AMBA Matters Winter 2012

Matters

Love it or

How to decide whether to renovate or sell your home ask the expert: mortgage protection ALSO INSIDE Exploring the amba member zone

Winter 2012

Matters

WINTER 2012 A SPECIAL THANKS TO OUR ADVERTISERS...

Verico �������������������������������� 2 Lanyard ���������������������������� 4 Alta West Mortgage ������ 5 Paradigm ������������������������� 7 Dominion Lending ��������� 8 J.E. Fletcher ������������������ 12 Cedar Peaks ������������������ 12 The Personal ����������������� 19 Romspen ������������������������ 20 Fisgard ��������������������������� 30 RMG ������������������������������� 32 Optimum Mortgage ���� 33 Bridgewater Bank ��������� 35 Capital Direct ��������������� 36 VWR Capital Corp �������� 37 Caplink ����������������������������38

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contents

2013 membership Renewal process

exploring the amba member zone

Community Roots: Medicine Hat

ASk the Expert: Mortgage Protection

PIPA: Moving to the Cloud

A Regulation Success story

Bmi follows beacon

reca update: Have you heard about the new MBRcc?

cover story: love it or list it

a good 'defence' is the best offence

First National ���������������� 39

private lenders forum taking membership

Equitable Trust ������������� 40

where do i find private clients?

Social centre: you have a facebook page, now what?

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

amba 2012 consumer report

Amba 2012 - 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

Communications Director Len Lane Verico Brokers for Life Inc.

Membership Director (South) Adil Mawji Invis

Consumers Awarness Director Cathy Sehn Verico Brokers for Life Inc.

RECA Relations Director Phil McDowell Mortgages Are Marvellous Education Director Ryan Spence D+H

Ethics Director Kevin Weeks Weeks Law

Professional Development Director James Kulus Canadiana Financial Corp.

Lionel Lewko Saskatchewan Director

getting ahead of the regulation game

OTHER FEATURES...

Publication Manager and Editor - Amanda Roy-Macfarlane

President’s Message 5 Manager’s Report 6 Industry News 26 AMBA Community Member Briefs 30 Member Profile of Doug Whelpton 34 AMBA Calendar 38

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

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Interest Rates Starting from an Incredible 5.75%

1st Mortgage Financing $1,000,000 - $15,000,000

High-End Single Family: • L/V: Up to 65% • Interest Rates: from 5.75% • Fees: from 1.5%

Income Producing Properties: • L/V: Up to 75% • Interest Rates: from 5.75% • Fees: from 1.0%

Condo Inventory: • • • •

L/V: Up to 65% Interest Rates: from 7.0% Fees: from 1.5% Flexible Partial Discharge Provisions

Toll free: 866-698-5388 Residential: Michael Gough: mgough@lanyardgroup.com Mike Saba: msaba@lanyardgroup.com FI N A N C I A L

C O R P O R A T I ON

Visit our website at: www.lanyardgroup.com

Commercial: Mike Saba: Brian Chelin:

msaba@lanyardgroup.com bchelin@lanyardgroup.com

President’s Message Ron McClenaghan AMBA President

The good thing about dreams is there are no boundaries or limitations.

There have been many times in life I have been accused of being a dreamer because of my thoughts and ideas. Guilty as charged.

Everyone draws their motivation from the many places our eyes, ears and mind take us.

we saw American lenders enter the Canadian business channel. The mortgage brokerage channel was the prime origination source for lenders throughout Canada and life was good for licensed mortgage professionals.

I have always been one to ask how can I make any situation better? How can I affect change and put a plan into action. Can I leave something in a better place than when I arrived? Will I accomplish the tasks at hand?

However, the always changing rules and industry challenges, especially over the past 12 years, have made business difficult for most – and we’ve had to refocus our business ways and dreams.

As President of AMBA, and with AMBA being part of the mortgage industry mosaic, I find myself often asking these very questions. In my travels I’ve experienced meeting all kinds of people within the mortgage industry. Everyone loves being a part of our industry, expressing their opinions on where we are and what is needed to make it better.

Remember when … market share for lenders became a challenge resulting in some withdrawal from the brokerage channel and some groups established their own mortgage representative sales teams.

We experienced certain lenders exiting the broker channel due to the economic squeeze and mortgage brokerage companies faced challenges within a shrinking economy while trying to grow. And in time, every American lender left the mortgage business in Canada.

Many volunteer their time on boards and committees to keep the growing needs of our associations moving along. And everyone pitches in to make us stronger either as a profession or in our representation to our customers.

In 2000, we had almost every major lending institution in Canada as part of the mortgage brokerage channel. Our market was so strong

As a testament to their strong will, mortgage brokerages made the adjustments necessary to survive. Today, mortgage professionals have advanced support systems to not only make them better at their business, but to deliver a far better product and service package to the customer. These industry challenges have made the importance of participating in professional development and continuing education ever so clear.

If there’s one thing we have learned in the past 12 years, it is situations change quickly.

Industry associations and brokerages working together to produce the most advanced mortgage professionals will always be a goal to strive for within our industry. More important – is getting the message out to the Canadian mortgage consumer to utilize the professional – services of our members. AMBA is in constant dialogue with our member brokerages on how to best serve this need on behalf of our membership and work with the other industry associations.

We’ve listened to your call for consumer awareness!

In 2013, we will introduce our new marketing campaign, Use an AMBA Mortgage Professional. This campaign will promote the benefits of utilizing the services of a licensed AMBA mortgage professional. The advertising campaign will use all avenues including television, print media and social media. Members will be encouraged to participate by using the campaign slogan within their own marketing efforts. Together, we can deliver a very loud message for all of us.

It is our time. We provide a valued service to Albertans and they need to know we have the very best products and services for their mortgage financing requirements. I encourage everyone to get on board; our strength is in numbers and the professionalism within our collective message.

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MANAGER’S

Report Winter 2012 Deborah Keshen AMBA General Manager

Association Membership is Key It has been a pleasure getting to know the membership over the last couple of months and see the degree of dedication to producing a professional association that fully represents the industry. Being a part of AMBA is about furthering the interests of the industry, but what does the association give back to you? As the association works on plans for the coming year, this question has been front and centre in our discussions.

The mortgage broker industry is provincially regulated and that will not change anytime soon. Having a group that is independent of the regulator and dedicated to your interests is very important. At the ground level, AMBA can be the industry voice, providing your thoughts, worries, needs directly to RECA. National issues are definitely on the horizon, and those matter, but the most fundamental concerns are local ones that impact your businesses on a daily basis. That is a key role that AMBA fulfills.

Member Benefits Your voice and representative with the Real Estate Council of Alberta (RECA) LMS Prolink – provider of E&O Insurance with more than seven years of experience in this industry and competitive pricing for AMBA members. Please note: There will be NEW insurance coverage to come in 2013.

The Personal Insurance Company – our exclusive provider of home and auto group insurance for AMBA members with preferred rates, special discounts and exceptional service.

Policies & Procedures Manual – Available to our members in 2013.

And much more with additional benefits to come in 2013!!

Stay tuned …

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WINTER 2012

The other tangible benefits come from being part of a collective group that can drive cost savings in areas that you need to work in the industry. Insurance may not be glamorous, but it is essential, so don't pay more than you have to – check out all the great programs we offer on the AMBA website. For instance, have you reviewed what is being offered on errors and omissions (E&O) insurance or home/ pet/auto insurance? Wouldn’t $700 or more be great to have with the holiday season almost here? Try calling and verifying what rates you can get on your home or car today as the savings could be significant.

Looking for other ways to cut business costs? What about the Cutco gift discount, the AMBA lead generation systems or discounts on a welcome home package? These discounts are available due to your membership in AMBA. In 2013, look for more great programs that can help save you money.

In addition to new programs, look to see some new events and a redesign of existing activities as the association adapts to your comments, needs and time constraints in 2013. AMBA will be offering a series of programs aimed at providing quality learning along with essential networking opportunities. You should also look for the newly created Private Lenders Forum to flourish; they have already produced a disclosure form that will greatly benefit the industry – see the article in this magazine for further details and watch out for more articles in the eNewsletter and future editions.

Your education committee is hard at work ensuring that the new MAP course is completed in 2013. This has taken considerable energy and efforts from volunteers, for which the association is greatly appreciative.

The membership committee is equally hard at work ensuring that we reach out to and engage current and new members as much as possible. As you plan your own corporate events in 2013, remember we are always available to present on AMBA and what we offer on behalf of the industry. We are open to having me, a member of staff, the board directors or the president, whenever we are available, present to any group at a meeting, workshop or conference that you are planning. Just call or email and let us know the time and date, and we will do our best to ensure a representative will be there.

As the year closes, we need to say a big thank you to the volunteers on the board and the many committees within AMBA. Without their drive, knowledge and expertise, the degree of output from the association would not be possible.

Thank you all, your efforts on behalf of the industry are greatly appreciated.

We look forward to representing you in 2013 and encourage all members to get active – attend events, volunteer or simply send us an email about what is top of mind, issues you are encountering, idea or suggestions – this is your association.

To all the AMBA members, a very happy holiday season to you and your family.

The perfect tool for any problem… all in one convenient package.

“One size fits all” isn’t always the best approach. At Paradigm, our multi-faceted team works together with the brokerage community utilizing a variety of tools to find unique solutions for your clients’ non-conventional financing needs. The depth of our experienced team is enhanced by our in-house law firm and our focus is building genuine long-term relationships in order to find the right solution for you and your clients.

Let’s talk solutions.

Find out how Paradigm can help find a creative lending solutions for your clients Call 1-800-979-2911 or visit paradigmmortgage.ca Paradigm Mortgage Corp. is the managing agent for Mission Creek Mortgage Ltd.

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Renew your membership today!

Christmas is near and so is renewal time! If you haven’t already renewed your membership, please do so soon. The clock is ticking and if you renew by January 31, 2013, your name will be entered in a draw for a $100 gift card for Best Buy. The winner will be announced in February’s eNewsletter.

Renew by Jan. 31, 2013 to be entered into a draw for a $100 gift card from Best Buy!

Thank you for your continued support and participation. To show how much we appreciate your loyalty toward the Alberta Mortgage Brokers Association (AMBA), we are giving you a bit of a break on increases, as there will be no membership fee change for 2013.

The fees are as follows: Brokerage and Corporate Fee : $360 Individual and Corporate Active Fee : $115 If you do not have your username/password details or require any other assistance, please contact Samantha Gill, Membership and Event Coordinator, via phone at 403.685.9652 Ext. 112 or via e-mail at sgill@amba.ca.

Here's how to renew:

Step 1

Step 2

Enter your login information to sign into the ‘Member Zone.'

Scroll down the homepage and you’ll see the renew membership button.

Once logged-in, you’ll see the ‘Members Zone’ homepage.

Please note: You will have access to your 2013 Membership Certificate only after your brokerage has paid their 2013 fees.

Step 3 Select your membership type and follow the payment instructions to complete your renewal.

Step 4 Once you’ve renewed your membership and your brokerage has also renewed, you can download your 2013 Membership Certificate in the ‘Member Zone.'

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Exploring the Member Zone Take advantage of your AMBA insider information

We encourage you to use the web features in our 'Member Zone' on a regular basis. It should be your go-to place for all important AMBA information and more. The site is jam-packed with knowledge-based information to engage consumers and

Log-in to your member zone today!

industry professionals. There are lots of exciting things to explore including daily national news updates, industry partner

You can also print off your member certificate at any time,

updates, social media feeds and a chat zone, where you can ask

register for events with ease, update your profile, browse

questions and or share information with fellow members.

AMBA Matters and photo archives and much more.

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Events Calendar & UPCOMING EVENTS Browse our event listings and register through one easy click in the 'Member Zone.'

President’s blog Read the President’s message regularly. It’s updated with important news and messages you won’t want to miss.

photo gallery Find your pictures with ease. The gallery is easy to navigate and kept up-to-date.

AMBA Matters Find any copy of your magazine with one click.

It’s your green option.

member certificate You can download your member certificate any time. Click the 'Member Zone' certificate button and print.

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Community Roots:

Medicine Hat is a great market Cathy Sehn, Consumer Awareness Director Medicine Hat is a beautiful community in southeastern Alberta, which is home to more than 60,000 people and, of course, the world’s largest teepee. It experiences the lowest combined tax rate in Canada, the lowest utility rates in the country, and is Canada’s sunniest city. Alive with a vibrancy and spirit few communities witness, Medicine Hat enjoys the closeness of family and values that are tied to its colourful history and quality of life. Varied from third generation families to new residents, there is an abundance of culture and ethnic pride throughout the community.

Due to low gas prices in the province, the Medicine Hat real estate market has had some challenges over the past couple of years.

However, 2012 is proving to be a much better year. After volumes to Oct. 31 decreased 4 per cent in 2010 and stayed virtually the same from 2010-2011, volumes to the end of October 2012 increase by 22

Fast and Fun Facts:

• Population – 61, 180, with the largest percentage (42 per cent) between the ages of 25-54 • 2,512 plus hours of sunshine per year • Home to the world’s largest teepee at 20 plus stories high • There are more than 100 parks and 90 km of walking trails throughout the city • Each year, it holds a variety of cultural events, such as the Spectrum Sunshine Festival, Jazzfest, and the Medicine Hat Exhibition and Stampede • Home of the Medicine Hat Tigers (WHL Hockey) • Home of the Medicine Hat Mavericks (WMBL Baseball)

per cent over 2011 levels. The average house price in Medicine Hat in October 2012 was $263,087.

As in other markets, new mortgage professionals can expect to network with both realtors and other contacts in order to be successful. Some of the specific challenges Medicine Hat mortgage brokers face include some lenders restricting loan to value ratios due to geographic location. These same lenders will accept a 500 beacon score, but won’t lend 75 per cent in Medicine Hat. Another challenge is there are many smaller communities around Medicine Hat, such of Irvine, Dunmore, and Redcliff, which are not on some lenders’ radars, so they will not lend there. These same lenders will lend in Sylvan Lake (20 minutes from Red Deer), or Blackfalds, only because they are more familiar with that area of the province. This represents a challenge to find lenders for some of those tougher deals.

Famous Hatters: Cam Barker NHL Hockey (Played junior

hockey with the Medicine Hat Tigers)

Bruno Gerussi Lead role in the Beachcombers TV show Darren Helm NHL Hockey (Played junior hockey with the Medicine Hat Tigers)

Ronnie Burkett International famed puppeteer

Matt Keetley Professional Hockey Player

Glen Edwards Namesake of Edwards Air Force Base

Arthur Kent Canadian television journalist

Terri Clark Internationally renowned music artist

Trevor Linden NHL Hockey (Hometown:

Murray Craven NHL Hockey (Hometown: The Hat. Played junior with the Medicine Hat Tigers)

(Calgary Flames draft pick)

The Hat. Played junior with the Medicine Hat Tigers)

Kalan Porter winner of Canadian Idol Season 2

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ask the expert:

Mortgage Protection

Uncovering the misconceptions This Issue’s Expert

Tracey Robinson Mortgage Protection Plan

Creditor Insurance! There, I said it. Depending on who you talk to, creditor insurance can be a bad word.

Assumptions, misinformation and lack of understanding have perpetuated many misconceptions of the value of creditor insurance to the mortgage borrower.

Creditor insurance has received a bad rap, primarily from independent life insurance professionals who sell personal insurance to consumers.

The fact is: These same individuals don’t have access to creditor insurance products and, therefore, can’t sell creditor insurance themselves. For the independent life insurance agent, the best defence is offense. The criticism of creditor insurance continues as life insurance agents look to protect their livelihood.

Is this why so many mortgage professionals shy away from having the discussion with their clients?

management primarily used to hedge against the risk of a contingent, uncertain loss. Creditor insurance is not the big bad wolf that it has been made out to be. It is an alternative to personal insurance. It is an important debt management tool for mortgage borrowers and a welcome addition to any mortgage professional’s product suite.

Actually, the answer to this question comes with varying opinions and complexities. Aside from the misinformation about creditor insurance that gets perpetuated in the marketplace, there are numerous other factors that also come into play (fear and apathy, first come to mind).

While there is definitely a cross-section of mortgage professionals who do the right thing and offer protection during the mortgage transaction, a notable majority do not feel that it is a part of their job.

Some mortgage professionals feel like they don’t have the tools in their tool belt to feel comfortable making the insurance offer, so they simply leave it up to the lender to handle the insurance discussion with their clients. Sadly, there are instances where a mortgage professional doesn’t believe it’s important enough to discuss.

The reality is that the appetite for creditor insurance is large and mortgage professionals would be well advised to help clients protect their homes from the uncertainties of life.

Creditor insurance is possibly the easiest and most affordable protection option for mortgage borrowers.

Certainly, some argue that it is declining coverage so it is inferior to personal insurance.

Creditor insurance is altogether a different type of insurance product than personal insurance. Like individual term insurance, it is designed to address a specific need for a certain timeframe.

At the end of the day, it is important to remember why creditor insurance exists. For 60 per cent of mortgage borrowers it will be the only type of insurance they will purchase. Insurance is not something that people buy because they want it. Insurance is a form of risk

An independent life insurance agent promotes insurance products that are available through their channel. In some cases, it can take months to get personal insurance in place, depending on

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a number of factors. It is an extensive application process, typically fourteen pages. The benefit of a creditor insurance product is it usually consists of a one page application.

Often, another communicated misconception regarding creditor insurance is it’s designed to never pay out. This is often referred to as ‘post claims underwriting.’ Post claims underwriting means that the insurance company will begin the underwriting process after a claim has been requested. A person’s medical history is then assessed to determine if there was a pre-existing condition that would prevent the claim from being approved. There are some creditor insurance products, as well as individual life products out there, that don’t offer up-front underwriting. Typically, smaller policies where initial health questions have been answered to indicate that a client is healthy and rates as a standard risk can go through a ‘jet-underwriting’ process and get auto approval. With that being said, there are also a number of insurance providers that underwrite at the onset of the application.

The advantage of underwriting an applicant at the onset is the insurer cannot decrease coverage, cancel coverage, or increase premiums because of a change in health status. As with any product or service, it is always recommended to understand the features and benefits before purchasing a product or service. This is true when applying for any type of insurance.

Now more than ever, mortgage protection is an important conversation that a mortgage professional should discuss with their borrowers.

Socially, strategically, legally and financially, a mortgage professional who fails to see this as an essential discussion is not only missing opportunities to increase profitability, but could potentially lose future business. More importantly, licensed mortgage professionals have a responsibility to provide a ‘Duty of Care’ to their clients. This means they conduct their business activities with professionalism, and in such a way that they do not cause harm to their clients. Often, the real importance of insurance doesn’t really hit home until tragedy strikes and a client calls their mortgage professional to find out if their mortgage is protected. It isn’t an easy conversation to have if the answer is no and a client faces losing their home.

Is it in the borrower’s best interest to ensure that there is some form of protection in place to protect their family home against death or disability? That goes without saying. Who’s in better shape? The client that bought creditor insurance because it was offered at the right time and place, or the client considering personal insurance that never got around to buying it?

Strategically, it makes sense for mortgage professionals to ensure that there is a protection option offered to borrowers during the mortgage transaction. Statistics show that the more products and services initially available to a borrower, less time is spent shopping elsewhere. Why send a client to someone else to complete their shopping list? The more a mortgage professional takes advantage of cross-selling opportunities, the more likely you’ll retain a client in the future. Mortgage professionals under estimate the powerful position

they are in because they provide the ‘right time and place’ to offer mortgage protection. Only one in 10 referred clients to a life agent actually talk to the life agent. Understanding the unique protection features of individual insurance providers will benefit both the mortgage professional and their clients.

Banks and lenders sell non-portable insurance products. This is part of their retention strategy and it can impact a mortgage professional’s future business. If a client faces a health issue, they can become uninsurable and they won’t move lenders in the future for fear of losing their coverage.

In Alberta, mortgage professionals are mandated to offer a protection option to the borrower during the mortgage transaction. A restricted insurance agent certificate is required. This restricted certificate allows a licensed mortgage professional to offer a protection option, but restricts them from acting in the manner of a licensed life agent.

A misconception in this area exists when a mortgage professional decides it is not part of their job to offer a protection option. By not introducing a protection option to a borrower, there is the risk of legal action to the mortgage professional and the brokerage they represent. Additionally, by offering borrower advice on what type of insurance is best for them is strictly prohibited unless the mortgage professional also holds a life insurance licence, which would qualify them to do so. A mortgage professional can stress the importance of having some form of protection in place, but it is important to ensure the borrower makes the decision.

Financial stability is required to maintain a family home, as well as to sustain a business. Creditor insurance is one of the easiest cross-sell products in the mortgage industry. Surprisingly, though, the protection rate figures for mortgage professionals is quite low compared to banks. Banks understand the money generated from creditor insurance and implement penetration targets around creditor insurance sales. They thrive when mortgage brokers are unsuccessful or apathetic about offering protection to their borrowers. It gives them the opportunity to increase their value to the borrower, while at the same time increase their bottom line. Twenty-five per cent of borrowers who waive coverage with the mortgage professional end up taking the creditor insurance coverage offered by the lender at the mortgage funding date. By simply recommending and understanding the key benefits of the protection option at the onset of the mortgage application, mortgage professionals can create a healthy secondary stream of income. The increase of income generated by the protection option can offset many challenges a mortgage professional faces with more restrictions to mortgage lending rules and changes to lender compensation plans.

Tracey Robinson is the Regional Account Manager for the Prairies with Mortgage Protection Plan and a licensed life insurance agent.

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Moving to the Cloud?

Make sure you have enough privacy up there.

Julia Lee, AMBA Privacy Officer

There has been a lot of buzz lately about how much cheaper, more accessible, and more efficient it is for small and medium-sized businesses up in the Cloud. Although the term ‘Cloud’ is relatively new, most consumers and businesses have been operating in the Cloud to some degree. If you have an Internet-based email account such as Hotmail, Gmail, Yahoo, Live, etc., you are already in the Cloud. If you have a website, or store pictures on Tumbler, or collaborate with others on documents in Google Docs, you're already in the Cloud.

While most of us have been playing up there for quite some time, we are still unsure of what exactly the Cloud is, or why it is being touted as the latest and greatest thing for small business. The Cloud, or cloud computing, is a model for how we function with, and in, technology.

Let’s compare cloud computing to the electricity in our homes and offices.

When we want to watch TV, we plug it into the socket so the electricity can flow into the TV and make it work. Ditto with the microwave, toaster, hairdryer, and so on. We don’t really think too deeply about where the electricity is coming from or how it is being created or where it is. We just know that it is out there – maintained and monitored by an electricity provider. Electricity is easy and relatively worry free to access.

We know if we take our hairdryer to another house, we can just as easily plug it in and it will work. Electricity is easily accessible, almost anywhere and anytime.

Cloud computing generally works on the same principles: We ‘plug’ our computers into the Internet (via physical connection or wireless router) and presto! We don’t worry much about how the applications are allowing us to work on them; we just care that we can. Cloud computing is easy and relatively worry-free to access.

We can work on our documents, spreadsheets and databases at home, on the road, in a coffee shop, as long as we have Internet access. We can input data, update customer accounts, collaborate on videos, music arrangements, contracts, project plans, budgets and on and on.

The files, applications, software and data that we need is ‘out there’ – maintained and monitored by a service provider. Cloud computing is easily accessible, almost anywhere and anytime.

Since Cloud applications reside outside of our own servers and IT hardware, providers have built software that can accommodate two users or 2,000 users easily, quickly and cost-effectively. Cloud computing is scalable.

It sounds like a technological Shangri-la.

Before we all begin walking around with our ‘heads in the Cloud’ (pun intended), we as mortgage professionals and small business owners need to make sure we know what’s happening with sensitive information that we put into the Cloud. In the end, whether we choose to use cloud computing or not, we are responsible and accountable for that information. Not only accountable to privacy regulations but, more importantly, to the individuals whose information is entrusted in our keep.

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Keeping it private, even in the clouds Cloud computing is a form of outsourcing. The service provider maintaining our databases and business apps is, in essence, a subcontractor. As with any sub-contractor working on your behalf, you as the ‘employer’ are ultimately accountable for any information outsourced to and/or utilized, or accessed by, and shared with those partners.

The Office of the Privacy Commissioner of Canada (OPC) cautions: Organizations must ensure they fully understand their obligations under Canada’s private sector privacy legislation, including those under certain provincial privacy legislation, and they need to carefully assess the risks against the benefits. Organizations considering a cloud computing service should carefully consider what information will be stored in the cloud and why.

Organizations must consider the sensitivity of the personal information and carefully assess all the risks and implications involved in outsourcing personal data to the cloud. (Ref: Office of the Privacy Commissioner of Canada. Cloud Computing for Small and Medium-sized Enterprises: Privacy Responsibilities and Considerations. ( June 14, 2012). Retrieved on Dec. 2, 2012 from: www.priv.gc.ca/information/pub/gd_cc_201206_e.asp#toc1) As more and more businesses take their business to the Cloud, cybercriminals are taking notice. Massive databases housed online are attractive to a generation of criminals whose technological capabilities are far beyond what most of us can fathom. The OPC warns that ‘internet services have proven to be difficult to protect’ (Ref: Retrieved on Dec. 2, 2012 from: www.priv.gc.ca/information/pub/gd_cc_201206_e.asp#toc1).

The first step is to conduct a review of your existing privacy policies and ensure cloud computing considerations are addressed.

In the next issue of AMBA Matters, we will explore strategies to help small businesses ensure they stay compliant with privacy legislation, even way up there in the Cloud.

It’s gotta get worse before it gets better Dave McKitrick, Alta West Capital My brother-in-law Jon once borrowed my garage to rebuild an old MGB. I walked into the garage one day, surveyed the wreckage of the once-proud vehicle, and stood there aghast. He looked at me, looked at the scrambled parts all over the garage floor and said, “Dave, it’s gotta get worse before it gets better.” This quote has helped me navigate through the past four years as our industry was reformed.

I’m the Chief Compliance Officer for Alta West Capital, and as the title suggests, I’m in charge of all the regulatory compliance issues that our company faces. Recently, Alta West Capital has had to embrace new titles including Exempt Market Dealer, Investment Fund Manager and Restricted Portfolio Manager. My brother and partner, Chuck, holds the best title of all, which is ‘Ultimate Designated Person.’ I’ve told him that it means he’ll go to jail if I mess up.

Alta West Capital has operated for more than 20 years as a mortgage syndicator and Mortgage Investment Corporation (MIC) operator in Western Canada. In 2012, our world was rocked when Alberta implemented new security compliance requirements. In 2008, when new requirements also threatened our industry, we felt frustrated, picked on, and just plain angry at the government for daring to infringe on the way we've done business for years. We petitioned, lobbied, yelled and screamed, but to no avail – the government had made up its mind and we were to become regulated by the Alberta Securities Commission and would have to comply. In 2009, we decided that it was time to stop screaming and instead get ready for the coming legislation/registration. A group of like-minded professionals founded the AMBA Private Lenders Forum to help us all prepare our applications, share costs and provide one voice for our industry.

At first it was horrible – mainly due to our own ignorance and fear – as we tried to understand the scope of the coming legislation/ registration. The changes required Canadian Securities Commission courses (CSC), seminars, changes in our operations, upgrading our software, paying lawyers for advice, new registrations and other non-income earning activities. In the end, we made the deadline and submitted our registration

by September 2010, along with all the other conscientious mortgage syndicators and MIC operators in Alberta.

Then, an amazing thing happened halfway though our first registered year. We started to see value in this process! Mortgage syndicators, acting under the radar for so many years, were suddenly held accountable for the money that they raised and how they attracted new investors to invest in a mortgage. Syndicators had to analyze the risk profile of each mortgage and match it with the risk profile of the potential investor. Dabblers in mortgage syndication and brokers who did the odd deal suddenly couldn't proceed unless they were properly registered. Alta West Capital was forced to improve processes as well.

We were more deliberate in our business and more careful with the type of deals that were offered to our MICs and investors. It was no longer the Wild West.

When we first realized how many documents and reports that we had to complete to remain registered, our staff (and myself) nearly threw up our arms and quit. Over the past few years, we’ve redesigned our entire system so that every process is completed in a timely and accurate fashion. We are investing in software to hold our employees accountable so that all questions are asked and all documents are collected. We now have a reporting system in place that actually helps us run our business better and allows us to confidently state that we are providing first-class service to our investors and to our borrowers.

I believe all the other compliant private mortgage lenders have a similar story.

Sure, we have seen some companies leave the industry, but we've seen the companies that are committed to our industry stay and thrive. The smaller companies have teamed up with contractors that provide exempt market dealer and investment fund services, while the larger companies do these services themselves. Since the new legislation was implemented, we no longer see fly-by-night companies popping up. There have been additional costs, but I feel our industry in Alberta has come out of infancy and has grown up. Alta West Capital has had to mature as well and we now have a stronger, stable and reliable company. We are more accountable than ever to our investors and borrowers and, best of all, our competitors are all held accountable to the same level. As well, the AMBA Private Lenders Forum has become a vibrant and active representative for our industry.

By the way, Jon finished rebuilding his MGB and could be seen for years driving around the city, proudly sporting his goggles and hat. But just like Jon’s MGB, our industry had to get worse before it got better.

WINTER 2012

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McDowell’s Humour:

BMI follows Beacon Phil McDowell, RECA Relations Director Today, Prime Minister Stephen Harper shuffles his cabinet and appoints Minister Jim Flaherty the Minister of ‘Finance and Fitness.’

Minister Flaherty explains this change is essential to the success of his role as finance minister because nine per cent of the federal government expenditure is for health care. Health care expenditure is about to explode out of control. The most worrisome health care issue facing Canada today is – Canadians are obese. Canadians are getting more obese, and will soon be the most obese of the G-20 countries.

Steps need to be taken to control Canadian obesity.

Mr. Flaherty has a plan. It is modelled after his success in reducing Canadian consumer debt. Mr. Flaherty managed Canadian debt by restricting the use of the highly used and cheapest source of consumer debt-mortgages.

Mr. Flaherty states that Canadian obesity is due to supermarkets.

Supermarkets sell the largest selection of calories, are convenient, and offer low prices for consumables. This encourages overeating.

Obviously, this is the cause for out-of-control Canadian consumer debt, Mr. Flaherty is convinced the obesity culprit is supermarket shopping by consumers.

Canadian obesity is not the supermarkets’ fault, but they must be part of the solution. Canadian obesity is caused by the choices made by the supermarket consumers. Mr. Flaherty plans to restrict supermarket use by Canadians because it is obvious that too many Canadians do not understand how bad supermarkets can be on their health.

There will be new rules for supermarkets: All stores will have greeters with scales and measuring tapes. Consumer ID will be checked for the consumer age and sex. These will be recorded along with consumer’s weight and height in order to determine their BMI. Those shoppers who have a BMI within 19 to 25 will be permitted to shop in supermarkets. Those consumers not within the permissible range have already demonstrated that they are not capable of handling supermarket shopping, and will be turned away.

Canadian obesity problems will soon be solved. Mr. Flaherty is convinced this weight-control initiative is as brilliant as his strategy for reducing Canadian consumer debt.

This could not come sooner because everyone knows food prices are going to go up!

18 WINTER 2012

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Have you heard about the new MBRCC? RECA Update With the establishment of the Mortgage Broker Regulators’ Council of Canada (MBRCC), mortgage broker regulators from across Canada, including the Real Estate Council of Alberta (RECA), have come together in a collaborative forum to improve consumer protection, develop national solutions to shared concerns and promote harmonization of Canada’s mortgage broker regulatory practices.

While the significance of this kind of collaboration cannot be understated, the MBRCC itself is most excited about the strategic priorities it has identified and committed itself to as part of its 20122015 Strategic Plan.

Led by chair Kirk Bacon, Deputy Executive Director with RECA, the MBRCC is committed to: 1) Establishing the governance framework for the MBRCC. 2) Developing and facilitating the implementation of common practices and occupational standards, as appropriate.

By agreeing to come together in a more structured manner under the banner of the MBRCC, the regulators will be better able to improve information sharing and cooperation among themselves, promote harmonization of regulatory practices across the country and develop a unified approach to engaging stakeholders.

The creation of the MBRCC will benefit not only mortgage brokerage professionals from coast to coast but also the consumers who work with mortgage brokers.

The creation of the MBRCC is going to help ensure consumers have the same experience from coast to coast when working with licensed mortgage professionals. Having the mortgage regulators from across Canada come together in a formalized body will better serve the interests of mortgage consumers across Canada.

To meet the identified strategic priorities, the MBRCC has planned a number of strategic initiatives for the coming three year period including work in the following areas: Mortgage suitability: ensuring that a mortgage fits a client’s needs and personal circumstances.

3) Enhancing structured information sharing and coordination among regulators.

Material risk disclosure: ensuring consumers understand all of the risks associated with any mortgage undertaking.

4) Enhancing coordinated engagement of external stakeholders.

Professional competencies: ensuring that licensed professionals are adequately skilled and knowledgeable.

5) Identifying and addressing emerging issues.

Prior to the establishment of the MBRCC at the end of October, Canada’s mortgage broker regulators had met informally on a biannual basis to exchange information and coordinate activities on issues of common interest. However, in 2011, the regulators engaged in a strategic planning session that resulted in a mandate calling for a greater degree of coordination and cooperation in the regulators’ efforts to serve the public interest across Canada.

While additional initiatives have been identified, the three aforementioned priorities will direct the work of the MBRCC to help ensure borrowers receive the information they need from licensed mortgage brokers across Canada.

The mortgage brokerage industry in Canada has seen significant changes in recent years and it continues to change, with new pressures and new opportunities continually being identified. The MBRCC will help the mortgage broker regulators in Canada stay on top of those pressures and opportunities, while ensuring they are working together for the betterment of the industry generally, individual mortgage brokers and consumers.

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PDF OF THIS ARTICLE IS AVAILABLE IN THE MEMBER ZONE UNDER MEMBER RESOURCES

Love it or

How to decide whether to renovate or sell your home Article Sponsored by Jody Robbins, Special to AMBA Matters

Canadians, it seems, have been conditioned to constantly upgrade their homes, and the idea of living in a bigger, better space, appeals to most of us. But deciding if you should stay or go depends on several variables, such as the type of renovations you desire and the current real estate market. The costs associated with both renovating and selling your home are considerable, and need to be weighed when making an informed decision. With so much to think about, it’s not unusual for homeowners to feel paralyzed when making this decision.

When it Makes Sense to Sell

“It’s quite common for us to see clients unsure if they should sell and move to a new community or renovate what they’ve got,” said Shane Rennie, Principle at Rectangle, a design and build firm.

Putting your house up for sale is often a wise choice when it doesn’t make sense for you to sink more money into your home. You may have bought at a point in the market when additional money put into a house will end up being nothing more than sunk costs. Occasionally, the structural integrity of a house doesn’t warrant any type of renovation. “There’s no telling what you’ll unearth once you pull back the layers of a house – from mould to faulty wiring,” warned mortgage associate Phil McDowell.

There are three main factors to consider before making either costly decision: 1. How happy are you in your current community? Is this location convenient for work, school and the activities you spend the majority of your time doing?

2. How much do you have to invest in a home upgrade or renovation?

3. Will it pay out to put additional money into a property in your neighbourhood?

22 WINTER 2012

Most people begin with a modest starter home under 1,500 sq. ft.

Then a change in circumstance, be it a new baby, job or elderly parent moving in, prompt a move for additional space or a more appropriate neighbourhood. “People have itchy feet, and it’s common to want just a little bit more space,” explained Justin Vroon, realtor with Maxwell Southstar Reality.

If you’re determined on having a 3,000 to 4,000 sq. ft. home, you’re likely better off going out to a new community. Frustrated by loud neighbours and traffic? If you’re keen to get out of your current neighbourhood, no amount of renovation can change that.

And let’s be honest, many of us don’t have the stomach for renovations.

If that’s the case, moving – even within your community, is probably your better option. “No way would I go through a major renovation.

Not with young kids in the house,” said Springbank resident Cris Housman.

When is a Renovation Worth it?

Thinking about renovating before selling? Think again. Most experts agree, this isn’t the smartest move. “Reno if you plan on living in the house for five years or more. If you’re not planning on staying, do cosmetic changes only and keep your costs down,” said John McCoy, general manager of Ultimate Renovations.

If you love your community and your kids are well established, it often makes sense to stay and sort out a way to make your home more pleasing and the space work better for you. Just anticipate the needs of a house shift as people grow older, said Rennie. “Kids want more privacy as they get older and kitchen design has changed so much in the last 20 years. It’s now the core of family life and serves double duty almost as a living room.”

Going from a family of three to six hasn’t swayed the Kryway family to sell their house in Ranchlands. Despite having reached a tipping point, the family, well established in their community, are firmly in the reno camp. “I’m just not keen to move. I love the feel of our house, it’s our home,” said Sue Kryway.

So You Want to Renovate, Now What?

Start the reno process by doing some research, talking to other people who are thrilled with their upgrade, and cruise the internet, looking for advice and inspiration. Think about what changes you’d like to see in your home, and which rooms you want to renovate. When you’re in the idea stage, it’s a good idea to decide on your budget so you don’t get too carried away.

It’s also paramount to make sure the renovations you have planned represent the neighbourhood, said Vroon. “If you’re in an average, middle class neighbourhood, you likely don’t need to spend thousands on chef appliances and granite countertops,” he said.

To avoid pricing yourself out of the market, you’ll want to keep your modifications consistent with other properties in the area. Before pimping out your place, do a little reconnaissance and see what conditions the other homes in your area are in. “It’s always about your neighbour – real estate is local,” said McDowell.

No surprise here, everyone should anticipate the renovation will take longer than expected. To mitigate this, customers should be well organized, making material selections quickly and replying promptly when asked questions by the contractor. Realize that if you make changes to the original renovation plan after the fact, it will add time to the project. “Lots of people are involved in the project team, and any indecision affects the timing,” explained McCoy. And don’t forget, major renovations are disruptive and taxing. They don’t call it divorce dust for nothing. “Even when it goes very well, being displaced from your house is stressful,” said Rennie. You’ll likely want to source alternative accommodations for as many months as the project is in progress. Fortunately, some renovation companies own furnished rental properties families can move into, taking one hassle out of the equation.

Do the Math There are two ways renovations are sold: Cost plus and all-in pricing.

With cost plus, the contractor gives a ballpark estimate and bills the homeowner as invoices from the subcontractors come in. This way of calculating the renovation is almost always the least expensive

Tips for Hiring a Contractor Hire a licensed professional and check with the Better Business Bureau to ensure you’re dealing with a trustworthy company.

Make sure your contractor is licensed by the province, not just in your city. When they’re licensed by the Alberta government, they’ve been bonded and had background checks.

Should anything go south, you should be able to get your deposit back.

Ensure the contractor has liability insurance.

If spending over $100,000, it’s worthwhile seeing if your renovator is a member of RenoMark™. This group of contractors, endorsed by the Canadian Home Builder’s Association, have passed stringent requirements and abide by a code of conduct, including offering a two year warranty on their projects.

Be sure to have all decision makers meet with the professionals at the same time, to avoid conflicting requests.

Always check references. Be sure to ask previous customers about budget increases and the reason for any delays.

See if the contractor will walk you through a couple of their past projects, to view the quality of their work, before you commit to anything. Doing so gives you a good idea of what you’re in for and you’ll be able to avoid a mistake before it’s too late.

Hire a firm you feel comfortable dealing with, where you won’t be afraid to bring up concerns.

When you’re working together in a longterm relationship, it’s just as important for the personalities to be in synch as it is to be aligned on the technical aspects.

CONTINUED ON PAGE 37...

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A Good 'Defence' is the BEST Offence Derrick Leue, President, LMS PROLINK Ltd. In the spirit of the 100th Grey Cup, (our condolences to Stampeders fans on the loss) a good defence is not only the best offence in football, but it is also critical in beating professional liability claims. The best defensive strategy for mortgage brokers, when it comes to protecting their interests, is comprehensive documentation. It sounds simple, yet poor documentation continues to represent our greatest challenge when it comes to defending professional liability claims. Without proper documentation, claim scenarios often spiral into unfortunate instances of ‘he said, she said.’ This makes things particularly challenging when it comes to responding to claims from private individuals who lost money on a mortgage investment.

AMBA and LMS PROLINK have partnered to develop a Disclosure Form for use on mortgages funded by an individual private mortgage lender that will help members in three ways:

1

Meet the Real Estate Act requirements for service agreements on private mortgages

2

Provide a comprehensive risk management tool to mitigate professional liability claims

3

Save brokerages money on Errors & Omissions (E&O) insurance premiums.

The new Disclosure Form will not be used on Mortgages funded by Mortgage Investment Corporations and Mortgage Trusts because they fall under the regulatory authority of the Alberta Securities Commission.

The new Disclosure Form is intended to protect mortgage brokers who arrange a mortgage with individuals who are not in the business of lending.

Private individuals investing in mortgages are responsible for 95 per cent of the professional negligence claims that lenders launch against brokers. In our experience, lenders represent approximately 75 per cent of the total number of lawsuits brought against mortgage brokers in Alberta. There is no doubt that this is the most significant source of exposure for brokers and yet, it is one that cannot be avoided.

Private investors play an important role in the Alberta mortgage industry. When institutional lenders cannot serve your client, then private mortgage lenders might be the only solution available. The vast

24 WINTER 2012

majority of mortgage brokerages arrange private mortgages, so it is imperative that brokers and associates have proper documentation procedures specifically for private lenders. As professionals, mortgage brokers and associates will be held to a higher duty of care by any judge. The courts are more sympathetic to the individual investor who lost money and relied upon the expertise of the professional mortgage broker.

Better Risk – Management Tool AMBA is taking the lead in Alberta by helping members more efficiently manage their risk on private mortgages funded by one investor or a group of unsophisticated investors.

We hope that brokers and associates find this new form valuable as it provides an accessible tool for documenting your interactions with private lenders. The long-term goal of this tool is to reduce the number of claims from private mortgage lenders, in order to reduce Errors & Omissions (E&O) Liability premiums industry wide.

Locating the New Private Lenders Disclosure Form To receive a copy of this newly created form, please visit the AMBA website (amba.ca) 'Member Zone.'

Please note: You will have to log in. The form is located under the button ‘Private Lender Forum Updates’ on the 'Member Zone' homepage.

For more information about protecting yourself against claims from private lenders and other risks, please contact Derrick Leue at LMS PROLINK.

EMAIL: DerrickL@lms.ca PHONE: 1-800-663-6828; ext. 7717 WEBSITE: LMS.CA/AMBA

AMBA Private Mortgage Lenders Forum Taking Membership in New Year Private mortgage lenders in the province of Alberta have navigated through many changes over the last few years. This includes dealing with new regulations and a new regulator, as well as four years of mortgage rule changes, all during a downturn in real estate values and a worldwide recession. These challenges encouraged progressive private mortgage lenders to ‘raise the bar’ by demanding greater professionalism amongst themselves and ensuring value to borrowers, mortgage professionals and investors.

On Oct. 15, 2012, the AMBA Private Mortgage Lenders Forum (PMLF) formally signed a Terms of Reference, which clearly outlines the mission, mandate, objectives and membership of the group. This was an important step to qualify its members and set clear standards as to how these industry members should conduct themselves in the marketplace. Membership requirements for company and key individuals for the PMLF include:

They must be approved – or be in the process of approval with the securities regulator – and have no outstanding enforcement by either provincial or national regulators; They must agree to a Code of Conduct (which is still in the developmental stage); and They must be a member in good standing with AMBA and meet and comply with AMBA bylaws and standards.

Become a member of AMBA’s Private Mortgage Lenders Forum Starting January 2013, you can register to join the AMBA Private Mortgage Lenders Forum (PMLF).

2013 fees will be as follows: $500 for registration with the PMLF and $115 for individual AMBA membership.

Please Note: In order to join the PMLF, you must be a member of AMBA in good standing.

Here’s how: 1. Go to www.amba.ca, and click the register button at the top of the homepage.

2. Next, select the option that is your membership category: Private Mortgage Lenders Forum.

3. Complete the membership form and payment options and submit your application.

Please note: Be sure to fill out all the fields, so we have your important personal information in our records.

“I am very encouraged by the progress being made in setting clear professional standards for ourselves as an industry. We continue to demonstrate to mortgage professionals, borrowers and investors that we are committed to best practices and transparency. We have also developed a good relationship with the Alberta Securities Commission (ASC) and the Real Estate Council of Alberta (RECA) in developing the right standards for our industry, which are for the greater good of all stakeholders,” said Dean Koeller, co-chair of the AMBA Private Mortgage Lenders Forum and vice president of Calvert Home Mortgage Investment Corporation.

For more information regarding becoming a member of the PMLF, please contact the AMBA office at info@amba.ca, Dean Koeller at dean@chmic.ca, or Dave McKitrick dave@awcapital.ca.

WINTER 2012

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Industry News Alberta parents worry most about children’s education Recent TD Insurance research found that parents in Alberta worry most about how their kids are doing in school (73 per cent) followed by their financial security (72 per cent), and health (71 per cent).

The poll also found 94 per cent of Alberta parents surveyed have life insurance. However, more than half (59 per cent) don’t think their policy will leave enough money to financially support their children up until their 18th birthday.

For parents in Alberta who do not own life insurance, 38 per cent hadn’t thought about it yet, 25 per cent don’t think it’s necessary and another 13 per cent say it’s because they can’t afford it.

Canadian home prices becoming more affordable Royal Bank (RBC) says the cost of home ownership became more affordable in the most recent quarter due to a modest decline in home prices and gains in Canadian household incomes.

RBC’s affordability index for a detached bungalow stood at 42 per cent of income nationally in the second quarter; meaning an owner would need to spend 42 per cent of pre-tax annual income to pay for mortgage payments, utilities and property taxes – one percentage point lower than in the third quarter of 2011.

The index fell even more for two-storey homes, by 1.2 percentage points to 47.8 per cent, and eased 0.6 percentage points to 28 per cent for condos.

According to Royal Bank, which publishes the index on a quarterly basis, ultra-low interest rates have been the key factor in keeping affordability levels from reaching dangerous levels in recent years.

RBC'S AFFORDABILITY INDEX percentage CITY

OF INCOME

Vancouver 83.2% Toronto 52.4% Montreal 40.2% Ottawa 38.7% Calgary 38.3% Edmonton 31.1%

26 WINTER 2012

RBC notes that Canada’s housing market cooled further in the third quarter, partially because of the effects of a fourth round of rule changes to government-backed mortgage insurance.

The index in Vancouver stood at 83.2 per cent of income, followed by Toronto at 52.4 per cent, Montreal 40.2 per cent, Ottawa at 38.7 per cent, Calgary at 38.3 per cent and Edmonton at 31.1 per cent.

Boost in migration strengthens Calgary housing market: CMHC Strong employment growth in the Calgary region has sparked more people from other parts of the country to move to the city, buoying the local housing market for the next two years.

According to Canada Mortgage and Housing Corp. (CMHC), net migration to the Calgary census metropolitan area will balloon to 20,000 people this year after numbers dropped to 9,209 in 2010 and 11,220 in 2011. And CMHC is forecasting net migration to the region to be 18,000 in 2013.

Net migration in the Calgary region peaked in 2006 as it approached 25,000 people.

The forecasted migration numbers will help boost MLS sales by 15.7 per cent this year in the Calgary CMA to 26,000 transactions and by another 1.9 per cent in 2013 to 26,500 sales.

The CMHC is forecasting average MLS sale prices in the Calgary region to rise by 2.0 per cent this year to $411,000 and by another 2.7 per cent next year to $422, 000.

Total housing starts are estimated to rise by 33.4 per cent this year to 12,400 units but dip by 4.0 per cent in 2013 to 11,900.

Albertans believe financial plan is critical in buying a home A new study by Bank of Montreal (BMO) Financial Group says the vast majority of Albertans believe a financial plan is critical when saving for and buying a home.

The survey indicated 89 per cent of people in the province felt that way compared with 86 per cent across the country.

According to the report: 85 per cent of Albertans with a financial plan (same nationally) are confident that their plan will help them achieve their financial goals; 78 per cent of Albertans (compared with 82 per cent nationally) report that a financial plan is important for raising children and saving for their education; and 96 per cent of Albertans (compared with 92 per cent nationally) believe a financial plan plays a critical role in helping them realize their ideal retirement lifestyle.

The report also showed: 47 per cent of Albertans with a plan (compared with 44 per cent nationally) review it a few times a year, while 26 per cent of Albertans (compared with 28 per cent nationally) go over it monthly; and 22 per cent of Albertans (compared with 19 per cent nationally) conduct an annual review.

Canadian personal debt levels balloon to highest levels ever

Alberta leads North America in economic freedom

The average Canadian consumer’s debt, excluding mortgage, has increased at its greatest rate in nearly two years, according to TransUnion’s quarterly analysis of national credit trends.

Alberta has the highest level of economic freedom among all Canadian provinces and U.S. states, according to a new report released by the Fraser Institute.

The report indicated debt levels jumped to 4.6 per cent in the third quarter of this year to $26, 768. The nation experienced both its largest quarterly (2.1 per cent) and annual (4.6 per cent) growth since the fourth quarter of 2010.

The Economic Freedom of North America 2012 report ranks Saskatchewan second among the provinces and third overall. Canadian provinces make up four of the top 10 jurisdictions, with Newfoundland and Labrador and British Columbia coming in ninth and 10th among all provinces and U.S. states.

According to the report, in the last five years between the third quarter of 2007 and the third quarter of 2012, inflation as measured by the Consumer Price Index has risen nine per cent, yet total consumer debt (excluding mortgage) had jumped more than 37 per cent.

The North America 2012 report examines key indicators of economic freedom in the Canadian provinces and U.S. states based on size of government, taxation, rule of law and property rights, and regulation using data from 2010.

In Alberta, the average consumer debt of $33, 688 was second only to British Columbia’s $38,837 in the third quarter of this year. Average consumer debt in Alberta rose by 0.4 per cent on a quarterly basis and by 1.5 per cent year-over-year.

The study measures economic freedom at two levels: The subnational and the all-government.

Alberta’s personal debt load comes as people in the province enjoy the highest income levels in the country.

Oil Sands will be Canada’s economic engine for next 25 to 30 years: Deloitte According to a recent study by Deloitte, Canada’s oil sands are key to the country’s prosperity, and for it to grow, the industry needs more pipelines, more collaboration, and dialogue that does not fuel ‘a climate of antagonism.’

Citing resources from the Energy Resources Conservation Board, the report estimates that, by 2021, the oil sands will have ramped up production from 1.7 million barrels per day to 3.7 million. However, new oil may have nowhere to go: The industry will hit pipeline capacity by about 2017 if developing projects are not completed, the report indicated.

Alberta’s crude oil is already sold at a discount to the U.S. because of our limited pipeline capacity; at a discounted average of $19 per barrel, the industry loses about $27 million a day. This loss would be lessened with the development of the Keystone XL pipeline which proposes to transport Alberta oil sands crude to Gulf Coast refineries, according to the report.

The report, entitled Gaining Ground in the Sands 2013, detailed 10 trends and obstacles facing the industry; discussion points included a call for increased productivity and a national energy strategy.

Ontario is the fifth highest-ranked province at 21st overall, followed

by Manitoba (32nd), New Brunswick (45th), Quebec (50th), and Nova Scotia (56th). Prince Edward Island ranks last overall at 60th.

Reinforcing the connection between economic freedom and prosperity, the report shows that Canadian provinces with the most economic freedom (Alberta, Saskatchewan, Newfoundland and Labrador) had an average per-capita GDP of $60, 163 in 2010, compared to the three provinces with the least economic freedom (Quebec, Nova Scotia, Prince Edward Island) at $45,872.

Province

canadian n. american ranking ranking

Alberta 1 1 Saskatchewan 2 3 Newfoundland 3 9

most economic freedom average GDP $60,163

British Columbia 4 10 Ontario 5 21 Manitoba 6 32 New Brunswick 7 45 Quebec 8 50 Nova Scotia 9 56 P.E.I. 10 60

least economic freedom average GDP $45,872

WINTER 2012

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Where do I find private clients?

Jared Morrison, Alta West Capital

In an earlier article, I covered how and why private lenders see a mortgage deal differently than ‘A (Alternative)’ lenders. I also talked about the benefits for the client, not to mention the opportunity private lending offers you, the mortgage professional.

I received great feedback from the article, but there was one question consistently asked by associates. It went something like this: “I understand why I should be brokering private deals, it can be good for the client, good for my business, and frankly the money is good, but where do I find private clients?”

To find private clients, first start with yourself. No, I am not suggesting you should be a private client. What I am suggesting is that with knowledge comes opportunity. Get to know a private lender or two, and get to know what they do and how they do it. You will be surprised once you understand the opportunities available with private lending, and you’ll be able to identify the opportunities better. It’s just like buying a car. Once you own a certain model, you start noticing them everywhere.

Secondly, using your new-found knowledge, look at your existing book of business. How many of your existing clients would fit into one or more of these categories? Bear in mind, they may not have fit these criteria when you first dealt with them.

Client Categories: Self Employed – Small business owners – Not reporting enough income or non-traditional

income sources/highly commission based

– Owe back taxes

Bruised Credit – High balances on credit card or unsecured debt – Require debt consolidation

– Have writs or judgments on title

– Bankrupt, either current or recently discharged

Property Related – Builder/developer/renovator/rental property owner Life Event – Recently divorced/widowed/sick/injured/job loss/ maternity leave/recent immigrant

Mortgage Related – Interim financing/non renewal/orphaned mortgage – Require more money than traditional lenders

can offer

28 WINTER 2012

Generally, any situation that falls outside of what traditional lenders can offer is suitable for consideration by private lenders.

Once you have been through your book of business and identified existing clients that fall into one or more of these categories and looked to see what options you may be able to offer them, now it’s time to look for external referral sources that can send you similar business. Sources that come to mind include: Accountants/bookkeepers Business network groups/professional associations/ small business support groups Debt counselors/bankruptcy trustees Divorce specialists Lawyers – family, employment, personal injury, immigration, estate, real estate, commercial Tax advisers/retirement planners/financial planners Where do you find private deals? Everywhere you find ‘A’ deals, but you have to know what you are looking for. Start by educating yourself on the possibilities, look at your existing book of business, and then educate your referral sources with the possibilities. Private lending is really not that different from your ‘A’ business and should be an important segment of your business plan.

Social Centre:

You have a Facebook page, now what?

Even though Mark Zuckerberg didn’t invent the concept of social media, his creation – Facebook – is, without a doubt, the standard to which all other social media sites are held. With more than 800 million active users, Facebook is a great place to make connections and promote your brand.

You probably think you need a Facebook page, but you may not be totally sure of the most effective way to use it. Luckily, the platform comes with some excellent built-in applications to help you and your fans engage in a meaningful online experience.

Timeline

Polls

You may have heard a lot of grumbling in the past few months about Facebook’s latest redesign, but the new timeline design actually has a lot of great elements that make it easy to share your story. Take a few minutes to mark the significant milestones of your company on your profile, tell people when you were founded, when you moved offices, changed your logo or hired a new president. When you can, use photos to add visual interest. Marking the milestones of your business will help potential fans and customers understand your history and, more importantly, your track record of success.

Photos Facebook recently enhanced their photo galleries, making it far less cumbersome for users to scroll through albums and individual photographs. You don’t have to hire Annie Leibovitz to shoot your staff Christmas party, the camera on your smart phone or point-and-shoot will do just fine. Try to capture both your business accomplishments and the social side of your company.

After all, when you tag your employees in photos at the annual golf tournament, you not only engage them, you engage all of their Facebook friends as well.

Your Timeline cover image can also be used to draw attention to promotions or initiatives that your business is involved in. Try and switch your cover photos up to generate interest and reflect what is happening at your office.

Just remember to keep your photos tasteful and ask permission to post someone’s picture. Untagging is a hassle and the Internet never forgets.

Your Facebook page comes with a built-in polls application that gives you direct feedback from your fans. You can ask them what kind of stories they’d like to see more of, which issues they wish they had a better grasp of or even what their holiday plans are. This kind of crowd sourcing will help you better understand your audience and guide future posts.

Try to limit your polls to one a week; more than that and users can become disengaged. Post a poll on Monday and remind people about it over the course of a week or two in order to get the most comprehensive results.

Highlighting Do you have a post that you want to draw special attention to? You are in luck; when you post to your timeline, you now have the option of highlighting your update (look for the little star on the right had side of your status). Highlighting changes the shape of your post so that it spans both columns of your profile, making it stand out amongst your other posts. Additionally, when scrolling back through your timeline, Facebook will make your highlighted posts visible for review.

Highlighted posts tend to garner more likes and comments than regular posts, but be careful to use this feature sparingly. If used too often, your audience will become blind to it. Make sure you only highlight updates that will make a large impact on your audience.

Always remember, when it comes to social media, content is king. If you post photos and stories that you are genuinely interested in, your fans and followers will pick up on your enthusiasm and carry that message forward to their online circles. Those ‘Likes’ are hard-won, but if you are dedicated to keeping your Facebook page vital and interesting it can become a great resource for your business.

Facebook Insights is an additional feature available to administrators of Fan Pages, helping them to see the traffic to their page and which posts are garnering the most attention. Here are a few tips and tricks for navigating the numbers: Get away from your Overview Pane The ‘Likes’ panel will give you great information on the demographics you are reaching, including their age, gender and what city they are viewing your post from. Use the information to tailor your messaging to the appropriate audience

Don’t get bogged down with unique page views Pay attention to unique users by frequency; there you’ll find out how often your fans saw your message.

Remember, just like more traditional forms of marketing, people need to see a message a number of times before they actually take action, so promote or highlight your posts to keep your audience engaged.

Pay attention to how people are talking You’ll know your social media strategy is successful when your fans and followers start creating their own stories and content based on what you are posting. Pay attention to which stories are garnering likes or shares and create more content along those same lines.

WINTER 2012

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AMBA BRIEFS Time to Renew Your Membership

Experience our President’s Pub

It’s that time of year again, go online to amba.ca and log in.

Click the ‘Renew My Membership’ button in the ‘Members Zone.’

This year’s fees are: Brokerage and Corporate $360 Individual Active and Corporate Active $115

President Ron McClenaghan has hosted several pubs across Calgary and Edmonton this past fall. The pubs are planned for every third week of each month at various locations. The pubs are a great networking opportunity and a chance for you to share your industry thoughts with AMBA.

next President's Pubs

2013 Online Media Kit

January 17, 2013 at Lounge Burger

Access our advertising and sponsorship opportunities in a click of a button. Go to amba.ca and click the media kit. Explore our 2013 advertising and sponsorship package opportunities.

Don’t Miss AMBA at the Home + Garden Shows In 2013, we will host booths at the Calgary Home + Garden Show (Feb. 28 – Mar. 3) and Edmonton Home + Garden Show (Mar. 21 – Mar. 24).

Members will have the opportunity to purchase a time slot to co-host with us and gain access to 65,000+ consumers attending the show.

Watch the eNewsletter for registration to open.

(14 Ave Macleod Trail SE Calgary)

3 p.m. - 6 p.m.

Meeting Space Available in the AMBA Office If you’re tight on space, we’ve got the solution. We have one large board room with room for 30 people and a meeting room for 15 -18 people. We’ll offer you a rate that can’t be beat!

If you’re interested, call Samantha Gill at 403.685.9652 ext. 112.

THE ALTERNATIVE LENDER You NEED To kNow Fisgard is one of the largest private alternative lenders in Western Canada and is dedicated to supporting mortgage brokers and their clients. We provide competitive products, flexible lending guidelines and dedicated customer service.

Having a good relationship with you, our broker clients, is critical to the success of our business. Fisgard’s creative, knowledgeable and experienced underwriting team wants to see all of your deals that don’t fit the typical “bank box”. Chances are that Fisgard can fund these deals, and fund them quickly. We are here for you and we’re here for your clients.

Call your underwriter today.

Call 866.382.9255 or visit www.fisgardmortgage.com

Fisgard Capital Corporation 1 30Fisgard_AMBA_half.indd WINTER 2012

|

3378 Douglas Street, Victoria BC V8Z 3L3

|

www.fisgardmortgage.com 2/17/2012 2:37:04 PM

AMBA Member briefs To our valued brokers, As I suspect you are aware, OSFI - the regulator of all Canadian Financial Institutions, has imposed underwriting guidelines for Residential Mortgages on all regulated lenders and CMHC. These underwriting guidelines are known as B20 and have been created at the insistence of the Financial Stability Board, the financial oversight organization of all G20 nations. The creation of these guidelines is a direct result of the financial crisis caused by poor American mortgage lending practices.

My purpose in writing this is to give you, our valued brokers, an overview of the components of B20 in general terms. I will explain to you what it means to your lender partners - at least to Optimum Mortgage and secondly, what it means to you.

Components of B20 The Guideline sets out what OSFI considers to be prudent residential mortgage underwriting standards. A residential mortgage is considered to be a loan or any other product, like a HELOC, that is secured by a residential property - up to a four-unit dwelling.

Guideline sets 5 principles for sound residential mortgage underwriting: 1. All lenders must have a policy outlining risk appetite, governance and oversight mechanisms to ensure lenders follow their own policies; 2. Lenders must confirm the borrower’s identity, background and demonstrated willingness to service debt obligations on a timely basis; 3. Lenders must assess the borrower’s capacity to service their debt obligations on a timely basis; 4. Lenders must be satisfied that the value of the property being financed has been confirmed by an independent third party; and, 5. Lenders must stress test their book of business with unlikely, but plausible scenarios to determine the impact to their business.

Lenders are expected to impose a higher level of due-diligence on higher risk deals, conduct ongoing risk-assessments on the insurers they use and generally pay close attention to the risk attached to their residential mortgage portfolio.

Lastly, while not one of the principles, on a quarterly basis lenders must now publicly disclose their book of business by insured vs. uninsured loans, amortization buckets, average LTV at origination and provide commentary on the impact on residential mortgage loans and HELOCs in the event of an economic downturn.

What Does This Mean to Optimum?

Our current underwriting policy is generally compliant with B20 regulations. As you are aware, we are primarily an Alternative lender – that is we are a Business-for-Self (BFS) and ‘bruised credit’ mortgage lender. However, we do offer ‘A’ residential mortgages and have a very competitive HELOC product called Homeworks™.

of years, we have requested bank statements as a means of doing so that will not change. If a BFS client states he/she has income of $75,000 per annum, we would expect to see business bank statements that would suggest the business can afford to pay the borrower $75,000 annually. We may also need to see personal bank statements, demonstrating personal income at this level. This all assumes no traditional income documents (such as tax returns) are available.

We suggest you continue to ask your client – “is this mortgage payment affordable?” Our expectation is that you are satisfied that your client can afford to repay this debt and we can see in their bank statements that the debt is affordable.

The Guideline does state that if a lender advances a non-conforming mortgage, the LTV is limited to 65%.

At Optimum Mortgage, a non-conforming mortgage is one where a borrower has either (or both) a lower than average beacon score and/or the borrower’s ability to service the proposed debt is in excess of our guidelines.

Defining a non-conforming mortgage beyond the above is difficult at this time. We suggest you work with your Business Development Manager and your Underwriter on a case-by-case basis and clarification will become evident.

What Does this Mean to You? In terms of your ‘A’ business -not a lot has changed. As I suspect you do now, you must know your client, know their financial circumstances and be satisfied that they have the ability to repay.

For your HELOC ‘A’ clients, LTV on the HELOC portion of the advance has been limited to 65%. Through our Homeworks™ product, you can still provide your clients with an 80% LTV option by combining the HELOC portion with a fixed or variable portion.

For your Alternative (‘B’, NIQ and Stated-Income) clients, you will probably have to provide a little more information. The biggest challenge will be for your BFS clients. However, the policy we have followed to determine affordability for the last two years will not change. Send us bank statements and make sure you’re satisfied the borrower can make the payments.

Summary • Bad underwriting practices in the USA on Residential Mortgages created a financial crisis throughout the world that has yet to be solved.

• These guidelines ensure lenders do not fall into the trap of doing business without appropriate consideration to risk assessment.

• Lenders have to ensure that you, our referring broker, conduct due diligence to satisfy yourself that you know who your client is and they have the capacity and the willingness to repay.

• Is this bad? No, not at all.

• Will this make business more difficult to conduct? Initially, but on balance you should not see much difference.

• What can you do? Work closely with your Underwriter and your BDM. Remember, we all want to get the deal done, so let’s all work through these changes together.

Prior to B20, we did not have stated TDS and GDS ratios for our Alternative Lending Program. Consequently, our underwriting policy will now include TDS and GDS ratio limits for our Alternative Lending products. These limits will be significantly higher than "A" lending requirements as our main focus will continue to be on ensuring affordability for the borrower.

Yours truly,

The challenge will be to confirm income levels for our BFS clients that do not have traditional income confirmation documents. For the last couple

Vice President, Optimum Mortgage

Lester Shore

WINTER 2012

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Consumers Unsure of Mortgage Brokerage Industry: Report The time is right for brokers to increase the consumer base in Alberta, according to AMBA’s recently released consumer study entitled, AMBA 2012 Mortgage Consumer Study. Conducted in June 2012, the study surveyed hundreds of current and future property owners in order to give AMBA and its members more insight into the perceptions of our industry amongst consumers.

Because Alberta consistently bucks national housing market trends, maintaining a robust market while other provinces struggle, there are ample opportunities for brokers to make a big splash with consumers.

The study found that younger urban families dominate the current market in Alberta. These families, primarily living in Calgary or Edmonton, looking for their first mortgage or seeking to renew, show the greatest potential for new business.

However, the study also outlined several roadblocks to brokers gaining a great market share.

To access the report and gain more information about the key findings of the Mortgage Consumer Study, log into the ‘Member Zone’ at amba.ca and click the ‘Other Resources’ button.

AMBA 2012 Mortgage Consumer Study The Findings: Potential mortgage consumers make up 60 per cent of the adult population in Alberta Consumers are more likely to trust banks over brokers – 70 per cent of current mortgages are held with one of the big banks Only 20 per cent of renewal mortgages are negotiated through a broker 50 per cent of surveyed consumers believe that mortgage brokers charge their clients a fee for their services Many believe that mortgage specialists are the same as mortgage brokers 45 per cent believe that mortgage specialists employed by banks must be licensed Consumers are more likely to trust brokers who belong to professional organizations like AMBA The No. 1 consumer concern is rates Mortgage brokers are primarily viewed as ‘rate seekers’ by the public 39 per cent (700,000 Albertans) are ‘fence-sitters’ needing some convincing to use a mortgage broker

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RMG mortgages Shawn Thompson

Northern Alberta, Saskatchewan & Manitoba

780.446.4440 shawn.thompson@RMGmortgages.ca

Ann-Marie Cunningham

South Alberta

403.880.3447 ann-marie.cunningham@RMGmortgages.ca

Corbett Connors

South Alberta February 2012 RMG Mortgages is a division of MCAP Financial Corporation Ontario Mortgage Broker licence no 10600 & 10515 / Ontario Mortgage Administrator licence no 11692 & 11790

32 WINTER 2012

403.650.7965 corbett.connors@RMGmortgages.ca

Getting Ahead of the Regulation Game Len Lane, AMBA Communications Director With the introduction of the Mortgage Brokers Regulators Council of Canada (MBRCC), I think we will be heading towards a national licence. As one of probably only a few mortgage brokers who actually has taken the time to become legal in five provinces, I have to applaud the efforts of Kirk Bacon at the Real Estate Council of Alberta (RECA) and this council as they attempt to find common ground on regulatory issues across the country. It has been confusing to say the least, dealing with the five provinces that we are licensed in – B.C., Alberta, Saskatchewan, Manitoba and Ontario, all have different guidelines for setting up your brokerage and different name designations in each province.

In B.C., under Ficom, I’m a broker and a sub-broker, and as I found out last month, they don’t renew on the same date. And there’s a hefty fine for missing the date, which they don’t notify you about. In Alberta, I’m a licensed brokerage and my broker licence is included in that fee. In Saskatchewan, I’m a broker and an associate, but they charge for the brokerage, the broker and the associate licence. In Manitoba, I’m a restricted brokerage, as I don’t lend my own funds and I’m licensed, as is anyone who works for me as a sales person. In Ontario, the brokerage is licensed and I’m licensed as a broker. You can have more than one broker in an office under the province’s rules. Are you confused yet? Can you imagine how the general public must feel as our governing bodies can’t agree on our designation?

Add on top of this that compliance documents vary in each province. Alberta

has the best setup at this point, with client agreement/consent first, and a compensation disclosure as to how you get paid. The province of Saskatchewan, took it a step further and you have to disclose who you might use as a lender, even before you get consent for credit. In Manitoba, you don’t have to have a signed consent unless you get an actual mortgage commitment. The provinces of B.C. and Ontario, require consent to pull credit, and of course, all the forms have different names across the country. Many brokers believe verbal and internet consents are good enough, but that is not the case – at least not according to RECA. Is a national licence coming? My guess is yes. But I’m sure it will take some time. The fees for all my licences are collectively about $7,500, including my Canadian Association of Accredited Mortgage Professionals (CAAMP) membership because it’s mandatory to be a CAAMP member across the rest of the country to deal in mortgages. I’m sure a national licence won’t be cheap, and it shouldn’t be.

So why go through all this hassle? Now that everyone has a licensing system, you are now in violation of the security commissions in each of these provinces if you solicit, advertise or engage in mortgage activity in that jurisdiction without a licence. This includes advertising on the Internet. In the future, lenders may be required to verify you are licensed in a jurisdiction before you can submit a deal. So, by becoming licensed in several provinces, I’m just ahead of the changes that are about to happen.

Being asked to work magic?

Seeing more customers with challenging income and credit situations?

Having difficulty with “out-of-the-box” applications? n Frustrated with restrictive lending criteria? n Ready to expand your client base beyond the traditional borrower? n n

We are the home of Sensible Lending® and have mortgage options suitable for most borrowers. (CWB:TSX)

Serving brokers in Alberta, British Columbia, Saskatchewan, Manitoba, and Ontario.

866.441.3775 www.OptimumMortgage.ca

Questions? Comments? Deals?

Contact your regional business development manager or our underwriting centre at 866.441.3775

WINTER 2012

33

Industry talk with

Douglas Whelpton Meet Douglas Whelpton of Worry Free Mortgage.

Tell us a bit about yourself …

I grew up on a farm in Saskatchewan and farmed for a number of years. I am married to Hayley Whelpton (she is also my broker) and we have four adult children that are in various stages of education and travelling. My eldest daughter and her husband will be making us grandparents next spring … so that will be interesting.

As well as farming, I have been a pastor in a church for a number of years and involved with summer camp ministry as well.

Where are you from?

I grew up just outside of Moosomin, Sask.

What are a few of your hobbies?

I enjoy spending time with my kids, camping and farming. We have a place in the country where we have a couple of horses and this lets me get out and do ‘farm’ things.

"When I first joined the business, it was important to me to make sure that I gave back to the industry that we were a part of. One of the natural ways to get involved was with AMBA."

Anything else you would like to share?

I love working together with Hayley. She is my friend, my partner, my wife, my soul mate, and she is just an amazing person to spend the last 25 years with and the rest of my life with going forward.

How did you get started in the business?

Hayley started the business back in 2002 and was mentored by Sheldon Deering. Sheldon is still a good friend and mentor for us.

After my time as a pastor came to a close, I decided to join Hayley in the business and help her out. As things progressed, I became more involved very quickly and became a licensed associate.

Please tell us a little bit about your company.

Worry Free Mortgage is in the business of helping people. We use mortgages as a tool to help them. We believe very strongly in relationships with our customers, our associates and our partners in the industry. We have identified the Christian market as our niche market and have enjoyed working with this market for the last 10 years.

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Winter 2012 member profile

How long have you been working in the business?

What advice would you give people trying to enter the mortgage business?

I have been in the business for just over six years.

If you are entering the business as a new associate, in my opinion, it is important to put the needs of your customers first. As you do business in a way that you are helping people and giving them value added services, then you will build a strong and loyal following. In today’s markets, which are hyper competitive, it is important to have qualities that set you apart from you, competition and make sure that people remember you. Building a business this way might be slower but will be much more stable in the years to come. The other piece of advice that we received in the early days of our business is to identify your niche market and do not stray away from the market. Be consistent in your message to that market.

What is your experience with AMBA? When I first joined the business, it was important to me to make sure that I gave back to the industry that we were a part of. One of the natural ways to get involved was with AMBA. I have enjoyed working with the people at AMBA, including the staff, board, committees, volunteers and members. I have volunteered on the conference committee as well as the curling committee and the awards committee.

The other thing that I would say is that you need to take and give.

What I mean by that is you need to make sure that you have strong CONTINUED NEXT PAGE ...

Powerful earning potential? Undeniably.

The power to earn is what drives business. And unlike the big banks, we drive business by serving brokers. In fact, our Power Compensation Program™ gives member brokers powerful opportunities to increase their earnings. To us, compensation is more than just a commission. It’s about empowering our brokers with the tools to succeed.

1-888-837-2326 • bwballstarportal.ca

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winter 2012 member profile and wise mentors in your business that you can learn from and that can give you wise counsel. Take everything you can from these mentors. But as you take from them, make sure that you are willing to give and invest into others.

What is your vision for the mortgage industry?

My vision is that this will be an industry that helps. I know that there are some bad apples in every industry that make things more difficult for everyone. But if we can have open dialogue with our lending partners to make sure that we have solutions that fit our customers and can build trust, our whole industry will be healthier. I would love to see our industry be more interested in helping the customer than getting the absolute lowest rate.

Helping our customers means saving them money but that is only part of the equation.

What aspects of the mortgage industry do you find most challenging?

Work-life balance, competition in the industry and the state of constant change.

Equity Lending!

Over 600 Million lent Since 1997 BR I T I SH COLUMBI A • ALBERTA • ONTA R IO • ATLANTIC PROVINCES

UP TO

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Member CAAMP, AMBA, MBABC, BBB, Offices in Vancouver, Calgary, Edmonton & Toronto.

George Lay

Paula Hutton

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Business Development Manager British Columbia

Business Development Manager Alberta South

Business Development Manager Alberta North

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Phone: 604 | 329.6067 Fax: 604 | 430.3287 Toll Free: 800 | 625.7747 glay@capitaldirect.ca

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Phone: 905 | 299.6951 Fax: 905 | 824.7095 Toll Free: 80 0 | 814.2578 hdoggett@capitaldirect.ca

Phone: 902 | 894.7700 Fax: 902 | 894.7736 Toll Free: 866 | 830.7734 tbowie@capitaldirect.ca

582904_Capital.indd 36 WINTER 20121

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or

estimate. Unfortunately, it also leaves home owners open for plenty of surprises – especially if construction management costs change during the project. “If it seems too good to be true, it probably is,” said McCoy. The alternative, all-in pricing, is when contractors detail all the work and materials upfront and you work off a fixed-price contract. This type of project is typically the more expensive option, but it offers peace of mind for customers who don’t absorb any of the risk.

It’s a good idea to have your contractor meet with you at your home to decide if the project makes sense, and determine the real cost of doing what it is you want done.

“In four out of five cases, the customer’s estimation of the budget isn’t realistic at all,” noted McCoy.

a $10,000 Kitchen reno can add up to $30,000 to the value of a home What’s Worth Renoing?

Home owners can go wrong when they dedicate time and9:45:37 money VWR half-pg-magazinead-CMYK-march2011.pdf 1 09/03/2011 AM to the wrong kind of renovation. How you renovate either attracts or limits

potential buyers when it comes time to sell.

If you know you want to sell, renovations come into play in a more minor way. Turning a three bedroom house into two bedrooms, just because you want a hot tub, is a nice touch (for you), but it likely won’t help you with a quick resale. If you know you’ll be putting your house on the market in the near future, cosmetic fixes like a fresh coat of paint and upgrading appliances are often all that’s needed. “The only time you throw money into a house prior to sale is to clean it up or update the style,” said McDowell.

Be sure to weigh the cost of home improvement against any increase in market value. Typically kitchens and bathrooms garner the most return on investment, but you’ll still need to be cautious. On a square foot basis, bathrooms can be the most expensive reno project out there.

Kitchens on the other hand, are fairly safe. “A $10,000 kitchen upgrade can add up to $30,000 to the value of the home. An outdated kitchen can kill a sale,” said Vroon.

As for basements, most experts agree it’s best to leave it unfurnished for the future buyer to develop to their tastes. “Basements usually do not solve the problem. People just don’t use them as much as they think they will,” said Vroon.

If you’re still unsure if you should sell or renovate, walk through a couple of show homes or spend an afternoon with a realtor. “Both are free, fun and let you see quickly if your current home and neighbourhood are still right for you. If nothing else, you’ll get great design tips for your current home,” said Vroon.

C

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CM

•

rates and nominal lender fees

MY

CY

CMY

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olution” RICHARD EARLES

richard@vwrcapital.com

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amba calendar march 2013

april 2013

Curling Bonspiel March 1st, 2013 The Calgary Curling Club Calgary, AB

Alt-'A' symposium Dates & Location TBA

FIND AMBA ON Facebook, LinkedIn, and Twitter!

Follow us @AMBA1975 We fund a broad spectrum of property types and loan situations.

Purchases, refinances, residential & commercial    

24 hour response time Competitive rates and fees Expert advice, consistent reliable Service Lending area, BC, Alberta, Saskatchewan

Caplink now offering FIRST mortgages up to 85% in major urban centres.

Contact us for more information.

Submit your applications through Filogix, fax 1-888-226-8834 or by email documents@caplink.ca Or give us a call to discuss your deal 1-888-429-0114 Residential Helen Neufeld ext. 215 Helen@caplink.ca Commercial Gay Andrews ext 236 gay@caplink.ca

Meet AMBA’s Newest Team Member While our trusted Communications Specialist Amanda Roy enjoys some well-earned bonding time with her new daughter, Stephanie Weidmann will be stepping into her shoes.

With a strong background in advertising and communications, Stephanie has worked as a consultant to many of Calgary’s largest builders and community developers. Prior to her foray into advertising, she worked at and volunteered with several prominent non-profit organizations throughout the city.

When she’s not crafting communications strategies you can find her playing French horn in the Band of Outriders of the Calgary Stampede, or hosting her nationally syndicated radio show, Writers Block, on CJSW 90.9 fm.

Caplink Financial Corporation | Suite 2200, 10104 103 Avenue, Edmonton, AB T5J 0H8 |

38 WINTER 2012

www.caplink.ca

For AMBA marketing and communication enquiries contact Stephanie via email at sweidmann@amba.ca.

Please Recycle This Magazine

to you and your family from all of us at AMBA Mortgages at the speed of life With First National you can rely on the strength and innovation of our technology and the flexibility of our mortgage solutions – introducing Option 60, our newest solution designed to keep you responsive to the always changing needs of clients.

Mortgage solutions are our business – making clients’ home ownership dreams come true is yours. Let’s make this happen together, call your Account Manager today.

800.567.8711 | FirstNational.ca

Delivering Ser vice. Creating Solutions. Building Success. *2010 Broker on Lenders study, conducted by CMP Magazine and published September 2010.

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Structuring deals that work for your clients.

We appreciate your time,value your partnership and would like to create The Broker Experience™ that builds on our top notch service model that guarantees a: • customized solution, • consistent and clear pricing and, • satisfaction of closing a deal.

Contact your RBM for more information.

Tim Wachter Manager Business Development (Western Canada) T 403.470.4434 E twachter@equitabletrust.com Ed Arnone (Alberta South & Saskatchewan) T 403.389.1357 E earnone@equitabletrust.com Erica Fikkert (Alberta South) T 403.606.9460 E efikkert@equitabletrust.com www.equitabletrust.com