CMP 10.09 by Key Media

MORTGAGEBROKERNEWS.CA ISSUE 10.9 | $6.95

BROKERS ON

LENDERS 2015

We asked, you answered – now find out how your lender partners stacked up

Canada’s leading brokers revealed COLIN WIN NEW READY FOR

Brokers on the state of today’s DREYER rapidly changing BUSINESS REVERSE? Verico’s CEO on 4 key strategies The new tool that makes real estate market and industry to increase where the industry it easier for brokers to enter the space

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ISSUE 10.9

CONTENTS

24 BROKERS

ON LENDERS COVER STORY

CMP’s ninth annual survey reveals the areas where lenders are meeting brokers’ expectations – and where they still have room to improve

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DATE:

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ISSUE 10.9

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CONTENTS

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UPFRONT 04 Editorial

The new way banks are cutting brokers out of the loop

44 PEOPLE

FEATURES

PLACING BROKERS IN THE DRIVER’S SEAT

BROKER PROFILE

Anne Brill started out as an art student, but she couldn’t resist the pull toward the mortgage industry

Standardizing mortgage penalties

10 News analysis

Cracking down on broker fraud

12 Broker network update Brokers call for more network cooperation

16 Opinion

Why you shouldn’t just take your borrower’s word on appraisals

INDUSTRY ICON

IMPROVE YOUR INFLUENCE

08 Head to head

The fastest-growing client sectors for alternative deals

After a quartercentury in mortgages, Verico’s Colin Dreyer is still committed to moving the industry forward

The housing market’s effect on broker incomes

14 Alternative lending update

PEOPLE

A new tool from HomEquity Bank is making it easier for brokers to expand into the reverse mortgage space

06 Statistics

FEATURES

Four key ways to sharpen this essential skill

FEATURES 50 Hourly rate identity crisis

Are you working too many hours for too little pay? Here’s how to take control

PEOPLE 54 Career path

After dabbling in real estate and property development, Ray Rochefort found the right fit as a mortgage broker

56 Other life

Doug Mawer hits the slopes with his kids

FEATURES

COMMERCIAL COLLABORATION The benefits of taking a ‘we’ (versus ‘me’) approach to leadership

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UPFRONT

EDITORIAL

www.mortgagebrokernews.ca ISSUE 10.9 EDITORIAL

Bypassing brokers – again

rokers have long accused the big banks of the worst sin imaginable, at least from a broker’s perspective: disintermediation. That act of cutting out the middleman – in this case, cutting the broker out of the mortgage origination process – has typically made use of real estate agents willing to send clients directly to the bank. But now banks have shifted their attention to others in financial services willing to play ball. “Banks are now not only paying commissions to Realtors for bringing mortgage deals to them, but to financial planners and insurance agents as well,” says Walid Hammami, a Quebec-based broker with Dominion Lending Centres. It’s something bank executives have used their quarterly investor calls to brag about, laying out what they’ve done to minimize dependence on mortgage brokers. This strategy not only lowers origination costs, argue the banks, but

Brokers have every right to feel threatened when the banks solicit mortgage referrals from financial planners and insurance advisors ... also allows them to claim full ownership of the client – no more brokers threatening to move clients at renewal. While brokers have long read the writing on the wall as far as Realtor referrals go, the addition of wealth advisors and insurance brokers presents new challenges. Survey after survey speaks to the influence those professionals have on their clients, given that their relationships are measured in months and years, as opposed to days and weeks for Realtor-client relationships. That’s a large part of why brokers have every right to feel threatened when the banks solicit mortgage referrals from financial planners and insurance advisors, whether those recommendations are paid for or otherwise. Still, brokers have already adapted their messaging on why referrals should be sent to their inboxes and not those of the local bank branch. “Advisors and insurance brokers are doing their clients a disservice,” according to mortgage broker George Macris of CHDLA Mortgage. It’s as plain and as simple as that, he says. But do those experts in risk management and investment securities agree? Vernon Clement Jones, editor

Editorial Director Vernon Clement Jones

SALES & MARKETING Associate Publisher Trevor Biggs

Senior Writer Justin da Rosa

General Manager, Sales John Mackenzie

Writers Olivia D’Orazio Donald Horne

Marketing and Communications Claudine Ting

Executive Editor – Special Features Ryan Smith Copy Editor Clare Alexander

CONTRIBUTORS Rosemary Madden David Mandel Janine Garner Tim Baker

ART & PRODUCTION Design Manager Daniel Williams Designer Joenel Salvador Production Manager Alicia Salvati

Project Coordinator Jessica Duce

CORPORATE President & CEO Tim Duce Office/Traffic Manager Marni Parker Events and Conference Manager Chris Davis Chief Information Officer Colin Chan Human Resources Manager Julia Bookallil Global CEO Mike Shipley Global COO George Walmsley

Traffic Manager Kay Valdez

EDITORIAL INQUIRIES

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tel: 416 644 8740 • fax: 416 203 8940 subscriptions@kmimedia.ca

ADVERTISING INQUIRIES trevor.biggs@kmimedia.ca

KMI Media 312 Adelaide Street West, Suite 800 Toronto, Ontario M5V 1R2 tel: +1 416 644 8740 www.keymedia.com Offices in Toronto, Sydney, Denver, Auckland, Manila CMCA AUDITED

Canadian Mortgage Professional is part of an international family of B2B publications and websites for the real estate and mortgage industries MORTGAGE PROFESSIONAL AUSTRALIA sam.richardson@keymedia.com.au T +61 2 8437 4787

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UPFRONT

STATISTICS

Broker incomes and real estate Broker incomes are closely tied to the real estate market – so as the market has soared, so have brokers’ paychecks THIS HAS been one of the hottest Canadian real estate markets ever, and mortgage brokers’ incomes certainly reflect it. In 2014, home sales across the country rose more than 5% from the previous year, while average Canadian home prices were up almost 7% year-over-year. That’s caused broker incomes to shoot up as well. According to CMP’s 2014 lifestyle survey, brokers’ incomes reflected the strength of the market, rising more than 20% over the average

60%

Average home equity held by mortgage brokers in 2014

53%

Percentage of brokers who will be set to retire by age 65

income the year before. But brokers haven’t just been hoarding cash. They’ve been paying off their own mortgages, reinvesting in the real estate market by purchasing rental properties and, of course, stowing it away for rainy days. Mortgage brokers aren’t the only ones benefitting from last year’s exceptional housing market: Real estate agents, too, have reported higher earnings than in previous years, thanks again to increasing house prices.

45%

Percentage of brokers who own rental properties

2.5%

THE RICHEST BROKERS IN CANADA Broker incomes are proportional to the local real estate market – and, unsurprisingly, Alberta and Ontario had a great 2014. Brokers in Atlantic Canada, though, found their spot on the map, beating out their British Columbian counterparts in average incomes.

British Columbia

$98,036 $568,405 Average broker income (2014) Average home price (2014)

Average mortgage rate secured by brokers in 2014 Source: CMP Lifestyle Survey, 2014

FINDING THE MONEY

REAL ESTATE ASSETS

More buyers are turning to brokers to finance their homes than ever before, and that’s why brokers’ books – the total amount of loans they’ve funded, on average – continue to rise

Real estate has been a driving force behind broker incomes for more reasons than just arranging mortgages. About half of mortgage brokers have more than 50% of their assets safely stowed away in real estate

$67,179,204

$58,022,949

11%

32%

0% to 20%

61% to 85%

25%

21% to 40%

86% to 100%

23% 2014 2013 Average funded volume (CMP Top 75 Brokers) Source: CMP magazine, 2013 and 2014

41% to 60% Source: CMP Lifestyle Survey, 2014

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Alberta

$140,542 $400,590

Manitoba

$90,000 $266,329

Quebec

$61,250 $271,227 Atlantic Canada

$118,333 $206,133

Saskatchewan

$73,333 $298,360

Ontario

$157,453 $430,984 Source: CMP Lifestyle Survey, 2014

ON THE UP-AND-UP

SPEND OR SAVE?

The average house price in Canada rose 6.7% in 2014 compared to the previous year, lifting broker incomes with it. Not surprisingly, the sharpest spikes were seen in Ontario and British Columbia, driven by the hot markets of Toronto and Vancouver

Higher incomes support not only more spending, but more saving too. In 2014, mortgage brokers more than doubled the average amount they kept in savings and investments, but they still fall below the saving habits of real estate agents and financial advisors

$600,000

2014

2013

$400,000

Financial advisors Real estate agents

$200,000

British Columbia

Alberta

Saskatchewan

Manitoba

Ontario

Quebec

Atlantic Canada Source: CREA, 2014

Mortgage brokers $0

$200,000

$400,000

600,000

Source: CMP Lifestyle Survey, 2014; REP Lifestyle Survey, 2015; WP Lifestyle Survey, 2014

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UPFRONT

HEAD TO HEAD

Should penalties be standardized? Banks have free reign to set mortgage penalties individually, drawing the ire of mortgage brokers across the country

Sally Kwan

Paul Sidhu

Geoff Del Grande

Mortgage broker ETC Mortgage

President Safe Money Mortgages & Financial Products

Mortgage agent Rock Capital Investments

“There are, of course, different types of lenders – federally and provincially regulated lenders – and their sources of funds and their costs are different. For that reason, the standardization of penalties may not be fair or feasible. But I do agree that lenders have to be transparent and upfront, and tell the clients how the early payout penalty will be calculated. Lenders, without having to be asked by the client, should automatically give clients a step-bystep calculation of the penalty. Few banks do this for the client. Most of the time, the branch says they don’t even know how the penalty is calculated. Clients are quite at a loss, and they’re not happy.”

“It’s absolutely overdue to have a standardized penalty. There’s so much confusion in the industry around penalties and different lenders calculating penalties differently – even the brokers get confused sometimes. If we were to standardize penalties, people would know what they’re getting into. We have to be able to compare apples to apples, and if every lender is calculating penalties differently, no one has any idea what’s going on. Standardizing penalties is the only way everyone can get on the same page and enable mortgage brokers to give their clients sound advice regarding these penalties.”

“Institutions should have the freedom to set whatever penalties they feel are fit. Every institution has its own expenses and its own administrative costs to deal with. The problem isn’t that banks charge penalties – banks should be able to charge whatever they want. But we should have the freedom to choose what bank we use, and if it’s based on the penalty charge, then so be it. The lack of transparency is a problem. If the five big banks are going to charge these penalties and then bury them on page 13 of the mortgage commitment, that’s totally unfair. Banks need to be more transparent about how penalties are calculated.”

A CALL FOR CLARITY When it comes to the mortgage industry, banks are often left to their own devices. While many brokers would argue that a free-market economy is a good thing, the lack of oversight when it comes to penalties certainly is not. The real problem, many industry professionals argue, is not that banks charge penalties to break a mortgage early. Some go so far as to claim it’s not even the sky-high fees with which they take issue. Instead, the varied methods of calculation – and the appearance that banks pull a number from thin air – is what’s really ruffling brokers’ feathers. So what’s the solution? Transparency, brokers say – the same transparency they offer their own clients when discussing the benefits and the drawbacks of different mortgage products.

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UPFRONT

NEWS ANALYSIS

Reporting wrongdoers Brokers are calling for strict and swift censure of players who flout the rules, but does that mean they want largely unproven allegations made public? THE FRAUD allegations involved just 45 mortgage brokers, but they may have cast aspersions on the ethics of 16,000-plus professionals plying their trade in Canada. “It’s never good to hear about broker fraud allegations,” says Blair Anderson, principal broker at Anderson Associates. “They undermine the long fight that many good brokers have taken to establish themselves as legitimate, professional service providers in the industry. But on the other hand, the news shouldn’t be taken lightly, and it should mobilize the overwhelming majority of brokers and other stakeholders to effect some necessary

Provincial regulators in Ontario continue to investigate, and even the big banks in the channel are stepping up to assert their confidence in brokers and their own safeguards against fraud. Still, brokers continue to grapple with the kind of questions Anderson is asking: What can the industry be doing better to remove bad apples? And how can it move more quickly to do so? In pursuit of those answers, the most controversial means of keeping tabs on broker ethics has garnered industry attention. In fact, longstanding broker opposition to the REDX database has started to weaken. “I think REDX should be mandated for

“The news should mobilize the overwhelming majority of brokers ... to effect some necessary changes ...” Blair Anderson, Anderson Associates changes to address this problem.” Ironically, Home Trust’s suspension of 45 still-unnamed brokers – information made public this summer – won the channel more media attention than at any other time since the great mortgage meltdown of 2008. Then, as now, the press was resoundingly negative, even though, as seasoned industry players will tell you, the story had nothing to do with the vast majority of Canadian brokers.

all brokerages,” says Walid Hammami, a broker with Dominion Lending Centres Lead Finance. “If you take a mortgage broker in and you know he has these ethical issues, the brokerage then needs to be more careful on due diligence, or they might say to the guy, ‘No, we have no interest in having you on our team.’” Brokers across Canada are voicing the same hard line, while at the same time pointing to the power of REDX to better hold

mortgage agents accountable for ethical lapses. The broad support for the subscription database represents an about-face on the part of many industry players. Teranet, the owner and operator of the REDX service, bills it as a cooperative risk management service designed for the mortgage and financial service industries in Canada, allowing subscribers to perform checks on the individual professionals and companies with whom they do business, and also file reports of their own. They detail incidents identified as questionable, if not downright fraudulent. The goal is to provide a secure mechanism for industry organizations to exchange information about industry professionals such as mortgage brokers “so that timely, protective measures can be taken to help increase the quality of mortgage loans and to reduce losses.”

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REDX ON THE RADAR Teranet’s REDX commercial database is accessed by more than 100 subscribers, who can file their own incident reports through the database. In 2013, broker pressure forced a seismic shift in how REDX collects and shares its data.

KEY CHANGE

AMP designation reports, including all past and future notations, were dropped from REDX reports

KEY DATA SOURCE

REDX draws its data from both public and non-public information, including but not limited to lender and association complaints and the records of regulatory bodies

REDX’S REPORTING SOURCES

100+, including lenders, government agencies and regulators

But brokers worry that in the past, REDX has unfairly charged some originators with disreputable conduct, thereby sullying their names with lenders who are often quick to blackball and slow to correct errors in their own reporting on brokers. But Hammami and Anderson are among a growing number of professionals looking to broaden industry access to the database as a way of better protecting its overall reputation. “Conceptually, REDX is a good idea,” Anderson says, “but I don’t think any smaller mortgage companies like mine – or bigger ones, for that matter – are using it. The subscribers to REDX are [pretty much] large lenders, private insurers, mortgage insurers. But REDX is not catering to the smaller player, like mortgage brokers.” Anderson points to annual subscriber fees, which run about $4,000 for an account,

“If you take a mortgage broker in and you know he has these ethical issues, the brokerage then needs to be more careful ...” Walid Hammami, Dominion Lending Centres Lead Finance plus another $950 for additional accounts, as cost-prohibitive for brokerages looking to file their own reports about rogue agents and access information about players looking to join their teams. “All the industry associations, lenders, self-regulatory bodies – they should all be accountable for upholding what contracts they have with brokers and their code of ethics,” Anderson says. While the Home Trust case has highlighted the need to bring broker networks and individual brokerages into the REDX loop, Hammami wants the database to go one

further. “Can we have some of that information going public off REDX?” he asks. “I think we should, because it’s a collection of information from all the regulators.” Make no mistake – the Montreal broker is suggesting REDX’s files should be opened up for the public to pore over. That kind of access would hand them allegations that, in most cases, remain unproven and uninvestigated. Critics of that kind of move rightly worry about the potential to once again stigmatize all brokers based on allegations involving just a few.

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UPFRONT

BROKER NETWORK UPDATE NEWS BRIEFS Dominion Lending Centres gets blogging You’ve seen them on TV, and now Canada’s largest network is taking to the web to reach clients. Dominion Lending Centres has launched a new blog to provide information to the public in an approachable way. “The Internet is the great equalizer. It is true democracy,” said Dave Teixeira, the director of public relations and communications for Dominion Lending Centres. “We are putting out everything from hard-hitting news to some great tips and tricks, to some fun stuff, such as brokers sharing what movies they’ve seen to their favourite summer read – and really, it allows us to share that information and get it into the hands of the public.”

Mortgage Architects launches new campaign

Broker networks are recognizing that online engagement – with a focus on creating personal relationships – is resonating with clients. The latest effort comes from Mortgage Architects, which has launched a ‘Get to Know Our People’ campaign featuring the company’s leaders and staff. “I’ve often said that the true measure of a company is the quality of its people,” said Mortgage Architects president Albert Collu. “We are absolutely delighted to share more about our people through this incredible campaign, which will allow us to humanize MA more than conventional approaches.

Network announces key appointment Mortgage Architects recently announced the appointment of Lloyd Ackerman as a lead planner in

Edmonton, Alta. Ackerman comes to the network from Home Loans Canada, and cited reputation, integrity, quality standards and training as his main reasons for joining Mortgage Architects. “Quality standards, training and large base of quality lenders that reflect the Mortgage Architects values is important to me going forward,” Ackerman said. “Mortgage Architects offers me all these things.”

Ontario brokerage hits the links for charity Giving back to the community and to those less fortunate speaks as loudly as quality customer service – and for one Ontario-based brokerage, it has become as synonymous with their brand. For The House Team/Mortgage Intelligence in Belleville, Ont., fundraising has long been part of the brokerage’s DNA – particularly its annual charity golf tournament, which raises money for Haiti. “I’ve been a mortgage agent now for 22 years, and we’ve done a charity golf tournament for 15 of those years,” said broker Peter House.

TMG celebrates its 25th anniversary TMG The Mortgage Group recently celebrated a quarter century in the industry at a gala event. TMG was formed in 1995 by Grant and Debbie Thomas, who had a goal of operating a strong brokerage with old-fashioned family values with a strong, competitive edge. From humble beginnings, the company has not only grown, but has thrived in a competitive market. “Our core values help promote an open, progressive, entrepreneurial environment,” said TMG president Mark Kerzner. “We think in terms of partnerships with our brokers and staff.”

United we stand It may be a long shot, but industry players are calling for more cooperation among the big networks Brokers across the country share two common wishes: the desire to see their own business grow and the desire to see the industry as a whole grow. And some players believe that to make both things happen, a more collaborative approach is needed at the top of the industry. “We need more cooperation among the major broker networks; right now, there is just way too much focus on growing individual companies and not enough focus on growing the industry,” says Walid Hammami of Dominion Lending Centres. “The broker networks are the key to saving this industry, and if they want to survive – and thrive – they need to focus on taking market share from the banks and not from each other.” Of course, the networks are individual businesses that are, understandably, focused on their own bottom lines and their own brokers. But Hammami believes they can broaden that focus to include the entire channel. He says he has spoken to individual lenders about his desire for more industry-wide cooperation, but that they “shied away from the idea.” He has higher hopes for the broker networks, though. Hammami suggests instituting a small shared fund that each network allots a certain amount of profit to, which would then be used for initiatives – such as marketing – that focus on growing the industry. And he believes brokers would even be willing to take part. “I think many would be willing to [participate] because we are all in this industry for the long-term,” he says. It may be a far-fetched – and idealistic –

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suggestion, but Hammami certainly isn’t the only broker calling for more collaboration among the major networks. “I don’t think it would be a bad thing if there was more collaboration among the houses,” says Ross Taylor of Mortgage Intelligence. “It would be difficult to organize and make sure each one feels properly represented and that they are benefiting.”

“Right now, there is just way too much focus on growing individual companies and not enough focus on growing the industry” The industry already has a number of associations that advocate for the channel, including CAAMP – which is known for its government lobbying – and the recently launched CMBA, which brokers hope will help unite the provincial associations. However, brokers hope that if the networks can do their own small part to ensure continued growth, a more united front will help lead to the broker channel earning itself an even larger share of the country’s mortgage business.

Q&A

Paul Therien Vice president of operations CENTUM

Years in the industry 25 Biggest satisfaction “Knowing that when I come to work in the morning, I’m helping people create futures – not just for themselves, but for the consumers” Biggest challenge “I don’t think there are any challenges; I think there are only opportunities. There might be obstacles and hurdles – but you just have to know how to look at them”

Preparing for the future How are things in the broker network space right now? I would say they’re interesting and exciting. As everybody knows, we’ve experienced some pretty significant change since 2008. A lot of people sit back and say, “I can’t wait for change to stop and everything to level out.” But we have a lot going on in a lot of different areas in the industry. Do you see any challenges or opportunities on the horizon? Well, I had a crystal ball, but I broke it. I think that the housing market in Canada will always be relatively robust compared to the rest of the world. We have a relatively stable political system. We have a pretty stable banking system, and we have really good immigration – people want to live in Canada. So from that perspective, there will always be opportunity in the housing industry. But people look at what’s going on around them, and it creates uncertainty for them because they don’t know. And more importantly, the consumer doesn’t know. I’ve always taken the mind that wherever there are challenges, there are opportunities there. Challenges force innovation. We’re seeing much more aggressive regulatory oversights than we’ve seen in the past. That’s a pain in the butt for the brokers, but it also forces innovation. It forces brokers in the Centum family to say, “How can I look beyond tomorrow?” So how do brokers set themselves up for that? How can they prepare to innovate? The most effective way to prepare for anything is education. If brokers and agents want to prepare for challenges and really grasp opportunities, they need to be on the ball. They need to really understand the marketplace and learn the concerns of consumers by talking to them. It all boils down to ensuring that the people who are the face of our brand – the ones who are talking to the consumer – are educated. Teaching people to fill out a credit application is important – but what’s more important is teaching them how to project knowledge and confidence to the consumer. What’s the most important thing going on in the industry right now, in your opinion? Fraud. There are three types of fraud in mortgages: fraud for rates, fraud for housing and fraud for profit. Fraud for profit is the one you hear about. That’s the one in the media. The other two frauds are the silent frauds, the ones that people don’t talk about – but they can also have an impact long-term. As regulations change, people will always try to circumvent them. Even when we had the stated income program here in Canada and it was really easy to get a mortgage, people were still committing fraud. It is an issue here, and I don’t think there’s enough education regarding the consequences of fraud.

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UPFRONT

ALTERNATIVE LENDING UPDATE

Growing opportunity for alternative deals One important segment for alternative lending is expanding quickly – and is set to climb even more

more on alternative deals to grow their books of business And that’s not the only good news in the medium-term: The bank argues the economy is on the path to recovery. “On balance, economic events this week have been consistent with a Canadian economy that is returning to modest growth following a shallow contraction in the first half of the year,” Brian DePratto wrote in a TD Economics note on August 10. Many industries are expected to rebound in the second half of this year, especially

“Right now most of my borrowers are businessfor-self people”

The Canadian economy added 6,600 jobs in July, largely in self-employment, according to TD Bank. If that trend continues, brokers in the alternative sector are set to cash in. “Right now most of my borrowers are business-for-self people,” says Christine Xu of Mortgage Architects. “A-lenders used to have business-for-self equity programs, but they are nonexistent now. It’s pretty much only alternative lenders doing insurance for self-employed people who want investment properties as well.”

NEWS BRIEFS

Despite a struggling economy, employment has been resilient, the bank reports. Overall, Canada has added more than 100,000 jobs this year, and job losses have been modest, even in energy-dependent areas like Alberta. A surge in self-employed jobs will provide a larger pool of those clients, who will likely have to rely on alternative lenders, given that they will be relatively new businesses that don’t yet have the history to qualify a mortgage in the prime space. That’s good news for brokers, who are relying more and

Alt-A and private lenders form tag team

The flexibility of private lending is attracting not just brokers, but also alternative lenders. Where once an alternative institutional lender could do 75-80% LTV, they are now more commonly doing 65%, and many are turning to private lenders to top up those mortgages. “It’s a way to get clients to 80% loan-to-value,” said Adam Hale of The Mortgage Centre, who specializes in alternative deals. He points to the reemergence of bundled deals, which usually involve the private lender coming in behind the alternative player with a second mortgage.

manufacturing. The finance, insurance and real estate sectors are also expected to benefit from the “continued resilience of the Canadian housing market,” according to DePratto. The Bank of Canada has made two cuts to its overnight benchmark rate this year in the hopes of stimulating the economy. The rate now sits at 0.5%, and the central bank said it plans on holding it at that mark until inflation hits the target of 2%. That may be delayed, however, thanks to the economic turmoil that has taken place across the globe of late. The Bank of Canada said at its last rate announcement that inflation is targeted to hit that mark in the first half of 2017, lending credence to TD’s prediction.

Window of opportunity for brokers closing?

While tougher lending regulations have provided greater opportunities for brokers, the window of opportunity is closing for investors eager to use brokers as middlemen for lending. Demand for private-money lending can only last so long, say experts, pointing to projections of interest rate hikes and the end of a heightened cycle of home buying. “These opportunities will not last forever,” said Art Appelberg, president of Northwood Mortgage. “In my opinion, there is a five- to 10-year window.”

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Q&A

Denise Buckley Director of mortgage origination

Keeping pace in the alternative lending space

MAGENTA

Years in the industry 15 Career highlight “The opportunity to help clients realize their dreams, even when they don’t meet what the traditional thought process is” Greatest challenge “The fact that the market continues to evolve, which means alternative lending continues to change. It’s never the same twice”

How are things in the alternative space right now? Is it a good time to be in the space? They’re busy, ever-changing, but they’ve been so dynamic. With industry changes, the alternative space has expanded. It’s bigger than it was before; it starts at Alt A and gets to go all the way down to D, for lack of a better word. It’s understanding where the players are that makes it exciting and ever-changing these days.

What challenges or opportunities are presenting themselves right now? The opportunity is better borrowers not needing traditional income confirmation. Doing away with the traditional stated-income program allows alternative lenders to move upmarket – but the biggest challenge would be evaluations. It’s making sure the property’s worth what we thought it would be worth, finding the right partners, understanding the markets – and even the pockets within the markets. So not just understanding Ottawa, but understanding each specific area of Ottawa. That would be our biggest challenge. It used to be that credit was the biggest challenge in the alternative space, but credit doesn’t often become the challenge anymore.

How about the future? How can alternative lenders keep pace with the changes? I think they should always be checking their process. Most people in the alternative space are small lenders,

Brokers respond to Home Trust fraud case

Mortgage brokers have praised Home Trust parent company Home Capital after it suspended 45 brokers for allegedly falsifying documents, while taking care to put the case in context. “I don’t think there is ever an excuse for taking shortcuts; there has certainly been some mortgage rule tightening, and the guidelines can be difficult to get a client qualified, but they are there for a reason,” said Janet McKeough of Verico Success Mortgages. “Whether or not we agree with the guidelines, we have to abide by them, and I applaud Home Trust.”

so they have the opportunity to respond immediately to a process change like the most recent outcry from brokers about turnaround times. It’s easy to fix that in a small company. We just recently did that ourselves – fixed two processes that allowed us to respond more nimbly and exceed expectations rather than disappoint the brokers. Especially when you become the second or third or even the fourth choice for a deal, it’s especially important to be nimble in your response time.

What’s the most important thing going on in alternative lending right now, in your opinion? If I had to pick one thing, I would say maintaining common sense. The market allows us to move upmarket, which then allows you to act like a more traditional lender. But by maintaining communication and a common-sense approach, it allows you to take less risky files and offer better rates while still meeting investor returns. By maintaining that integrity and not losing focus, it allows you to stay ahead of the curve. [Lenders] have got to be focused on transparency. The most important thing is having the tough conversations with the clients – whether it’s a 700 Beacon score or a 550, asking them the questions that someone else is going to ask. I think that’s a tough conversation that doesn’t always get addressed. It’s almost like, “If I don’t know, then I don’t have to disclose.” But honestly, if you knew and you disclosed, you’d probably get a better deal.

Tighter guidelines lead to more bundled products

It’s not just prime clients who are frustrated by mortgage lending rules. Alternative lenders are increasingly clamping down on their own underwriting – much to the benefit of private players. “On the alternative lenders, it’s much harder to qualify; they are so regulated now with the B20 and the B21 guidelines, they can’t do anything they used to be able to do,” said Greg Domville of Plan B Mortgage Services. “That’s why the private sector is blowing up … you need a lot more help with these private lenders to top up mortgages …”

Business-for-self segment too big to ignore

Things can get tricky when securing financing for self-employed clients, but that segment represents almost one in five Canadians borrowers. “The BFS segment in Canada is growing and represents about 18% of the workforce,” said Tom Hickey, VP of operations (adjudication) for B2B Bank. “We see an opportunity to adapt to the changes in the workforce Canada is experiencing.” Lenders like B2B Bank offer 65% LTV products, but there is an expectation of income reasonability, which demands the broker be thorough with the client.

www.mortgagebrokernews.ca

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UPFRONT

OPINION

GOT AN OPINION THAT COUNTS? Email mortgagebrokernews@kmimedia.ca

Experience they don’t teach If you’re just winging it with the knowledge you present to lenders about a property, you could be setting yourself up for failure, writes David Mandel

ONCE UPON a time as a broker, I learned very quickly that ‘20/20 deal vision,’ or knowing all there is to know about the property you are financing, is imperative. Today, as a private lender managing the private commercial mortgage investments of hundreds of investors, I am thankful for the lessons I have learned. Of all the important details you need to represent to your lender, none is more important than knowing the property. This means either visiting the property or viewing it and the surrounding area by using street view from Google Maps and Google Earth. This should be done before you have signed up the client so, for example, if the client says the property is “rural,” you can learn if what he really means is a remote cabin in the woods with water access only. Consider this hypothetical example. You are approached by known private mortgage borrower who is seeking a refinance on a summer cottage. The borrower has been making a name for himself buying, building, selling and renting high-end summer homes and cottages in Muskoka. You are presented with an appraisal for $1.5 million on what is represented as a Muskoka lakefront cottage – similar to the borrower’s holdings and recent builds – that has some minor cosmetic deficiencies. You accept the appraisal at face value, and you present a private investor

with the following proposal: a second mortgage at 75% LTV behind a credit union first mortgage; the second mortgage will come due in one year with the first mortgage. The deal is closed, and you think you are done with the file. However, eight months into the loan, payments cease, your private lender is calling, the borrower is not returning your

date of the appraisal he provided to you. That sale was for a similar property at $495,000. The second mortgage is wiped out in a sale, and you are served with a claim. Now, don’t you wish you had inspected the property with the borrower and your investor? There are things you can learn about a property by being there that you simply cannot get otherwise. Your physical site inspection will show you how the property is being maintained, how solvents or chemicals are stored, if the roof is leaking or is near the end of its economic life, if the asphalt needs to be repaired or completely redone, if there are unreported vacancies, if construction or renovations claimed to be complete are in fact completed or if work on a construction site has stopped. As the link between the lender and the borrower, you owe it to yourself to know the details of the property. If your representation of the property is wrong and there is a loss to the lender, it could come back to haunt you in the form of an E&O claim. You also owe it to your lender, in the interest of maintaining a good relationship, to know that the property facts you are

“Of all the important details you need to represent to your lender, none is more important than knowing the property” calls, and after a few third-party inquiries, you learn that the borrower’s success has fooled everyone. He is overextended, his bank has cut him off, and he is inches from being completely shut down. The property is listed for sale by your investor, and a new appraisal reveals that the more-than-just-cosmetic repairs were never done. Furthermore, what was described as “Muskoka lakefront” was in fact at the mouth of a river, 100 yards from the actual lake. The subdivision the property is in has a stigma surrounding the original developer’s failure, and prices never recovered. In fact, the appraiser happen to omit a sale of a neighboring property five days before the effective

representing are true and that you are simply not taking the word of the borrower. In fact, this is a great opportunity to spend time with your borrower – ask him or her to meet you on site and give you a quick tour. This way you get both property disclosure and personal verification. A lender wants to know that you have ‘20/20 deal vision’ – that you’ve met with the borrower and have inspected the property. David Mandel is a private mortgage syndicator with more than 25 years of industry experience, and is owner of First Source Mortgage Corporation, a private commercial mortgage lender in Toronto.

www.mortgagebrokernews.ca

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2015-07-22 3:04 9/09/2015 4:34:47 AMPM

PEOPLE

INDUSTRY ICON

STILL GOING STRONG Colin Dreyer, president and CEO of Verico Financial Group and one of the Canadian mortgage industry’s pioneers, weighs in on everything from market share and broker responsibility to the role of industry organizations

COLIN DREYER got his start in the mortgage industry more than 25 years ago, but you have to go back further than that to gain a full understanding of just how experi enced he is. “I’ve been involved in real estate devel opment, real estate sales, real estate franchising, mortgage development, mortgage franchising, lending, public speaking – a very diversified career,” Dreyer says. “But I’ve always landed back on the mortgage side simply because I love the mortgage industry and I’ve always been excited about the possibilities.” That love fuelled his desire to form his own mortgage brokerage at a time when market share for brokers was about 9%. That brokerage was the precursor to the network behemoths that currently dominate the mortgage industry; Dreyer jokes that he should have trademarked the ‘network’ term long ago. “I amalgamated that company with the formation of Invis, which started the super broker,” he says. “I did some consulting work with Invis because I had other business interests at the time, but I always had this notion and idea that there was a higher and better level to perform in the mortgage marketplace with a network – a network that allowed the top echelon of mortgage brokers and owners to perform with equal value as a superbroker.”

Dreyer envisioned an exchange in which superbrokers worked in harmony with lenders, both parties benefiting equally and receiving equal compensation. It’s philosophy he brought with him when, 10 years ago, he and John Kelly launched Verico. According to Dreyer, the Verico model was simple. “It was bringing together the top 20% of originators in Canada and offering a

“Aside from having a consistent relationship and understanding the pains on both sides of the industry, we’re very fortunate to have a number of lenders that are basically the backbone of our particular business,” he says. “Without lenders, without products to sell, where would the industry be? As origin ators, we are very reliant on our lenders, and the lenders are very good in the compensation

“We’re very fortunate to have a number of lenders that are basically the backbone of our business. Without lenders, without products to sell, where would the industry be? As originators, we are very reliant on our lenders ...” level of service that would accommodate their business so they could build their business and their brand in their way along with our guidance and governance. And because of our recognition in terms of our volume and quality, lenders would obviously pay accord ingly in relation to superbrokers.” That premise of mutual profitability – a business model that equally supports networks and lenders – is one that is still close to Dreyer’s heart.

levels that they provide to the broker community.”

Today’s challenges According to Dreyer, it’s up to the networks – and the brokers themselves – to ensure high-level deals are sent to lenders. But the lenders share some responsibility as well. “On the lenders’ side, we need to look at it as a partnership for long-term strategy,” he says. “The trailer fees enhance the partnership

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PROFILE Name: Colin Dreyer Company: Verico Financial Group Title: President and CEO Years in the industry: 25+ Career highlight: Living in the here and now. “I live in the present,” Dreyer says. “My career highlight is right where I am today: being president and CEO of Verico.” Career lowlight: “The recessionary period in the early ’80s was a lowlight, and I learned valuable financial lessons,” Dreyer says. “I was lucky to learn those lessons at a young age, and they have helped me in my career.”

www.mortgagebrokernews.ca

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PEOPLE

INDUSTRY ICON COLIN DREYER: NOTABLE MILESTONES

relationship and create ongoing revenues and consistency for both sides. Some lenders are using the trailer fee model to maintain their level of business. “Churn is a big problem for lenders,” he continues. “When they pay for a particular customer, they would like to see that customer

reformed. “There are a number of inefficiencies in our industry today, and a lot of that revolves, unfortunately, around our associations,” Dreyer says. “I think they all do a wonderful job trying to advance our industry, but when you take a look at that part of the industry, we

“If we can collectively promote ourselves and our industry as one voice to consumers, we all win in the fight to increase broker market share” stay in their database. So they’re recognizing that to do that, perhaps the partnership level should be to pay at renewal.” But that’s just one of the challenges facing mortgage industry these days. One of the biggest, according to Dreyer, is the need for better standardized education. Another is reinvestment into the industry to ensure continued growth. “For any industry, to make it healthy, you have to have reasonable margins to reinvest into your business,” he says. “Educational training and support is important to any industry; to bring new participants into the industry, you need an infrastructure that they can believe in. That’s why I’m so high on professionalism in the industry, but we need to leave some margins in the business so the leaders of the industry can continue to build the infrastructure to make it sustainable for the long-term.”

The associations’ role Dreyer also believes industry associations are responsible for helping the mortgage industry grow as well. But the current fractured model, in which there are a number of different industry associations that may have conflicting philosophies, is one he would like to see

are a tad overserved, and we’re getting new entrants who offer new opportunities.” Even when Dreyer served as CAAMP chair, he felt there should be better harmonization among the associations. “We have duplication of funding, whether it’s conferences, golf tournaments, magazines, etc., etc. I think we need to clearly have that harmonized so that we can advance the industry. Government relations is really important, and it will continue to be important to lobby for our industry.” According to Dreyer, too much money – which could be used for investment back into the industry – is being wasted on activities and programs that don’t benefit individual brokers or the collective. “As an industry, we need to be coordinated with that,” he says. “That’s one thing I really champion because we are too splintered in that way. We need to determine how we define ourselves to the Canadian public. Are we mortgage originators, mortgage consultants, mortgage advisors? There are so many different titles across the country. If we can collectively promote ourselves and our industry as one voice to consumers, we all win in the fight to increase broker market share.”

Former chair of CAAMP and an original designee of CAAMP’s AMP designation program

Chair of the CIMBL Foundation

Past director of the BC Real Estate Association and Canadian Real Estate Association, and past president of the Fraser Valley Real Estate Board

CAAMP Hall of Fame Inductee

Winner of the CMA Lifetime Achievement Award and Network of the Year Award, the MBABC Pioneer Award, and the Founder Award

www.mortgagebrokernews.ca

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FEATURES

COVER STORY: BROKERS ON LENDERS

BROKERS ON

LENDERS Hundreds of mortgage brokers participated in our annual survey to reveal how their lender partners are performing in 10 critical areas

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WELCOME TO CMP’s ninth annual Brokers on Lenders survey. Once again, we’re taking a look at how lenders’ performance is perceived by the brokers who work with them. We’ve combed through hundreds of ratings to determine how lenders are doing – and which ones are excelling. To make our determinations, we asked brokers to rate their lenders on a scale from 1 (very poor) to 5 (excellent) in 10 key areas:

AVERAGE LENDER PERFORMANCE: 2015 We asked brokers to rate their lenders on a scale of 1 (very poor) to 5 (excellent) in each of 10 categories. Here’s how the numbers shook out:

4.03 3.99 3.89 3.85 3.85 3.81 3.80 3.78 3.71 3.63

Transparency of commission structure BDM support Underwriter support Interest rates

• Turnaround time • Underwriter support • Overall service levels • Interest rates • BDM support • Product range • Satisfaction with credit policy • Broker support • IT/technology • Transparency of commission structure Once we eliminated lenders who garnered only a vote or two, we were left with 17 lenders to rate this year. (See page 28 to find out which lenders made the list.) We were also left some disappointing results. While several lenders did well individually, in the aggregate, they only broke a score of 4 in one category – transparency of commission structure. That means that on average, lenders are doing no better than a high ‘satisfactory’ when it comes to fulfilling brokers’ expectations. What’s more, lenders scored lower this year than they did last year in four out of 10 categories. That’s not to say individual lenders didn’t perform impressively. Lendwise absolutely dominated this year, taking the top spot in seven out of 10 categories. Perennial contender RMG finished in the top three in six categories, and First National also performed excellently, finishing in the top three in five out of 10 categories. Several lenders also saw tremendous improvement in select categories. Want to find out how your lenders fared, and where brokers think lenders can improve? Read on.

Broker support Product range Satisfaction with credit policy Overall service levels Turnaround time IT/technology 0

AVERAGE LENDER PERFORMANCE: 2014 How do this year’s overall performance scores compare to last year? While lenders gained some ground in most categories, their ratings slipped in four key areas

4.14 3.99 3.89 3.88 3.87 3.86 3.75 3.73 3.70 3.53

Transparency of commission structure BDM support Interest rates Product range Broker support Underwriter support Overall service levels Satisfaction with credit policy Turnaround time IT/technology 0

www.mortgagebrokernews.ca

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FEATURES

COVER STORY: BROKERS ON LENDERS

2015 average score: 3.71 2014 average score: 3.70 On average, brokers found lenders’ performance on turnaround time satisfactory, but that’s about all that can be said. With an average of 3.71 out of a possible 5, brokers scored lenders lower on turnaround time than any other category except IT/technology. On the upside, lenders did marginally increase their score from last year’s 3.70 out of 5. Indeed, several brokers pointed to turnaround time as a prominent problem area with their lenders. When asked what they’d like to see lenders improve on in the next six months, 34% of survey respondents mentioned turnaround times as a major concern. “We are busy and need to know what is doable or not when we are meeting with the client,” one survey respondent said. “[My lender] has great products, good rates and a phenomenal BDM, but turnaround times this year have been a deterrent,” said another. “Faster turnaround [lets us] compete with branches and banks, and we look good to the client,” added a third. That’s not to say no lenders impressed in this category. First National, CMLS and ICIC Bank all wowed brokers with their turn times. “CMLS Financial has outperformed other monoline lenders,” one broker said of the silver medalist. “They have good turnaround times and are not as documentation-heavy as some.” Other lenders also showed marked improvement. RMG, which came in ninth in this category last year, leaped up the list to take fourth place, while Scotiabank, last year’s eighth-place finisher, advanced to fifth.

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ON LENDER

Bronze: ICIC Bank

ON LENDER

Silver: CMLS

ON LENDER

GOLD

SILVER

ON LENDER

Gold: First National

GOLD

UNDERWRITER SUPPORT

ON LENDER

TURNAROUND TIME

Gold: Lendwise Silver: First National Bronze: Scotiabank

2015 average score: 3.89 2014 average score: 3.86 Lenders did fairly well in the underwriter support category, scoring an average of 3.89 out of a possible 5, the third-highest average in any category. It’s also an improvement from 2014’s average of 3.86 – but many brokers still complained that their lenders’ underwriting practices needed work. “Learn to underwrite again – not just check the boxes,” said one survey respondent. “Instead of declining deals, have the underwriter work with the broker to see how the deal can work,” said another. “Try to make a deal work rather than declining it,” agreed another broker. “It’s easy to send a decline. Mortgages are not black and white; sometimes we need a little grey.” Lendwise topped this category for the second year in a row with a score of 4.39, while First National took the silver with 4.31. Scotiabank was right on First National’s heels, earning the bronze with an impressive average of 4.30. Showing a large leap from last year’s 11th-place finish in the category was RMG, which surged ahead to fifth place this year.

BROKER PREDICTIONS: BROKER/LENDER RELATIONSHIPS We wanted to know what issue brokers thought would affect their relationships with lenders the most over the next six to 12 months. The move to an efficiency ratio was the most commonly cited concern, but higher volume requirements from lenders weren’t far behind. Perhaps surprisingly, less than 15% of survey respondents cited commissions as a pressing broker/lender relationship issue.

Commissions 14.6%

Lender concern about fraud during originations 22.9%

Higher volume requirements from individual lenders 25.3%

The move to efficiency ratio 37.2%

“Try to make a deal work rather than declining it. It’s easy to send a decline. Mortgages are not black and white; sometimes we need a little grey”

www.mortgagebrokernews.ca

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9/09/2015 4:36:51 AM

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News

InternatIonaL

FEATURES

u.s. COVER STORY: BROKERS ON LENDERS 90.6%

inspectors have found problems; appraisals showed a home was worth less than the bid; a buyer lost a job before the closing. U.S. housing market worse than thought More than two years after the recession The number of Americans who bought previously officially ended, many people can’t qualify for occupied homes rose in October. But the National OVERALL SERVICE LEVELS RATES meet higher down payment Association of Realtors says it overstated more thanBROKERS’ MOST USED loans or INTEREST requirements. Even those with excellent credit three million sales during and after the Great Recession, LENDERS Gold:the CMLS Gold: Lendwise showing housing market was weaker than When rating lenders, we only included those and stable jobs are holding off because they fear Percentage of previously thought. used by many brokers. After eliminating regionallythat home prices will keep falling. Sales are also homeownership Silver: First National RMG in first-time buyers, who being hurt bySilver: a decline The private trade group says sales rose four per focused lenders costs, who onlyincluding received a few ratings, are critical to reviving the housing market. cent in October to a seasonally adjusted annual rate of we narrowedmortgage the list downpayments, to the following: Sales have fallenCanadiana in four of the five years 4.42 million. That’s below the roughly six million homes Bronze: RMG Bronze: utilities and property since the housing boom went bust in 2006. a year that economists say are consistent with a healthy that take up a Declining2015 prices and record-low housing market. But 3.78 it’s ahead of 2008’s revised sales, 2015 average score: average score: 3.85 mortgage rates • B2B Banktaxes typical household’s haven’t been enough to boost now considered the worst in 13 years. 2014 average score: 3.75 2014 average score: 3.89sales. • Canadianamonthly pre-tax At the same time, home construction has The trade group revised its sales from 2007 to 2010 in Vancouver begun a gradual comeback and should add to the down 14 per cent, from more than 20.6 million to nearly • CMLS income Lenders seem to be doing a satisfactory job when Lenders performed relatively well when it came and Toronto, economy’s growth in 2011 for the first year since 17.7 million. Among the reasons for the lower figures, (RBC • Equitablerespectively Bank it comes to service 3.78 of the a Census to interest rates, averaging of 5. Still, the Great Recession began in 2007.3.85 Lastout month, the Realtors grouplevels, says:averaging changes in theout way Economics Housing possiblecollects 5. However, still theshifts third-lowest average rating category buildersthe broke ground onin anthis annual rate took of a minor Bureau data,that’s population and some sales • First National Trends and 685,000 homes, thelast government said recently. being counted twice. rating out of the 10 categories, although it’s a tumble from year’s 3.89. • Home Trust Affordability Report) That was aLendwise 9.3 per cent jump from October The Realtors consulted withaverage government slight improvement from 2014’s of 3.65.and took its second gold forand 2015 in the fastest pace since April 2010. private housing experts, including the Federal Reserve, • ICIC Bank The top three in the category – CMLS, First this category with an average score of 4.43. RMG Most economists say home prices will keep the Department of Housing and Urban Development, National and RMG – performed considerably and Canadiana took silver and bronze, • Lendwise falling, by at least five per cent, through 2012. the Mortgage Bankers Association, the National better than the average, earning scores of 4.3, respectively, with scores of 4.34 and 4.27. Merix Many forecasts don’t foresee a rebound in prices Association of Home Builders, mortgage giants Fannie • MCAP 4.28 and and Freddie 4.22. Mac and CoreLogic, a California-based until at Financial least 2013.also had a good showing, climbing Mae • Merix Financial This is the year CMLS firstthe place last yearhas to fifth this year. Thefrom higheighth rate ofplace foreclosures made data firm thatsecond first raised doubtstook about annual for overallearlier service this levels; nearly half of the brokers Brokers seemed satisfied resold homes cheaper thanfairly new ones. Thewith rates, numbers year. • National Bank medianbut price of afelt newlenders home could is roughly 30 per has estimated the5.Realtors whoCoreLogic use CMLS rated it at a that perfect Other group• Optimum Mortgage many improve here, too. cent above the price of one that’s been occupied overstated sales in 2010 by at least 15 per cent. lenders showed significant improvement, “[Lenders need] better competition on rates,” • Radius Financial before –one twice the normal markup. Investors are but The changing numbers could affectfinisher, how economists including last year’s eighth-place said. “Buy-downs are not my game, taking advantage of the discounts. view the trade group’s data. It could also affect companies • RMG Scotiabank, which moved up to sixth this year. there should be a cheaper buy-down for when The housing market is struggling even that use the figures for hiring and expansion plans. Still, felt lenders it is necessary to has win improved a client file • Scotiabank as the broader economy in from a big Salesbrokers are measured whencould buyersdefinitely close on homes. improve broker demanded “some bank.” recent months. But manyhere. dealsOne are collapsing before that point. • Street Capital service standards on returning calls emails.” “”Make sure are competitive so that The economy grewthe at rates an annual pace of two One-third of Realtors said they hadand at least one contract • TD Canada Trust per centweindon’t the July-September quarter. scuttled in October, up from 18 per centapplies in September. “Return calls,” agreed another. “This have to alter deals at theMany last minute economists expect slightly better growth in broker. the are being cancelled fromContracts the underwriter to the BDM.” for several reasons: to retain a client,” suggested another October-December quarter. CMP Banks have declined mortgage applications; home

52.1%

ON LENDER

SILVER

ON LENDER

SILVER

GOLD

ON LENDER

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28 28

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www.mortgagebrokernews.ca

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FEATURES

COVER STORY: BROKERS ON LENDERS

BROKER SUPPORT ON LENDER

ON LENDER

S 15

GOLD

ON LENDER

SILVER

Gold: Lendwise Silver: RMG Bronze: CMLS

2015 average score: 3.85 2014 average score: 3.87 Again, brokers seemed basically satisfied with the support they received from their lenders, rating them at an average of 3.85 out of 5. Once again, though, this year’s average represents a slight drop-off from 2014’s average of 3.87. Perennial favourites Lendwise, RMG and

CMLS once again took gold, silver and bronze; Lendwise earned an average rating of 4.39, while RMG received an average of 4.28, and CMLS was rated at 4.19. First National climbed from fifth to fourth this year, improving its average from 4.09 to 4.15. Broker support is an area that, obviously, is important to brokers – who don’t tend to appreciate being unappreciated. “Value the broker relationship rather than just taking it for granted,” demanded one. “Understand that brokers are not salaried employees,” another wrote. “Our time is money.” “Lenders need to partner with their brokers and allow the broker to be more involved,” said a third. “Hold them accountable for lack of retention.

BROKER EXPERIENCE Here’s a look at how long our survey respondents have been in the business:

Less than a year 1.1% 1-2 years 4.7% 5+ years 78.8% 2-5 years 15.4%

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We attribute our success to the We attribute our we success to the strong partnerships have created strong partnerships we have created with our valued MERIX originators with our valued MERIX originators

We are humbled by your support and forever grateful We are humbled by your support and forever grateful

› Broker Support ›› Broker Support Underwriter Support ›› Underwriter Support Interest Rates › Interest Rates

merixfinancial.com merixfinancial.com

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› Product Range ›› Product Range Satisfaction with Policywith › Credit Satisfaction Credit Policy

› › › ›

BDM Support BDM Support Transparency of Commission Structure Transparency of Commission Structure

lendwisemortgages.com www.mortgagebrokernews.ca lendwisemortgages.com

9/09/2015 4:37:27 AM

FEATURES

COVER STORY: BROKERS ON LENDERS

15 ON LENDER

Silver: RMG Bronze: CMLS

2015 average score: 3.99 2014 average score: 3.99

BR O

ON LENDER

SILVER

Gold: Lendwise Silver: Scotiabank Bronze: MCAP

2015 average score: 3.81 2014 average score: 3.88 Brokers rated lenders at an average of 3.81 for product range – a bit of a drop-off from last year’s average of 3.88. Lendwise once again took the gold with a score of 4.27. Scotiabank, making its second appearance in the top three, came in second with an average of 4.23, and MCAP took the bronze with a score of 4.11. In fourth place was B2B Bank, making a big leap from last year’s 11th-place finish in the category. Brokers appeared relatively happy with the product range offered by their lenders; most lenders averaged at least in the high 3s on the category, and none fell below a 3. Some lenders

ON LENDER

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ON LENDER

ON LENDER RS S

ON LENDER

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ON LENDER

GOLD

PRODUCT RANGE

Brokers rated lenders at an average of 3.99 out of a possible 5 in BDM support – the second-highest rating given on the survey. The score also tied last year’s rating. Lendwise led the field in this category, taking yet another gold with an average of 4.71. RMG and CMLS rounded out the top three, racking up averages of 4.5 and 4.37, respectively. Scotiabank inched up from 12th to 11th place this year, increasing its average score in the category from 3.7 to 3.88.

SATISFACTION WITH CREDIT POLICY O

SILVER

ON LENDER

Gold: Lendwise

GOLD

ON LENDER

received raves: Scotiabank, one broker said, was “far above the rest,” while MCAP was “amazing” and – perhaps slightly less glowing but still complimentary – “very consistent.” That’s not to say brokers wouldn’t like to see a greater selection, of course. “More products – even for people with the worst credit,” was one respondent’s suggestion.

BDM SUPPORT

“Reintroduce common sense into the credit evaluation process. The guidelines are too stringent”

Gold: Lendwise Silver: CMLS Bronze: Scotiabank

2015 average score: 3.80 2014 average score: 3.73 Lenders also fared pretty well when it came to broker satisfaction with their credit policy. Brokers rated their lenders at an average of 3.8 in the category, significantly higher than 2014’s average of 3.73. Once again, Lendwise took the gold with an average of 4.36, while CMLS averaged 4.01 for the silver and Scotiabank scored 3.97 for

the bronze. Merix climbed from fifth last year to fourth this year, improving its performance from 3.89 to 3.95. The decent overall scores don’t mean there’s not room for improvement, according to brokers. Many feel lenders’ credit policies are too tight, which results in turning away good customers. “Relax on explainable credit problems,” suggested one broker. “Loosening guidelines” and displaying a more “common-sense” approach to credit were also frequent suggestions. “Reintroduce common sense into the credit evaluation process,” one broker said. “The guidelines are too stringent.”

THE AVERAGE BROKER: BANK VERSUS MONOLINE Brokers said there were a number of reasons they might send a deal to a bank rather than a monoline lender. The most common reason given was that the bank’s product offering compared favourably. A number of brokers also cited client preference, as well as BDM and underwriter service, as their primary reasons, while only a fraction cited better compensation at banks.

46.0%

Product offering

26.2%

Client preference

18.5%

Underwriter/BDM Service

7.2% 2.2%

Rate Compensation 0

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N AT I V E L E N

N LENDE SO RS

R KE

N LENDE SO RS

O O

IT/Technology Broker Support

N AT I V E L E N

Satisfaction with Credit Policy

N AT I V E L E N

Interest Rates

NG DI

N AT I V E L E N

G G

SILVER DI

BR B

ON LENDER

Overall Service Product Range Levels

SILVER LT

ON LENDER

15 N AT I V E L E N

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Underwriter Support

SILVER DI

ON LENDER

02 KE

ON LENDER

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Turnaround Time

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KE ON LEND ER S RRSS E S KE ON LEND

BDMGOLD Support

ON LENDER

N AT I V E L E N

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N AT I V E L E N

ON LENDER

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ON LENDER

Thank you to our Broker Network for choosing Equitable Bank.

N AT I V E L E N

Transparency of Commission Structure

Your support and partnership is greatly appreciated. www.mortgagebrokernews.ca

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FEATURES

COVER STORY: BROKERS ON LENDERS IT/TECHNOLOGY ON LENDER

ON LENDER

S 15

GOLD

ON LENDER

SILVER

Gold: First National Silver: MCAP Bronze: RMG

2015 average score: 3.63 2014 average score: 3.53 Lenders got their lowest average rating in the IT/technology category – just 3.63 out of a possible 5. However, that’s still a significant improvement on last year’s score of 3.53. First National took the gold in this category with an average rating of 4.41. MCAP came in second with an average of 4.38, while

RMG rounded out the top three with a score of 4.23. TD Bank, meanwhile, showed a dramatic improvement from last year, jumping from a 14th-place finish and a score of 2.38 in 2014 to eighth place at a score of 3.71 this year. Not too many survey respondents mentioned technology as their biggest concern – which is not to say they were completely unconcerned; shoddy technology can slow down every process it touches. “It’s a big time-waster fighting with technology to move documents,” complained one broker. Others grumbled about lenders not having online customer access, or the lack of broker access to regularly updated web portals to view files without having to wait for a call or an email.

THE AVERAGE BROKER: LENDER SUBMISSIONS We asked brokers to tell us how many lenders they submit deals to over the course of a year.

One 1.1% Two 1.1% Three 4.4% Four 11.6% Five+ 81.8%

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CF 276

LENDE S ON RS 20

R KE

TO OUR BROKER PARTNERS, THANK YOU FOR YOUR RECOGNITION ON THE 2015 CMP BROKERS ON LENDERS SURVEY.

GOLD

As a customer-focused company, we are always looking at new ways to enhance our service programs to respond to your needs, and the expectations of your customers. We will continue to go beyond in offering you outstanding levels of service and support.

OVERALL SERVICE LEVELS

ON LENDER

YOUR CONFIDENCE IS WORTH MORE THAN ANYTHING SILVER

TURNAROUND TIME

SATISFACTION WITH CREDIT POLICY KE

ON LENDER

BDM SUPPORT

ON LENDER

SILVER

BROKER SUPPORT

CANADA’S MORTGAGE COMPANY.™ Over 40 years, 10,000 customers and 10 billion in assets under administration. A dedication to Customer Forward.

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9/09/2015 4:37:49 AM 2015-09-08 2:18 PM

FEATURES

COVER STORY: BROKERS ON LENDERS Lenders scored highest this year, like last year, in transparency of commission structure. Brokers rated them at an average of 4.03 out of 5 – a bit of a slide from 2014’s average of 4.14. Lendwise took the gold in this category, racking up an average of 4.54. First National earned the silver with an average rating of 4.434, barely edging out RMG, which took the bronze with a score of 4.431. “First National performs better,” said one

TRANSPARENCY OF COMMISSION STRUCTURE ON LENDER

ON LENDER

S 15

GOLD

ON LENDER

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Gold: Lendwise Silver: First National Bronze: RMG

2015 average score: 4.03 2014 average score: 4.14

broker who worked with the lender. “They also pay better than other lenders.” MCAP showed improvement this year, moving up to fifth from its 2014 seventh-place finish. But not all brokers were happy with their lenders’ commission structures. “Use more of a trailer fee model for compensation,” suggested one. “Build a better residual compensation model,” offered another.

ALTERNATIVE LENDING For this year’s survey, we also wanted to take a look at brokers’ relationships with alternative lenders, so we crunched the numbers to determine survey respondents’ top three alternative lenders. Optimum Mortgage was the top alternative lender, earning an overall average score of 3.87 out of 5. Equitable Bank took second place with 3.80, while Home Trust came in third at 3.56. Here’s how they fared in the individual categories:

BY THE NUMBERS TURNAROUND TIME

UNDERWRITER SUPPORT

OVERALL SERVICE LEVELS

INTEREST RATES

BDM SUPPORT

PRODUCT RANGE

SATISFACTION WITH CREDIT POLICY

IT/ TECHNOLOGY

TRANSPARENCY OF COMMISSION STRUCTURE

Optimum Mortgage

4.00

4.21

4.08

3.46

4.21

3.58

3.92

4.08

3.29

3.88

Equitable Bank

3.93

4.09

3.98

3.20

4.29

3.71

3.89

3.22

3.80

Home Trust

3.24

3.66

3.45

3.65

3.35

3.84

3.85

3.54

3.11

3.89

DEALS SENT TO ALTERNATIVE LENDERS Business-for-self deals were the most popular ones for brokers to send to alternative lenders – nearly 80% of survey respondents who used alternative lenders sent them BFS deals. More than 57% made use of alternative lenders for customers with bruised credit, and another third used alternative lenders for ‘purchase plus improvement’ deals.

AVERAGE LENDER BREAKDOWN The brokers who responded to our survey use alternative lenders almost a third of the time.

79.6%

Business for self

57.5%

Bruised credit

Traditional 70.1%

33.1%

Purchase plus improvement

Alternative 29.9%

28.2% 26.2%

New to Canada Secondary/vacation 0

BROKER SUPPORT

100

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FEATURES

COVER STORY: BROKERS ON LENDERS BROKER PREDICTIONS: THE EVOLUTION OF COMMISSIONS We wanted to know how brokers thought commissions and bonuses might evolve over the next one to two years. Overwhelmingly, most agreed they would stay the same, although there was a relatively equal number of optimists and pessimists who thought they would increase or decrease. 80

72.7%

“Engaged our office to better understand the depth of the changes. Home Trust was particularly active with this initiative “Doing an $800,000 purchase and improvement – which was well over maximum guidelines”

“I had a rushed, complicated application that wasn’t going anywhere. I called Raymond Lee at Merix, and he took ownership of the application, and it closed as required. Without Raymond and his team’s assistance, I don’t think the application would have closed”

40 30

12.9%

10 0

We asked brokers to be honest about how lenders could improve – but we also wanted to know what lenders were doing right. So we asked brokers to tell us about the best thing a lender had done for them in the last year. Here’s what they had to say:

“Getting an exception on a deal with a client who had bruised credit”

WHAT’S THE BEST THING YOUR LENDER HAS DONE FOR YOU IN THE LAST 12 MONTHS?

11.6% 2.8%

Increase

Decrease

Stay the same

Move to a flat-fee commission

“Use more of a trailer fee model for compensation”

“The underwriters dropped everything they were doing to get my deal done when in a rush situation” “Excellent service from our underwriter. Consistent service is the best thing that a lender can do” “Took the time to listen to our needs when it related to the client. Happy clients turn into more referrals and more business for the lender” “Stephen Cheng at Lendwise has worked multiple files to the bone for me. If he thinks it can be done, he fights for it” “Providing exceptions when needed to alleviate client stress”

www.mortgagebrokernews.ca

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9/09/2015 4:38:20 AMPM 2015-07-31 8:14

SPECIAL PROMOTIONAL FEATURE

REVERSE MORTGAGES

Placing brokers in the driver’s seat As Baby Boomers march toward retirement, HomEquity Bank is introducing a new distribution channel for its reverse mortgages – one with its leading referral partners, brokers, at the wheel REVERSE MORTGAGES have been available in Canada for 29 years, and HomEquity Bank, provider of the CHIP Reverse Mortgage, has seen a growing interest in their products in recent years. As Canadians age, live longer and face the realities of underfunded pensions and insufficient savings, their homes continue to be their most valuable asset. To service this trend, HomEquity Bank is introducing a new and exciting distribution channel via one of their leading referral partners: mortgage brokers. With the introduction of Mortgage Broker Direct [MBD], a new platform that creates an opportunity for mortgage brokers to be certified to sell reverse mortgages directly, HomEquity Bank hopes to see its growth strategy come to life and to transform the concept of a reverse mortgage into a more common solution for seniors with a financial need. HomEquity Bank president and CEO Steven Ranson and partnership director Fiona Campbell offered up details about the upcoming launch of the MBD platform and the bank’s plans for the next year.

Why mortgage brokers? Mortgage brokers are at the heart of many mortgage decisions. They provide expertise throughout their clients’ home purchase

process – for their first mortgage and often subsequent ones. According to a 2015 CMHC survey, mortgage brokers have seen an increase in clients who are repeat buyers (32% in 2012 to 42% in 2015), first-time buyers (48% to 55%) and refinancers (27% to 33%). Because of their expertise and the loyalty effect, mortgage brokers are in the best position to service their aging clientele by becoming reverse mortgage experts. “Mortgage brokers have a very loyal customer base with a solution-oriented

in the process of completing all of the logistics behind Mortgage Broker Direct [to launch in mid-September], and our team will be ready for all of the challenges and successes that this new channel will bring.” “We are launching [MBD] in the last quarter of 2015, and we know that 2016 will be the year of the mortgage broker at HomEquity Bank,” Campbell adds. “We are excited for this new chapter at the bank …”

What is Mortgage Broker Direct? “Mortgage Broker Direct gives mortgage brokers the ability to sell and deal directly with the client instead of the current process of going through a referral channel to fund a deal,” Ranson says. “Through the education and certification process, we want to provide brokers with the knowledge and tools to enable them to evaluate and recommend a reverse mortgage as a viable option for their client’s retirement. “Mortgage brokers will be able to help their senior clients by providing them with a unique financial solution to stay in their homes, manage their debt, improve their cash f low and reduce their stress. Through MBD, we will also be providing brokers with an opportunity to generate higher commissions. Being a certified reverse mortgage specialist gives clients the

“Our team will be ready for all of the challenges and successes that this new channel will bring” Steven Ranson, HomEquity Bank approach; they provide exceptional value to their clients,” Ranson says. “HomEquity Bank’s broker business saw a tremendous growth of 39% last year. We also saw over 1,000 mortgage brokers send in referrals with an average deal size of $150,000. “With this success, as an organization, we felt that mortgage brokers would be the best channel to target in order to maximize the benef its of reverse mortgages for consumers nationally,” he continues. “We’re

confidence that their mortgage broker is presenting all options to them.” The no-fee certification process launches in September, and a limited number of mortgage brokers will be invited to enroll. “The course is a half-day session that includes quizzes and an in-class test,” says Campbell, a true industry expert with more than 20 years of experience in mortgages, banking and lending. “It’s quite comprehensive, but also fun to learn.”

www.mortgagebrokernews.ca

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HELPING YOU DELIVER. The HomeOpeners® App is now available. This web-based App helps you close the deal with better mobile resources than ever. Genworth Canada recognizes that busy mortgage professionals need access to resources that will help their clients through the homeownership journey when they are on the move. With features like the ability to send customized emails from mortgage calculators, product videos, business updates and geolocation-driven account manager contacts, this App will help support your business wherever you are. Visit www.Genworthmobile.ca or scan the QR code.

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SPECIAL PROMOTIONAL FEATURE

The MBD Program will provide: • Certification (2.5 CE credits) • Professional designation (Certified Reverse Mortgage Specialist) • Marketing support • Increased commissions “I am very excited that HomEquity Bank is elevating its level of partnership with the mortgage broker industry and working with brokers to deal directly with

“This is a growing market, and mortgage brokers are at the centre of many decisions that their older clients have to make” Fiona Campbell, HomEquity Bank us,” Campbell says. “This allows mortgage brokers to expand their product offerings and introduce reverse mortgages to their clients. This is a growing market, and mortgage brokers are at the centre of many decisions that their older clients have to make. Being a HomEquity Bank Certified Reverse Mortgage Specialist gives clients the confidence that their mortgage broker is presenting all options to them.” “It is imperative that brokers are educated in our products so that they can become experts in reverse mortgages,” Ranson adds. “We want our clients to receive the correct information and completely understand our terms and the fine print before they decide to proceed with us. “We are excited for this new chapter at the bank, and for our mortgage brokers to consider our CHIP Reverse Mortgage product as a preferred financial solution for our senior clientele. We are confident that Mortgage Broker Direct will change the landscape of our business as we know it.”

A WORD FROM OUR PARTNERS

Colin Dreyer, President/CEO, Verico Financial Group We are very pleased that HomEquity Bank is a Preferred Partner to Verico members. They provide our members with a significant niche product that is important to an ever growing segment of Canadian consumers. Partnering with a lender, such as HomEquity Bank, that understands the significance of broker/ consumer relationships and is committed to the broker channel is important to our network.

Gary Mauris, President/CEO, Dominion Lending Centres Today more than ever, it is incredibly important to have as many financial solutions as possible for our clients. DLC has worked extremely close with HomEquity Bank for the last few years, and they have been incredible partners. Reverse mortgages are competitive and fill a giant need in our aging population. The more our agents learn about this product, the more inclined they are to recommend it. We are HomEquity Bank’s number-one partner in Canada in terms of volume and deal flow, and we expect our numbers to continue to grow significantly.

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PEOPLE

BROKER PROFILE

Never say never As a university student, Anne Brill wanted to open an art gallery, but a series of coincidences led her to mortgages – and she couldn’t be happier

IT’S NOT uncommon for mortgage brokers to fall into the business, but for Anne Brill more than others, it was a real trip down the rabbit hole. “I didn’t know the world existed, truthfully,” she says. Like many brokers, Brill got her start in the banking industry, joining Scotiabank as a teller on her 19th birthday. The extended hours worked perfectly with her schedule as a student at the University of Toronto, where she split her time studying business and art administration. “I wanted to own my own art gallery, so I was doing half studio art, art history, art courses, and the other half was business,” she says. “I just figured I’d probably make more money doing business, so I went full-fledged business in my second year.” Brill finished off her degree studying commerce and economics and continued working at Scotiabank. By 25, she had become a manager, and she eventually moved on to CIBC as a financial advisor.

But, because of the various financial advisor designations she held, Brill was unable to secure a mortgage licence in her name. So, Siddiqi secured a licence through Invis to keep the pair’s mortgage business afloat. “My goal was to never do mortgages, but every year we kept getting stronger on the mortgage side,” Brill says. “At the beginning, we did 30% mortgages; at the end, it was 95% mortgages.” Surprisingly, Brill also found she quite enjoyed the mortgage business – and her clients certainly reciprocated that appreciation, enabling Brill to build a business largely supported by client referrals. “I love how I can help people,” she says. “When they come to me, they have no idea what to do, but then we can get them into a home.”

“I love how I can help people. When they come to me, they have no idea what to do, but then we can get them into a home”

The move to mortgages In 2000, Brill started Think Tank Financial with her friend Saleem Siddiqi, offering clients a long list of financial services. Soon after, Brill got a call from an old client of hers from CIBC, Patricia Giankas, who suggested she enter the mortgage industry.

Seizing the opportunity When the brokers Brill worked most closely with at Invis left for Dominion Lending Centres, Brill decided to get a licence in her own name and join them. A few years later, the brokerage owner was forced to unexpectedly close shop due to illness. “Dominion Lending fought to keep me on board, but I wasn’t sure what I was going to do,” Brill says. She landed back at Think Tank Financial – but once again, Giankas came calling.

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TIMES, THEY ARE A-CHANGIN’ The mortgage industry has faced countless changes – many of them in the last several years – and they just keep coming. In fact, Anne Brill says that’s one of the biggest challenges facing the industry. “There have been some really good changes, but these lenders are mandated to do different things,” she says. “It’s hard to keep up.” Brill says the changes make their way down the pipeline so frequently that a deal approved by a lender today could be rejected by the same lender just days later. So what does it mean for mortgage brokers? “I’m doing more work per deal with lenders than I used to,” Brill says.

“She phoned me, this lady who got me in the business 14 years ago, and whom I hadn’t spoken to in 11 years,” Brill says. “She said, ‘I met two of your clients, and they both praised you … let’s do some business together.’” Giankas had a large brokerage, and Brill knew her name carried weight in the industry. Brill visited her office and agreed to do a few underwriting tasks for her. Eventually, Giankas offered Brill a partnership in the brokerage. Brill went back to Siddiqi, her longtime business partner, and explained that she was offered a great opportunity that she wanted to explore. He told her Giankas’ offer sounded great – and that she should take it. Now, having earned her broker licence, Brill heads Centum Metrocapp Wealth Solutions as principal broker. She’s fostered a great mortgage family there – not only among staff, but among her various lender partners and her co-owner, Giankas. “Coincidentally, the person who introduced me to the mortgage industry is now my business partner,” she says. “What a small world.”

www.mortgagebrokernews.ca

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FEATURES

LEADERSHIP

Four ways to improve your influence We are all in the business of influence – but instead of seeing it as manipulation, Dr. Tim Baker outlines how influence, when used ethically, can be an essential business tool

INFLUENCE IS the lifeblood of business, especially for brokers, who must influence the many stakeholders they deal with on a daily basis. However, the word influence means many things to many people. To some, it means being cunning, manipulative and tricky. Others see influence as ethical and open. In my view, influence is the power to make other people agree with your opinions or get them to do what you want willingly and ethically. The key words here are ‘willingly’ and ‘ethically.’ Sustainable influence is not an exercise in manipulation and trickery. In the context of sales, marketing and professional advice – areas that brokers regularly work in – influence is, more often than not, about persuading others to think and act in ways that benefit themselves and their circumstances. People make up their own minds, but they do so on the basis of how they are influenced. This is why influencing must be done from an ethical standpoint. My new model of influencing, the Influ encing Capabilities Framework, illustrated on the opposite page, identifies four primary ways that leaders can and do influence others. You will notice two styles – push and pull. The push style is more assertive, direct and upfront, while the pull style is more collab orative, indirect and subtle. Both are effective in the right place, at the right time, with the

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INFLUENCING CAPABILITIES FRAMEWORK PUSH STYLE

PULL STYLE

APPROACH

Investigation

Calculation

Logical

Motivation

Collaboration

Emotional

right people. The two approaches are logical and emotional. The logical approach is based on fact, rationale, structure and clarity, whereas the emotional approach is based on inspiration, possibility and the ‘big picture.’ Again, both approaches work in the right circumstances. So we end up with four distinct strategies: investigation, calculation, collaboration and motivation. Which one do you favour?

Investigation As a strategy of influence, investigation basi cally means gathering the facts and presenting them in a logical and convincing manner. The presentation of a coherent and assertive argument based on well-founded research is a powerful form of persuasion in the right set of circumstances. People usually are not convinced by someone who does not have a sound grasp of the facts, nor are they influenced by someone with wavering conviction or an incoherent presentation of his or her ideas. Then again, even if you are logical, coherent, assertive and well-researched, that doesn’t necessarily guarantee that you will be persuasive. But these attributes are at least a good starting point. Brokers who have a preference for investi gating like to search for supporting evidence and, from this data, generate hypotheses or ideas based on a logical, rational argument. Once investigators have prepared a well-founded case, they assert their ideas to others. Being well-prepared, investigators are typically on solid ground to oppose others’ arguments. In other words, an investigator’s influencing ability is reliant on a carefully researched and assertively communicated case. Climate change campaigner and former US vice president Al Gore is an example of an investigator.

Calculation

Collaboration

Calculation means to influence by clearly articulating the pitfalls of the status quo and demonstrating how those pitfalls can be overcome with a new proposal. Psychologists tell us that we are all motivated by pain and pleasure: We try to avoid painful situations as much as we can,

The strategy of collaboration funda mentally involves influencing through trust-building and sharing the ownership of the leader’s proposal. Clients are more likely to be persuaded by a broker’s suggestion if they feel they have been genuinely consulted about it.

Influence is, more often than not, about persuading others to think and act in ways that benefit themselves and their circumstances such as being late for an important meeting we are chairing. Conversely, we gravitate to pleas urable experiences, such as pleasing our boss by finding the right information in a timely manner. While this should appear obvious, we each have different ideas of what pain and pleasure are, so we interpret the significance of situa tions in our own way. A potentially painful situation for one person could be viewed as enjoyment by another. Brokers who are calculators are likely to talk up both the advantages and disadvantages of an approach. Former UK prime minister Margaret Thatcher was a calculator.

Motivation The motivation strategy, in essence, means to influence by associating an idea, change or proposal with a clear, compelling and common vision of the future. Brokers who can paint a convincing picture of the future and motivate people with that vision are generally inspira tional and influential. Most great leaders have this aptitude. Unfortunately, from my observations, too many people get caught up in the minutiae of what they are doing. Consequently, they often forget to articulate the link between the proposal and the big picture. People in sales don’t always explain the why – why we are recommending this approach or portfolio. “How does what we are currently doing contribute to the big picture?” is the type of question motivators answer. Former civil rights activist Martin Luther King, Jr. was a motivator.

By collaborating with others, the influencer is inviting the people he or she is influencing to be emotionally engaged and involved in the proposal. Clients feel they have a stake in the change and are subsequently more receptive to its merits. Through authentic collaboration, trust builds and influence increases. Collaborators create positive emotional energy. They are concerned with developing a sense of trust and engagement. Collaborators are consul tative in their approach to problemsolving; they actively listen to others and are willing to share ownership of the outcomes through open communication. The influence of collaborators permeates from encouraging input and building higher than normal levels of confidence in colleagues. The late activist Mother Teresa was a collaborator. We each favour one of these strategies over the other three. The problem is that, from time to time, we will doubtlessly use the wrong strategy, either for the person we are trying to influence or the situation we are in. Outstanding persuaders and influencers use all four strategies in the right place and at the right time.

Dr. Tim Baker is a thought leader in organizational and leadership development, an international consultant and bestselling author of the book The New Influencing Toolkit: Capabilities for Communicating with Influence.

www.mortgagebrokernews.ca

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FEATURES

LEADERSHIP

Commercial collaboration: the operating system of the future A new methodology of collaboration is necessary to keep pace with the speed of today’s business environment, according to Janine Garner THE PHENOMENAL speed of change that got us to the 21st century’s technological frenzy is not going to slow down any time soon – and it is creating an uncertain future on a global business level. There is an ongoing war between the need for stability and the need for growth. It is up to each of us to actively listen to the demands of this society and evolve how we operate accordingly so that what we do aligns with – and leads – the new paradigm. We live in a highly connected world. The constant transformations happening on both domestic and global levels are affecting us as we try to maintain balance in our personal lives while striving for our dreams. Business is under pressure – evolution within society demands constant innovation and invention in product design, delivery, communication, marketing and customer service, as well as in business itself, from office layouts to organizational structures, from leadership styles and culture to working hours and communication platforms. Societal evolution is driving a feeling of uncertainty about what the future will hold – especially for Gen X and the Baby Boomers, who have had both financial and philosophical certainties stripped away over the last decade. For these two generations in particular, who make up the majority of the

leadership pool at present, this feeling of the unknown is resulting in business methodology regression. Regression to what? To the comfort of the known, of protecting ‘me,’ when what is actually needed is the courage, confidence and bravery to move to the new operating system of ‘we’ – one that will enable leaders to create the solutions needed to future-proof personal, business and team successes. Those who are willing to be a part of a collaborative working environment are doing so because they want to be challenged. They want the opportunity to constantly learn from others, and to share what they’ve learned. To engage on an intellectually challenging level with

like-minded thinkers. To see their own business benefit from the knowledge of specialists. To be happy knowing that they are on the edge of technological advancement, constantly pushing the ‘what if’ button – because as a team, they feel secure enough to take risks.

Moving from ‘me’ to ‘we’ The concept of commercial collaboration, and the move from the ‘me’ space to the ‘we’ space, is not for the faint-hearted. It’s for those who can see the far-reaching benefits of what the ‘we’ space is about — and yes, it is a gradual move, one that involves challenging thinking. But it is not something one has to contemplate in solitude.

THE BENEFITS OF ‘WE’ Leaders who are already operating in the ‘we’ space: Are able to think big

Promote based on merit, irrespective of gender or age

Recognize the need to act as a team

Are innovative

Embrace fears and vulnerabilities

Disrupt the status quo

See the value in helping others see their worth

Lead with a questioning spirit

Actively engage with others

See what commercial collaboration brings to an entrepreneurial mind

Act with bravery

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A COLLABORATIVE ENVIRONMENT This new operating system is one where: Networks of connected individuals, communities and businesses work together to drive success We can bring our skills, strengths and talents to the table, and together amplify and share expertise to create progressive, results-oriented solutions Collective intelligence means we work smarter and quicker together Diversity and difference of opinion is actually the new competitive advantage Commercial collaboration: Creates momentum Drives new thinking Builds resilience and determination to succeed Enables individuals and businesses to explore possibilities and develop strategies to future-proof success Every part of the ‘we’ space has the backing of others. Overcoming fear and facing up to vulnerability are done with full disclosure and honesty, with the knowledge that by sharing your fears, you are empowering not just yourself, but those who work with and for you. You are giving the team the opportunity for empowerment and trust. When you disrupt the status quo, when you disturb the accepted and the everyday, you are forging a new strength and getting rid of the weak and humdrum, which bog down business decisions and keep processes stale and stagnant. In the spirit of openness and full disclosure, you are not moving secretively, but so that those in your team or circle of excellence are aware of your thought processes and why you are taking the actions you are. In this way, you have backup – and trust in your actions.

Understanding the power of your network and using its potential is intrinsic to the ‘we’ mentality. To care about the well-being of those who are connected to you through business similarities or ethical focus or a desire to advance the same cause – while expecting nothing in return – creates a fantastic opportunity for collaborative relationships, and also for a true value exchange, where ‘what’s in it for me’ turns into ‘what can I do for you.’ The ‘we’ space is not a pipe dream. There are businesses and leaders who are clearly succeeding by operating within this framework. It is the centre of discussion among academics, thought leaders and consulting groups. Those corporations and entrepreneurs who are using the space well, and understand the shift in thinking needed to get there, are seeing procedures streamlined, the bottom line coming up, and employees happier and more

engaged. Their ‘communities’ are becoming actual communities. It is not enough, in the words of Sheryl Sandberg, to ‘lean in’ to future-proof our success, our businesses and our careers. For leaders who are taking teams into an uncertain future, it’s now about leaning out and collaborating with others. Because to lean out means to embrace and engage on an unforeseen aggregated level – where thinking bigger than ever before will bring rewards to a collective commercial mind.

Janine Garner is a businesswoman and entrepreneur, and is the author of From Me To We: Why Commercial Collaboration Will Futureproof Business, Leaders and Personal Success. She is the founder and CEO of LBDGroup.

www.mortgagebrokernews.ca

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FEATURES

MARKETING

Hourly rate identity crisis If you’re a sole operator or business owner who is working every hour available to you but still have your back up against the wall, this excerpt from the book From Deadwood to Diamonds by Stefan Kazakis is for you HAVE YOU thought about the investment you are putting into your business? Are you working for nothing? Or are you satisfied with the return on your personal exertion investment? I find that about 75% of small business owners have a disconnect here. The issue of maximizing the return on each hour you work can be a tricky one, and it can be another thing that is holding you back. I call this the Hourly Rate Identity Crisis. To see whether you’ve hit this crisis, answer the questions below: Q: How much do you charge for your time per hour? Q: How many hours on average do you work a week? Q: How much did you pay yourself last month? Q: Is there a disconnect? Chances are you have worked out what an hour of your time is worth, based on your skills and experience and the industry you are in. This isn’t where the problem usually lies. The issue is, how many hours a week do you actually earn that rate? Time is a finite resource, so it’s crucial that you put it to good use. If you have an identity crisis here, it can spell trouble. What activities should you be doing to give your business the best outcomes for each hour you work? Be clear about who you are, what you do and why. Think about your number-one Big Outcome. The best opportunity for your business is to build a reputation for doing one thing, then add to it.

Ask yourself, what’s my one thing? What am I actually worth an hour? Why? What are the activities that I do daily, weekly and monthly that help me ensure I achieve that rate? The next question is, how many hours a week do you work on average? Now you can calculate the following equation: What you are worth per hour × how many hours you work on average per week.

Consider the answer carefully Now, here’s the kicker: when was the last time you took home a weekly paycheque close to that amount? Sadly, for some business owners, the answer is never. If this is you, this is a huge wasted opportunity for your business. If you’re not taking home close to that amount each week, or even some weeks, or

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even occasionally, what’s the problem? If you’re not skiving off and going to the beach, then clearly you’re spending time at the office doing tasks you shouldn’t be doing. Yes, that’s right, you shouldn’t be doing! I’m not saying those tasks don’t need to be done, just that they don’t need to be done by you. What about if you are achieving this every week? Does that mean everything is peachy? Not at all. If you are reaching this target every week, your hourly rate is too low! Nobody can work at their maximum achievable hourly rate every single hour for a whole week, let alone week after week, so if you think you are doing this, you need to increase your hourly rate. There is clearly room for you to do so, and you are currently missing out on this opportunity.

Focusing on your strengths Once you start asking some brutal questions and facing up to reality, you will realize that a lot of time you spend in your business is wasted opportunity. Too many small business owners spend time on things that earn a low hourly rate for their skill set. It’s a very common problem. Many entrepreneurs start out alone with little cash, so they get into the habit of doing everything themselves and trying to cut costs while they do so. This can be OK – and is often necessary – in the very early days of getting the business off the ground, but once you are past that stage, having a Lone Ranger complex will be a massive hindrance to the growth of your business.

Delegation is a wonderful thing Have a look at what you are doing each day. For each activity you do that is not at your maximum hourly rate, you have four options.

Delegating: You need a great team around you. Not good, great. And what’s the point of a great team if you don’t delegate to them?

Outsourcing: You can outsource just about anything these days without too much expense, and you can trust that the job will be done right. Some small business owners see this as a cost they can’t afford, but your

maximum hourly rate will be more than the hourly rate you pay for outsourcing, so you come out in front and you can be spending your time more productively.

Terminating: Sometimes you’ll find that a task can simply be done away with altogether. Plenty of businesses have old habits and systems that they could get rid of, but nobody has stopped to look at them closely. Or maybe there’s something you do five times a week that really only needs your attention twice a week.

properly, you have to do it yourself, right? Wrong! The tasks for which you earn your highest hourly rate are best done by you, but let me tell you something: For most other tasks in your business, there are people out there who are better at it than you – and that’s fantastic! Chances are you are not an expert bookkeeper or warehouse manager or marketing manager or customer liaison, but too many small business owners try to wear too many hats and don’t perform any of these tasks as well as they could be done. You

You need a great team around you. Not good, great. And what’s the point of a great team if you don’t delegate to them? Systematizing/automating: Can you set up processes that reduce or eliminate time spent on a task? For example, can you set up your website so that orders go directly to your suppliers and you don’t have to send products out? Delegating and outsourcing are essential to the growth of your business, but these are two areas people often struggle with. Let’s have a look at some common challenges to outsourcing and delegating.

I don’t know what I don’t know

I don’t trust anyone else to get things done

Sometimes we just become so caught up in the day-to-day craziness that we don’t even stop to consider other options. Make the time to stop, look and listen; find out what the issues are in your business and how you can address them. You can’t solve a problem you don’t know about.

This is a common problem for entrepreneurs. They are so used to being experts in their field and doing everything themselves that they are reluctant to hand responsibility to others. If you want something done

need to trust your staff and service providers. You don’t need to be afraid of outsourcing to Bangladesh or maybe even Russia.

I’m too busy

We can’t afford it

As a business coach, this response drives me nuts! The reason you think you are too busy today is that you didn’t stop and make changes yesterday. You must make the time to improve things today; that’s the only way you’ll be less busy tomorrow. Got it? Put things in a format people can follow: Because small business owners get used to doing everything themselves, they often develop their own unique methods, and this becomes an impediment to delegation. But this is an easy problem to overcome – you just need to spend some time developing processes that you can easily pass on. It may take a bit of extra effort now, but I guarantee it will save you time in the long run.

Let me dismiss this one for you here and now – if you want to grow your business, you can’t afford not to delegate and outsource. Even if you are outstanding at what you do, if you don’t let go of managing

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FEATURES

MARKETING

the day-to-day issues in your business, you are putting a ceiling on how much you can grow, and that ceiling is how many hours you can work in a week. If you think you can’t afford it, can you afford not to? If you are this close to the edge, something has to change. If any of these are holding you back, you

It can’t be more than this, or you’ll just start getting bogged down again. Most of my clients have about five activities that they are really good at within their skill set and are their highest hourly rate activities. For most small business owners, these activities will be related to the skills

Your goal is to spend 80% of your time on your highest-rate activities. You won’t get to 100%. As the key decision-maker, you will always spend some time on mundane decisions have to address them – now. You need clarity about where your best work is done and what is getting in the way of growth. It might be you. The sooner you do this, the faster you will build a business that gives you the outcomes you deserve.

How to best spend your time? To work out what you should be doing with your time, just figure out the three to five activities that are your strengths.

that got them into the business in the first place. If you’re a graphic designer, you didn’t go into business to spend time doing the accounts, chasing new clients or firefighting problems as they arise. There are other people who will be better at these things than you, so let them do it; then you can spend your time doing what you do best. Even if you are on your own, you can still find somebody to help keep you accountable. I’ve been getting coached for 22 years. I still

get coached today. I still write a cheque for somebody to help me improve my business. Once you’ve identified these activities, answer this question: How much of your time each week as a percentage is invested in these specific tasks? The difference between how much time you could be spending on these tasks and how much you are spending on these tasks is your gap to creating a business that at some point will give you freedom of time and freedom of money. Your long-term goal is to spend 80% of your time on your highest-rate activities. No matter how well you do, you won’t get to 100%. As the leader and key decision-maker in your business, you will always be required to spend some time on more mundane decisions and tasks. The most successful business people I know are at 80%, and that’s great. Even if you’re on your own, this is achievable. There are all sorts of excellent outsourcing services that cater to small businesses. Trust yourself to find the right people and guide them well, and then trust them to do the job for you. Give them good systems, wind them up and let them go. The world has become a smaller village, and the days of dodgy overseas outsourcing are long gone. Once you start to address these harsh truths about how you’re spending your time and you start walking the walk, you will quickly learn that you shouldn’t be making the coffee, going to the post office and chasing unpaid bills. It’s about having a strategic mindset. How will your next hour best be used to grow your business? You have to hold yourself accountable, and this can be tough because it can mean facing the fact that you haven’t been working as well as you could have been. I see it all the time: People think the solution to a struggling business is to work harder, but it’s not. It’s to work better.

Stefan Kazakis is a business strategist, soughtafter presenter and speaker and author of the book From Deadwood to Diamonds. He is a futurist and an inspiring communicator with the voice of experience. For more information, visit www.stefankazakis.com or email info@ stefankazakis.com.

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PEOPLE

CAREER PATH

FINDING A HOME From real estate broker to business owner to mortgage agent, Ray Rochefort has finally landed at his dream job 2008

2004

TRANSITIONS TO DOMINION LENDING CENTRES

JOINS LEADS UNLIMITED

Several years ago, The Mortgage Centre offices in London transitioned to Dominion Lending Centres, and it’s there that Rochefort continues to practice

About a decade ago, Rochefort found himself searching for a networking group to join. Leads Unlimited had an opening for a mortgage broker, so Rochefort applied “It’s a bit of a low-key type of group, but there’s a lot of business that gets done there. There are insurance people, financial planners, contractors, web designers, a travel agent – if everyone knows 50 people, we know a lot of people”

“I love it – it’s the best job I’ve ever had. I remember one of my girls telling me, ‘Gee, Dad, it’s nice to have you home for supper’” 1997

TAKES A JOB WITH THE MORTGAGE CENTRE Rochefort took a year after his move to London to decide what he wanted to do, ultimately landing on the mortgage industry “I chose mortgages because I was really comfortable doing mortgages. The Mortgage Centre was a really good franchise to work for. The business itself is so incredible, and it’s changed so much since I started”

1982

LAUNCHES HOMES BY RAYMOND Rochefort tapped into his own contacts to build a home for himself and his family, and that transformed into a custom home-building company called Homes by Raymond “The first home I did for someone else was a custom home for a family with a handicapped child. I was really good friends with a guy who had been handicapped … and he fine-tuned everything for us” Rochefort got his start in the industry by way of real estate, joining a forward-thinking firm called Cambrian Realty “We used to have a mortgage manager [at Cambrian], so on every listing we’d have something about how to finance this particular property. I was pretty good at learning that kind of stuff, so early on in my career I was arranging financing for my clients”

1996

MOVES TO LONDON, ONT. By the mid-90s, Rochefort and his family finally grew tired of the long winters in his hometown of Timmins, Ont. – some of which required taking a snowplow to the roof – and decided to move south to London with their two young daughters “I said, ‘Enough is enough!’ We didn’t do any [jet-skiing] or skiing or ice fishing, so we said, ‘What are we doing here?’”

1975

OPENS ROCHEFORT REALTY

1972

BECOMES A REAL ESTATE AGENT

A few years later, Rochefort opened his own realty office and again found himself arranging mortgages on the side “I was doing mortgages for my agents but never getting paid for it because, prior to the mid-80s, the banks never paid you if you sent them a deal. So I was doing the work just to get the deals in my office done”

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PEOPLE

OTHER LIFE

TELL US ABOUT YOUR OTHER LIFE Email mortgagebrokernews@kmimedia.ca

THE BOARD ROOM Just before his big 5-0, Doug Mawer traded his waterskis for a snowboard and joined his kids on the slopes DOUG MAWER isn’t quite sure he likes snow boarding, the sport he picked up a few years ago, just before his 50th birthday. But if it means spending more time with his teenaged kids – son Micah and daughter Kalen – then he’s all for it. “It’s hard, but I like it because it doesn’t come naturally,” Mawer says. “It’s a different set of skills and balances and coordination. It was completely different and outside of what I had an instinct for.” Together with his kids, Mawer bought the necessary equipment and made his way to the slopes. “We learned together,” he says, “but they learned a little quicker than I did!” Mawer, who grew up downhill and water skiing, spends his weekdays arranging mortgages via PropertyGuys.com in Saint John. Beyond quality time with his kids, Mawer says snowboarding – along with the other outdoor activities he enjoys – affords him a well-deserved break to refocus. “It makes you feel fresh and revived when you come back to work.”

The number of times, on average, Mawer goes snowboarding each year

277

The summit elevation, in metres, of Mawer’s local hill, Poley Mountain

1965

The year snowboarding – originally called ‘snurfing’ – was invented

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