MORTGAGEBROKERNEWS.CA ISSUE 15.08 | $12.95
COMMERCIAL
LENDING
GUIDE 2020 Experts weigh in on what’s ahead for Canada’s commercial mortgage market
RECKONING ON RACISM
Is the mortgage industry doing enough to fight racism within its ranks?
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MASTERING THE ART OF SOCIAL MEDIA
How one young broker is using Instagram to cultivate relationships with clients
PUTTING THE PIECES TOGETHER
What is system integration, and why does your brokerage need it?
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GET READY TO BE SERVED LIKE NEVER BEFORE... (We’re excited for you to dig in!)
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ISSUE 15.08
20 COMMERCIAL LENDING GUIDE 2020 SPECIAL REPORT
COVID-19 will likely reshape the commercial lending landscape for years to come. CMP spoke to four experts in the sector to find out how brokers can make the most of the new challenges and opportunities
Why can’t your lenders be as creative as your architect? With over $3 billion under administration and ready for immediate deployment, Romspen is a boutique non-bank mortgage lender specializing in commercial real estate in Canada and the US. For your financing of $10 million to $400 million we bring speed, agility, and a commitment to complex execution you will not find in larger institutions.
Blake Cassidy or Pierre Leonard | 800 494 0389 | www.romspen.com
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ISSUE 15.08
12
UPFRONT 04 Editorial
The challenge of increasing supply in Canada’s largest cities needs a dose of unorthodox thinking
06 Statistics UPFRONT
08
TECHNOLOGY UPDATE
Why brokers need to prioritize system integration
28
Industry executive Kyra Wong’s royal alter ego PEOPLE
PEOPLE
A NEXTGENERATION BROKER
2
14 Opinion
32 Other life
A closer look at the mortgage industry’s efforts to combat racism reveals more talk than action
16
Trez Capital revs up its reopening plans
PEOPLE
NEWS ANALYSIS
Linda Tosini approaches mortgage brokering the same way she approaches marathon running: with a commitment to never give up
10 Alternative lending update
There’s no time like the present to start teaching kids how credit works
UPFRONT
INDUSTRY ICON
Despite a dismal employment market, home-buying is starting to regain momentum across the country
Chris Bargis reveals how he’s using social media to promote an education-first approach to the mortgage process
30 FEATURES
ARE YOUR DIVERSITY EFFORTS JUST LIP SERVICE?
Five ways to ensure you’re making real headway with diversity initiatives
MORTGAGEBROKERNEWS.CA CHECK IT OUT ONLINE
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UPFRONT
EDITORIAL
It’s time for some new ideas
I
n a widely circulated August 5 op-ed in the Financial Post, Jasmine Moulton wrote that “government is why housing in Canada is unaffordable, and more taxes won’t help” – yet another drop in the “cut taxes, increase supply” ocean. Let’s be clear: Housing in Canada is largely affordable. It’s only in select, though admittedly densely populated, areas in Ontario and British Columbia where it isn’t, as well as Montreal to some extent. In these cities, there isn’t enough developable land, resources or time to build the supply needed to meet surging population demands. So, in the face of that impossibility, let’s get weird in proposing a couple of solutions for at least one of those problems: land availability. Idea one: No more golf courses within 20km of cities with a vacancy rate below 10%. Those that currently exist could be transformed into mixed-use communities. This may elicit some gasps, but really, what’s the non-selfish argument against it? That people won’t be able to golf? According to Golf Inc., in 2016, only 10% of Canadians even played golf. Why are we cordoning off hundreds of
Increasing supply is the solution – unquestionably – but there’s a lot more to it than taxes and zoning and talk kilometres of valuable, accessible land so a handful of people can walk around on it for four months of the year? Replace golf courses with a combination of housing, community centres and essential retail. Developers will have the added advantage of not having to bend over backward to provide green space. Idea two: Replace cemeteries in urban areas with mixed-use developments or affordable housing. Because of our society’s superstitious, fear-driven relationship with death, this might be a hard sell. But it’s the 21st century. Why should dead people have an easier time finding a place to live than the living? Cemeteries are a colossal waste of space – not because the dead don’t deserve respect, but because after a generation passes, no one visits their graves anyway; they’re a short-term panacea for distraught family members but a long-term waste for the rest of society. After a few years, any buried body is just dust in a box. Is that dust more important than a family trying to find a secure place to live so they can get their kids on a path to success? If it is, people should be willing to drive a bit farther to pay their respects. Are these ideas problematic? Sure. Are they ridiculous? Possibly. But they may also be a more valuable, and more progressive, starting point than braying “cut taxes, increase supply” into a megaphone for the millionth time and hoping that this time it becomes reality. Increasing supply is the solution – unquestionably – but there’s a lot more to it than taxes and zoning and talk. The team at Canadian Mortgage Professional
www.mortgagebrokernews.ca ISSUE 15.08 EDITORIAL Managing Editor Clayton Jarvis
SALES & MARKETING Vice-President, Sales John Mackenzie
Writers Ellen Burkhardt Ephraim Vecina Kasi Johnston
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Centu
IT'S ALL ABOUT THE PEOPLE CENTUM PROUDLY WELCOMES AXIOM MORTGAGE SOLUTIONS
Centum is one of Canada's fastest growing national mortgage broker brands in Canada. Contact us today to discover how we can help you grow your brand and your business.
thecentumnetwork@centum.ca | thecentumnetwork.ca ®/™ trademarks owned by Centum Financial Group Inc. (C) 2020 Centum Financial Group Inc. The intent of this communication is for informational purposes only, and is not intended to be a solicitation to anyone under contract with another mortgage brokerage operation.
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UPFRONT
STATISTICS
The missing piece
SALES ARE REBOUNDING ... Canada is beginning to show signs of recovery from what some are calling “the shortest and sharpest recession in history,” and nowhere was that optimism more apparent than in the country’s real estate markets. June saw nationwide sales rebound by 63% month-over-month, putting them more than 150% above April’s levels; some markets recorded even more impressive month-over-month gains.
Canadians appear eager to buy houses despite the lack of one key fundamental: employment growth IN A NORMAL market in a normal world, brokers would have little reason to ask questions when their volumes spike year-overyear, as they did in June, when CREA reported a 63% month-over-month jump in home sales nationally. But what if those surges are taking place at a time when a historic number of Canadians are out of work? The national unemployment rate is still in the double digits (10.9% as of July), and while
8.2%
the economy is expected to recover some of the jobs lost due to COVID-19, just how many is impossible to predict. Thousands are gone for good, and many businesses that have survived the pandemic thus far will be using new models and lower budgets that allow for fewer employees going forward. Even for those who do have jobs, recent data indicates they’re still spending a worryingly high proportion of their income on ownership costs.
2.4%
Annualized decrease in Canadian GDP in the first quarter of 2020
MONTH-OVER-MONTH INCREASE IN HOME SALES
63%
$20 billion $62.75 billion
Year-over-year increase in debit and credit card spending as of July 24
Wages lost in Canada because of COVID-19 between March and May
NATIONAL
Total amount paid out by CERB as of July 26
Sources: Statistics Canada, RBC Economics, Government of Canada
… BUT UNEMPLOYMENT REMAINS A PROBLEM
DETERIORATING SENTIMENT
Despite the enthusiasm for house purchases, Canada’s employment situation is still a mess. As of the end of June, only one province had an unemployment rate under 10%.
Despite the relatively smooth reopening of the economy so far, a recent Bank of Canada survey found that Canadians are growing increasingly worried about their job prospects.
PROVINCIAL UNEMPLOYMENT RATE
April
May
June
Q1 2020
18%
CANADIANS WHO EXPECT TO LOSE THEIR JOB IN NEXT 12 MONTHS 9.8%
16% 14%
18.2%
12%
CANADIANS WHO BELIEVE THEY CAN FIND A NEW JOB WITHIN THREE MONTHS 50.2%
10% 8%
40.6%
6% 4%
CANADIANS WHO EXPECT TO LEAVE THEIR JOB VOLUNTARILY IN THE NEXT THREE MONTHS 19.0%
2% 0
BC
AB
SK
MB
ON
QC
NB
NS
PEI
10.1%
NL Source: Statistics Canada
6
Q2 2020
Source: Canadian Survey of Consumer Expectations – Q2 2020, Bank of Canada
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75.1%
59%
43.6%
EDMONTON
MONTREAL
QUEBEC CITY
22.5% WINNIPEG
99.7%
55.6%
FRASER VALLEY
OTTAWA
83.8% GTA
60.3% GREATER VANCOUVER
34.8%
54.9%
HAMILTONBURLINGTON
CALGARY
67.9% LONDON
Source: CREA, June 2020
PRICES STILL INCHING UPWARD
THE HIGH COST OF OWNERSHIP
While the benchmark price across Canada has levelled off from the significant gains seen in the first few months of 2020, prices have yet to drop as a result of the economic fallout from COVID-19. In June, CREA reported month-overmonth price gains in 17 of the 20 markets it tracks.
Many Canadians are still spending close to or more than half of their income on homeownership costs, according to RBC’s latest data on housing affordability. Particularly in Vancouver and Toronto, ownership costs remain well above the aggregate long-term average of 42.2%. SHARE OF INCOME REQUIRED TO COVER OWNERSHIP COSTS, Q1 2020
NATIONAL MLS HPI COMPOSITE BENCHMARK PRICE
Canada 50.5%
$640,000
Vancouver 79.0% $630,000
Calgary 38.1% Edmonton 31.3%
$620,000
Toronto 69.0%
$610,000
Ottawa 39.3% $600,000
Dec 2019 Jan 2020 Feb 2020 Mar 2020 Apr 2020 May 2020 Jun 2020 Source: CREA, June 2020
Montreal 43.5% Source: Housing Trends and Affordability, RBC
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UPFRONT
NEWS ANALYSIS
Talk versus action The Canadian mortgage industry’s stand against racism – both conscious and unconscious – has so far amounted to a lot of talk, but little concrete action to back it up
ON JULY 16, MortgageBrokerNews.ca ran a story entitled “What Are Canada’s Mortgage Companies Doing to Promote Diversity and Fight Racism? Not Much,” which compared two companies’ approaches to preparing their employees to better serve Canada’s diverse marketplace. On one side, there was Equitable Bank’s strategy of hiring a dedicated equity, diversity and inclusion specialist and providing ongoing education for its staff around the issues of systemic racism and unconscious bias. On the other side was Centum, where, according to president and COO Chris Turcotte, the network’s strategy is “getting to know any candidates before we bring them to our organization,”
and CMP to take part in the conversation. But it’s increasingly clear that conversation alone isn’t going to accomplish much. According to DS Sheppard, Equitable Bank’s equity, diversity and inclusion specialist, it’s no longer enough for companies to simply be non-racist. To truly chip away at the cancer of racism, they need to be anti-racist. “It’s critical that we honour each other,” Sheppard says. “And part of honouring each other means doing the work to have a better awareness of people’s lived experiences that exist beyond our own.” The gulf between non- and anti-racist education is colossal, but many companies in the mortgage space either don’t understand
“Part of honouring each other means doing the work to have a better awareness of people’s lived experiences that exist beyond our own” DS Sheppard, Equitable Bank continuing “to listen” and using the company’s platform to “raise awareness.” Tellingly, only two companies MBN reached out to were even willing to go on record to talk about what they’re doing to educate their staff around race. Since then, representatives from other companies have contacted MBN
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the distinction, don’t think it’s important or aren’t comfortable talking about it. Take, for example, the approach of Marathon Mortgage Corp., now led by former M3 president Albert Collu. In a recent interview, MBN asked Collu if the company is doing anything to educate its employees about the
perniciousness of racism. “No, not at all. And I’ll tell you why,” he said. “You would need to do that if you’re in a culture that is predominantly one particular race, where you have to unravel thoughts that may not be conducive to where this society’s going. I don’t have that situation. I have a group where it’s already in the DNA of who we are. We are proportionally more diverse than any company I have already worked in.” Collu does at least acknowledge that companies that talk about the evils of racism without actually doing anything to combat it are doing themselves no favours. “Inserting a little pledge into your organization doesn’t abolish that you may have an undercurrent of racism, as far as I’m concerned,” he said. MBN was also contacted by multiple representatives from TMG The Mortgage Group. Veronica Love, vice-president of corporate development, said in an email that TMG strongly believes “in diversity, equality and full support. We have zero tolerance for bullying, and our model truly leads us to support the agents and brokers. We are invested in their growth and business 100%.”
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WHAT INDUSTRY PLAYERS ARE SAYING Although few companies in the Canadian mortgage space have committed to taking concrete steps to fight racism, people in the industry certainly have plenty to say about it. “If we say, ‘We are all equal,’ we have to do what it takes to make it a fair playing ground and treat clients that way, too.”
Pankaj Sharma CEO, iBridge Capital “Racism is everywhere, and it’s not always obvious or seen outwardly. Until people change their thinking, their internal thoughts towards one another, we won’t see the changes we need to see.”
Chris Turcotte President and COO, Centum Financial Group But when asked for specifics about what actions the company is taking, Love could only point to a recent town hall TMG hosted in “an effort to keep the conversation going.” Love and Sheppard agree about one thing: Fighting racism starts at the top. “It has to be your most senior leaders, your CEOs, your senior vice-presidents,” Sheppard says. “They have to have already committed to doing that
positions of influence across its North American businesses. Manulife is aiming to increase BIPOC representation in leadership roles by 30% by 2025. “Establishing goals not only demonstrates our commitment to this important work, it will help us build a more inclusive culture to drive innovation and enable us to better serve our customers,” Manulife president and CEO
“Inserting a little pledge into your organization doesn’t abolish that you may have an undercurrent of racism, as far as I’m concerned” Albert Collu, Marathon Mortgage Corp. work with you. Otherwise, it’s an uphill battle that’s not sincere.” A prime example of top-down leadership in the industry came on July 17, when Manulife announced that it was adapting its recruitment goals to increase the number of Black, Indigenous and people of colour (BIPOC) in
Roy Gori said when announcing the initiative. The move followed Manulife’s June announcement that it planned to invest $3.5 million to promote inclusion across the company and support organizations that help BIPOC communities. If you were a non-white consumer who had
“At the end of the day, you don’t know a person’s background or their stories. You have to be cognizant of the fact that some people might take offense [to what you say].”
Anthony Venuto InTouch Mortgage Solutions “A lot of people will have the conversations with their friends, but they try not to bring it into the workplace. But this is a subject that you can’t avoid based on what’s going on now.”
Christa Devers-Williams TMG The Mortgage Group experienced a lifetime of racism, both overt and unconscious, which company’s actions would speak louder to you? The next generation of borrowers is increasingly growing frustrated with major companies’ unwillingness to invest even a fraction of their profits into making their employees less racist. If Canada’s lenders and brokers can’t learn to swim under these new conditions, they risk sinking under the weight of their own indifference.
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UPFRONT
ALTERNATIVE LENDING UPDATE NEWS BRIEFS Consumers put the brakes on home equity borrowing
Growth in Canadian home equity debt halted in May, according to the Office of the Superintendent of Financial Institutions. The national balance of home equity borrowing fell by 0.64%, to $305.78 billion, between April and May. On an annual basis, home equity borrowing increased by 1.53% – the most sluggish year-over-year growth since 2016. Personal debt, which accounted for $268.88 billion of the May volume, fell by 0.6% monthly and was up just 0.12% year-over-year.
Equitable Bank reports notable decline in deferrals
As of mid-July, deferrals at Equitable Bank have declined to 6% of its portfolio, totalling approximately $1.66 billion – a significant drop from the 20% level (around $5.6 billion) the lender reported near the end of May. “Our general feeling is that many of our customers called looking for a deferral just out of an abundance of caution in an uncertain economic scenario,” said president and CEO Andrew Moor. “Many of those have rolled off. And it’s clear, I think, that if there are people in financial trouble, it’ll start to emerge now.”
Non-bank lender launches private commercial mortgage fund
Non-bank mortgage lender Cameron Stephens has launched a $100 million private placement offering in response to growing demand for private capital in the commercial mortgage space. Available on the online private placement platform DealSquare, the Cameron Stephens High Yield Mortgage Trust (CSMT) will focus on the residential land, development
and construction sectors. “Our goal is to raise $100 million in CSMT initially and increase the fund to $300–$500 million over the next several years to keep pace with Cameron Stephens’ strong origination growth,” said chair and CEO Scott Cameron.
Reverse mortgages can function as an exit strategy
According to Sue Pimento, vicepresident of referred sales at HomeEquity Bank, brokers should consider reverse mortgages when helping older clients build an exit strategy out of a high-interest alternative mortgage. “Alternative loans usually have monthly payments, while reverse mortgages don’t – your clients only pay what they owe once they sell their house or pass away,” Pimento said, adding that the same strategy can be applied to those who want to get out of a second mortgage, which usually has higher rates and fees than a primary mortgage.
Government aid, deferrals keeping insolvency in check
According to data from the Office of the Superintendent of Bankruptcy Canada (OSB), federal fiscal support and mortgage deferrals are helping households retain their purchasing power during COVID-19, leading to a significant decline in insolvencies. The OSB reported 6,111 insolvency filings in May, a decrease of 8.8% monthly and 51% year-over-year. Observers cautioned that these figures are no cause for celebration, however, as the COVID-19 pandemic continues to upend the national financial system. Earlier this year, TransUnion Canada predicted that mortgage delinquencies older than 90 days would rise from 0.3% in Q1 to 0.9% by the fourth quarter.
Trez Capital takes steps to reopen The non-bank commercial lender has adopted a cautious approach to resuming operations as the economy restarts
In early July, major commercial lender Trez Capital announced that it plans to resume redemptions on some funds and launch a new high-yield fund to invest on debt that has been significantly affected by the impact of the COVID-19 pandemic. Trez will begin allowing limited redemptions on the Trez Capital Prime Trust and Trez Capital Yield Trust, two of the four funds it halted in March when the coronavirus outbreak took hold in Canada. As of press time, the lender has yet to announce the status of the other two frozen funds. “We want to reopen progressively and deliberately,” Daniel Marchand, senior vice-president at Trez Capital, told BNN Bloomberg. “Although we are being conservative in our approach, it’s that risk culture that’s kept us solid through this and previous crises.” The mispriced debt Trez will be investing on for its new fund includes first mortgages – “loans that are secure but, because of the current environment, offer higher yields than what we could earn pre-COVID-19,” Marchand said. “Lenders have pulled back on their borrowing activities, and this fund allows our investors to capture the additional spread.” Trez said it has already closed the first round of financing on the high-yield fund, although it will remain open for investments until the end of December. Marchand said he hopes to raise a maximum of $100 million in capital; the fund’s relatively small size stems
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from the lender’s projections of full market recovery by the end of this year or early 2021. “During the global financial crisis, we were able to capture additional spread – higher yields on quality deals – for only about a year,” Marchand explained. “We would expect a similar experience in this crisis.”
“We want to reopen progressively and deliberately” Activity in Canada’s alternative lending segment has significantly decelerated over the last few months. Even now, experts remain divided over the possible duration of the country’s economic recovery from the COVID-19 pandemic. Mikael Khan, director of financial stability at the Bank of Canada, recently told the Canadian Press that the years leading up to COVID-19, which were characterized by sustained growth in demand and activity in Canadian markets, portend a faster rebound from this recession than the last one. The prolonged recession after the 2008–09 crisis was brought about by “an underlying fragility in the global financial system,” Khan said. “One thing that’s always very important when you’re facing a large negative shock is the initial conditions.” However, in a recent report, Capital Economics made a more sobering prediction that mounting household and business debt could significantly delay recovery. “High private-sector [business and consumer] debt is likely to hold back productivity growth in the coming decade relative to that in the US,” said Stephen Brown, senior Canada economist at Capital Economics.
Q&A
Trish Pigott
Staying in touch is key
Owner and mortgage broker DOMINION LENDING CENTRES PRIMEX MORTGAGES
Years in the industry 16 Fast fact Prior to becoming a broker, Pigott spent more than a decade as a regional manager for Home Depot Canada
How has your business been doing recently? During the months following the pandemic, we have been insanely busy. We did not miss a beat, and we’ve been staying in constant communication with people. I’m a firm believer that communication is 100% vital to success in this industry. This level of service and close contact makes all the difference when your business is going through an economic downturn, because that’s when your clients and business partners actually need your support the most.
What impact has COVID-19 had on your operations? We were very lucky because even prior to COVID-19, we had already gone completely electronic and virtual, so clients never had to come and visit our office or meet us in person if they chose not to. We didn’t experience the panic of having to figure out systems of working from home; our service levels did not waver because we’d already set up our systems prior to this crisis. A successful business requires constant client communication through every available channel.
How have your alternative borrowers been faring so far? We’re proud to have extremely strong relationships with all of our alternative lenders. Because I have been in this business for a long time, I know so many of them. Our underwriters, our various lenders and our business development managers are very good at understanding what short-term solutions might be needed to help people get through one situation to the next. Especially in this environment, when clients don’t qualify at traditional sources like banks, we help through our wide variety of credit repair plans. We have multiple solutions lined up, and we help clients see the big picture; we make clients understand that yes, these are temporary solutions, but these will fix the immediate situation and help them get their bearings. I have two underwriters in my office, and they work alongside me. Between the three of us, we know our tools and products inside out, so it doesn’t take us long to find effective private or alternative lending solutions for our clients.
What advice do you have for those who are looking for alternative financing in these challenging times? My advice would be to make sure that you’re working with someone experienced in the industry, especially in the alternative financing side of things. Every so often, I get a client who has been dealing with somebody in the bank or with a broker who might not be that knowledgeable in terms of products or structuring mortgages. When you get bad advice, you end up making bad decisions. An experienced professional will know how to best help people based on their current situation.
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UPFRONT
TECHNOLOGY UPDATE
The future of mortgage technology Mortgage companies that don’t prioritize system integration run the risk of becoming relics
The goal of an integrated system is “absolute data transparency,” Hall says, wherein a company knows that all of its data is as accessible as it is accurate. In such a system, errors are reduced to the point where there should be no potentially costly discrepancies. “If you mess up one number, or if one thing gets miscommunicated to the client or the lawyer or whoever, that can have serious implications on the whole mortgage process,” Hall
“You can’t be looking at one thing while the truth is in a different system or a different place”
Client data can provide mortgage brokers with all of the information they need to ensure their customers’ needs are being met in real time. But for that to happen, that data must be accessible to anyone who needs to see it – and if it has to travel across a company’s various systems, those systems must be able to communicate with one another seamlessly. The concept of system integration is relatively simple: Data gets entered at one point and is then accessible at all others. Yet Tom
NEWS BRIEFS
Hall, product manager at software company BluRoot, says there are plenty of Canadian mortgage companies that view system integration and open data transfer as small, barely obligatory pieces of the back-end puzzle. That’s a risky attitude, Hall says, because a growing segment of the industry, propelled by tech-savvy young brokers, is waking up to the benefits of open, integrated systems. “You’ve got to be open, or you’re going to be someone who’s considered more of a relic,” he says.
Equitable Bank platform hits $3 billion milestone
In early July, EQ Bank, Equitable Bank’s digital banking platform, surpassed $3 billion in deposits. The platform has seen significant growth over the past three months as COVID-19 restrictions limited mobility and drove consumers to online banking options. “The speed at which we reached the $3 billion deposit milestone in comparison to other branchless banks is something I see as a testament to the power of doing things differently,” said Equitable Bank president and CEO Andrew Moor.
says. “In the world of mortgage brokering, you can’t be looking at one thing while the truth is in a different system or a different place.” For brokerages considering system integration, the choice often comes down to using an all-in-one platform that covers all the bases or picking and choosing a best-in-class product for each need and integrating them separately. While the former might sound like the most convenient option, Hall says many all-in-one packages tend to under-deliver – and swapping out disappointing components for more effective ones can be nearly impossible. Piecing a system together bit by bit, though more labour-intensive, provides increased levels of control and scalability, generally at a comparable cost. “That modularity provides a lot of value for brokers,” Hall says.
TransUnion and Newton offer free credit reports
Newton Connectivity Systems has teamed up with TransUnion to provide users of the Velocity mortgage platform with free access to credit reports until the end of 2020. Newton president and CEO Geoff Willis estimated that the offer will collectively save brokers around $2 million and will boost competition in the credit bureau space, creating a more robust service offering and innovative market. Willis and his team are also pushing lenders that still don’t use TransUnion data to accommodate the firm’s reporting.
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Q&A
Mackenzie Gartside
Shifting to digital communication
Mortgage consultant MACKENZIE GARTSIDE & ASSOCIATES – SELECT MORTGAGE
Years in the industry 14+ Fast fact Gartside worked in banking for four years before moving into the broker channel in 2006
How has your business been doing over the past few months? Business has been holding up surprisingly well. As soon as things started to look like they would get serious back in March, we were able to refocus a lot of our marketing energy on looking for refinance opportunities. We are also starting to see the purchase market pick back up, and I think we’ll see a pretty busy summer as those who deferred activity in the spring decide they’re now comfortable moving. What impact has the COVID-19 pandemic had on your operations? For us, the biggest impact of COVID-19 has been the quick change to remote work and virtual meetings. About half of our team have young children who have been out of school since mid-March, so we had to move fast and get those people set up with laptops and VPN access so they could begin working from home. We’ve suddenly had to jump into the world of remote work and videoconferencing, which we did not use much previously, and that has been a huge learning curve – not just the technology itself, but also adapting our workflows, communication styles and expectations to these new mediums. To make sure we are protecting the safety of our clients, we made the decision in mid-March to change
Nesto provides new option for lead generation
Montreal-based Nesto has hit upon a lead generation model that “does not really exist in the Canadian market today,” according to co-founder and CEO Malik Yacoubi, who explained that Nesto’s online mortgage application delivers brokers “leads that are not just leads – they’re basically full mortgage applications that [brokers] can access on our platform.” The company has so far partnered with more than 70 brokers, and Yacoubi said he expects demand for Nesto’s online process to remain high amid the pandemic.
all of our appointments to phone or video calls and requesting clients to submit all documentation digitally. That was also a big learning curve for some of our clients, and so we invested resources into building a full tutorial page on our website describing our recommended tools – and step-by-step directions – to help people learn how to generate PDFs and upload them to us. What does your brokerage bring to the table that puts you ahead of the competition? A sense of community. We operate in a relatively small, rural town – an area in which many of our team members go back at least a couple of generations. Often, our clients are Melissa’s neighbours, or a friend of Lisa’s brother, or a friend of a teammate from Jenn’s softball team, who also it turns out was in the same high school class as Kevin’s older brother. When a client steps through our door, they’ll be greeted by our office dogs, offered coffee, asked how their day is going, how their kids are doing in their hockey league, have they tried the newest restaurant up the street, etc., and it might be five minutes before they remember the documents in their hand that they came to drop off. Mortgages are often seen as big, boring and serious. We bring the opposite: a sense of ease, fun and friendliness, because at the end of the day, we’re just one neighbour helping another.
FICO exec touts power of artificial intelligence
Brokers shouldn’t discount the power of artificial intelligence to build a “360-degree view” of client needs, Kevin Deveau, managing director of FICO Canada, said in a recent interview with Canadian Underwriter. “By incorporating predictive analytics and machine learning, [brokers] could be much more reactive and more customer-service-oriented,” he said. “The broker could be more fine-tuned to when [a significant] event happens to the end customer: ‘I see you just bought a house. Do you have mortgage insurance?’”
Brokers must provide a robust search experience
Mortgage companies that fail to provide an informative search experience run the risk of losing customers, according to Shane Closser, head of industry and general manager for financial services at Yext, who points out that a robust search platform can help build trust with potential clients. “Consumers are using Google and other search engines to get to these sites,” he said. “We should continue that experience … so consumers aren’t having to go back to other places to find those answers.”
www.mortgagebrokernews.ca
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11/08/2020 3:42:21 AM
UPFRONT
OPINION
GOT AN OPINION THAT COUNTS? Email mortgagebrokernews@kmimedia.ca
A solid foundation We teach our kids all we can about life and how to live it – but we need to do more to teach them about money, savings and credit, writes Anne Brill I BELIEVE that we as parents are doing a disservice to our kids: We should be teaching them, at home and at school, about savings, credit and how important these concepts will be to their futures. It’s something I’ve done with my 13-year-old daughter, Tiana. I’ve found that getting her to think about money and savings can be as simple as asking her to split her birthday and Christmas cash into two categories: money that can be spent and money that can be saved. My hope is that as she gets to the age when she starts working a part-time job, she’ll have developed savings habits that allow her to see that the more you save, the more you’re able to buy on your own. That’s an exciting, empowering realization for a kid to make. Imagine if some of your clients had been given the same lesson when they were young and impressionable. When I was 19 years old, I started working for a bank as a teller. A colleague explained to me that, from every pay cheque she received, she was putting $25 towards her RRSP and $25 towards Canada savings bonds. She was older that me, and I didn’t feel comfortable saying no, so I followed suit. Those amounts grew as I got older and made more money, and when I bought my first home, I had saved 25% for a down payment. But getting to that point required not just my colleague’s initial lesson and support, but also the realization that buying the latest clothes or using my money to go out on the town with my friends wouldn’t provide long-term benefits. These are things a young
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person isn’t likely to learn on their own, unless it’s through trial and (generally costly) error. Kids also need to be taught about investments. Should they save in a GIC, where principal is guaranteed but the return is typically low? Or should they take a calculated risk and look into investment vehicles that may produce higher returns? Every person, young and old, has a different risk
I know I’m not the first broker to hear these stories. Let’s stop giving kids excuses to hide behind – “I was young and stupid”; “I didn’t know any better” – and instead teach them the importance of credit. At the end of the day, all we want is for our kids to be successful, good people, and teaching them about money and credit could prevent them from making mistakes they will regret. It’s never too early to get started. I had a conversation with my daughter about credit when she was 6 years old. About two weeks later, she, my husband and I were in the car when my husband said he needed $20 so he wouldn’t have to stop at the bank machine. Tiana immediately piped up. “Dad, I will lend you $20,” she said, to her dad’s surprise. She then told him, “But you have to give me $30 when you return it, and if I don’t get it back in three days, I want $1 extra per day until monies are returned.” Terry asked his daughter why the terms were so strict. “At the age of 6, I can’t work, so I need to make money somehow to buy a laptop,” Tiana replied. Lesson(s) learned.
“Clients often tell me they didn’t understand how credit worked: They thought it was free money, so they spent more on credit than they could afford to pay, making the mistake of thinking that more credit would help them meet their monthly bills” tolerance, something I believe to be reflective of a person’s overall financial knowledge. I have been a mortgage broker/agent for almost 19 years now. Sometimes when I get an application from someone in their early to mid-20s looking to buy a home and I pull a credit bureau, I ask them what happened with their credit five years ago. They often tell me they didn’t understand how credit worked: They thought it was free money, so they spent more on credit than they could afford to pay, making the mistake of thinking that more credit would help them meet their monthly bills.
As adults, we know that we need a balance between what we earn, what we spend, what we buy on credit and what we save. Many of us only learned how necessary that balance is because we wrecked our credit or spent our early adult years living a lifestyle we couldn’t afford. Let’s help our kids learn from our mistakes and avoid making the same ones themselves. Anne Brill is the award-winning principal broker and owner of Centum Metrocapp Wealth Solutions and a muscle car enthusiast.
www.mortgagebrokernews.ca
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11/08/2020 3:46:43 AM
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PEOPLE
INDUSTRY ICON
ACROSS THE FINISH LINE Linda Tosini has spent the past 16 years going the distance for her clients, an approach that has made her one of Multi-Prêts’ most valuable assets
WHEN LINDA TOSINI picks up the phone at 8:30 on a Friday morning, she’s still out of breath from her workout at the boxing gym she owns in Montreal. A hard-core marathon runner turned boxer, Tosini’s affinity for solo sports mirrors the unrelenting approach that has shaped her first 16 years as a mortgage broker at Multi-Prêts. A committed, determined woman who holds no one but herself accountable for her performance, Tosini is a force to be reckoned with, whether in the ring or across a desk. “It turned out exactly the way I wanted it to be,” Tosini says of the gym she purchased three years ago. But she could just as easily be talking about her career. Prior to entering the industry in 2004, Tosini was encouraged by her sister to give mortgage brokering a try. But as a recently divorced mother of three young boys, Tosini failed to see how the industry was a fit for her newly reshaped life. “I’m getting divorced, I’m selling a house, I’m buying a house, and I have a marathon coming up. Are you out of your mind?” she
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recalls asking her sister. At that point in her life, Tosini still hadn’t even procured a mortgage of her own. “When I graduated university [in 1987], mortgage brokers didn’t even exist,” she says. “I never would have known what a mortgage broker was.” She proved to be a quick study. After enrolling in online classes and working toward her
– the same ones that helped her complete 17 full marathons – and found she was sitting on an endless source of fuel. All she needed was a simple, winning strategy to pump it into.
Begin at the beginning Right from the start, Tosini knew service would be her business’s calling card. Having watched banks transition in the mid-’90s from service
“I didn’t want to be a transactional broker. I wanted to be a difference-making broker. That’s how I viewed myself ” licence, Tosini signed with Multi-Prêts in November 2004 and wrote her exam shortly after. In March 2005, her second month of brokering, she closed $1 million worth of deals. Raising three kids while hitting the ground running in a new career requires levels of confidence and commitment that are foreign to most people. But Tosini tapped into her inner reserves
points to places where financial products were sold, she knew that borrowers were likely to be undereducated about mortgages. “This is what I clued into when I started,” Tosini says. “I didn’t want to be a transactional broker. I wanted to be a difference-making broker. That’s how I viewed myself.” Tosini says she can often tell how much a
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PROFILE Name: Linda Tosini Title: Mortgage broker Company: Multi-PrĂŞts Based in: Montreal Years in the industry: 16
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11/08/2020 4:28:15 AM
PEOPLE
INDUSTRY ICON
prospective client knows about mortgages (and where they got their education) within the first few seconds of an introductory conversation. “When people call me, the first thing they say, invariably, is ‘What’s your best fiveyear fixed rate?’” she says. If that’s a client’s first question, Tosini says, it’s a likely indicator that the person lacks an awareness of anything beyond rates. Why would they ask about one of the big banks’ most common, most promoted and most profitable products first? Because most Canadians don’t know more than what the banks are constantly trying to sell them.
of the book.” Ultimately, Tosini uses education to empower her clients to make informed, independent decisions about their mortgages. By building their confidence, she frees them from feeling like the prey of financial institutions. “In the finance industry, you can either be the player or you can be the toy,” she says. “And I try to make my customers be the player.”
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Has completed 17 full and 25 half marathons
Why not? When faced with a fresh challenge – whether quitting a years-long smoking habit, running the Boston Marathon or sourcing financing
“In the finance industry, you can either be the player or you can be the toy. And I try to make my customers be the player” “The average Canadian does not complete their five-year rate, so it’s very lucrative for the bank,” Tosini explains. “They recover their principal, they receive a penalty, and most likely [the client is] going to stay with them because it’s just easier. Clients don’t know there’s other stuff you can talk about.” That’s why Tosini approaches her clients as if they know next to nothing about the mortgage process – because more often than not, that’s exactly the case. That gap in knowledge can be compounded by borrowers’ unwillingness to ask questions and put their ignorance on display, so Tosini takes the pressure off by starting at the beginning – the difference between variable and fixed rates – and building their knowledge from the ground up, often using diagrams to get concepts across to her clients. “I don’t even talk about rates until the end of the process,” she says. “That’s the last chapter
LINDA TOSINI AT A GLANCE
for someone on parole – Tosini’s first response is almost always the same: Why not? “I try to teach my customers the same thing,” she says. “It’s not ‘no’; it’s ‘not yet.’” But ‘not yet’ is a lot trickier than ‘no’; it implies a goal that must be worked toward over time. Tosini puts in that work, squeezing every possible drop of information from her clients to determine the right path to put them on. And if her clients are willing to commit to her, she stands by them. One client worked with Tosini for nine years before finally being able to purchase. That level of dedication echoes the life lesson Tosini passed on to her three boys prior to running her first marathon. “This is the same thing as life,” she told them about her impending run. “I’m going to start, I’m going to hurt, I’m going to want to quit, but I’m going to cross that finish line, no matter how hard it is.”
Owns a boxing club
Mother of three boys
Her office wall features a portrait of Freddie Mercury, a photo of Tosini with Bill Clinton and an LGBTQ pride flag
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Equitable Bank Switch Mortgage Solution Is your client ready to make the switch to a mortgage that better meets their financial goals?
By removing some of the hurdles that exist when switching a mortgage to another lender, we’ve created a cost-effective switch option that makes it easy for your clients to pursue the mortgage option that works for them. Here’s how it works: • We permit up to $3,000 to be capped onto the loan to cover transfer-related fees1 • For mortgages that are registered as conventional charges, we cover the registration fee
• For mortgages registered as collateral charges, the collateral registration fee can be capped onto the loan2 • Loans with active transactional insurance receive high-ratio pricing irrespective of LTV • We accept switches from all three primary mortgage insurers3 • Some switches may qualify under “grandfathered rulings” permitting qualification on the contract rate, 30 year amortizations, purchase prices over $1MM, etc.
CONTACT YOUR RBM TODAY
2
|
EQUITABLEBANK.CA
1 This includes prepayment charges, discharge fees, collateral registration fees, etc. No equity takeouts permitted. Provided total charges/fees capped on the loan do not exceed $3000. All switches are re-registered as standard charges. | 3 All deals must be insured or insurable.
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11/08/2020 3:48:47 AM
SPECIAL REPORT
COMMERCIAL LENDING GUIDE
COMMERCIAL
LENDING
GUIDE 2020 The COVID-19 pandemic has hammered the commercial lending sector – but there are signs of recovery on the horizon. CMP spoke with four experts in the space to find out what commercial brokers need to know to navigate a still evolving landscape
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THE COVID-19 pandemic has left no sector of the economy untouched, commercial lending included. Canada entered 2020 riding high on an unprecedented bull market and economic conditions that not only supported the nation’s commercial real estate market, but actively pushed it forward. Given that momentum, the 2020 predictions for Canada’s commercial lending space were optimistic. Even after an incredibly challenging start to the year, there’s still a chance the sector could end 2020 on a high note. A rebound in jobs in May signalled that a recovery might already be underway and led the Conference Board of Canada to forecast that the unemployment rate would return to 6.6% by 2021. Not only that, but according to CBRE’s quarterly outlook for Q2 2020, most Canadian markets entered the economic slowdown at or near record office conditions,
which means downtown markets would remain competitive even if there were no leasing activity for another year. Additionally, CBRE noted that construction development continues to push forward with 18.1 million square feet of active projects – 3.8% of the national inventory, 63.2% of which had been pre-leased by the end of the second quarter. On the industrial side, wholesale trade and manufacturing sales fell at a record rate in April but are expected to improve as the economy continues to reopen. Rental rates have already increased in six of the 10 major markets tracked by CBRE, boosting the national average net asking rent by 2.6%, to $9.17 per square foot. In addition, 20.9 million square feet of industrial space is currently under construction, and prospects for the sector look good, given the recent uptick in e-commerce.
Overall, Canada’s commercial investment volume dropped between 2018 and 2019, falling from $49.3 billion to $45.12 billion. Even with the sizeable amount of construction underway and signs of economic improvement, commercial investment activity is likely to fall short of the $50.4 billion CBRE initially projected for 2020. However, as of June, the firm was still optimistic that investment could rebound strongly by the end of 2020. All of this creates opportunities for brokers in the commercial space. To help brokers make sense of this constantly evolving sector, CMP asked four commercial market experts for their advice on some of the biggest challenges commercial mortgage brokers are facing today. Their insights and reflections on the past 12 months offer a valuable blueprint for commercial brokers – both new and experienced – to follow.
THE CANADIAN COMMERCIAL REAL ESTATE OUTLOOK
INVESTMENT VOLUME 2017: $43.1 billion
2018: $49.3 billion
VACANCY/AVAILABILITY RATE 2019
14%
14%
2020: Original forecast
12%
12%
12%
10%
10%
10%
8%
8%
8%
6%
6%
6%
4%
4%
4%
2% 0
2019: $45.1 billion
9.8%
12.2%
3%
Office – downtown
Office – suburban
Industrial
2% 0
2020: Q2
14%
10.2%
11.9%
2.8%
Office – downtown
Office – suburban
Industrial
2% 0
10.0%
11.9%
3.5%
Office – downtown
Office – suburban
Industrial
SQUARE FEET OF NEW SUPPLY 2019
30m
2020 (original forecast): $50.4 billion
2020 (Q1): $9.6 billion
30m
2020: Original forecast
30m
25m
25m
25m
20m
20m
20m
15m
15m
15m
10m 5m 0
10m
1.49 million
22.63 million
Office
Industrial
6.61 million
5m 0
Office
2020: YTD
10m
26.25 million Industrial
5m 0
1.58 million
9.52 million
Office
Industrial
Sources: Canada Office and Industrial Quarter Stats Q2 2020; Canada Investment MarketView Q1 2020, CBRE
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11/08/2020 3:51:51 AM
SPECIAL REPORT
COMMERCIAL LENDING GUIDE
thoroughly and for which you have a proven track record of success. Find your niche and stick with it. Master what you do, and you will be more successful at it. I see too many people trying to do anything and everything that comes across their plate, hoping to make it work. Hope is not a good business model. Working on transactions that you do not master leads to the borrower and lender getting frustrated and, more often than not, the transaction falling apart.
MICHEL DURAND President and principal broker Mortgage Alliance Commercial
What do brokers need to do to succeed in the commercial market? Michel Durand: There are no secrets here, and it’s no different than what it takes to succeed in any market or industry. First, surround yourself with the best professionals to help you accomplish your objective – I would recommend using the most reputable commercial mortgage brokers to facilitate financing your transactions for your client or, if you’re helping with purchasing a property, seek out and find the most reputable and active commercial Realtor in that particular market. I would also add that to be successful, you need to stick to what you know how to do well. As a broker, you will get better returns by investing your time in transactions that you understand
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What are some of the major trends affecting the commercial market today? MD: The pandemic has had a significant effect on securing commercial mortgages. The lenders reacted, as they usually do to abrupt changes in the economy, by immediately taking a wait-and-see position with respect to any new loan requests they received at the beginning of this situation. Many commercial loan programs were stopped, as this was the first time in history that the lenders had to deal with so many requests for mortgage deferrals. Many lenders had no choice but to take a significant amount of personnel out of their usual underwriting and loan processing positions and have them spend all their time addressing mortgage deferrals. Most lenders have come back to something we can describe as close to normal operations. That being said, because much of the staff is working from home, there are additional delays in processing commercial loans for all the lenders right now. The lenders are not the only ones with additional delays that affect our industry; CMHC has now advised the market that it will be between eight to 12 weeks, once the file is submitted, before they can start working on that transaction. With uncertainty continuing in the market, lenders are being appropriately more conservative in their underwriting, which is affecting loan-to-values being offered to borrowers. The lenders are being
rightfully less aggressive on loan-to-values in the current market. That said, the current situation is significantly better than the uncertainty that reigned in the market three months ago. What’s the best way for a broker to transition from residential to commercial mortgages? MD: I cannot understate how difficult it is to transition from residential to commercial mortgages as a broker. There are absolutely no synergies that can be shared or that can be used in commercial mortgage brokering that come from residential mortgage brokering. I believe the biggest mistake most residential mortgage brokers make is trying to apply the concepts that have served them well on the residential side to getting a commercial transaction done. To become a successful commercial mortgage broker, you essentially have to throw out everything you’ve learned and every reflex you’ve developed on the residential side. Everything is different: the client approach, how to target your market, how to underwrite the loan, how to submit to a lender, how you get paid for your transaction, how you need to negotiate with the lender, as well as all of the professionals involved in getting the transaction closed. I have rarely seen a residential agent successfully transition to commercial mortgage brokering. That being said, the best way to transition from residential to commercial is to find yourself a mentor who has dedicated his career to commercial mortgage brokering and shadow that person for the next three to five years. Learn how to underwrite a commercial mortgage transaction. Unless you can defend your request to the lender and prove that your request meets all their policies, the lender will see your intervention as being a fly in the ointment. Last but not least, recognize that unless you are ready to dedicate 100% of your
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time to commercial mortgages, you will not achieve much success or respect from the lenders you need to work with to meet your clients’ needs. What qualities does a top commercial broker need to have? MD: Without a shadow of a doubt, if you do not master your craft, you will not be successful at what you do. You need to develop relationships with lenders so the lender sees you as a facilitator who will allow the transaction to be processed with fewer challenges, instead of seeing you as the broker who just keeps asking when the term sheet will be ready. If you are unable
to have the lender recognize that you are an expert and an ally, and that you will help expedite the process, you will not get much collaboration from that lender. Additionally, you need to know the lenders’ underwriting policies as well as – if not better than – the underwriter or account manager you’re dealing with. It’s fair to say that most lenders on the commercial side do not like dealing with mortgage brokers. That’s because most brokers submitting a commercial transaction are not properly prepared to ensure the process is easier than if the broker were not involved. Most brokers underestimate the
amount of time, work and effort required to successfully conclude a commercial mortgage transaction. The broker needs to be systemized, needs to be organized and needs to follow up on a regular basis on every aspect of the transaction with both the borrower and the lender. Lastly, the commercial broker needs to have enough experience and confidence that will allow him or her to properly address and mitigate any challenges the lender may have, as well as to properly correct any misconceptions the borrower may have on how quick or easy or at what rate his loan should be. In sum: Be less of a broker and more of a facilitator.
Email lender notes, application, and credit bureaus to:
deals@vwrcapital.com D IMITRI K OSTUROS
Chief Operating Officer dimitri@vwrcapital.com
P AULA H UTTON
BDM - Prairies paula@vwrcapital.com
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11/08/2020 3:52:09 AM
SPECIAL REPORT
COMMERCIAL LENDING GUIDE
“A commercial presence allows a broker to diversify and generate multiple streams of income” operating at full capacity. With employees working from home and adapting to online tools for virtual meetings, demand for office space could suffer in the long term. Rent collection is a significant concern for property owners, with layoffs and businesses closing their doors. The result is that many property owners and tenants have requested mortgage payment and rent relief. One of the biggest challenges facing commercial mortgage lenders today is getting comfortable with property valuations with all the uncertainty around cash flow. On a more positive note, multiresidential and industrial assets continue to be in high demand and are benefiting from historically low vacancy rates.
JAY BLACHFORD Director, commercial originations Equitable Bank
What’s the best way for a broker to transition from residential to commercial mortgages? Jay Blachford: First, start small. Specializing in one or two asset classes, such as multi-residential and mixed-use properties, will allow the broker to stay focused and become comfortable with lending parameters by asset class. Second, a broker should leverage their existing database of residential clients to identify those who own a business and commercial property or investors with a real estate portfolio.
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Lastly, build partnerships with commercial lenders across the industry. Our commercial team at Equitable Bank is here to help, and a big part of what we do involves educating and encouraging residential brokers as they expand their business into the commercial market. Every deal represents a learning opportunity, and we can clear up the common misconception that commercial mortgages are too complex. What are some of the major trends affecting the commercial market today? JB: The commercial real estate market has been negatively impacted by COVID19, with the effects varying depending on the type of real estate. Most notably, mixed-use properties with retail units have seen restaurants and shops closed or not
What qualities does a top commercial broker need to have? JB: A top commercial mortgage broker needs to be customer-focused and an effective communicator. These skills are fundamental for brokers when it comes to developing strong relationships with clients and commercial lenders. It’s also essential that the broker have a positive outlook and be highly motivated to succeed. Commercial mortgage loans have a longer sales cycle than residential mortgages, but the earning potential on each deal can be significantly higher. A commercial presence allows a broker to diversify and generate multiple streams of income. Also, a successful commercial broker must be an expert in their market and stay current on commercial trends.
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What are some of the major trends affecting the commercial market today? Skip Walters: Given our government’s position on immigration, residential is and will be strong for years to come. People tend to migrate to the big cities. Therefore, townhouses, stacks, singles and condos are and will continue to be in high demand. We all need a roof over our heads. Since COVID-19, the jury is still out on whether or to what extent office buildings will be repopulated. Will businesses allow their employers to work from home postCOVID-19? Stay tuned.
STEVEN (SKIP) WALTERS Senior vice-president First Source Mortgage Corporation
What strategies should brokers employ to find success in the commercial market? SW: Networking. It’s important to introduce yourself to big and small developers and builders and purchasers of income-producing properties. Meet with the top-tier commercial brokers. Meet with the city planners, appraisers, lenders, etc. Get your name known and your face recognized. It’s truly amazing the information you will collect, the knowledge you will acquire and the insights you will discover.
“A commercial broker deals with borrowers who typically know what they’re talking about. A broker needs to acquire the skills to ask the right questions” What qualities does a top commercial broker need to have? SW: I wish I could answer “crystal ball,” but in lieu of that: professionalism. A commercial broker deals with borrowers who typically know what they’re talking about. A broker needs to acquire the skills to ask the right questions, or he or she may be wasting the borrower’s time. Prudent questions may be loan-to-value ratios, environmental assessments, pro forma and the budget of the project. Knowledge of how to read a financial statement is helpful, as well as knowledge of the planning and development process.
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11/08/2020 3:52:34 AM
SPECIAL REPORT
COMMERCIAL LENDING GUIDE
“Expect stricter underwriting, less risk and higher pricing in order to contemplate loans that were being previously funded in 2019” the pandemic far from over, hospitality and senior care facilities will also face aboveaverage refinancing challenges in the face of COVID-19.
BLAKE CASSIDY Managing partner Romspen Investment Corporation
What are some of the major trends affecting the commercial market today? Blake Cassidy: The commercial lending market is experiencing a tightening credit market as a direct result of the pandemic. Expect stricter underwriting, less risk and, in some cases, higher pricing in order to contemplate loans that were being previously funded in 2019. Institutional lenders will be unwilling to lend in certain sectors and will focus their lending to existing clients. This leaves a large gap for the alternative lenders to fill. However, with institutions removing themselves from many lending opportunities, there is a domino effect to
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many other lenders in the credit spectrum, and a lack of liquidity permeates through the system. What strategies should brokers employ to find success in the commercial market? BC: Keep your eyes open for borrowers in need who may not have previously sought the assistance of a broker. Understanding who is lending on what, identifying what these lenders are willing to do and who will get things over the finish line is very important in a restrained lending market. Are there any unique areas of the commercial market brokers should be particularly aware of right now? BC: All but the top-tier assets and developers will have some difficulty in obtaining new commercial mortgage loans these days. Particularly hard-hit will be land and speculative construction loans, but with
What’s the best way for a broker to transition from residential to commercial mortgages? BC: Transitioning from residential to commercial is possible if you do your homework, understand the true circumstances affecting your clients, provide a reasonable package and accurate information to your institutional and/or alternative lender connections, and above all, be forthright, act with integrity and don’t be afraid to seek advice from commercial lenders and other commercial brokers. Where do you see the commercial market heading in the future? BC: We see the industrial segment maintaining very strong fundamentals across Canada and the US. We see continuing strong demand for multi-family, and we are cautiously watching what may be a fundamental disturbance for retail, office and hospitality as the world adapts to a new environment and an acceleration of change in these historically predictable commercial sectors. Some development lands will go through a value compression as projects get mothballed until we return to a more viable and/or liquid time.
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We have something other lenders often don’t. Money. With over $3 billion under administration, Romspen is a boutique non-bank mortgage lender specializing in commercial real estate in Canada and the US. For your financing of $10 million to $150 million we bring speed, agility, and a commitment to complex execution you will not find in larger institutions. Blake Cassidy or Pierre Leonard | 800 494 0389 | www.romspen.com
License # 10172
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PEOPLE
BROKER INSIGHT
A next-generation mortgage broker Breaking into the mortgage industry is no easy task, but Chris Bargis of Mortgage Edge is climbing the social media ladder to the top
BECOMING A mortgage broker wasn’t Chris Bargis’ initial plan, but he found himself drawn to the balance between people and finance. His introduction to the industry came via his father, John, the owner of Mortgage Edge and founder of the Coalition of Independent Mortgage Brokers of Canada (CIMBC). His father’s guidance was critical, Bargis says, as was his first position as an underwriter, which helped him quickly grow his knowledge and expertise through exposure to different types of transactions. “Mentorship is important in any profession,” Bargis says. “I am fortunate to have my father as my mentor, who continues to guide me and give me the tools to carve out a path for myself in the industry. Having someone to guide you through rough waters and be a light through difficult, challenging situations is priceless.” Building on this foundation, Bargis brought in his own techniques and strategies to attract a new generation of borrowers. While he admits he’s still earning his stripes in the industry, social media has played an important role in his success, helping him attract new clients and stay connected to his network. Bargis also uses social media to educate clients and show them that mortgages are about more than just rates. “A lot of veterans in our industry don’t take advantage of online advertising, and
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when they do, it’s through rates and promotion,” he says. “We need to showcase agents and teach homebuyers how mortgage professionals can offer guidance and support from start to finish of a transaction. We need to promote our services and expertise and show the true value of what we can offer. Mortgages aren’t easy, but our job as brokers is to make it feel that way.” Instagram is one of Bargis’ favourite platforms to engage with new and returning clients. He’s known for putting out focused tidbits of knowledge in one-minute videos, sometimes highlighting different mortgage products or offering an inside look at a particular part of the process. Bargis says it’s all about increasing transparency, building trust and steering the
discussion away from rate. Highlighting the ins and outs of a mortgage, explaining the nuances of the process, and breaking down misconceptions are all important to him. “There are lots of things to consider when getting a mortgage,” he says. “Some lenders offer the best rates but don’t always have the best technology, so the post-close experience may not be as good. There is often a trade-off, and the more educated a customer is, the better for everyone.” Bargis does most of his marketing through Instagram as well. He made a decision early on to combine his personal and business pages so he could leverage his base of existing followers, made up of family, friends and colleagues. He’s since found a balance between posting professional and personal
BARGIS ON CHOOSING A BROKERAGE Joining Mortgage Edge was a natural choice for Chris Bargis, as the brokerage is run by his father, John. But for other new brokers without a family connection, Bargis stresses the importance of finding a brokerage that checks three important boxes. Size: Choosing a brokerage that has volume behind it in order to access a wide suite of products is a huge advantage because every deal is not cookie-cutter. Support: Mortgage Edge has a central underwriting desk for agents with tricky deals or new agents who need extra guidance navigating a file. Culture: Being a part of an ecosystem creates a sense of belonging and dependability.
www.mortgagebrokernews.ca
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FAST FACTS: CHRIS BARGIS
BROKERAGE Mortgage Edge
NETWORK CIMBC
YEARS IN THE INDUSTRY 3
LOCATION Richmond Hill, Ontario
“We need to promote our services and expertise and show the true value of what we can offer. Mortgages aren’t easy, but our job as brokers is to make it feel that way” content. While he acknowledges that many brokers prefer having a purely professional page, he says his approach allows his followers to get to know him not just as a mortgage broker, but also as a friend. Bargis’ rise to social media stardom didn’t come easy. It took him a while to get the hang of lighting and angles, and the presentation of information wasn’t perfect from the start. However, he encourages anyone who’s looking to engage their audience online to
stop obsessing over the perfect take. “Repetition is key, and you learn as you go: how to speak to your audience, develop your style, what works and what doesn’t,” he says. The Canadian mortgage industry has been known to be a bit of a stick in the mud when it comes to innovation, but the COVID-19 pandemic is lighting a fire under many brokers to start incorporating technology in their businesses or be left behind. Archaic practices are quickly changing, from
SPECIALTIES Residential, commercial and construction financing
ACCOLADES Named one of CMP ’s Rising Stars in 2020 CRM systems to the way transactions are submitted and received by lenders. “Our industry is begging for more efficient ways to do business,” Bargis says. “Especially throughout this crisis, people aren’t venturing out of their homes, and everything is online. It’s bred a new way of doing business, and it will change the way we transact with clients and connect with them. Meeting your clients won’t be something that totally disappears, but in time, it may be phased out.”
www.mortgagebrokernews.ca
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FEATURES
DIVERSITY AND INCLUSION define what your company stands for, which helps attract top talent. For example, millennials – who will soon make up the majority of the global workforce – consider diversity an important value, but it must be authentic. To go beyond lip service and authentically instill diversity into the workplace, you must be intentional. Keep in mind that diversity isn’t just about race and gender — it’s also about seeking employees with different backgrounds, ideas and ways of thinking. Here are a few things organizations can do to encourage diversity. Companies must take a long-term strategic approach to embracing diversity. The best way to achieve this is to put someone in charge of these efforts and hold them accountable. Evaluate progress at least once a year.
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Are your diversity efforts just lip service? Molly Moseley offers five ways to transform diversity and inclusion initiatives from talk into action WHILE NO ONE will argue against the importance of diversity in the workplace, it too often receives lip service from executives who do little to make it a permanent thread in the company’s fabric. Diversity is often considered nice to have but not essential. But what if I told you that diversity is more than just a nicety? Research shows that having a diverse workforce influences profits dramatically. According to McKinsey, companies in the top quartile for gender or racial and ethnic diversity are 35% more likely to have financial returns above their respective national industry medians, and companies in the top quartile for gender
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diversity are 15% more likely to have financial returns above the median. This really shouldn’t shock anyone. A diverse workforce brings together people from many different backgrounds, allowing them to collaborate and generate ideas more effectively. For international companies, diversity provides an indisputable business edge when working with different cultures across the globe. Even for businesses that only operate domestically, diversity fuels innovation. Diversity is also incredibly important from a recruiting standpoint. Hiring a diverse workforce not only means access to bigger talent pools, but also the opportunity to
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Beware of forcing diversity because it will backfire. Diversity isn’t a quota to be met – it’s something that must fit into every aspect of day-to-day operations. Leaders must embrace diversity for it to become a permanent part of the company’s makeup. If it starts at the top, it will trickle down. Consider executive training programs if necessary.
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Use diverse sources to recruit diverse talent. If one source is providing you with cookie-cutter candidates, experiment elsewhere to find untapped markets.
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Demonstrate your commitment to diversity by joining organizations that aim to increase representation of minorities in your industry. By actively participating in groups like these, you’ll gain knowledge while building your company’s reputation.
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Molly Moseley is a marketing strategist and brand evangelist. She serves as part of the cross-functional leadership team at LinkUp, developing, managing and positioning products that capture new market share and expand existing relationships. For more information, visit linkup.com.
www.mortgagebrokernews.ca
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PEOPLE
OTHER LIFE
TELL US ABOUT YOUR OTHER LIFE Email mortgagebrokernews@kmimedia.ca
In addition to her party appeara nces as Elsa, Wong has also been Lady Gaga, wearing a dress made of Hello Kitty toys at the 2017 DLC National Sales Conference
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Number of costumes Wong owns
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Total number of parties she’s appeared at
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Appearances she’s made so far in 2020
PARTY TIME Manulife executive Kyra Wong brings a dose of magic and wonder wherever she goes KYRA WONG, district VP at Manulife and founder of The Magical Unicorn Project, has a long history of showing up in costume when giving presentations to professionals in the mortgage industry. But it wasn’t until a few years ago that she decided to turn her love of dressing up into a way to bring magic and wonder into the lives of children. The idea was sparked at a trade show in BC, when, dressed as Elsa from the Disney
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classic Frozen, Wong was swamped by a throng of adoring little girls. Since then, she has been regularly appearing at parties dressed as the famous princess. “It just makes everybody so happy,” she says. “Kids are so in awe of princesses and unicorns. They believe in these things.” Despite the thrills she brings to the children at the parties, Wong refuses to charge for her services. That’s not what these appearances are about.
“I think the purpose of life is to give whatever gifts you have,” she says. “I think one of my gifts is the ability to spread fun and magic and joy in people’s lives, and that brings me a lot of joy.” Even when the party’s over, Wong tries to keep the magic alive. “I’ve always done this,” she says. “Princess Elsa is just an extension of what I already do in the industry. It’s bringing that magic to the world outside.”
www.mortgagebrokernews.ca
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Everybody has a story
And a mortgage application doesn’t tell it all Let’s partner and ask the right questions to truly understand your client’s story. Together, we can develop the right financial solution. To see the whole picture, visit hometrust.ca/realstories
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