CMP 8.04 by Key Media

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APRIL 2013 / ISSUE 8.4 / $6.95

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CONTENTS / ISSUE 8.4 MARKET MATTERS

FEATURES

6 | Letters to the Editor

20 | Housing Statistics The numbers are in and it ain’t pretty

8 | Reading between the Lines Broker Sean Binkley turns the tables on Jim Flaherty, specifically using the Finance head to sell his rock-bottom rates 12 | Market Matters Valuing your mortgage brokerage isn’t as simple as tallying up your fixtures and fittings, says industry veteran Lloyd Manning

38 | Investor Series Brokers need to do their homework on any syndicate mortgage player before referring a client, says agent Josh Will 42 | Forget the Golden Rule Motivational coach Roger Ellerton makes his case for why you should abandon that guiding principle if only to better figure out client needs

54 54

54 | Cheers, First National It’s been 25 years for the leading lender, sharing its story and its success with brokers

42 22 | CMA Finalists CMA Broker of the Year awards feature the most diverse group in the awards’ history

issue

8.4 We’ll have you laughing allthe Way past the bank.

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MORTGAGEBROKERNEWS.CA | 1

CONTENTS / ISSUE 8.4 MARKETING

NEWS

REGULARS

46 | The Lease of These A commercial broker can’t afford to overlook the lease details of any deal, says Toronto lawyer Ronald B. Melvin

18 | Product News Street Capital opens an underwriting centre in Calgary; Radius Affinity creates a broker-loyalty program

36 | CMA Judges They’re drawn both from within and outside the industry, but united in their hunt for recipients of the 2013 Canadian Mortgage Awards

50 | Positioner or prospector? It’s a question all brokers face one day, says Doren Aldana

58 | Broker Profile No sleight of hand here, with Marlborough Stirling working hard to outperform its very good 2012

62 | Favourite Things 64 | CMP Service Directory

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CONTENTS / EDITOR’S LETTER

READY? SET. GO! CMA finalists for 2013: Get into your starting blocks! No matter where you place, this sprint to the finish – and the May 10 Canadian Mortgage Awards – is really just the latest lap in your race for excellence. That’s how CMP, the host of the industry’s premier awards, sees it. In fact, just in case you have any doubts, we’re profiling finalists in two of the 21 award categories to back up the boast. Starting on pg. 22, we tell the individual stories of all 17 mortgage professionals in both Broker of the Year categories, fewer than 26 employees and 25 or above. The tales offer readers insights not only into what makes these pros tick, but their individual strategies for getting ‘er done. That’s no mean feat in this market. So, this issue of CMP comes to praise brokers, still I’m not prepared to bury the many other features this issue has to offer. For starters, we have a guide to getting a handle on just how much your brokerage is worth, cutting out the sentiment and looking at the hard, cold facts that determine value (pg. 12). Less hard and certainly less cold is this month’s Reading between the Lines (pg. 8) and one broker’s take on why Finance Minister Jim Flaherty may just be what the doctor ordered to perk up orginations in 2013. There’s more to inspire, so start flipping those pages, and when you’re done log onto CanadianMortgageAwards.com for more on this year’s Toronto gala. It comes on the heels of the second-annual CMP Mortgage Summit. The education-focused conference is also preparing you for the battle ahead. www.themortgagesummit.com.

Vernon Clement Jones

CONNECT

Contact the editor: vernon.jones@kmimedia.ca

COPY & FEATURES

ART & PRODUCTION Alicia Chin

GRAPHIC DESIGNER

SALES & MARKETING

NATIONAL SALES MANAGER Trevor Biggs MARKETING AND COMMUNICATIONS Julia Comitale PROJECT COORDINATOR Jessica Duce

CORPORATE PRESIDENT & CEO Tim Duce OFFICE/TRAFFIC MANAGER Marni Parker EVENTS AND CONFERENCE MANAGER Chris Davis

Editorial enquiries vernon.jones@kmimedia.ca Advertising enquiries trevor.biggs@kmimedia.ca Subscriptions tel: 416 644 8740 • fax: 416 203 8940 subscriptions@kmimedia.ca KMI Publishing 312 Adelaide Street West, Suite 800 Toronto, Ontario M5V 1R2 mortgagebrokernews.ca 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.

Broker FiNaLists

April 2013 / issue 8.4 / $6.95

Last Laugh... On Jim Flaherty Brokers revisit... the GOlden rule

We've got the answer. And it's not as simple as tallying up your fixtures and fittings Page 12

Cover and Spine.indd 1

4 | MORTGAGEBROKERNEWS.CA

Vernon Clement Jones Rachel Naud Donald Horne Lloyd Manning Sean Binkley Doren Aldana Josh Will Roger Ellerton

EDITOR SUB-EDITOR SENIOR WRITER CONTRIBUTORS

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CONVERSATIONS / LETTERS TO THE EDITOR

LETTERS TO THE EDITOR Re: Reading Re: Penalty between the lines Puzzle (CMP 8.3) (CMP 8.3)

Telling tale

Renewed skeptic

Vincent Li

I do not know if brokers will see the renewal money they are hoping for from this credit union or any trailer fee lender. I think that now is the time to start eating immediately what you kill and not leaving some on the plate. Brokers can’t afford to let a lender dictate their future income.

Franklin Lester

There are some surprises here in terms of which lenders are forcing borrowers to incur what level of costs for breaking their mortgages. I think it underscores the need to seek out broker advice if you are looking at refinancing or a switch in the middle of the term. Thanks, Rick.

Re: Broker Kit Bag 2013 (CMP 8.2)

dhouse Dustan Woo

New provider

Dustan Woodhouse

Cloud computing is still the way to go, but despite the recent article suggesting IMOGO as a service provider for mortgage professionals, I have since made the shift to www.ottomortgage.ca. OTTO mortgage systems provides the Canadian mortgage professional with a far more finely tuned solution for secure documents storage, deal flow management, with an advanced CRM solution all woven together. I’m happy to write more on OTTO for future issues.

Re: Broker Sentiment Poll 2013 (CMP 8.3)

Sentimental salvo

MortgageBrokerNews.ca Reader Poll DO YOU ROUTINELY GET COPIES OF APPRAISALS ORDERED FOR LENDERS?

79

per cent

 21

per cent

Michael Velenz

As brokers, we need to make our voices heard at the federal level of government and clearly what we are saying is that the latest mortgage rules are a problem not only for ourselves, but consumers, home buyers and our clients. I would hope that this concern that is so clearly spelled out in the results of the poll will strengthen our lobby efforts in Ottawa.

LETTERS TO THE EDITOR ARE WELCOME! Due to space considerations, priority is given to those 300 words or less. We reserve the right to edit, condense or reject submissions for accuracy, brevity, clarity, good taste and legal reasons. Writers must provide their full name, address and telephone number to verify authenticity. Please reference the article.

6 | MORTGAGEBROKERNEWS.CA

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FIRST UP / READ BETWEEN THE LINES

READING BETWEEN

THE LINES: A

s the Federal Finance Minister wagged his finger and cautioned lenders not to engage in a rate war, one broker decided to engage the funny bone of consumers with an advertising campaign promoting the same rock-bottom rates Jim Flaherty opposes. Sean Binkley, a mortgage broker with Your Home Team @ Dominion Lending Centres, uses a photo of the finance head to help promote his own rate of

2.79 per cent of a five-year fixed. That’s 20 bps lower than the BMO rate that flabbergasted Flaherty. The caption on that ad might have said it all, but CMP asked Binkley to eke out a little bit more on the subject. The good-natured fellow was more than Sean Bin kley happy to oblige. Dominio n

Lending Centres

1 It was a great thing to talk about, a great

icebreaker at the Home Show.

2 I sent out the flyer to a financial planner who is

with BMO Nesbitt Burns, and he said he would come by to do some business. BMO can’t match that rate.

3 To make 50 bps, but get some referrals out of it is worth it. But I’m not gonna give the farm away all year-round - it is only for 30 days, and it is a fun thing to do for the spring.

4 A lot of people say that it is not about rate, but it is. My main competitor advertises their rate every week. If it isn’t about rate, we wouldn’t be advertising it so much.

6 8 | MORTGAGEBROKERNEWS.CA

5 Humour really does work in advertising. It is a great conversation starter. You may not close today, but down the road you may hear from them or from a referral because of that conversation. 6 I’m not a proponent of the lowest rate, but right now we certainly got the press on our side, and so I said ‘Let’s go with it’ and ride on Flaherty’s coattails.

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Western Canada · meini.ickert@mtgarc.ca · 604.970.8650 Central Canada · ricardo.camara@mtgarc.ca · 416.716.1074 Eastern Canada · luisa.simonetti@mtgarc.ca · 888.961.3510 © Copyright 2013, Mor tgage Architects Inc., all rights reserved.

MARKET MATTERS / POSTAL CODES

FERT LE

GROUND? Reading industry reports doesn’t have to get you down. Here’s a quick and easy study of the single “richest” postal code in each province. Are you there?

here’s no substitute for sheer mortgage volume, argue most brokers. But if a slowing market means you simply can’t do as many deals as you’d like, why not make sure more of those fewer deals are multi-milliondollar ones? This infograph by Canada FAQ can help point you in that direction, by identifying the single richest postal code in each of the provinces. The idea is to bump up the number of originations you can claim from that region and in the process grow your commission cheques. It’s a strategy that works for many mortgage professionals as they hone-in on the high-end as a way of buoying a deflating market and compensating for volume declines.

10 | MORTGAGEBROKERNEWS.CA

MARKET MATTERS / POSTAL CODES

MORTGAGEBROKERNEWS.CA | 11

MARKET MATTERS / YOUR TRUE WORTH

WHAT'S YOUR

BUSINESS

WORTH? Valuing your mortgage brokerage isn’t as simple as tallying up your fixtures and fittings, writes industry vet Lloyd Manning. But there is a way The mortgage brokerage industry is undergoing radical changes. Lender volume requirements are becoming more stringent, some lenders are opting out, competition is becoming stronger and profits are harder to come by. Many are joining the networks while others who are greying are phasing out. Whichever, the question always arises, “What is my mortgage brokerage worth?” All indications point to a market for the stronger mid-sized to larger mortgage brokerage that has a good client base that is well staffed, efficient and profitable. However, many smaller, non-affiliated brokerages with few of these attributes cannot be sold at all, but must merge with another, join a network or just fade away.

12 | MORTGAGEBROKERNEWS.CA

There is little market criteria Although there have been empirical studies on the efficiency of real estate brokerages, some of which offer a word or two on the mortgage brokerage industry, when it comes to valuation guidelines, the supply is negligible. Interviews with practicing brokers produce inconsistent opinions and few outright sales. In the divestment of any business or professional practice, buyers determine the going-concern value based on historical performance while the seller's is largely on future customer–client recurrence, “the book.” Characteristics that are unique to mortgage brokerages create special appraisal challenges. It becomes difficult to estimate future cash flows. Hence, the near impossibility of establishing a going-concern value! And, since we are valuing services and not the sale of products, the task becomes still more onerous. Interviews with several

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MARKET MATTERS / YOUR TRUE WORTH brokers indicate that since it is near impossible to place a specific value on a mortgage brokerage, they discuss price, which is the result of a negotiating process between seller and buyer. Most of the canons for appraising businesses and professional practices do not apply. A mortgage brokerage can have a positive going concern value, while at the same time a negligible book value. The difference between the value of the tangible assets, principally office furniture and equipment (O.F&E) and the going concern value is “Goodwill.”

Goodwill Defined Although there are several, the best definition for goodwill comes from an English law case when in 1910, Lord Eldon said, “Goodwill is nothing more than the probability that the same patrons will continue to patronize the same shop.” In a mortgage brokerage, this is referred to as “The Book,” a roster of past customers and clients. Other than the O.F&E, the value of which may be negligible and is therefore discounted, when the firm is valued and/or sold, this is what is being referred to: the probability that the same customers will return and what comes as part of the package. Although there is overlap, and some discussions could fit into any, for this purpose, there are four categories of goodwill:

In a mortgage brokerage this is referred to as “The Book"

(1) Personal Goodwill is exclusive to the broker. It was built up over the years by his/her dedication and perseverance. As it is not transferable it must be considered as personal to the seller. Once you depart, it goes too. On the other hand, a successful brokerage was developed largely as a trust relationship between the broker and the customers. As it is relied upon, that trust may be in part transferrable. A fair assumption is that no one will purchase your firm unless he/she has substantial training in this field, is fully qualified and properly licensed. This in itself ensures a modicum of continuity and is therefore transferable.

(2) Goodwill of Establishment, aka Business Goodwill is a measure of durability. The longer the brokerage has been established, the more regular and devoted the customers and the greater the number who are expected to return, the greater its value. We are back to Lord Eldon, the probability that the same clients will return no matter who is in charge. This suggests that “the book” has a value in and of itself. However as the return of past customers is nebulous, to assign a specific value to a collection of historical records is often pure speculation. In researching for this article it was not possible to obtain statistics on any mortgage brokerages that were actually sold. All that can be offered are the opinions of several brokers. Keith Gilmour, founder and now consultant to Edmonton’s Mortgage Makers Inc, can boast of 30-plus years in the business, but says he can only count on about 50 per cent of his former customers returning. He adds that the number is hard to pin down and is dependent on how satisfied they were with your services the first time. Gordon Wintuk of Vancouver’s Bayfield, who has several agents throughout British Columbia and Alberta, says 40 per cent to 50 per cent. Yet, due to many intervening factors, it could be as low as 10 per cent. So much depends on keeping in contact with former customers and how you treat your agents. He adds that you are a moving target. Ross Taylor of Toronto, an independent agent, says 20 per cent to 30 per cent. Ken Gilles a partner in Edmonton’s Cameron Financial, a commercial-industrial mortgage broker, says that recurrence is never a given. As differing markets create different retention per cents, estimating the number that will return is guesswork. Developers have a very high mortality rate. In all cases, for any meaningful prediction there must be a detailed analysis of past customers.

(3) Profitability Potential is a must. The value of a mortgage brokerage, or any business for that matter, is the present worth of anticipated profits. History is only a yardstick. Other than personal motives, the principal reason why anyone purchases a business is to make money. (4) Goodwill of Location. To assess the value of this goodwill contributor, it is important to determine how important its location is to the continuance of the firm. Does it rely on patronage from a defined area surrounding it, walk-ins, or could it be anywhere. If anywhere, there is no goodwill of location. Still, “Location, location, location,” Vans LeBlanc, doing business as Top Mortgage Lenders of Maple Ridge, B.C., told MortgageBrokerNews. ca last February. Having been in his location for 20 years, in offering for sale “his book,” he is emphatic that continuance in this highly visible, storefront location is responsible for the high volume of walk-in traffic and number of regular customers who’ve developed a pattern of coming to this particular spot. As it is an important value contributor relocating could create a loss of customers.

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MARKET MATTERS / YOUR TRUE WORTH What’s There For The Buyer?

In summary, the goodwill value of a mortgage brokerage is the balancing of its affecting forces, the effect that each has on its performance and customer recurrence. However, the value of goodwill is predicated on its unencumbered transferability. If another cannot assume and capitalize on it, the goodwill portion of your mortgage brokerage is substantially reduced and could be valueless.

Although many mortgage brokerages can garner a high price, unfortunately others are worth very little. The first step in determining its going concern market value is to nail down what is there for a buyer. Providing an unbiased assessment of its pros and cons is the most difficult part in the valuation process. Undoubtedly you have a sentimental attachment, a valuable book, a large supply of lenders begging for your submissions, an enviable reputation, oodles of like-new equipment and perhaps an excellent location, all of which you know creates a high value. Regrettably, your brokerage is not the jewel to another that it is to you. Before estimating its going-concern value you must ascertain exactly what you have to value. Take into consideration:

•

• • • • • • • •

• • • • • • • • STATS

23,900 - British Columbia Housing starts February 2013 Source: CMHC

16 | MORTGAGEBROKERNEWS.CA

• •

History of the brokerage. How long has it been established? In this location? By this same owner(s)? The longer of each the better. The size of the brokerage. It is a single person or one with a staff of agents? The mixture or blend of services offered and particular market niches. The relationship you have with lenders. Connections. The source(s) of the customers, clients. Present competition and market saturation. Commissions and bonuses obtained. Are revenues and continued patronage dependent upon any specific client group(s), Realtors, lenders, developers, etc. Historical growth and prospects for growth. The reputation of the brokerage. The probability per cent of the book’s customer recurrence. Underserviced niches and the changing market landscape Reliance made on high-cost advertising to attract new clients Level of agent compensation and/or fee splitting arrangements. Location considerations, occupancy cost, remaining lease term. Details of competitive mortgage brokerages that are or could be for sale. Your assessment of the future for this brokerage. Projected profitability (left for last as it is the hardest one to pin down)

MARKET MATTERS / MASTER CLASS Price and Value Although there could be many reasons to establish the value of a mortgage brokerage, we only address the assumption that it is to be sold. Hence, it is necessary to establish going-concern market value; which is what a willing, knowledgeable buyer would pay and a willing, knowledgeable seller accept, neither being under any compulsion, both possessing all the facts, and acting at arm’s length. Depending on personal objectives and motives, price is what a specific purchaser would pay and a specific seller accepts. This could be higher or lower than market value. In the sale of a mortgage brokerage, different from most businesses, yet not necessarily out of line with other agency type businesses, there is no clear demarcation line between value and price. We are back to Lord Eldon and the customers returning. It is therefore important not to confuse value with price. If you are looking at selling or buying a mortgage brokerage and basing your estimate on the return on capital investment, you are talking about value; but if it's on the retention from the book, we're talking price. The value – price differential is created by what comes

with the package and other value determinants such as a buy-in or an earn-out. Blair Anderson, owner/broker of Anderson Associates Mortgage Brokers of Hamilton, Ont., a 15-plus year veteran of this industry, says that valuation of a mortgage brokerage should be based on the business, agents commission structure and networking, to which the attachment of a specific going-concern value is difficult. He adds that much of this business is built on the concept of kill and eat. In Part II we will detail the mechanics of arriving at goingconcern value.

Lloyd Man ning

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MARKET MATTERS / PRODUCT ROUNDUP

PRODUCT

ROUNDUP AND INDUSTRY ANNOUNCEMENTS A bite-sized guide to the industry's newest products as they come down the channel Who: Street Capital What: To Open Calgary Underwriting Centre this May The facts: Street Capital will be opening a Calgary Underwriting Centre as part of its corporate strategy to provide broker partners with customer service through local mortgage underwriting centres with dedicated senior underwriters.

The reasoning behind implementing the program: “The Canadian market in the Prairie provinces continues to be strong,” says Paul Grewal, president of Street Capital. “All of us at Street Capital are excited about this expansion and are looking forward to working more closely with mortgage brokers in Alberta, Saskatchewan and Manitoba.”

How it fits into the overall strategy:

The facts:

“We have been executing on our growth strategy, which includes broadening and deepening our relationships with highquality mortgage brokers,” Grewal Tells CMP. “This decision by Counsel Corporation enables Counsel’s senior management to focus and build on the opportunity for growth and profitability we can provide.”

“The Radius Affinity loyalty program empowers our loyal broker partners to achieve more personally and professionally,” Suzanna Stefanec, the vice-president of national sales and products for Radius Financial, tells CMP. “Radius Affinity recognizes loyal brokers for their support by awarding them with greater rewards and enhanced Discount and Reward Points to allow them to be more competitive.”

Who: Radius What: Radius Affinity – a broker loyalty program, based on the existing Radius Points program.

How the program rewards loyalty: “We understand the importance of a true partnership. When our business grows as a result of loyal brokers, we want to share our success with them,” says Stefanec. “The Radius Affinity loyalty program gives brokers a competitive advantage in an ever-changing marketplace and gives them flexibility in how they want to run their business."

LAUNCHING A NEW PRODUCT? Want to be considered for inclusion on this page, send the details to the editor: vernon.jones@kmimedia.ca

18 | MORTGAGEBROKERNEWS.CA

YOU SEE AN OLD EYESORE.

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STATISTICS / RESIDENTIAL RESALE ACTIVITY

NATIONAL PICTURE

AT-A-GLANCE

This monthâ&#x20AC;&#x2122;s roundup looks at the most recent data on residential new listings and resale activity

Powell River, B.C. N/C Saskatoon, Sask. -2.5

Central Alberta, Alta. 11.4

Prince Edward Island -20.9 Trois-Rivieres, Que. 1.4 Brandon, Man. -16.8

TOP CITIES Sales Activity

(year-over-year percentage change) Source: CREA

20 | MORTGAGEBROKERNEWS.CA

Newfoundland & Labrador

SarniaLambton, Ont. 16.1

Fredericton area, N.B. 2.2 Annapolis Valley, N.S.

Sales Activity by Province

Source: CREA

British Columbia: -17.7 per cent

New Brunswick: -10.6 per cent

Alberta: -2.9 per cent

Nova Scotia: -29.9 per cent

Saskatchewan: -15.5 per cent

Prince Edward Island: -20.9 per cent

Manitoba: -24.7 per cent

Newfoundland and Labrador: -2.9 per cent

Ontario: -17.2 per cent

Northwest Territories: -60.0 per cent

Quebec: -14.8 per cent

Yukon: -44.4 per cent

Home sales were up slightly nationwide for the month of March, but remain well below levels recorded from a year ago, according to statistics released today by the Canadian Real Estate Association (CREA). More importantly, the Home Price Index for March rose only 2.2 per cent – its smallest gain in more than two years. “National sales have been holding fairly stable since last summer,” says CREA President Laura Leyser. “We’ll be watching closely as the spring market picks up to see whether the March sales increase marks the beginning of an improving trend.” Home sales rose 2.4 per cent from February to March of this year, but actual activity for March compared to the same month a year ago were 15.3 per cent below the 2012 levels. New listings were up 3.2 per from February to March, with average sale prices up 2.5 per cent from compared to March 2012. CREA attributes the sluggish March sales numbers to the Easter holiday and the loss bank days due to an extra full weekend at the end of the month – known as the “trading day effect.” “Easter and trading day factors combined effectively to cut March sales short,” says Gregory Klump, CREA’s chief economist. “Activity in the months ahead will reveal whether the monthly improvement in seasonally adjusted March sales reflects technical seasonal adjustment factors or a fundamental improvement in demand.” Home sales improved in more than half of all local markets from February to March, led by gains in Greater Vancouver, Fraser Valley, Calgary, Greater Toronto, Montreal, Saskatoon, HamiltonBurlington, and Kitchener-Waterloo.

FEATURE / CMA FINALISTS

STANDO U Broker of the Year finalists for the 2013 Canadian Mortgage Awards are proof that despite a difficult market, talent and perseverance reap great rewards. CMPâ&#x20AC;&#x2122;s Donald Horne profiles each

22 | MORTGAGEBROKERNEWS.CA

UTS!

FEATURE / CMA FINALISTS

FIRST NATIONAL

MORTGAGE BROKER OF THE YEAR FEWER THAN 25 EMPLOYEES CINDY FAULKNER VERICO Coastal Mortgages, Langley, B.C. Cindy Faulkner is all about accessibility, whether it is through her regular blogging, or a free guide for first-time buyers on her website. “Our website is social media-friendly, and we blog on a regular basis,” says Faulkner. “By providing mortgage and real estate services with an in-house law firm associate, we’ve created a one-stop real estate solution. “One point of contact, one location to sign documents and less stress for our customer. A simple, easy experience.” The three-person brokerage is designed as a traditional distributor of services, with a niche focus on first and second-time home buyers in the Greater Vancouver Area. “Eighty-five per cent of our business comes from referrals by past clients and the remaining from Realtors, solicitors and our online presence,” she says. Faulkner herself began as a Realtor and a human resources manager before entering the broker channel. “I think I am adding value to my clients through my experience in real estate and I have been an investor for over 20 years, which helps me give back to my clients all the do’s and don’ts of being a landlord.” Faulker’s son is her business partner – another aspect of her success – although there are other factors. For example, she implemented a system that allows employees to remain on the same page, be it through training, meetings or standardized forms. “Our day-to-day activities within the office have been systemized,” she says.

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FEATURE / CMA FINALISTS KAREN GIBBARD Verico Gibbard Group Financial, North Vancouver, B.C. Karen Gibbard decided to restructure the office in 2012, and, in the process, she redesigned the business dynamic, earning hers a place among this year’s CMA finalists. She actually won last year. “This process gave us the energy to re-think all of our processes and how we do business,” says Gibbard. “We reviewed every aspect of our business and have made positive changes to increase our efficiencies on files and communication with clients. The results have been astounding.” A slow market in 2012 didn’t slow down Gibbard, who recorded strong volume numbers last year. “Our volume was strong (even in a weaker market), our client satisfaction increased, our funding ratios with our lending partners significantly increased, and the overall morale in the office is riding high and incredibly positive,” she says. “Who says change isn’t a good thing?” Although brokering does afford a lot of freedom as far as work hours are concerned, Gibbard remains a nine-to-five office sort of person. “I continue to work hard and treat being a mortgage broker as a full-time job. A lot of mortgage brokers are taking advantage of the freedom that this career allows” and there is nothing wrong with that, she says, “but I’ve always worked in my office nine to five; which is great for my clients and the Realtors because they always know where I am to get a hold of me -- in my office working.” That work ethic has paid handsomely for Gibbard, but there is another secret to her success: Knoledge. “I read pretty much everything a lender sends me regarding their policies,” she says. “As an ex-auditor you learn to memorize policies and procedures, so I keep this up and do my best to know what each lender is offering and make sure my staff get the important points so they are kept up-to-date as well.”

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GREG NOWIK Universal Mortgage Architects, Nanaimo, B.C.

Building relationships has been at the core of Greg Nowik’s life – be it personal or professional. “They’re key in my life. I have been married to Cindy for 30 years and she has worked in this industry, by my side, since the formation of Universal Financial Corp.,” says Nowik. “It is wonderful to have a partner where our strengths and weaknesses are so different that we can function as an organized team.” Although Nowik came to brokering from a sales position with Xerox, he’s definitely an original in the industry. “Coming from a five-year Xerox sales background in 1989, I thought that regardless of what the product, in the end if you had good sales skills you could sell mortgages or copiers,” he says. “My beliefs have changed and my business has evolved. Today I meet with all my clients and strive to be part of their financial plan. We discuss budgeting, mortgage planning, and future goals. My belief is that our business is not ‘mortgages’ but ‘relationships.’” Nowik is a strong believer in vision statements, holding a two-day workshop with his team of brokers and support staff: “Working as a team of committed professionals, our vision is to create relationships by consistently providing innovative mortgage planning.” The proof is in the pudding. Some 50 per cent of his business is repeat and 20 per cent of new business is referred by past clients. “I am pleased that I am the first person they call, that I am doing the job and giving the advice everyone deserves,” he says. “You certainly know you are getting old when your past clients are now referring their children.” Family values and friendships continue to be at the centre of Nowik’s vision, and at the heart of his business. “Being a part of Mortgage Architects since its inception has provided me with a group of individuals whom I respect and I am proud to be on their team,” he says. “I am thankful to Mortgage Architects, my peers and team for nominating me.”

I am pleased that I am the first person they call

FEATURE / CMA FINALISTS DAVID WILD Dominion Lending Centres Regional Mortgage Group, Red Deer, Alta. Helping people has always been in David Wild’s blood – whether it’s fundraising for Ronald McDonald House or helping rebuild a client’s bad credit, eventually putting them on the road to homeownership. “Prior to starting with Regional Mortgage Corporation I was in the finance business for over eight years working with people with damaged credit to get their credit rating re-established,” says Wild. “My friend Dave McNabb started up Regional Mortgage and persuaded me over a number of years to make the move to the mortgage industry and join him at Regional Mortgage Corporation.” So in the winter of 2002, Wild took the exam and became a mortgage agent. Six years ago, Wild became partner and the Broker of Record, the team joining the Dominion Lending Centres team in the fall of 2010. “Over the years we have grown our company from four to include 16 agents and two support staff.

We have two offices, one in Red Deer and one in Spruce Grove, Alta,” he says. “Joining the DLC network has been a tremendous asset to building our company and to give the agents all the tools to be able to succeed! It is very satisfying to see them grow their business through hard work and dedication.” Wild credits an aggressive online presence through Facebook, Twitter and Kijiji for helping him reach out to past and present clients, but underlines his two greatest referral sources as his Realtor and new home-building partners. “They also know that the mortgage will get done effectively and with the least amount of stress for their clients,” says Wild. Wild has been married for 39 years to his “biggest supporter Wendy.” He’s also passionate about serving his community, helping raise over $189,000.

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FEATURE / CMA FINALISTS JACKIE BOWEN Verico Essential Mortgage Company, North Vancouver, B.C. Jackie Bowen lives and dies by the referral; and so she’s full of the vigour of life. “Ninety-eight per cent of my business was referral. I spent no money on advertising last year,” says Bowen. “Instead I focused my time and money on the main sources that had generated the majority of my business in 2011 and kept that as my main focus for my 2012 business.” With almost 11 years in the mortgage/real estate industry combined (four of those as a broker as of this August), her office of seven employees funded $3.2 million in 2012. “Instead of spending money on marketing myself elsewhere, I used it to thank my referral sources for their business,” she says. “I have sent out thank you cards with lotto tickets/gifts for every referral received, and I’ve done giveaways, quarterly lunch meetings. Stuff like that.” Along with being nominated as a finalist for Best Newcomer Individual Broker at the 2012 CMAs, Bowen was recognized as a “Go-To” Mortgage Broker for Rent to Own and Credit Repair in B.C. and Alberta by her business partners and colleagues. “I started working with a rent-to-own company in 2011 and vastly grew in 2012 to where I now work with four companies throughout B.C. and three companies in Alberta,” says Bowen. Everywhere Bowen goes, she treats it as a business opportunity – a testament to her determination to grow the business and make Essential Mortgage a success. “I never hesitate to ask for business. Whether I am working with a new or repeat client, talking to one of the parents at my daughter’s school, at a social function or even at a grocery store, I simply introduce myself and hand out business cards,” she says. “It takes a quick minute to do but has played a large role in the growth of my business.”

SANDY HIGGINS The Mortgage Centre – Island Properties, Victoria, B.C.

Collin Bruce

I never hesitate to ask for business 26 | MORTGAGEBROKERNEWS.CA

2012 Broker of the Year Winner (25 employees or more)

The key to success for Sandy Higgins is not going to work – but going to a place where she loves to be. “I cannot call this a job, as I enjoy coming to the office every day,” says Higgins, who is now in her seventh year as a mortgage broker with The Mortgage Centre – Island Properties. “I have more than 35 years in the lending industry, and I enjoy what I do each day.” Those years in the lending industry include 29 years at a credit union, where she left in 2006 as manager to enter the mortgage broker channel. “As the owner of my own franchise with The Mortgage Centre, I feel it is my broad base of knowledge of the lending industry that gives me success,” she says. “It is always important to keep up-to-date with lending policy knowledge of the many lenders to choose from to put my clients into the best rates and products to fit their needs.” Higgins’s philosophy is to “always put the client first and work with them to save them both time and money,” citing years of hands-on experience – including building houses – which has provided her with “a solid knowledge base for construction financing mortgages” for her clients. “Commercial property building and subdivision of properties – all this has given me knowledge to be able to walk my clients through the process and where to take them for the right types of mortgage financing products,” she says. “This has been an invaluable tool in this industry.” A point of pride for Higgins is the low turnover in her office. Higgins says she has a total of six brokers on her team, and in 2012 she was awarded Top Three Mortgage Professional (Owner) in the Pacific Region and received a Top Franchise Growth Award (under $100 million) nomination.

Sally and Jim were so moved by the CHIP Home Income Plan they fell out of their rocking chairs.

FEATURE / CMA FINALISTS JONATHAN ASKEW The Mortgage Store, Verico Money Business Inc., London, Ont. Humble beginnings of Kraft Dinner are now only fond memories for Jonathan Askew, who has today joined the ranks of some of the most respected brokers in Canada. “I started in the industry early in 1991, coming from a background of financial planning and insurance,” says Askew. “It was difficult because in those days, rates were 13.75 per cent on a 25-year amortization, and compensation was only 50 bps on a five-year going down to 10 bps on a one-year term. No volume bonus and the average mortgage size was $102,000. We ate a lot of Kraft Dinner in those days.” The intervening years were spent slavishly building up a customer base, resulting in $30 million in mortgage deals written in 2012. “That has paid off tremendously because we have a very loyal following,” he says. A dedicated family man, everything Askew does is for his wife and children. “My key to success is my wife. She is the most positive person I know and she truly believes in projecting a positive attitude, which is infectious.” Passing along his knowledge to newcomers in the channel is a source of pride for Askew, watching mortgage novices grow and mature into seasoned, successful brokers. Askew personally closed 136 mortgages last year, but remembers the standout deals with personal pride. “A client came to me who had a 486 score beacon and two months later purchased a $420,000 home with a 735 beacon. That is what brokering is all about.” Although Askew is appreciative of the honour of being nominated as a finalist at the CMAs, he cherishes even more the gifts and letters of thanks past clients have bestowed upon him. “Those are the awards that I am thankful for every day,” he says.

LAURIE FURNESS The Mortgage Centre R.D.M. Financial Consultants, Oakville, Ont.

Tom Lam

2011 Broker of the Year Winner (25 employees or more)

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Never one to sit back and let life “just happen,” industry veteran Laurie Furness jumped into the broker channel when her last underwriting deal was declined. “I started as an underwriter with CMHC, then moved to Royal Trust when they first introduced ‘road reps,’” says Furness. “I went on to TD for a year in the same capacity until they declined my last deal. I became a broker and have never looked back!” Furness attributes her success to a stable team and a promotional vehicle that has increased her volume. “I have an excellent staff who have been with me for years and we are an efficient team,” she says. “I found a publication that I felt was worthy of sending to my clients and have found it has increased by volume with previous clients to where they represent over 50 per cent of my business.” One of the keys to success is through customer service, with the mantra “under promise and over deliver.” “My clients know they can count on me to do the best for them and my word is gold. I value the reputation I have built in this industry with my clients, referral sources, lenders and colleagues,” says Furness. Her reputation includes being second in Canada for MCC in 2012 once again, and winning a Readers Choice award in Oakville. “I only found this out as a client told me when I asked where they got my name!” Her background in underwriting makes her appreciative of those underwriters she works with today, and tries to tailor her deals to best suit their needs. “Know how to structure a deal, who to take it to so as not to waste the lender’s time and get the best deal for the client,” she says. “Then all parties are happy.”

FEATURE / CMA FINALISTS

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MORTGAGE BROKER OF THE YEAR 25 EMPLOYEES OR MORE

GORDON ROSS Axiom Mortgage Solutions, Calgary, Alta.

It could have been Gordon Ross, MD – but the medical field’s loss is the broker channel’s gain. “I attended Arizona State University and was once an aspiring MD,” says Ross, who instead decided to put down the scalpel and instead pick up the calculator, entering the mortgage industry in May of 1999. “I started working with a company called New Concept Mortgage, then opened my own brokerage called Unisource Mortgage Corporation and grew the business to over 30 agents,” he says. Merging the brokerage with Integrity First Mortgage Solutions in 2006, that amalgamation became Axiom Mortgage Solutions (the brokerage), and Axiom Mortgage Partners (the national network). In 2009 Axiom Mortgage partners won the CMP award for Best Newcomer – Mortgage Brokerage Firm.

“I proudly wear two hats. I am the co-owner and managing partner of a brokerage called Axiom Mortgage Solutions and a national network called Axiom Mortgage Partners,” he says. “Our primary focus has been long-term sustainable business growth through the use of CRM software and unique marketing.” Although Ross has found tremendous success in brokering, he does offer a word of caution to those entering the channel. “Don’t. Next question please,” says Ross, halfjokingly. “OK, OK maybe that was a little bit hasty. The advice I was given when I got into the business was that this industry is the greatest industry in the world and the best kept secret. Today I would agree with the first part of that statement; but a well-kept secret? Not so much anymore.” For Ross, his vision of the future is a better working relationship between broker and banker, each complementing the other to offer the best product possible. “I think there has clearly been a shift in the way that we do business and the idea of ‘bank vs. broker’ is no more,” he says.

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FEATURE / CMA FINALISTS

NICK L’ECUYER Verico The Mortgage Wellness Group, Barrie, Ont. While last year was tough for those trying to make a buck in the channel, Nick L’Ecuyer basked in the glow of a 50 per cent increase in mortgage volume over 2011. “We saw the real benefits of our unique approach to a mortgage brokerage service model in more than the increase,” explains L’Ecuyer. “It’s doubly impressive how much of that increase found its way to our bottom line. I attribute that directly to the efficiencies we’ve created within our model. When you consider that our customers are experiencing a truly high level of service and we’re creating a quality product, improving your profitability through efficiencies is just icing on the cake.” While this is consistent with his previous years in the business, last year’s increase was a milestone – an increase to over $60 million in annual mortgage volume, making him the highest volume broker in Barrie. The Barrie office has a support staff of seven, each specializing in a specific area of mortgage lending, part of a larger network of The Mortgage Wellness Group that has grown to nine regional offices from Sarnia to Ottawa, with 42 mortgage agents. “I believe that operating a ‘client-first’ service model is the key to success and repeat business,” he says. Married for five years to his wife, Nancy, they live on the outskirts of Barrie with their two-and-a-halfyear-old daughter, Chloe. The newest addition to the family is Caleb. An active member in the Downtown Barrie Business Association and the local BNI chapter, L’Ecuyer was named the top “giver” in his group for passed business in 2012. “In the same way that I built a ‘customer-first’ philosophy and service model to improve repeat business, our satisfied customers regularly refer us to their neighbours, family and friends,” says L’Ecuyer.

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DON MACVICAR Verico Premiere Mortgage Centre Inc., Dartmouth, N.S.

Lou Perotta

2010 Broker of the Year Winner (fewer than 25 employees)

The past year has been a true test for Don MacVicar, who has had to push ahead despite his brother and business partner, David, being diagnosed with brain cancer at the young age of 47. “It has been a true test of the fortitude of our team,” says MacVicar, the president of Verico Premiere Mortgage Centre in Dartmouth. “David has since taken early retirement and, with his departure, the entire team has come together to backfill the gap created in his absence, although David will never truly be replaced.” This tight-knit family of 58 mortgage agents, five support staff and two sales people has drawn even closer together. In banking and mortgage financing for 19 years, MacVicar started his career with Scotiabank in Halifax in 1994. “I come from a family of bankers, including my father, Don Sr., who was a banker for over 40 years. I entered the mortgage brokerage channel in 2000 when I was with CIBC Mortgages in Toronto and was involved in the early evolution of the HLC Home Loans Canada model,” he says. “In 2006, my brother David and I, along with other partners, decided to leave the banking world and go out on our own as an independent brokerage to create Premiere Mortgage Centre.” The other major business partners in the company are Kerri Reed, the VP Ontario Broker of Record, and Michelle Drover, the VP of the Atlantic division. MacVicar’s life is inextricably intertwined with business and family – with people.

FEATURE / CMA FINALISTS

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FEATURE / CMA FINALISTS

JANET MACDONALD Verico The Mortgage Professionals, Kingston, Ont.

DAVE TRITHART Dominon Lending Centres 1st Financial Link, Edmonton, Alta. Dave Trithart had 21 years of banking experience before joining the world of commercial mortgage real estate financing. “I began in the banking industry in 1972, a career that included positions from teller to branch manager,” says Trithart, broker- owner of Dominion Lending Centres 1st Financial Link in Edmonton. “My entrepreneurial spirit led me to brokering.” From there, Trithart moved on to become founding partner with Montrose Mortgage in Edmonton in 1997, leaving the partnership five years later to join Mortgage Intelligence with his son Sean (his other son Keith being an actuary in Calgary). Trithart and his wife and business partner, Lauren Hills, have seen the business grow during a tough 2012. “Over the past 10 years, we have grown our brokerage to a team of 42, generating volumes in 2012 of $225 million,” says Trithart. “The data base and our networking are what work for us.” Trithart takes pride in how his business has expanded despite a difficult year responsible for shrinking so many other brokerages. “The standout achievement of 2012 was growing our team from 18 agents and about $100 million in volume in 2011 to 42 agents and $225 million,” he says. “I am proud to admit that we have never in the past 10 years lost an agent to a competitor, as I use the same approach to service with my team.”

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Janet MacDonald got her start in the channel purely by chance. “I was hired as a summer student at Canada Trust in 1988,” she says. “After a week of filing they asked me if I could handle processing mortgage discharges. For two years I worked full time in the summer and 20 hours a week during the school year actually preparing the old paper discharges and mailing them to clients and solicitors.” It was after graduation that MacDonald took on several roles in mortgage administration, eventually moving up to supervise a mortgage administration group. Later, at CMHC she continued to expand her mortgage knowledge, providing support to the lenders and brokers before moving on to Municipal Trust and ReMax. MacDonald joined The Mortgage Professionals in 2001 in administration then started brokering in November 2003, growing her business to become top broker in 2012 at her office. Currently a mortgage agent with Verico The Mortgage Professionals, MacDonald attributes her success to always acting in the client’s interest! “I’ve always believed that if you do what is best for your client, even if that means sending them back to their own bank or doing a deal with little pay, then you will always have business coming in the door,” she says. MacDonald, a married mother of two, understands the value of family and living life to the fullest. “Surviving breast cancer in 1999 had a definite impact on the importance of family time,” she says. “We love to travel and I typically take 10 weeks off yearly. Most people in my office are astounded that I can take so much time off, but having a well-run business and always being in touch while I am away allows me to do this.”

MacDonald attributes her success to doing what is best for the client

FEATURE / CMA FINALISTS KELLY WARDLE

Pro Link Mortgage Inc., Calgary, Alta. Kelly Wardle went from helping people find their dream home to arranging mortgages to make their dreams come true. “I had more than 10 years in real estate before entering the mortgage industry working for Bridge Capital as a mortgage associate in Calgary,” says Wardle. “I stayed with Bridge Capital from 2004 to January 2010, moving my licence to Pro Link Mortgage to work with Debbie Weiss – and where I plan to spend the balance of my mortgage brokerage career.” The company has approximately 42 brokers, associates and staff located in British Columbia, Alberta and Saskatchewan. “A good 27 per cent of my business in 2012 was repeat business from past clients who had their existing mortgages up for renewal, purchasing move-up properties, or purchasing additional properties for investment purposes,” he says. With nearly three-quarters of his business coming from referrals, Wardle credits his experience

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FEATURE / CMA FINALISTS JEFF CODY MCC Mortgage Brokers City, Ottawa, Ont. Signing his name to a non-compete clause opened the door for Jeff Cody to try his hand at brokering. “Before I started mortgage brokering, I owned a high-tech company,” he says. “In 1986, I sold it, worked for the purchaser (CTG) for two years before turning it over and moving the Canadian head office to Toronto. “I had a five-year non-compete, so I decided to look for a new career and obtained my mortgage broker’s licence in 1988 in Toronto. Then I decided to move back to Ottawa and start a mortgage brokering firm.” A fully licensed mortgage broker and managing partner of Mortgage Brokers Ottawa, Cody obtained a Bachelor of Mathematics, majoring in business, from the University of Waterloo before obtaining his broker’s licence. “My more than 30 years of financial background includes three years working for CMHC, lending for two trust companies (FMMC, Prudential), business management and over 24 years of mortgage brokering in the Ottawa area for Prestige, Norlite, Mortgage Intelligence, Invis and MortgageBrokers. com.” Cody can measure his success by the billions of dollars of deals he and his team have originated over the years. He’s currently one of four owners and a managing partner of Mortgage Brokers City Inc., which is operating as Mortgage brokers Ottawa. It’s all been made possible by the love and support of his family. “I’m lucky to have a great wife, Penny. We have been married 24 great years. I often say she is my best friend, salesman and love of my life,” he says. “We love ballroom dancing. We have met many wonderful people and friends through dance - many of whom are also my clients.” In fact, Cody says his key to success is being surrounded by so many great people, a team of 117 mortgage professionals, which includes more than 100 licensed mortgage agents.

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BILL HARRIES The Mortgage Centre Sky Financial, Edmonton, Alta.

Greg Williamson

2009 Broker of the Year Winner (National network member)

Bill Harries and his wife and business partner, Nicole, love to spend time in their condo in Mexico – but don’t for a moment think they are not at work. “We like to get away to the condo in Mexico for two or three weeks to recharge our batteries,” says Harries. “But we use it as an opportunity to strategize and brainstorm as well. And with the VOIP line we have, we’re readily accessible, staying in contact with the office at all times.” Married for 27 years, Harries and Nicole have a 23-year-old daughter, but before becoming parents, it was air traffic controlling that brought the two into a partnership of marriage and brokering. “I was an air traffic controller for 20 years with the Air Force, starting in Ottawa,” Harries says. “Then I moved to Portage la Prairie where I met Nicole, and then we moved to Edmonton. She was an air traffic controller, too.” Together they bought a broker franchise, The Equity Centre, which was then bought out by FirstLine mortgages, eventually merging into The Mortgage Centre. “We’ve been the top MCC franchise for the Prairies for the past three years,” says Harries, who can point to 50 per cent of his referral business coming from newsletters, the Internet and videos. “Forty per cent of our repeat business can be mostly attributed to our Stay in Touch program, which has been highly successful for us,” he says. With more than six offices scattered across Alberta and Saskatchewan, the company has grown from five people in 1992 to a staff of 30 and a thriving business, which in 2012 brought in $337 million on 1,075 deals. “The key to success has been a combination of things,” he says, “but I would have to say it is something that we have built from the inside out.”

FEATURE / CMA FINALISTS

ANTHONY CONTENTO Mortgage Architects Sherwood Mortgage Group., Toronto, Ont.

Anthony Contento doesn’t measure success by the size of his portfolio, but through team effort. “This year it comes with the help of my business partner and the agents who work hard every day,” says Contento, president and CEO of Mortgage Architects Sherwood Mortgage Group. “I have always measured success by not how big a portfolio we have, but by the size of my team’s heart and passion.” Contento started in the broker industry January of 2009, having worked for financial institutions for over 20 years. At RBC, “my top year I funded $186 million and was also top nationally with CMHC. Prior to that, I was a regional manager with BMO and an executive lender. I started my banking career with RBC as a co-op student when I was 16.” Contento credits his success to the respect, trust and honesty his parents taught him as a child. “They were key in my family home and my parents made sure I understood what it meant for my livelihood, and as a person,” he says. And watching young agents grow and mature in the industry is just as rewarding.

“What makes me feel young are the up-andcoming new agents who have the right frame of mind to work in this industry,” he says. “Watching them grow and providing some assistance from my experience is a great motivator for me.” True success is measured not in new clients, but those who keep coming back because of excellent service – what Contento sees as the true prize to win every day. Still, Contento is flattered to be a part of the awards ceremony. “I would like to thank all the people involved in helping me get nominated,” he says. “and my business partner, Athena Constantinou.”

True success is measured not in new clients, but those who keep coming back

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FEATURE / JUDGES

CMA JUDGES They’re drawn both from within and outside the industry, but they’ve united in the hunt for recipients of the 2013 Canadian Mortgage Awards

BRENDAN CALDER This co-founder of FirstLine Trust Company is now an adjunct professor and Entrepreneur in Residence at the University of Toronto’s Joseph L. Rotman School of Management. Calder conducts the “GettingItDone” MBA course, chairs the Desautels Center for Integrative Thinking and was the founding chair of the International Centre for Pension Management. Prior to joining Rotman, Calder was CEO of CIBC Mortgages and president of FirstLine Trust. He serves on the Board of EllisDon, FirstService, Impact Consulting and the WSIB. This past chair of the Toronto International Film Festival is now on the advisory board of Canada’s Top 40 under 40. Calder has a BMath from the University of Waterloo and attended the Advanced Management Program at Harvard University.

ALDO CUNDARI This Canadian marketing guru is a graduate of the prestigious L’Instituto Europeo di disegno in Rome and founder of Cundari Group Ltd. Established in 1980, the firm is now one of Canada’s largest independent communications companies, with expertise in integrated communications services, branding and design as well as interactive web and software development services. A past judge of the CMAs, Cundari has also served as chief judge for the World Globe Awards and in 1998 was included on Marketing Magazine’s Power list. He is a fellow of the Quantum Shift program at the Ivey Institute for Entrepreneurs and was selected in 2008 and 2009 as one of Ernst and Young’s Entrepreneurs of the Year.

36 | MORTGAGEBROKERNEWS.CA

FEATURE / JUDGES

FIONA CAMPBELL An Industry professional – on both the lending and brokerage sides – Campbell brings more than 20 years of experience to the judges’ table. Her past work has its roots at the CIBC branch level, ultimately spreading upward to lead the Ontario mortgage sales force for the forerunner to HLC. Campbell moved to Invis at the start of the company in 2000 and managed the growth of Eastern Canada till late 2009. Within that time, and working with other mortgage professionals, she grew Invis from a small company with few consultants to a major force within the industry and one able to buy Mortgage Intelligence. She has a background in sales, sales management and entrepreneurial endeavours outside the channel in the hotel, trades and real estate industries.

FRANCES BLAU This 50-year veteran of the industry is also president of Abacus Mortgages Inc., an independent private lending brokerage. In that position – and in partnership with Bob Andrew and Jeff Atlin – the Ontario broker has helped nurture and educate dozens of mortgage agents, many having gone on to their own active brokerages. That community work extends beyond her private practice, with Blau serving in a number of volunteer positions, including president of the-then Ontario Mortgage Brokers Association. This Hall of Famer is not only the first female broker to win that accolade from the Canadian Association of Accredited Mortgage Professionals, but the first broker, period. That honour came in 2004, with many other awards marking Blau’s storied career.

HARRY SINGH This industry vet has held various positions in the channel since enlisting in 1998. Singh started his career in mortgage servicing and transitioned to mortgage originations while managing teams of underwriters and business developments managers. He has a degree in economics and a master’s degree in business administration, that education brought to bear in his current work at Equitable Trust as manager of business development. Singh previously taught the Financial Services Underwriting program for Ontario and is currently an instructor for the mortgage agent program at Seneca College. Singh currently sits on the board of the Independent Mortgage Brokers’ Association as a director.

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Vancouver CMHC/Conventional Financing Single Family Financing Phone: 604-685-1068 Email: vancouver@peoplestrust.com | 37 MORTGAGEBROKERNEWS.CA

FEATURE / INVESTOR SERIES

GET

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FEATURE / INVESTOR SERIES

ur business is constantly evolving and changing. Traditional products go by the wayside and new ones emerge to take their place and respond to the needs of the marketplace. One of the most interesting products now available to mortgage agents is a bit of both; an old idea with a new direction. Syndicate mortgages have long been the bastion of private lending to borrowers looking for loans too large for a single lender to take on. With sophisticated new systems and client-friendly marketing, syndicates are now being used to fund a much broader array of projects, including largescale, blue chip development projects. With attractive yields in place, syndicates are now becoming part of asset allocation models for financial advisers and others looking to introduce direct real investing opportunities to their clients. The increasing popularity of “alternative investments” presents an intriguing opportunity for mortgage brokers, but one that must be carefully reviewed and entered into with a full understanding of both the merits and risks of these products. All investments have some element of risk and syndicate mortgages are no different. Understanding the risks involved is an important part of making an informed investment decision. You want to make sure that the companies or projects you are investing in have been carefully reviewed so that any risk factors are clearly identified and planned for as best as possible. Furthermore, understanding how these risks are mitigated is a crucial part of the due diligence of all investors and mortgage agents.

FOUR KEY CRITERIA KNOW WHO YOU’RE INVESTING WITH Many syndicates have similar terms and yields but not all are created equal. One of the most important factors in choosing or declining to participate in a syndicate mortgage is the reputation, performance history and track record of the builder/developer that is the borrower. Look for experienced developers with a long history of timely and successful completions of their projects. Be careful when looking at companies that are trying a new build type for the first time; you may not want to be their “test flight.” Remember, at the end of the day, the developer/builder is the borrower that your client is relying on for a successful completion of the project; be wary of “startups,” companies with only one or two projects or those without a strong completion history. There are many high-quality options available; be sure to choose the best development and builder brands for your clients to invest with.

WHAT IF THE DEVELOPMENT FAILS TO GET THE REQUIRED ZONING?

STATS

33,300 - Alberta Housing starts February 2013 Source: CMHC

This is a common concern that individuals voice when looking at any development-oriented real estate investment; for many developers, this is one of the risks that can affect the timing and exit of the project. If unable to get the required zoning, the planned project cannot proceed or can be stalled for years. Looking for mature projects that already have the proper zoning in place will certainly help eliminate that risk. Try to get involved in syndicates where the current planning is complete, so that it will minimize this risk exposure.

MORTGAGEBROKERNEWS.CA | 39

FEATURE / INVESTOR SERIES WHAT IF THE PROJECT RUNS OUT OF MONEY BEFORE OR DURING CONSTRUCTION?

WHAT IF THE PROJECT DOESN’T MEET ITS OBJECTIVES? HOW DOES THE CLIENT RECOUP?

I have heard of projects that grind to a halt and sit unfinished for years. Make sure your investment comes with an interest reserve (that is a combination of developer equity, project proceeds and cash). These monies are securely maintained in a separate account to ensure that the funds required to service the debt on your full term are safely administered and available at the proper intervals. Furthermore, you may want to ensure that the developer you are lending the funds to has a policy regarding bonded and insured construction contracts (usually on highrises only). Construction and labour/material bonds give the developer the assurance that the quote that was agreed upon to build the project will hold true and not be inflated due to, among other things, market fluctuations or credit risk. In addition to construction bonds, many developers require insurance policies on the builder once construction has commenced to protect the agreed-upon bonded building contract. These checks and balances are in place to protect the project as much as possible from cost over-runs and costly delays, and ultimately to protect the investor.

The benefit of this structure is that all syndicate mortgages carry fixed terms and defined horizons and give the investor a direct charge on the development. Monies are due back at the maturity date and any delays in the project provide additional exit options: • A negotiated extension for which the developer/builder compensates the investor • Refinancing by a new institutional lender that exits the investors • Forcing a sale of the property to recoup investor capital In all options, the advantage of being part of a syndicate mortgage is that charges against the land get paid first and ensure that investors get their monies paid back prior to the developer’s equity or any other shareholder. So now that you know the risks involved, make sure when you are selling a syndicate mortgage product, the client is getting a choice, defined terms and, most importantly, understands who the investment is with. Be sure to review the developer’s track record and ability to execute on profitable development projects. Remember, real estate is about: location, location, location. Development is about location, timing and financing. Be sure to understand how well the developer has proven its ability to execute on this formula.

These monies are securely maintained in a separate account to ensure that the funds required to service the debt on your full term are safely administered

40 | MORTGAGEBROKERNEWS.CA

ABOUT THE WRITER: Josh Will is a mortgage agent with Centro Mortgage Inc. and the senior vice president of National Sales for Fortress Real Developments.

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FEATURE / GOLDEN RULE

FORGET THE

GOLDEN Motivational coach Roger Ellerton makes his case for why you should abandon that guiding principle if only to better figure out client needs

42 | MORTGAGEBROKERNEWS.CA

As a mortgage broker, you are constantly influencing others to accept you, your ideas, products or services. Many people have difficulty with influencing others because they tend to use the same strategies and emphasize the same needs and values on other people that they would like other people to use with them. Or they take the “spray and pray” approach, hoping their client will find something useful in the information provided. Each of us has different needs and different strategies for buying. If we didn’t then there would be only one type of mortgage with one rate. To be truly effective at influencing others, you need to view the situation from their perspective. That is, determine what is important to them and how they like to purchase. I am not a mortgage broker and from my perspective, with my limited knowledge of your profession, all mortgage brokers are the same -- you

FEATURE / GOLDEN RULE have access to mortgages with various terms and rates. So it is really up to you to provide the difference that makes the difference. Help me feel good about the process and allow me to buy the mortgage that I need rather than have you sell me a mortgage. How you interact with a potential client will have a significant impact on your success rate in closing mortgage deals and obtaining motivated referrals.

People may not remember exactly what you did, or what you said, but they will always remember how you made them feel. - Maya Angelou

DETERMINE YOUR CLIENT’S NEEDS AND VALUES Far too often, we think it’s the product or service that people want to buy. In reality, however, people buy the benefit that the product or service provides. If you are not certain of what is important to your client, you will not be able to present your products or services clearly. Having an understanding of your client’s needs and values can: • • •

•

Shorten the whole influence process Provide a better understanding of how to present your offering Lead to a better agreement for both parties -- may give you an opportunity to suggest something the other person forgot, did not think was possible or was out of their awareness Create a firmer foundation on which to conclude this and future interactions positively

the difference? Begin by asking questions. Listen for what is important to your client and how they express what is important to them. I’ll be discussing this more in part two of this article. As you know, some clients come to you with their minds already made up as to the best mortgage for them -- having obtained “expert” advice from their friends or an Internet search. For example, your client may start by saying they would like a 10-year fixed-rate mortgage. Rather than telling them why their choice is not a good idea given the current financial climate or simply offering the best available rate, acknowledge their choice and explore the reason behind it. Once you have clearly identified the underlying need or value, you can raise the possibility that this need could be addressed in ways that provide additional benefits. Even if a client comes in looking for the lowest possible interest rate, there is a need or value behind their decision that may be better addressed in a different manner. For some people, you may have to ask lots of questions. For others, you may have to interrupt politely to ask questions to get them back on track. A client’s needs and values can be intangible such as respect or tangible such as a monthly payment that is within their budget. Having an understanding

A client’s needs and values can be intangible such as respect or tangible such as a monthly payment that is within their budget

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FEATURE / GOLDEN RULE of your client’s specific needs and values will provide clarity on what truly is important to them and will help you recognize where you can compromise, suggest trade-offs or hold firm. Although not comprehensive, I have found that specifying your client’s most important needs and values in terms of the acronym RIGHTS can stimulate your thought processes, encourage you to take a more concerted look at their needs and values and help you remember what is important for your client. To begin, take a moment and for your typical client determine their RIGHTS. If you have more than one typical client, e.g. commercial vs. residential mortgages, do this exercise for each typical client. That is, identify at least one need or value that corresponds to each of the letters in RIGHTS. To get the most out of this exercise, you may wish to act as if you are a typical client and imagine you are talking to a mortgage broker.

The more RIGHTS you satisfy, through the way you interact with your client and the mortgage package you arrange, increases your closing success rate and provides more motivated referrals ABOUT THE WRITER: Roger Ellerton is a public speaker, coach and author. This article is based on his book, Win-Win Influence: How to Enhance Your Personal and Business Relationships. For more information, see www.renewal.ca.

44 | MORTGAGEBROKERNEWS.CA

POSSIBLE SUGGESTIONS ARE:

R – reputation, (minimize their) risk,

reduce (costs), respect (their view point -- you don’t have to agree with them, just respect they have a different perspective), responsive (to their needs).

– information (on rates or how to better handle their financial resources), investment (alternatives). (low) interest

G – guarantee (interest rate for a

specific period of time), green (environmental, e.g. electronic rather than paper documents).

H – health (reduced stress), helpful

(broker), (feels respected and) heard.

T – (convenient meeting) time, time (to closing, amortization), timely (response to requests).

S – safety (affordable monthly

payments), save (money), satisfaction (with process and results).

Having the RIGHTS specified for a typical client is a good starting point. As you meet each client (in person, by email), customize this list to focus on their specific needs. For each subsequent meeting, use this list to refresh your memory about this client and modify as you get new information. The more RIGHTS you satisfy, through the way you interact with your client and the mortgage package you arrange, increases your closing success rate and provides more motivated referrals. In the second part of this article in the next issue, we will explore how to present your offering in a way that is motivating for your client.

FEATURE / COMMERCIAL LEASES

If there’s something a commercial broker can’t afford to overlook, writes Toronto real estate lawyer Ronald B. Melvin, it’s the lease details of a deal

THE LEASE OF THESE 46 | MORTGAGEBROKERNEWS.CA

FEATURE / COMMERCIAL LEASES

any commercial mortgage loans are intended for properties that are income-producing or will be incomeproducing once construction is completed. Typical examples of these types of properties, of course, are office buildings and shopping centres. In these projects, the various leases, be they large or small, are critical to the cash flow of the property, which is required to service the commercial loan indebtedness. Examples tend to work best in conveying the ins and outs of these leases and what exactly lenders are looking for, so let’s consider a small- or medium-size shopping plaza having one or two anchor tenants and a greater number of relatively smaller tenants. The first consideration is the overall aggregate net rents, which are generated by the leases and will form the basis for setting an appropriate capitalization rate and fair market value of the project. From that, the lender can establish the maximum loan amount based upon an appropriate loan-to-value ratio (LTV). Another major consideration is the debt service coverage ratio (DSCR), being the ratio of net cash flow from the property to the debt service cost of the loan. Typically, commercial mortgage lenders will require an LTV not exceeding 65 to 70 per cent and a DSCR of not less than 1.3x. Note, however, that these ratios are given only as a frame of reference and can vary considerably depending on the nature of the commercial property and the strength of underlying covenants of both borrower and guarantors of the loan. For example, it is typical for hotel properties, which are considered riskier in nature, to be underwritten on the basis of an LTV of 55 per cent or less and requiring a DSCR of 1.4x or higher. The determination of capitalization rate, fair market value, LTV, DSCR, quality and size of various tenants, lease expiry dates, renewal options and many other factors relate to the financial underpinning of the project and have direct bearing

Ronald B. M elvin

ABOUT THE WRITER: Ronald B. Melvin is a senior partner of Rose, Persiko, Rakowsky, Melvin LLP, a boutique law firm in Toronto, Ontario, which specializes in real estate and commercial law, including real estate development, mortgage lending and other secured transactions, commercial leasing, mortgage remedies and general corporate and commercial law.

on the underwriting of a commercial loan for it. But once a commercial loan is determined to be viable, there are other factors that come into play and relate to the relationship amongst the borrower/ landlord, its tenants and the lender. From the perspective of a tenant and the lender, an important issue relates to whether the lease exists prior to funding of the commercial mortgage loan or whether the lease arrangement is established after the loan is funded. If the property owner/borrower enters into a new lease after the initial funding and during the

ROSE, PERSIKO, RAKOWSKY, MELVIN LLP Barristers & Solicitors 390 Bay Street, Suite 600, Toronto, Ontario, M5H 2Y2 | Phone: 416-868-1900 | Fax: 416-868-1708 Rose, Persiko, Rakowsky, Melvin LLP is a boutique law firm specializing in real estate and commercial law, including real estate development, mortgage lending and other secured transactions, condominium law, commercial leasing, mortgage remedies and general corporate and commercial law. Ronald B. Melvin, LL.B. | Direct Line: 416-868-1908 | Email: rbmelvin@rprlaw.com MORTGAGEBROKERNEWS.CA | 47 Allan A. Rakowsky, B.A., LL.B. | Direct Line: 416-868-1905 | Email: alrak@rprlaw.com

FEATURE / COMMERCIAL LEASES

In the absence of anything else, the lender could elect to intentionally terminate that lease term of the mortgage loan, sometimes called a subsequent lease, then the rights of the new tenant will be subordinate to the rights of the lender. In this case, in the event of a default under the loan and subsequent remedial proceedings taken by the lender, in the absence of anything else, the lender could elect to intentionally terminate that lease or, by its actions, could unintentionally create an opportunity for the tenant to disclaim and walk away from the lease. In the vast majority of cases, these are scenarios that neither the lender nor the tenant desires. So, for a subsequent lease, the common, if not universal ,practice is for the parties to enter into a non-disturbance and attornment agreement (NDA). The NDA will provide that, in the event of default under the loan and remedial proceedings being taken by the lender, the tenant will agree to recognize the lender as its landlord, which in legal terms is called “attornment” to the lender. The NDA will also provide that the tenant agrees to attorn to the rights of any purchaser of the property to which the lender may ultimately sell the property under power of sale or otherwise. In consideration for the tenant’s agreement to attorn, the lender will agree that, in the event of default under the loan and remedial proceedings being taken, the lender will not disturb the rights of the tenant under its lease and will permit the tenant to remain in possession of the leased premises provided that the tenant honours all of its obligations under the lease. This is what is called the “non-disturbance” covenant.

Typically, an NDA will also deal with a number of other important and certain lesser issues. The lender will require notice of any default of by borrower/landlord, which may be alleged by the tenant, and an opportunity to cure such default thereby preventing the tenant from terminating its lease obligation. The NDA will deal with which of the landlord’s obligations the lender is required to assume responsibility for upon taking remedial action. Generally, the lender will not agree to assume financial obligations of the landlord. There are other landlord obligations or covenants, such as landlord bankruptcy, which are generally not curable by the lender. On the other hand, the lender will have to assume responsibility for those landlord’s obligations that are necessary to provide the leased premises to the tenant in the manner in which it is required to be provided under the lease. It is clear from the foregoing that dealing with a subsequent lease involves a number of tricky issues between the tenant and the lender. If those issues are not dealt with, the lender may have difficulty holding the tenant to its obligations under the lease or, alternatively, the tenant may find itself exposed to an undesired early termination of the lease. The NDA can, therefore, represent a significant point of competing priorities requiring substantial negotiation in a commercial loan transaction. This is especially so, for example, in the case of larger anchor tenants of a shopping centre or in the case of single user properties such as industrial buildings. The situation is very different, and in fact considerably simpler, in the case of a prior lease that is, a lease that has been established prior to the initial funding of the commercial mortgage loan. In those cases, the rights of the tenant have priority over the rights of the lender. In the event of default under the loan and remedial proceedings being taken by the lender, the lender is entitled to enforce the prior lease and no attornment by the tenant is required. The landlord and tenant relationship

Allan A. Rakowsky, B.A., LL.B. | Direct Line: 416-868-1905 | Email: alrak@rprlaw.com

FEATURE / COMMERCIAL LEASES between the lender and the tenant, or between a purchaser from the lender and the tenant, becomes established by operation of law. Because of this, the lender has no right to terminate the lease except in the case of default by the tenant under the lease, and then only in accordance with the provisions of the lease. Absent default by the lender as landlord under the lease, there is no risk of any action by the lender creating an opportunity for the tenant to terminate the lease. The lender and the tenant are bound to each other and, as such, there is no need for them to enter into an NDA. For a shopping centre or other income-producing property, prior leases are definitely the preferred situation as far as the commercial mortgage lender is concerned. For these reasons, there is no need for the lender to require postponement or subordination of prior leases. Sometimes lenders and commercial loan commitments are confused in this respect and stipulate postponement of all leases under the mistaken belief that the lender’s mortgage must have priority in all respects. Given the advantages and simplicity of making a commercial mortgage loan in the face of prior leases, it becomes apparent that no such postponements would be necessary. In fact, by insisting on postponement, the lender only creates the additional complications of a subsequent lease, thereby requiring negotiation of an NDA, which would otherwise be unnecessary. Whether the leases are prior or subsequent to the commercial mortgage, in virtually all instances the lender will require estoppel certificates to be obtained from some or all of the commercial tenants. In essence, such estoppel certificates, also

STATS

62,700 - Ontario Housing starts February 2013 Source: CMHC

called tenant’s acknowledgements, are documents signed by each tenant confirming the basic terms of the lease, that the tenant is in possession, that the lease is in good standing and that the tenant understands that the lease will be assigned to the lender as security for the loan. If not required for all tenants, usually estoppel certificates will be required from all anchor tenants and/or from sufficient tenants so as to represent a certain percentage of the net cash flow from the property. A discussion of leases in commercial mortgage transactions would not be complete without mention of ground lease financing. This is a relatively specialized and far less common situation where the borrower’s interest in the property is only as a head tenant under a long-term ground lease of the property. Each actual occupant’s leasehold rights arise by virtue of a sub-lease form the head tenant/borrower. The primary loan security is a mortgage of the head lease and an assignment of the sub-leases. Critical to any leasehold mortgage transaction is the need to enter into a three-way agreement between the land owner (which is not otherwise party to the loan transaction), the head tenant/borrower and the lender. The three-way agreement is in many respects similar to an NDA and is designed to ensure that the lender can take over the head lease in the event of any default by the borrower under it. There are many other additional details of such arrangement which are beyond the scope of this article. It is hoped that the foregoing will serve as a concise summary for mortgage brokers in structuring commitments for commercial loan transactions. Often some of the nuances of the issues are either unknown or overlooked by the parties, thereby leading to complications in closing the loan transaction once a commitment has been signed. If these issues are addressed within the commitment letter itself, the final product and outcome will be best for all concerned.

ROSE, PERSIKO, RAKOWSKY, MELVIN LLP Barristers & Solicitors 390 Bay Street, Suite 600, Toronto, Ontario, M5H 2Y2 | Phone: 416-868-1900 | Fax: 416-868-1708 Rose, Persiko, Rakowsky, Melvin LLP is a boutique law firm specializing in real estate and commercial law, including real estate development, mortgage lending and other secured transactions, condominium law, commercial leasing, mortgage remedies and general corporate and commercial law. Ronald B. Melvin, LL.B. | Direct Line: 416-868-1908 | Email: rbmelvin@rprlaw.com MORTGAGEBROKERNEWS.CA | 49 Allan A. Rakowsky, B.A., LL.B. | Direct Line: 416-868-1905 | Email: alrak@rprlaw.com

BUSINESS / MARKETING

POSITIONER OR PROSPECTOR? It’s a clear choice that all brokers will someday have to make. Have you, asks Doren Aldana, made yours?

50 | MORTGAGEBROKERNEWS.CA

BUSINESS / MARKETING

21 S E C R E T

S OF SUPER MORTGAG STAR E BROKER S

SECRET #1:

THEY ARE POSITIONERS, NOT PROSPECTORS.

W STATS

5,600 - Manitoba Housing starts February 2013 Source: CMHC

hat is a positioner? A positioner is a mortgage professional who builds a brand and reputation such that prospects come to them. Prospectors, on the other hand, chase clients. You see, positioners command respect, while prospectors are seen as beggars. Positioners pick and choose their clients, while prospectors will take anyone with a pulse who can fog a mirror. Positioners are seen as experts, while prospectors are seen as a replaceable commodity. As a result, positioners enjoy a lucrative income with more clients than they can handle, while prospectors are always hustling just to put food on the table. When you position yourself as an expert, people start talking about you, and your name and reputation spread quickly. Once you build your brand as the “go-to” mortgage authority in your local market, you become the only logical choice for mortgage financing. At which point, your clients are

willing to stand in line and even pay higher fees, just to have the privilege of working with you. That’s the power of expert positioning. In contrast, prospectors myopically focus on getting that “next deal” to pay the bills. They lose sight of the distinction between income and equity, activity and productivity. Therefore, they stay stuck in hustle, going from transaction to transaction, like

In contrast, prospectors myopically focus on getting that “next deal” to pay the bills

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BUSINESS / MARKETING a hamster on a hamster wheel. Instead of investing their time to develop marketing assets that build wealth for the future, they spend their days prospecting for their next sale. They do crazy things like cold calling Internet leads and knocking on doors. And then they wonder why they feel burned out, overworked and underpaid. That’s the prospector’s way! At the same time, they’re watching the positioners who seem to effortlessly attract all the clients they want, while enjoying lots of time off to play golf, hang out with family and go on vacation. So, what’s their secret? Their secret is that they position themselves as “mortgage experts” who are authorities at solving their target market’s unique problems as it relates to mortgage financing! How is this accomplished? Admittedly, there are no easy buttons or quick fixes. If there were, everyone would be successful! However, there are several factors that contribute to manufacturing expert status. Just a few of which are credibility, third-party endorsement, publicity and educationbased marketing. The remainder of this article series is dedicated to unpacking those key strategies, so you understand what they are and how to use them. In the meantime, remember this: The second secret of Superstar Mortgage Brokers is that they are positioners, not prospectors. In next month’s third secret, you’ll learn a tried-and-true process that that can help you generate all the qualified prospects you can handle. Stay tuned.

Their secret is that they position themselves as “mortgage experts” who are authorities at solving their target market’s unique problems as it relates to mortgage financing

ABOUT THE WRITER: 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 copy of Doren’s new CD titled, “21 Secrets of Superstar Mortgage Brokers,” visit: www. SuperstarMortgageBroker.com

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Front row (left to right):

Casey Archibald, Account Executive (BC) Darren Kirk, Vice President, Regional Sales

FEATURE / FIRST NATIONAL MARKS 25 YEARS

FROM

TYPEWRITERS TO TWEETS

FIRST NATIONAL REFLECTS ON ITS 25 YEARS One of First National’s founding fathers, Stephen Smith, shares 25 years of memories with CMP’s Donald Horne, and gratitude for the brokers who’ve made them

54 | MORTGAGEBROKERNEWS.CA

An office above Toronto’s Fox & Firkin pub was a humble, albeit handy, spot to start First National, say founders Stephen Smith and Moray Tawse, toasting 25 years of excellence. “Moray and I sat down and decided that I would sell the insurance and he would do the underwriting,” says Smith, remembering those early days in 1988. “Three years later CMHC gave us lender status, and it took another three before we made our first million.” Founded on March 31, 1988, First National Financial claimed revenues of about $200,000 that year. Fast forward to 2012 and those numbers had exploded, with a MUA surpassing $67 billion and revenues reaching a record $628.6 million. First Nat, as its broker supporters call it, is now the largest non-bank originator and underwriter of mortgages in Canada, and among the top three in broker market share. “The past 25 years have been an incredible

Left to right: Sharon MacKenzie, Josie Bohren, Scott McKenzie, Peter Cook, Dru McAuley and Nuala Bourke

FEATURE / FIRST NATIONAL MARKS 25 YEARS

MORTGAGEBROKERNEWS.CA | 55

FEATURE / FIRST NATIONAL MARKS 25 YEARS journey for First National and it’s time to show our sincere appreciation to those who have helped our company become the leader that it is today,” he says. That appreciation, called “Thank You for 25 Years of Shared Successes,” will feature a number of customer, employee and mortgage broker events and contests throughout the year. First National’s growth parallels the development of the mortgage broker industry, starting when the channel had only single-digit market share. Today, almost 30 per cent of all new mortgages in the country are originated by the independent professionals who call themselves brokers. “Mortgage brokers have played an important role in the service of homebuyers and as key contributors to the growth of First National,” says Scott McKenzie, VP of Residential Mortgages. “Their professionalism, independence, insight and advice make mortgage brokers the trusted choice for Canadians from coast to coast.” A CMHC-approved lender by 1991, First National would introduce its MERLIN a decade later in 2001, the industry’s first online mortgage approval and tracking system. It’s being expanded this year to enhance commercial mortgage administration and investor communications. “We owe a debt of thanks to mortgage brokers for our success,” says Smith. “We wouldn’t be here today without them.” First National currently employs 600 people across Canada – a far cry from when Smith and Tawse were spending their every waking moment either in the office at 51 Eglinton East, or downstairs at the, ahem, pub. “They had a customer appreciation night once,” laughs Smith, “and we were given tickets numbered ‘1’ and ‘2’. I guess we spent a lot of time there.” Smith has been at the forefront of innovation in developing and implementing various securitization techniques to finance mortgage asset growth, and is still a regular speaker at securitization and financial

service conferences. A forerunner in the development and application of information technology, MERLIN – the leading mortgage origination software in the industry – can trace its roots back to the late 1980s. “We rewrote MERLIN in 2000, but you can go back to 1988 for a version of it,” says Smith. “Back then, there were typewriters, and anytime you had a new commitment, or had to change an offer, you had to take it back to the typing pool. “It was our idea to incorporate a dot matrix printer and do all of this on computer,” says Smith, “pretty advanced stuff for the time.” When MERLIN was rewritten in 2000, First National fully embraced the digital age. “We moved on to an entirely paperless system, an online database. That is when we saw real growth,” he says. A large part of that revolution to hit the channel was the Internet, reflects Smith. “The Internet came along in 1995 or 1996, and that’s when Outlook began to hit critical mass with everyone emailing one another,” he reflects. “People don’t use telephones anymore. People send me an email and ask ‘Can I telephone you?’” Another major contributing factor to the lender’s

“The past 25 years have been an incredible journey for First National and it’s time to show our sincere appreciation to those who have helped our company become the leader that it is” - STEPHEN SMITH, FIRST NATIONAL

56 | MORTGAGEBROKERNEWS.CA

News

FEATURE / FIRST NATIONAL MARKS 25 YEARS

InternatIonaL

u.s. has been securitization. success “When we began, NHA MBS had only just begun, U.S.ithousing market worse thanthat thought and wasn’t until the mid-1990s the advent of The number of Americans who bought previously asset-backed commercial paper arrived, and then occupied homes rose in October. But the National commercial mortgage-backed securitiesmore at thethan end Association of Realtors says it overstated of themillion century,” says Smith. of the those three sales during and“All after Great Recession, showing the housing market weaker securitization vehicles havewas fuelled ourthan growth by previously thought. providing funding, and concurrently fuelled growth The private trade group says sales rose four per in the mortgage broker channel.” cent in October to a seasonally adjusted annual rate of What won’t be changing anytime soon is First 4.42 million. That’s below the roughly six million homes National’s philosophy. a year that economists say are consistent with a healthy “We’re a monoline to the broker housing market. But it’sdedicated ahead of 2008’s revised sales, channel,” stresses “It13isyears. a strong channel that now considered theSmith. worst in trade group revised salessee from 2007 to 2010 willThe continue to grow, and Iits don’t us changing down 14 per cent, from more than 20.6 million to nearly how we do business. 17.7“Imillion. Among the reasons for the lower fi gures, can’t emphasize how important brokers are to the Realtors group says: changes in the way the Census us,” he says. “We are always looking to make the Bureau collects data, population shifts and some sales process easier. We are always listening to them, to being counted twice. brokers, trying toconsulted make it easier for brokersand to do The Realtors with government business.” private housing experts, including the Federal Reserve, theThe Department of Housing Urban Development, broker channel hasand grown considerably the Mortgage Bankers Association, the National since the early days of First National, and Smith can Association of Home Builders, mortgage giants look back fondly on how both brokers and theFannie Mae and Freddie Mac and CoreLogic, a California-based company worked together to grow it. data firm that first raised doubts about the annual “Back then, there were maybe three or four per numbers earlier this year. centCoreLogic of the market that was made upRealtors of mortgage has estimated that the group brokers – and weinworked those brokers,” overstated sales 2010 bywith at least 15 per cent. says The“Our changing numbers couldreflected affect how Smith. growth has been byeconomists the view the trade group’s data. It could also affect growth of mortgage brokers as a whole. Wecompanies that use the gurestoday for hiring and expansion wouldn’t befihere without the hard plans. work of Sales are measured when buyers close on homes. mortgage brokers.” But many deals are collapsing before that point. The early years were tough for Tawse and Smith, One-third of Realtors said they had at least one contract who remember theup sixfrom years took to in make their scuttled in October, 18itper cent September. firstContracts million inare sales, compared the $400 reasons: million being cancelledtofor several Banksmake havein declined they a weekmortgage today. applications; home

showed a home was worth less thanto the bid; a We’re a monoline dedicated 90.6% buyer lost a job before the closing. More than two the recession the broker channel. It years is aafterstrong cially ended, many people can’t qualify for 52.1% offi higher down payment channel that loans willor meet continue to grow, requirements. Even those with excellent credit and stable jobs are holding off because they fear Percentage of and I don’t see us prices changing we that home will keep falling. how Sales are also homeownership being hurt by a decline in first-time buyers, who costs, including do business are critical to reviving the housing market. mortgage payments, inspectors have found problems; appraisals

Sales have fallen in four of the five years utilities and property since the housing boom went bust in 2006. taxes take tough up a market “It wasthat a pretty from 1988 to and 1996,” Declining prices record-low mortgage rates typical household’s says Smith. “The biggest challenges during the haven’t been enough to boost sales. pre-tax At the same time, 1990smonthly were that there were no aggregators, and thathome construction has income in Vancouver a gradual comeback and should add to the made it difficult to develop andbegun underwrite deals. and Toronto, economy’s growth in 2011 for the first year since “Back then, we(RBC didn’t have any idea it would get respectively the Great Recession began in 2007. Last month, to the stage it isHousing today.” Economics builders broke ground on an annual rate of An electrical engineering grad from Queen’s Trends and 685,000 homes, the government said recently. Affordability Report) University who also happens to have anaM.Sc. incent jump from October and That was 9.3 per

Economics from the London School of Economics, the fastest pace since April 2010. Most economists Smith spreads his talents around rather liberally, say home prices will keep falling, by at least from the C.D. Howe Institute to vice-chair of five per cent, through 2012. Many forecasts don’t foresee a rebound in prices Metrolinx and advisory council member for the until at least 2013. Royal Conservatory of Music. The high rate of foreclosures has made The father of three, Brendan, 22, and Hilary and resold homes cheaper than new ones. The Patrick, both 22, and husband to Dianeprice Blake, median of aSmith new home is roughly 30 per shares the most important thing heabove has learned after cent the price of one that’s been occupied before – twice the normal markup. Investors are 25 years in the business. taking advantage “My wife is always right,” he smiles. “But oneof the discounts. The housing market is struggling even lesson I have come to learn is that the tools of the as the broader economy has improved in industry may change – be it computers replacing recent months. typewriters – but a lot of things I have held sacred The economy grew at an annual pace of two have been reaffirmed. Good value, goodinservice, and per cent the July-September quarter. Many giving as good as you can. Those will always be inslightly better growth in the economists expect October-December quarter. CMP demand.”

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PROFILE / PROVIDER

FOR ITS

NEXT TRICK Actually, there’s no sleight of hand here: Marlborough Stirling is working hard to outperform a very good 2012 Marlborough Stirling – the company behind MorWEB -- has claimed a number of headlines over the past few months. That’s thanks to a series of deals with broker lenders that have, quite frankly, made it more of a contender in the eyes of mortgage professionals. The reinvigorated profile can be seen as serendipitous: The company recently passed the quarter-century mark. We caught up with CEO Tim Brown to ask him what has been going on at Marlborough Stirling since those transformational deals, specifically, what is next on the company’s agenda. “At present, everything is about making things simpler and quicker – not only for the broker but also for the lender and the customer,” says Brown. “We have always responded to the demands of the broker market – historically they have placed the highest emphasis on reliability and client service, and it was by delivering this for so many years that we have now

58 | MORTGAGEBROKERNEWS.CA

PROFILE / PROVIDER become such a key source of applications from mortgage brokers.” But the demands of the market have matured and technology must increasingly outpace that rapid transformation. Brown’s goal is to ensure all the new enhancements, products and services he brings to market in the coming months will improve processing and tracking of information with more automation and efficiencies. Still, there’s more to his ambition. “We are always working to improve broker-lender interaction, as well as usability and service for the end consumer,” he says. “For example, by introducing innovative self-service functionality through our Optimus mortgage administration system.” As well as making Optimus more customer-friendly, Marlborough Stirling has also improved its broker portal through its Omiga underwriting and fulfilment product, and brought mobile functionality to this and to the sales platform MorWEB. The new portal already allows brokers to look at the status of deals online and provides extra tools to allow them to track cases and interact with underwriters wherever they are. Next, says Brown, his team will build on additional

sales and point-of-sale tools for dealing with customers in the mobile environment. “The fact is that brokers spend much of their lives out of the office,” says the CEO, also a member of CMP’s Hot List 2013.” Not only is a rapidly increasing proportion of online business being conducted via mobile and tablet devices versus desktops and laptops, but our users are by nature themselves mobile – so keeping up with this trend is critical for us.” As well as the current technical developments, we

We are always working to improve brokerlender interaction, as well as usability and service for the end consumer

UP TO

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PROFILE / PROVIDER

As well as helping brokers to manage their business more efficiently, we are also bringing services to help them to differentiate themselves in their increasingly competitive market also asked Tim Brown what was next on a strategic level. “We are continuing to integrate with other industry partners to bring new services to brokers, and to allow them the option of using whichever systems best fit their own business models,” he says, pointing to the company’s move to combine its system with TrueContact and GoMax, which results in the delivery of payroll processing systems and a broker back-office dashboard. MorWEB was also integrated into OTTO, allowing Marlborough to offer a cloud-based CRM system. “As well as helping brokers to manage their business more efficiently, we are bringing services to help them to differentiate themselves in their increasingly competitive market. As well as simply offering the best rate, brokers need to be able to add value, and our new services will help them do this. “Two examples are the credit repair tools MorWEB can now offer: ScoreMaker – an established credit analysis tool that gives customers a bespoke action plan to achieve a target credit rating – and access to a product from Refresh Financial, which allows customers to re-establish credit with a savings loan. “The MorWEB network is continuing to grow at an extremely exciting rate,” says Brown. “We are regularly welcoming new lenders onto our Preferred Lender Program, and the number of brokerages converting to MorWEB is still climbing. We expect further growth to be driven by a combination of broker demand and lender support.” Still, there’s more to say on the subject of those

60 | MORTGAGEBROKERNEWS.CA

same high-profile deals with broker lenders. Brown says he’s gratified by their response and their acknowledgement that the new “Preferred Partner” status increasingly positions MorWEB as a go-between themselves and the brokers. “It is refreshing to have somebody working to bring value to the industry as a whole,” says one such lender, Jim Smith at Scotiabank. “We and the brokers we work with all benefit from a mutual partner who creates worthwhile competition by giving us highquality service at pricing that enables us to service our borrowers at lower cost.” Brown agrees. He also asserts that the bigger picture is important, and that the current positioning of Marlborough Stirling and MorWEB is a good thing for the industry at large. “We will continue to promote our own values of reliability, innovation and quality service, but we have also worked hard to introduce healthy competition into the broker market,” he tells CMP. “We believe that we have provided better economic reasoning behind the delivery of broker applications, and Canada’s mortgage broker channel is more sustainable as a result.” STATS

6,200 - Saskatchewan Housing starts February 2013 Source: CMHC

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PROFILE / BROKER

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SERVICE / DIRECTORY

Banks

RMAI Financial Group www.rmaifinancial.com Ph: 1 866 955 7624 Page 21

Tribecca Finance Corporation www.tribecca.ca Ph: 416 225 6900 Page 59

B2B Bank b2bbank.com/mortgages Ph: 1 800 263 8349 Inside Back Cover Commercial Lenders

Technology & Software

ROMSPEN Investment Corporation www.romspen.com Ph: 1 800 494 0389 Page 1

Bridgewater Bank www.bridgewaterbank.ca Ph: 1 888 837 2326 Page 13

Delta 360 www.delta360.com Ph: 905 475 2360 Page 17

Legal

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

ROSE, PERSIKO, RAKOWSKY, MELVIN LLP Barristers & Solicitors Ph: 416-868-1900 Page 47,48,49

HomEquity Bank www.homequitybank.ca Ph: 1 866 522 2447 Page 27 Insurance

National Bank www.nbc.ca Ph: 1 888 483 5628 Page 33

Canada Guaranty Mortgage Insurance Company www.canadaguaranty.ca Ph: 1 866 414 9109 Page 53

Keystroke Quality Computing Inc. www.keystroke.ca Ph: 1 800 857 0558 Page 29

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

Marlborough Stirling Canada www.morweb.ca Ph: 1 877 626 2022 Page 35

Non-Bank Lenders

Capital Direct www.capitaldirect.ca Ph: 780 868-0550 Page 43 Broker Networks

First National Financial LP www.firstnational.ca Ph: 416 593 1100 Page 7

Real Estate

Appraisal Institute of Canada www.AICanada.ca Ph: 613 234 6533 Page 19

Argentum Mortgage and Finance Corp www.argentummortgages.ca Ph: 1 888 402 7436 Page 45

Home Trust www.hometrust.ca Ph: 1 877 903 2133 Page 15

Canadian National Association of Real Estate Appraisers www.cnarea.ca Ph: 1 888 399 3366 Page 57

Centum Financial Group Inc. www.centum.ca Ph: 1 604 257 3940 Page 5 Credit Union

Optimum Mortgage A Division of Canadian Western Trust www.OptimumMortgage.ca Ph: 866 441 3775 Page 25

Peoples Trust www.peoplestrust.com Ph: 1 800 663 0324 Page 37

Radius Financial www.radiusfinancial.ca Ph: 1 877 369 6398 Page 9

64 | MORTGAGEBROKERNEWS.CA

Dominion Lending Centres www.DominionLending.ca Ph: 1 888 806 8080 Page 31

Home Loans Canada www.hlcmortgages.com Ph: 1 866 452 1821 Page 3

Mortgage Architects www.mortgagearchitects.ca Ph: 1 877 802 9100 Page Inside Front Cover

IC Savings www.icmbs.ca Ph: 416 253 4007 Page 51

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