment of a property's environmental conditions, the door is still open to significant financial landmines.

Whether underground oil tanks, water damage, asbestos or soil contamination, there are a number of environmental concerns that can affect an asset's market value, its re-saleability, or the owner's ability to carry a mortgage above and beyond the cost of clean up.

It's easy, then, to see why financing residential or commercial properties can be akin to navigating an environmental minefield. As such, Phase 1 environmental site assessments (ESA) have become common practice for both residential and commercial deals.

“Normally, you don't have to do a Phase 1 unless somebody is asking for it,” explains David Fisher, president of Fisher Environmental.

“For example, in residential deals, if somebody from the bank goes to the property and sees a potential vulnerability, then they may ask for a Phase 1. In commercial deals, on the other hand, you pretty much have to do it all the time. That's not just to cover the interests of the bank, but because if you skip it, you could be very sorry later on.”

Fisher adds that once a Phase 1 is conducted, the owners must declare it on all future property sales. Overall, however, he notes, “Phase 1s aren't written down anywhere as 'a must have' because each mortgage case has to be treated differently. Still, it's prudent to have that so that nobody gets hurt, or people get less hurt.”

Residential red flags Residential properties are rarely host to extreme environmental hazards. Nevertheless, Phase 1 ESAs are advisable for dwellings that reside next to commercial properties where run-off from local service stations or leftover hazards from older manufacturing sites can affect the site's condition. According to Don Pinchin, president of Pinchin Environmental, the latest CSA standard for Phase 1 ESA looks for everything from underground and above-ground tanks, storage containers, contaminated fill, residue from industrial processes, and a myriad of other hazardous materials.

“Those are all things that are used by the purchasers to knock the price down and they can have a really significant effect on the value, particularly the soil issue,” says Pinchin. “In many cases, the soil contamination may have gone under the building and under the footings and you have a real problem trying remediate that.”

Failure to identify environmental problems before the deal is done can have costly consequences.

Phase 1 evaluations may come with a price tag, but in cases where environmental red flags are identified, they can be a saving grace.

Once ordered, properties are evaluated from an environmental standpoint to determine if a more intrusive Phase 2 test is required.

If so, a secondary drilling phase is conducted to analyze the soil for dangerous materials and pollutants such as hydrocarbons, pesticides, PCPs, metals, and other contaminants.

“If everything is fine and clean, then you get a clean report on a Phase 2 and the bank will give you a mortgage. If, on the other hand, there is contamination – whether it's chromium or gasoline in the soil – then you move on to Phase 3, remediation,” says Fisher.

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While most residential environmental concerns rarely pose enough of a threat to endanger a mortgage, properties that have either been host to a marijuana grow-op, or even been near a similar operation, can pose the biggest risks of all.

“These sites can have significant water damage and require extensive materials removal. There may also be issues with getting the power turned on, since when you have grow-ops or meth labs, the Electrical Safety Authority (ESA) has the authority to disconnect power and they will not allow power to go back on,” explains Bruce Stewart, vice president of indoor air quality at Pinchin Environmental. “In Ontario, among the information the owner has to provide is a statement that they're not aware of any significant water damage and they're not aware that the area has been a marijuana grow operation.”

Understanding this, Stewart echoes Fisher's advice that all stakeholders, including mortgage brokers, be vigilant in their environmental assessments.

“Since the mortgage broker is acting on behalf of the person with the funds,” he says, “they should be insisting on due diligence on their end.”

If everything is fine and clean, then you get a clean report on a Phase 2 and the bank will give you a mortgage. If, on the other hand, there is contamination – whether it's chromium or gasoline in the soil – then you move on to Phase 3

Commercial concerns Though residential properties can house their own environmental risks, Pinchin says the real minefield lies within the commercial real estate realm. “The key thing mortgage brokers should understand is that there are major differences between the environmental impact on residential and commercial properties. In a commercial mortgage, while you do look at commercial viability, you're heavily looking at land value. In residential deals, you look at the ability of the client to pay with the hope you never have to foreclose and there is always a market for it.”

Severe environmental problems are not limited to large-scale industrial complexes alone. In fact, Pinchin insists environmental due diligence is vital for any commercial property, no matter its size. “We did a Phase 1 on a three-storey walk-up on Dundas street that has a variety store on the bottom. That's a commercial property, and a place like that can be next door to a gas station, or worse, an old dry cleaner. You could be buying a tremendous liability there. That's not to say there could be a residence next door that has the same problem. It's just that you'll likely be able to move the residential property without a Phase 1 and nobody would be the wiser ever.”

Failure to identify environmental problems before the deal is done can have costly consequences. In a personal example, Don recalls, “My father did some mortgage lending through an independent mortgage broker. It was a commercial property, but this independent mortgage broker did not do a Phase 1 when they

Concerning commercial properties, Fisher says the main environmental culprit is often gasoline contamination from nearby service stations. “(The presence of) hydrocarbons in the soil is the largest issue because there are a lot of service stations around, and the gasoline leaks and floats on top of the water. It goes far, and sometimes it can go half a mile and hit you.”

Next to gasoline, cleaning solvents, chlorinated solvents, and metallic materials like chromium, lead and cadmium are other materials that can be suspected from the results of a Phase 1 ESA, but which cannot be confirmed until a Phase 2 is performed. Once their presence is confirmed, they generally must be dealt with in some way to obtain mortgage financing. The other option is to leave severely contaminated sites, aka 'brownfield' sites, to niche companies that specialize in cleaning brownfield sites at a hefty price and selling them in their remediated state.

CONTINUED on next page

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Navigating the environmental minefield CONTINUED

placed the mortgage. When they went to sell it, they discovered they had underground contamination. Suddenly, my dad's $50,000 investment became worth $30,000 because they had to take the rest and clean up the site before they could sell it.”

What's more, Fisher says there's reputational damage to be risked for mortgage brokers who fail to run assessments, thus burdening lenders with unsellable properties. “Every bank has encountered these problems,” he notes. “Every bank has a list of properties where they have given out mortgage and now own them because something is wrong with them. If you as a mortgage broker are involved in a lot headaches like that, you aren't going to do too well.”

All said, financing in an environmental minefield can be risky. But like anything else in the mortgage game, it's simply another risk that can be mitigated through awareness, due diligence, and a genuine concern for the client's best interest. After all, adds Fisher, “It's always buyer beware.”

Whether underground oil tanks, water damage, asbestos or soil contamination, there are a number of environmental concerns that can affect an asset's market value, its re-saleability, or the owner's ability to carry a mortgage above and beyond the cost of clean up

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The ins and outs of identity theft Picture this: a company selling off one of their sales divisions passes on a list of current employees to the potential buyers.

Only a few months later, two people are arrested for using the information found on that list to apply for credit cards, potentially damaging those employees’ credit scores for years to come.

A recent report by Verizon that spanned more than four years and 500 forensic investigations involving 230 million records, found that 87 per cent of data breaches were entirely avoidable. The study showed that it was usually a combination of small errors – as opposed to a single slip-up- that lead to the breaches. It also discovered that while 59 per cent of breaches were caused by hackers, almost all of them could have been stopped using patches and security features that have long been available to the public.

Identity theft is a global problem, with more and more being reported every day. Because we work in an industry where clients trust us with their valuable personal information, we need to be extra-vigilant when it comes to protecting our information from hackers or thieves.

The fact of the matter is, most businesses simply don’t understand how likely they are to lose data, and what the legal repercussions of those losses have. Almost all of your electronic devices – cell phones, lap tops, copiers, printers, USB sticks and portable hard drives are vulnerable to attacks from hackers and identity thieves. Due to federal regulations regarding technology and privacy, businesses are responsible for implementing identity theft prevention programs and can be held accountable for the loss or theft of personal information.

Where are they accessing the information?

Many businesses house massive amounts of confidential information on what are known as peer-to-peer (P2P) networks. A quick search of Gnutella (one of the largest P2P networks on the web) conducted by Information Week, turned up the spreadsheets, billing data, health records, internal audits, product specs and meeting notes of hundreds of businesses.

When installing these P2P networks, the default installation often accesses and shares all the documents housed in the “My Documents” folder of Windows. It seems highly unlikely that all of the information that was discovered during Information Week’s investigation was there by accident, but it’s reasonable to conclude that much of it was there simply because of these default settings, information that is now highly susceptible to theft.

STEPS TO HELP PROTECT YOURSELF AND YOUR CLIENTS FROM IDENTITY THEFT • Change default installation settings on all networks.

• Do not open or reply to any emails requesting personal information.

• Change your passwords frequently.

• Shred or digitally destroy all documents not needed in the future.

87

%

data breaches that were entirely avoidable

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59

%

data breaches caused by hackers that could have been avoided

How are they using the information?

By now you’ve probably received more than one ‘Dear John’ email that seemed slightly suspect, possibly from a company you thought you could trust. Usually these emails follow a formula, they will have the company logo and say something along the lines of “We are sorry to report that we have lost your personal information due to hacking (stolen computer or laptop, etc). Please send us your full name, address, social security number and banking information to confirm your identity”.

Most of us are internet savvy enough to brush these emails off as obvious fraud, but that isn’t necessarily the best course of action. Roughly one in nine people receive a Dear John email each year, and almost one half of all consumers have received one since the year 2000. Data shows that those who receive these emails are about four times more likely to be hit with identity theft than those who do not.

If you have received a Dear John email you have a one in five chance of becoming a victim of identity fraud within the next five months. If you receive one of these emails, it might be a good time to change your passwords and back up your data, just to be on the safe side.

There were more than 12 million identity fraud victims in 2012 according to the latest Javelin Strategy and research report – that’s equal to one victim every three seconds. Security breaches involving identity theft are the most damaging; all instances of identity theft can be incredibly damaging both financially and personally.

Password Protect your PDF’s Before you send out that PDF contract containing names, addresses, incomes and possibly even social insurance numbers, take the time to ensure that information won’t be stolen if your email is somehow compromised.

• Go to www.pdfprotect.net • Upload the pdf you want to password protect • Establish your password • Share the password (over the phone) with any necessary parties • Click “Protect” button The file will download to your hard drive with the file name “xxx-passwordprotected”. Anyone who received the pdf over email will have to enter the password in order to view the pdf.

We’ve Got You Covered!

To protect yourself, your clients and your business, take precautionary measures such as changing passwords often, shredding or digitally destroying what personal information you can (so long as you aren’t mandated to keep it for your records) and password protect any sensitive documents that you are sending via email.

LEARN MORE:

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Social Centre:

HOW DO YOU MEASURE UP? TRACKING THE ROI OF SOCIAL MEDIA Constructing and maintaining a social media strategy takes time, energy and diligence, and sometimes it can feel like the most thankless job in the world.

So how do you justify all that time you spend engaging with potential clients on Facebook or checking out what is trending on Twitter? How do you find the ROI in your social media program?

There are some social media guru’s who argue that social ROI shouldn’t be counted the same way as other, more traditional forms of advertising. Scott Stratton, author of the book Unmarketing – considered by many to be the godfather of social media for business argues that before you begin to question your online time investment you should consider other investments your office might be making on a daily basis that could be considered wasteful.

Stratton says that things like lengthy meetings, leather desk blotters and yes, even having employees commute to work are huge time and money commitments that could be done away with before you scrap social media.

Of course, it’s important to account for your time and money – and having some way to monitor your social media programs successes and failures will ultimately be important in fine tuning your strategy.

So before you shut down your Twitter account in a fit of exasperation, let’s take a look at some different ways to monitor your online presence.

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Determine your goals

What does a successful social media program look like to you or your company?

Is it 3,000 likes on your Facebook page? 800 retweets of your latest nugget of wisdom? Or is it something more concrete like a uptick in customers, phone calls or visits to your website.

Whatever it is, set out your goals, but make sure you are being realistic. Of course you are passionate about your business and about educating your current and potential clients, but you may never be able to compete with the genius of Kanye West’s Twitter feed. Instead, think rationally about who your followers might be, what social media tools they might use and what kind of information would be interesting and helpful to them. You may only ever have a fraction of Ye’s following, but the followers you have will actually be interested in what you have to say.

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Measure the ‘Intangibles’

One big advantage of using social media to reach out to perspective clients is that you can directly influence how people perceive your brand.

Things like ‘market perception’ can be hard to quantify with solid numbers, but you can start by looking at what responses are getting posted on your Facebook page, what people are tweeting to and about you and how your social community is growing. Track which posts gain more ‘likes,’ ‘shares’ and followers to determine the direction of future posts.

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Consider your savings

Social media is a powerful tool when it comes to educating people about your business and your industry; it’s made all the more powerful when you consider the fact that it is largely free.

Companies no longer need to rely solely on traditional advertising to get their message across in 30 seconds or less. A Facebook page, for instance, can be turned into a round the clock tool for disseminating information and attracting business.

Buying ad space can still be a great way to reach a broad demographic, but targeted social media posts and advertisements can become a large (and relatively inexpensive) platform to build your business on.

Consider promoting specific posts or running a short term, low budget Facebook ad campaign. You can be incredibly broad in determining who sees your ad, or you can get very specific.

Facebook’s ad tools let you filter out your ad’s audience by age, education, location, interests and hobbies, allowing you to tailor your ad to niche groups who might be really interested in what you have to say.

Track it down

Once you’ve started your social media program, it’s important to keep track of your analytics. At least once a month take the time to track all of your social media impressions.

Check each of your platforms for activities including how many new ‘likes’ or followers you have, your number of shares or retweets, and your mentions.

Compare these numbers month to month to determine whether or not your social media plan is working. A sharp increase or decrease in numbers means that you should go back and review what might have caused a change in your social standing and adjust your course accordingly.

While these numbers don’t give a full picture of how successful or unsuccessful your strategy is, they are a great jumping off point for helping to adjust your program.

Tools to help you track your social media relevance: Facebook

Administrators on facebook fan pages have access to incredibly detailed analytics about their pages.

Klout

A site that measures your social media “influence”

Hootsuite

This site has an ROI calculator that can help you track your social savings

Google Analytics

Track who is coming to your page, where they are coming from, what information they are accessing and for how long, all in handy graph form.

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WHERE'D YOU GET THAT? How to access your amba member benefits

By now you’ve heard about all the amazing discounts and deals available to AMBA Members on everything from gas to legal insurance, but you might not be sure how to access your member benefits. Follow this handy guide to make the most of your membership and be sure to check out new offers from the AMBA Affinity Program as well as new expanded legal insurance from LMS Prolink.

STEP

1

Navigate to www.amba.ca

STEP

STEP

STEP

Click on the ‘Member Zone’ button to log in to your account

Scroll down the page until you see the button that reads ‘Click Here to View Discounts for AMBA Members’

Scroll down the page until you see the benefit you are interested in accessing and click on the link to access it

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3

4

Having trouble logging into the ‘Member Zone’ or accessing your member benefits?

Contact Samantha Gill, Membership Coordinator for more information or troubleshooting

16 SUMMER 2013

SOLUTIONS. ADVICE. MOVE.

SMART

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ask the expert:

Mortgage Lending 101 This Issue’s Expert

caterina olivito-velti

As Alberta Mortgage Industry Members, we need to collectively preserve our industry and the way we maintain this is through a high level of education, professionalism and knowledge.

“Knowledge is power.” The more knowledgeable your clients are in the areas of A B and C Lending, the more you have to offer them in finding a solution to obtaining their place called home. Understanding how to diversify your mortgage lending knowledge will only build your success as a Mortgage Industry member.

What is a Mortgage?

A mortgage loan is a loan secured by real property

The word mortgage is a French Law term meaning "death

through the use of a mortgage note which evidences the

contract", meaning that the pledge ends (dies) when either the

existence of the loan and the encumbrance of that realty

obligation is fulfilled or the property is taken through foreclosure.

through the granting of a mortgage which secures the

A home buyer or builder can obtain financing (a loan) either

loan. However, the word mortgage alone, in everyday

to purchase or secure against the property from a financial

usage, is most often used to mean mortgage loan.

institution, such as a bank or credit union, either directly or

What is the Bank Act?

indirectly through intermediaries. Features of mortgage loans such as the size of the loan, maturity of the loan, interest rate, method of paying off the loan, and other characteristics can vary considerably.

The Bank Act is the law passed by the Parliament to regulate Canada`s Charted Banks. The Statute has 3 main goals:

• Protecting depositors` funds • Insuring the maintenance of cash reserves • Promoting the efficiency of the financial system through competition

CLIP& SHARE 18 SUMMER 2013

In many jurisdictions, though not all (Bali, Indonesia being one notable exception), it is normal for home purchases to be funded by a mortgage loan. Few individuals have enough savings or liquid funds to enable them to purchase property outright. In countries where the demand for home ownership is highest, strong domestic markets for mortgages have developed.

That’s the definition in a nut shell! But if Mortgages were really this simple; A, B and C Lending Mortgage rules would not exist.

Cut out this issue of Ask The Expert and share it with your clients as a handy guide to navigating the basics of mortgage lending.

What is the difference between A, B and C Lending?

Lending A lending consists of mortgage lending via our major financial institutions and conventional lenders. These lenders consist of chartered banks, credit unions, trust companies, loan companies, ATB Financial, life insurance companies, pension funds and finance companies, also known as A Lenders.

Chartered Banks Since the first bank in Montreal, Canada was established in 1817 a lot of changes have developed and evolved within the Canadian Banking system. We now have what you call Schedule I Banks, (Domestic banks whose purchased shares are widely held by individuals and by groups such as mutual funds and pensions funds with no single owner permitted to control more than 10% of the banks` voting stock. These institutions are authorized to accept deposits in Canada.) Schedule II Banks, (foreign bank subsidiaries authorized under the Bank Act to accept deposits in Canada.) and Schedule III Banks, (foreign bank branches of foreign institutions that have been authorized under the Bank Act to carry on banking operations.)

Credit Unions These are member based cooperatives that offer a full range of financial services through which its members can deposit and borrow funds and obtain mortgages. Some credit unions service a region or area, while others are specific to a group of individuals such as teachers, fire fighters or government employees.

active in mortgage active in mortgage lending and their rates have been competitive. Most of these financial institutions have been acquired or have merged with banks. Those that are part of the mortgage brokerage industry primarily concentrate on obtaining new mortgages.

Loan Companies Loan companies are often affiliated to Trust Companies although Trust companies cannot provide Trustee functions. A loan company must obtain funds through the use of debentures (debt obligation normally used against the credit of the corporation rather than against a specific asset) as opposed to short-term certificates and savings deposits.

ATB Financial Formally known as Alberta Treasury Branch, ATB Financial was established in 1938 and has since 1997 become a crown corporation.

They are a full service financial institution that is provincially regulated rather federally. ATB is an active mortgage lender in all areas of the real estate industry.

Life Insurance Companies These companies have substantial amounts of money flowing in every month from life insurance premiums paid by policy holders which is then used to invest in products such as stocks, bonds, mutual funds and mortgages. Essentially; life insurance companies distribute certain portions of their monies to mortgage lending since mortgages offer good security and interest rate returns.

Finance Companies

Trust companies are financial institutions that operate under either provincial or federal legislation. Trust companies have always been

Unlike a bank; finance companies offer financial solutions, although they do not offer deposit features like a bank. Finance companies are active in the secondary mortgage market through collateral loans and promissory notes - meaning the loan - are secured by a note, with additional collateral security in the form of a mortgage.

Lending

Lending

Trust and Loan Companies

This type of mortgage lending provides brokers the ability to help consumers with mortgage lending that other traditional mainstream lenders may not. These Lenders do not accept deposits like their A Lender counterparts. This is where working with a mortgage broker can be a distinct advantage. Brokers have the great ability to offer choice to their clients’ in terms of where they fit for their mortgage borrowing needs. “The Mortgage Brokerage Channel,” involves certain Financial Intuitional A Lenders to work with them as the demand of Mortgage Brokers’ continues to grow. A Lending Intuitions typically and traditionally distribute mortgage products through their own institutional sales force; although with the Broker Channel growing, this is changing constant for all brokers!

AKA Private Lenders These include any individual, group of individuals (syndicated mortgage) or a mortgage investment corporation other than a financial institution that advances funds.

They do not all work like their A Lender counterparts only in the case of the legal status of the mortgage itself. The legal status of any mortgage is the same regardless of the lender (mortgagee). Private lenders all have the same legal security in a mortgage as conventional lenders. The Private Mortgage Lending industry is ever so growing offering consumers more choice for their borrowing needs.

Descriptions of each Lender have been obtained from The Fundamentals of Mortgage Brokerage study guide book for the Mortgage Associates Program under the direction of the Real Estate Council of Alberta.

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Helping Brokers and Associates Sleep Easy at Night Derrick Leue, President, LMS PROLINK Ltd.

In ancient times, the Romans forced engineers to sleep under a bridge once it was completed. In today’s fast paced and litigious mortgage industry, the equivalent might be relying on your documentation to sleep easy at night.

Location, location, location... is the mantra when buying real estate. Documentation, documentation, documentation... is the mantra when supporting your professional mortgage brokering services from allegations of negligence.

their case even when the investor has significant experience lending. RECA does not mandate that a specific disclosure form must be utilized when arranging mortgages with private lenders.

The Real Estate Act simply stipulates that an agreement must be in place between the broker and the private lender. Other provincial jurisdictions such as Saskatchewan and Ontario have developed specific forms mandated to be utilized on every private deal.

AMBA has always been committed to helping members and the industry improve policies and procedures. AMBA assembled

Who is Suing Mortgage Brokers?

The statistic is simple but alarming. Private individuals investing in mortgages are responsible for 95 per cent of the E&O claims that we see lenders launch against brokers. In our experience, lenders represent approximately 75 per cent of the total number of E&O claims brought against mortgage brokers in Alberta, so we are dealing with a significant source of exposure.

It is important to note that the private lenders suing our clients are typically individual private lenders and not mortgage syndicators or Mortgage Investment Corporations.

Mortgage brokers

will often tell us that they only work with individuals if they are accredited investors. The financial security of the private lender does not appear to reduce their propensity to sue the broker or associate who arranged the mortgage. We are witnessing both

an experienced team of board members, brokers, lawyers and insurance professionals to develop an industry acceptable disclosure form that could be used by mortgage brokers and associates arranging mortgages with individual private lenders.

AMBA has posted this new Individual Private Lender Disclosure Statement on its website. Members insured through Liberty under the AMBA E&O Program will be receiving a copy of the Individual Private Lender Disclosure Statement from the PROLINK Insurance Group.

We hope that brokers and associates find this new disclosure form valuable as it provides a consistent approach to documenting your interactions with individual private lenders.

The longer term goal is to reduce the number claims from private lenders and reduce the overall E&O premiums for the industry.

accredited and non-accredited private lenders making claims against brokers.

Learn More about the AMBA E&O Program

We have defended lawsuits from individuals who funded their

The PROLINK Insurance Group Inc. is the proud manager of the AMBA E&O Liability program.

first mortgage of $50,000 and from investors who have funded multiple mortgages for decades. In theory, defending claims from an experienced lender should be simpler because your E&O insurer can try to demonstrate that the sophisticated lender understood the risks related to mortgages but this is not always the case.

Better Risk Management Tool

Please contact a representative from the PROLINK Insurance Group’s AMBA Service Team in order to learn more about how your E&O policy protects you.

Contact The PROLINK Insurance Group:

P. 800-663-6828; Andrew Spencer: AMBA Program Business Development Manager; ANDREWS@LMS.CA

when defending E&O claims, is documentation. The mortgage

Kristin Mavroudi: AMBA Program Account Manager: KRISTINM@LMS.CA

broker/associate must have thorough documentation supporting

Website: www.lms.ca/ambav

The best tool, which can also present the greatest challenge

20 SUMMER 2013

FINANCIAL LP

“The

relationships are

Doug Farmer, Calgary Branch Manager Valerie Kowalchuk, Watson Financial Corporation – MCC Patti Hyland, Underwriter

genuine.

It’s like working with

family.”

“That’s why I know my clients are going to be well looked after.”

At First National we’ve spent the last 25 years focused on delivering outstanding service to you and homeowners. And we will continue that commitment towards the next 25.

Behind the scenes

Thank you mortgage brokers for 25 years of shared success.

This year, the annual AMBA Conference is all about building your winning hand. It’s no secret to anyone in the mortgage industry that sometimes we can be dealt some tough cards, but this year we are all about focusing on how to play what you are dealt – and win big.

We invite anyone involved in the industry, whether they are AMBA Members or not – to join us at the Marriot River Cree Resort (300 East Lapotac Blvd Enoch, Alberta) just outside of Edmonton.

The conference kicks off on September 11 with a golf tournament at the amazing Links at Spruce Grove followed by a charity poker tournament and opening reception benefiting the Stollery Children’s Hospital.

September 12 will open with a Trade Show where you can meet with industry insiders and discover what they can do to help you

7:30 - 11:30 am

Registration Opens

8:00 - 9:00 am

Breakfast & Trade Show

9:00 - 9:15 am

Welcome

9:15 - 10:00 am

and your business get ahead. Check your conference guide for special deals offered by our exhibitors.

The rest of the day will be filled with incredible information from industry experts who will help you take the gamble out of your business and navigate our industry like a pro.

Check amba.ca for conference, poker and golf tournament registration information.

Spaces will fill up fast, so register today!

Technology Presentation - "Up the Ante... Tomorrow's Tech Tools for Today's Business" Speaker: Michael Rogers

10:00 - 10:15 am

Break

10:15 - 11:00 am

Technology Panel - "Technology – The Wild Card in Business Excellence"

11:00 - 11:15 pm

Technology Panel - "Lay Your Cards on the Table... Let's Hear Your Q&A"

11:15 - 12:00 pm

AGM + Lunch

12:00 - 1:00 pm

Dessert Buffet & Trade Show

1:00 - 1:35 pm

Prevention Presentation - "Laying the Cards on the Table – Fraud, Privacy and Other Legal Issues" Speaker: David Papp

1:35 - 2:15 pm

Prevention Panel - "How to Spot the Joker in the Pack"

2:15 - 2:30 pm

Panel - "Laying the Cards on the Table... Let's Hear Your Q&A"

2:30 pm

Close

2:30 - 4:30 pm

Trade Show and Reception

22 SUMMER 2013

Tradeshow Booth Spaces There are a limited number of tradeshow booth spaces still available at the conference. If you want the opportunity to advertise your business to AMBA members from across the province, contact Samantha Gill at 403- 685-9652 or sgill@amba.ca

9:15 – 10:00 AM

"Up the Ante... Tomorrow's Tech Tools for Today’s Business" More and more, technology is becoming key to helping us get business done. Whether it’s moving to a paperless office, generating new business via social media or using various portals to find the best options for your clients, industry members have to be tech savvy to thrive in today’s economy. Technology pioneer Michael Rogers will offer you insights and expertise on how to navigate this ever-changing landscape and how to use it to your advantage.

Michael Rogers is a technology pioneer, author and journalist whose consultancy, Practical Futurist, helps businesses worldwide think about the future. In recent years he has worked with companies

ranging from FedEx, Boeing and NBC Universal to Prudential, Dow Corning, American Express and Genentech.

He recently completed two years as a futurist-in-residence for The New York Times Company and also writes the Practical Futurist column for MSNBC. For ten years he was vice president of The Washington Post Company's new media division, guiding both the newspaper and Newsweek into the new century. He is a regular guest on radio and television including Good Morning America, The Today Show, PBS, CNN and The History Channel.

10:15 - 11:00 AM

Panel – “Technology – The Wild Card in Business Excellence” Moderator: Michael Rogers How do you move from idea to implementation? Technology innovations are intriguing, but how do they help your business? This practical discussion from front line industry members will address just that – what they are doing and why, the benefits and what to look

out for as you move forward. Issues include: electronic versus paper options; how to use social media for lead generation; how to utilize technology without breaching new CASL privacy rules; mobility and accessibility.

Staying Overnight?

AMBA has a block of rooms reserved at the Marriot River Cree Resort. To take advantage of special AMBA Member pricing visit amba.ca

1:00 – 1:35 PM

"Laying the Cards on the Table – Fraud, Privacy and Other Legal Issues” How do you prevent fraud in your business? How do you steer your business and your clients through potentially tricky legal situations?

How do you ensure that you are meeting the privacy restrictions mandated for all industry members in Alberta? David Papp will answer these questions and more in our first afternoon session.

David Papp's twenty years of experience, extensive knowledge and dynamic personality serve both to entertain and to educate. David has

a wide range of clients from small businesses to large organizations.

In addition to his professional computer engineering degree, David has numerous industry certifications (Cisco, Microsoft, VMware, security, auditing). He is registered with the Canadian Association of Professional Speakers and enjoys sharing his expertise with audiences worldwide, resulting in his appearance on TV and in the news as a top industry analyst.

1:35 - 2:15 PM

Panel – “How to Spot the Joker in the Pack” Moderator: David Papp Take a look at fraud, privacy, cyber-attacks/data loss, identity theft.

How do they affect the industry, how do you identify and prevent

these issues before they occur? Join us for real life experiences, best practices and advice from industry experts.

SUMMER 2013

23

Reserve Your Spot!

165 + G.S.T. at amba.ca, spaces are filling up fast so sign up today. $

Of course golfers of all levels and abilities will find something to love at the Links, it’s picturesque setting and close proximity to the Marriott River Cree Resort, make it the perfect site for this years’ tournament.

Join us between 8:30 and 9:45 AM for breakfast and registration, then load up your golf carts for the 10:00 AM Shotgun Start.

AMBA invites you to play where the pro’s do.

The 2013 AMBA Golf Tournament will be held on September 11 at the incredible Links at Spruce Grove.

Long considered one of the best public golf courses in Alberta, the Links at Spruce Grove has been the site for many prestigious golf tournaments, including the Alberta's Junior Championship, Telus Open Qualifying, P.G.A Assistants Championship, and most recently in 2008 Alberta's P.G.A.

The Links at Spruce Grove is a magnificent championship course that has been delighting golfers since 1983 with its unique blend of large bent grass greens, rolling terrain, tree lined fairways and 70 sand traps. Even more experienced golfers will be challenged by the six water hazards spread throughout the course.

24 SUMMER 2013

A full day of incredible golf and networking will be capped off with a barbecue and awards ceremony celebrating AMBA’s best and brightest on the course before heading to our Charity Poker Tournament and Conference Opening Reception at the Marriot.

8:30 - 9:45 am

Golf Registration Opens / Breakfast

10:00 am

Shotgun Start

10:00 - 4:00 pm

Golf Tournament

4:00 - 5:30 pm

Golf BBQ & Awards

POKER Feeling a little intimidated by all the poker power players that are sure to take to the tables at the AMBA Charity Poker Tournament on September 11? There’s no need to be, whether you are an old hand or you’ve never sidled up to a table before, we invite players of all levels to join us for good times and good competition in support of the Stollery Children’s Hospital.

Follow this handy guide to help you make the most of your night in the casino. Register for your spot at the table at amba.ca, space is limited.

AMBA 2013 2013 AMBA CONFERENCE CONFERENCE

Players contribute toward a central 'pot' that contains play chips or chips representing actual money Players are dealt cards (a 'hand'), some or all of which are concealed Wagers are made on the strength of the cards in rounds of betting After the betting rounds are over, the player with the strongest hand - or the last player left standing after the others have folded - wins

An ace high straight flush.

A five-card straight, all in the same suit.

Four cards of equal rank.

A set (three) of cards of one rank and a pair of another rank.

Any five cards, all of the same suit.

Five cards in sequential order.

Two cards of one rank and another two from another rank.

Two cards of the same rank.

Three cards of the same rank.

The hand with the highest card(s) wins. In the event of a tie with either four of a kind, three of a kind, two pair, or one pair, the highest unpaired side card or 'kicker' in a player's hand wins the pot.

SUMMER 2013

25

Share this helpful article with your clients a PDF OF THIS ARTICLE IS AVAILABLE IN THE MEMBER ZONE UNDER MEMBER RESOURCES

Article Sponsored by Jody Robbins, Special to AMBA Matters

Providing proof of home insurance coverage is a requirement for all mortgage clients. And in a competitive industry like mortgage brokering, a little knowledge can go a long way toward adding extra value for your clients.

“You always need to be thinking about how you can serve people better. It’s about being aware of your client’s needs, filling in the gaps and building a stronger relationship,” says Gordon McCallum, AMP and President of First Foundation Mortgages and Insurance.

26 SUMMER 2013

You don’t need to be jack of all trades, but letting your clients know some of the intricacies of home insurance will put you ahead of the crowd. Here’s what you need to know:

Most people’s home and its contents are their largest investments. If the property is uninsured and destroyed, not only is that investment lost, but the owners will likely be faced with paying the outstanding amount - which equates to financial ruin for most folks. Home owners insurance avoids such risk and covers other perils such as theft, sewer back up and water damage.

Home insurance can be a significant expense and knowing how to keep your clients costs low will go a long way in nurturing your relationship. As with all things, lower cost doesn’t always mean the best deal; impeccable service and quick accessibility to the insurance company are also important. Suggest your clients use these six tips to save money:

Raise the Deductible: Changing the standard deductible from $500 to $1000 is a matter of personal risk that more clients are taking. By doing so, they can expect to get discounts of up to 13 percent off their rate. The higher the deductible, the lower the premium. “But remember,” warns Driscoll, “in the event of a claim, you’ll have to come up with that deductible.”

Multi-policy Discounts: Insurance companies don’t just want a fraction of your business; they want it all. That’s why they’ve set up discounts for when clients group their home, auto and personal insurance with the same carrier. Bundle up under one umbrella for advantageous savings.

Alarm Systems: To qualify for this discount, home owners need to have their system set up through a company that monitors for both fire and burglary. Expect to save anywhere from five to 15 percent off premiums.

Install a Sump Pump: Even if you don’t live on a floodplain, installing a sump pump in your basement for sewer backup will quite often qualify you for lower rates.

Choose a New Home: Because newer homes come with all sorts of bells and whistles like alarm systems, they often qualify for more discounts than older homes.

Pay off the Mortgage: Once a home is owned outright, get a release of interest letter from the lender and submit it to the insurance company. They’ll then remove the mortgage supplier from the policy, so they’re not part of any settlement in the event of a claim. “If your bank isn’t owed any money, there’s no need to have them co-sign the cheque on your claim,” says Scott Marit, Personal Insurance Account Executive at First Foundation Insurance Inc..

Just as it’s taken time to educate the market on the role of mortgage brokers, the market is not fully aware of the benefits insurance brokers can bring. In fact, many home owners aren’t aware they exist. “We’ve used a mortgage broker twice, but I’m not familiar with the role of an insurance broker,” admits former Calgarian, Tracy Hyndman.

Here’s a look at the benefits insurance brokers can bring to your clients: Better deals: Just like mortgage brokers, insurance brokers work with the customer’s best interest in mind, and clients don’t pay additional fees to work with them. “We’ve developed good relationships with our insurance companies, and they tend to be more flexible with us,” says Marit.

Insurance brokers are involved in the market place on a daily basis. When renewals come in, they’re immediately checking pricing from multiple sources, and supplying clients with several different quotes to choose from. “Liaising with multiple providers means competition, which gives more choice to our clients,” notes McCallum.

Save Time: Comparison shopping takes time. If it’s unlikely your clients are going to annually compare the costs of other insurance policies to their own, why not let someone do that for them at no additional charge? “At renewal time, we look over each client’s policy to see if changes need to be made or if we can get a better premium rewriting the policy from one insurance company to another,” says Driscoll.

Additional Support: Insurance Brokers customize client’s insurance plans to best suit their needs. Because mortgage insurance only covers the amount remaining on the mortgage, many people find that limiting. Insurance brokers can offer alternatives such as income replacement in the event of a tragedy.

That way stay at home parents aren’t forced to go back to work in order to make ends meet.

Personal Attention: Dealing directly with an insurance agency limits options as there’s only ever one product offered.

Singular insurance companies can decide not to insure someone if they don’t meet their guidelines, but brokers are often able to find a solution.

If a client isn’t happy with their policy, it helps to have a relationship with someone who can get their needs addressed. It’s difficult to build a relationship when you’re dealing with a representative from a call center.

“It’s all about educating the client so they know what they getting, why they’re getting it and that it fits with their budget,” says Michelle A. Priest, Financial Coach at Minrva Group Inc..

Assistance When Choosing a Neighbourhood: If your client can’t decide between communities, a quick call to an insurance broker can often seal the deal. “If someone lets us know the area they’re looking at, we can look up the postal code and let them know the frequency of break ins or floods in the past decade.

We’re happy to talk to our clients about this,” says Anders.

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Competitive Advantage Any added value brought to the closing process only solidifies your relationship with your clients. Knowing how they can save time and money on other aspects of home ownership, gives mortgage brokers a competitive edge.

Extra Income Relationships mean referrals. Did you know referral fees are often paid to mortgage brokers when their clients sign on for an insurance policy under the recommended insurance broker? Get to know a few local insurance brokers, and start swapping business back and forth.

Marketing Support Some marketing activities are designed to generate leads. When these quality leads turn into sales, everyone’s happy. But not all marketing activities (like advertising) are designed for lead generation.

Spending money on unqualified marketing efforts is futile. Fortunately, insurance brokerage firms like Minrva Group Inc., support mortgage brokers by assisting them in developing strategic marketing plans. “We advise mortgage brokers on what activities they need to do each week to generate leads, and give them strategies for follow up,” says Priest.

Know This Before Renting a Primary Residence Before home owners consider renting their property, they need to review the terms of their mortgage and insurance carefully. Not all mortgages allow for homes to be used as a non-primary residences, and many homeowners’ insurance policies exclude renters - particularly when the owner moves out of province or utilizes third party property management. When something relevant to the insured context changes, and the policy holder fails to notify the insurer, it’s called a material change in risk.

“If people want to rent out their property, they need to let the insurance company know ASAP. This changes the type of insurance offered and the minimum deductible,” says Driscoll.

Insurance companies operate on the premise that home owners take better care of their property than anybody else, which explains the increase in premiums and deductibles when renting.

28 SUMMER 2013

Suggest your clients be insured for current replacement costs. Jane Driscoll, an Insurance Broker at Minrva Group Inc., recommends her clients add in a guaranteed replacement cost clause on their home insurance policy. “That way, the insurance company will pay the current rebuilding value, which is important in case costs like lumber go up,” she warns.

Keep videos or photos of possessions outside the home. Detailing your contents on a separate hard drive or keeping a written inventory list with a friend is invaluable should you ever need to make a claim. “In stressful situations, it’s hard to think of everything you had in the house. If you have an inventory list, the insurance company will give you time to replace your contents,” says Kathy Anders, CAIB, CRM, Managing Partner and Commercial Insurance Broker with First Foundation Insurance Inc..

All insurance companies penalize clients who cancel mid-term. This short rate cancellation is usually the equivalent of one month’s premium. If your client wants to go with another agency, recommend they wait and shop around at renewal time.

If home owners leave their property vacant or unoccupied for more than 30 days, their policy could become null and void.

Properties need to be checked inside and out on a regular basis, to ensure they’re kept up and that no illegal activity is going on.

Industry News Big Banks increasing rates

2013 Real estate sales exceed original predictions

Interest rates across Canada are continuing to go up with big banks like Scotiabank and RBC following TD Canada Trust by announcing increases to special discounted rates.

TD Canada Trust recently announced that it would increase its special five year closed residential rate 3.39 per cent. Shortly Scotiabank, announced that it would also be moving its two, four, seven and ten year fixed terms up 10 bps on June 22, with a 4-year mortgage now 3.09 per cent.

The Canadian Real Estate Association (CREA) has announced that even though it expects fewer homes to be sold across the country than last year, sales figures for the first part of 2013 are better than they had originally anticipated.

RBC is increasing to 3.29, 3.39 and 3.79 per cent respectively, with the three year closed rate going up to 3.75 per cent.

After predicting a 2.9 per cent decline in units sold, the actual numbers indicate the decline to be closer to 2.5, a small but significant change in the forecast.

B2B Bank and Laurentian announced increased rates last week, each moving posted numbers to 3.14 per cent on a one-year fixed closed.

CREA says that sales activity began to pick up at the end of the first quarter after a somewhat sluggish start and have continued to accelerate into the second quarter.

The big banks are arguing that while customers will see an increase, they are still able to offer better rates than brokers, a statement may contend with.

Evidence of gaining momentum can be seen in the month-tomonth analysis of CREA’s numbers which show that May saw a 3.6 per cent increase over April in Nationwide sales.

The increase in rates is being seen as a reaction to First National and MCAP’s rate increases, as both lenders raised their five year fixed rates to 3.09 per cent.

Even better news comes from the 2014 forecast which predicts a strong, nationwide turnaround for the market with indications that roughly 9,700 more units will be sold than last year.

A SENSE OF...

URGENCY

As a broker, you’re under a lot of pressure. You have to respond to the needs of your clients at a moment’s notice.

At Optimum Mortgage, we are dedicated to keeping our brokers informed of the status of their deal every step along the way. We guarantee you a response time within 24 hours of submitting your deal. And for those times where you just can’t wait, pick up the phone and give us a call. We have a no voicemail policy at our underwriting centre and would be happy to help.

1.866.441.3775 www.OptimumMortgage.ca PH

YOUR SENSIBLE LENDING PARTNER

SUMMER 2013

29

First National Marks 25th With Thanks In 1988, Stephen Smith and Moray Tawse made life-altering decisions. They left steady jobs and on March 31, 1988, incorporated First National Financial, now Canada’s largest non-bank originator and underwriter of mortgages.

To say they started small would be an understatement. Their first office was over a pub in Toronto and in a fitting irony, they capitalized the business, in part, using funds from a mortgage Moray took on his family home.

In their first year, they earned revenues of about $200,000 by originating mortgages and selling them to life insurance companies under what at the time was a new vehicle: National Housing Act Mortgage-Backed Securities.

Not content to let others serve the mortgages they originated, they decided to seek CMHC-approved lending status, which at the time required a three-year business history. They waited, applied and received their license in 1991, the same year they opened their Vancouver office.

The early years were by no means glamorous. Their head office had limited amenities, forcing Mr. Smith to shovel the snow to keep the sidewalk clear. But what they did have was something far more valuable: a keen appreciation for and understanding of the mortgage broker channel.

While the banks continued to rely on their own captive channels, First National chose what, at the time, was the path less travelled. That decision proved instrumental in the years that followed.

“Back when we started, mortgage brokers had less than 5% market share,” said Mr. Smith who serves as the company’s Chairman and President, “and they were considered by the banks the channel of last resort.

Today, they are the first choice for almost a third of Canadian home buyers. Choosing to work with the mortgage broker channel was the best decision First National ever made.”

Stephen Smith and Moray Tawse founders and CEOs

It’s hard to argue with that statement. By supporting the channel with both competitive mortgage products and service, First National created a sound alternative to Canada’s banks and watched its mortgages under administration rise from about $400 million in 1994 to $67 billion at the end of 2012. Those are big numbers, but as Mr. Tawse says, “what really makes us proud is that we’ve helped thousands of Canadian families purchase homes along the way by offering choices that simply did not exist in Canada 25 years ago.”

Scott McKenzie, who joined the company 11 months after its founding and now serves as Vice President, Residential Mortgages, notes that

30 SUMMER 2013

“This is a chance to show our sincere appreciation – to say a heartfelt thank you – to those who have helped our company become the leader that it is today,” said Mr. Smith.

Fittingly, the celebration will feature a number of customer, employee and mortgage broker events and contests throughout the year. The biggest event will happen when First National names 25 Wizards who, along with a guest, will receive an all-expenses paid trip to the Cayman Islands in February 2014. The winners will include the 17 top Wizards as well as eight others whose names will be chosen randomly.

Full details are available at www.firstnational.ca.

the growth and development of First National has paralleled that of the mortgage broker channel. “Their professionalism, independence, insight and advice make mortgage brokers the trusted choice for Canadians from coast to coast, and we can’t think of a better way to say thank you than by making them a focal point of our 25th anniversary.”

To meet mortgage broker expectations for service, First National sets rigorous national standards for submission turnaround time and tracks the performance of each of its offices against these measures and publishes the results internally. This has created friendly competition among the Company’s offices across the country and helps First National consistently achieve its service objectives.

While these events are ongoing, First National will continue to focus on the fundamentals, including competitive rates and products, turnaround time on submissions, courteous service and technology leadership as it applies to both mortgage brokers (Merlin and the First National Automated Valuation Model) and borrowers through My Mortgage.

“When we look ahead this year and in the years to come, we can’t say for sure what will happen with interest rates or real estate prices,” says Mr. Tawse, “but what is certain is that First National will remain very attentive to mortgage brokers and borrowers. Being quick, nimble and service oriented have gotten us through the first 25 years and will allow us to begin building towards the next 25.”

The desire to provide mortgage brokers with best-in-class service was also the driving force in First National’s creation of Merlin, the industry’s first online mortgage approval and tracking system.

Introduced in 2001, Merlin increases line of sight for mortgage brokers as they deliver rapid-response service to borrowers.

Another key reason for the company’s rise in market share is First National’s steadfast refusal to discriminate based on a mortgage broker’s volume. Said Mr. Smith: “First National has always taken the long view in terms of relationships, knowing that a newcomer today can be a Wizard tomorrow. By helping the new broker to get established, we hope they will remember us when they become a top producer.”

And of course no discussion of First National’s progress is complete without acknowledging the Company’s team, now numbering over 600 across branches in in Vancouver, Calgary, Toronto Montreal and Halifax. Mr. Tawse labels them “the industry’s best workforce” and point outs that six employees will celebrate 25 years of service to the company in 2013.

These attributes have helped the company establish long-lasting mortgage broker relationships, such as the one it enjoys with Bill Phinney. “Their service is unequivocally the best in the industry,” said Mr. Phinney, a top mortgage broker with Mortgage Intelligence.

“That’s why I’ve been doing business with them for 25 years.”

Anniversary Celebration One thing that First National is not is boastful. Mr. Smith readily admits that he “never in a million years” thought the company would become a Canadian leader with the means to compete with the banks.

It’s perhaps for this reason that they decided to celebrate First National’s 25th anniversary with a campaign entitled Thank You for 25 Years of Shared Successes.

From left to right: (back row) Sharon, MacKenzie, Scott McKenzie, Dru McAuley, (front) Josie Bohren, Peter Cook, Nuala Bourke Members of the First National Team

SUMMER 2013

31

Industry talk with

Adil Mawji

Meet Adil Mawji from Western Mortgage Services Inc.

Tell us a little about yourself I’m 28 years old and I’ve been a mortgage broker for exactly five years. I got started in the industry straight out of university of Calgary where I graduated with a Bachelor of Arts in Economics.

Where are you from?

Born and raised in Calgary, which is actually sort of rare in the mortgage industry in Calgary.

What are a few of your hobbies?

I’m really passionate about giving back to my community by volunteering. My family owns a handy bus, and for a few years now I’ve been driving it and helping seniors get to and from Mosque.

I also love ball hockey and soccer and play at a very competitive level.

My favourite movies are the Dark Knight trilogy and Star Wars – you could say that I’m a bit of a Sci Fi geek.

Travelling is another of my favourtie hobbies. My favourite places so far have been the Mediterranean coast in Europe, the south of France, India, Thailand and Africa.

Anything else you’d like to share?

Just that I love my work and I love giving back both to my community and to the industry.

How did you get started in the industry, what drew you to it?

My aunt is a financial advisor, she actually ask me to get licensed right out of university, so I did and it just kind of grew from there.

Hopefully it will continue to build for many years to come.

Please tell us a little about the company you work for I work for Invis and I’ve been there for 5 years – so since I started in the industry. I like it a lot because Gary Siegle has been such a great mentor to me. It’s such a professional environment, the staff are all fantastic and I really like the support that the brokerage offers.

32 SUMMER 2013

sUMMER 2013 member profile

What is your experience with AMBA? Why did you join and how has it benefitted you?

I initially joined AMBA because I like to give back and get involved.

I decided that if I was going to be in this industry for the rest of my career, I might as well get involved in the industry side and that if I could contribute in any way, I should do so. Right now I’m really excited about the launch of our new education program and our new drive to increase membership.

Why did you decide to become involved with the AMBA board?

I just happened to be having lunch with AMBA President Ron McClenaghan and Gary on the deadline day for board nominations.

After we talked about it, Ron ended up nominating me and I was elected. Now I am the membership director and I absolutely love it, I hope I continue to get re-elected for years to come.

What advice would you give to someone just starting out in the industry?

Work hard, stay ethical and you’ll do great.

What is your vision for the future of the mortgage industry?

The competition is going to shrink down considerably. The whole industry has gotten so competitive that only the brokers who are honest and who provide the best service for their clients are going to be able to survive.

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SE: IMMEDIATE RELEA

tions Collaborate ia oc ss A a: ad an C rn ta education in Weste kers in BC & Alber ro B e ag Enhancing broker tg or M r ucation Platform fo n (AMBA) are Brokers Associatio to Build a Solid Ed rm Alberta Mortgage

education platfo BC (MBABC) and a western Canadian ers Association of lish ok Br tab e es ag to rtg nt Mo me e Th re access to quality into an agree re is a need to ensu the ce they have entered d un an no lly an tia to tan ed bs as ple has changed su ers. “Our industry ent of MBABC. for Mortgage Brok Jared Dreyer, Presid id sa ”, ers ok br “It is a logical next e ag in both provinces. , ers education for mortg ok Br e ag rtg d employ Mo our knowledge and erages that work, an llaborate in sharing ok co br to ny da ma na Ca are rn There in Weste ide greater access ovincial associations associations to prov pr th y bo ke of o al tw go the the for is step enaghan. It Associations to find President Ron Mc Cl s been pushing for BA ha try AM us id sa s ind e s”, Th rm . platfo ment costs as cost savings; thi eater value as well ile of fsetting develop gr wh es hip urs ers co mb ty me ali to qu m to bring the ity and develop the point s of connec tiv . is essential for the both these goals th a similar mandate wi initiative delivers on ps ou gr t gs on ration am on in a positive way eration and collabo age broker educati op rtg co t mo tha s ing ve nc lie va be ad “RECA ecutive Direc tor e this MOU as e.” Bob Myroniuk, Ex try in Canada. We se tiv us tia ini ind s er thi ok br on r e ag mortg lator’s Council of y work togethe rtgage Broker Regu Associations as the Mo the the ts or by pp ed su ho ec CA s and RE ntiment wa llaboration among cil of Alberta. This se the importance of co un on Co e ed tat nd Es fou al n Re tio of the r in an effor t to organiza . Kirk Bacon, “A s an ABC coming togethe Mr MB air d Ch an ) BA CC BR AM ts (M or Canada on for advancing MBRCC supp ucation is a foundati oker regulators, the ed br ty e ali ag qu rtg t mo tha s ’s ve da Cana The MBRCC belie quality education. improve access to protection.” l desire to see a alism and consumer inces and a mutua ov pr o industry profession tw the n ee ration betw ational areas are ndation for collabo for these two educ ls fou tai the de is the nt as me ree low This ag ormation will fol industry. Further inf strong, professional developed. tion please contact: O For fur ther informa Samantha Gale, CE r ge na sociation of BC Ma As ral ers ne Mortgage Brok Deborah Keshen, Ge da Place Brokers Association Suite 40 4, 99 9 Cana Alberta Mortgage SE 3E2 enue Vancouver, BC V6C Suite 20 0 1940 – 9 Av 89 /1- 877-371-2916 2 Phone: 60 4-4 08 -99 Calgary, AB T2G 0V @mbabc.ca 2/1-888- 452-2652 Email: samanthagale Phone: 403- 685-965 ba.ca Email: dkeshen@am s to indus try and exist vince’s mortgage pro the ts en the , res 90 h Columbia rep orporated in 19 Association of Britis rtgage indus try. Inc ers mo ok the Br n e thi ag ers wi rtg off s The Mo ical standard . The MBABC fessionalism and eth ership of over 1800 pro mb e me nc ha ng en wi n d thi gro an wi a t suppor ver and has onship building fit, based in Vancou lopment and relati pro ve de orl t-f na no sio is d n fes an tio pro tor Associa d to enhance Executive Direc ing events designe ard of Direc tors, an ork Bo tw d ne cte d an ele al an on by d educati MBABC is governe ong clientele. The a c.c ab the indus try and am mb w. ww at: Visit our website m. tea s ce rvi Se er Memb

ABOUT MBABC

34 SUMMER 2013

OUR OFFICE IS YOUR OFFICE “As the water recedes and the affected areas go into clean up and repair mode, we can all be proud of how well everyone pulled together. Government, emergency responders and all types of people have rallied together to deal with an unprecedented situation.

If we can be of any assistance to our membership in the flood affected areas please let us know. If your office space is damaged or just inaccessible and you need to use our facilities, give us a call or drop by and we will do our best to accommodate your needs. We have a meeting space, office, internet, phone and copier available for use for any AMBA Member who may need them. The AMBA offices can be reached at 403- 685-9652. We are proud to be part of such a strong community in Alberta and want to do whatever we can to help.

In difficult times we also want to highlight the acts of good will that have occurred around the province. If you have stories or anecdotes about personal or professional acts of kindness, support, funds that have been created or outreach to those in need, let us know. We would like to highlight them to the mortgage broker community as well as the public.

We hope that all of you and your families are safe and well. Our thoughts and well wishes go out to everyone affected. “

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MCAP and Brokers Pay It Forward in New Orleans For brokers attending MCAP’s recent Summit in New Orleans, the Big Easy was the perfect place to celebrate achievement by paying it forward with a Habitat for Humanity build in a low-income, hurricanedevastated neighbourhood.

“What a powerful day!” says Brandi Pierik, DLC Regional Mortgage Group, Red Deer, AB. “You could see how high the water level had risen. It gave you a very real sense of the danger people encountered and what has been lost.”

Pierik was one of four Alberta-based participants among MCAP’s 40 top-producing brokers from across Canada who spent the second day of their well-earned five-day N’awlins trip in hard hats and work gloves.

time to make a difference while they’re here,” says Tusa. “A Habitat build day is very empowering. You see the pride of achievement that comes from working side by side on a site with people you usually only see across the water cooler.”

MCAP’s broker camaraderie and sense of team accomplishment was well documented by a film crew who followed the novice builders as they gamely, and enthusiastically, hammered in nails (and unhammered mistakes!) Check out the video at http://www.youtube. com/MCAPFinancial Mike Cameron, Axiom Mortgage Partners, Sherwood Park, AB, shared his perspective with the cameras:

Under the tutelage of Habitat’s building specialists, the team devoted eight hours to working tape measures, levels, saws, hammers and nails like pros as they laid floors and erected walls at the residential building site located in the Central City Area of New Orleans.

“As mortgage brokers, one of the things we find most rewarding is the opportunity we have to help families become homeowners. This is just an extension of that.”

Gino Tieri, MCAP’s Vice President of Sales, worked with the New Orleans Area Habitat for Humanity to organize the day. Habitat for Humanity has been MCAP’s charity of choice for a number of years.

Cameron and Pierik enjoyed the opportunity to work with fellow Albertans Gord Appel, The Mortgage Group, and Todd Fralic, Quantus Financial, both Calgary-based brokers.

“We wanted to take a different, more holistic approach this year that included celebrating partnership, learning from one another at our business meeting and dedicating time to give back to those in need of help,” explains Tieri. “Being in New Orleans gave us the opportunity to work together as one, regardless of what brand the brokers work for, to give back to those in need. It was an amazing day!”

For Pierik, a MCAP Summit first-timer, it was her favourite day of the trip.

The four-bedroom home is slated for completion this month (June), with a single mom and her four children under 10 eagerly awaiting move-in day. The young family has struggled to find affordable housing in the city.

According to Aleis Tusa, Communications Director, New Orleans Habitat for Humanity, Hurricane Katrina’s impact has been long lasting and far-reaching for everyone, but low-income families have been especially hard hit.

“If you didn’t lose housing in the storm, then you were hit by rental increases or huge repair costs, or displaced by circumstances or renovations,” says Tusa.

On the up side, however, Habitat New Orleans has received 2.5 million volunteer hours since Katrina’s destructive wrath swept through the area in 2005. Ninety-eight per cent of those helping hands are from out of town, often delegates visiting the city for a corporate meeting or conference.

“We are so appreciative of companies such as MCAP who take the

36 SUMMER 2013

“The teambuilding aspect was excellent, but even more valuable and memorable was the ability to give back to the community,” says Pierik.

MCAP has been an avid supporter of Habitat for Humanity for over a decade, organizing employee and partner volunteer efforts to help the non-profit organization put low-income families into homes. The company also has the Key to HopeTM program that allows mortgage clients to make tax-deductible donations to the cause through their mortgage payments. Visit www.mcap.com for details.

“Working with Habitat definitely made this year’s trip memorable,” notes MCAP’s Tieri. “These brokers will remember and be proud of the good they did that day for a long time.”

About MCAP: MCAP is an independent mortgage financing company with more than $36 billion in assets under administration providing mortgage solutions for residential and commercial properties. Founded in 1981, MCAP originates, trades, securitizes and services mortgages in offices across Canada. MCAP originates residential mortgages exclusively through the mortgage broker channel as we believe that a professional mortgage broker is a consumer's best option and MCAP actively promotes the services of mortgage brokers across the country.

MCAP is also a leader in the Canadian residential construction lending market with over 20 years in the business. Our teams of dedicated professionals serve a variety of developer, construction and lender clients across Canada.

MEDIA CONTACT: Jack Shapiro Vice-President, Marketing and Communications 416.591.2477

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RECA PROPOSED REAL ESTATE ACT AMENDMENTS: You spoke, we lobbied and RECA listened We are pleased to let you know that through AMBA, the voice of our membership was heard and that several key proposed amendments that you (our members) did not support were not approved by the RECA Council.

When you have a strong regulator who is willing to work with trusted organizations such as AMBA, a lot can be achieved. When RECA issued their consultation paper on proposed amendments to the Real Estate Act AMBA quickly responded by forming a task force to review the paper in detail and surveying members on key areas. RECA met with AMBA and the Private Mortgage Lenders Forum to discuss their proposed amendments and to receive our feedback.

The following changes, supported by the AMBA membership, were approved by the RECA Council: 2.1. Brokers at Banks, Treasury Branches, Credit Unions, Loan Corporations, Trust Corporations or Insurance Corporations CONSULTATION RECOMMENDATION: The Real Estate Act should apply (to the above) when dealing in mortgages from other financial institutions.

2.2. Agents of Banks CONSULTATION RECOMMENDATION: The application section of the Real Estate Act should remove the word agent to support consumer protection and a fair market place.

The following proposed were amendments AMBA, based on member feedback and task force input, did not support: 2.4 Private Lending AMBA RESPONSE: Facilitating a transaction between a borrower and a lender is the essence of mortgage brokerage and it is incumbent upon RECA to continue regulation of brokers who seek out single entity lenders, and assist them in making mortgage investments.

Result: This amendment was not approved by the RECA Council 9.0 Service of Documents AMBA RESPONSE: While avoidance of members to being served official documents is an issue, the need for due diligence in notifying a member is a higher priority.

Result: This amendment was not approved by the RECA Council 11.3 Notification of Investigation AMBA RESPONSE: RECA proposed their collect of personal information on Industry Members without notification. The membership overwhelmingly indicated a concern with this change.

Result: This amendment was not approved by the RECA Council.

RECA is pursuing an amendment of the Personal Information Act instead. AMBA will keep our members apprised of the progress on this requested change.

The following amendment AMBA supported with a change: 11.1 Collection of Personal AMBA RESPONSE: Over 80 percent of AMBA survey respondents acknowledged the need to this requirement by RECA but for the purpose of authorizations only.

Result: The amendment as originally proposed was not approved by the RECA Council. The Council did however, approve an amendment to the Real Estate Act to permit collection of specific personal information for issuing authorizations.

One key issue that was approved by RECA and supported by their Council but not the AMBA membership relates to the extension of record retention from three to 10 years. AMBA maintains that this will create an undue burden and liability for members. Consequently AMBA will meet with the Minister for Service Alberta (the Hon. Manmeet Bhuller) to discuss this issue. We will also take the opportunity to voice support for the Minister to address the current inequities with respect to brokers at Banks, Treasury Branches, Credit Unions, Loan Corporations, Trust Corporations and Insurance Corporations.

Collective action is effective. Encourage your colleagues and clients to get involved in AMBA; the more we work together the greater the opportunity to effect change. As one voice we are strong.

Thank you to all the members who responded to the survey and got involved in the task force.

38 SUMMER 2013

amba calendar july 2013

september 2013

Stampede Party

AMBA GOLF TOURNAMENT September 11th, 2013 Links of Spruce Grove 100 Links Road Spruce Grove, Edmonton 8:30 AM – 4:00 PM (BBQ and Awards to Follow

July 9th, 2013 Ironwood Stage and Grill 12229 9 Ave SE, Calgary 11:30 AM – 2:00 PM

AMBA Poker Tournament and Welcome reception September 11th, 2013 Marriott River Cree Resort, 300 East Lapotac Blvd, Edmonton 7:10 PM – 10:00 PM

For more information or to register for any of these great events, please visit amba.ca

AMBA CONFERENCE, TRADESHOW September 11th, 2013 Marriott River Cree Resort, 300 East Lapotac Blvd, Edmonton 7:30 PM – 4:30 PM

Richard Earles

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