CMP 6.12 by Key Media

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NO. 17

Guide to alternative lending www.mortgagebrokernews.ca

home equity pr覺mer CUSTOMER SERVICE YOUR CRM COULD BE YOUR SECRET WEAPON

SPECIAL FOCUS MORTGAGE INVESTORS FACE TAX CHANGES

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December 2011, 6.12

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SPECIAL FOCUS 2011: A Year in Review

FEATURE Mortgage investors face tax changes

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INSIDE

guide to alternative lending

In CMP’s continuing series of guides, we look at the growing niche market of alternative lending and talk to lenders and brokers who thrive within it. Whether it’s debunking myths or knowing how the economy has altered the client landscape, this guide is not to be missed

6. 12 issue

cover story

32 Year in Review - Brokers lend a helping hand CMP had the easy job: Tally mortgage industry contributions in 2011. But, as Vernon Clement Jones found out, the really tough work fell to brokers

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contents

NEWS & COMMENTS 8 Some of the best stories and comments from MortgageBrokerNews.ca: • Brokers: Time for monolines to eat refi fees • REDX sparks broker concerns • Network head proposes recruitment code of conduct • Top brokerage head: Time for graduated licensing • Part-timer defends the controversial practice • The downside to good publicity • Broker clients clamour for bank-branded mortgages 24 News Analysis: The Big Story: A compilation of the top quotes from our weekly multimedia broadcasts on MortgageBrokerNews.ca

PROFILES 49 Provider: Through volunteerism and fundraising, Equitable Trust is working directly with communities to transform lives 56 Insight: The organization of mortgage brokers continues as Atlantic Canada finally has an association to represent the industry 58 Provider: After experiencing phenomenal growth in the broker channel over the past four years, National Bank will be focused on service in 2012, says Mark Squire

mortgagebrokernews.ca

Realtor Marketing Secrets In the third instalment of his latest series, Doren Aldana explains how brokers can attract more purchase business by finding the right Realtor partner

59 Insight: Canadian First Financial’s referral program offers brokers access to financial and insurance advice as a way to increase their usefulness to clients 62 Guest Column: According to Scott Ede and Michel Durand, many brokers feel referring commercial deals is like giving away business, but that doesn’t have to be the case

regulars 28 International News 30 This time last year 60 Favourite Things 63 CMP Service Directory

What is The Mortgage Centre offering at its annual conference this year? A speaker lineup including Avery Shenfeld, CIBC Senior Economist and J’amie Nowak of Buffini and Company. Skill building on the latest tools we have to offer. Relaxed networking opportunities including a round of golf at the Nicklaus Design course. Opportunity to spark creatively with your colleagues at the luxurious Hard Rock Hotel and Casino in Punta Cana!

If you’re ready to take your career to the next level, contact your local Mortgage Centre office.

The Mortgage Centre is a division of CIBC Mortgages Inc., a member of the CIBC group of companies. ® The Mortgage Centre is a registered trademark of CIBC Mortgages Inc.

Editor’s Letter

‘Tis the season As we head into the holiday season, thoughts turn to giving and helping out those less fortunate. While we tend to ramp up our efforts during the last month of the year, most of us try to keep the spirit of giving alive and well, all year long, and that certainly is the case with those in the Canadian mortgage industry. In this issue we take a rather unscientific look at how brokers, lenders and others in the industry have given back to their communities and the findings were astonishing and heartwarming. From brokers completing physical challenges in support of their favourite charity to the more simple gesture of making sure those in their communities have enough to eat, the breadth of the broker channel’s generosity was very impressive. Most will agree that 2011 wasn’t the best year financially for the industry but that didn’t deter many from doing their best to lend a hand. “This year brokers increasingly found themselves going and doing the extraordinary in an effort to give back to their communities, even as many of them struggled to maintain revenue streams in a year marked by unprecedented levels of competition and an all-but stagnant share of the overall mortgage market.” “I mean if I’m having a tougher year, what about those who need the help?” says one broker, summing up the feeling that there is always someone who needs our help. Happy holidays to everyone and see you in the New Year. And, as always, I encourage you to contact us with any news related to the broker and mortgage industry or just to share your opinions on how we’re doing. It is exciting times for our industry and we look forward to helping you and your business navigate them. Cheers, John Tenpenny Editor john.tenpenny@kmimedia.ca

mortgagebrokernews.ca

6. 12 issue

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Quotables

“In terms of business, I’m having a worse year than I did last year. As a result, I`m increasing the number of turkeys I give away this Christmas to 250 turkeys instead of the 225 from last year. I mean if I`m having a tougher year, what about those who need the help?” Chris Dopp, on his efforts to give back to his community during the holiday season. Page 32

“MICs have been around for years and have been a reliable investment vehicle, and one that I and my family have used to plan our retirement. With this bill, the government, instead of weeding out those abusing the system, have decided to take a broad-sweeping approach that penalizes all of us.” Alan Cross, discussing Bill C-13 and its effects on mortgage investment corporations. Guide Page 6

December 2011 Publications Mail Agreement #41261516 Postmaster: Return undeliverable addresses to KMI Publishing, 312 Adelaide Street West, Suite 800 Toronto, Ontario M5V 1R2

EDITOR Senior Staff Writer

John Tenpenny Vernon Clement Jones

NATIONAL SALES MANAGER

Trevor Biggs Scott Clarke

OFFICE MANAGER

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SUB-EDITOR

Rachel Naud

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SALES MANAGER, Mortgagebrokernews

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Advertising enquiries trevor.biggs@kmimedia.ca

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Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as CMP magazine can accept no responsibility for loss.

Editorial enquiries john.tenpenny@kmimedia.ca Printed by Solisco imprimeurs-printers www.solisco.com

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CMP announces new broker-focused business event CMP Magazine and KMI Publishing & Events are proud to announce the launch of our new, must-attend, annual event to the mortgage industry; The Mortgage Summit, 2012, to be held at The Carlu, Toronto on May 31st and June 1st 2012. The Mortgage Summit is a two-day business learning event for brokers and mortgage professionals keen to develop their business skills and knowledge and learn how to succeed and excel in an industry that is feeling the pressures of change. CMP readers will receive two days of content for as little as $299. The conference provides a unique opportunity to hear directly from top industry executives, as well as industry leading and innovative fellow brokers. The event takes place alongside the fifth annual Canadian Mortgage Awards, to be held on the evening of June 1 at The Carlu. Attendees will have the opportunity to hear financial forecasts, learn how to build business strategies, network with other conference attendees through our dedicated event meeting scheduling tool “Synced” and engage lenders, service providers and peers on key issues, from building a fail-safe commitment letter to beefing up industry ethics and shifting away from rate. “The feedback we’ve received from CMP readers told us there is a need to provide brokers with an expanded offering of what they’ve come to expect in the magazine – and that’s how to grow their business,” said Tim Duce, president and CEO of KMI Publishing & Events Inc. “We expect a large turnout of brokers looking for a unique educational an affordable experience.” For more information, or to register your place now, please visit www. themortgagesummit.com. CMP

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Nominations for 2012 Canadian Mortgage Awards now open

Nominations are now open for the 2012 Canadian Mortgage Awards, which is taking on a Roaring Twenties-inspired theme and is scheduled for June 1 at The Carlu in Toronto. Anyone involved in the Canadian mortgage industry is encouraged to nominate candidates for this not-to-be-missed event of the year. This year we are pleased to have Home Trust as our Platinum Sponsor The CMP Canadian Mortgage Awards recognizes and celebrates excellence across the entire spectrum of mortgage brokering. There are 21 organizational and individual categories that have been designed to ensure national recognition of both large and small organizations on their individual merits. This annual black-tie gala is the event highlight of the year that attracts the biggest names in the business throughout Canada. Mortgage industry professionals gather to praise the achievements of their peers and industry leaders at this year’s new venue, the unique and stylish Carlu in Toronto. An estimated 500 guests are expected to attend the awards festivities in 2012. Other sponsors for the event include Bridgewater Bank, Genworth, Davis & Henderson, ING Direct, National Bank, and Merix. To nominate or for more information please visit www.canadianmortgageawards.com. CMP

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The past month has seen a lot of broker discussion of articles posted on MortgageBrokerNews.ca. Here we collect some of the most commented on stories and the reaction they garnered from the mortgage broker community. To read the full stories or to make your own comment visit: www. mortgagebrokernews.ca

There is only so much money in profits. If the lenders start offering free legal fees, closing costs, and other fees, it ultimately comes out of our commission. I totally agree with Bauer, who says, “monolines have to look at offering products that really set it apart from the banks.” The product is what will make it easy for us to sell. If all we have is rate, then we will die by the rate. – MortgageFlex

brokers: time for monolines to eat refi fees It’s increasingly apparent all monolines will have little choice but to cover legal and appraisal costs for refis, argue leading Toronto agents, billing it as essential to satisfying clients – now inundated with no-fee offers from the banks. “One lender offered brokers an incentive to bring bank refi clients over to the broker channel,” Darin Bauer, with Mortgage Intelligence in Toronto, told MortgageBrokerNews.ca. “But I think the incentive has to be for the client, not the broker, because they’re already getting that offer from bank branches, which are covering their legal and appraisal costs. To draw business from the branches broker channel lenders have to match that.” His analysis reflects that of a growing number of brokers, struggling to grow their refi portfolios in order to compensate for a weaker real estate market. Consumer interest, spurred by rock-bottom rates, has also played a part. Still, renewed aggression at the bank branch level means that most are prepared to assume a client’s associated legal costs, including disbursements, said another Ontario agent, Sudip Adhikari, with CENTUM Gold Mortgages. As a result, brokers are opting to cover those costs themselves. Both Bauer and Adhikari want to see that burden lifted from off the backs of brokers. CMP

mortgagebrokernews.ca

Oh my, now I have heard it all. First brokers buying down rates and now brokers paying for legals. If you find yourself doing either of the above, it’s because your customer sees no value in your service-you are a commodity. My office has never had to pay legal fees, nor would we, and our clients simply don’t ask. They see the value we offer and at the end understand there will be some costs they will have to absorb. Change the way you look at things, and the things you look at will change. Time to change the way you do things and stop blaming others for not doing enough. Hold yourself as willing and able! – AB Broker Why should the monolines subsidize mortgage agents/brokers? If they offer $500 to the client the banks will offer $750. The banks will make it up on over-priced products they cross-sell to the client, like “garbage life.” The monolines don’t have that luxury. Point out the benefits of the monos,show the drawbacks of dealing with one institution, especially a bank. “Mortgage specialists” hate brokers/agents who sell rate, because they are paid based on rate. The higher the mortgage rate they can have an uneducated borrower agree to, the higher their commission. You have to be your own solution. Don’t blame lenders/appraisers/ insurers/government...the banks are your “enemy.” They are trying to take food from your family’s table. Know your “enemies” strengths and weaknesses and “attack” their weak side. Big plodding organizations take forever to move. You need to plan and execute your plan swiftly. Start by trying to educate your consumers and “attack”( in the business sense) a mortgage specialist or two in your area. Show the consumer what they really are, one-trick ponies. – An Ontario Principal Broker Demanding that the monolines eat refi fees or pay for appraisals is ridiculous. I believe that our service should differentiate us in the marketplace, if we press our lending partners for competitive advantage we give them the control. – @kiltedbroker I don’t think it is appropriate for brokers to “demand” things from lenders. Mono-lines are businesses who compete with the banks, and also with each other. It is up to them to offer products and features that will attract more business to them. The job of brokers is to provide good service to the client and scan the lending landscape for the best product that meets the needs of the client.Lenders and brokers who provide the right service or product will prosper and others will exit the business.This is the normal way things happen in the free market world. As brokers we should stay focused on doing what we do to the best of our ability instead of trying to change business models of others in the marketplace. – Ad Lakhanpal`

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Top brokerage head: Time for graduated licensing Inexperienced part-timers and newcomers to the industry should undergo a two-year apprenticeship before being eligible for licensing as agents, said a respected veteran broker. “Allow part-timers and new agents, with no experience who wish to develop into full time agents, but do not allow them to be licensed,” Brian Matthey, head of Verico The Mortgage Professionals in Kingston, Ont., told MortgageBrokerNews.ca. “Have a minimum two-year supervisory period during which they have to work for a licensed broker who has a minimum of five years’ experience. That broker (would then) have to sign off on everything they do and assume responsibility. “Even someone with five years’ experience is far from a seasoned broker, but at that point, they should, with the benefit of their experience, be in a position to assist someone in their development.” The suggestion would effectively raise the bar on qualifying standards for mortgage agents in all regulated provinces. Currently, agent-candidates have only to pass a licensing exam and be employed by a brokerage. Matthey joins the growing number of industry professionals arguing the threshold is simply too easy for candidates to cross. “We use the essence of this program in our office with new completely inexperienced agents who work for an agent as an underwriter for two years,” Matthey said. “We have graduated four successful agents who were prepared to carry our card and represent themselves as mortgage professionals. We have spent 22 years developing a name and a reputation. Why would we settle for putting anybody on the street who would jeopardize that? Why would we not try to give an agent the best chance at success?” CMP

Agreed. Our strength as brokers is our experience. Hiring inexperienced agents and cutting them loose into the marketplace causes problems on so many levels. Efficiency with our lenders drops, everything turns into a rate war and we spend more time putting out fires. We can look to FISCO, but in the end it is selfregulating as to what type of brokerage you want to run. – George C. New life insurance agents and the so-called financial advisers out there have to go through a two-year supervised period before being allowed to operate independently. I think that would make sense for new mortgage agents as well: Get a sponsor. – Victor I have yet to see any of the Big Six put anything negative out about the mobile specialists they employ. Now do you wonder why they are leading in lending? Listen to this if a client was to read this and many of the articles circulating. What do you think they’re going to do? Run to the bank. Yes the pie is getting a little smaller, but you can’t stop the young from advancing. All things change as time goes on. You’re not only putting down those new to the industry, part-timers and the like, you’re making it look as if the industry as a whole is lacking. –LSGB I agree with the probation period, because most new agents come in with no experience and are looking for very large splits instead of good training to be successfull in this business. – Allan Zider

mortgagebrokernews.ca

I’m all for ongoing training and setting standards, however, I agree that pressure needs to be put on the bank “specialists” to have them licensed as well and to go through all of the same requirements as independent brokers. After all, the client is buying the same product from them, so should expect that they have some training/regulations to follow as well. Would you not expect a doctor that is employed by a hospital to have the same training as one who has his own practice? Lets level the playing field a bit. – MR Broker The reality is that in B.C. and Ontario you have to be a “sub-broker” for two years prior to being able to become a broker of record. The broker of record is responsible for their sub-brokers behaviour and conduct – this is what is being suggested in this article. I see nothing wrong with this being established elsewhere in Canada, as it has proven effective in B.C. for years. But, if the pattern is going to continue with brokers dealing with tightened licensing and education, the question must become: What of the mobile sales force of the banks? These individuals do not need to be licensed, they do not have continuing education requirements and yet they conduct business the same way that the independent broker does. Independent brokers across Canada are calling for tighter educational requirements, stricter licensing, etc. We are creating our own unlevel playing field – those that cannot “make it” on their own simply hang their hats with a bank. I am not suggesting that we forego stricter requirements, what I am suggesting however, is that they apply to all people who make the claim of being a mortgage professional – independent or with a bank. – Paul

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Capital Mortgages Inc., Ottawa, ON In support of Weekend to End Women's Cancers

Margo Wynhofen

Troy Alexander

"On April 2nd, my Mother was diagnosed with Terminal Cancer. She went from a fun loving Mother, Grandmother and Great Grandmother, to a shell of a woman not able to eat, drink or speak....all within 3 weeks. My Mother passed away April 23rd 2011. At that point, I had two choices.... wallow in sorrow or do whatever I could to make sure this doesn’t happen again."

VERICO One Mortgage Corp., Grimsby, ON In support of the Terry Fox Foundation for Cancer research

VERICO Select Mortgage, Victoria, BC In support of Shelterbox Refugee camp in Dadaab Kenya where 7,000 Shelterbox tents have been setup providing shelter for up to 70,000 people who were fleeing the draught and conflict in Somalia. Originally designed for 90,000 people, this camp now hosts a population of approximately 440,000 with more still continuing to arrive.

Thank you to all VERICO members who have made a difference!

Gabe Hoffart

VERICO Gibbard Hoffart, North Vancouver, BC In support of Canuck Place Children's Hospice With three young boys of his own, Gabe has always had a soft spot for the Canuck Place Children’s Hospice – He can’t imagine what some of these parents & families have to go through with their sick children and has been a passionate supporter of the Hospice’s cause for the last 4 years.

Chris Heidt

VERICO Tekamar Mortgages Ltd., Armstrong, BC In support of Dream Auction, The Kalamalka Rotary Club Kalamalka Rotary Club holds the 27th anniversary of the Dream Auction, one of the largest fundraising event in Okanagan.

Richard Smith

VERICO Tekamar Mortgages Ltd., Salmon Arm, BC In support of the Revelstoke Ski Club Provides professional ski coaching for upcoming racers aged 5- 18 years of age.

John Ribalkin and Ethan Ribalkin

VERICO Nova Financial Services Inc, North Vancouver, BC In support of Harvest Project "For the past few years, my famiy and I have spent 4-7 weekends, depending on weather, broken circuit breakers, other repairs, etc., putting up Christmas lights to raise money and collecting food donations for the Harvest Project."

Pamela Bice

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Pamela Bice and Devon Bice-Askew in Nairobi assisting the SUD Academy for Sudanese refugees.

VERICO The Mortgage Practice has been proudly supporting Lupus Canada since 2007. The company raises funds with raffles and matches total contributions made by mortgage brokers over the year.

VERICO Money Business Inc. London, ON In support of Canadian Aid to Southern Sudan

VERICO The Mortgage Practice, Mississauga, ON In support of Lupus Canada

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Please visit www.verico.ca/welcome or e-mail membership@verico.ca to find out more.

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REDX sparks broker concerns

Even the credit reporting companies allow consumers to know who has put derogatory content on their files and can have removed if they are false or proven to be incorrect.Why the secrecy? Does REDX allow comments and flags to be reported about the banks’ mortgage officers, both in the branch and on the road, to be reported on this website? Just wondering. – John Pasley

A system to flag “fraud and misrepresentation” has been misused by lenders, quick to pin incident reports to brokers, who have little way of getting those records removed, charges a seasoned mortgage professional – preparing to lodge his own complaint. “I agree that if somebody is doing something fraudulent and has had a pattern of problems develop then, absolutely, that agent should lose the benefit of the doubt,” Paul Mangion, a broker with The Mortgage Centre in Mississauga, told MortgageBrokerNews.ca, “but posting records against an agent who would have had no control over the outcome of a case and then not to allow that agent any real appeal to an impartial third party represents a misuse of REDX.” His criticism focuses on REDX’s Non-Public Incident Reports, which act as a sort of credit agency for brokers. Its electronic database of agent names contains information contributed by REDX subscribers “regarding incidents of alleged fraud and material misrepresentation and is exchanged on an anonymous basis,” according to the company’s website. Those subscribers not only include lenders and insurers, but other industry service providers, who append those reports to individual broker names as a red flag alerting other subscribers to their concerns. The anonymous nature of those complaints and the fact that they have the potential to limit a broker’s access to other lenders is problematic, argues Mangion, who worries that brokers are not only being criticized for incidents out of their control, but those that may not, in and of themselves, amount to “fraud or material misrepresentation.” CMP

REDX is not fair and I believe that professionals like ourselves should stand up to REDX and shut them down. When a matter gets taken to court it gets fully investigated and once someone is found guilty then they are punished or given a bad name only if they have committed such an act. REDX gives brokers a bad name and makes it harder for them to resolve any issues and we all know how small the broker community is. People just bad mouth one another because someone has a REDX hit. – John T. A company that has numerous brokers working for it and submits the deals in the DI name is asking for trouble. The DI has no idea that something has gone wrong. The banks never tell the DI, they just report it. There is a big difference between a company doing $100 million a year and one that does $10 million a year. – Don Estrada This site is a free-for-all to possibly make false and career-damaging accusations against anyone’s good character. Any person who has had any attempt to have his or her good character damaged has every right to address this issue and every right to defend themselves against any attempt of defamtion against them. Bottom line here is if REDX wants to operate and operate properly, they better start to look to make an equal playing field here. Now. – J.M.

rect ad August2011_SYD_REVISED.pdf 1 8/30/2011 10:51:41 AM

The REDX system is an inherently unfair system. A broker is not even notified and would never know that his or her name has been tarnished or that he or she is under suspicion. In the meantime the accuser has a complete cloak of anonymity, and can say anything they like on the report. This is exactly the kind of unfairness that a broker representative body like CAAMP should be championing. If they don’t they will lose all credibility as a representative body. – Rudy

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Network head proposes recruitment code of conduct Some might call it a “poaching proclamation,” but the head of a national broker network is proposing a “code of conduct” dictating the way brokerages recruit professionals at other firms. “I guess the biggest thing is to adhere to a code of ethics and integrity in our recruitment practices,” Mike Cameron, managing partner at Axiom Mortgage, told MortgageBrokerNews.ca. “I don’t purport to have all the answers, but I am prepared to open the discussion because any improvements here would allow all of us to better focus on innovation and improvement without having to worry about defending against slander and misleading representations.” Cameron is proposing a list of agreed-upon recruitment rules for the channel’s 10 biggest networks, but also its smaller players. It would mirror those used by chartered accounting and law firms and, ostensibly, limit the kind of aggressive headhunting critics charge has increased over the last year. That growth coincides with a slowdown in the real estate market and a slip in broker originations. “With margins being as slim as they are, every dollar of origination volume counts a lot,” said Cameron, also leader of the Mortgage Revolution, a grassroots effort to raise industry integrity and ethics. “This is why the recruiting is happening in the first place. This is also why organizations need to defend against recruiting. “I am not opposed to competition, but I truly believe that aggressive recruiting will ultimately be the demise of our channel if we are not careful.” CMP

Speaking from 19 years of experience in the mortgage biz, I believe that people don’t quit their company, they quit their boss. If your people are happy, they won’t leave you, no matter who tries to steal them. Always keep the lines of communication open with your people. – Julia Krause Will never fly. The secret to regaining market share is strong, large brokerages that can actually compete with the banks. It happened in real estate, it happened in insurance, and now it will happen in the mortgage broker industry. And how would you even enforce this? The bottom line is, if you don’t have a strong value proposition with your company, and someone else has a better one, then brokers and agents need to be free to make those choices. Law of the jungle. It’s how it works. I’m not even sure I understand how trying to recruit agents and brokers from other firms is “unethical.” Sorry, I don’t think you have a leg to stand on with this issue. – Ontario Broker Are you kidding me? This is a free economy and capital and human resources will chase the highest return. This is not a school yard where we need to be told how to play nice with all the kids. Give me a break. In this world, you grow or you rot. – George I think you guys are missing the point entirely, this isn’t a matter of right or wrong, ethical or unethical, this is a matter of market share. As a broker channel we aren’t maintaining the market share we have, and the banks sales force is growing year by year. The point is, why are we aggressively recruiting agents from each others brokerages as a means to eat more pie while the size of the entire pie is shrinking? Don’t we have better things to do with our time? Recruit all you want, if you don’t address the issues that are staring us in the face with respect to market share, you will have a huge brokerage with no business to write! Mike is simply saying that “Our primary concern has to be the viability and longevity of the channel” - wait, isn’t that a direct quote from the article? So regardless of the rules of the jungle and your thoughts about reigning in the school yard bully - look a little deeper and maybe you can figure out what is actually going on here. – @kiltedbroker

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Part-timer defends the controversial practice

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A seasoned broker – now a part-timer – is defending that choice, challenging mortgage professionals who argue the industry has no place for him and a growing number of others. “I take strong exception to someone saying that there is no room for part-timers in the industry,” Greg Barrow, a part-time agent with Dominion Lending Centres in Richmond Hill, Ont., told MortgageBrokerNews.ca. “You know, I understand where they’re coming from, but there is no reason that a part-timer who is keeping up with all the changes in the industry – the lender products, the regulations and rule changes – should and could be distinguished from a full-time one. Certainly I make sure that I spend the time and make the commitment to ensure that there is no disadvantage to the client.” Barrow’s comments are a direct answer to an increasingly loud call for regulatory changes that would discourage part-time brokering. Advocates view it as the best way to shore up professional standards and maximize client satisfaction while minimizing client complaints. The move has also been billed as a way to increase broker efficiency ratios and to re-establish a more profitable playing field for full-time mortgage professionals. Barrow, who worked full time as a broker for four years before taking a full time position as a web developer last fall, understands the concerns of peers opposed to part-timers, but is himself concerned about stereotyping. “I’ve made a conscious decision to take on a limited number of clients each month so that I can devote the time necessary to serving that client and ensuring they get the best deal possible,” he told MortgageBrokerNews.ca. “I refer on most clients to other brokers because I don’t’ have the time to devote.” CMP

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I understand where Greg Barrow is coming from, but we as an industry need to draw the line somewhere. If brokers are finding success brokering, why would they need another full-time job outside of the industry earning less? If you’re not successful full time, you won’t be successful part time. As Wayne Dyer once said, “You are being paid in direct proportion to the value you offer.” Come to the realization that this line of work might not be for you, it’s OK. Why would anyone do anything half-assed? – Jeremy

Own shares in RMA that pay annual dividends and own shares in a commercial real estate portfolio with a target value of $10 million.

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I love this industry because of the positive difference we make when we are at the top of our game and I want the professionals in it be of the highest caliber so that every day that passes the consumer knows a reputable broker outshines a bank rep 100 per cent of the time. It’s a battle being fought every day and part-timers are ammunition for a bank rep all day long. If you’re not committed, pour your energy into something that sparks your passion and do the world a favour my friend. I’m not telling you I don’t want to see you not make more money and perhaps you are the exception to the rule, but tougher entry standards to limit mediocrity is certainly the right path for the industry. – B.J.

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The downside to good publicity

It is unfortunate that CAAMP does not do as an effective a job all year long as they do the 10 days leading up to their conference given the amount of press (good or bad) we have seen the past week. P.S. “helps promote the AMP designation.” Does that mean you are not going to get as good advice from just a FSCO Licensed Broker? – ON Broker

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The AMP designation doesn’t mean much. I’ve never had a client ask me about it. It’s also unfortunate that there are brokers out there so desperate for a paycheque they’ll do anything to get it. If this is you, you should probably look at a new career. Some of us run ethical businesses, and because of our clients’ satisfaction, our business is purely referrals. I haven’t spent $1 on marketing this year, yet I doubled my business in each of the past three years. That’s how you run a brokerage. – Chris

$478,137

It may be a matter of taking the bad with the good. But consumer comments about a Globe and Mail article lauding brokers have highlighted the challenges facing the industry, say mortgage professionals. While the article’s focus on mortgage brokers and their value proposition was overwhelmingly positive, the majority of the 60-plus comments were negative, alleging unethical behaviour and concerns around rates that ultimately proved to be less competitive than those of the banks. “I have to say that our experience with a mortgage broker was a near disaster,” wrote one reader going by the name Dividend Investor. “Our broker offered us two fixed-rate mortgages, either 5.4 or 5.8 per cent. Naturally and naively we said, oh, we’ll take 5.4. Our broker never even mentioned variable-rate mortgages.” “GrumpyGus” offered the same kind of kind of scathing analysis, at the same time challenging the Globe’s objectivity: “Hmph. My perception was that they were where people who aren’t credit-worthy go to buy more than they can afford,” he said. “Nice press release.” B.C. agent Adam Hawryluk, with Canadian Mortgage Experts, was struck by the negative comments, although suggests they reinforce the need for more consumer education. “There’s obviously going to be a couple bad apples in any group and that’s unfortunate,” he told MortgageBrokerNews.ca. “I think mortgage brokers in general have to do a better job of educating consumers about the process that goes into arranging mortgages. There are going to be people who are not happy with the process and that may be based on their misperceptions.” The criticism aside, brokers celebrated the article, with hundreds tweeting and posting links to the GlobeandMail.com webpage late last week. The story offered brokers a pat on the back, said CAAMP CEO Jim Murphy, one of the many tweeting the good news after the article appeared. But it also helped efforts to promote the AMP designation. CMP

It’s a shame that individuals with bad experiences tend to be more vocal than those with positive experiences. Despite the unfortunate histories had by these people, however, there is a need for the mortgage broker and we shouldn’t be dogged based on a few bad experiences. – Bruce Smith

average selling price of resale homes in the Greater Toronto Area in October — up eight per cent compared to October 2010 (TREB)

I think that the big brands would be the ideal to get together and spearhead the creation of a broker association - just for licensed individuals. One that represents mortgage brokers exclusively. One whose mandates are: (1) Consumer education. (2) Regulatory partnership with the provinces. (3) national representation of mortgage brokers which means people who are actively participating in the mortgage brokerage business (not lender underwriters, BDMs, etc). (4) One that has an executive committee comprised of the people who actually represents 90 per cent of the broker community - the leadership at Verico, Dominion, Centum, Invis, Mortgage Alliance, etc. They have a vested interest in the success of the individual mortgage broker. We are their customers, employees, and the back bone of their businesses and so we are guaranteed that our best interest as an industry will be looked after. – Mike I have a hard time picturing some at the top working together, but if we ever want to change our image - I believe that they too need to step up. I for one would support it 100 per cent. The folks at the top of the brands have done more for this industry than CAAMP will ever be able to do. Let’s look to them as our true leaders for support and guidance. – Kev One point on Mike’s suggestion No. 4: please understand the leaderships of networks and superbrokers do not share the same interests as mortgage brokers who are dealing directly with the public everyday. The network and superbroker owners have their own agendas which are not the same as individual mortgage brokers and agents. We need people who are in the trenches brokering mortgages every day at the top of CAAMP before any meaningful change will occur. – Ron Butler

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INDUSTRY

appointments As part of its strategic plan to expand in the Quebec marketplace, Dominion Lending Centres announced Robert Perrier as the new Sales Manager for the province to lead this endeavour alongside Chad Gregory. Robert has an extensive resume working with brokers including the last eight years at Mortgage Intelligence as Vice President for Quebec, where he led a team of 120 brokers. DLC also announced that Glenn May-Anderson has joined its Head Office Team as Director, Franchise Development for Ontario & Atlantic Canada. Invis and Mortgage Intelligence announced that Kelly Neuber will be joining their senior management team as vice-president of marketing. “We’re thrilled to have Kelly Neuber join us to lead our strategic brand and marketing initiatives,” said Cameron Strong, CFO and Chairman of the Board of Invis and Mortgage Intelligence. “Kelly has a spectacular track record of success in this industry. Her reputation for leadership and innovation is outstanding: among her colleagues, competitors, and mortgage brokers across Canada. If you look at the record-setting successes of these companies Top: Robert Perrier Middle: Glenn May-Anderson during her tenure, you’ll share Bottom: Kelly Neuber our view that Kelly Neuber is a very consistent and successful ‘brand builder’ in this business.” “I am delighted to be a part of the new vision here at Invis and Mortgage Intelligence,” said Neuber. “There have been exciting changes here in the last few years; this is a very different company. It is now broker-owned, with excellent leadership and vision, and the company is committed to a new emphasis on brand and marketing. I’m confident that we’ll be setting a new standard for excellence in this industry. It’s exciting to be a part of that. I’m really looking forward to connecting with the broker network across the country.” CMP

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broker clients clamour for bank-branded mortgages It may be a reflection of economic uncertainty, but an increasing number of broker clients are retreating to the “security” of bank-branded mortgages, even if they come with a 20 basis point premium. “I had just had a client that I was able to get a rate of 3.29 per cent with one of the monolines and a higher rate of 3.49 per cent with TD,” Marcus Keller, the principal broker with Dominion Lending Centres House, told MortgageBrokerNews.ca. “She rejected the lower rate and went with TD – she said she wanted the stability of knowing that the lender would still be around after a while. I would say that (broker) client preference for the banks is growing, even if we can offer them a lower rate with a monoline.” It’s an observation echoed by other brokers, telling MortgageBrokerNews.ca about the challenges of selling the product of even relatively well-known non-bank lenders and even in relatively large Canadian markets where brokers enjoy more than 25 per cent market share.

The phenomenon presents a significant challenge to monolines as they grapple to maintain originations in a slowing real estate market. It also highlights the concerns of other brokers worried that those lenders may need to up their profiles among consumers. “Indeed, I think that there needs to be a push to educate consumers on just what a monoline lender is,” Dustan Woodhouse, broker with Dominion Lending Centres Canadian Mortgage Experts on B.C.’s Lower Mainland, told MortgageBrokerNews.ca. “They are pretty much invisible to the consumer currently. “The non-bank lenders do not do any significant advertising promoting the channel that brings them business or even of themselves. Thus in the minds of most consumers, when they hear names MCAP, Street, First National, etc., they lump them in with the heavily advertised local B lenders.” CMP

Interesting. My office has no issues with consumers running to the banks for “security”. If you don’t educate an ill-informed consumer then yes, I can see then running away or suggesting a big bank. Educate, educate, educate! If you don’t already have a value proposition, I suggest taking the time to create one, your business depends on it. – Jeremy

as the broker plays a role, we can maintain and manipulate our market share.

– Bruce

Clearly the brokers who have a difficult time advising their clients to choose one lender over another are experiencing a trust gap with the client. The client doesn’t trust them enough to follow their suggestions, and doesn’t respect them enough to take a recommended course of action. In fact, they’re voting With all due respect, one customer does not a trend make. Selling monolines to clients should be a piece of with their dollars. It’s not a lack of confidence in the lenders - it’s a lack of confidence in the broker. cake for anyone who does their homework on terms and conditions. – Gord McCallum – David Larock The sad truth is mono-line lenders are invisible to the majority of mortgage clients. While the mono-lines are Banks have 75 per cent and we have 25 per cent. There are many reasons why clients like dealing with effective at marketing and advertising to mortgage professionals they overlook the end user. In any form their bank. However, I have never had a client turn of sales people do business with people they know, like down a 20bps rate advantage from mono-lines over and trust. If a consumer doesn’t know the lender, the banks. Its money in their pocket. I agree its how we position the mono-lines. Believe it or not, most of the lender is at a disadvantage. Consumers have heard the horror stories of banks closing and mortgages being mono-lines have banks as major shareholders. Its an called or sold off for a couple of years. Even though easy sell. – 75/25 Market Share Split those stories originate in other countries the Internet makes it visible everywhere. A challenge then to the The important thing here is that the client takes out a mono-line lenders: step up and show yourself and help mortgage through a broker. The worry is when clients the mortgage professionals market your products. skip the broker and head straight to the bank. As long – Dan Beresford

mortgagebrokernews.ca

News Analysis Multimedia

Your trusted news source

Every week, MortgageBrokerNews.ca rounds up influential figures to discuss the major issues in the mortgage industry. You can watch these videos online in the Broker News TV section of our website, but here we bring you the highlights from last month’s clips

the

big story

On the topic of …

Lender incentives for Realtors Elisseos Iriotakis: “Initially I was surprised when I heard that there was a lender out there paying commissions directly to Realtors, but to me it doesn’t really make sense. When you do the math on it and you’re looking at [the bank] paying the Realtor and mortgage specialist and we’re back at what they’re paying their brokers. So what they’re really doing is jeopardizing relationships with big-producing brokers that have in-house relationships with Realtors and more or less shooting themselves in the foot.” Mauro Di Cosola: “It may be a good idea for the lender, but not necessarily in the best interest of the client. When a broker or an agent sits down with a client we’re basically trying to understand what their needs and wants are and we have available to us a vast array of lender and products at our disposal. Once we understand what the client’s needs are, at that point we determine what lender would best suit their needs. That in my opinion is what is in the best interest of the client. However, when a Realtor recommends a specific bank or lender, they’re restricting that client to that one particular banks’ products and services. It almost like the last time my wife went to buy shoes. She went to 10 different stores. But imagine me telling her that she has to buy her shoes from one store and can only buy one particular shoe. It wouldn’t go over well and it’s not something I recommend.”

On the topic of …

Syndicated mortgage investments Roy Deeks: “The mortgage market is shrinking and the stock market has been volatile since 2008, which presents a challenge to both our clients, as investors, and to brokers to increase their book of business and to survive in these trying times with the banks being more aggressive. I believe that I’ve found a solution to adapting to the change we’ve been presented with and that is a syndicated mortgage investment. It’s within my expertise level; I don’t have to go outside of the box and bring in insurance products or investment products that I don’t understand. It’s something that I can go back to my database with and actually provide value-added to what I provided when I first met my clients. Like most brokers, I spend a lifetime building this client base and how do I capitalize on that? There’s no market for selling my business and I’d rather be spending less time at work and more time doing the things I want to with my life. So how do I do that? When I did my due diligence on this product I realized that most of the work would be done by

Elisseos Iriotakis

Mauro Di Cosola

Roy Deeks

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Barbara Hale

Account Executive, Prairies

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Your trusted news source

the product provider and all I have to do is go back to my clients and offer them something they’re already focused on, which is wealth preservation, wealth growth and income generation. I’m using it in my business and it’s been a runaway success as far as I’m concerned. The beauty of the product is that it is a secured investment that gives the client a guaranteed eight per cent return over a three-year term, plus a 12 per cent profit participation at the end of the project and they have direct, registered ownership in the mortgage that’s registered against real security. So, guaranteed returns, real, tangible security, with bank-quality projects, developers with a proven track record and real estate that you can touch and feel when you want to see how your investment is doing. The referral fees are greater than what I was earning on my standard mortgage business, so it’s resolved another issue for me and I don’t have to worry about selling my book of business.” On the topic of …

Renewal fees John Bargis: “I’ve been a proponent of renewal/trailer fees right from the very beginning. I’m not sure 15 bps is the magic number and frankly I don’t think it would prevent an agent from re-soliciting that client after the term, or maybe even in between. I think what really needs to happen to address the issue is a strong focus group of broker and lenders alike to determine really what the sensitive issues are and create more of a long-term viable solution.” Ariel Santos: “I think the idea of an across the board 15 bps renewal compensation would be a great idea for brokers and for lenders. I think it would eliminate a lot of moving from one lender to the next and I think the 15 bps compensation is a nice ‘thank you’ for being loyal to the lenders.” On the topic of …

Creditor insurance Kelly Price: “I would say the top three challenges we face when bringing a mortgage

mortgagebrokernews.ca

broker into the fold to offer creditor insurance are first, the same thing that’s been in place since the very beginning and that is the general feeling that it’s someone else’s job to do it; ‘the lender should it, an insurance broker should do it, but I shouldn’t do it.’ It’s a challenge to bring people along to get them to take that leap of faith and make that first offer. Second, three years ago there was some pretty negative buzz about the product and we still battle that today and we have to go through a process we never had to go through before to convince people that our product is a quality product and that they can offer it confidently. And the last one is a very practical one. With mortgages going up our premiums go up and that makes for a new sales process now that the cost is higher.” Ray McMillan: “Having been on both sides of the fence, I’m not too fond of creditor insurance. I prefer to refer my clients to an insurance adviser who can give them a better perspective of their financial insurance needs. I also get a lot of referrals from insurance advisers, so only think it’s fair that I return those referrals to them also, that way we build a very solid long-term relationship between myself and my referral sources.” Kim Luxton: “So the analogy of refer and insure is probably a great idea, whereby [brokers] can set them up on the creditor insurance first and then utilizing that third party or the insurance person, could then turn around and offer more of an economical insurance, like whole or term life and then cancel the creditor insurance down the road.” CMP

Ariel Santos

Kelly Price

Ray McMillan

Kim Luxton

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australia More than 40,000 Australians hope group action can bring a better mortgage deal The concept is beautifully simple: get together with fellow homeowners and use your combined muscle to pressure financial institutions into offering better mortgage deals to the group than they do to individuals. It’s a strategy its Sydney-based backers claim is a world first and, at last count, 40,306 Australians hope it is going to work. Recently, consumer advocacy group Choice launched a campaign called the Choice Big Bank Switch, hoping to attract 1,000 consumers keen to test the waters on group discounts and willing to switch lenders for a better deal. Within 12 hours about 12,000 people signed up. That number has since grown to 40,000. Choice is the public face of the campaign but the scheme is the brainchild of One Big Switch, a private company founded by Lachlan Harris, former press secretary to former prime minister Kevin Rudd, and his friend Paul Hunyor, a Harvard graduate and former management consultant with a background in corporate finance and private equity. Harris says the pair hatched the plan by combining two ideas that have been around for ages. “Switching has been around for a long time,” said Harris. “You’ve seen group buying on smaller stuff, like a haircut or a restaurant meal. If you combine those two things together you come up with the idea of group switching. It’s a ridiculously simple idea. If, theoretically, one person switching can save money, a couple of thousand people who are willing to switch together should be able to save a bit more.”

33% of Canadians who are 55 or older have at least 16 years left on their mortgage term (RBC Housing Snapshot/Ipsos Reid)

The response to the campaign has taken the company by surprise and Harris admits it has made negotiations longer and more involved. “Ironically, even though it’s great to have so many people, it has made it a bit more complex, which is why we’ve had to sort of slow down and have discussions with multiple lenders over multiple states … and … different customer categories as well,” he said. Although Mr Harris and Mr Hunyor’s avowed aim is to save consumers money, they’re upfront about their plans to make a profit. “One Big Switch absolutely is a for-profit business,” Harris said. “It’s completely free for customers to use; even if you take up the deal, our services are free. We earn a commission from lenders who generate business through One Big Switch.” For those concerned about a possible conflict of interest, Harris insists the company will disclose all commissions and won’t try to influence participants’ decisions about which offer to accept, if any. “We’ll present [offers] in a clear and simple way and it’s a matter for individuals to decide if any of the offers presented are right for them.” Although customers are free to negotiate better deals for themselves with service providers such as banks whenever they like, the task seems overwhelming to many people. “The idea of sitting down doing the negotiations and discussions - people are sort of stuck up the apathy tree,” Harris said. “Start shopping around on these essential expenditure items and … that’s the best way to save money.” CMP

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this time last year

11/29/10 11:34:08 AM

2010

Canadian homeowners comfortable with mortgage debt: CAAMP Canadian homeowners are comfortable with their mortgage debt, according to the sixth Annual State of the Residential Mortgage Market report from CAAMP. They also have significant home equity and can handle an increase in their mortgage interest rate. “Canadians are being smart and responsible with their mortgages,” said Jim Murphy, CAAMP president and CEO. “They are building equity in their homes and making informed, long-term mortgage decisions. The survey results speak to the strength of our mortgage market, especially when compared to the United States.” A few highlights from the report:

• About one-third (32 per cent) of homeowners with mortgages had some mortgage activity in 2011, with 23 per cent renewing or refinancing their mortgage • Fixed-rate mortgages remain most popular (at 60 per cent), while 31 per cent have variable-rate mortgages • Among those who renewed their mortgage in the past 12 months, 78 per cent saw a reduction in their rate • Among those who renewed or refinanced their mortgages in the last year, 21 per cent changed lenders • Levels of equity takeout have dropped in 2011 - only 10 per cent of mortgage holders took out equity in the last year, a 40 per cent drop from 2010

• 80 per cent of Canadian homeowners have more than 20 per cent equity in their homes; • 35 per cent of mortgage holders either increased their monthly payments or made a lump sum payment in the last year; • 84 per cent of mortgage holders said they could withstand an increase of $300 or more on their monthly payments.

Canadians have insulated themselves by shopping for the best interest rates with the help of a mortgage broker whose market share has increased. Among those who renewed a mortgage in the past year, the number who switched lenders was up to 21 per cent in 2011. For a five-year fixed-rate mortgage, the average discount has been 1.46 per cent during the past year. And fewer Canadians have taken out equity, down to 10 per cent in 2011. By comparing rates with different mortgage lenders, aggressively paying down their mortgages, and decreasing the amount of equity they take out of their mortgages, most Canadians appear to be in a comfortable position to weather the economic challenges ahead. In fact, 84 per cent of mortgage holders said they can handle an increase of $200 per month in their mortgage payments, and 78 per cent have at least 25 per cent equity in their homes. “Despite less than positive feelings towards the economy, or maybe because of that, Canadians are showing a level of prudence in their decisions that is inspiring,” said Murphy. “That suggests to us that there is no need for policymakers to introduce new measures that would reduce housing activity.” CMP

One year later Canadians have heard the many cautions about carrying too much debt and are taking action to insulate themselves from future economic downturns, according to the seventh Annual State of the Residential Mortgage Market report by CAAMP. “Overall, our survey paints a picture of Canadians generally and homeowners in particular as very focused on their finances. They are planning ahead, aggressively paying down their mortgage in advance of any further economic jolt,” said Jim Murphy, president and CEO of CAAMP. “Prudent is the word that best sums up how Canadians are feeling at this time.” Highlights from the report:

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Year In Review

a helping

hand Canadian brokers give back in 2011

CMP had the easy job: Tally mortgage industry contributions to charity in 2011. But, as Vernon Clement Jones found out, the really tough work fell to brokers

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Year In Review

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Cover

Year In Review

2011 top stories from mortgageBrokerNews.ca Jan. 12 Xceed to halt mortgage origination

f Chris Dopp had let business dictate this year’s charitable giving, the broker might be handing out frozen chickens instead of hundreds of big, fat 10-pound turkeys, with all the Christmas trimmings. As it is now, he’s upping last year’s largess in consideration of those challenging times – not only for mortgage brokers but the communities they serve. “In terms of business, I’m having a worse year than I did last,” says the principal broker for The Mortgage Centre – Elite Mortgage Group in Collingwood, Ont. “As a result, I’m increasing the number of turkeys I give away this Christmas to 250 turkeys instead of the 225 from last year. I mean if I’m having a tougher year, what about those who need the help?” Indeed. It’s a question mortgage professionals from one end of this country to the next have asked themselves this year. Their collective answer, according to CMP’s own calculations, was just under $1 million in cash and in-kind contributions to more than 40 different charities. Getting that money into deserving hands was in many ways the biggest challenge – from hosting community fundraisers to barrelling across country on motorbikes to climbing Africa’s highest peak. Make no mistake: those journeys were also a big part of the fun. “On the bucket list of most Canadians is to drive straight across country and see every nook and cranny of it,” Michael Beckette, president and CEO of Mortgage Alliance tells CMP. “To be able to do that with this year’s MAC Rally of Hope and raise $110,000 for the breast cancer cause is just phenomenal.” Indeed.

“ I mean if I’m having a tougher year, what about those who need the help? ”

mortgagebrokernews.ca

Jan. 16 Ottawa tightens mortgage rules

Jan. 17 Street Capital introduces trailer fee model

Feb. 28 Desjardins joins forces with Meridian

Mar. 2 Equity Financial Trust now accepting deals

Mar. 9 Street Capital acquired by Counsel Corp.

Apr. 4 Pacific Mortgage Group bids to buy Invis

Apr. 17 Controversial document from RBC infuriates brokers

May 23 Brokers welcome Manitoban mortgage regulations

June 21 Macquarie Financial to leave broker channel

Aug. 6 MAC’s ‘Right Mortgage’ moves to Paradigm Quest

Aug. 15 CAAMP launches online education centre

Sept. 7 DLC launches commercial division

Sept. 8 MonCana Bank newest A lender for brokers

Oct. 2 Xceed returns to broker channel

Oct. 11 Lawyer files prepayment class action against CIBC

Oct. 25 myNext becomes Radius Financial

Nov. 7 MCAP launches Deal Run call centre

Nov. 16 New broker association for Atlantic Canada

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Year In Review

“ the result has been to plant the broker channel’s flag as an industry focused not only on building relationships with clients, but also those who may never walk in looking for a mortgage ”

Chris Dopp (left) handing out turkeys.

“ this year, brokers increasingly found themselves going and doing the extraordinary in an effort to give back to their communities ” Beckette’s team of industry professionals, and more than 150 bikers from across the country, rode their way to that record-setting figure this summer, criss-crossing 7,500 km of highway and six time zones. Between July 17 and 29, they’d pass by hundreds of communities, stopping only to pick up riders

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and rev up their resolve at community events, which poured their proceeds into the same kettle of cash bound for The Canadian Breast Cancer Foundation. The Rally’s efforts in 2010 translated into the third highest fundraising event for the foundation in 2010, when the final 2011 contributions are tallied, should place it in this year’s second spot. Praise from the recipient of that giving – like the many other non-profits receiving broker channel help – has been just as tremendous. “We are so proud of the MAC Rally of Hope riders’ dedication to the breast cancer cause and the Canadian Breast Cancer Foundation,” says Diane Gordon, VP of national development for the organization’s central office. “This vital support will allow the foundation to continue funding research, education and awareness programs in support of our vision of creating a future without breast cancer.” This year, brokers increasingly found themselves going and doing the extraordinary in an effort to give back to their communities, even as many of them struggled to maintain revenue streams during a year marked by unprecedented levels of competition and an all-but stagnant share of the overall mortgage market. The result has been to plant the broker channel’s flag as an industry focused not only on building relationships with clients, but also with those who may never walk in looking for a mortgage.

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Year In Review

big appointments Here were the movers and shakers of the mortgage industry in 2011: The provincial mortgage broker associations all appointed new presidents: Paul Bojakli at AMBA, Albert Collu at IMBA and Geoff Parkin at MBABC. IMBA also named Joe Rosati as its new executive director. The former president and CEO of Invis, Gord Dahlen joined Dominion Lending Centres as executive vice-president. George Hugh, former VP, broker services at ING Direct, left to start his own brokerage, Taurus Mortgage Capital Inc. Tim Rye was appointed the new Chief Operating Officer of The Mortgage Centre Canada Inc. MAC Rally of Hope participants, including president Michale Beckette (centre).

In October, Vancouver’s Jacqueline Baker climbed her way to her own personal fundraising goal as part of an expedition to the top of Mount Kilimanjaro, in Tanzania, Africa. “I climbed for children who are sick,” says Baker, a broker with Dominion Lending Centres Total Mortgage & Leasing. She would ascend the range’s tallest peak – all 19,341 feet of it – stretching out her arms in triumph on the last day of the climb. All 100 per cent of the funds raised have been earmarked for cancer research, patient care, education and advocacy for the B.C. Children’s Hospital Foundation and the Summits of Hope Endowment fund.

“ Vancouver’s Jacqueline Baker climed her way to her own personal fundraising goal as part of an expedition to the top of Mount Kilimanjaro ”

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Bob Ord left Mortgage Architects and soon after joined Invis/MI to launch an as yet unnamed mortgage investment corporation. Axiom Mortgage Partners named Tony Roberts VP for Ontario and Eastern Canada. Home Trust named Vince Agozzino to the position of director of national sales. Ron Swift, former president of MCAP, was named CEO of Pacific Mortgage Group, as founder and former CEO Alex Haditaghi became executive vice chair. ING Direct promoted Frank Giacomini to senior manager operations, broker sales. Dan Pultr was named TMG The Mortgage Group’s director of sales for B.C. Lori Smith was named director, business development, broker services at FNF Canada. Kelly Neuber, formerly of Mortgage Architects, was named VP, marketing for Invis/Mortgage Intelligence. Jason Kay joined Merix Financial as its VP, corporate development and sales. VERICO named Ellen Watt national manger professional development and Martin Marshall joined the corporate sales team for Ontario.

WHAT’S YOUR GOAL? BUILDING PROFILE

Help your clients build a better future

If your goal is building your profile, consider MCAP’s Key to Hope program. Without swinging a hammer, you and your clients can help build homes for families in need – with contributions to Habitat for Humanity Canada, matched by MCAP*. It means your clients can help provide housing while going about their daily activities – no hard hats needed! When you enroll, you’ll receive a kit with brochures and promotional materials. Your clients simply agree to add a donation to each mortgage payment. The result? You look good, while doing good. To discover how you can take part in MCAP’s Key to Hope program, please contact your Regional Account Manager or visit mcap.com/brokers.

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Year In Review

“ brokerages and broker networks have been just as eager to get out in the community ” Other members of Canada’s broker channel put Africa in their sights as they ramped up giving in 2011. “It’s really amazing what you can do there,” Kelly Price, of Mortgage Protection Plan, tells CMP. “I think the year’s budget for the school Benesure sponsors is about $50,000.The real trick is not so much in providing the money, but in providing the right infrastructure and teachers and lots of ongoing monitoring.” It’s something MPP parent Bensure has focused on, helping gifted students at Eta College in Cameroon prep for the postsecondary education that will allow them to give so much back to their communities. Those dividends are already pouring in, says Price. Closer to home, broker and CAAMP board director Scott Ede rode alongside Beckette in that rally ride ‘cross country.

Canadian Mortgage Awards The fifth annual CMP Canadian Mortgage Awards in April were a fun-filled Las Vegas-themed evening attended by more than 500 industry professionals. Diana Zitko of Dominion Lending Centres-West Coast Mortgages was named Mortgage Broker of the Year (fewer than 25 employees), while Tom Lam of Urban Mortgage received the Mortgage Broker of the Year (more than 25 employees) award. On the brokerage side, True North Mortgage captured the Mortgage Brokerage of the Year (fewer than 25 employees), while VERICO The Mortgage Professionals won the Mortgage Brokerage of the Year (more than 25 employees) award. TMG The Mortgage Group was the first recipient of the award for National Broker Network of the Year. Congratulations again to all of this year’s finalists and winners. The 2012 CMAs are scheduled for June 1, 2012, at The Carlu in Toronto and nominations are now open. Visit www.canadianmortgageawards.com for more details. Photo: Brian Devries of ICICI Bank (left) and Brian Matthey

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As it is for so many brokers, his charitable energies were directed at cancer – a common threat binding too many Canadian families. “Being a 13-year survivor of non-Hodgkin’s lymphoma, I have spent most of my waking hours giving back to the ‘cancers’ in some form,” he tells CMP, pointing to the kind of volunteer work brokers spent more than 50,000 hours at this year, alone. Brokerages and broker networks have been just as eager to get out in the community, in the process elevating public awareness of an industry still struggling to explain itself to many consumers. “RMA has been supporting Fit Active Beautiful Foundation for the

“ the real trick is not so much in providing the money, but in providing the right infrastructure ”

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Year In Review

past two years,” says CEO Ron De Silva. In addition to being the lead sponsor of its FAB 5K Challenge – an event focused on helping girls in Grades 6, 7 and 8 train for and complete in five-kilometre runs – the brokerage’s staff and mortgage professionals raise money through several events and volunteer on the non-profit’s committees. It’s the same kind of commitment brokers across the country have shown this year, backing lender charitable campaigns like MCAP’s celebrated Key to Hope. Through that program, the monoline has seen brokers and their clients channel their collective support for Habitat for Humanity. The organization, of course, aims to help get families into safe and affordable homes that they then own. More specifically, MCAP borrowers have added specified donation amounts to their mortgage payments. MCAP has then matched those funds, effectively doubling the impact. Brokers haven’t been left out of the loop.

“ we want to foster healthier, more educated, stronger, well-built communities ”

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“ people want to make a difference and if they know that they can add a dollar to their mortgage ... then they realize that they can make a difference ” “I participate in MCAP’s Key to Hope program for a minimum of $500 and whatever they get for Habitat when they took from our commission in June,” says Laurie Furness, an agent with The Mortgage Centre RDM Financial. “I am sure (it’s) not that high, but every bit helps.” According to MCAP’s senior vicepresident John Thompson, the Key to Hope and other programs will raise nearly $500,000 for Habitat for Humanity in 2011. “People want to make a difference and if they know that they can add a dollar to their mortgage payment and MCAP will match that, then they realize that they can make a difference,” says Thompson, who is also chair of Corporate Social Responsibility at MCAP. MCAP also supports other charities that its employees are passionate about. The company hands out five grants per

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Year In Review

“ corporate philanthropy efforts are very much engrained in our corporate culture because as a company and as individuals, we feel very fortunate to lead the lifestyles we do ” quarter to charities their employees are involved with, as well as giving one paid day off a year to volunteer. “We want to foster healthier, more educated, stronger, well-built communities,” says Thompson. “So, MCAP and our employees together with our brokers and our customers combine their efforts in order to really make a difference.” Adding up contributions, both big and small is a challenge for an industry celebrating independence and with more than 15,000 individual brokers and agents plying their trade across the country. Jacqueline Baker on the summit of Mount Kilimanjaro.

CMP top 50 brokers No. 1 on CMP’s Top 50 broker list in 2011 was Gord Pipkey, owner/broker of VERICO Real Mortgage Services in Richmond, B.C. Pipkey topped this year’s list with a total of over $263 million in funded residential mortgage volume for 2010. “I never focused on the commission,” Pipkey said. “I never dreamed of this. I just did the deals and it kind of happened.” Rounding out the top-five were Dan Eisner of True North Mortgage in Calgary, Jim Tourloukis of Advent Mortgage Services in Unionville, Ont., Calum Ross of Mortgage Professionals-Mortgage Centre Canada in Toronto and Collin Bruce of Dominion Lending Centres-Mortgage Mentors in Edmonton.

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Gord Pipkey

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Year In Review

Still, broker organizations are increasingly finding a common thread among mortgage professionals intent on sharing their success in very tangible ways. “Together, we have raised $100,000 for various charities this year,” says The Mortgage Group’s Mark Kerzner, pointing to recent broker campaigns raising tens of thousands of dollars for disparate causes such as clinical trials for multiple sclerosis liberation therapy and an SPCA in Kelowna. “Corporate philanthropy efforts are very much engrained in our corporate culture because as a company and as individuals, we feel very fortunate to lead the lifestyles we do.”

On the micro level – where most of the channel’s charitable works get done – individual brokerages like DLC BTB in Niagara Falls are winning community praise for the time and energy its mortgage team puts into helping others pull up their boot straps. The challenge has been to strike a balance between building strong brokerages and even stronger communities. As one of the owners of Verico Gibbard Hoffart Financial Group, Gabe Hoffart in North Vancouver has worked the frontlines for more than a handful of charities this year. As the main organizer of the fifth annual Broker Lender hockey tournament, he, along with industry

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Year In Review

Brokers on Lenders 2011

Overall Performance Rank

Lender

Score 2011

Change

MCAP

4.03

3.50

+0.53

Merix

4.02

4.44

-0.42

First National Financial

3.98

4.59

-0.61

Street Capital

3.89

3.41

+0.48

ING Direct

3.83

3.28

+0.55

Scotia Mortgage Authority

3.78

3.45

+0.33

FirstLine Mortgages

3.71

3.37

+0.34

Home Trust

3.69

3.42

+0.27

National Bank of Canada

3.23

TD Broker Services

3.23

Overall performance In the overall performance category this year there was some shake-up, as MCAP leapfrogged Merix to switch places with First National. Street Capital and ING also made some gains from last year, with Street moving up three spots to fourth and ING moving five places all the way to fifth. “MCAP has surprised me this year and the overall service with BDM and underwriter work very hard at answering your questions. For someone new, that is so important and others just have not taken that much time.” “Merix so far has been the most personable lender I have worked with. I appreciate that they truly desire to have my business and work hard to get it. They also treat newcomers with respect.” “First National is by far the best lender. All lenders could learn something from them.

Score 2010

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Brokers are their customers and we feel like customers.” “Overall Merix works the hardest to get my business. With lower volumes I don’t send in as many deals as some, but [they] treat me like I do. Their system is based on efficiency not quantity.” “Common-sense lending, good policy procedures to support that, great underwriters, that is what makes the difference working with MCAP. Their competitive commissions and programs allow us to be competitive.” “I think First National is one of the best lenders out there. They are fast with their approvals and that is important. They also update their conditions very quickly, which when you are on a deadline to remove financing conditions is of prime importance.” CMP

Who do YOU think is the best and the brightest? Brought To You By:

2012

June 1, 2012 The Carlu, Toronto

NOMINATIONS NOW OPEN ! www.canadianmortgageawards.com Platinum Partner:

Official publication

Award Sponsors Another event organized by

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Year In Review

veterans Mike Ashe, a Mortgage Centre VP, Gary Pabla, with D+H, and Kristina Morrison and Cindy Ricketts at First National, raised over $11,000 for Canuck Place Children’s Hospital. It’s just one of the many unsung contributions inspiring other brokers. “I am quite sure if Gabe was digging ditches in Hope, B.C. he would be up to the same thing,” says business partner Karen Gibbard. It’s exactly what colleagues and clients were saying about Dopp as he ramped up his annual spending spree for that Christmas dinner giveaway. He and a dray load of volunteers, many of them Realtors, will work at an assembly line for the 250 Collingwood families expected to pick up not only that 10-pounder, but a five-pound sack of spuds, a dozen dinner

“ I’m helping people who are down on their luck and that’s why I’m helping them. I’m not counting on them to come to me to arrange a mortgage ” rolls, a couple of cans of vegetables, an apple pie and something to wash it all down with. Like so much of the channel’s charity in 2011, it’s aimed not so much at building a book of business, but contributing to community. “I’m helping people who are down on their luck,” Dopp tells CMP, “and that’s why I’m helping them. I’m not counting on them to come to me to arrange a mortgage.” CMP

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CMHC/Conventional Financing Brian Kennedy 604-331-2211 Jonathan Wong 604-331-2218

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Toronto Suite 1801 130 Adelaide St. West Toronto ON M5H 3P5 Fax: 416-368-3328 Email: toronto@peoplestrust.com CMHC/Conventional Financing Michael Lombard 416-304-2078 Ady Steen 416-304-2089

NO. 17

Guide to alternative lending www.mortgagebrokernews.ca

home equity pr覺mer Customer Service Your CRM could be your secret weapon

Special Focus Mortgage investors face tax changes

Q&A Equity Financial Trust Home Trust MCAP Optimum Mortgage PUBLICATIONS MAIL AGREEMENT #41261516

A new spirit in mortgage lending Dedicated to mortgage brokers at equity financial mortgage services we deliver a new level of responsiveness and common sense lending to the ontario mortgage broker community.

EquityFinancialTrust.com/Mortgage Toll Free: 1.866.393.4891

TrusT. Leadership. performance. ÂŠ 2011 equity financial Trust company

contents cmp guide no.16

NO. 16

Guide to alternative lending

2 6

Private lenders, punitive policy The showdown over tax changes for mortgage investors took place in Ottawa, writes Vernon Clement Jones, but the casualties may ultimately be spread across the broker channel

The Future Looks Bright New initiatives at MCAP Eclipse reflect the broker preference for reaching a live person when dealing with lenders

De-mystifying the alternative lending myths Misconceptions abound about alternative lending, but that doesn’t mean brokers and consumers

Home equity primer What are your choices when dealing with Alt-A clients? Knowing your home equity loan options will help you serve the self-employed, credit-challenged and other credit-challenged borrowers

should shy away from this opportunity, says Home Trust

Help is at hand Your customer relationship management (CRM) system could be the secret weapon your business needs — if only you could figure out how to use it. Our sister publication MPA asks IT professionals about the biggest mistakes brokers make when it comes to utilizing their systems

One good thing With brokers increasingly looking to expand their revenue streams, Nick Kyprianou of Equity Financial Trust says alternative lending is a great opportunity

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Guide FEATURE

home

equity pr 2

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rımer

Guide FEATURE

What are your choices when dealing with Alt-A clients? Knowing your home equity loan options will help you serve the selfemployed, credit-challenged and other credit-challenged borrowers

ost of your business is likely made up of A clients, the ones with great credit and a steady full-time job. It’s easy getting them a mortgage with a bank at a low interest rate. But in our society where more and more people are choosing the selfemployed route, there’s a cache of consumers to serve that don’t qualify with traditional financial institutions. Instead of turning these alternate-A, and even B (the credit-challenged), clients away, familiarize yourself with alternative lending products that tap into home equity for loans rather than strictly examining income and credit. “I understand why some brokers may be afraid of it,” says Ron Cuadra, vicepresident of sales and marketing at Home Trust. “It’s not inside-the-box lending, unlike A lending, where credit is good, income is provable and the story is straightforward.” Home equity loans act exactly the same as a traditional mortgage for the consumer with some subtle differences. But the broker needs to be more thoughtful when recognizing why a client requires alternative lending. A woman enters your office or calls you on the phone. She started a baking company a few years ago and rode the trend of fancy cupcakes to success. She began the project out of her city apartment rental and now feels financially comfortable to purchase her first home. But she invested most of her revenue back into the business and claimed little income when filing her taxes—or didn’t file at all. “A lot of people who are business-for-self haven’t filed their taxes for maybe a year or two,” says Paula Hutton, business development manager at Capital Direct, a private alternative lending company. “Or even a lot of regular people haven’t filed their

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Guide FEATURE

“ you have to know how much of the home they own or are going to own, whether they’ve paid their taxes ... You want to know what they want the money for ” taxes. And if you don’t declare enough money the bank says, ‘You don’t make enough money,’ and you won’t qualify for a home.” Another example of this is a firefighter who works his full-time job but has a side job where he receives cash and doesn’t claim it. To obtain a mortgage, he would need the combination of his full-time salary and side income. So a home equity product on the alternative lending side looks at a client’s story instead of just rigid criteria. Generally, the only qualifier for a home equity loan is proof of how much equity exists. Typically, when you submit the application, the lender will send a certified appraiser to walk through the home to assess its worth. “The appraiser sees if there’s mould damage or a grow-op in the basement,” says Hutton. “Or it has high-end appliances, beautiful floors and everything is just top-notch, and it’s going to be a lot more valuable home than the guy next door who maybe lived there for 50 years, has old cabinets, old linoleum and has never done any upkeep on the home.” Another qualifier that an alternative lender may examine to some extent is the client’s ability to make the loan payments. The lender could ask for the past three months’ bank statements to show that the client has enough money to pay back the loan. A client’s credit report also acts as a gauge of personal financial behaviour. But circumstances do arise where the client doesn’t want to submit any official documentation. Hutton has seen cases where certain cultural groups consider finances sternly private and won’t budge on releasing that information. “They may not want to tell you about the nine properties they own with a brother or a sister,” she says. “They’ve got three companies, a house here and another house there, but they don’t want to go into those particulars.”

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As the broker, it’s your job to extract as much information as you possibly can through conversation. “You have to know your client,” adds Hutton. “You want to know how much of the home they own or are going to own, whether they’ve paid their taxes—unfortunately you do have to find that out—and the purpose. You want to know what they want the money for.” Having that discussion means you can suggest a home equity product since an appraisal suffices for qualifying in most instances. Alternative lenders can do this because the remaining equity in the home mitigates the risk. As long as there’s equity available, it’s not very challenging for the client and often the path of least resistance when you see a non-income qualifier. So, home equity loans work well for the credit-challenged client, too. One common instance is a divorced couple where during the last year of marriage, both partners thought the other was paying the bills. Instead, neither was and it dropped both of their credit scores. This is a classic case where there’s a story behind the credit report that a bank won’t consider. Home Trust’s Cuadra stresses how alternative lenders do concern themselves with the story because the risk falls on them. “At the end of the day, we have the remaining equity as a backup if the client runs into trouble paying the mortgage,” adds Cuadra. “We price to risk. If we have to take over that property, we have enough equity out there to mitigate any losses.” Though obtaining a home equity loan is an easier process for the client than a traditional mortgage, the rate is often higher and additional fees can apply. So if your client can qualify for A lending, you want to take them where the rate is lower. The other minor advantage to a client who qualifies for A lending but looks at the alternative route is that a home equity loan is processed much more quickly. If your client needs something to take place

“ we price the risk. If we have to take over that property, we have enough equity out there to mitigate any losses ”

Guide FEATURE

“ we don’t hesitate to follow up with the client when they fall behind in payments. Our goal is to offer solutions by working with them ” extremely fast, these types of mortgages are processed smoothly because all it requires is an application being submitted, a commitment signed, an appraisal done and checked by a lawyer. Another aspect of alternative lending you would advise consumers on is what would happen if they don’t make their payments. Since this loan is considered higher risk, private lenders are more diligent in following up on the client’s status when a mortgage is in arrears. “We have a very highly trained collections department,” says Cuadra. “We don’t hesitate to follow up with the client when they fall behind in payments. Our goal is to offer solutions by working with them. If no solution is possible internally, we refer the client back to the broker to see if they can help.” Aside from these minor points, a home equity loan functions like a normal mortgage for the consumer. Length of term, rate, amount and frequency of payments are all established to work best for your client. If you’ve dealt mostly with A clients but want to help anybody who comes your way, start building your alternative lending knowledge. Knowledge is power and the best way to use alternative lenders is to learn as much as you can about their products. Generally speaking, whenever you become more educated on a product, it gives you the confidence to present to the client. Once you see a product such as this exists, you’ll see it as an opportunity that many other brokers are taking advantage of right now. Alternative lenders are typically broker-friendly and want to help you. “With Home Trust, we specialize in brokers that don’t know a lot about alternative lending,” says Cuadra. “Our underwriters and salespeople,

and as a company, we’ve all been trained to work with brokers and invite those who are unfamiliar with this type of lending. We help them along the way and work in conjunction with them to get the deal done.” Though a home equity loan requires less documentation—the only essential paper is the application then an appraiser inspects the home—Cuadra understands that it takes more thought and effort when packaging the deal. It makes sense to use the business development manager, such as Capital Direct’s Hutton. Her job involves hosting seminars on the private lending products and establishing relationships with brokers. “I get 20 or 30 associates a day calling, asking, ‘I’ve got a deal. I want to run it by you. Is this something you guys will do?’” she says. And often, the answer is if the equity is in the home, the client will qualify for the loan. CMP

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Guide Feature

private lenders, punitive policy 6

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Guide Feature

The showdown over tax changes for mortgage investors took place in Ottawa, writes Vernon Clement Jones, but the casualties may ultimately be spread across the broker channel

he broker channel certainly came, it certainly saw, but didn’t quite manage to conquer parts of a controversial bill wending its way across Parliament Hill and threatening to cramp its funding style. “With Bill C – 13, it’s like the government is salmon fishing and has caught all of us – legitimate MICs and any players out there gaming the system – all in one net,” says Alan Cross, president of the Vancouver-based First Circle Financial, one of an increasing number of Mortgage Investment Corporations. “As a result there is going to be less capital available for private lending in the broker channel.” Broker associations – along with their MIC counterparts, including the one Cross founded for B.C. MIC managers – are voicing the same concerns about legislation set to transform a growing part of the business. A private lender from Alberta, in fact, took those concerns to Ottawa in November, asking a finance committee to amend its amendments in order to protect that industry. While the government billed C-13 as a way of closing tax loopholes around investment corporations, among other key areas, the broker channel has baulked at the ways it intends to do it. Chief among the bill’s amendments was the decision to move MICs to a “prohibited investment” list in terms of RRSP and RRIF tax exemptions. In practical terms, it means that members of a family – or related individuals – lose that tax advantage if their collective ownership of any class of shares in a MIC or syndicate is more than 10 per cent, argue industry critics. That ceiling used to be set at 25 per cent. The definition of “related

individuals” has also been altered, and will now extend to any blood, marital or adoptive relative and not just a spouse or minor child. All told, that represents a sea-change for many small- and medium-sized MICs that have their roots in family members getting together, pooling their retirement savings and lending it out in the form of mortgages. Those companies have now burst free of those humble beginnings, drawing investors well outside family circles. But in the case of Cross’s First Circle – as it is with so many other MICs – those familial ties still exist. It means Cross and his own extended family will likely have to assess their collective ownership and cut back to meet the new, more-stringent standards, he says. The government is allowing a ten-year phase-in period before the full weight of taxation comes on to their shoulders. “MICs have been around for years and have been a reliable investment vehicle, and one that I and my family have used to plan our retirement,” Cross told CMP. “With this bill, the government, instead of weeding out those abusing the system, have decided to take a broad-sweeping approach that penalizes all of us.” Those penalties will ultimately get pushed out to brokers and their clients, increasingly turning to the alternative sphere to short-term lending as mortgage rules make it harder to gain a foothold in the A realm. “The big concern for mortgage brokers is the ability to have financial options available to them and their clients,” Dean Koeller, immediate-past president of the Alberta Mortgage Brokers Association, says. “We have

“ with this bill, the government, instead of weeding out those abusing the system, have decided to take a broad-sweeping approach that penalizes all of us ” mortgagebrokernews.ca

Guide Feature

a list of 70 MICs across the country that are supporting us in calling for changes to this legislation. “Some have suggested that they will close down due to an inability to meet the new ownership levels, others will have to divest a significant portion of their investments to provide shareholders with the equity to pay tax penalties. Others will not be able to grow due to related party issues or ownership issues or tax penalties being imposed.” Koeller’s brother, Dale – VP of private lender Calvert Home Mortgage – was that private lender sent as an envoy to Ottawa in November. Both AMBA and MBABC, along with several MICs, signed off on his speaking points. The underwriter addressed a finance standing committee on the proposed changes to the country’s federal tax regime as part of the government’s Bill C-13. “It is important to note that the impact of these rules changes will have a varying effect from company to company,” says Dean Koeller, also Calvert’s CFO. But “either way, if MICs have less capital resources or are not operating at all, this will reduce the financial resources that brokers will have available to assist their clients with their financial needs.” Those arguments ultimately failed to persuade both the finance committee and the House of Commons both of which signed off on the bill before bundling it up and sending it along to the Senate. The Koellers and the coalition surrounding them also shifted their lobby efforts to that

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appointed body. Still, in the final analysis, says Dean, they may have to lump the changes today in hopes of influencing and, in fact, encouraging future amendments tomorrow. Cross is moving now to figure out what if anything he and related First Circle investors can do to comply with the new restrictions and still protect nest eggs covered by Canada’s RRSP/RRIF program. “In short, we are at a loss to understand why the Department of Finance has lumped in MICs with engineered tax avoidance schemes,” he says. “We must point out that the framework for MICs was created by Act of Parliament in 1972, and underwent a full review in 1998.” Those investment vehicles are still in a state of regulatory flux, taking on changes that insiders had hoped would shield it the government’s tightening up of the tax code. While there are some concerns Federal Instrument NI 31-103 needlessly duplicates oversight of private lenders, its new investment rules, imposing tighter registration requirements for investment fund managers, actually raise the bar for MICs and syndicates. Greater transparency should also increase investor confidence in MICs, which continue to grow in B.C., Alberta and Ontario, and the additional licensing and registration standards will likely lend the relatively new sector greater legitimacy. That may be the case, but with Bill C-13, Ottawa was more focused on beefing up its tax coffers now instead of waiting for RRSPs and RRIFs to reach maturity. “They want that money now,” says Cross. CMP

Guide MCAP

The future looks bright New initiatives at MCAP Eclipse reflect the broker preference for reaching a live person when dealing with lenders

or Eclipse lending, MCAP’s alternative lending division, the future’s looking brighter and more positive than ever. Eclipse has a bright new look, a new strategic energy and a host of groundbreaking initiatives in the pipeline. According to the incoming Director of Business Development, Megan McDonald, the new Eclipse brand personality, tone and look is rooted in actual broker experiences. “Brokers kept telling us they liked reaching a live person every time they called,” says McDonald. “So we felt it was time to reflect this focus on enhanced service and attention.” The new communications campaign makes the point. New print advertisements feature headlines such as: ‘Our staff will seem smarter and more knowledgeable. Mainly because they know how to pick up the phone.’ As well, the new look reflects Eclipse’s proven attentive approach to customer service and the high quality of their people. Eclipse underwriters typically have 10-plus years of experience. But the new brand look is only the beginning, according to McDonald. “We have other initiatives on the horizon, excuse the pun.” One of the best of these is DEAL RUN, a special toll-free broker hotline (1-866-260-D-RUN) that opened in November, where brokers can call and run their deal past a live person to get immediate answers on whether the deal is viable. In addition to the DEAL RUN desk, Eclipse also recently launched DEAL RUN 5-on-5 – a series of quick questions that, when answered for an Eclipse underwriter, lead to a near immediate response on the likelihood of a deal being approved. The actual questions are broken into two camps, Determines LTV and Determines Pricing: Determines LTV: • Property location (address if possible)? • The home’s current state? • LTV – how did you assess the value? • Purchase or Refinance? • Income source (provable or stated?) Determines Pricing • Beacons – if low credit score, why? • Is the current mortgage up-to-date? • Are there property tax arrears? • Do they owe Canada Revenue Agency? • Have they been bankrupt or had a proposal?

According to McDonald the whole process should take only minutes. “Brokers simply assess their file for the 5-on-5 facts, share them with Eclipse, and we get answers to them fast on the viability of their deal.” And to give brokers even more – and mobile – convenience, the Eclipse team recently launched the DEAL RUN 5-on-5 Megan McDonald Mobile Smartphone App – one of the first broker-specific smartphone apps in Canada. The app uses a similar structure to the 5-on-5 question format, except that all the questions are answered on the smartphone and then emailed to Eclipse where one of the trained professionals analyzes the data and sends back a response ASAP. The entire process can take as little as a few minutes, significantly improving productivity for many brokers. The Eclipse team continues to roll out the 5-on-5 theme with other initiatives that are designed to give brokers tangible and actionable ways to improve productivity and efficiency. In October 2011 Eclipse launched the FUND-5-ADVANTAGE, a new exclusive broker benefits club that provides brokers with their own dedicated underwriter. To join the exclusive FUND-5ADVANTAGE club, brokers simply fund five deals with Eclipse and then they automatically receive their own personal underwriter. The benefits of this kind of personal service are well understood, says McDonald. A better underwriter relationship can easily lead to smoother closings and make it easier for brokers to serve their clients – and thus grow their business. There are more service initiatives on the way, according to McDonald, adding that Eclipse remains committed to being the brightest light on the alternative lending front. “We’ve got the stability and we’re committed to our brokers and their business. We’re going to continue to live up to our new tagline, the brighter alternative.” CMP

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Guide

Home Trust

Misconceptions abound about alternative lending, but that doesn’t mean brokers and consumers should shy away from this opportunity, says Home Trust

De-mystifying the alternative lending myths M

Pino Decina

ost Canadians are aware that mortgage brokers exist, but after that, their knowledge tends to wane a bit. Fact is, according to the most recent Maritz study, only 40 per cent of all Canadians say they have a good or full understanding of the services that mortgage brokers provide. And even among those clients who do know about brokers, misconceptions abound. When it comes to alternative lending, there are also misconceptions, but this time, the shoe is on the broker’s foot. It’s estimated that at least 20 per cent of all Canadians don’t qualify for a mortgage through traditional financial institutions, and that number may be on the rise as banks tighten their lending criteria. These clients turn to alternative lending solutions to meet their needs. Yet while most brokers are aware that they could help these clients get a mortgage, many choose not to. Why not? As it turns out, brokers can harbor their own misconceptions when it comes to alternative lending: it’s only for people with bad credit; the market’s unstable; closing a deal is too time consuming and complicated; lenders are difficult to work with; the list goes on. So, many mortgage brokers continue to shy away from offering alternative lending solutions, and could be missing out on opportunities to grow outside of an increasingly competitive market. Listed below are some of the most prevalent myths – busted – surrounding alternative lending: MYTH: Alternative lending in Canada is unstable. Busted: Companies like Home Trust who offer alternative lending are subject to the same stringent regulatory guidelines as all Banking and Trust companies in Canada. “We’ve been serving the underserved market in Canada for over 30 years now”, says Pino Decina, Senior Vice President of Home Trust Company. “It’s a market we know and understand very well, and we have the products to serve it.”

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MYTH: Alternative lending is all about bad people with bad credit. Busted! Granted, there are probably some clients who are recovering from bruised credit. But more often, that’s just not the case. ” Many of our clients are self-employed and unable to provide the required form of income documentation to satisfy their bank,” says Decina. “These clients comprise up to 80% of our business. The remaining 20 per cent may include those with bruised or no credit, or they may be new to Canada”. Many clients who start out with an alternative product graduate to an ‘A’ product, often within one or two years. MYTH: Alternative deals are too complicated to package. Busted! There’s no doubt that ‘B’ deals are unique and can be tricky. They often require out-of-the-box solutions that are tailored to the client’s individual needs. But if the broker is partnering with an established broker-friendly alternative lender like Home Trust, they will work directly with the experienced underwriter or business development manager to get the deal done. Decina added: “We’re not a bricks and mortar bank. We depend on brokers to bring us business, and we work hand in hand with them to close the deals.” Education is key to building awareness and breaking down the myths – for both clients and brokers. Lenders like Home Trust are doing their part to inform and educate brokers by offering information sessions, webinars, and broker events throughout the year. They’ll also be launching a new online tool in 2012 to make it even easier for brokers to stay connected and informed on top of all their deals. For Brokers who choose to offer alternative lending solutions, they not only provide a valuable service to an underserved market, but in the process, stand to benefit from expanding their client base today and their earning potential tomorrow. CMP

Guide

Optimum Mortgage

Transition time Economic turmoil and uncertainty has created a mortgage market in Canada where brokers need to ensure they are positioned to meet the needs of clients who no longer fit the A mortgage space, says Optimum Mortgage’s Lester Shore CMP: It has been about three years since the housing correction in the U.S. and it appears we are still dealing with the macro-economic fallout that is rippling through the world economies. In your opinion are there darker days ahead for the mortgage industry in Canada? Lester Shore (LS): I expect the road ahead will be bumpy as governments around the world deal with serious debt issues, which is clearly impacting consumer confidence in Canada. In Canada we are very fortunate that consumers, brokers and lenders acted prudently during the boom of the early 2000s; the Canadian real estate and mortgage markets were not exposed to the same frenzy that they were in the U.S. The mortgage foreclosure rate in Canada has remained low and even though real estate values

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in some parts of Canada have decreased from their 2007 highs, we have seen modest price gains in most markets over the last two years. Additionally, Canadian unemployment rates continue to decrease, in some regions we are back down to pre-2007 levels. Our view today is that the upcoming year will see relatively low interest rates, stable to slightly appreciating home values and a slight improvement in unemployment. This will translate into another stable and positive mortgage market for 2011/2012. CMP: Do you see major upheaval in the world economy such as the European debt crisis as the major threat to the mortgage industry here in Canada?

“ I expect the road will be bumpy as governments around the world deal with serious debt issues, which is clearly impacting consumer confidence in Canada. ”

Guide

Optimum Mortgage

“ the potential challenge to the Canadian mortgage industry is the high level of Canadian household debt levels ” (LS): There is no question that a major macroeconomic event such as a default by Greece or Italy, a double-dip rescission in the U.S. or a major slowdown of the Chinese economy would have some economic impact on Canada. Like storm clouds on the horizon, we must always keep an eye on such major macro economic events. However, the potential challenge to the Canadian mortgage industry is the high level of Canadian household debt levels. How do we as lenders react and more importantly are the regulators going to become more involved in our industry? I had the opportunity last month to attend the American Mortgage Bankers Association annual meeting and was shocked by the dramatic increase in mortgage lending and mortgage broker regulations. Some of these changes were clearly needed; however, one wonders whether the pendulum has swung too far and home ownership is no longer an option for those who, in a normal market, would and should qualify. My hope is that brokers and lenders in Canada will continue to show the Canadian regulators that we conduct ourselves in a prudent manor. In my view, there is no need to follow the U.S. lawmakers whose “new rules” have resulted in a material reduction in risk appetite by lenders because of increased regulations and criteria. The Canadian regulators, I know will take into account the difference between the two markets and ensure our industry continues to contribute to help Canadians achieve the goal of home ownership. CMP: How is Optimum Mortgage reacting to these concerns? (LS): At Optimum Mortgage we believe in using common sense. We have always strived to be a prudent lender, we offer a number of stated income mortgage solutions in which we always ensure that we are satisfied that the borrower’s stated income is reasonable and that the overall affordability of the deal makes sense. The biggest

failing of the U.S. mortgage industry was putting people in mortgages they simply could not afford. There is a need in the marketplace for a lender who can provide alternative mortgage solutions for clients who do not fit the traditional bank income, credit and TDS/GDS guidelines. There are life events along with the fallout from these economic swings that cause people to fall outside of the A lending criteria. The alternative mortgage solutions that we offer at Optimum allow these borrowers to transition back into the A mortgage space over a couple of years as they build their business, increase their tenure with their employment or repair their credit. At Optimum we also appreciate the value of our broker partnerships. We will continue our commitment to the broker channel by not competing with them by having our own sales force of mortgage specialists, not having a formal retention department and by continually adapting to the changing needs of our broker partners.

Lester Shore

CMP: Do you have any suggestions for brokers on how best to position themselves for the road ahead? (LS): With the recent decrease in the number of mortgage applications most brokers are seeing, I have witnessed a number of brokers who have successfully expanded their reach beyond just A clients, which has resulted in less of a decline in their fundings. The ups and downs of the economy have resulted in a larger percentage of clients who do not fit within the A mortgage space. If you have not already positioned yourself as a mortgage broker who can provide solutions for these clients you may be missing out on a growing part of the market. If you are not familiar with the alternative lending solutions that are available, Optimum has put together an accredited training program (issuing CAAMP credits) on alternative lending that our BDM’s are presenting on a regular basis. CMP: Any final thoughts? (LS): As history has shown us, in times of uncertainty and chaos there is both great anxiety and great opportunity. Those who can manage the anxiety, see the opportunity and adapt to take advantage of the opportunities will not only survive, but will also prosper. Optimum Mortgage continues to see great opportunity in the Canadian mortgage industry, especially in the area of providing alternative lending solutions – and we have built the team to successfully serve brokers in this market. CMP

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Guide

CUSTOMER SERVICE

help is at hand Your customer relationship management (CRM) system could be the secret weapon your business needs — if only you could figure out how to use it. Our sister publication MPA asks IT professionals about the biggest mistakes brokers make when it comes to utilizing their systems

“P

eople rarely implement 100 per cent of any software,” explains Chris Mills, managing director of Linx Software, “but there are a lot of things that people should be doing with regard to their CRM systems to improve their business.” It’s a sentiment that is echoed across CRM providers and aggregators alike. FAST managing director Steve Kane recently complained that despite investing more than a year’s worth of profit into its CRM system — which was also adopted by PLAN and Choice - many brokers are simply using their CRMs as “static repositories of information.” While a variety of different systems are available through aggregators and direct from IT companies, there are some commonalities between the systems that brokers could be capitalizing on to improve the success of their business. Here are some aspects of CRM systems that will not only help you manage your clients more effectively, but they could even generate leads that boost your bottom line. Data mining According to Stargate CEO Brett Spencer, data mining is the single biggest

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Guide

CUSTOMER SERVICE

top CRM tips While aggregators are investing in CRM systems to improve their offering to members, some brokers are choosing to find their own solution. According to Wayne Macartney, manager of sales and marketing at Loanworks Technologies, the introduction of NCCP has been a major catalyst for broker companies to sit down and review how they operate. “The penny has dropped that if their data is solely stored in their aggregator system then it’s highly problematic if they choose to switch aggregators,” he warns. “Similarly, if they put some business through an aggregator but have direct accreditations elsewhere (such as with a commercial lender) and are also selling car finance, chattel mortgages and insurance, then this highlights the need for independent software.” Whether you’re shopping for an aggregator that offers a better technological solution for your business, or simply just looking for a CRM alternative to what you’ve got, then these are the “must-have” attributes of a quality CRM system. 1. Industry specific: generic CRM/ marketing solutions will require configuration. Shoehorning your business into a generic CRM system is a false economy 2. Cloud-based: broker companies can minimize IT spend by effectively outsourcing hosting. This also means that the system Is available anywhere 3. Portable: software should run on a tablet PC and have smartphone portals so that the broker can access information from his/her iPhone, BlackBerry or similar 4. Automation: the software should be able to be configured so that workflow processes are tracked, followups are automated and both the applicant and any third-party referral sources are kept in the loop 5. Document management: the software should enable the broker to generate and fax/email documents from the system, as well as to store supporting documents for compliance purposes 6. Integrated with broker tools: product comparison, scenario modelling and loan submission should all seamlessly integrate to minimize double handling of data 7. Both customer-centric and deal-centric: the software should allow the broker to drill-down on a piece of business with a given customer, but also give the total picture of that customer over time 8. Multi-user: as soon as you have staff, you need to be able to manage their workloads, monitor activity and measure performance 9. Marketing-savvy: brokers need to be able to readily access customer data for marketing, as well as being able to “slice and dice” for truly segmented marketing 10. Good support: a good system comes with good support that is able to respond to your questions and queries in a timely manner.

Sources: Loanworks Technologies and Linx Software

area of a CRM system that brokers fail to use effectively. “Brokers are not using the data for simple things such as keeping in contact with customers on an annual basis, and the classic example that we use with the Symmetry platform is an annual letter around settlement,” he says. “If a loan settles in September, then they can data mine their system every October to find what loans settled the previous year in September and it gives them the ability to keep in contact with their customer at least annually. It may also give them an opportunity to review a fixed-rate expiry period or a honeymoon rate period.” Cross-selling Using your CRM system to help you diversify your business should also be a no-brainer, according to Linx Technologies’ Chris Mills. “I think this is one of the most important areas of a good CRM system,” Mills states. He advises brokers to look for a system that at least caters to risk insurance — a go-to area of diversification that many brokers are now adding to their business. Checking commissions Using your CRM system to verifying commissions could not only save you time, it could save you huge amounts of money. Mills points out that some aggregators have substantial orphan accounts — misplaced money that belongs to brokers. While you could check your commissions manually each month, the complexity of this exercise and the time involved means most brokers just rely on the lender and aggregator to sort it out. But according to Mills, one broker reported that by using his CRM system to make the calculations he was finding an average of $500-$600 in unpaid commissions each month. Selling your business Another huge advantage to effectively using your CRM system is the increased value it adds to your business — particularly when it’s time to sell. “Your business will have a lot greater value if the information is neatly organized and not in a broker’s head:’ Mills says. This last point is of greater significance to the older generation of brokers, who may be on the cusp of retirement. According to Mills, older brokers are more likely to under-utilize their CRM system, than the younger, tech-savvy mortgage professionals. CMP

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Guide MCAP

one good thing With brokers increasingly looking to expand their revenue streams, Nick Kyprianou of Equity Financial Trust says alternative lending is a great opportunity

ick something you’re good at and stick with it. That could easily be the motto for alternative lender Equity Financial Trust, which joined the ranks of mortgage lenders in March of this year. “You can’t be everything to everybody and that’s what makes us so good at the B side,” says Equity CEO Nick Kyprianou. “We have a clearly defined niche in the market space and we want to be the best player in that space.” Just as Equity only does alternative lending, so do they only deal with mortgage brokers. “Our mortgage business is built around serving mortgage brokers. We understand their requirements for quick turnaround times and customer service. We do not work with the public directly. Mortgage brokers are our sole focus.” And they’re serious. “If a client calls us directly, we refer them to a mortgage broker.” In a market where A originations are slowing, Kyprianou feels brokers need to focus their attention on other revenue opportunities. “The majority of the brokers out there focus on the A business that’s easy to do,” he says. “But when the market softens, lenders tighten their lending criteria and there is more opportunity to do B business.” And when brokers take their business to Equity, everything is done to help make the deal work. “We take a common sense approach when looking at the deal,” says Kyprianou. “For us, if the real estate is marketable, we can work around poor credit and soft income. We’re never flexible on real estate, but we are flexible on covenant issues.” Besides being flexible, Equity is also diligent. “We don’t throw the file back on the broker’s lap and say ‘fix it,’ we do our best to solve the problem for the broker and then go back to them to advise them that we’ve solved the problem. It’s one of our value propositions.” Value is also added on a monthly and quarterly basis as Equity offer specials to its brokers for

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Nick Kyprianou

meeting pre-set goals for which they receive cash bonuses and that highly prized property known as Leaf tickets. It’s those perks and going the extra mile that attracts brokers to Equity, but Kyprianou says they are being selective. “We’re not bringing on any broker that wants to come on,” he says. “We want this to be a partnership.” That partnership extends to the underwriters at Equity, who “own” and are responsible for 50 mortgage brokers each. Equity may have to add to that stable as Kyprianou expects geographical expansion in 2012, which may see the lender expand its reach to Ottawa from its current footprint in the GTA and London. On the A side, it’s all about rate says Kyprianou, which makes mortgages a commodity product. “When you go to an A lender, brokers say ‘You need to give me a good rate because my clients are expecting a good rate.’ All things being equal, everybody has the same rate, so now it becomes ‘what are you going to do for me.’ “On the B side it’s not about the bells and whistles, it’s about the money. Because clients have already gone to another lender and been declined, at this point the crisis has set in and the client isn’t focused on rate, they’re focused on getting the money to close the purchase or consolidate their debts and reduce their monthly payment. “It’s a different value proposition. If you’re self-employed and you’ve got bad credit, you’re not looking for a 2.10 per cent mortgage – you might be, but nobody’s giving it to you. The focus then changes from the rate to ‘I need the money.’” Getting clients their money also generates referral potential, according to Kyprianou. “If you help that client who has been turned down by a couple of banks and you get them a mortgage, they’re going to be much more loyal to you than they would have if all you had done was got them a good rate. ” CMP

Our staff will seem smarter and more knowledgeable.

Mainly because they know how to pick up the phone. , That s Eclipse Lending. Brokers need answers fast. So Eclipse lending ensures you reach a knowledgeable person, not a voicemail. Our underwriters typically have 10+ years experience and are now standing by to help make your deals more efficient. Plus, our new DEAL RUN broker hotline gets you answers almost immediately. Give us , , a call. You ll find the light s always on at Eclipse lending.

Call us at 1-866-260-D-RUN (3786) or email us at DEALRUN@mcap.com. MCAP Financial Corporation Ontario Mortgage Brokerage #10600 Ontario Mortgage Administrator #11790

as canadaâ&#x20AC;&#x2122;s leading alternative mortgage lender, Home trust company has been opening our doors to brokers for over 25 years. our dedicated underwriting team along with our wide range of financial products are the keys to success that can close even your most difficult deals. Whether your clients are self-employed, new to canada or recovering from bruised credit when your next opportunity knocks, Home trust will answer.

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PROVIDER

Through volunteerism and fundraising, Equitable Trust is working directly with communities to transform lives

all hands on deck E

quitable Trust is committed to promoting a sense of community building through its volunteer efforts in the communities. As a socially responsible organization, its core value is to interact with people with common interests living in an area to create a better environment in which to live. The company teamed with Madison Community Services, a registered charity promoting the health, recovery and community integration of individuals with mental health challenges through advocacy, education and high quality support services. With seven houses in downtown Toronto and limited funding support for infrastructure, Equitable supported Madison with both volunteer labour and funds to transform three properties in need of repair. “The impact of a building not being in premiere shape makes clients more anxious and the state of the house impacts on their sense of well being and overall health. By improving Madison’s Ballantyne House, Spadina House and Epworth House, we saw a wonderful transformation in the physical wellbeing of the property and the positive impact on the well being of all residents,” comments Garry Green, executive director, Madison Community Services. Logistics for the transformation included managing all 200 employees at the various properties. Teams were organized in shifts with specific tasks ranging from cleaning, to teardowns, to building a perennial garden, and painting as well as home decorations. The project lasted a full day. Together with Madison, Equitable sourced building suppliers, caterers and transportation for the team building event to come together. “The impact transcends the clients to their families and to their neighbourhood. Neighbours feel that the house better fits with the community and are less concerned about having this type of housing in their community, which helps reduce social isolation and social stigma. We feel that what ETC has done in terms of helping people access a property and its corresponding “pride of place” helps to fulfill people’s dreams. Our clients have dreams

(From L to R): Equitable Trust President and CEO Andrew Moor; Garry Green, Executive Director, Madison Community Services; Jody Sperling, VP Human Resources, Equitable Trust.

as well, even if at times seemingly humble. For them a roof over their head and a shared, supported property where they feel safe and respected means every bit as much,” added Green. Equitable has had a history of engaging with the community directly and in partnership with brokerages on several philanthropic efforts. This past summer Alberta South RBM, Aaron Rainville rode his bike from Vancouver to Calgary in the MAC Rally of Hope while the company became a national sponsor. Funds were raised from the brokerage community with past events ranging from “Creating a Buzz” head shaving for Princess Margaret Hospital which $22,000 in proceeds going to the hospital to the Texas Hold’em Tournament raising $30,000 in an evening to the Humane Society of Canada. Volunteers will hit the road again supporting Invis’ Angels of the Night program in December and a donation has been made to boost the goals. On-going internal fundraising programs continue with matching funds. These are just some of the ways Equitable gets involved in community building. CMP

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Business Marketing

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Business

Marketing

In the third instalment of his latest series, Doren Aldana explains how brokers can attract more purchase business by finding the right Realtor partner

Realtor marketing secrets O

ne of my coaching clients was telling me recently that he literally “hates” working with Realtors. That’s a strong word. When I asked him why he felt so strongly, he said it’s because they’re “flakey and waste his time.” He continued by saying he’d “rather work with consumers” because he sees himself as more of a “consumer broker” than a “Realtor broker.” Can you relate? Do you ever wish there was a way to attract more purchase business without having to wait around for Realtors to send you the odd referral here and there? If so, this article will point you in the right direction. When it comes to Realtor marketing, you essentially have two options: you can go after anyone with a pulse who can fog a mirror, or you can be a bit more selective and target top producers. The first option may seem like the safer, easier more comfortable option, however, the second option – while being admittedly more challenging – provides the most leverage and the highest income potential. Here are eight unique characteristics of the top 10 per cent highest producing Realtors (and why you want to partner with them): 1. They have automatic lead generation systems and full pipelines. Their automated marketing systems allow them to generate full pipelines of buyer clients and listing clients. They understand that systems allow them to save time, energy, money and stress. Their systems work while they’re not working.

Sec ret No 3

Partner with top-pr oducing

Realto rs

2. They understand the importance of building clients for life. Low producers get a customer to make a sale while top producers, on the other hand, make a sale to get a customer – a customer for life. That’s why they’re so big on controlling the quality of their clients’ experience; they understand that it is inextricably linked to the amount of repeat and referral business they receive.

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Business Marketing

3. They understand the “team concept.” For the most part, top producers “get” the fact that they can’t do it all on their own. They know teamwork makes the dream work. As a result, they’re always looking for top-notch professionals who can help leverage their time and money. 4. Iron-fisted client control (high influence). Based on the previous point, they place a high priority on leading, guiding and counseling their clients throughout the entire home-buying process to ensure their clients have the best experience possible. In order to achieve that outcome, they need professionals like you – the mortgage professional – to help provide their clients with the best experience possible. 5. They don’t need to be resold. You don’t have to sell them on Monday and then resell them on Wednesday and then resell them again on Friday. Once you prove your unique value, and you consistently deliver on your promises, chances are they’ll be partners for life. Admittedly, these are generalizations but based on my experience, top producers tend to make decisions quickly and reverse them slowly. 6. They control the area’s inventory. When it comes to listings, they hold the lion’s share of the inventory in their market area. What does that mean to you? Well, remember this important truth: listings are the ultimate bait to attract homebuyer leads. In other words, the more listings they have the more buyer leads that you’ll attract into your pipeline. This is especially the case if you are able to show your Realtors how to increase their buyer leads using lead generation technology such as Text Capture and Call Capture (more on that in a future article). With that said, it obviously provides you with a lot more leverage if you work with real estate professionals who have lots of inventory. The more the better.

how do you attract them? Before we get into the details, let me give you an overview on how you can position yourself so they actually start chasing you instead of you chasing them. Courting Realtors is just like dating, if you don’t have absolute clarity about who you want to attract in advance, chances are you’ll get swept away with the emotion of the moment and end up settling for a dud instead of a stud. Bad example, but you get the idea: clarity is power. One helpful fact to remember is that you don’t need many Realtor partners to make a life-changing impact on your income. For example, if your average commission per deal is $2,000, all you need are four Realtors sending you one measly referral per month to add an extra six-figures to your bottom line. Why is that important to know? Because it reminds you that you can afford to be selective with whom you choose as partners. Here are six criteria for qualifying your Realtors: 1. Rapport/attitude Since you’re looking for a long-term “partner” and not just a short-term “fling”, you want to be very aware of the level of rapport and connection you have in your initial meetings. And obviously, that’s something you can’t really contrive; it’s something organic that happens serendipitously. Sure there are lots of techniques for building rapport, but when it comes to natural rapport, it’s either there or it’s not. Here are a few questions to ask yourself after your initial meeting: • Do you have good rapport with that person? • Do they have a positive, upbeat attitude? • Are they someone who gives you energy or sucks energy from you?

Be cognizant of those often-overlooked elements because you want to work with positive, upbeat people 7. They control a large and responsive database. who inspire you to greatness. You want to work with They understand the importance of compiling, someone who has an eye for opportunities instead of maintaining and utilizing a database. They obstacles, who breathes life into your sails and propels understand that the only true equity they have in their you forward instead of holding you back. business is their database of prospects, clients and referral partners. That’s why they guard it with their 2. Number of transactions How many transactions life and ensure they communicate in such a way that or ends are they doing per year? Quite frankly, if they’re their “relationship equity” continues to build over time. not doing at least one transaction per month, they’re They position themselves as a trusted adviser who probably not worth your time. Top producers are always has their clients’ best interest at heart. usually doing two or more transactions per month. Remember, anyone can send you a referral, but you 8. They have many more opportunities for joint shouldn’t be investing your valuable time with just promotion. For all the reasons listed above, there’s anybody. You want to be purposefully selective because a lot higher likelihood that they’re going to be able it’s going to require a significant amount of time, energy and willing to do co-marketing initiatives that and money to cultivate a high-level relationship with produce profitable results for all parties involved. your key partners. As you can see, there’s huge leverage in working with top producers. Now the important question is

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3. Number of listings As you may recall, listings are the “bait” that attracts buyer leads, so if they don’t have

“ courting Realtors is just like dating, if you don’t have absolute clarity about who you want to attract in advance, chances are you’ll get swept away with the emotion of the moment and end up settling for a dud instead of a stud ”

Business

Marketing

listings they’re not going to provide you with many buyer leads. For that reason, I wouldn’t bother courting potential Realtors partners who have fewer than four listings. That’s an absolute minimum. Top producers typically have dozens of listings.

6. They recognize and appreciate the value you bring to the table If they don’t appreciate and respect you and the value you bring to the table, they’re probably not the right fit. A strong win-win alliance is built on the foundation of mutual respect.

4. Annual sales volume Determine in your own mind what your minimum criteria should be. $5 million? $10 million? $20 million? You decide. Again, this is just another helpful performance indicator to help you determine if they’re a real player or not. Generally speaking, the more sales volume, the more leverage they can bring to your business.

So, as you start to interview Realtors as potential referral partners, keep those six criteria in mind and give them a private score accordingly. If they meet the mark in all six of those areas, you’ve got someone worth investing a significant amount of time, energy and money in in order to make yourself an irreplaceable asset on their team. In my next article, I’ll teach you seven simple steps for building a strong, profitable partnership with top-producing Realtors! Stay tuned…

5. Coachability Are they coachable? Are they willing to work within a system? Are they someone who values what you’re bringing to the table and is willing to do their part? And are they willing to learn? Are they humble or do they think they know it all? If they think they’re God’s gift to the world, they’re probably not the right fit. You need to find someone who is humble, coachable and a lifelong learner. Admittedly, those qualities aren’t easy to find in top-producing Realtors but they’re out there. You just need to find them. And don’t settle for anything less.

About the Author: Doren Aldana is considered by many to be Canada’s leading Mortgage Marketing Coach. Since 2005, he has been dedicated to helping mortgage professionals attract more clients with less effort, regardless of market conditions. For a free online workshop on “How to Turn Your Realtors’ Listings into a Flood of Red-Hot Mortgage Leads,” visit: www.UltimateRealtorMarketingSystem.com. CMP

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Profile Insight

The organization of mortgage brokers continues as Atlantic Canada finally has an association to represent the industry

welcome to the club! M

ake room, IMBA, AMBA and MBABC: there’s a new provincial mortgage broker association in Canada, and it’s focused on four provinces grappling to promote tighter regulation and facing their own brand of lending challenges. “The MBAAC – Mortgage Brokers Association of Atlantic Canada – is a completely independent association,” said President Glen Ward, also regional VP for Mortgage Architects in Atlantic Canada. “We launch next week and will draw membership from not only mortgage brokers but lenders, insurers – basically anybody who is a part of our industry.” The idea of a professional association for the region, mirroring those in Ontario and the West, has been kicked around for years, said Ward, who “received positive feedback from brokers and decided to go ahead with it.” He also drew on the support of those other provincial organizations. Development has been a year in the making, with an appointed board of directors now in place for the independent association. Those mortgage professionals will be replaced with an elected board in 2013, said Ward, a financial services veteran and a licensed broker for the last five years. Part of the group’s mandate is to grow the number of those regulated mortgage professionals across the Atlantic region. Currently, only Ward’s province, Nova Scotia, and Newfoundland license brokers. New Brunswick and PEI are being encouraged to move in the same direction, although many

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brokers in all four jurisdictions want to see the industry more tightly regulated. “Currently there is no educational component to licensing in any of the four provinces,” said Ward. “Our goal, as an association, is to provide a voice for the industry with government regulators.” While MBAAC will count lenders among its members – offering both a broker membership level and one for other channel partners – it may, in fact, need to take up broker concerns around access to funding. Mortgage professionals outside Halifax and other metropolitan centres point to some lender reluctance to fund deals in rural areas. Minimum volume requirements, given lower home prices, is another point of contention. In other parts of the country, potential conflicts between brokers and their lenders are now stirring calls for a national association with an exclusively broker membership. MBAAC opted not to go in that direction. “Our goal is be inclusive of all parts of our industry,” he told CMP. Reaction from the broker community has been mostly positive. “As former broker for many years in Atlantic Canada I congratulate all concerned on this initiative and look forward to watching their development from a distance,” said Eric Putnam. “Congratulations to the brokers of Atlantic Canada for having the foresight and intelligence to see that provincial/regional associations of mortgage brokers are the future, not a national association of bank reps,” commented David O’Gorman. Former AMBA president Paul Bojakli welcomed the new association. “Congratulations to you and your team Glen. What MBAAC is doing is very positive not only for brokers and industry partners but for your consumers as well. Let AMBA know if we can assist in anyway.” Others had concerns about the make-up of the association.

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Glen Ward

“Frankly I see no value added to being part of an organization where the lenders are involved,” said John Dearin. “Like CAAMP they will rule the nest.” Another broker, while encouraged by the formation of a new association, issued a warning. “I think that this is great for our industry, and to see broker associations being created is really great. CAAMP however, does not represent the broker community, they represent the mortgage community, including banks and lenders and others. My only caution is this: CAAMP does not like the provincial associations and they are pushing to be the only national voice.” Others aren’t so sure. “In B.C. we have some lender involvement and our model works extremely well. It provides great dialogue between professions. It’s great to

hear that Atlantic region will have support to the brokers,” said Finn Larsen. In response to some of the criticisms about promotion of the association and its membership, Ward said the former is being increased while the latter is what the executive wanted. “This association is just launching now and our goal over the next few months is to contact as many brokers across Atlantic Canada as we can to help build membership. I’m sorry some of you feel that lenders will not add any value to the association. Our executive disagrees and we are pleased to have the support of our industry partners and are looking forward to building a local association that can create value for our regional brokers on many levels. Please stay tuned for more information before you make a final decision.” CMP

License #11127

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profile PROVIDER

Outstanding Growth – What’s Next? S After experiencing phenomenal growth in the broker channel over the past four years, National Bank will be focused on service and improved efficiencies in 2012, says Mark Squire

Mark Squire

ince 2007, National Bank has seen tremendous growth in the broker channel, growing its market share over the past four years from 21st to 6th. That kind of growth doesn’t come easy and certainly not without the support of broker clients, says Squire, Director, National Bank Broker Services. While National Bank has been in the broker business for more than 15 years, Mark Squire says it has only been in the last four years that they’ve increased their presence in the broker channel. “We’re really proud of how we’ve become a more predominant player in the market,” says Squire. “When Sebastien Kuperhause, National Bank’s National Sales Manager and I came on board in 2008, we sat down and asked ourselves, ‘What’s going to set us apart? How will we differentiate ourselves in the market?’ The answer in large part, according to Squire is the National Bank All-in-One mortgage product. “It’s our signature product and it’s what our BDMs talk about when they’re out there with the brokers and a large percentage of our funding volume is in that product,” says Squire. The National Bank All-in-One mortgage is a re-advanceable line of credit, which allows borrowers to have multiple sub-accounts with both fixed and variable components. “It’s a full financial planning product, including a bank account,” says Squire. “You can use it to do a Smith Manoeuvre, or set up an account for your kids’ education fund.” Squire reports the average number of accounts held by borrowers runs from three to five. The product took off with brokers in 2008, when it became re-advanceable. “That’s when the product grew legs and allowed us to springboard off from it,” says Squire. In addition to products, Squire points to other factors for the main reason for the bank’s 650 per cent surge in broker business since 2007. These factors include their loyalty program, competitive rates, service excellence and market presence. In 2009, the bank revamped its MVP (Most Valuable Partner) program, now called Red Carpet Program, to attract new broker partners and to build on existing relationships. National Bank Mortgage Broker Services introduced the ‘Trip of a Lifetime’ as well as other incentives in the lower tiers of the program. “This program has created some great momentum for us and we have seen a deepening of the relationships with a number of our existing brokers and brought on new broker partners as a result,” says Squire.

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National Bank also made a conscious effort to maintain a consistent pricing model, one that is aligned with the major lenders. Squire adds “We’re far more present than we used to be. Starting in 2008 we made sure we were at all the trade shows and industry events, participating in lender panels and quickly simply just getting ourselves out there, getting our name known.” National Bank has also increased its BDM support and now has 12 BDMs covering the country (outside of Quebec). National Bank Mortgage Broker Services has also held a number Broker Forums in Toronto, Calgary, Vancouver, and Ottawa to solicit feedback as to what they would like to see changed and Squire says National Bank has integrated some of the changes. Squire explained that “it is important to listen to our broker clients, and implement changes that are going to help grow the business and add value to the broker.” National Bank is in the process of setting up another set of Broker Forums in early 2012. This success has not come without challenges, explained Squire and he has acknowledged that the growth has resulted in some client experience challenges, and that is the primary reason for the shift in focus for the upcoming year. In order to catch up with growth National Bank has experienced, Squire says it is investing heavily in technology, streamlining of processes and human resources in its operations and credit centre. BDMs will also be working on an account management approach, according to Squire, so that they will work with a core group of brokers. He says efficiency ratios will be key performance driver for National Bank in the coming year and they have implemented broker scorecards for all brokers. “We are currently considering the implementation of an efficiency bonus program, to support this initiative as well,” says Squire. Squire says that “Over the last couple of years if someone asked me what our top priority was, it was about building the business through client acquisition and volume growth.” When asked what National Bank Mortgage Broker Services priority was for 2012, the answer was clear and concise: “We now have a presence in the market, it is time for us to focus on efficiencies and making sure that we streamline our processes to provide a better level of service.” Squire acknowledges the brokers who deal with National Bank, saying “we would not be where we are today, without the ongoing support and loyalty of our brokers, and we are truly thankful for their growing support.” CMP

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Insight

a winning formula Canadian First Financial’s referral program offers brokers access to financial and insurance advice as a way to increase their usefulness to clients

anadian First Financial Centres has now doubled the number of broker-partners for its financial and insurance advisory services, adding 12 retail “Referral Partners” using an on-call model launched this year. “We are thrilled with the rapid growth we have experienced,” said CEO Karl Straky, himself a veteran of the broker industry. “Our original target for 2011 was to reach 20 locations, through a combination of Canadian First Financial Centres and Canadian First Referral Partners, but the response was so favourable we had to finally cut the expansion program off at 24.” Straky, in fact, started the company as a way of bolstering the utility of mortgage professionals, helping them deepen their relationships with clients to better compete with the banks and insurance companies. Those financial institutions bring several financial products under one roof and within easy reach of their clients. Initially, Straky’s strategy relied on the one-stop-shop model, providing each retail broker-partner a dedicated insurance/financial planner. The model brings outsourcing inside the business. At the same time, it increases traffic for the retail operation. The Referral Partner program has offered retail brokers the same opportunity to increase their usefulness to clients, said Straky, but is sensitive to the fact they don’t produce the kind of funded volume needed for a dedicated in-house insurance and financial advisor. Under the referral program they access financial and insurance advisors acting as mobile specialists. That formula has had significant appeal with brokers. “Our network growth was stopped at 24 to ensure we handle the setup, training and rollout of these new offices in an efficient, controlled and productive manner,” said Straky, suggesting the new 12 partners were identified and recommended by existing Canadian First Financial Centre broker/owners. Even a more limited partnership with Canadian First helps retail brokers weather the uncertainty of a slowing market, said Peter Majthenyi, a lead planner with Mortgage Architects and one of Straky’s broker/owners. “We’ve had great success with the Canadian First advisory end of our business,” he told CMP. “It has also given the mortgage business a real lift.” Like Straky, he points to the partnership’s core strength: helping brokerages better compete with the banks and retain existing clients by increasing their “relevance.” There’s also the added benefit of growing referrals through both ends of the business – the cross-pollination all banks depend on. “It has brought more traffic through our door,” Majthenyi said. “And clients for our financial or insurance advisory services can become clients for our mortgage broker services, and vice versa.” CMP

Karl Straky

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Andy Vickers + Mortgage Expert, DLC-Harbour View Mortgages Corp. + Victoria, B.C.

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Favourite Things Drink Ice cold Corona on the beach

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Guest Column

Leave it to the experts According to Scott Ede and Michel Durand, many brokers feel referring commercial deals is like giving away business, but that doesn’t have to be the case

leaving you with more time to focus and generate business in your own area of expertise. Here are a few tips on finding the right commercial broker:

• The commercial mortgage broker you choose e will try to shed a little light on how to make must be one who has dedicated his practice to dealing with commercial loans easier, and doing nothing but commercial mortgage how co-brokering with the right commercial broker transactions with at least 10 years dedicated to will increase your bottom line. commercial practice. There are two major concepts involved here, both of which are very familiar to every business person, and mortgage agent. First., focus on your core business. “ Focusing your time and efforts on what you know it becomes clear that by referring how to do best, will always generate more success for your business and in the end generate more dollars to your commercial business to a the bottom line. dedicated commercial broker, you Secondly, surround yourself with experts and will have more time to close more professionals to handle the stuff you are not an expert deals that are part of your core in, or is not part your core business. This will also generate more success for your business and in the business and are easier for you to end generate more dollars to the bottom line. manage not to mention for which Make more money by having someone else close you have more control on the the commercial transactions that cross your desk. Every residential agent who has tried to get a outcome/success of the transaction commercial transaction done will recognize that a ” commercial deal is extremely time consuming. It becomes clear that by referring your • The commercial broker you choose must have a commercial business to a dedicated commercial national presence. This is in order to be able to tap broker, you will have more time to close more into lenders across the country. It is not unusual to deals that are part of your core business and are have a lender from out West being more easier for you to manage not to mention for which competitive on deals out East; lenders need to you have more control on the outcome/success of balance their portfolio of mortgages not only by the transaction. asset class but also by region. So if they are too By the same token, by letting a commercial heavily weighted in product out West they will broker handle your commercial deals, you are tend to be more motivated by transactions in other increasing your odds in having that deal closed regions of the country. efficiently, thereby increasing your ability to make money on the commercial business. • The commercial expert you choose should be Too many agents and brokers look at referring a accredited with CMHC to be able to deal directly transaction as losing or giving away business, when with CMHC. This is a sure sign that the reputation it’s really the opposite that happens when you do it of the broker is head and shoulders above the rest right. Regardless of the split you co-broke the deal for, of the pack and ensures that you and your client you not only make a few dollars, but just as get are dealing with a recognized and proven importantly keep your borrower happy by making professional. CMP sure the deal is professionally handled. All this, while

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service directory

Banks

Bridgewater Bank www.bridgewaterbank.ca Ph: 1 888 837 2326 Page 9

Firm Capital www.FirmCapital.com Ph: 416 635 0221 Page 16

The Money Source www.mymoneysource.ca Ph: 416 699 2274 Page 57 Commercial Lenders

HomEquity Bank www.homequitybank.ca Ph: 1 866 522 2447 Page 31

ROMSPEN investment corporation www.romspen.com Ph: 1 800 494 0389 Page 1

FirstLine Mortgages www.firstline.com Ph: 1 800 387 2020 ext. 6044 Inside Back Cover

Insurance

ICICI Bank Canada www.icicibank.ca Ph: 1 888 ICICI CA or (1 888 424 2422) Page 7

National Bank www.nbc.ca Ph: 1 888 483 5628 Page 35

Canada Guaranty Mortgage Insurance Company www.canadaguaranty.ca Ph: 1 866 414 9109 Page 25

Home Trust www.hometrust.ca Ph: 1 877 903 2133 Pages 41 & Guide Outside Back Cover

MCAP www.MCAPBROKER.com Ph: 1 866 289 7389 Page 39

Genworth Financial Canada www.genworth.ca Ph: 1 800 511 8888 Outside Back Cover

Broker Networks

Non-Bank Lenders

Capital Direct www.capitaldirect.ca Ph: 780 868-0550 Page 14

Equity Financial Trust Company www.equityfinancialtrust.com Ph: 1 866 393 4891 Guide Inside Front Cover

MCAP Eclipse Ph: 1 866 289 7389 Guide Inside Back Cover

Equitable Trust Company www.equitabletrust.com Ph: 1 866 407 0004 Page 23

Optimum Mortgage A Division of Canadian Western Trust www.OptimumMortgage.ca Ph: 866 441 3775 Guide Page 11

Centum Financial Group Inc. www.centum.ca Ph: 1 604 257 3940 Page 11

Peoples Trust www.peoplestrust.com Ph: 1 800 663 0324 Page 48

Dominion Lending Centres www.DominionLending.ca Ph: 1 888 806 8080 Page 15

INVIS www.invis.ca Ph: 1 866 854 6847 Pages 20 & 21

Radius Financial www.radiusfinancial.ca Ph: 1 877 369 6398 Page 43

Street Capital www.streetcapital.ca Ph: 877 416 7873 Page 5

Home Loans Canada®

Home Loans Canada www.hlcmortgages.ca Ph: 1 866 452 1821 Inside Front Cover

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service directory

Real Estate

Canadian National Association of Real Estate Appraisers www.cnarea.ca Ph: 1 888 399 3366 Page 28

The Mortgage Group www.mortgagegrp.com Ph: 877 899 1024 Page 45

Mortgage Architects www.mortgagearchitects.ca • Ph: 1 877 802 9100 Page 37

Services

HV Mortgages www.gregmartelcoaching.com Ph: 250 477 7555 Page 53

VERICO www.verico.ca Ph: 1 866 983 7426 Page 13

The Mortgage Centre Canada www.mortgagecentre.com Ph: 1 800 423 0107 Page 3 Technology & Software

RMAI Financial Group www.rmaifinancial.com Ph: 1 866 955 7624 Page 17

The Lions Share Group www.lionssharegroup.com Ph: 1 866 726 5159 Page 19

D+H Limited Partnership www.dhltd.com Ph: 1 866 345 6449 Page 2

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