Canadian Mortgage Professional (CMP) issue 4.11

www.mortgagebrokernews.ca

issue 4.11

superbrokers

Canadian Mortgage Award nominations open.

See page 59 for details

ANALYSIs Where are Canada’s green mortgages?

TRAILER FEES When to Show the money, now or later?

ProfileD Julie Stamp: Down but not out in Motor City PUBLICATIONS MAIL AGREEMENT #41261516

50 Money now or later?

There are still only two Canadian lenders offering the trailer fee option, but that doesn’t mean it’s not being talked about. CMP checks in with brokers to see what they like and dislike about this form of payment

4.

11 issue

cover story

40 Superbrokers CMP recently polled 14 national brokerages across Canada to uncover what they offer their brokers – everything from compensation to training to ancillary services. Here are the results

Romspen Investment Corporation

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contents

NEWS 10 Invis and MI announce one president; Quebec announces new regulation; CHIP to go charter; National Bank increases portfolio; grow-ops grow up; and more…

NEWS ANALYSIS 34 Wanted: green mortgages: Concern for the environment has led to an increasing number of environmentally friendly product choices, including homes. But green mortgage options remain scarce and the ones that are in place go unnoticed by most consumers. CMP explores why

54

38 Flaherty Extends $125-Billion Program: A Broker & Lender Weigh In: At the end of September, Finance Minister Jim Flaherty announced that the government’s $125 billion mortgage fund program to buy mortgages from lenders was extended.

Melissa Kim finds out what this means for the mortgage industry

Community player After just three years in the mortgage industry, Erin Letson finds that Julie Stamp has made a name for herself in the auto-industry town of Oshawa by forging community ties – and helping people through tough times

PROFILES 60 Q n A: Making it work: Equitable Trust remains a key player in Canada’s alternative lending market, providing mortgage brokers in Ontario, Manitoba and Alberta with financing options for their alt-A clients. CMP talks to Harry Singh, the company’s team leader (sales) about what brokers need to know about partnering with a niche lender – and how they can increase their chances of closing a deal

regulars

62 Insight: A revolution in real time: Home n Work mortgage consultants and Smart Equity have come out with a program that they say will “revolutionize” 30 the way brokers interact with their clients, saving Canadians hundreds of thousands of dollars in 63 the process ST_CMP_ThirdPg_08_09final 8/26/09 12:28 PM Page 1

and service [Security in the right combination ]

This time last year

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Editor’s Letter

That time of year There must be a reason why elections always seem to happen in November. Not only have the Canadian Mortgage Awards nominations opened, but CAAMP’s new board of directors has been announced. The U.S. presidential election is also always in November, and it’s a safe bet to say that if Michael Ignatieff had his way, Canada would have one this month too (and every month thereafter until he’s prime minister). Even Afghanistan is getting in on the November election fervour.

The most common sense reason would be that November is close to the end of the year, so I guess it’s prudent to have everything sorted out before January in order to start the New Year on a clean slate. Or maybe it’s because of all the months in the year, November doesn’t really have anything else going for it?

Halloween is the previous month, Christmas the next, plus, it doesn’t exactly bring in any new season either, but rather acts as the miserable tail end to fall.

Maybe elections are just a way of giving November something to make it less dreary, killing time before the exciting things that December has in store for us (i.e. Christmas, time off work for Christmas and Christmas vacations).

Being this close to the end of the year, CMP also thinks it’s a good time to poll Canada’s superbrokers to see exactly what they have to offer. This year we were able to include valuable information from more brokerages than in the past surveys, and we’re glad to present that information for you on page 40.

Also in this issue we were lucky to receive an insider’s tour of Oshawa, Ont. – an area that has been seriously affected by the economy but still continues to move forward. In Erin Letson’s profile with Oshawa broker Julie Stamp, (Community Player, on page 54), she tells CMP just how she’s managed to grow her business during the turbulent times.

As for the Canadian Mortgage Awards nominations, all the info you need to prop up the people in the industry that you think deserve the recognition is on page 59, as well on mortgagebrokernews.ca. While we always depend on you, our readers, to make the night a success, this year it will be even more important.

Not only will you be responsible for making the nominations, but this year you will even be picking some of the winners.

None of this can happen unless you nominate though, so what are you waiting for? ‘Tis the season for elections, after all.

Regards, Jesse Kinos-Goodin Associate Editor Jesse.kinosgoodin@kmimedia.ca

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4.

11 issue

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Quotables

“Most of my business was A business before, but with lots of people in danger of losing their homes, it’s been about finding new solutions like re-financing or bringing on a co-signer, or consolidating debt” - Julie Stamp on what it’s like to be a mortgage broker in Canada’s Motor City, FinTies_CMP page 54 7/9/07 3:52 PM Page 1

“We would love to see another lender jump onboard with trailer fees.... I think the issue you run into in this industry is that there is so much volume being done with the big banks and they have made it clear that they own the customer after they pay that referral fee. So I can’t see any of the big banks going with this model as a result – they’ve already got high retention rates without it” - Andrew Kuyper, director of marketing and operations, Merix, on page 50

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ASSOCIATE EDITOR

Jesse Kinos-Goodin

STAFF WRITER

Erin Letson

SALES MANAGER

Scott Clarke

OFFICE MANAGER

Marni Parker

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INTERNS

Kaleigh Ambrose Melissa Kim

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Choices.

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Macquarie Financial Ltd. (MFL) is not an authorized deposit taking institution for the purposes of the Banking Act (Cwth) 1959. MFL’s obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 (MBL). MBL does not guarantee or otherwise provide assurance in respect of the obligations of MFL, unless noted otherwise. MFL is not regulated as a bank or other financial institution or as a holding company thereof.

Reader’s write Web comments

Your “must-have tool” I have been working in the Canadian mortgage brokerage industry for over 10 years and I would like to express my appreciation for the great articles in CMP magazine. I find this monthly magazine to be very informative, educational, and very easy to read. I would strongly recommend that if anyone wants to be considered an industry professional, CMP magazine is a must-have tool to give you a competitive edge you need to succeed.

Thanks very much for the great articles every month,

have you ever been affected by mortgage fraud?

Every month CMP will have a new broker poll on mortgagebrokernews.ca. Here are the results of the latest one.

Bobby Gill Mortgage Broker

Thanks a lot Bobby, It’s always nice to get letters from our readers, especially when it’s about what we’re doing right. In case you didn’t know, mortgagebrokernews.ca is now being updated on a daily basis so you don’t have to wait a month for your next fix.

- CMP To B, or not to B The so-called B lenders do not lend in smaller towns and cities, nor do they lend in rural areas. We have a serious void in the market and I’m hoping we’ll get one or two lenders to step up and take the smaller markets seriously - otherwise they’re just handing the business to the banks that do much more B lending at the branch level than most people realize.

- Marjorie

56%

Never. Not inadvertently or blatantly

22%

Yes, my trial is coming up

17%

Yes, it caught me completely off-guard

Total Votes: 86 If you have something to say and would like to potentially see it in the pages of CMP, you can either comment on mortgagebrokernews.ca or send a letter to Jesse at kinosgoodin@kmimedia.ca. Letters and comments may be edited for length and clarity.

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News

community

Above The second annual ladies charity golf tournament for the Ontario mortgage industry drew 130 participants to Meadowbrook Golf & Country Club in Gormley, Ont. on Sept. 25 for a day of teeing off, putting, networking and celebrating.

To read more about the event, turn to page 22. Left to right: Kendra Lowry (Manulife), Jacqueline Feather (Manulife), Brigitte Beauchesne (FNF Canada) Bottom Left Rose Simard-Bachand of Dominion Lending Centres Plancorp educated attendees of the Calgary Home and Interior Design Show – held in September at BMO Centre in Stampede Park – about TDMP’s tax-deductible mortgage strategies. .

Bottom Right On Oct. 1 and 2, 85 mortgage planners from Mortgage Architects attended a two-day conference in Vancouver called Blueprint for Success.

Lender product knowledge was the primary objective, along with internal company updates, a preview of the company’s proprietary virtual office and data management technology and an industry forecast by Mortgage Architects chairman Bob Ord.

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News Industry

Dahlen to “create one voice” as new president and CEO of Invis and MI Gord Dahlen is the new president and CEO of Invis and Mortgage Intelligence after serving as the executive vice-president for both brokerages, which together represent more than 1,600 brokers and agents.

“The board of directors decided collectively to go in a more typical hierarchy like most companies are run,” said Dahlen, who is travelling across the country to meet with members from both companies.

“The executive team was fine in the interim, but it was never going to be a long-term solution.”

A 25-year veteran of the mortgage industry, Dahlen joined Invis in 2000 and helped lead other member brokers to buy back the company from HSBC in spring 2008. (Invis acquired Mortgage Intelligence from GMAC last October.) In his new role, Dahlen said he will focus on ensuring both brokerages give support to members across Canada so they can better serve their clients and emphasized they are more than aggregators, but full-service brokerage companies and brands.

“My focus will be to bring us together and create one voice within the industry,” he said, adding the brands will remain separate in the marketplace, with Invis focusing on more access to management and MI focusing on independent consultants and a more handsoff approach.

Dahlen also added that the companies are ready to deal with challenges that lie ahead.

“We believe we’re well-positioned to deal with the lenders’ needs in this new era of tighter credit and looking for more efficiency in the closing ratios,” he told CMP. “Even in my first week on the job, I’ve been talking to lenders and what I’m hearing is that they’re interested in establishing a closer relationship.”

To celebrate the two companies – both which mark their 10-year anniversaries in 2010 – Invis and MI will be holding an event during the CAAMP conference in Toronto in November. CMP

Gord Dahlen

CHIP becomes chartered bank

Steven Ranson

The Canadian Home Income Plan (CHIP), Canada’s largest provider of reverse mortgages, began operating as a federally regulated chartered bank on Oct. 13 under the name HomEquity Bank.

“The continuance as a bank is part of a strategic initiative that allows access to additional cost-effective and reliable sources of funding, which will directly enhance our ability to offer competitively positioned products and services to meet client needs and grow our business,” said Steven Ranson, the company’s president and CEO. Ranson added that the diversified source of funding that comes with being a bank –

including offering products like GICs – will help lower the cost of borrowing for consumers. In anticipation of CHIP becoming a bank, rates were recently reduced to as low as 4.95 per cent for a reverse mortgage.

HomEquity Bank will continue to work with mortgage brokers, banks and financial planning organizations to offer reverse mortgages to Canadians who are 60 and over. As a federally regulated institution, the company said reverse mortgages will be raised to a “consistent national standard” that will increase awareness and understanding of the product. CMP

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News

mortgages in the press

Commercial

Although York University professor Moshe Milevsky still believes variable-rate mortgages save customers money in the long run - a point his well-known 2001 study showed - he said current market conditions mean there is more risk involved in these types of products.

“At some point, people have to ask themselves if they can afford the fact that eventually these things are going to go up, whether it’s in one year, two years or five years,” Milevsky told the Financial Post. The paper said the professor was leaning “somewhat in favour” of a five-year, closed fixed-rate mortgage.

Post columnist Garry Marr said the recent risk in variable-rate mortgages is tied to the up-and-down discounts and premiums being offered by lenders on these types of products. In addition, he said most of the variable mortgages being sold by banks are closed and customers will have to pay more if they want an open mortgage they can pay off at any time.

About 25 per cent of mortgage holders in Canada have variable-rate mortgages, the paper said. CMP

Mortgage-backed securities key to commercial market success, experts say Condo buyers are facing stricter lending guidelines, dropping values (especially for inconstruction buildings) and new rules if they are self-employed or buying for investment purposes.

“Lenders are making some dramatic changes in their policies,” Jeff Mayer, an agent with Mortgage Intelligence told the Globe and Mail, adding, “I am seeing situations where people who bought suites two years ago and thought they had a big enough mortgage to cover 75 per cent of the price are now being told 65 per cent is all their lender will put up.”

New condo buildings can go down in value due to builders cutting back on extras and upgrades to increase affordability, the paper said.

Along with dropping values, Mayer pointed out that self-employed condo buyers, in particular, have to show higher credit scores (in the 680 range, up from 620) while Gary Siegle, a regional manager for Invis in Calgary, told the Globe that real estate investors also face more restrictions – for example, lenders can only count 50 per cent of rental income toward revenue needed to qualify for a loan (it used to be 80 per cent). CMP

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mortgagebrokernews.ca

Lawyer-related mortgage fraud drops while mortgage grow-ops rise While mortgage fraud is still a very real concern today, compared to a decade ago, instances are down dramatically.

This was the finding in a recent article in the Globe and Mail, which said that Canadian lawyers were involved in a large number of frauds costing millions of dollars in the early part of this decade, and that the problem is waning now, in large part to regulatory actions and consumer awareness.

“Predominantly this is an Ontario problem, with some in British Columbia,” Lorne Shuman, director of legal services for First Canadian Title, said in the article.

Shuman said that First Canadian Title’s payout of claims related to fraud went from 43 per cent of total payouts in 2007, to 72 per cent in 2008.

In fact, CMP learned that in Ontario the problem with lawyers and fraud was enough that it is now common practice for lenders to take out a title insurance policy on any loan before it closes, just to protect themselves from lawyers absconding with fraudulently obtained mortgages.

Coincidentally, the Globe reported that there has been a “drop in accusations of mortgage fraud against lawyers in Ontario.

The Law Society of Upper Canada has opened only 18 new investigations to date in 2009, from five a month in the 2006-2008 period.”

An area of fraud that is still a major concern involves the practice of illegal marijuana grow-ops though, an issue that will be addressed at the Canadian Association of Accredited Mortgage Professionals’ (CAAMP) Mortgage Fraud Summit, held this Nov. 6 in Toronto. CMP

135,182

Milevsky re-ponders variable rates

The number of home sales in Canada in the third quarter of 2009, the highest level of any third quarter on record, according to the CREA.

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News

mortgages in the press

Economy

Commercial market back on track Canada’s commercial mortgage market has changed drastically over the last two years, with appetite for certain sectors completely drying up and lending guidelines drastically tightening. All that seems to be on the way out, however, as recent signs point to a recovery.

The Globe and Mail reported than an 18-month slump in Toronto is over and that other urban centres shouldn’t be far behind - all signs that Canada’s commercial market has “de-coupled from its troubled U.S. counterpart.”

It also pointed to stats from industry tracker RealNet Canada Inc., which show that “investments in commercial property in the Greater Toronto Area increased by 46 per cent in the third quarter over the second quarter, to $1.31-billion, while the number of transactions increased by 20 per cent,” it said. CMP

Bridgewater Bank ups broker support with new coaching program Bridgewater Bank kicked off its new Business Plan 2010 coaching program on Oct. 14 after the lender’s business development managers selected 40 brokers from across Canada to participate.

The brokers have been divided into groups based on experience levels and business goals and will meet online on a bi-weekly basis for 10 weeks. Calgary broker Greg Williamson, who recently launched his own coaching business called 180 Degrees, will lead the sessions.

“This is a unique initiative that we are very excited to offer,” said Todd Poberznick, assistant vice-president of production at Bridgewater Bank. “Everyone in the program has a desire to get to the next level so we have stepped in and offered this coaching program at no charge to the brokers and they have responded with great enthusiasm.”

Poberznick added that the initiative’s purpose is to strengthen relationships with brokers who work with Bridgewater and increase levels of support. CMP

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mortgagebrokernews.ca

Our Best Competitor’s Bank Interest Rates On a $300,000 first Mortgage*

Our Lower Effective Interest Rate

Term

Our Lower Effective Interest Rate

Monthly Payment SAME

Total Monthly Payments to Pay Off Mortgage

# Monthly Payments SAVED

360

1 YEAR

1.60%

$1260.21

188

172

360

3 YEAR

1.99%

$1367.74

201

159

360

5 YEAR

2.36%

$1467.58

214

146

360

Adjustable

1.15%

$1137.58

176

184

Term

Good Bank Rate

Monthly Payment

Total Monthly Total Monthly Payments to Pay Payments to Pay Off Mortgage off Mortgage

1 YEAR

2.99%

$1260.21

3 YEAR

3.65%

$1367.74

5 YEAR

4.24%

$1467.58

Adjustable

2.20%

$1137.58

Why?

Mortgage Tune Up™ Analysis

Home n Work Mortgages Inc, a national Canadian mortgage broker, uses an exclusive mortgage product tool called Smart Equity™ that powers down the effective rate of interest that your client pays. We are different because we preach a lending principle to our clients to get out of debt wisely and not get into more debt like other lenders tend to encourage.

We are ‘referral motivated’ and not ‘renewal motivated’. And that is our winning game formula. We wish that every homeowner will become clear title and debt free. We first ‘match’ the best bank rate of any competitor and then we keep the mortgage payment the exact same. This is key to our lending principle because by keeping the mortgage payment the same, while lowering the effective rate of interest that your clients pay, then your clients are able to pay off their mortgage YEARS EARLIER – without changing their current budget. Unlike other ‘accelerator’ programs we do not use discretionary income at all. It is all done without the need to get a new job or forsake some important lifestyle need for a family. It is within their current budget and it is a game plan that makes sense - to everyone.

Exclusive to us - when you join us you will be given powerful program tools that will show just ‘how much’ your clients will save in both interest costs and the time it takes to pay off debt. You will also be given the Smart Equity™ program for your own personal use and for demonstrating its power to your clients.

For Who?

*Assumption:

Average to good credit, 30 year amortization, rates stay same throughout term, $5000 / mo net family income and $4367.74 in monthly household expenses and that client acquires and uses our Smart Equity™ program with our proposed mortgage products. Table is for illustration purposes only as bank rates may change at anytime without notice. Broker / Lender fees may apply.

By being part of our team you will be able to offer lower effective rates of interest to your clients. No one will be able to compete against you! You will be assigned to Smart Equity Coaches™, that are licensed financial advisors, where each advisor will send 20 to 30 mortgage referrals to you each year. Your goal will be to have 3 to 5 of them working with you. That is up to 150 deals flowing to you each year. Our company is training up to 1000 Smart Equity Coaches™ over the next 12 months that will need to be assigned to our Mortgage Consultants. You could be one of them - and earn a top compensation package - by helping us.

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For your average client that knows too well that it is tough to survive in today’s economy. As long as they make at least $100 more than they spend each month then they should use our Smart Equity™ approach to lending. Every dollar saved creates a better way of life and larger nest eggs to one day rely on. Not only will your client save in interest costs but also in the time it will take to pay off their home – and any other debts that they may have – a lot faster. The average client saves more than 10 years in mortgage payments. That’s over $200,000 and that is a ‘big deal’. Just think of the number of people that you can help!

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News Industry

National Bank acquires Canadian Tire’s $167M mortgage portfolio Canadian Tire is selling its mortgage portfolio – worth approximately $167 million – to the National Bank of Canada and focusing on expanding other areas of its retail banking division.

“National Bank of Canada is delighted to acquire such a high-quality portfolio of mortgage accounts,” said Réjean Lévesque, the company’s executive vice-president, personal and commercial banking in a statement.

“This latest acquisition is a good example of our strategy to expand in select markets in Canada.”

Canadian Tire said its mortgage portfolio will be sold at “essentially the book value,” adding it expects to take an estimated $6-million pre-tax charge in the fourth quarter for selling off the business. The sale is expected to close in the fourth quarter of 2009, with the transition of customer accounts to be completed by early 2010.

The company’s retail banking business – which includes high-interest savings accounts, tax-free savings accounts, GICs and the Canadian Tire One-and-Only account – had more than $2.1 million in deposits at the end of the second quarter and says it will be expanding into credit card products and related services. CMP

CAAMP awaits new mortgage broker licence in Quebec

Nominations now open for 2010 Canadian Mortgage Awards Nominations are now open for the 2010 Canadian Mortgage Awards, which are taking on a Mad Men-inspired 1960s theme and is scheduled for April 23 at the Liberty Grand in Toronto.

Anyone involved in the Canadian mortgage industry is encouraged to nominate candidates for this not-to-be-missed event of the year.

There are a few changes this year, including two new categories, best newcomer BDM of the year, and best newcomer lender underwriter of the year, both based on having three years or less experience in the industry.

Nominations can be made online at www.canadianmortgageawards.com/ nominations, and are open until Jan. 14, 2010. But don’t wait until the last minute - send them in today.

Remember, you can vote for as many or as few categories as you wish, the only stipulation being that you cannot nominate your own company (or someone who works at your company).

CMP looks forward to your responses. Happy nominating. CMP

Canadian Mortgage Awards

2o1o

April 23, 2010 • Liberty Grand • Toronto

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mortgagebrokernews.ca

New Quebec licensing regulations that differentiate mortgage brokers and real estate brokers (as well as mortgage and real estate agencies) are expected to soon be pre-published for review, according to CAAMP. “We will move from the current law which simply specifies two types of licences (real estate broker or real estate agent), to new rules approved in 2008, which significantly clarify the roles of each real estate professional,” said CAAMP chair Pierre Martel, noting that there has been some delay in getting the regulations approved by the Ministry of Justice and passed on to the pre-publication stage.

As it stands in Quebec, all real estate professionals – including those who deal primarily in mortgages – hold a real estate broker/agent certificate because there is no separate education or licence requirement for mortgage professionals.

To differentiate industry roles, the provincial Ministry of Finance and the real estate industry’s governing body, ACAIQ, have created four new licences: real estate broker, mortgage broker, real estate agency and mortgage agency. There are close to 900 mortgage brokers and 38 brokerage firms in Quebec, Martel said.

“The most important thing for us is to have recognition of the mortgage broker position in the actual bill,” he said, adding he is hoping the new regulations will be in place by early 2010. CMP

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Housing market

Central Bank to keep watchful eye on real estate: TD Current market strength maintainable, Royal LePage says In a recent survey conducted by Royal LePage, which surveyed more than 1,100 agents and brokers from across Canada, 61 per cent agreed that today’s real estate market strength is sustainable.

The No. 1 driving force in today’s market is the low interest rates, with 66 per cent of Royal LePage agents and brokers who completed the survey agreeing. The second highest factor was the belief that the economy is strengthening, with nine per cent of agents and brokers choosing this option.

The new environment that has been created by low interest rates is one of the most important factors in attracting homebuyers, and because of it, the survey revealed confidence in today’s market.

For the portion of brokers and real estates agents that took the survey who do not think the current market is sustainable, 36 per cent of them stated that this is mainly because of a fear that interest rates will rise again in the near future. CMP

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Canada’s place on the United Nations’ annual Human Development Index, which ranks 182 countries based on factors like life expectancy, literacy, school enrolment and per capita GDP.

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While the Bank of Canada has maintained its pledge to hold rates until 2010, and inflation remains a low risk, the Central Bank may raise rates earlier than expected if the strong rebound in Canadian house sales and resale home prices continues, according to a new report by TD Economics.

“The Bank’s view at the moment is that the recent resurgence in real estate is temporary, but if it does not moderate in the coming year - or worse still if price growth accelerates, it could lead to an earlier and more substantial tightening in policy than currently anticipated,” the report read.

Despite the warning, TD Economics also said that it expects to see a cooling of home sales and prices in the coming months due to pent-up demand being absorbed, dampened affordability and weak economic fundamentals.

“Overall, the most likely scenario is that the home sales growth will moderate and home price growth will not become excessive,” the report read.

“Recent comments from the Bank of Canada suggest they also believe the recent strength in MLS readings is temporary.” CMP

Home sales up – but there’s a catch Just because the economy is weak doesn’t mean houses are going to be cheap, according to the latest statistics by the Canadian Real Estate Association.

The average residential home price rose 11 per cent to $327,736 since the same quarter last year in part because of increased sales activity. In addition, national home sales in the third quarter were up 18 per cent from last year’s third quarter – the largest increase since 2002 – tallying up at 135,182 units sold.

“Monthly sales activity remained on a strong upward trajectory throughout the third quarter in British Columbia, while showing signs that it may be topping out in other provinces,” said CREA chief economist Gregory Klump.

“On balance, this suggests that sales activity may be starting to plateau after having climbed rapidly earlier this year.”

New listings were down by 12.5 per cent in comparison to the third quarter of last year, according to MLS, and a story in the Globe and Mail said the combination of a strong demand in the housing market with a limited supply has created a seller’s market.

“It is perhaps not a surprise that with demand up and supply down, the differential has resulted in a price squeeze,” Eric Lascelles, chief economics and rates strategist at TD Securities, told the Globe. “The new level of prices is a record high, meaning that all of the earlier declines have been fully unwound.” CMP

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Housing market

Golf tournament grows in attendance, adds activities Despite cloudy skies and intermittent rain, 130 women from the mortgage industry brought their game to the second annual ladies charity golf tournament held Sept. 25 in Gormley, Ont. “I created the tournament specifically for women in the mortgage industry because traditionally over the years there have been many, many ‘men’s only’ golf tournaments and activities where we have been excluded,” said Kathy Gregory, CEO of Paradigm Financial, who founded the event and whose company – along with Merix Financial and Genworth – serves as a platinum sponsor. “In a male-dominated industry, this is a great opportunity for the women in the mortgage industry to get together and create a fun day.”

This year’s event adopted a shoe theme, meaning each of the 18 holes at Meadowbrook Golf and Country Club was based on a shoe type (e.g. wedge) or brand. Every hole also included an activity like trivia or a wine and cheese sampling, and participants received gift bags filled with Colleen Liao and items like flip-flops, Dianne Harrison from Merix. magazines and a

42% From left to right: Anne Stevenson, Sue Gaston, Giselle Bodkin and Jacqui Kirkland

pedicure kit. The night ended with a dinner and awards presentation.

“I would like to see more women in the banking hierarchy because we still haven’t seen the changes there – but women are taking a much bigger share in the mortgage industry and that is very, very cool,” said broker Donna Mullen of YourMortgageStore, a participant.

The event raised $20,000 for the Canadian Women’s Foundation, which holds programs to improve the lives of disadvantaged women. Gregory said her goal for next year’s tournament is to expand it to other areas of Canada and double the attendance. CMP

The decline in the inventory of homes for sale in Toronto in September compared to the same month last year, according to Market Watch.

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News Economy

Mortgage market grows alongside arrears: CIBC

10

The mortgage market is growing at a year-over-year rate of 7.8 per cent, but mortgage arrears are likely to continue rising over the next six to 12 months, a new report released by CIBC World Markets said.

The report also revealed that the strong performance in the mortgage market is largely due to low interest rates leading to a “remarkable improvement in affordability” in housing.

“Current activity reflects some utilization of pent-up demand as well as a realization by homebuyers that this window of low interest rates will not last forever, so in many ways we are stealing activity from 2010 and 2011,” the CIBC Household Credit Analysis said, also pointing out that banks outperformed non-banks in mortgage market growth.

Despite a strong real estate market, the report pointed to a continuing upward trend in mortgage arrears, which are at 0.42 per cent compared to the mid-2007 level of 0.24 per cent. The number of consumer loans in major delinquency positions is also rising, CIBC economists said.

The main finding of the report was the seven per cent, year-over-year increase in household credit (including mortgages) and the fact that debt interest payments as a share of disposable income now stands at 7.7 per cent – the lowest rate since early 2006. In the past year, the debt-to-income ratio rose from 131 per cent to 140 per cent. CMP

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Vancouver’s rank in Coldwell Banker’s Home Price Comparison Index, which ranks the most expensive cities to live in North America based on the prices of 2,200 sq. ft. “aspirational” homes.

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News Industry

National securities regulator moves further along Canada’s new national securities regulator is set to be in place by 2012 and Doug Hyndman, who is heading up the transition team, announced representatives from 10 participating provinces and territories on Oct. 15.

The three provinces holding back participation in the plan are Manitoba, Alberta and Quebec. The latter two threatened a Supreme Court challenge to the proposal earlier this year saying the new body

would be too “Toronto-centric.”

Hyndman said provinces and territories that nominate representatives do no have to commit to joining the national regulator until further details are released next year. Finance Minister Jim Flaherty proposed a national securities regulator in his January budget and in June appointed Hyndman, former chair of the B.C. Securities Commission, to head up the transition team. CMP

$156,613 The average MLS house price in New Brunswick in August – a record for the province.

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News

Appointments

News bites

appointments After working at Wells Fargo Canada for 13 years, most recently as vice-president of sales, Steve Malone recently joined Filogix as the company’s new vice-president of broker services.

“I think I bring a balanced approach in that I’ve dealt with the broker community through Wells Fargo and also saw it from a lender’s point of view,” said Malone, who started at Filogix’s Toronto office at the end of September.

In his new role, Malone will be working with a team of directors and regional sales managers across the country to roll out new programs and get feedback from brokers to find out if the products are meeting their business needs.

“I’m hopeful that my management experience, combined with my knowledge of the broker and lender industry will be of great benefit in creating some positive change for the company, the team and, most importantly, our clients,” he said.

Tyler Hildebrand recently joined Mortgage Architects as the company’s first mortgage planner in Saskatchewan. Nolan Matthias and Jay Columbia of Alberta also signed onto Mortgage Architects.

Thom Henderson (left) has been appointed director of commercial underwriting at Equitable Trust and Jason Nice (right) joins the lender as a commercial underwriter.

Mortgage Alliance recently hired two in-house underwriters at its Toronto head office to help speed up turnaround times for its member brokers.

Brokers submit their deals through the Mortgage Alliance VIP Lender Hub, where it goes through an underwriting review process before being sent to the lender.

Genworth Financial Canada launched a new online tool called yourmortgageplan.ca at the end of September. The site allows mortgage brokers to document the needs and goals of prospective homebuyers with features like a budget plan, financial check-up and mortgage payment plan calculator.

Merix Financial recently introduced its new Concept 2 program, which takes away a volume requirement (which used to be $5 million) for brokers who want to send deals to the lender.

Under the new model, originators are asked to commit to sending 10 per cent of their business to Merix and close 60 per cent of the deals they submit. Andrew Kuyper, director of marketing and operations at the company, said the program is part of an effort to encourage brokers/agents to submit deals individually as opposed to pooling volumes. CMP

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News

ISSuE 3.11

subhead

SUPERBROKERS Annual survey results revealed

PLUS: FOCUS Investing in family mortgages BUSINESS Tips for boosting credit scores PROFILE Gord McCallum CMP CANADIAN MORTGAGE AWARDS 2009 NOMINATION FORM ENCLOSED

2008

this time last year DLC gets the word out Dominion Lending Centres launched a new Canada-wide advertising campaign in October 2008, which included ads on HGTV, CBC, Sportsnet and Global. The brokerage targeted the 25-to-54 demographic and paid for the advertising campaign and other branding initiatives through DLC member contributions of $150 a month.

“The advertising fund dollars collected in each local area are spent back into the same prospective area – directly and proportionately benefitting those who contribute,” said DLC’s vice-president of marketing Michael Davies.

One year later, and DLC’s ad campaign is continuing to grow as more mortgage professionals sign onto the company (there are now more than 1,500 members) and contribute to the company’s National Advertising Fund.

The company said that since the advertising budget is increasing in each market, DLC is benefitting from discounted media-buying rates and more than $25,000 worth of free bonus spots from the TV networks. In May, the company’s television commercials aired during the Survivor and American Idol finales, one month after it won a Canadian Mortgage Award for Best Branding. CMP Invis acquires Mortgage Intelligence Two of Canada’s most prominent mortgage brokerages joined forces to become the largest superbrokerage – representing 20 per cent of the broker market – when Invis acquired Mortgage Intelligence from GMAC in October 2008. Invis said it planned to run the companies as separate entities but with a central business model. Stan Falkowski was named senior vice-president of MI, while Gord Dahlen, Fiona Campbell and Cameron Strong (who led Invis’ take-back earlier in the year) remained at the top of Invis.

One year later, and Gord Dahlen has been named president of both companies (see news page 12 for more details). Cameron Strong is now executive vice-president and chief financial officer of the companies and Stan Falkowski remains as Mortgage Intelligence’s senior vice-president (Fiona Campbell left the company earlier this year).

Together, Invis and Mortgage Intelligence have more than 1,600 broker members and Dahlen said he is looking forward to “unifying the direction” of the two brokerages, which share a central office in Mississauga, Ont.

30

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“I think that in the past we’ve been viewed as two companies and I’m really excited about bringing the two together and having a unified force while still having the brands differentiated in the marketplace,” he said. CMP Canada’s competitiveness rising The World Economic Forum’s 2008 Global Competitiveness report ranked Canada 10th overall for the world’s most competitive country, up from 13th in 2007. The rankings were calculated from publicly available data as well as an opinion survey sent to more than 12,000 business leaders in 134 global economies with questions about 12 “pillars,” including market size and financial institutions.

One year later, and Canada moved up another spot to 9th place among the world’s most competitive countries. The report – which ranked Switzerland, the U.S. and Singapore in the top three – said Canada benefits from “highly efficient markets, particularly labour and financial markets and well-functioning and transparent institutions.” It also said Canada has improved its macroeconomic stability since last year, adding it would be important to reduce the debt level to grow sustainably. The report listed the most problematic factors for doing business in Canada as access to financing and tax rates. CMP

www.hometrust.ca

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News

International

australia The number of mortgages originated online in Australia has doubled in the last four years, sparking concern over the relevance of traditional brokers in the future market.

According to a new report by Retail Finance Intelligence (RFI), the Internet channel only accounts for six per cent of loans made by the survey’s respondents, but is expected to grow as the “variety and complexity of available loans decreases.”

RFI’s Consumer Attitudes to Mortgage Brokers found the next generation of borrowers aged 18 to 24 are the least likely to make inquiries and apply for a loan through a broker (27 per cent and 21 per cent respectively). They are also the most likely to use the Internet to apply for a home loan. According to report authors, the statistics highlight to brokers the importance of having high Internet visibility.

“With the ease of the Internet and branch channels, combined with the decreasing number, variety and complexity of available loans, it is particularly important that brokers are able to distinguish what customers value and expect from such a service, as well as being able to distinguish the characteristics of potential customers,” it said.

Borrowers between 25 and 44 are significantly more likely to conduct inquiries using the broker channel, with 47 per cent of 25- to 34-year-olds and 41 per cent of 35- to 44-year-olds doing so compared to the survey average of 37 per cent. CMP

u.s.

Mortgage foreclosure filings in the U.S. reached a record high in the third quarter despite falling numbers in August and September, according to a report by Realty Trac Inc. Even with a one per cent decrease in mortgage default notices, home repossessions and house auctions in August and a four per cent decrease in September, foreclosure filings have increased by 29 per cent since last year.

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One out of every 136 houses filed for mortgage foreclosure in Q3 – a total of 937,840 homes between July and September – resulting in the highest mortgage foreclosure rate on record since Realty Trac began issuing foreclosure filing reports in January 2005. Bank seizures also increased in almost every state, according to the report.

Amherst Group LP told Bloomberg News that more foreclosures in the U.S. equate to the continuation of falling home prices, carrying on until late 2010 when the unemployment rate is expected to reach 10.2 per cent.

Nevada has the highest foreclosure rate of any state with six times the national average (or one in 23 houses foreclosing). CMP

$408,500 (AUD) The median value of a house in Australia in August, an increase of 2.51 per cent compared to the same month last year and the first time the median value has surpassed the $400,000 mark.

u.k A severe drought in U.K. residential properties for sale is to blame for the increasing price of homes, according to various industry sources’ latest figures.

Housing prices increased by 2.6 per cent in the last quarter, according to the Department for Communities and Local Government. However, the lack of supply leading to the price increase is mostly found in London and the southeastern region of the country, according to the Royal Institution of Chartered Surveyors.

Despite the increase in property prices, there has not been an increase in lending. Real estate experts warn that home prices will not be sustainable unless lending goes up.

New mortgages decreased by five per cent in August, but the Council of Mortgage Lenders said lending is 30 per cent higher than last year overall. The Centre for Economics and Business Research expects interest rates to stay steady until 2011. CMP

News Analysis

Concern for the environment has led to an increasing number of environmentally friendly product choices, including homes. But green mortgage options remain scarce and the ones that are in place go unnoticed by most consumers. CMP explores why

Wanted: green mortgages green home building programs and standards • R2000 (National) • GreenHouse (Ontario) • GreenHome and Super GreenHome (Yukon) • Built Green Gold Label Homes (Alberta) • Built Green BC Gold Label Homes (B.C.) • Novaclimat (Quebec) • Energy Star for New Homes (Ontario and Saskatchewan) • Power Smart (Manitoba and B.C.)

I

n the latest EnerQuality Green Building survey released in October, the certifying organization found 40 per cent of Ontario homebuyers were willing to pay an extra $10,000 for a green home in 2009 compared to 22 per cent in 2008. The survey also found that purchasers paid an average of $3,707 for energy efficient features in new homes this year, up $500 from last year despite the state of the economy.

But while the interest in having a greener home – along with a greener lifestyle in general – appears to be strong in Canada, the mortgage industry hasn’t seen much action on the green product front.

When following up on a story about green mortgages published early last year, CMP had trouble finding new products that fell into this category or promotion of these types of offerings.

“I think it’s a lack of marketing on the part of the lenders that actually offer [green mortgages],” said Rowan Smith, a broker with The Mortgage Centre in Vancouver, a city with a governmentstated goal of being the greenest city in the world by 2020. “If people knew more about it, I think there would be a much bigger demand. I don’t think there’s much awareness out there about the advantages of it.”

Gordon Shields, executive director of the Net Zero Home Energy Coalition (an organization dedicated to research and programs for energyefficient buildings) also argued that lenders need to step up their efforts, saying he would like to see them offer more financing options for homeowners who want to invest in green technologies instead of simply giving rebates or discounts on posted rates.

“I think a green mortgage should be intended to help homeowners adopt what I would call advanced energy efficiency upgrades that are beyond what we see as mainstream energy efficiency standards,” said Shields. “There’s considerable room right now for banks to move into a new space where they offer truly green mortgages.”

The options Since the last time CMP checked on green mortgage offerings, the list appears to have remained almost unchanged.

TD Canada Trust has continued its Green Mortgage and Green HELOC, which offer one per

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cent off the posted rate and an increased rebate of up to 1.5 per cent of the amount of the mortgage if the borrower makes Energy Star-qualified purchases on items like appliances and windows.

HLC offers CIBC’s Enviro-Saver Mortgage, which provides rebates of up to $300 on a home energy evaluation and a report on the provincial and federal grants a borrower may qualify for.

Citizen’s Bank, which offered a green mortgage that included an energy audit and an option of a $10,000 line of credit to make upgrades, pulled out of the Canadian mortgage market earlier this year.

Its parent company offers a low-interest loan called the Bright Ideas loan to make energy-efficient upgrades after having an audit done, but the product is only available in B.C. On the mortgage insurance side, both CMHC and Genworth have similar programs in place to help homeowners who buy green homes or who want to make eco-friendly renovations. These programs include a 10 per cent refund on mortgage insurance premiums and the option to extend amortization without normal premium surcharges.

Both programs require new home purchases to be constructed under a specified list of eligible green building codes (which vary from province to province) or meet an EnerGuide rating off 77 (determined by a home energy assessment). For renovations, homeowners also need to have their home audited to ensure their improvements have increased to a minimum energy rating of 40 on the EnerGuide scale.

“In the last two years we’ve been getting more and more consumer inquiries about the program and more mortgage professionals are asking questions about it,” said Eleanor Hughes, the acting manager of homeowner policy at CMHC, also noting the federal agency has expanded its list of qualifying green building programs. “We’re continually reviewing the program and looking at ways to further support and encourage Canadians to consider attaining higher levels of energy efficiency in their housing choices.”

What can be done?

To raise awareness about the benefits of green homes and offer more incentives for green purchases and renovations, Shields suggests banks

News Analysis

compare and evaluate a base home and an advanced energy-efficient home on an operating cost level.

The savings the customer who owns the energy-efficient home incurs should be taken into account as to how much more money they could be loaned from the bank to make upgrades.

Shields also said banks need to be educated on the appraised (and resale) value of energy-efficient houses and added that Net Zero is hoping to organize a lenders’ forum Rowan Smith in the coming months to move the topic of green mortgages forward.

“Appraisal value is an important first step in the move toward real green mortgages,” he said. “Banks need to better understand the value of homes with features like solar energy because if they better educate themselves on the resale value of what that means in the marketplace, then I think that will give them more of a comfort zone on entering this market more aggressively because there’s a security there for them.”

Lenders also need to figure out ways to effectively market green products to make them more accessible (and attractive) to consumers, especially as green homes gain popularity. (Case

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green mortgage/financing information: “TD Green Mortgage and HELOC http://www.tdcanadatrust.com/greenhome/index.jsp CIBC Enviro-Saver Mortgage (available through HLC) https://www.cibc.com/ca/mortgages/enviro-saver-mortgage.html VanCity Bright Ideas home loan (only available in B.C.) https://www.vancity.com/MortgagesRenos/ EnvironmentalOptions/ CMHC Green Home Refund http://www.cmhc-schl.gc.ca/en/co/moloin/moloin_008.cfm Genworth Financial Canada Energy-Efficient Housing Program http://www.genworth.ca/content/genworth/ca/en/products/ features/energy_efficient_housing.html

in point: the Toronto Star recently reported there are plans to include home energy efficiency ratings in MLS listings).

Rowan Smith – who wrote an explanation of green mortgages on his website – pointed out most consumers care more about great rates and other terms than the benefits offered through green mortgages.

“That’s one of the hardest things to sell to a client on this – just doing the right thing might be costing them a quarter point in interest over the five years and that can be, say, $25,000,” he said. “So where does the threshold of people doing the right thing end and begin? I think that’s why we’re not seeing a big focus on that and seeing more of a focus on rate.”

Smith added that he hasn’t had many inquiries about green mortgages and has only referred a few customers (“I can count them on one hand”) to insurers for rebates – even customers who have moved into a home with green building standards.

One reason he cites is that many clients get bogged down with the idea of an energy audit, which can involve things like a smoke test to evaluate how airtight a home is.

As the recent EnerQuality survey indicated, a significant portion of Canadians are looking for ways to make their homes greener. Further to that point, a Canadian Green Home Index survey released in April by Home Depot found 83 per cent of Canadians acknowledged they want to make green improvements on their home, with only two per cent claiming their home was already as green as it could be. Legislation is even moving along: as the Toronto Star recently reported, anyone making an offer on a home will soon be able to demand or waive the requirement of a green energy audit from the seller under new rules proposed under Ontario’s Green Energy and Green Economy Act. So what’s the solution to linking environmental concern with green mortgage products? Shields said lenders, along with real estate and mortgage professionals, should become more informed about the still-emerging area of green housing while looking for solutions to encourage environmentally friendly choices.

“Consumers are interested in energy-efficient homes, but rely on building codes to protect them from that,” said Shields.

“Are they exploring things that are much more advanced? Not yet, because they are not educated enough yet on the benefits and what’s available in the marketplace.” CMP

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News Analysis

Flaherty Extends $125-Billion Program:

A Broker & Lender Weigh In At the end of September, Finance Minister Jim Flaherty announced that the government’s $125 billion mortgage fund program to buy mortgages from lenders was extended.

Melissa Kim finds out what this means for the mortgage industry

T

he Insured Mortgage Purchase Program came about in October 2008 as a buyout of $25 billion insured mortgages and was later expanded, according to the Canadian Press. Finance Minister Jim Flaherty implemented the program in order to increase the flow of credits in banks and keep mortgage rates stunted, as well as to protect against liquidity pressure buildup. To date, about $64 billion of mortgages have been purchased.

Boris Bozic, president of Merix Financial, believes that extending the program is good for the mortgage industry because of its stabilizing affect on the market and assistance in keeping interest rates down and boosting consumer confidence.

“Today it’s really an insurance policy because the reverse option has been undersubscribed for some time now,” he said. “However it is an insurance policy that the government wants to keep in place giving the banks the opportunity in the event that the economy doesn’t recover in a timely fashion to insure that there is a lower cost of funds available in the marketplace.”

Bozic attributes the program’s extension as a sign of not only government concern about the overall economy, but also the importance of the mortgage and real estate industries in stimulating said economy. Without this program, he said that everyone would be at the mercy of the banks in terms of making their decisions on what they want to lend on, what that price point would be and how much of a risk would be embedded in pricing.

key dates • October 2008: Finance Minister Jim Flaherty proposes $25-billion buyout of insured mortgages, later expanded • Annually, this program could mean a profit of $372 million a year for the federal government, or more than $1.5 billion over five years.

• The government is also earning 1.02 per cent differential on about $19 billion of floating mortgages.

• $2.95 billion of the mortgages have already been repaid, reporting no defaults.

• September 2009: In anticipation of its end of the month expiry date, Finance Minister Flaherty had the $125 billion mortgage purchase program renewed

Source: Canadian Press

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“I just think [Flaherty] definitely has his thumb on the pulse of what’s going on in that segment… I think they’ve been quick to move.

They’ve worked in conjunction with the lending community as well, so I personally, from my perspective, think they’ve done a tremendous job and I think they’re on top of the issues.”

Economists speculate that the federal government will profit up to $1.8 billion from this program within five years, according to the Canadian Press. The government called the program a “lifeline.” Bozic called it an “insurance policy.” Calum Ross, senior vice-president and mortgage agent at Mortgage Professionals Inc., calls it something else.

“I would call it symptomatic of an oligopoly system where five banks control the government and financial services system. Not to be a cynic – to be a realist. It’s largely a political play. It’s a good contingency to preserve the integrity of our system, but I mean, come on, you look at some of these bail-out packages and you don’t have to be an MBA grad or an economics major to figure out that a lot of people got payouts that didn’t need them,” he said.

Despite these sentiments, Ross argues that mortgage brokers and lenders will benefit from lower funds because they encourage mortgage applicants. However, he finds that subsidizing institutions like banks showing record profit levels startling.

“I just have to question the ideology behind putting contingencies for institutions that, quite frankly, haven’t shown a loss yet. Putting a future contingency in place may actually be a really good idea, but insuring against a risk that hasn’t yet emerged might be a little premature,” said Ross.

Ross blames the sub-prime crisis in the U.S for Canada’s anticipation of a financial turmoil that has yet to materialize, at least not according to property evaluations, default provisions on mortgages and the profitability of loan portfolios.

“I don’t think the Canadian mortgage system has been fairly reflected in terms of our impact from the sub-prime. I think we’re paying way too much of a price for losses that haven’t happened in our country and I think particularly variable-rate mortgage consumers have paid a hefty price for mismanagement of the mortgage market south of the border. And that’s completely unfair.” CMP

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Superbrokers

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superbrokers

superbrokers CMP recently polled 14 national brokerages across Canada to uncover what they offer their brokers – everything from compensation to training to ancillary services. Here are the results

I

t’s been quite a year for all the superbrokers polled in CMP’s annual survey, and if all the accounts are accurate, it’s a year that should end on a high note. Brokers enjoyed steady business with the help from record low rates, housing sales have enjoyed a robust period of movement, and some have even uttered the dreaded ‘b’ word (as in, boom) to describe what’s currently happening.

That said, rates are well on their way back to “normal” and pretty soon that wonderful euphemism the experts like to throw around, “market correction,” will be the new buzz phrase, but it’s fair to say that all of Canada’s superbrokers, through a combination of innovations and staying the course, have weathered the rough ride wonderfully.

About the survey This year CMP decided to let the brokerages speak for themselves, so in the following pages what you will find is a chart devoted to each participating brokerage that was generated based on their responses.

The actual survey was in the form of an e-mail questionnaire and followup phone call, asking various questions about how the brokerage does its business. Along with the information charts, CMP has also included various answers to these questions.

Since the survey’s inception the number of participating brokerages has varied, citing several different reasons why. This year we have more participating brokerages than ever, and our goal for next year is to have even more.

While several national brokerages opted to tell all and completely answer every question, some others selected to only answer specific questions for privacy reasons, while others still decided not to participate altogether or simply did not answer repeated e-mails and phone calls.

With the missing entries this survey is obviously not what you would call a complete coverage of the brokerage market in Canada, but it does include information from 10 leading brokerages all across the country and serves as a great reference tool for anyone interested in seeing what is out there. Of course, if you have any further questions about the information in the following pages, don’t hesitate to contact the respective brokerage.

We hope you find the results informative, and be sure to look for more coverage on mortgagebrokernews.ca, when CMP anonymously polls various broker from across the country to see how their respective brokerages can improve their game.

mortgagebrokernews.ca

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Superbrokers

Axiom Mortgage Partners Number of agents: 450+

Established: 2007

Compensation

• 100% commissions; 100% volume bonus; each owner determines agent splits • All fees paid to licensees regardless of whether they switch firms

Brokering Model

• National network of independently owned and operated brokerages • No cost to join, anyone with brokerage can apply • 60 brokerages across Canada

Ancillary Services

• White label • Hybrid of upfront compensation and trailer fee model • Group benefits

Lead Generation

• Rather than providing leads, they teach agents/ brokers to grow business

Compliance

• Individual licensee is responsible for compliance

Payroll

• Not currently offering payroll services • May be made available to the network in 2010

“ the Axiom tools and systems were designed to help agents grow their businesses without great effort, allowing the agent to focus on their day-today operations. Our collective focus is giving clients the attention needed to build lasting relationships. There are many things brokers know they ought to be doing to grow their business but simply just don’t have the time, money or know-how to get it done. Axiom makes it simple, and most importantly, makes it happen. ” - Mike Cameron, partner, Axiom Mortgage Partners

MorCan Financial “ we have introduced a sales conference, which provides a range of skill development initiatives, to assist in developing the agent’s business.

Our focus will be on recruiting quality mortgage professionals. ” - Harold Kennedy, president, Morcan Financial

Number of agents: 150

Established: 1997

Compensation

• Commission splits not specified but described as “aggressive” and based on volume thresholds • Agent’s split affects all volume bonuses in accordance with the compensation package offered at the time agent joins • If someone leaves the company, the trailer fees follow contractually

Brokering Model

• Franchise opportunities available • There is no franchise cost to the broker who opens up a branch office • Require that agents sign and adhere to the Morcan Code of conduct and regulatory body in the provinces in which they operate their business • Operate in Atlantic Canada, Ontario and Manitoba.

Expect to launch in Alberta and B.C. by year-end

Ancillary Service

• leasing program • centralized underwriting • Alternate Financing Solutions program • Journaling and best practice forum • Morcan creditor insurance

Lead Generation

• Brokers/Agents generate own business

Compliance

• All staff and brokers/agents must be fully compliant and adhere to provincial regulations

Payroll

• Upon receipt of an audited, completed file and receipt of the finder’s fee from the lender, agent will be paid electronically into their account every two weeks.

• Process also applies to all volume bonus payments and trailer fees • Payment must be received by the lender five business days before the pay day

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Superbrokers

superbrokers Dominion Lending Centres Number of agents: 1,500+

Established: 2006

Compensation

• Franchise owners receive a 95/5 split • How brokers and agents are paid is determined by individual franchisees • Trailer fees can be earned through white-label offerings • If someone leaves the company, the trailer fees follow contractually

Brokering Model

• Franchise opportunities available –cost = $20,000 • For an existing team with volume exceeding $40 million, this fee can be absorbed by head office • Over 200 franchises across Canada

Ancillary Services

• White label • Equipment leasing, with internal credit department • Creditor life insurance through Mortgage Protection Plan package (life and disability insurance) for clients

Lead Generation

• Generate leads through national campaign and main website • Rotationally distributed to agents • Leads also generated by agent websites

Compliance

• Every mortgage professional has access to ongoing education and up-to-date compliance information from regulators and industry associations • Information communicated via network-wide or province-wide communications (depending on the issue), the DLC Intranet, DLC Weekly Bulletins and the monthly Dominion Opinion internal newsletter

Payroll

• Turnaround time for receiving payment from lender to paying broker/agent: 48 hours

“ we expect 2010 to be a very strong year for our industry.

Consumer confidence is growing again, the housing industry is stabilizing and the overall economy continues to improve. From a network perspective, we will continue to identify and implement new revenue streams for our agents and owners, and focus on cross-selling opportunities so that we can build lifelong relationships with our customers. We will continue to focus on our brand awareness campaign.

Our nationwide television campaigns will make more than 150 million viewer impressions to Canadian viewers in 2010. ” - Gary Mauris, president, Dominion Lending Centres

The Mortgage Group Number of agents: 685

Established: 1989

Compensation

• Splits range from 65 to 95 • Bonus varies on splits • Trailer fee • Trailer fees follow the broker contractually through TMG

Brokering Model

• All provinces except Quebec

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Ancillary Service

• Various TMG branded products • Internal CRM

Lead Generation

• none

Compliance

• Required digital document storage and payroll compliance

Payroll

• Automated payroll system • Paid weekly

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superbrokers

Mortgage Intelligence Number of agents: 800

Established: 2000 (traces back to 1989)

Compensation

• No response

Brokering Model

• Affiliate program that offers broker teams access to volume bonuses, payroll services and compliance

Ancillary Service

• Private label products • Fees paid upfront or trailer • Mortgage Insurance, covering mortgage life protection, critical illness protection and disability • Book of insurance business earns commissions and trailer fees

Lead Generation

• Affinity programs with major financial planning companies

Compliance

• No response

Payroll

• Process payroll and pays brokers via weekly direct deposit

“ at Mortgage Intelligence, we will continue to introduce valueadded programs to brokers to increase their revenues for 2010. The potential for rising interest rates as the economy recovers will be an important driver behind real estate markets across the country. ” - Gord Dahlen, president, Mortgage Intelligence

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Superbrokers

Home n Work Mortgages Number of agents: No response

Established: 2007

Compensation

• 100 % on the first $2,000 earned on a per file basis and then 90 % thereafter • Lowest is 10 % and highest is 90 %. Pay based on the greater of (1) personal production or (2) recruiting others • 90 % trailer fee is paid to the writing agent • Trailer fees follow the writing agent contractually • All clients are owned by the writing broker and vested, meaning all rights to and all data belongs to the writing broker forever

Brokering Model

• Everyone is offered a ‘lifetime guarantee’ that they can leave at anytime with all their files • Not a franchise model, so no fees are attached • Based on training in order to do more deals

Ancillary Service

• National weekly training through web seminars and designed online video tutorials • Weekly web seminar talk show on lowering one’s effective rates of interest and paying off debts faster, which agents can invite clients to attend

Lead Generation

Compliance

Payroll

• Agents receive $20,000 worth of marketing support for $495 • Receive customized website • Generate leads through referral partners and advertising • Each agent is assigned at least three to five financial planners that will refer to them • Detailed checks and balances throughout the file process • For new people to the industry or just busy people, there is MC Assist - a backroom of licensed brokers to handle the paperwork on a file

Real Mortgage Associates Number of agents: 440+

Established: 2007

Compensation

• Senior consultants receive 100% of all finders’ fees and volume bonuses • RMA only provides payroll and compliance services to consultants. As such, it charges a standard monthly fee of $750 to process and pay up to 200 funded deals per year • A pay-per-deal program is also available ($1 - $149,999 is $99, $150,000 - $249,999 is $125, $250,000+ is $175) • Trailer fees follow the senior consultant contractually

Brokering Model

• Operating in every province but P.E.I. • Licence strategy • $750/month or a pay-per-deal fee program

Ancillary Service

• An extranet system, RMAnet. ca, including commercial mortgage hub and a private lending hub • Central underwriting unit

Lead Generation

• No response

Compliance

• Zero-tolerance policy for consultants that abuse lender relationships

Payroll

• Weekly payment via electronic fund transfer

• Three times weekly • Turnaround is less than 24 hours from when funds are received • Goal is to be daily 5 times per week in 2010

“ our Smart Equity Approach to lending will become a cornerstone in the way mortgage lending is done in Canada. Just like the assembly line was for the automotive industry, our focus will be to pay clients’ debt down as quickly as possible with the lowest effective rate possible. It is good for the client and it is good for Canada. ” - Greg Stanley, president, Home n Work Mortgages

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“ there is no other broker firm in Canada with a similar model to RMA. Over the past year we’ve not only launched RMAnet. ca, which is full of tools to help our brokers in their business, but we increased our pay period frequency from 52 per year to 104 per year. ” - Ron DeSilva, CEO, Real Mortgage Associates

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superbrokers

Invis Number of agents: 800

Established: 2000

Compensation

• No response

Brokering Model

• Invis regional managers will assist brokers to establish their own offices, guiding them through the process of getting the premises set up • Commissions are upfront and trailer fee • “Competitive” rates

Ancillary Service

• Private label mortgages • Underwriting • Mortgage Insurance for mortgage life protection, critical illness protection and disability protection.

Lead Generation

• Invis call centre provides brokers with qualified leads.

• Partnerships with major financial planning companies

Compliance

• No response

Payroll

• Brokers paid via weekly direct deposit

“ at Invis we will continue to provide our brokers with wide-ranging support in the areas of IT, marketing, compliance and deal support, all to help our brokers serve their clients better. The issues for 2010 are offering maximum mortgage choice for our clients in the face of a stillrecovering lending sector. ” - Gord Dahlen, president, Invis

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Superbrokers

Mortgage Architects Number of agents: 357 Established: 2006 Compensation

• 90/10 commission and volume bonus split to all lead planners • Associate planners get their splits from lead planners • Continue to pay volume bonus and trailer fees to the submitting agent if they leave the firm

Brokering Model

• No franchise opportunities • All lead planners have ownership in the company, as long as they have minimum production of $25 million in annual volume before joining • No contract, only 3-day notice clause

Ancillary Service

• Exclusive access to My Next Mortgage Company – a lender that provides exclusive and competitive products and rates • MPP creditor life insurance available to clients • Errors and omissions and fraudulent act coverage • Lender rate summary • Group benefits through Standard Life • Corporate discounts with Rogers and Telus • Personal websites and html e-mail program

Lead Generation

• Generated for planners through website and referred to planners on a rotational basis • Lead and associate planners receive own planner web pages with customized bio and link to their online application, which is automatically directed to them

Compliance

• Paperless compliance process • Planners scan their documents into a secure compliance module rather than send documents to head office • Where required by provincial rules, some planners must also maintain secure storage of their own physical files • Every file is reviewed by a fully trained compliance officer • If required, deficiency notices are auto e-mailed during the review process, giving the broker quick notification so he/she can correct the deficiency in a timely manner

Payroll

• Most of commission process is automated • System allows them to apply funds automatically to a deal upon receipt of funds and for a compliance officer to sign off on a deal as soon as the documents are uploaded into compliance module • Commission calculation automatically happens when both of these steps have been completed • Weekly payment

“ our going forward plan is to roll out our proprietary client data management and workflow tools to all of our planners, starting in spring 2010. These tools are developed internally by MA to support our bold vision of an exclusive mortgage planning model that will give our planners an unbeatable edge in the market. Our goal is to become a mortgage planning company. ” - Bob Ord, chairmen and CEO, Mortgage Architects

“ what is the value of a brand to a network unless the brand is generating sales leads today? Centum has partnered with the leading real estate website in Canada – this website gets over 700,000 visitors per month. Then we pass free mortgage leads from this site down to our network. Our brand advertising helps build equity in your business, it is efficient, aggressive, and specifically targets consumers who are in the market to get a mortgage today. ” - Bill Jamieson, vice-president, operations, Centum Financial Group

Centum Financial Group Number of Established: 2002 agents: 1,700+

Compensation

• Starts at 5 per cent and declines to 0.3 per cent on all lender commission • Commission and volume bonus splits vary between broker and agent • Trailer fees can follow brokers/agents if they leave the company, but it depends on the lender

Brokering Model

• The storefront model is the only model at Centum • Over 240 franchises across Canada

Ancillary Service

• White label • Home and automobile insurance • Creditor life insurance • Free underwriting

Lead Generation

• Online leads generated through partnership with real estate website (traffic: 700,000 visits per month) • Websites optimized for search engines and pre-packaged Google Adwords campaigns localized at the office level • Referral from other industries and professional organizations • Automatic direct marketing through internal CRM system

Compliance

• No response

Payroll

• Franchisees are paid daily • Turnaround time for receiving payment from lender to paying broker/agent: two hours

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Feature Trailer fees

later?

money

now or

the trailer fee debate

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Feature Trailer fees

There are still only two Canadian lenders offering the trailer fee option, but that doesn’t mean it’s not being talked about. CMP checks in with brokers to see what they like and dislike about this form of payment

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sk a handful of mortgage brokers what they think about trailer fees as a compensation model and you’ll likely get a mixed response (we did).

Some brokers strongly agree with being paid over a long period time as opposed to getting all the cash upfront. They also see benefits for clients, mainly because of the retention programs trailer fee-friendly lenders offer. However, some brokers like getting paid all at once and are concerned about how trailer commission can be split among associates. They also say any incentive to keep the borrower in one place at renewal time can defeat the purpose of a broker’s services.

“Opinions on trailer fees are very individualized,” says Marvis Olson, a Calgarybased mortgage planner with Mortgage Architects who is strongly on side with the compensation model. “A lot of people say, ‘I want to get paid upfront and I should decide what I want to do with my own money,’ but it really depends financially where you’re at.”

While the issue of trailer fees is contentious, it can be argued that it’s not that big of an issue because there are still only two lenders in Canada offering them – Macquarie Financial and Merix Financial, the latter which recently got rid of its upfront payment model completely and now offers two trailer payment options with different splits.

“Our opinion at Merix is that we would love to see another lender jump onboard with trailer fees because it helps validate what we’re doing and supports it,” says Andrew Kuyper, director of marketing and operations at Merix. “I think the issue you run into in this industry is that there is so much volume being done with the big banks and they have made it clear that they own the customer after they pay that referral fee. So I can’t see any of the big banks going with this model as a result – they’ve already got high retention rates without it.”

With that, let’s take a look at the issues with trailer fees and why some brokers are for them and others are firmly against.

Commission splitting The main divide between brokers on the trailer fee issue is the method of payment. Eschewing the traditional upfront model, where commission is paid in one chunk when a deal closes, trailer fees follow the broker throughout the life of the mortgage. A percentage is still paid upfront – for example, Merix pays 90 basis points in its basic trailer fee model – but the remaining points are spread out and another chunk of commission is paid upon the client’s renewal with that lender.

Cory McLean, a broker/owner at Verico Axis Mortgage in Lethbridge, Alta., says while he likes the idea of trailer fees (“I can work hard now and be compensated for many years down the road”) he doesn’t often opt for them because it becomes too hard to split with his associates who pool volume through him.

“The biggest hurdle I have with trailer fees is sharing the splits because all the fees are paid to the brokerage,” says McLean, pointing out that he has tried two different ways of fee-sharing: one, splitting all the compensation between the brokerage and associate, and two, allowing the associate to keep the upfront commission and the brokerage to keep the trailer fees.

“If you minimize the accounting, the problem lies with the associates feeling they’re not getting compensated nearly as well to write a mortgage with you and they could be going off to somebody else. I think a lot of brokers are keeping the trailer fees in full because if you’re sharing the small trailer fee every year it’s an accounting nightmare to get it where it needs to go.”

Kuyper agrees that splitting commissions can be an issue for brokers who pool volumes with their agents and says an individual focus is encouraged at Merix to avoid confusion and build relationships with brokers. He also points out that to incent individual deal submissions, Merix recently got rid of volume requirements for brokers and replaced them with a 60 per cent funding ratio requirement.

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Many brokers are also concerned about whether trailer fees will follow a broker if they decide to leave the network or brokerage they’re a part of. Since trailer fees have been introduced in Canada, many networks have agreed to let brokers keep their trailer fees if they leave the network – but not all companies have adopted that policy. To counteract this issue, Merix offers XRewards instead of straight cash and these rewards belong to the originator regardless of their network’s policy on trailer fees.

Client retention Another point of contention with trailer fees is how they affect the client because, in effect, they encourage brokers keep clients with the lender they first signed a mortgage with. This can be seen as positive or negative, depending on who you ask.

Ken Lankin, a broker with Mortgage Intelligence in Niagara, is not onboard with trailer fees because he thinks it’s a lenders way of getting brokers “not to bother the client” at renewal time.

“I’m not a believer in trailer fees,” he says.

“I’d much rather look at refinancing the deal or re-placing the deal somewhere else upon expiration.”

While McLean isn’t totally opposed to trailer fees – he deals with both Merix and Macquarie and says about five per cent of his deals are compensated this way – he also has qualms about getting clients to simply renew with the same lender when there could be better options available, dubbing it a “passive approach.”

“We have a high percentage of clients who come back to us at renewal time and that’s based on service and relationship,” says McLean.

“People are not just signing the renewals like they used to. They don’t feel a loyalty to a lender and they’re becoming more educated – I think that diminishes the value of a trailer fee.”

There is, of course, the argument that placing a deal with another lender at renewal time means more money in the broker’s pocket.

But Marvis Olson says in most cases she sees this practice as “churning the account” – a term used in the stockbroker industry that means the broker is setting up lots of deals so he or she will get paid more (but to no extra benefit to the client). Olson also argues that lenders with trailer fees have aggressive retention programs that make it worthwhile for a client to stay put.

“They spend a lot of money on their retention programs and they undercut rates,” says Olson.

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“With trailer fees, you’re under no incentive to move to a different lender because you’re partnering with that lender and you’re sharing the client, as opposed to the lender owning the client by paying a one-time referral fee.”

In response to the argument that a broker could end up making less money by encouraging a client to stay with a lender instead of shopping around for a better deal, Olson says that in her experience, trailer fees are much more financially beneficial to brokers.

“A lot of people shop, but they really only shop when they buy the house,” she says. “At renewal time, they want to take our rate and use it to barter with their existing lender.

Nobody wants to go through the hassle of re-qualifying and applying somewhere else – so we provide that rate environment for the clients, but we don’t really get the benefit. With trailer fees, it’s financially to my benefit if the client stays with the first lender.”

What’s next?

Both Canadian lenders who offer trailer fees have reported success with their respective programs. Before moving away from upfront payment models altogether, Merix reported 83 per cent of originators were opting for trailer fees. Macquarie Financial CEO Grant Mackenzie told CMP earlier this year that the company was paying out more than $100,000 a month in trailer fees.

In addition, both Merix and Macquarie have partnered with brokerages to release privatelabel products with a trailer fee feature (Axiom is the most recent example of this with its Smart Trail Mortgage through Macquarie). The only other minor player is National Bank, whom Olson says has a partnership with Mortgage Architects to pay trailer fees on its All-in-One product (but only to MA brokers).

“I don’t see a big shift toward trailer fees any time soon,” says Kuyper. “I think it’s going to remain a niche product unless we get more small lenders out there taking a more strategic approach with their originator customers.”

And even if the topic of trailer fees remains a divided issue with brokers, there is – at the very least – the benefit of having another option for compensation as opposed to one similar model across the board. And as brokers further share their opinions and reservations about these models, there’s a good chance lenders will take notice – and be convinced to come up with more innovative and broker-friendly solutions. CMP

Top: Cory McLean Middle: Marvis Olson Bottom: Ken Lankin

Profile Brokers

Community

Photo by Jesse Kinos-Goodin

Player

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Profile Brokers

After just three years in the mortgage industry, Erin Letson finds that Julie Stamp has made a name for herself in the auto-industry town of Oshawa by forging community ties – and helping people through tough times

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ne of the first qualities I notice in Julie Stamp, aside from her friendliness, is her focus. We’re playing on the same team at the second annual Ontario mortgage industry ladies charity golf tournament, and while the two other women on my team and I tee off without too much thought (my goal as an amateur golfer is, quite simply, to make contact with the ball), Stamp takes her time.

At each hole, she places her club on the ground, lining it up with the flag in the distance and crouching down to concentrate on what direction her ball needs to head. On many occasions, her calm preparation ritual works – we’re playing best ball and she’s the one with the highest number of top shots among us, likely contributing to a much smoother (and faster) game. Our team didn’t place first at the tournament, but thankfully we didn’t finish last, either.

When I catch up with Stamp, a mortgage agent in Oshawa, Ont., a couple of weeks later to arrange an interview – there was only time for informal chatter on the golf course – she tells me she participated in three other games of golf in the week of the women’s mortgage industry event, among them a charity tournament for Big Brothers and Big Sisters of Oshawa (an organization she volunteers for) and a networking game with an insurance company she gets referrals from.

“It was a lot of golf in one week, but I surprisingly wasn’t tired at the end of it all,” she says when we meet up again, this time for a guided tour of Oshawa in her red Ford SUV. “It was a lot of fun!”

Her willingness to say yes to four games of golf in one week speaks to Stamp’s business philosophy of what she calls “constant networking” and community involvement – two

things that have taken her far during her short time in the industry and led her to build a large client base during a period of hardship in Oshawa and the surrounding areas.

Tough times In the middle of May, Oshawa’s General Motors truck plant closed its doors, an event that meant the loss of 2,600 jobs in the community, not to mention a ripple effect on surrounding businesses both related and unrelated to the auto industry.

Stamp, who lives in the nearby community of Brooklin (which she describes as a kind of “Pleasantville”), says the state of the local economy caused a notable shift in her clientele.

“Most of my business was A business before, but with lots of people in danger of losing their homes, it’s been about finding new solutions like re-financing or bringing on a co-signer, or consolidating debt,” she says, recalling phone calls she received earlier this year where people were crying on the other end of the line because they couldn’t pay their mortgages.

In one instance, Stamp helped a husband and wife who were both let go from a plant that manufactured car seats. Although they faced a large penalty by breaking their mortgage, Stamp was able to find them a much lower interest rate at another lender and reduce their monthly payments by almost $1,000. She has also helped clients who have run into trouble when refinancing their homes because they took an early retirement package from their employer (not always considered “gainful income” by a lender).

In another case, she met a woman who bought a new house but wasn’t able to get the lender to advance the difference between her old mortgage and her new mortgage, bringing her to take out a second loan from a private lender that eventually drove her into debt. Stamp ended up asking the

When looking for an appropriate place to photograph Julie Stamp, she suggested the back entrance to a section of the General Motors plant in Oshawa – a place that defines the city.

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woman’s sister to co-sign on the new mortgage and got rid of the client’s second mortgage – something that saved her almost $1,300 a month.

“Probably the best part of the job is being able to help people financially and come up with solutions for them to help relieve some of the burden of debt,” she says.

While Oshawa is still in recovery mode, Stamp says she has seen the city’s situation slowly improving, citing new developments like the downtown courthouse building and various condo and housing projects. From her office, she also sees many workers at the Michael Starr government building on the main King Street strip and says she has several younger clients who work for the Ontario Power Generation (OPG) in nearby Whitby.

“The population has really been building along the outer edges of Oshawa in the last 10 years and there has been a massive new home build-up in the northern areas,” she says while driving around the city’s old and new parts. She also points out that Oshawa has some of the highest taxes in the province due to its lack of industry.

Grassroots marketing With a background in sales and marketing and work experience at a bank, Stamp started exploring a career in real estate a couple of years ago when a friend mentioned the mortgage business to her. She says her love of meeting

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people and working with numbers prompted her to take the leap to self-employment as a mortgage agent in 2006. Since then, she has worked to build her business by attending local events, joining networking groups (like the one at the Whitby Chamber of Commerce) and advertising in smaller community newspapers.

“I really believe in grassroots marketing,” she says. “If you’re an active part of your local community and you support it then they, in turn, will support you.”

Stamp is also a firm believer in education, so she started holding “lunch and learn” sessions with local businesses to promote the services of a mortgage professional. She contacts the human resource departments of companies for permission and then gives half-hour talks covering topics like credit history and the benefits of using smaller “broker-friendly” lenders as opposed to big banks.

A recent session at an auto company drew 16 attendees on short notice.

The legwork of finding community contacts and referral sources has paid off for Stamp, who says her business increased almost tenfold in the past year (the constant buzz of her BlackBerry during our drive is a good indication of the demand for her services).

“May, June, July, August were crazy months for me – I was working from first thing in the morning until about 7:30 at night – but I’m not complaining because it was nuts in a good way,”

Quick Q&A with Julie Stamp + Toughest challenge?

“Building my book of business.” + Unfulfilled ambition? “To travel through Europe, specifically Scotland and Ireland where my grandparents were from.” + Greatest risk you ever took? “Leaving my salaried job to venture into self-employment.” + If you were not a mortgage broker, what would you be doing now?

“Forensics.” + Hobbies? “Golf, mountain biking and reading.” + What words would you use to describe yourself?

“Passionate, energetic, friendly, tenacious – and a puzzle solver.”

Invis.

Right where I want to be.

Hi everyone, Gerri here.

Running a successful brokering business takes time and effort, and so does raising a family. And with Invis on my side, I can balance my business and my life.

My work days are busy. I’m focused on my mortgage clients… and doing everything it takes to make sure they stay satisfied clients.

But life’s busy, too. Caring for my family keeps me on the go. Being there at my kids’ ball games. Checking homework. Serving in my community.

With all this on my plate, Invis is a fantastic team to have working for me.

I love it that brokers have a strong voice at Invis. Managers at all levels are just a phone call away. They get what we as brokers need. They get problems solved.

At Invis, they make it easy for me to work with my colleagues. We don’t solicit each other’s referral sources. We share information and best practices. We share our successes. We know that we’re in this together.

Invis gets the value of a solid reputation. They’re leading the charge for greater professionalism in our industry. Quality matters, and I benefit directly from the respect and credibility Invis has with lenders.

I have choices and I choose Invis. I’m right where I want to be.

Making her home in Edmonton, Gerri Vaughan is the number one individual mortgage associate with Invis in Canada. At her kids’ softball games, Gerri can be found in the bleachers firing up the cheering section.

Gerri Vaughan Senior Mortgage Associate Invis Inc. Edmonton, AB

www.invis.ca 1.866.854.6847

Profile Brokers

Oshawa at a glance Canadian Real Estate magazine looks at Oshawa’s investment property potential in its November issue (on newsstands now). Here are some facts it uncovered about the city: • Oshawa’s long-neglected waterfront will soon get a $9-million facelift from the federal government.

• Downtown Oshawa was identified by the province of Ontario as a priority urban centre for growth intensification.

• GM boosted production at its Oshawa plant to meet demands for the 2010 Camaro.

• Oshawa’s transit options – including GO Transit and VIA rail – have made it increasingly popular with downtown Toronto commuters.

• The vacancy rate in Oshawa is low at 3.7 per cent overall and is forecasted to decline as commuters continue to move to the city and construction continues to stall.

• Oshawa’s housing universe consists of older, compact housing in the industrial southern neighbourhoods and more suburban-style homes in the more affluent northern side.

• Oshawa’s unemployment rate is slightly higher than the national average at 9.7 per cent in July. However, the city has fared much better than the autodependent Windsor, where unemployment reached 15 per cent in July.

she says, adding it meant much less time to devote to hobbies like mountain biking along Oshawa’s waterfront and cooking.

While Stamp expects the fall and winter months to be slower – she has scheduled a well-deserved cruise in November – she is also launching a side business in the coming weeks with a real estate agent in the area. The business, called SmartHome Solution, will be a referral service directory for local homebuyers and owners who need to find businesses like movers, painters and real estate and mortgage professionals. She says it will provide her with co-branding opportunities and another avenue to get her name out in the community.

With her focus on building a client base – a focus that harkens back to her determination on the golf course – Stamp is not only optimistic about the future of her business, but about the future of Oshawa, which she believes is slowly but steadily shaking its downtrodden image.

“When I first moved here, lots of people were like, ‘what were you thinking?’” she says, laughing. “But I think in five to 10 years, Oshawa is really going to be a destination … right now it’s just in a transition stage.” CMP

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profile Q n A

Equitable Trust remains a key player in Canada’s alternative lending market, providing Ontario, Manitoba and Alberta with financing options for alt-A clients. CMP talks to Harry Singh, the company’s team leader (sales) about what brokers need to know about partnering with a niche lender

making it work CMP: How can a broker successfully work with an alternative lender?

The key to successfully dealing with an alternative lender is for the mortgage broker to educate themselves on the lender’s products and services.

With this knowledge, the broker can then match their borrower’s needs with the right lender based on the five C’s of underwriting – credit, capacity, character, collateral and capital.

Harry Singh

CMP: What does a broker need to do to make sure the deal gets done?

In order to establish a borrower’s character, a broker should analyze his or her credit to understand the reasons behind slow payments, collections or judgments when presenting this information to a lender. The broker must also evaluate a borrower’s ability to make mortgage payments by reviewing his or her income in relation to their obligations. In addition, the broker must consider various assets in relation to various liabilities against those assets to establish the customer’s net worth. Typically an alternative lender tends to be more flexible in this regard than traditional lenders. And finally, a well-seasoned broker will analyze the collateral to establish any concerns that an alternative lender may have with the property. Concerns can range from the value of the property, to the location and or the condition of the property.

CMP: Why is disclosure so important to a lender, particularly an alternative lender?

Brokers providing full disclosure will find the process of arranging an alternative mortgage much more efficient. By presenting all the relevant information to a lender, it eliminates a certain

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amount of time spent on phone calls between the underwriter and the broker. A broker also avoids the risk of a deal being cancelled once new information surfaces about a customer’s employment situation that will then render the deal unfit for the lender. These situations tend to get quite complicated and invariably result in borrower dissatisfaction.

CMP: Why should brokers look beyond rate when dealing with their clients?

Most brokers understand that they have access to the same lenders and basically the same available rates. In the world of alternative lending, customers are not as price-sensitive and appear more concerned with the overall solution being presented to them. The focus of attention should be on features such the amortization period, prepayment privilege options and prepayment penalties as well as administrative costs for managing property tax accounts and so forth.

CMP: What are some features of Equitable Trust products that brokers might not know about?

At Equitable Trust, there are several features that a broker would find attractive for their customers, including a flexible GDS/TDS (up to 50/50 considered) requirement, a longer amortization of up to 40 years without a surcharge and the additional flexibility for a self-employed borrower to qualify for a mortgage with up to 85 per cent loan to value. In addition, we offer generous rental offsets and a mortgage that has flexible pre-payment options to real estate investors, as well as affordable post-funding services where your clients can use their own lawyers for purchases and refinances. CMP

We’ll be there first, too

Since its inception, Merix Financial has led the way by being first to offer Mortgage Originators selective access, a compensation program focusing on the individual Originator, and dual-branded customer correspondence. MERIX provides approved Originators with the tools they need to succeed, and an industryleading compensation structure that builds a book of business with ongoing value. So you can count on MERIX to be ahead of the competition. Now. And in the future.

Learn how MERIX can reward you now and build long-term value.

Call 1-877-637-4911 or email info@merixfinancial.com today.

Profile Insight

A revolution in real time Home n Work mortgage consultants and Smart Equity have come out with a program that they say will “revolutionize” the way brokers interact with their clients, saving Canadians hundreds of thousands of dollars in the process

Quick facts Smart Equity + $1,595,000 Smart Equity software giveaway for advisers over next 12 months + $100,000 amount your average client will save in interest payments over life of mortgage by using Smart Equity + $20,000 value that brokers receive in a “kick-start” customized marketing materials for signing up with Home n Works + Free Smart Equity software for advisers, with a $95 annual user fee

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ou can’t blame Greg Stanley, president of Home n Work Mortgages, for being excited.

After all, it’s not every day that you get to change the way an industry does its business – which is exactly what he says will be the result of the new Smart Equity program and its claim to save the average homeowner over $100,000 in interest over the life of a mortgage.

Stanley, also a certified financial planner, says that it’s all part of what he believes should be the true role of a mortgage broker – being the clients’ personal coach to help relieve them of debt as efficiently as possible.

Most lenders and competitors shy away from encouraging clients to be clear title and debt-free, he says. “They are more renewal-motivated rather than referral-motivated, but as coaches we don’t want to see people simply refinancing every five years. We want them focused - without needing to change their current budget - to pay off all debt as quickly as possible.”

Smart Equity The premise to the program sounds surprisingly simple, but it is the result of complex software that Stanley says will reduce the time it takes to pay down mortgages as well as other debts that any client may have at any given time, and will tell the client when to pay what on a monthly basis.

“What we’re doing is using a line of credit to make a pay down on their actual existing first mortgage, so on the very first day Smart Equity will prompt you to take $5,000 and throw it on your mortgage, so on a $100,000 mortgage that is now $95,000, it’s still accepting payments as if it was a $100,000,” he says.

The result is a lower amortization, which is accompanied by having normal revenue and expenses flow out of the line of credit until it is

mortgagebrokernews.ca

back to zero, in which the program will prompt the client to put another $2,500 down on the mortgage, and so on, until the debt is gone.

Basically, it first sets the monthly payment at a fully discounted bank rate. Then it will powers down the effective rate of the mortgage to be lower while keeping the payment the same, Greg Stanley explains Stanley.

“Naturally what is going to happen is that it’s paid off quicker, so rather than 30 years it’s done possibly in 12 or nine.”

Home n Work also has an extensive financial adviser network across Canada, with plans to train 1,000 more in the next year. All Home n Work mortgage consultants are assigned to the advisers in order to work together to “come up with creative solutions that improve immediate cash flow, plan for wealth accumulation and pay off debts faster,” he says.

Another one of the benefits of the program, says Stanley, is that “we don’t need to wait for the next five-year renewal to see what is happening with our clients’ finance because the household budget of each client is uploaded every 30 days - that is as close to real time tracking as you can get in the mortgage brokerage industry.”

All this, he says, will simply mean more clients paying off their debts sooner.

“Our mission is to be the national mortgage broker that saves thousands of Canadian households billions in unnecessary interest costs.” CMP

service directory

Banks

Broker Networks

Bridgewater Bank www.bridgewaterbank.ca Ph: 1 888 837 2326 Page 39

Lanyard Group www.lanyardgroup.com Ph: 604 688 5388 Page 36

ING Direct www.ingdirectbrokerteam.ca Ph: 1-800-574-5629 Page 37

Macquarie Financial www.macquariefinancial.com Ph: 1 877 462 3788 Page 7

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

Merix Financial www.merixfinancial.com Ph: 1 877 637 4911 Page 61

Peoples Trust www.peoplestrust.com Ph: 1 800 663 0324 Page 24

Scotia Mortgage Authority www.scotiamortgageauthority.com Page 9

Axiom www.axiommortgage.ca Ph: 1 866 504 0516 Page 23

Centum Financial Group Inc. www.centum.ca Ph: 1 604 257 3940 Page 15

Dominion Lending Centres www.DominionLending.ca Ph: 1 888 806 8080 Page 29

Home Loans Canada www.hlcmortgages.ca Ph: 1 866 452 1821 Page 19

Non-Bank Lenders

Abode Mortgage Corporation www.abodecorp.com Ph: 1 877 226 3305 Inside Front Cover

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

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

The Money Source www.mymoneysource.ca Ph: 416 699 2274 Page 47

Home n Work Mortgages www.homenwork.com Ph: 1 866 658 0492 x 100 Pages 16 & 17

INVIS www.invis.ca Ph: 1 866 854 6847 Page 57

Insurance

Financial Ties www.finties.com Ph: 905 793 3393 Page 6

Firm Capital www.FirmCapital.com Ph: 416 635 0221 Page 22

Home Trust www.hometrust.ca Ph: 1 877 903 2133 Page 31

AIG United Guaranty Mortgage Insurance Company Canada www.aigug.ca Ph: 1 877 244 8422 Page 49

Canada Mortgage and Housing Corporation www.cmhc.ca Ph: 1 888 463 6454 Page 43

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

Mortgage Architects www.mortgagearchitects.ca • Ph: 1 877 802 9100 Page 27

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

Mortgage Intelligence www.mortgageintelligence.ca Ph: 1 877 667 5483 Page 25

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service directory Tax-Deductible Mortgages

The Rose Corporation www.rosecorp.com Ph: 1 877 449 3535 Page 58

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

Technology & Software

Verico The Mortgage Practice Inc careers@vtmp.ca Ph: 905 458 4222 Page 12

TDMP.com www.tdmp.com Ph: 1 866 500 8886 Page 33

Title Insurance

Stewart Title Guaranty Company www.stewart.ca Ph: 1 888 667 5151 Contents Page

Filogix Limited Partnership www.filogix.com Ph: 1 866 345 6449 Page 53

Commercial Lenders

Real Estate

Nexus Investment Corp www.nexusinvestment.ca Ph: 1 604 664 7079 Page 26

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

Appraisal Institute of Canada www.aicanada.ca Ph: 613 234 6533 Page 21

Vector Financial Services www.vectorfinancialservices.com Ph: 1 866 483 8018 Page 28

Solidifi Inc www.solidifi.com Ph: 1 866 583 3983 Page 11

Real Estate Institute of Canada www.reic.ca Ph: 1 800 542 7342 Page 45

Is your company looking for a new team member?

Please contact Scott Clarke: scott.clarke@kmimedia.ca

Got news?

Y Your

news n ews is our news!

Do you hav have a e news to share? r Hav ave you you held d a recent event v or made d a new w appointment? pp If so,, Have CMP W WANTS ANTS to hear from ffrom you.

Send us your newsworthy submissions and photos, and you may find your story printed in a future issue of CMP. Send your news to: jesse.kinosgoodin@kmimedia.ca

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