AMBA Matters Winter 2015/16

Matters Mortgage s n o i t p e c n Misco Have Your Clients Fallen Prey?

ALSO INSIDE

SAGE ADVICE: AN APPRECIATION OF VALUE HIGHLIGHTS FROM THE 2015 AGM & HOLIDAY PARTY

Winter 2015/16

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Matters

Winter 2015/16 A SPECIAL THANKS TO OUR ADVERTISERS...

Rompsen ����������������������������� 2 First National ��������������������� 4 Capital Direct �������������������� 4 V.W.R. Capital Corp. ��������� 6 Premiere Mortgage ��������� 8 LMS PROLINK ��������������������11 D+H ��������������������������������������13 Axiom Mortgage �������������16 Calvert ��������������������������������22 Alta West Capital �����������24 Armada Mortgage ��������� 27 Hendrix Law ���������������������28 SidePix Ltd. ����������������������29 Equitable Bank ����������������32 Cedar Peaks ���������������������32 Home Trust ����������������������34 Caplink �������������������������������38 RMG ������������������������������������39 Street Capital ����������������� 40

6 9 10 12 13 14 15 18 20 23 25 26 30 31 33 35 36

AMBA 2016

BE HEARD, RENEW YOUR MEMBERSHIP TODAY

UPDATE FROM THE REAL ESTATE COUNCIL OF ALBERTA

WHAT IF ... ?

A LOOK BACK — AMBA'S PAST PRESIDENTS

THE LINK: EDUCATION, WAGES AND PROSPERITY

ALOHA FROM OUR HAWAII TRIP WINNER

TO INCORPORATE OR NOT TO INCORPORATE?

HIGHLIGHTS FROM THE

2015 AGM & HOLIDAY PARTY MORTGAGE MISCONCEPTIONS: HAVE YOUR CLIENTS FALLEN PREY

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 150, 1209 59 Ave SE Calgary, AB T2H 2P6

HOW TO REAP THE BENEFITS OF YOUR MEMBERSHIP SAGE ADVICE: AN APPRECIATION OF VALUE

PRIVATE MORTGAGE LENDERS FORUM UPDATE AMBA FAMILY FROZEN FESTIVAL HIGHLIGHTS SMARTPHONE APPS TO HELP YOUR BUSINESS

Past President Adil Mawji Invis

Vice President Ron McClenaghan Invis

Treasurer Katie McDowell Mortgages Are Marvellous

Education Ryan Spence D+H

Events Erica Fikkert Equitable Bank

Consumer Relations Jan Gosse Jencor Mortgage Corp.

Consumer Relations Pam Pikkert Dominion Lending Centres Regional Mortgage

Government Relations Kevin Weeks Weeks Law

Communications Stephanie Blake DLC 1st Financial Link

Membership (South) Tracey Robinson Mortgage Protection Plan

Membership (North) Shawn Jewers First National Financial

Director-at-Large Michael Cameron Axiom Mortgage Solutions Magazine Publisher: Amanda Roy-Macfarlane Magazine Editor: Holly Mazur

President Dave Trithart DLC 1st Financial Link

WHAT IS HOLDING YOU BACK?

BOOST YOUR FACEBOOK POSTS WITHOUT PAYING

Matters

BOARD OF DIRECTORS

MEMBER PROFILE: DAVID WILD

OTHER FEATURES...

Past President's Report 5 Manager's Report 7 Industry News 28 2016 AMBA Calendar of Events 38

Return undeliverable Canadian addresses to: Alberta Mortgage Brokers Association Suite 150, 1209 59 Ave SE Calgary, AB T2H 2P6 Art & Design: Erin Lehtisaari Some photos within this issue ©shutterstock.com.

Winter 2015/16

3

Partnerships between people At First National, our business is about people – the brokers that we partner with and their clients that trust us with their real estate dreams.

That’s why, for us, partnership is paramount.

Working together as a team. Delivering on expectations. Taking ownership. Being accountable. Celebrating mutual success. Focusing on mutual growth.

Every team member, in every branch office, commits to those values.

When you work with First National, it’s people working with people.

It’s partners contributing to each other’s success.

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Past President’s Report

Winter 2015/16 Adil Mawji

AMBA Past President

As the 2015 president, I am proud to have represented AMBA and our membership at various events and partnering association dealings. In 2015, AMBA accomplished many great things, including: Launching a new website and our Verified Information Program (VIP), hosting our largest conference in recent history, and building stronger working relationships with our government regulator and partnering associations, just to name a few.

I am proud to announce a Memorandum of Understanding (MOU) drafted between AMBA and the recently rebranded Mortgage Professionals Canada, formerly known as the Canadian Association of Accredited Mortgage Professionals (CAAMP). This is a significant milestone for us in Alberta, as there has never been a formal relationship with our national association.

The MOU will allow AMBA and Mortgage Professionals Canada to have board reciprocity, which will promote efficiencies between both associations. An amendment to AMBA’s bylaws was passed unanimously at our Annual General Meeting on Dec. 3, 2015, to approve a 13th director to our board. I am excited to announce that Michael Cameron has filled this position on our 2016 board of directors, and I have become the AMBA representative on Mortgage Professionals Canada’s board.

The MOU will also help AMBA and Mortgage Professionals Canada work together to eliminate duplicity in our province with respect to events and sponsorship recruitment. We have done this by having Mortgage Professionals Canada join us in hosting our annual conference in Jasper June 5, 6, and 7, 2016 In closing, I would like to thank the membership, sponsors, board and staff for making 2015 a memorable and successful year. I look forward to what 2016 will bring, and wish you all the best in your 2016 business ventures.

Until next time,

Adil Mawji, AMBA Past President

Remembering Edward James Dooley July 6, 1930 – November 24, 2015

A leader in the community, Ed Dooley’s kind and friendly personality captured the hearts of all he met. Born and raised in Hamilton, Ontario, Dooley earned his high school letter in rowing, played semi-pro football and enjoyed a good game of golf.

Always serving his community, Dooley served as a Calgary Alderman, brought the Christopher Leadership program to Calgary and was president of the Optimist Club. He also was an active member of St. Mark's Parish and ran his own successful mortgage brokerage, Lance Mortgage.

One of the founding members of the Alberta Mortgage Brokers Association (AMBA), Dooley was president in 1979, and in 2009 was the recipient of AMBA’s Lifetime Achievement Award. Dooley was a remarkable influence on the establishment and growth of a reputable mortgage industry in Alberta.

He made the world a better place, and will be missed.

Winter 2015/16

5

Be Heard, Renew Your Membership Today!

RENEWING MEANS:

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Being a part of a powerful industry voice; Professional education and support for career advancement;

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Winter 2015/16

General Manager’s Report

Winter 2015/16 There are four members of our team at the Alberta Mortgage Brokers Association (AMBA), and we work so closely to accomplish a great deal for such a small team that I call us the AMBA family. Dedicated to each other and the work we do for our members and the industry, each family member plays an integral role in AMBA’s successes.

Amanda Roy AMBA General Manager

I’ve had the privilege of getting to know so many of our members over the past five years and I would like to start 2016 with a more personal look at the rest of the AMBA family, so you can get to know them a bit better. They may not be front-and-centre at every event throughout the year, but you can be sure they are doing their part to ensure perfection, whether they are in plain view or behind the scenes.

Samantha Gill: Membership and Education Manager Sam is rarely seen without a smile. She has been working for AMBA since 2009 (minus a couple of maternity leaves so far).

Over the past six years, she has steadily taken on more and more responsibility. AMBA wouldn’t function as smoothly without her coordinating all the course components and dealing with any questions or issues you, the members, may have on a daily basis.

Yuming Li: AMBA Accountant Yuming rejoined AMBA a little more than a year ago and is the numbers wizard who has kept everything balanced and ensures your investment is put to good use. He’s also more than willing to pitch in and do some heavy lifting at our many events. Keep your eyes peeled for the quiet guy hauling things around with a smile on his face.

He and his wife Chunchun welcomed a baby girl, Emma, to their lives in December 2013 and the little one has

Holly Mazur: Communications Assistant Holly is the newest and youngest member of the family, joining us last December after graduating from Mount Royal University. She’s learning more and more about the complex mortgage brokerage industry every day and has been the driving force behind AMBA Matters, our monthly e-newsletter and our social media presence for the past year.

A nasty ankle injury knocked her out of the sporting world in 2015 but she’s looking forward to getting back into soccer this season both as a player and a coach to

She is also a terrific mother of two — to daughter Maya (4) and son Jovan (2) — and a wife to husband Gurjit, who is a huge Calgary Flames fan. Jovan starts preschool this year and Sam is looking forward to another transition for the family.

They are building a new home in Chestermere, but Samantha is originally from the salmon capital of the world, Campbell River, B.C.

already attended a few of the fun industry events herself, including the 2016 Frozen Family Festival.

Yuming plans to take them all on a trip south of the border this year. He’ll need the rest because not only is he busy with the day-to-day AMBA business, but he’s just a few Charted Public Accountant courses away from his CPA designation.

A little known fact about our Yuming — he has a law degree in his homeland of China.

a great group of minor soccer players.

It’s no wonder her favourite AMBA event is the AMBA Winter Games. She loves the competitiveness and also the teamwork involved.

She is engaged to a super guy, David, and they plan to be married in September this year.

Just don’t ask her to look after your furry friends when you’re away. She has never owned a dog, cat or anything with hair.

Winter 2015/16

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President

Update From The Real Estate Council Of Alberta The Real Estate Council of Alberta (RECA) makes a number of commitments to its stakeholders — but chief among them is the commitment to transparent engagement. As part of that commitment, RECA’s Council approved a formal Stakeholder Engagement Policy at its October 2015 meeting. This policy formally sets the parameters around Council stakeholder engagement activities, including with whom and how.

RECA has a vast stakeholder group, with diverging interests, backgrounds and objectives. It doesn’t take a one-size fits all approach for engagement, but rather demonstrates its willingness to do so with stakeholders in a variety of ways on matters that affect the regulation of Alberta’s industry professionals.

In the two months since Council approved the policy, RECA has further enhanced its commitment to transparent engagement by publishing a complete list of its stakeholder engagement activities since Oct. 1, 2014. This list includes activities undertaken by senior RECA staff. We’ll update this list on a weekly basis and encourage you to view the groups we engage and the ways we engage. AMBA and its members are important stakeholders and we take these relationships seriously.

In late February, Council will meet to review the results of its strategic planning research, which includes formal requests for feedback to each of the organizations named in Council’s Stakeholder Engagement Policy, consumer focus groups and a comprehensive online survey with industry professionals carried out by an independent marketing research company.

While Council has the responsibility for developing its strategic plan, RECA staff lead the operational implementation, and we cannot overstate the importance of the feedback, involvement of and support from industry professionals.

RECA is actually in the midst of one of its most significant engagement activities and that is its preparation for the next round of strategic planning. RECA began the fifth and final year of its current strategic plan on Oct. 1, 2015.

Throughout the fall, RECA travelled around Alberta and hosted town hall sessions in nine locations to meet face to face with industry professionals and discuss the issues, challenges, trends and opportunities facing the industry. The final question RECA asked at these sessions and something it continues to think about is, what is the one regulatory issue on which it should focus for the next three to five years?

A number of Alberta mortgage brokerage professionals joined us at these sessions and provided extremely valuable input, but if you didn’t get a chance to attend one of these town hall sessions, and still want to provide input, please take a few minutes and complete an online survey, which can be found at: https://www.surveymonkey.com/r/RECA_strat

Article Links Stakeholder Engagement Policy https://www.reca.ca/industry/about/PDF/stakeholderengagement-policy.pdf List of Stakeholder Engagement Activities https://www.reca.ca/industry/about/stakeholder-engagementactivities.html

Winter 2015/16

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What If ‌?

Derrick Leue, President, LMS PROLINK Insurance Group Inc.

Insurance is a boring topic that people don’t really want to think about. That is, until something goes wrong. Mortgage brokers and the general public typically buy on price, then hope they never have to call upon their insurance to respond to a claim. True insurance professionals love receiving what if questions from their clients because they can engage in scenario discussions, and how the coverage will respond to protect you.

WHAT IF I HAVE AN E&O CLAIM? The most popular what if question we receive from AMBA members is: What happens if I have an E&O claim brought against me? Our response depends upon whether or not you are a brokerage principal or an associate.

IMPACT OF CLAIMS ON BROKERAGE PRINCIPALS The brokerage owner will inevitably be involved in defending a lawsuit alleging professional negligence, regardless of whether or not the statement of claim specifically names the brokerage as a defendant. The most difficult claim situations are when the associate named in the lawsuit or responsible for arranging the mortgage is no longer licensed under the brokerage. The brokerage principal will often become the primary contact for the defence lawyers, if the associate is not cooperative or actively involved in the mortgage business any longer.

The Real Estate Council of Alberta (RECA) requires that E&O liability insurance is purchased and maintained by the brokerage.

All associates licensed under the brokerage are supposed to be covered by the E&O policy. Unfortunately a claim against a negligent associate, is also a claim on the claims record for the brokerage. When applying for E&O insurance, the insurers will request details on all claims brought against the brokerage for the past five years. The claims history for a brokerage can create challenges when renewing or seeking a new insurer for E&O insurance.

HIGHER E&O COSTS When brokerage owners ask: What happens if I have an E&O claim brought against me? They are really asking, what happens to my future premiums. Unfortunately the answer is, it depends.

However, there are four E&O claim factors that can cause E&O premiums to increase by more than 20 per cent to 25 per cent.

Did your insurer pay damages exceeding $100,000 on your behalf, because your brokerage or the associate was either found negligent, or the likelihood of being found negligent was high?

The plaintiff was an individual private lender who sued a brokerage or associate for recommending a mortgage investment that was not suitable for their risk profile, or financial position.

The associate was clearly negligent with minimal managerial oversight provided by the brokerage.

The brokerage reported two or more separate claims in one policy term.

Any combination of the above four factors can result in significant increases in your next E&O premium. Many brokerages attempt to spread the E&O premiums evenly across their associates.

This becomes more difficult when associates discover that their E&O premiums are increasing due to the claims reported by their colleagues at the brokerage.

10 Winter 2015/16

IMPACT OF CLAIMS ON ASSOCIATES Aside from stress, and the time required to defend a claim, associates often do not experience the same repercussions as the brokerage principals. This is because the associate does not retain an E&O claims history. The mortgage brokerage the associate was licensed under when they provided their professional services (i.e., arranged the mortgage), gets stuck with the claims record. The impact of E&O claims on the associates would be different if the associates were responsible for maintaining their own individual E&O coverage.

We are witnessing more brokerages requiring their associates to reimburse the brokerage for any deductible that the brokerage incurs, as a result of the defence of an E&O claim. This could have a bigger financial impact on associates in the future, as the deductibles applied by E&O insurers are starting to rise.

When E&O insurance became compulsory for practicing in2011, in Alberta, the majority of E&O policies had deductibles of only $1,000. Now the majority of policies have a $2,500 deductible, and it is not uncommon to see $5,000 deductibles on policies where the brokerage is arranging a significant number of mortgages with private lenders.

LEARN MORE ABOUT THE AMBA E&O PLUS+ PROGRAM The PROLINK Insurance Group Inc. is the proud manager of the AMBA E&O Liability insurance program. We welcome the opportunity to help you understand how to reduce your exposure to E&O claims. It is important that you select an E&O insurer has a long-term view on protecting your brokerage instead of an insurer who provides a low introductory price only to apply large increases after a claim.

Please contact a representative from the PROLINK Insurance Group’s AMBA Service Team in order to learn more about how E&O PLUS+ protects brokerages and associates.

Peter McCabe: AMBA Program Business Development Manager; PETERM@LMS.CA Phone: 800.663.6828 Website: www.LMS.ca/AMBA

Private Lender Proteccon:

Winter 2015/16

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A Look Back

AMBA's Past Presidents

Serving as president is no small task. As the representative of the association, its members, and the industry in Alberta, AMBA’s past presidents and the boards under them for the past 40 years have made major educational, regulatory, technological, and business management changes that have developed the mortgage professionals that exist in our province today.

Without the dedication of these individuals, AMBA would not be where it is today.

President Facts

Glen Gregory

1975 – 1976

Eric Stewart

1995 – 1996

Glen Gregory

1976 – 1977

Carol William

1996 – 1997

Harry Hodgson

1977 – 1978

Dan Cameron

1997 – 1998

Harry Hodgson

1978 – 1979

Brian Menges

1998 – 1999

• Glen Gregory

Ed Dooley

1979 – 1980

Dave Mercer

1999 – 2000

• Harry Hodgson 1977 – 1979

Barry Slipp

1980 – 1981

Eric Stewart

2000 – 2001

John Fraser

1981 – 1982

Dave McNabb

2001 – 2002

• John Fraser

John Fraser

1982 – 1983

Cal Morstad

2002 – 2003

Dave Carlson

1983 – 1984

Clarence Lee

2003 – 2004

Alan Rolfe

1984 – 1985

Pat Kelly

2004 – 2005

Paul Robins

1985 – 1986

Gary Siegle

2005 – 2006

John Fournet

1986 – 1987

Pat Kelly

2006 – 2007

Hal Reynolds

1987 – 1988

Phil McDowell

2007 – 2008

Ross Brown

1988 – 1989

Frank Hickey

2008 – 2009

Carol Williams was AMBA’s first female

Fred Cone

1989 – 1990

Todd Fralic

2009 – 2010

president.

Lorne Keethaas

1990 – 1991

Dean Koeller

2010 – 2011

Glen Gregory was AMBA’s first

Marcel Notschaele 1991 – 1992

Paul Bojakli

2011 – 2012

president.

Frank Hickey

1992 – 1993

Ron McClenaghan 2012 – 2013

Bob Cameron

1993 – 1994

Gord Appel

2013 – 2014

Cameron Quilliam 1994 – 1995

Adil Mawji

2014 – 2015

Bylaw Quick Facts

The president of the association shall be a licensed member in good standing and who has served at least one year on the board of directors and at the time of their nomination must be a sitting member of the board of directors.

It is the duty of the president to preside at all meetings of the association, to take care of the general interests of the association and to ensure that the several provisions of the bylaws are enforced.

The president shall have the power to appoint the chairperson of all committees and to declare and fill vacancies of any committee chairpersons for any reason.

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Winter 2015/16

Only six members have completed two terms in office as president.

1975 – 1977

1981 – 1983

• Frank Hicky

1992 – 1993 2008 – 2009

• Eric Stewart

1995 – 1996 2000 – 2001

• Pat Kelly

2004 – 2005 2006 – 2007

An AMBA president must be a licensed mortgage broker.

The Link — Education, Wages And Prosperity Ryan Spence, AMBA Education Director

I recently read an article about the link between education and long-term prosperity (link below), written in the United States a couple of years ago. The researchers analyze what makes a state and its residents realize long-term economic prosperity. Using this research, I would like to align the three levels of: Nation, state and individual, to the mortgage industry, brokerages and the individual mortgage associate, to illustrate why brokerages should ensure they are involved in the education of their associates. there are no directly comparable statistics currently available in the brokerage industry I believe it is fair to say median wages increase with better education.

NATION — THE INDUSTRY

At the highest level the study determined, “The majority of students graduating from state schools will remain in the state over their working lives, and as a result of being better trained, will have better jobs” (page 10). Adjust the language and the statement becomes: The majority of associates nurtured within brokerages will remain in the brokerage over their working lives, and as a result of being better trained, will have better jobs.

The goal of both the individual and brokerage is to increase longterm economic gain. Brokerages that do more to promote the education of their associates will see increased economic gain. It is then the responsibility of brokerages to encourage and promote continuous educational development, through online channels, internal brokerage resources or being an active participant in AMBA offerings. Foster the desire for and demonstrate you can lead your brokerage to success through education.

At the top level, the industry provides the framework. The Alberta Mortgage Brokers Associations (AMBA) partners with the Real Estate Council of Alberta (RECA) in the Mortgage Associate Program (MAP), to ensure a sophisticated education to those entering the industry in Alberta. Concurrently, AMBA provides opportunities for education through the annual conference and multiple one day symposiums.

I would encourage each broker to ask themselves the following question: Am I upholding my responsibility to ensure brokerage economic growth that benefits all associates? If you find yourself struggling with an answer, it may help to have some quantitative answers. Firstly ask, how many years has my brokerage been in business? Secondly ask, what is the average number of employment years of my associates? If there is a big gap, ask yourself: Am I setting the stage for my associates to increase their knowledge and skill set, thus being better trained and AMBA Ad March realizing economic gain?2015_Final.pdf 1 01/04/2015 10:53:40 AM

STATE — MORTGAGE BROKERAGE

The study found, “Many states have been retreating from their responsibility to ensure state economic growth that benefits all residents in favor of a short-sighted approach to economic development. In these states, the focus is on luring employers from other states with strategies that do not lead to rising incomes because they do not make the workforce more productive” (page 1).

At the middle level brokerages try to increase their economic performance. They may do this along several paths including organic growth – each person does more; or growing by acquisition – bring in new people with an existing book. Productivity doesn’t increase just because someone immigrates to a new brokerage.

Put another way, an individual isn’t better just because they have a new colour on their business card. Given the individual seeks to make economic gain, a brokerage that attracts an associate, but does nothing to help that associate make that economic gain, will likely see the associate move on within a short time frame.

A brokerage that attracts an associate and helps the associate realize an economic gain through proper education, mentorship and resources will retain that associate.

INDIVIDUAL — MORTGAGE ASSOCIATES

C

M

Y

CM

MY

CY

At the ground level, individual associates seek a better economic CMY environment, and will try to do so with the least amount of effort K to achieve this goal.

The research found that, “Median wages are substantially higher in states with better-educated workers” (page 7). Change this language slightly to: The median wages are substantially higher in brokerages with better-educated associates. While Berger, N. & Fisher, P. (2013, August 22). A well-educated workforce is key to state prosperity. Economic Policy Institute.

Retrieved from http://www.epi.org/publication/stateseducation-productivity-growth-foundations

Winter 2015/16

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PRESENTED BY

u f r om o

r

Tammy Anderson from TMG The Mortgage Group Alberta, was the winner of our conference trade show all-expenses paid vacation to Honolulu, Hawaii, in June. Tammy and her family enjoyed seven nights at the Hilton Hawaiian Village® Waikiki Beach Resort, a Waikiki Starlight Luau, a Kualoa Experience Package (Jurassic Excursion) and much more.

Trip r e n n i W derson n A y m m Ta

On the secret island beach excursion, we enjoyed kayaking, canoeing, paddle boarding and playing beach volleyball.

We also saw a turtle on the beach sunning himself.

Both of these excursions were worth every minute, and created some of the best memories from our trip.

WHAT WERE YOUR TOP THREE MEMORIES OF THE VACATION?

1. Spending time with my family and seeing them happy, smiling and enjoying themselves in the water.

2. Sitting on the lanai, drinking coffee while watching the ocean.

TELL ME ABOUT YOUR EXPERIENCE IN HAWAII.

Hawaii was awesome! The resort, scenery, food, great weather and smells did not disappoint. Not only did I get to share this experience with my husband, but with my children as well, which made it all the more special.

WHAT WAS YOUR FAVOURITE ADVENTURE YOU AND YOUR FAMILY WENT ON?

We rented a car to go to the North Shore, a more laid back and quiet part of the island. Along our way, we stopped at Waimea Valley.

Since our kids are daredevils, they wanted to get as close to the Waihi waterfall as possible, which resulted in us swimming at the base of this 45-foot tall waterfall. It was well worth the hour drive.

TELL ME ABOUT THE KUALOA EXPERIENCE PACKAGE.

I cannot say enough about the Kualoa experience package. We went on two excursions, the jungle expedition tour and the secret island beach. On the jungle expedition tour, we drove through rugged Hawaiian rainforest and hiked to the top of a mountain that overlooked Oahu’s eastern coastline. My kids loved every minute of it, as it’s where the Jurassic World movie was filmed. They got to see the cage where a ‘real’ dinosaur was kept.

14 Winter 2015/16

3. We decided to rent an economy model car to tour the island.

When my husband came barrelling around the corner of the resort, he was in a Chevrolet Convertible Camaro. My kids and I started laughing, as that’s not the Ford Focus we rented. I guess that was the only car they had available, so we lucked out and got to drive around the island in style.

WHAT WERE YOUR THREE FAVOURITE THINGS YOU DID ON YOUR VACATION? 1. Playing with my family in the pool and ocean.

2. The Kualoa experience package.

3. Hanging out on the North Shore and watching the sunset.

WHAT DID THIS TRIP MEAN TO YOUR FAMILY?

I feel fortunate to have won the Hawaii vacation. I want to thank AMBA and Equitable Bank for giving my family a wonderful vacation that allowed us to create memories that will last a lifetime. I cannot express how grateful we are, for giving us the family time we needed.

To Incorporate Or Not To Incorporate?

Teri Tetreault, Pi Business Solutions Ltd.

To incorporate or not to incorporate, that is the question.

The misconceptions and myths surrounding this question are manifold and varied. Today we will examine some of the facts and factors that need to be weighed when considering to incorporate your business — bearing in mind that the answer, as with almost all tax strategy questions, is that it depends.

One of the most commonly cited reasons to incorporate is as a means of transferring liability of debt and legal actions from the business owner personally to the corporation. Creditors, including the Canada Revenue Agency (CRA), almost always seek or enforce a personal guarantee from the directors of the corporation, and it is advised that appropriate insurance be in place to cover any surprise lawsuits. Still, in many industries, putting a corporation between yourself and your personal assets can have tremendous value.

What About Tax Savings?

In Alberta, small companies only pay 14 per cent income tax, but your personal tax rates are far higher, currently ranging from 25 to 39 per cent. This difference in tax rates suggests that we can save tax with a corporate structure. It’s true, but the most crucial thing you can know about saving tax with a corporation is that only the income left behind in the company after the taxpayer takes everything needed to pay all the personal bills allows the taxpayer to get the 14 per cent treatment. Everything

drawn from the company to personal coffers is taxed at personal rates, so you want to leave as much money as possible in the company. This accumulation of money should eventually fund your retirement.

One of the major drawbacks of being self-employed is that you’re not building up a pension through your employer.

Because the business owner’s personal cash requirements are so integral to the overall tax plan, it is important to fully assess the needs of the individuals involved and the future plans, and goals of the family and business, as well as the immediate costs and benefits. I often hear things like don’t incorporate until you have $70,000 in profits, or $100,000 in sales, or some other essentially random measurement. However, I’ve seen businesses where incorporation makes sense with revenues of only $20,000, and some who gross more than $250,000 and the company isn’t saving any tax at all because the owner takes all the money out.

The actual cost of incorporating will be an absolute minimum of $500. I suggest paying more to get a proper share structure and advice, as bank charges will be at least $12 per month and accounting and legal fees will be much higher since statutory requirements are stricter for corporations. These financial burdens need to be weighed against the potential tax savings to be derived from the new business structure.

Such tax savings can be profound with proper planning and execution. The most crucial advice I can offer is to speak to an experienced accountant as soon as possible to help you with your decision — preferably before you incorporate. A proper assessment of your situation goes far beyond the scope of an editorial. I often spend two hours with clients helping them work through the process, and if you’ve recently incorporated, it’s no less important to speak to an accountant as soon as possible, as just complying with CRA’s requirements can be an extremely expensive minefield to navigate. So the sooner you have the best plan in place for your specific needs, the better!

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AXIOM MORTGAGE SOLUTIONS ON ACHIEVING UPWARDS OF

1 BILLION

In mortgages funded for 2015!

We love what we do and it shows!

Thank you to all of our agents, lender and industry partners alike.

Your hard work, passion and dedication continues to make a difference in the lives of Canadian families every day!

Passion

Pride

Purpose

Axiom is looking for a few good men and women.

Have you been considering a change? Do you want to grow your business?

Call or e-mail us for more information. Explore all Axiom has to offer today!

Call 1-800-517-8670 or e-mail us at info@axiommortgage.ca for more info.

What makes Axiom different?

We work hard and play hard. We put people before profit. We believe in doing what is right for our clients and our community. We believe in technology. We know the right sales and marketing can make all the difference.

It’s about efficiency. It’s about lifestyle. It’s about the Axiom Advantage. It’s about time!

Along with the Realtor Community Foundation Axiom Cares helped raise over $350,000 in 2015 and helped 40+ grassroots charities!

Highlights Fr om The 2015 AGM & Holiday Party On Dec. 3, 2015, the Alberta Mortgage Brokers Association (AMBA) held its Annual General Meeting (AMG) and Holiday Party in Calgary. AMBA took this opportunity to gather members for some holiday cheer while reviewing the 2014 financials, introducing the 2016 Board of Directors and showcase our Shaw Media commercial.

2014 Financial Review

2016 Board of Directors President Dave Trithart – DLC 1st Financial Link Past President Adil Mawji – Invis Inc. Directors Ron McClenaghan – Invis Inc. Jan Gosse – Jencor Mortgage Corp.

Erica Fikkert – Equitable Bank Kevin Weeks – Weeks Law Tracey Robinson – Manulife MPP Ryan Spence – Davis + Henderson Katie McDowell – Mortgage Alliance, Mortgages are Marvellous Shawn Jewers – First National Financial LP Pam Pikkert – DLC Regional Mortgage Stephanie Blake – DLC 1st Financial Link Mike Cameron – Axiom Mortgage Solutions

The financial update was presented

by Treasurer Phil McDowell. McDowell announced that after having a deficit of over $400,000 in 2012 and a deficit of almost $150,000 in 2013, AMBA has a surplus over $90,000 for 2014. The note to the financials from the auditors that AMBA was not sustainable as a going concern has been lifted from this report.

McDowell went on to explain that AMBA’s net worth is in cash, increasing by almost $120,000 in 2014 to just over $525,000, compared to just over $405,000 in 2013.

This allows AMBA to continue to invest in member education.

Year-over-year revenues are up 33 per cent as a result of education and events. The revenue from memberships has not increased, and accounts for only 17 per cent of the Association income. AMBA spent $3.25 supporting mortgage brokers for every membership dollar received. Expenses were cut in 2014, to premises costs by $59,000 and to staffing costs were reduced by over $66,000.

Motions Motion one: To approve the 2014 Financial Report.

Motion two: To approve Myers Norris Penny (MNP) as the 2015 financial auditors.

Motion three: To approve the bylaw amendment to section 5.01 a) and e), in order to have the ability to appoint a thirteenth director — Director to be approved.

All three motions were passed unanimously.

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RECA Update Kirk Bacon giving a brief regulatory board update for the Real Estate Council of Alberta (RECA).

Outgoing President Speech Outgoing President Adil Mawji thanking the Association and discussing highlights from his term as President.

2016 President Address Mawji presented the traditional gavel to incoming President Dave Trithart.

Trithart thanked the members and outlined his commitment to the Association, the industry and his focus of growing AMBA’s membership. He thanked Adil and Gord for their guidance and hard work, and emphasized how the new strategic plan will center on creating value for our members. Trithart also highlighted the upcoming 2016 events and the partnerships AMBA will have with Mortgage Professionals Canada (previously CAAMP) and Mortgage Loan Association of Alberta (MLAA).

Charity Presentation We raised $3,000 in support of Inn From The Cold at our charity event this year. This non-profit charity offers shelter and sanctuary to homeless children and their families. Thank you to everyone for helping us raise money for this great cause.

Mixing and Mingling

Director’s Oath The new Board of Directors being sworn in and congratulated.

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Mortgage s n o i t p e c n o c Mis Have Your Clients Fallen Prey?

Dean Koeller, Calvert Home Mortgage Investment Corporation

It can be challenging to overcome the many misunderstood mortgage beliefs clients have. Yet, when you consider the average person purchases a home every five to seven years, it’s understandable how these misconceptions are formed. Costing your clients in the long-run, re-education of the mortgage basics might be needed. Ensure you’re familiar with the common mortgage myths, so you know how to educate and set realistic expectations for your clients.

The Lowest Interest Rate Is The Best Option When Heather Matthews of Edmonton discovered she was having twins, she knew they’d instantly outgrow their rental.

Matthews and her partner took their time looking at more than 50 homes to find the right one to meet their needs for the next five to ten years. Becoming a first-time homeowner was a daunting prospect, and Matthews was keen to get the lowest rate possible.

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Yet, interest rates are not the only factor when it comes to mortgaging a home.

While the majority of prospective buyers would say getting the lowest rate is their top priority, it’s not what they’re coming to you for in the end, explains Shannon Byrt, an Olds based mortgage broker with TMG The Mortgage Group Alberta.

“If I myself sold based on that, I’d be doing a disservice to my clients. Everybody has that to offer. There’s so much to a mortgage, and rate is not what they’re shopping for. It’s up to us to probe and find out what is,” says Byrt.

In a world where people talk about the weather and the latest interest rate, but not about their car loan or how much they owe on their line of credit, it’s understandable why clients are fixated on this one number. Many clients are unsure what to ask, but if mortgage brokers can make the transaction personal to their client, that’s when the client truly understands what they need.

To get to that point of understanding, talk to clients about where they see themselves in five to ten years. The goal is to develop the correct mortgage strategy for the type of product they’re trying to buy – be it a first home, rental or recreation property.

For some, having prepayment ability is paramount, for others interest only payments are more palatable during an uncertain job market. After examining a client’s goals and needs, you can narrow it down to a lender that fits the goals, and then start talking about interest rates.

“Certainly the best rate can save clients some money, but it’s not always the best value, especially if there’s risk, they’ll get a penalty in the event of job loss, divorce or a sudden move.

Circumstances can change and clients may not have options to move, if focused solely on securing the best interest rate.” says Michael Toporowsky, a Spruce Grove mortgage broker with Real Mortgage Solutions.

Lock It Down At A Fixed Rate There’s a premium paid for security, and that price can be pretty high in certain market conditions. Still, the majority of people want to lock down their interest rate, because that’s what they know.

“When I explain the differences, advantages and disadvantages between rates, it’s usually never been explained to my clients before,” says Byrt.

Begin by gauging your client’s tolerance level to risk. If they’re adverse to exposure in their investment portfolio, they may not be willing to take similar risks with their real estate investment.

While financial gurus like Alan Greenspan have urged homeowners to tolerate more risk – that can be a daunting prospect for first time homeowners like Matthews.

“We knew we wanted to keep our monthly payments within a certain range, but we had no preconceived ideas on fixed versus variable rates. Our mortgage broker walked us through the differences, and we made a decision that fixed was best for our circumstances,” said Matthews.

If clients can afford to tolerate risk, than a variable rate is the way to go. Those with a solid income who can easily afford their mortgage, and live within means, have the wherewithal to allow for it, explains Toporowsky.

My Bank Will Give Me A Better Rate Some shoppers think they’ll receive the best rate at the bank that they have the majority of their accounts with. They mistakenly believe because they’re loyal to a particular bank that commitment will result in favourable treatment. Reality is, interest rates are based on the credit scores of borrowers and current market conditions, not how many accounts you have open.

Yet, compared to mainline banking, mortgage brokers are still relatively new. It’s human nature to be cautious and sometimes fearful of what you don’t know or understand. Many individuals think they have to pay a mortgage broker out of their pocket.

Originally known as lenders of last resort, mortgage brokers were known for closing deals banks couldn’t. Mortgage brokers still can, but that’s not what the majority of this industry focuses on nowadays.

While there are some who do charge fees (typically when dealing with more challenging clients sporting less than desirable credit), most often this is not the case. Realize the job of a mortgage broker is to educate clients about your role, including how you get paid. Ask potential clients if they’ve ever dealt with a mortgage broker before, and if not, explain your role.

“I answer questions openly and honestly. And say to clients, I don’t know how I’m going to be paid until I take your application.

I give examples of some of the different ways I typically get paid, and let them know they won’t pay any fee until they’ve agreed to it and it’s been disclosed to them,” says Byrt.

It's Better To Own Than Rent Many people still hold onto the notion they’ve got to get into the market as soon as possible. While it may seem counterintuitive to guide a potential client away from a purchase, this could turn out better for all parties in the long-run. Sometimes a one year rental is a much better decision for certain clients.

“People should be buying because it’s the right time for them, not because a rate dropped or they just moved to a new city.

You have to buy for your own circumstances,” says Toporowsky.

Even if interest rates are lowered, it doesn’t mean it makes sense for everyone to enter the housing market. For some, waiting until they finish school, improve their credit history, or have an extra six months in a new job ultimately pays out. By waiting until the timing is right, they’ll likely go into the purchase with more money down and could receive more favourable conditions from the lender. It could also mean they’re able to afford a more expensive house purchase.

“If the rates fluctuate, they won’t lose sleep over it,” says Toporowsky.

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My Credit Is Too Low While it’s true the lower the credit score the more difficult it’ll be to get financing, that doesn’t mean it’s impossible. Worse than having low credit, is having none to speak of. Begin by having your client find out their credit score by contacting TransUnion Canada (transunion.ca) and Equifax (equifax.ca), the two major credit reporting agencies in Canada. After they’ve received their free credit report, you can advise them how to improve their credit rating. Closing down any unnecessary credit accounts and getting into a regular habit of paying their bills are quick fixes.

Encourage them to settle any accounts in dispute, and not to max out the credit lines they’ve kept (using less than 30 per cent of their limit is what they should be shooting for).

Anyone who lends money wants to know the borrower’s capacity for paying it back in a timely manner. Mortgage brokers are in an advantageous position to search out non-traditional lending sources that might be willing to take on clients the banks won’t, or who have solutions better suited to your needs than the bank can offer.

The House Will Pay For My Retirement While this attitude isn’t as common, it still exists, especially when pricy recreation properties look like an alluring investment.

While we saw many such dreams crushed during the flood of 2013, it’s not uncommon for Albertans to throw extra cash into

Alberta’s Private Mortgage Lender

the property game with the assumption the value will only increase. Historically that’s true, but it doesn’t mean it’ll work for you when you’re ready or need to cash out. Nothing in real estate is guaranteed.

Buying as much house as you can afford with the plan of downsizing when the kids fly the coop never quite works out that way. For starters, those who really love their home or their neighbourhood have a hard time giving it up after being committed for so long. Saving money by moving into a condo isn’t the deal it was decades ago. Special assessments and rising condo fees are something owners have no control over (unless they’re an influential condo board member). Yes, a home is part of one’s net worth, but rationalizing not putting money aside for retirement because you’re investing in your home, is a risky move.

There’s a lot more to mortgages than people realize.

“Every deal is individual. Prospective homeowners have to look at their own circumstances to understand what they’ll need down the road, and develop a strategy that follows that plan,” says Toporowsky.

This is where mortgage brokers have their work cut out for them. Those who deal with a knowledgeable professional can ensure they’re being kept up-to-date with the latest industry changes, and are getting the right package tailored exclusively for their needs.

WE PROVIDE NICHE LENDING FOR: » FLIPS/REHABS » 2ND MORTGAGES » QUICK CLOSINGS

» CONSTRUCTION » SHORT TERM NEEDS » DEBT CONSOLIDATION

Call us today for more infomation

888.752.4642

Dale Koeller, Sherwin Dziwenka & Dean Koeller

info@chmic.ca

22 Winter 2015/16

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www.chmic.ca

What Is Holding You Back?

Tim Hurlbut, Alta West Capital

The reality is often far from the perception.

Equity lending is a bit different from covenant lending. Typically, the five C’s of lending (character, collateral, capacity, capital and credit) are shortened. Though there are times when all five are important, generally speaking, with equity or private lending, the most important of the five C’s are:

Collateral

What type of property is it? Where is it located? How much is it worth?

Capital How much money is the client requesting — to what LTV?

Capacity How much can the client afford for a monthly payment?

I'm sure you've seen this meme on the internet. The perception is the horse isn't intelligent enough to simply walk away with the chair in tow. The reality, a well-trained horse only needs to feel resistance on the rope to know it's supposed to stay put.

The size of the hitching post is irrelevant — the intent is what’s keeping the horse in one place.

Do you want to be untied and released from the chair?

In the world of mortgage professionals, the ability to do as we were trained can be both a blessing and a curse. There are times when we need to follow the established rules. Regulators, employers and our own morals often have us following long established rules, and usually that’s a good thing.

However, there are times when we find ourselves behaving like the well-trained horse, in the above example, doing what we should do, without questioning the what ifs? We move from deal to deal following the same well planned path, having our favourite referral sources, favourite lenders and even our favourite client types. Often becoming the well-trained horse, we stand beside the imaginary hitching post, saddled with our own pre-conceived notions.

For private lending, breaking tradition is often considered too expensive, too slow and too document heavy. We’re uncomfortable with the prospect of handling the unfamiliar.

With this in mind, let’s review these common assumptions about private lending.

You would be correct in your assumption that rates and fees are typically higher with private financing, compared to a typical bank rate or a monoline lender. It comes down to risk and reward. There are higher risks involved, when there is no insurer, and often clients are far from ideal. Perhaps credit is an issue or the ability to prove income. Sometimes it’s a combination of both, or it may simply be the structure of the loan or security offered. Bottom line, there are many reasons, but one thing all private deals have in common is if one or more of the C’s are outside normal limits, the client has a higher risk profile. If they didn’t have a higher risk profile, they wouldn’t require private financing.

Nevertheless, as important as rate is, it should be one of the last topics discussed. Remember, when engaged with a private client, you are providing a solution, not rate shopping.

The next two most often heard misconceptions are: Equity lending is cumbersome and bureaucratic. Most equity lenders can fund within 72 hours (or less) from receipt of application.

But being organized is the key. Be prepared and understand what the lender is likely to ask for and have the documentation available. Just because a lender is not concerned with elements of the five C’s, doesn’t mean they don’t want to verify. Having the documentation ready means it’s possible to provide very quick funding. Get to know your equity lender and learn their guidelines, like you learned those of the major lenders.

image source: thechive.com/2014/08/29/i-like-my-reality-with-a-healthy-dose-of-inspiration-24-photos/

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In a few short minutes, we’ve busted three simple misconceptions. That’s all the hitching post (plastic blue lawn chair) was: Perception.

You’re a good salesperson, you see the opportunity and you’ve clarified these misconceptions. You’re free to wander off in to the wide world of private lending, right? What could possibly hold you back?

In order to successfully wander away from this particular hitching post, you also need to get the client on board. Step one was to break your own misconceptions. Step two is to ensure you successfully transfer this knowledge to your client. Often clients are saddled with as many if not more hesitations and misconceptions about private lending. They too will require education before they are prepared to walk with you.

When dealing with a private client, the key to success is recognizing the situation. No longer is private lending the domain of the down and out client. Now the difference between that bank client and the private client is one piece of income verification.

Once you recognize the situation, you’ll need to educate your client as to why they don’t currently qualify for A lending.

Notice I said currently, as this is important. Educate them on the requirements of the various lending options, and help them understand where they fit and why. Explain the broad differences between A, B and private financing. This step will help you set realistic expectations regarding the type of mortgage product available for their current situation.

Now that they understand why they needed to go private and what that looks like, show them your proposed solution.

Remember you are here to solve a problem, not to rate shop.

Lastly, map out how they can move back to A financing. This may require two or more steps, but map it out. Remember private lending is rarely a long-term solution, it’s often step one of a multi-step solution.

If you are prepared to bust your own misconceptions, than spend the time to do the same for your client. You may just find that there is nothing tying you to the hitching post. You and your client will be free to wander in the direction that best suits you.

Drag that chair around, or better yet, unite yourself and discover private lending and what it can do for you and your clients.

WHY

WHY CHOOSE US?

www.awcapital.ca 1.888.554.9075

Top 5 reasons to work with Alta West Capital 1. Get your deal done.

We understand private lending and private clients.

2. There is no “box”.

We are flexible and able to structure the best deal.

3. Get paid sooner.

Decisions are made quickly and efficiently.

4. Deal Direct.

We are “the lender” giving us control and flexibility.

5. Proven and trusted. With decades of experience we have earned our stripes.

ALTA WEST MORTGAGE CAPITAL CORPORATION 600, 11012 MACLEOD TRAIL SE, CALGARY, AB T2J 6A5

AWC AMBA ad.indd 1

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2015-02-12 11:48 AM

How To Reap The Benefits Of Your Membership Tracey Robinson, AMBA Membership Director

Membersh ip

As one of your membership directors, I was given the opportunity to speak to the benefits of being a member of the Alberta Mortgage Brokers Association (AMBA). I thought about how many ways I have benefited from my membership, and how important it is to represent the members and industry by participating in educational events, on the board and on AMBA committees.

As an association, AMBA has forged its name in the mortgage industry and in our province for the past 40 years. While I have been a part of the association, I have watched it grow and change with the mortgage environment. Listening, responding, and formulating plans to ensure the success, growth and sustainability of Alberta mortgage professionals. AMBA has raised the bar on professionalism and expertise throughout the province, and continues to take our membership to the next level, by weathering storms and celebrating the successes.

WHAT AMBA DOES FOR YOU

Whether you realize it, AMBA is more than a social club. AMBA is responsible for delivering value and representation, and if you’re like me, you see every dollar you pay in membership fees as an investment in your future. AMBA invests in its members through:

Ongoing professional educational opportunities through events, webinars, a quarterly magazine and monthly newsletter; Building and maintaining alliances with federal and provincial government officials, and other associations; Delivering the latest industry updates; Ensuring best practice management through the AMBA Member Zone; and Giving consumers an outlet to reach you through AMBA’s Verified Information Program (VIP).

YOUR ROLE

I hear over and over, professionals say they are stuck in limbo, frustrated with ineffective or convoluted processes, or don’t know who to turn to for advice. However, the resources and opportunities are right in front of you. AMBA! AMBA provides the opportunity to interact with your association peers through various forms, and it doesn’t have to stop at AMBA events. Learning, personal growth and career progression can happen in any form, whether it’s social media, over coffee, at an AMBA educational event or over the phone. Use AMBA as a resource to connect with your peers, to find new solutions to current problems.

The expertise and leadership AMBA members possess is necessary for the continued growth of AMBA, our members and the mortgage brokerage industry. Continuing to be a member allows you to revisit your fit within the industry on a regular basis, helps you in assessing your industry knowledge, helps you seek mentorships and progresses your career.

I foresee a future of the best, brightest and most innovative mortgage professionals in the industry. And being a part of an association like AMBA proves you are dedicated to future of the industry.

Your membership is only as involved as you make it.

So I pose the question — should you continue to be a member of AMBA? If you want to get ahead in your career, the answer is yes!

AMBA’S 2016 CURLING FESTIVITIES February 4-5, 2016 Lead AMBA Sponsor:

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Winter 2015/16

Water

25

Sage Advice: An Appreciation Of Value Greg Macdonald, Canadian Revenue Agency (CRA), Sage Appraisals

Word of the Day: Bifurcate (bi·fur·cate) — to divide into two branches or parts.

Isn’t it cool when you pull a carrot out of the ground and find it has two intertwined roots? Not so cool is when economics fractures the real estate market into increasing, stable and declining segments. A splintered market not only increases uncertainty and risk, it can also lead to confusion and anxiety for all market participants, including homeowners, lenders, mortgage brokers and appraisers. There are, however many excellent sources of information related to key market ingredients such as, net migration and its drivers, interest rates, new construction trends, and average prices for homes and condos. These tend to be macro indicators, and relate to the broader market rather than a single property. Stated differently, average home prices are good to know, but could someone please show me an average house?

This article will drill down to explore some of the challenges and solutions to real estate valuation for individual properties.

APPRAISAL VS. ASSESSMENT One of the first places to turn for a clue to a property’s value is the latest property tax assessment notice. Brokers might want to manage borrower’s expectations when assessed values are quoted, especially for properties most affected by the market downturn. This is because the current tax assessment has an effective date of July 1, 2014, also known as the good old days, when oil was over $100 per barrel and the entire market was enjoying appreciation.

purchase is for a secondary property, perhaps a line of credit on the principal residence will mitigate a shortfall at closing, and the negative consequences that can result. Establishing the line of credit sooner rather than later could be wise.

THE USUAL SUSPECTS

WHOSE STANDARDS APPLY?

History is a good teacher. In 2008, the hardest hit market segments were newer high rise condos, acreages, semi-rural communities and multi-million dollar properties particularly in the new construction market and/or in the suburbs. Similar trends are developing. On a more positive note, the entry level market is robust.

In response to a number of issues including: The Office of the Superintendent of Financial Institutions (OSFI) B20 and B21 papers, a nationwide recession and concern over Alberta’s declining oil and gas prices. Lenders have increased their due diligence on mortgage applications, including the appraisal which places a market value estimate on the underlying collateral asset. Increased scrutiny is necessary and prudent in order to mitigate risk and maintain public confidence in the market. While appraisers roundly endorse increased due diligence, some challenges have emerged for the profession.

NEW CONSTRUCTION CHALLENGES For the custom-built home market, whereby a contract is entered into prior to construction; declining market values can generate a gap between yesterday’s cost and tomorrow’s value.

This is especially true for high rise condominiums where the time lag can exceed a year. Mortgage brokers might consider the prudence of obtaining an appraisal early in the process to lock-in the value estimate.

A draw mortgage when available may be a good option.

Subsequent progress inspections will advise the lender of the percentage complete. Be sure to check lender policies first. If the

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When searching the Multiple Listing Service (MLS) system for comparable sales, an appraiser can use lender requirements as search parameters. However, more and narrower lender requirements typically yield fewer MLS results. The challenge – just because a comparable sale fits the lender’s requirements, doesn’t necessarily make it the best comparable available.

Perhaps the house next door is identical, but was sold 91 days ago, in a stable market. This sale would be outside the lenders requirements, but otherwise would be a very good indicator of the market.

The Appraisal Institute of Canada (AIC) has a mandatory set of standards, one of which states: When a direct comparison approach is applicable, an appraiser must analyze such comparable data as are available to indicate a reasonable value conclusion.

six are given sole reliance in arriving at the final estimate of market value. Sometimes this means reports will take longer, and in some cases, require a fee increase. Professional appraisers understand the need to satisfy both the AIC and lender requirements, and will communicate with their broker clients.

Increased lender requirements are not always rational for appraisers, and they cannot put on blinders and ignore other good sales data. Instead it becomes necessary to satisfy both sets of criteria — the lenders requirements and the AIC`s standards. When this challenge arises, it is not uncommon for the appraiser to include up to six comparable sales.

WRAP UP

In the reports comment section, it will discuss the relative merits of the comparable sales which may include an explanation that comparable sales one through three were included to meet lender requirements. However, comparable sales four through

A splintered market not only increases uncertainty and risk, it can also lead to confusion and anxiety ...

Increased due diligence is an understandable and necessary response to a market with greater inherent risks. A professional real estate appraiser plays an important role in mitigating risk and providing insights into market conditions on the micro level. Greater attention to MLS statistics for the subject’s neighbourhood and its sub markets, will ensure accurate identification of the subject’s market trend, as well as support appropriate time adjustments.

Please remember appraisers do not make the market. If your client is not happy with the value conclusion, please don’t shoot the messenger. We would much rather be bulls in a bull market, and look forward to the day when that is once again the reality.

Explore some of the challenges and solutions to real estate valuation for individual properties.

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Industry News CMHC Securitization Program Changes The Canada Mortgage and Housing Corporation (CMHC) announced changes to the guarantee fees it charges issuers, as well as the annual limits for new guarantees for 2016 for both National Housing Act Mortgage-Backed Securities (NHA MBS) and Canada Mortgage Bonds (CMB).

Effective July 1, 2016, guarantee fees under the NHA MBS and CMB programs will be adjusted from current levels to the following:

• The

threshold for an issuer’s annual NHA MBS guarantees will increase from $6 billion to $7.5 billion;

• An increase will be issued to five-year NHA MBS

from 60 base point (bps) to 80 bps, for NHA MBS guarantees in excess of $7.5 billion;

• A decrease will be issued for five-year CMB from 40 bps to 30 bps; and

• All NHA MBS sold into CMB series issued after July 1, 2016, as original or reinvestment assets will be subject to NHA MBS guarantee fees.

Effective July 1, 2016, the guarantee fee for CMB will be restructured and will account for the fact that guaranteed NHA MBS will be sold into CMB. The following guarantee fees will apply:

UPFRONT GUARANTEE FEE Guarantee Fee

Prior to July 1, 2016

As of July 1, 2016

Five-year NHA MBS

30 bps (annual guarantees <= $6.0B)

30 bps (annual guarantees <= $7.5B)

Five-year NHA MBS

60 bps (annual guarantees > $6.0B)

80 bps (annual guarantees > $7.5B)

Five-year CMB

40 bps

30 bps + market NHA MBS fee

Effective February 15, 2016 Down Payment Requirements Changing In an effort to contain risk in the Canadian housing market, reduce taxpayer exposure and support longterm stability; Canadian Finance Minister Bill Morneau announced that effective Feb. 15, 2016, the minimum down payment for new insured mortgages will increase from five per cent to 10 per cent for the portion of the house price above $500,000. The five per cent minimum down payment for properties up to $500,000 remains unchanged.

The government continuously monitors the housing market and is committed to implementing policy measures that maintain a healthy, competitive and stable housing market. The change represents a graduated approach to increasing the down payment requirement proportional to the cost of a home, and how higher homeowner equity plays a key role in maintaining a stable and secure housing market.

Source: Department of Finance. (December, 2015). Government of Canada takes action to maintain a healthy, competitive and stable housing market. Retrieved from http://www.fin.gc.ca/n15/15-088-eng.asp

Hendrix Law WHEN NOTHING BUT THE BEST WILL DO!

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*bps = basis point; 1 bps = 0.01%

For 2016, the Minister of Finance has authorized CMHC to provide new guarantees of up to $105 billion for market NHA MBS, and up to $40 billion for CMB. The increase in the annual guarantee limit is to accommodate the use of guaranteed NHA MBS used for CMB starting July 1, 2016. This limit excludes NHA MBS issuance as original or reinvestment assets for CMB series issued on or before June 30, 2016.

Source: Canada Mortgage and Housing Corporation (December, 2015). CMHC announces changes to its securitization programs. Retrieved from http://www.cmhc.ca/en/corp/ nero/nere/2015/2015-12-11-0900.cfm

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AMBA VIP! Join your fellow members and take advantage of our Verified Information Program (VIP).

Benefits of being VIP: • A personalized online profile with direct links to your company website, Twitter, LinkedIn and Facebook pages; • Advertising throughout our website at no additional cost outside of your membership fee; • Ensures you have up-to-date and accurate information; • Provides search engine optimization when clients and mortgage professionals are searching for you; • Adds credibility to your partnership with AMBA and the industry; and • Association VIP status — VIP badge.

How to become VIP

(it only takes five minutes): 1. Log in to the AMBA member zone,

2. Go to your profile, 3. Verify your contact information, and 4. Upload a headshot, company logo and a short biography.

Join the elite group today!

Winter 2015/16

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Boost Your Facebook Posts Without Paying Daryl Maksymec, Creative/Technical Director, SidePix Ltd., and Gina Monaco, Manager of Communications, TMG The Mortgage Group

Facebook is a busy place, with more than 60-million active users, spending an average of 20 minutes a day uploading

photos, videos, memes, sending messages and having discussions. The highly sought-after demographic of ages 18 to 25, hold 52 per cent of Facebook’s user base, averaging 30 to 45 minutes each day on the social site. This means that businesses are seeing Facebook as the new frontier to target audiences.

Known for its ability to reach consumers, build brand awareness and brand loyalty, Facebook uses an algorithm to determine which posts appear in each user’s newsfeed. Corporations that sponsor posts try to tap into this, in hopes of reaching a percentage of their desired target audience.

So how do you leverage this popular social media site for your business needs?

your posts by likes, comments and shares. Look to see if there is a pattern? Once you have identified the type of content that engages your followers, start posting that type of content.

Additionally, you could also investigate what gets your followers talking, what’s trending and what you could share that’s unique to brand. You can also optimize who you want to target by selecting who can view the posts.

TIME OF DAY

FACEBOOK ADVERTISING When you run a Facebook ad, you choose the audience that should see it by location, age and interests. This makes your ads more relevant to the people viewing it, and can bring real results. This can be an effective way to advertise at the local level, without the huge financial investment a television or newspaper ad would cost.

When to post is important. Under Facebook Insights select posts and it will show you when your followers were online engaging with your content — making it easier for you to know when to post. Research has found that early morning and evening during the weekdays are the best times to post. However on weekend, most followers have free time and it is advised that you post on weekend lifestyle such as: Family, activities and entertainment.

Using your newly acquired Facebook marketing skills, you now have the tools to get the exposure you want to help create awareness about your business’s brand on Facebook.

BOOSTING A POST When you post something on Facebook, you have the option of boosting it. Similar to a Facebook advertisement, boosted posts are paid for and allow your posts to appear higher on a user’s newsfeed.

You can use the boost option on most posts, as long as they follow Facebook’s advertising guidelines. However, you can boost a post without paying.

Take the time to analyze your posts and see what’s popular with your followers. Look at your Facebook Insights — it ranks Photo Credits: Like Hand: OmniArt / Shutterstock.com; Facebook Shares: Hadrian / Shutterstock.com; Facebook Profile: nevodka / Shutterstock.com

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Private Mortgage Lenders Forum Update Dean Koeller, Chair of the Private Mortgage Lenders Forum

Facts on doing private mortgages: A great way to supplement your income; The bigger the problem, the bigger the business opportunity — clients who have been turned down by the bank, are looking for an alternative solution; Saves yourself time and sell the whole deal up front — if there is a challenge with a client, put it at the front of the file so the underwriter sees it right way (a fast no is way better than a slow no); Typically banks do not have access to private mortgage options; It does not require more work — once you understand the lending criteria for a handful of credible lenders, you can easily pick the right lender to save you time; and Be clear with your clients as to what they can expect in dealing with private mortgages (no one likes surprises).

Types of mortgages: Time sensitive transactions, Investment properties, Construction financing, Non-conforming property,

PMLF Agenda There are a total of 23 membered companies participating in the Private Mortgage Lenders Form (PMLF), and represent more than $1.6 Billion of mortgage financing. Here is a summary of some of the issues the PMLF is focused on:

1

Expected challenges for the coming months are:

• Deal attraction,

• Access to new capital,

• Mortgage arrears and foreclosure, and

• Compliance audits.

2

Developing a national voice — PMLF in Alberta continues to improve communication with private mortgage lenders across the country. Learning more about the challenges other lenders face, and will continue to build a national voice to strengthen the capacity of our industry.

Awareness — PMLF continues to identify methods of educating mortgage brokers on way to do more private mortgage lending business.

3

Debt consolidation, Foreclosure situations, Poor credit, Bridge financing, Variability of income, and Business for self.

How To Learn More?

Take the time to learn more about private mortgage lenders in your area, and understand how they can help you be more informed and offer more solutions to meet your client’s needs.

Dean Koeller, chair of the PMLF is available to answer questions by phone (403-278-0249) or email (dean@chmic.ca).

Winter 2015/16

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In celebration of AMBAâ&#x20AC;&#x2122;s 40 years of success, members and their families joined us on Dec. 6 2015, at our first AMBA Family Frozen Festival. Getting into the holiday spirit, members, spouses, nieces and nephews alike enjoyed an afternoon of ice skating, reindeer races, wagon rides, dancing, face painting, tasty food and a visit from Santa.

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Smartphone Apps To Help Your Business 3. Hootsuite

Remember when there were no smartphones, when desktops, newspapers, radios, books and televisions were used for information gathering?

With more people using mobile devices to search and shop online, traditional formats of information dispersion have changed. Today, more than 24 million Canadians have mobile devices, with 19 million users having smartphones.

Hootsuite allows you to manage, promote, and schedule your Facebook, Twitter, LinkedIn and other social media accounts all in one app.

4. Evernote

5. Caller Notes

But what makes a smartphone more invaluable then a mobile device? Apps!

Apps are simple, familiar and innate in the process of finding information 24 hours a day, seven days a week. With 88 per cent of smartphone users using apps and 89 per cent of homebuyers using mobile devices to aid in their home search, now is the perfect time to board the smartphone wave. Apps are the future of the mortgage brokerage industry.

Your new virtual assistant, Evernote allows you to easily gather lists, web articles, handwritten notes and physical documents, and communicate to help organize, update and track deals.

The perfect phone call assistant, Caller Notes can attach notes and schedule reminders to phone contacts, reminding you to follow-up with clients.

Power up your smartphones and download these five apps to help you and your business on-the-go.

1. Genius Scan

Genius Scan is an easy way for you to scan client files into your phone. Snap a picture of the document and Genius Scan will save it as a PDF, allowing you to organize and edit documents to best suit your needs.

2. DocuSign

DocuSign allows you, your clients and your associates to easily sign paperwork. Forget overnight couriers and faxing, this app allows you to collect legally binding signatures from several parties all at once.

Top Two Mortgage Apps For Consumers 1. The Canadian Mortgage App (CMA) Ranked number one in Canada, CMA saves consumers money and time by offering accurate and comprehensive information to help them estimate realistic monthly home ownership costs.

2. Zillow Mortgages Calculator & Home Loan Rates Zillow Mortgages assists consumers in gaining control of their finances, calculating what they can afford, and customizing rates from highly-rated lenders.

Article Links SMcLister, R. (May 2015). Mobile or bust.

CanadianMortgageTrends.com. Retrieved from http:// www.canadianmortgagetrends.com/canadian_mortgage_ trends/2015/05/mobile-or-bust.html MBN. (Jan 2015). 8 must-have apps for 2015.

Mortgagebrokernews.ca. Retrieved from http://www. mortgagebrokernews.ca/news/8-musthave-appsfor-2015-186835.aspx

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Member Profile

David Wild Spending many years in the finance business helping people with damaged credit get their credit rating re-established. David Wild began his career in mortgage brokerage industry in 2003, when he joined DLC Regional Mortgage Group. In 2007, David became partner and has worked hard to advocate for his clients and his community. Living in Red Deer, David lives with his wife of 41 years, Wendy, and has two children and three grandsons.

How did you get started in the business?

Over a number of years of listening to how good and how much fun the mortgage industry was, from my friend Dave McNabb influenced me to make the move and join him. I have never looked back.

What accomplishments has your company been recognized for?

We have been nominated for the Canadian Mortgage Professionals (CMP) brokerage of the year award for the past three years.

We have been nominated for CMP’s outstanding community service award for the last three years.

We have received the professional member of the year award from the Canadian Home Builders AssociationCentral Alberta (CHBA-CA) four times in the last 11 years.

We were also awarded best of Red Deer – mortgage broker in 2014.

In 2014, I also made CMP’s top 20 list for volume funded for small market across Canada.

Tell us about your company…

I am proud to be a part of DLC Regional Mortgage Group. The years of experience and how we work together makes it the best company in the industry. We also have a great owner group who works with us to be effective, this has allowed for us to grow into another franchise, DLC Westcor.

I am a big supporter of community charities and at DLC Regional Mortgage Group, we promote being involved and giving back to the community. We do this through our charity Build a Kid to Cure/Golf a Kid to Cure, which has raised approximately $1.7 million in funds for various children charities. We’re also involved in various service groups in Red Deer, Spruce Grove and Calgary, and recently became registered with Ronald McDonald House – Red Deer, where we cooked our first supper for the families staying at the house.

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What do you love about mortgages?

I really enjoy helping young couples realize the dream of owning their very first home. It is very satisfying to guide them through the process. I also like the fact no two files are exactly alike, keeping things interesting.

What is your vision for the mortgage industry?

I see the mortgage industry continuing to flourish with more mortgages being completed by our membership in Alberta and across Canada. Mortgage brokers can offer our clients so much more than any bank. We have the experience to source out the best mortgages, which is so important for our clients.

How do you stay ahead of your competitors and remain successful, in such a competitive market?

I believe that we do so many different things to keep front and center with our clients. As a company, we send out annual review letters on our client’s mortgages, and monthly newsletters. We hold client appreciation days at the movie theatre, pancake breakfast for our westerner days, and have booths at local home shows to interact with our clients.

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

Over the past couple of years, the biggest challenge has been trying to keep up with all the changes that have occurred with lenders and insurers. Also low oil prices will affect the housing market, but that opens the door for more re-financing.

What is your experience with AMBA? I have been an AMBA member since 2003, when I started in the industry. At that time, AMBA’s office was situated in our DLC office in Red Deer, and my daughter was the only AMBA employee.

What’s your favourite AMBA event?

The annual golf tournament and conference, when I can attend.

Please share three fun facts about yourself.

I enjoy spending time with my family as much as possible, as family time, is the best.

I love golfing whenever I can.

My wife and I love to travel, as there is nothing like exploring the local scenery and cultures of our Province with the top down on the convertible.

Please share three facts about your company.

We consistently been in the top 20 across Canada, for both volume and number of deals funded.

We are deeply rooted in the community with all our service work.

We enjoy having a good time.

What other professional associations do you belong to?

I am also a member of the Canadian Association of Accredited Mortgage Professionals (CAAMP), the Alberta Mortgage Professionals (AMP), the Mortgage Brokers Associations of BC (MBABC), and CHBA-CA.

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FACEBOOK.COM/ALBERTAMTGBROKERSASSOC

Follow AMBA on Facebook and Twitter for the latest on events, webinars and industry updates

2016 AMBA Calendar of Events February AMBA Rocks – The Red Piano (Kick-Off Party) In partnership with The Mortgage Loans Association of Alberta (MLAA) Edmonton.

February 4, 2016 The Red Piano – Edmonton Register at AMBA.ca

AMBA Curling Bonspiel — SOLD OUT (Curling Tickets ONLY) February 5, 2016 The Derrick Club – Edmonton Networking packages available at AMBA.ca

March AMBA Winter Games March 3, 2016 WIN Sport Canada (Canada Olympic Park) – Calgary Registration opens February 3, 2016.

TWITTER @AMBA1975

October ALT-A Education Series Webinar October 19, 2016

December Annual General Meeting (AGM) And Holiday Party December 1, 2016 Calgary AMBA Family Frozen Festival December 4, 2016 Calgary Edmonton Holiday Party December 8, 2016 Edmonton

Throughout 2016 Industry Webinar Series Quarterly (February, June, September, December)

ALT-A Education Series Webinar March 31, 2016

April ALT–A Education Series — Lunch And Learns April 20, 2016 Marriott River Cree – Edmonton April 21, 2016 Delta South – Calgary Spring Industry Night April 28, 2016 AMBA Office Atrium

Western Canada’s Private Lending Specialists Since 1997

-

First and seconds to 85% LTV Flexible terms and renewal options No beacon requirements Fast approval times

June Annual Conference

In partnership with Mortgage Professionals Canada.

June 5, 6 & 7, 2016 Fairmont Jaspar Park Lodge – Jasper

September AMBA Golf Tournament September 22, 2016 Innisfail Golf Club – Innisfail Fall Industry Night September 29, 2016 AMBA Office Atrium

38 Winter 2015/16

Residential Helen Neufeld 780-702-9215 helen@caplink.ca Commercial Gay Andrews 780-702-9236 gay@caplink.ca www.caplink.ca

SMART

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