CMP 5.12 by Key Media

NO. 13

Guide to e iv alternat lending

Guide to alternative lending

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PUBLICATIO

www.mortgagebrokernews.ca

December 2010, 5.12

NICHE SERIES Reverse mortgages

SPECIAL FOCUS Saskatchewan

PROFILED Elfie Hayes: Making her mark online PUBLICATIONS MAIL AGREEMENT #41261516

44 Saskatchewan Saskatchewanâ&#x20AC;&#x2122;s small broker industry has benefited from a provincial economic boom and is brimming with optimism. Heather Li explores the changes and the opportunities within this tight-knit community

5. 12 issue

cover story

26 Year in Review 2010 saw some ups and downs for brokers, but overall the health of the mortgage industry remained fairly healthy. John Tenpenny takes the temperature of the industry as brokers look ahead to better cut top on things crop marks

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contents 8

get them back on track – and earn referral bonuses in the process

Letters & comments from mortgagebrokernews.ca: Some of the best stats and comments from CMP’s website

56 Broker Profile: By embracing social media and the Web, Elfie Hayes was able to expand her business during recessionary times. Heather Li looks at how she translated personality into online success

NEWS 10 News: Mortgage market increases, HST confusion, household debt, reaching first-time homebuyers, broker industry report and more 34 Niche Series – Reverse Mortgages: Identifying opportunities is the key to growing reverse mortgages as part of your business 38 Business Diversification: The mortgage industry has evolved over the past few years, from delivering a specialized service to offering a more diverse product range. Our sister publication MPA looked at the benefits of providing property investment services to your clients 49 Six referral mortgage marketing mistakes: Doren Aldana explores some of the reasons why new brokers fail in the first two years of their career

PROFILES 54 Provider: Instead of sending clients with damaged or non-existent credit on their way, mortgage brokers can now refer them to a secured MasterCard® program through Peoples Trust to

mortgagebrokernews.ca

INSIDE Guide to alternative lending In CMP’s continuing series of guides, we look at the growing niche market of alternative lending and talk to the lenders and brokers that thrive within it

60 Insight: Erin Hamilton talks about her shift from training as a cop to becoming a young mortgage agent with MortgageBrokers.com and why she enjoys the business 62 Guest Column: Catherine Evel explains why celebrity endorsement will help all mortgage brokers in the long run

regulars 22 International News 24 This time last year 63 CMP Service Directory Follow us on Twitter Twitter.com/CMPmagazine

Editor’s Letter

A warm welcome from the broker community My wife and I bought our first home earlier this year and I’m glad to say we used the services of a mortgage professional. The experience was educational and informative and the service was first rate. When it’s time to renew our mortgage, I won’t hesitate to return to this broker, knowing I will get the best mortgage for my needs. Now that I’ve sufficiently lowered your guard, I want to introduce myself as the new editor of CMP. In case you’re wondering, the previous paragraph is a true story. That experience certainly gives me an understanding of why the broker industry in this country continues to grow and why homeowners need to consult with a broker when purchasing a home. I recently attended the annual CAAMP conference in Montreal and met a number of brokers and others associated with the mortgage industry. Everyone had good things to say about the magazine and our aim is to continue to improve the content of both the magazine and our website www. mortgagebrokernews.ca to ensure that the information and news brokers want is being provided in a timely and interesting way. I want to thank everyone for their words of encouragement and for their enthusiasm for the mortgage industry. In preparing our cover story (Year in Review on page 26) I learned that 2010 has been a challenging year for brokers, but there is optimism going forward and some things to be proud of over the past year. Recent surveys and reports on the broker industry in Canada from CAAMP and consulting firm Deloitte show that the broker business is strong and will continue to gain market share as more Canadians become aware of the industry because consumers are becoming much more knowledgeable about their mortgage options and of course want the best rate. While brokers are no longer the lender of last resort, simply offering rates won’t be the way forward. Successful brokers have and will position themselves as advisers offering a valued-added advice to the consumer. In closing, I must remind everyone that nominations for the fifth annual Canadian Mortgage Awards are currently open and everything you need can be found at www.canadianmortgageawards.com. I look forward to seeing everyone at the event on April 29th, 2011 at the Liberty Grand in Toronto. As always, please feel free to contact me and let me know what’s happening in your corner of the mortgage broker industry. Cheers. John Tenpenny Editor john.tenpenny@kmimedia.ca

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5. 12 issue

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Quotables

“what it tells us is that almost 50 per cent of Canadians who are buying a home for the first time are seeking out the advice of a professional mortgage agent or broker. And most importantly, it shows that Canadians realize that there is a real advantage to seeking out an independent mortgage professional – someone that can offer them numerous choices.” - Martin Marshall, Ontario Sales Manager with Homeguard Funding Ltd. (Verico) and chairman of the Communications Committee for IMBA, on recent broker industry study. Page 26 Correction In November’s “Superbrokers” article there appeared some incorrect information about Invis and Mortgage Intelligence. Both Invis and MI were founded in 2000 and each brand has approximately 700 brokers working across the country. The company representative quoted in the article was Stan Falkowski, senior vice president and national sales leader with Invis and Mortgage Intelligence.

“what we like to do with our broker relationships is put that fully in the hands of our people because disclosure statements are quite different than conventional mortgages. So as the subject matter expert, our BDM manages that client through the process and keeps the broker well informed along the way.” - Greg Bandler, senior vice-president, sales and marketing for HomEquity Bank, on reverse mortgages. Page 34

December 2010 Publications Mail Agreement #41261516 Postmaster: Return undeliverable addresses to KMI Publishing, 100 Adelaide Street West, Suite 300, Toronto, Ontario M5H 1S3

EDITOR

John Tenpenny

Staff Writer

Heather Li

Staff Writer

Shane Buckingham

NATIONAL SALES MANAGER

CEO

Tim Duce Mike Shipley

Marni Parker

SUB-EDITOR

Rachel Naud Jacqui Alexander

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Readers Write Web comments

Federal budget cuts IMPP, standardizes prepayment disclosure

As I attempt to explain differences between IRD calculations and thee-month interest penalties, I sometimes seem to arrive at a different result than what the lender comes up with. I have found that it is easier to ask for a discharge statement from the lender for information purposes only. This ensures the prepayment amount is accurate allowing the client to determine if they indeed want to break their mortgage contract. It is an extra step in the process of refinancing and it would be greatly appreciated to have a standard method of calculating prepayment penalties. This would be in the interest of all involved, from lenders to mortgage specialists to the clients. -RB Public awareness campaign aimed at first-time homebuyers

I have checked out the site and it contains a lot of good information, but an assumption is made that consumers are going to seek out each lender independently. There is no mention of the role brokers play in the process. I have contacted them and encourage all brokers to do the same. Below is the response I submitted to the FCAC:

Thank you for providing the information for consumers on advice shopping for mortgages. I almost entirely agree with your claim of “independent” information and advice. The portion of the site I differ on is the suggestion of asking each lender certain questions about the terms of

mortgagebrokernews.ca

the mortgage. This assumes the consumer will not be using a mortgage broker who has access to many lenders. As you may be aware, mortgage brokers constitute over 30 per cent of all mortgages arranged in Canada each year. This share has been slowly increasing year after year. Brokers also have access to many lenders, who do not advertise to the public, who often have better terms than the typical financial institutions. Therefore, if your purpose is to provide independent and unbiased information to the Canadian mortgage consumer, it would be only proper to include the mortgage broker as a source of mortgage options. After all, 30 per cent of Canadians already do. - Brad Currie, Verico Versa Mortgages HST confusion abounds in Ontario

The article stated that they are trying to get Ontario to launch an awareness campaign when what they should be doing is petitioning against the HST all together! Get rid of the HST tax grab and manage the money that you already get efficiently, instead of just taxing the people more. We see government scandals wasting money almost every week and then they come back asking for more... it sickens me. – Jon S. View DLC’s Don Cherry ad

Perhaps CAAMP will take note to advertise the benefits of a broker instead of the bank. With or without AMP. - Vic

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News Industry

Mortgage market surpasses $1 trillion The Canadian residential mortgage market has surpassed $1 trillion for the first time this year as higher prices forced many to borrow heavily for new homes, and low interest rates encouraged more refinancing. At the end of August, there were $1.008 trillion in mortgages outstanding, according to the Canadian Association of Accredited Mortgage Professionals (CAAMP). This marked a 7.6 per cent gain from a year ago, and the volume of outstanding mortgages has increased by 194 per cent over the past 15 years. Many Canadians have also been using their mortgages to free up extra money. Eighteen per cent of mortgage holders took equity out of their homes, with nearly half citing a need for “debt consolidation or repayment.” The average amount borrowed against home equity was $46,000. CAAMP estimated total borrowing at $41 billion, about the same as last year. About $15 billion was taken out for renovations, $6 billion for education and other spending, $7.5 billion for investments and $4 billion for other purposes. CMP

housing starts expected to decline for 2011 Housing starts are expected to continue to moderate in the last quarter of 2010 and into 2011, according to the Canada Mortgage and Housing Corporation (CMHC). CMHC estimates total housing starts for 2010 will be in the range of 176,700 to 194,700 units, with a point forecast of 186,200 units, while starts in 2011 will be in the range of 148,000 to 202,300 units, with a point forecast of 174,800 units. “High employment levels and low mortgage rates will continue to support demand for new homes in 2011. Nevertheless, housing starts will decrease to levels more in line with long-term demographic fundamentals next year,” CMHC Chief Economist Bob Dugan said in a news release. Dugan also expects that the resale home market will remain balanced over the next two years as existing homes sales continue to ease and inventory levels rise. Existing home sales are expected to be in the range of 423,800 to 455,900 units in 2010, with a point forecast of 440,300 units sales. Sales in 2011 should be in the range of 390,600 to 483,700 units with a point forecast of 438,400 units. As supply and demand move into balance during 2011, the average existing home price is expected to increase only modestly in 2011. CMP

Canadian homeowners comfortable with mortgage debt: CAAMP Canadian homeowners are comfortable with their mortgage debt, according to the sixth annual State of the Residential Mortgage Market report from the Canadian Association of Accredited Mortgage Professionals (CAAMP). They also have significant home equity and can handle an increase in their mortgage interest rate. “Canadians are being smart and responsible with their mortgages,” said Jim Murphy, CAAMP president and CEO. “They are building equity in their homes and making informed, long-term mortgage decisions. The survey results speak to the strength of our mortgage market, especially when compared to the United States.” A few highlights from the report: • 80 per cent of Canadian homeowners have more than 20 per cent equity in their homes; • 35 per cent of mortgage holders either increased their monthly payments or made a lump sum payment in the last year; • 84 per cent of mortgage holders said they could withstand an increase of $300 or more on their monthly payments. CMP

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News Industry

How much the value of Canadian building permits issued in August 2010 fell compared to July 2010

Public awareness campaign aimed at first-time homebuyers To encourage first-time homebuyers to consider all options before choosing a mortgage, the Financial Consumer Agency of Canada (FCAC) is launching a public awareness campaign that offers free “unbiased mortgage information.” “There are so many options for consumers, including the type of lender, mortgage, length of term and amortization period, and the size and frequency of payments that it can be overwhelming, particularly for first-time homebuyers,” said Ursula Menke, FCAC commissioner. “First-time homebuyers need to weigh those options, as they would if they were interviewing someone for a job.” The campaign launched October 25 and ran for four weeks. Ads were placed inside subways, sky trains and buses in Ottawa, Toronto and Vancouver. Online and banner ads also ran on selected websites. Interior transit ads contained customized codes that could be scanned with a smartphone. It directed the phone to FCAC’s website, moneytools.ca, which included publications, tip sheets, a video testimonial and two online interactive tools, the Mortgage Qualifier Tool and a Mortgage Calculator. CMP

-9.2%

Canada’s household debt risks are being mitigated: Scotia Economics After witnessing the experiences of other countries during the global credit crisis, and living through the painful deleveraging here in the 1990s, Canadians are very cognizant of the dangers of excessive debt leverage, according to a special report released by Scotia Economics, entitled Canada’s Balance Sheet & Economic Advantages Mitigate Household Debt Risks. “There is an understandable concern about the rapid rise in borrowing, and the buoyant housing market in particular, that has pushed Canadian household debt leverage to new records,” said Warren Jestin, chief Economist, Scotiabank. ‘However, our analysis suggests that the odds that current household debt leverage will trigger a full-blown relapse – either in the housing market, or more generally in the economy – are relatively low.” According to Jestin, “today’s situation is much different than the early 1990s when corporate, household and government balance sheets were simultaneously imperiled and monetary policy was much more restrictive. Canada entered the recent downturn with close to two decades of government fiscal repair, strong corporate balance sheets, and a world-class banking sector.” He goes on to say, “even with the continuation of low borrowing costs, existing debt burdens coupled with reduced employment gains point to a cooling of consumer spending and housing activity in the year ahead.” The report also notes that the structural features of Canada’s financial sector – and, more specifically, its mortgage market – operate as a last line of defence behind Canada’s other advantages. CMP

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News Industry

Xceed not federally regulated yet

Canadian house prices overvalued Canadian housing is overvalued, but not as much as those in Australia, Hong Kong or France, according to a new worldwide survey. The Economist magazine’s annual survey showed Canadian homes cost on average 23.9 per cent more than they are worth. Meanwhile the scale ranged from the high end with Australian homes overvalued by 63.2 per cent, to Japan at the low end, where houses are undervalued by 34.6 per cent. “Singapore, Hong Kong and Australia boast the gaudiest year-on-year price increases, even if the rate of appreciation is a down a bit from the summer,” the report states. Canada’s house prices were up 4.5 per cent from one year earlier. From 1997 to 2010, prices have increased by 70 per cent, according to the report. The Economist’s analysis of “fair value” housing is based on comparing the ratio of current house prices to rents with the long-term average. In other words, the purchase price of a house is divided by the rent it could have earned per year. CMP

4, 816 number of detached home starts in Edmonton for first nine months of 2010 (Canada Mortgage and Housing Corporation)

new Calgary condos under construction There are 3,710 apartment-style condominiums under construction in the Calgary Census Metropolitan Area, according to Canada Mortgage and Housing Corporation. There are also 707 units in standing inventory, which does not include the 1,000 new or vacant apartments listed for sale on MLS. Calgary has issued permits for 818 new condos by the end of September, compared to the 352 new permits issued by the end of September last year. Most of the new construction was started during the housing boom from late 2005 to mid-2007 when labour, materials costs and buyer demand significantly increased prices. Unfortunately, for many developers, the boom ended when the units were brought to market, with prices reflecting the high construction costs rather than the new reality. Earlier this year, several new developments experienced a rush on sales of smaller units, priced under $200,000, but as soon as those units vanished, so did the buyers. There are at least three major apartment-condominium projects either under construction or about to be launched that are targeting the new reality of the condo market. The Manchester, The Drake and University City are all selling units below the $200,000 threshold with some as low as $160,000. The price point is targeted at younger buyers and could bring investors back into the condo market because of location and the confidence they will easily be able to rent the units cheaply and cover their mortgage costs. CMP

mortgagebrokernews.ca

Xceed Mortgage Corporation, a provider of insured mortgages, announced that it has asked the Office of the Superintendent of Financial Institutions to place its application to become a federally regulated institution on hold pending the completion of several initiatives to be completed by Xceed. These initiatives include completing its transition from operating as a non-conforming lender to a prime lender and the significant reduction of the remaining mortgage balances in the various trusts to which Xceed sold the mortgages in the first place. It is Xceed’s expectation that these initiatives will be completed over the next several quarters. According to Xceed, this will also convert the interests in these mortgages to cash resulting in the majority of the $68 million of equity becoming available for new business opportunities. CMP

Calgary single-family home demand remains low: CMHC Demand for detached single-family homes in Calgary has slowed over the past couple of months and is likely to remain that way heading into 2011. During September, construction began on 368 homes—the weakest month of this year and the second straight monthly decline, said the Canada Mortgage and Housing Corporation (CMHC). “There are still a lot of people hesitant to spend because they are concerned about the continuing uncertainty in the economy,” said Deep Shergill, president of Prominent Homes and past president of the Canadian Home Builders’ Association Alberta. “As well, the resale market continues to provide competition for new home builders.” September’s construction starts were 40 per cent below the 616 recorded in September from a year ago, according to senior market analyst Richard Cho of CMHC in Calgary. “Single-detached starts declined for the second consecutive month following 13 months of yearover-year gains,” Cho told the Calgary Herald. “With demand for new homes moderating and stronger numbers to compete with from the latter half of 2009, new construction for the balance of this year is expected to trail 2009 levels.” CMP

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mortgages in the press

Industry

Canadian mortgage broker industry strong for the future: Deloitte The Canadian mortgage broker industry is poised to remain strong, according to a new report by Deloitte. The report entitled “Winning strategies in the brokered mortgage marketplace” found that mortgage brokers have evolved from “lenders of last resort” to a legitimate option, and is shaping a more positive mortgage landscape for Canadian homebuyers. “In the face of significant industry developments, such as the recent credit crisis, industry consolidation and price competition, many banks and non-bank lenders are starting to seriously evaluate the economics involved in pursuing the mortgage broker channel,” said Todd Roberts, consulting partner at the Corporate Strategy Practice. “As more of these lenders enter this business, Canadian mortgage consumers will ultimately benefit in the form of increased choice of products, value-added advice and more convenient services.” It is unlikely mortgage brokers will dominate market share as suggested five years ago, but the broker channel will continue to stabilize. In 2009, brokers represented 38 per cent of total origination transactions in 2009, up from 26 per cent in 2003, according to the Canada Mortgage and Housing Corporation’s 2009 Mortgage Consumer Survey. Also, mortgage agents sourced half of their 2009 volume from the three big national banks still actively participating in the broker channel. A few notable trends the Deloitte report predicted: • Mortgage brokers will evolve from “rate shoppers” to “advisers.” • Major banks will continue to compete against broker business. • Superbroker networks will continue to consolidate. In 2005, almost 70 per cent of Canadian mortgage agents were employed by one of five broker houses. Since mid-tier networks have emerged, the figure tops out at 85 per cent. • Niche lenders with specialized product offering will emerge through the broker channel, increasing options for new immigrants, the self-employed and individuals with credit challenges. CMP

mortgagebrokernews.ca

Ontario boomers to downsize homes: TD buyer report Most Ontario boomers are planning to move to smaller homes, according to the TD Canada Trust Boomer Buyers Report. Eighty-six per cent are looking to downsize. Half said the smaller size will help them save money, while 36 per cent want to enjoy more luxurious features. “Many boomers find that their needs and priorities have changed since they moved into their current home,” said Farhaneh Haque, regional sales manager for mobile mortgage specialists at TD Canada Trust. “If you find you have more room than you need, consider ‘right-sizing.’” The report found these other provincial trends: Sixty per cent of Atlantic Canadian boomers, versus 49 per cent nationally, plan to spend retirement in their current homes. But only 41 per cent of Atlantic homeowners will be retiring mortgage-free. Further, 22 per cent still need to pay off more than half their mortgage. Alberta boomers are the most likely in the country to have paid off their mortgage in full with six in 10 being mortgage-free, compared to 44 per cent nationally. Albertans are also the most likely to spend retirement at their vacation home (nine per cent versus five per cent nationally). Meanwhile 56 per cent of boomers in Manitoba and Saskatchewan, compared to 36 per cent across the country, would consider buying a retirement property in the U.S. Boomers in British Columbia are the least likely in the country to own a home and be mortgage-free, as nearly one-third of homeowners have more than 60 per cent of their mortgage left to pay off. CMP

HST confusion abounds in Ontario It seems that the majority of Ontarians still don’t get it. According to a recent Ipsos Reid survey, 56 per cent of Ontarians still mistakenly believe that the harmonized sales tax (HST) applies to the full purchase price of an existing home. In truth, the tax only applies to the transaction fees for existing homes, and applies to the full price for new homes. Since the average price of a resale home in Ontario is roughly $330,000, the majority of the survey’s respondents thought they would have to pay an additional $40,000 to purchase the home, according to the Ontario Real Estate Association (OREA). The association says the province’s Realtors are become increasingly concerned that this persistent confusion is in fact dampening the housing market. “We see it on the front lines every day. Clearly, Ontarians still don’t know what the HST covers and what is exempt,” OREA president Dorothy Mason said in a news release. “This is not helping the housing market, and it’s not helping the Ontario economy. This confusion means that many buyers think the cost of a resale home is tens of thousands of dollars higher than it actually is. “We’re doing our part to inform our clients, but we shouldn’t have to do it alone. We’re calling on the Ontario government to launch an immediate public awareness campaign to educate taxpayers and end the HST confusion,” said Mason. Ipsos Reid surveyed 830 Ontarians from Oct. 4 to 11 on behalf of OREA. The estimated margin of error is +/-3.8 percentage points, 19 times out of 20. CMP

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Industry

Andrew Moor sees lots of opportunity for brokers Andrew Moor, president and CEO of Equitable Trust, was positive on how much opportunity brokers have in Canada and his perspective on how they can continue to grow business. “I do have a strong view that brokers should focus Andrew Moor on mortgages, and choose either residential or commercial but don’t try to do both,” he said to CanadianMortgageTrends.com. “There is no big win to be had on selling complementary products and it only confuses the broker’s position in the market. A broker that can be really, really good at offering mortgage advice will never be short of customers.” Moor spoke with the mortgage blog about the subprime market, competition for deposits and prospects for mortgage brokers. Prior to joining Equitable, he was the president and CEO of Invis Inc., and was the chairman of the Canadian Association of Accredited Mortgage Professionals. CMP

AMBA helps Edmonton charity give pregnant and parenting teens a better life Alberta Mortgage Brokers Association Director Gord McCallum was all smiles as he held up his part of the bargain, sporting an adult diaper, bib and soother in front of the media and Realtor counterparts. This fall, AMBA Edmonton and area members challenged the Edmonton Realtors Community Foundation to a diaper square-off as part of Terra’s Baby Heroes Diaper drive, held from Oct. 6 to 24. Each organization set generous internal goals to 23,000 diapers, and challenged each other to see who could raise the most by Oct. 22. If AMBA won, Realtors Community Foundation board members were to wear bibs and dine on baby food: Creamed corn, beef broth, sweet potato custard and, for dessert, pureed prunes – all served cold. The grand tallies were AMBA 23,692 diapers and the Realtors came in with 25,403. CMP

mortgagebrokernews.ca

News Industry

appointments The Mortgage Group Ontario Inc. is pleased to welcome Morgan Vaughan to the position of lending solutions manager for Ontario. TMG Atlantic Inc. announces Eric Gall and Sheila Bianchi as new lending solutions managers with Bianchi covering Nova Scotia, and Gall overseeing Newfoundland, Prince Edward Island and New Brunswick.

Gord Dahlen leaves Invis

TMG Alberta Ltd. welcomes Ed Arnone as the new lending solutions manager in Alberta. National Bank announced that Susan Thomas and Vin Dewar have joined its broker services business development team. Thomas will act as the BDM for Brampton, Caledon, Orangeville, Etobicoke and North York in Ontario, while Dewar will be the BDM for eastern Ontario region that encompasses Ottawa to Napanee. HomEquity Bank, provider of CHIP Home Income Plan, is proud to announce several new appointments in response to the growing business demand: David Bernardi in the role of director, corporate partnerships for Quebec, Richard Chevalier as business development manager for Montreal South Shore East, Greg McKernan as business development manager for Toronto Metro West, and Rob Tarasio is business development manager for Toronto Metro North.

Top: Morgan Vaughan Bottom: Rob Tarasio

Gord Dahlen, the president and CEO of Invis, stepped down from his position in mid-October and left the company. According to a memo from Invis’s board of directors, the parting was mutual and the firm wishes Dahlen well for his future endeavours. Invis started in 2000. In 2008, Invis and Mortgage Intelligence merged as one firm. In 2009, Mr. Dahlen became president and CEO of Invis and Mortgage Intelligence. Prior to serving as Invis president and CEO, Dahlen was the executive vice-president for Western Canada at the company. CMP

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In the community

Right Rafick Hosany (third from left) was the first monthly winner of Dominion Lending Centres Bankfighter’s Great Mortgage Giveaway contest. Also pictured are mortgage agent Steve Vuceta (second from left) and broker/owner Darick Battaglia (fifth from left).

mortgagebrokernews.ca

News

mortgages in the press

Industry

Coast Capital launches new mortgage product Coast Capital Savings launched a new product that the company says will give customers greater flexibility and control. The credit union’s You’re the Boss Mortgage was introduced Nov. 9, and includes one of the highest level of extra payments in Canada, easy access to funds when needed and a new rate option that is supposed to integrate the best features of fixed and variable rates. “Our research revealed that customers feel their financial lives are being controlled by their long-term mortgage debt and they are highly motivated to get out of this debt,” said Lawrie Ferguson, Coast Capital’s chief marketing officer. “But financial institutions don’t make it easy for them to eliminate their debt, while managing their ongoing financial needs, so our new mortgage product includes flexible payment and withdrawal features designed to place control back in the hands of customers.” The new product includes the Save and Take Payments feature that allows customers to pay off their mortgages faster without penalty by making prepayments of any amount at any time, up to 30 per cent of the principal of the mortgage annually. Coast Capital’s research found 40 per cent of mortgage holders in the Lower Mainland and Vancouver Island area set aside funds for emergencies rather than paying down their mortgage, while 47 per cent were unsure about whether to purchase a fixed or variable rate mortgage. CMP

High buy/rent ratio may lead to housing price correction The current high buy/rent ratio may indicate a vulnerable housing market said Desjardins Securities, but others aren’t placing too much weight on the measurement. Canadian house prices rebounded from the recession, hitting a new record in May and bringing the buy/rent ratio to about 1.85x. This means mortgages are increasingly difficult to afford compared to rent, as house prices increase and rents remain stable. So, excluding major factors such as taxes and maintenance, homeowners pay about twice what renters pay. “This is precipitously close to the 2.3x level reached in December 2007 and the 2.5x level reached in 1988, which preceded house price corrections of 13 per cent and 10 per cent, respectively,” Ed Sollbach and Deep Jaitly of Desjardins wrote in a research note. They added that when the buy/rent ratio hit an “unsustainable” 3.6x in Toronto in 1989, it was followed by a 29 per cent decline in house prices. However, at that time unemployment was also rising and a spike in interest rates to 14 per cent forced many homeowners to sell. The problem with the rent/own ratio is that half of the provinces employ rent control, so prices can’t rise with the broader housing market. For example, house prices in some Toronto neighbourhoods have gained 30 per cent in the last year but Ontario limits rent increases to 2.1 per cent. “Maybe that’s just telling us that rents are just too low,” said Gregory Klump, the chief economist at the Canadian Real Estate Association in a recent interview with The Globe and Mail. “I’m not a fan of the price-torent ratio because it’s so skewed by the fact that rents are subject to rent control.” CMP

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U.S. mortgage applications drop the most in four months U.S. mortgage loan applications decreased 10.5 per cent for the week ending October 15 from the previous week, which is its biggest drop in the past four months. The Refinance Index fell by 11.2 per cent from the week before, and the seasonally adjusted Purchase Index declined 6.7 per cent from one week earlier, according to the Mortgage Bankers Association. “People just don’t really have the confidence or ability to buy a new home,” Paul Dales, a U.S. economist at Capital Economics Ltd. in Toronto, said before the report. “A lot of homeowners are constrained by accumulated debts or the fact that they’re in negative equity.” The average rate on a 30-year fixed mortgage increased to 4.34 per cent from a record-low 4.21 per cent the prior week, today’s report showed. At that rate, monthly payments for each $100,000 of a loan would be about US$497, or US$44 less than a year ago when the rate was 5.07 per cent. CMP

Homeowners hit by mortgage stress Almost 50 per cent of home loan borrowers are suffering from mortgage stress, according to a new survey. Beat Home Loans, an arm of non-bank lender Liberty Financial, found that every second borrower aged 25 to 54 spends at least 30 per cent of household income on mortgage repayments. The survey, which was conducted on the eve of the banks’ latest round of mortgage rate increases found 60 per cent were paying less than seven per cent interest – with the latest changes though, borrowers are expected to be under even greater financial strain. The second quarterly survey polled 1,000 mortgage customers – 81 per cent of respondents were bank customers, while the rest held home loans with credit unions, building societies and other non-banks. CMP

U.S. to probe mortgage foreclosures As many as 40 U.S. state attorney generals are expected to announce an investigation into the mortgage financing industry in the near future. The investigation may pressure financial institutions to rewrite a large amount of troubled loans, according to the Wall Street Journal. The inquiry comes among recent allegations that mortgage servicers submitted fraudulent documents in thousands of foreclosure proceedings nationwide. The mortgage companies are scrambling to defend, and where needed, improve their foreclosure procedures due to anger among homeowners and regulators. The issue arose last month when GMAC Mortgage revealed officials had signed thousands of affidavits supporting such proceedings without knowing their contents. CMP

u.k Three million Britons struggle to pay mortgage In the U.K., as many as three million people are struggling to pay their mortgage each month, an increase of 80 per cent from a year ago, according to the housing charity Shelter. Eighteen per cent of mortgage holders say they are constantly struggling to meet monthly payments, compared with 10 per cent a year ago. “With potential interest rate rises, higher unemployment and steep increases in food and fuel bills on the horizon, it seems unlikely things are about to get easier for homeowners any time soon,” said Shelter’s chief executive Campbell Robb to the U.K. Guardian. “Unless we take urgent action, we may well be faced with a sudden surge of people at risk of losing their home in the coming months.” Currently, repossession levels are not as high as anticipated. Between April and June, 9,400 homes were reclaimed, compared to 9,800 in the first quarter of the year. CMP

Number of Ontario housing starts in September, seasonally adjusted and annualized figures (Canada Mortgage and Housing Corporation)

54,500

u.s.

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ISSUE 4.12

4 2009 31 things you won’t forget about

MARKETING EASY WAYS YOU CAN START A WEBSITE

ANALYSIS LIVE FROM SAN DIEGO, IT’S THE MORTGAGE BANKERS ASSOCIATION

PROFILED GORD DAHLEN: AT HOME WITH THE INVIS AND MI PRESIDENT

2009

Canadians more diligent savers More than half of Canadian workers have changed their spending habits and reduced their debt in 2009 according to the Sun Life Financial Canadian Unretirement Index. Sixty per cent of the 1,200 respondents reduced their debt and 50 per cent cut back spending. Canadians are also more confident of their retirement prospects, with 55 per cent of those surveyed saying they believe they will be retired by age 66. According to Dean Connor, who was then Sun Life Financial’s Canadian president in 2009, paying housing expenses is the No. 1 financial priority of Canadian workers until age 51, when retirement savings takes over as the top priority. One year later Working Canadians are feeling slightly more confident about retirement, despite the recent economic downturn. Canadians showed resolve and character during the financial crisis, with many reducing their debt and cutting spending. At an average age of 51, saving for retirement is still a financial priority for Canadians. One in five men and women say the main reason they’ll be working past age 65 is they need to. Twice as many men as women say the main reason they’ll be working past 65 is they want to. CMP Canada’s alt-A market still performing well Home Capital Group, whose principal subsidiary is the Home Trust company, posted a third quarter net income of $38.2 million in 2009, which was better than expected results, as the lender saw shares increase 37 per cent from last year. The core of Home Trust’s business is in the alt-A market, which saw a resurgence in Canada last year. Although there was 10 per cent unemployment, Gerry Soloway, the CEO mentioned in an interview with the Financial Post that 90 per cent were still working and had good opportunities to buy a house at a low interest rate. One year later The company remained strong in 2010 and its third quarter results released on Nov. 2 showed a net income of $45.5 million, an increase of 18.8 per cent over last year. The total value of mortgages originated in the third quarter of 2010 was $1.68 billion and $5.02 billion

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for the first nine months of 2010, an increase of 17 per cent over the $1.34 billion advanced in the third quarter of 2009 and 44 per cent over the $3.29 billion originated for the nine months ended Sept. 30, 2009. Home Capital also announced an increase in its quarterly dividend to 18 cents per share, which amounts to 72 cents on an annual basis. “This represents an increase of 12.5 per cent in the quarterly dividend and is the 12th increase in the last six years, reflecting Home Capital’s strong growth, profitability and commitment to enhancing long-term shareholder value,” CEO Gerald Soloway said in a news release. The Toronto-based company loans portfolio includes both residential and non-residential mortgages and personal and credit card loans. CMP Profit calls Paradigm Quest’s Katherine Gregory “one to watch Quest’s Katherine Gregory “one to watch” Katherine Gregory was named the No. 1 Canadian female entrepreneur to watch by Profit magazine for founding Paradigm Quest. She started the company with an aggressive sales target and a unique business model that focused on the back office processing of mortgage transactions. Sales grew 55 per cent in one year with revenues close to $20 million. Clients included ING Merix, CMHC, Genworth and Merrill Lynch. One year later Paradigm Quest has commenced work, both from a technology perspective and people/location in Quebec, and its progressing extremely well. “We are working closely with our brand partners and are excited about our launch and the opportunity in Quebec and expect the launch will bring our brand partners in 2011,” said John Bordignon, executive vice-president, Strategic Development. “On the technology front, we have invested heavily in our proprietary technology and are in the midst of launching this month. We believe the system will provide us with the flexibility we need to continue our growth. It is important to note we do not consider ourselves a technology company but rather wish to use the technology we have developed to offer greater value to our business partners as well as continue to grow our business.” CMP

Cover

Year in review

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cover

Year in review

2010 saw some ups and downs for brokers, but overall the health of the mortgage industry remained fairly healthy. With interest rates remaining low, housing prices stabilizing and economic growth for next year forecast to climb slowly, you could say things are not too hot and not too cold, but just right. John Tenpenny takes the temperature of the industry as brokers look ahead to better things in 2011

ertainly the last few years in the Canadian mortgage industry have not been what you would call a “fairy tale” by any stretch of the imagination. However, the past year has seen some emerging trends that have something in common with a certain young girl who liked to enter empty houses and conduct experiments on household items she found inside. According to many pundits the Canadian real estate market seems to be headed towards stabilization or as one bank economist described it, as having its “Goldilocks moment,” not too hot and not too cold. That could be said for the industry in general as most economic indicators predict slow but steady growth for the country over the next year. According to the Canadian Real Estate Association, October sales were halfway between the lows of December 2008 and the record high of Deccember 2009, a sign of stabilization after two years of wild fluctuations. After slowing in the recession of 2008, sales activity reached a peak in late 2009 as buyers rushed back into the market. “The stabilization and ensuing uptick in resale housing activity should help to limit the downside risk to the overall economy,” said TD Bank senior economist Pascal Gauthier. “On the flipside, subdued employment and income growth in the quarters ahead should act to cap the housing market’s upside in 2011.” Porter said the market is approaching “something closer to normalcy.” “Sales are still down heavily from the piping hot pace of a year ago, but they are close to average levels since 2000,” he said. “And, prices are up just slightly from a year ago, while the inventory of unsold homes is close to typical. In other words, there’s not much here for either the wild-eyed optimists or the ranting pessimists, which is probably a good thing.” “High employment levels and low mortgage rates will continue to support demand for new homes in 2011. Nevertheless, housing starts will decrease to levels that are more in-line with long-term demographic fundamentals next year,” said Bob Dugan, chief economist for CMHC. Interest rate intrigue With the Bank of Canada raising interest only once in 2010, there is a consensus that rates will surely rise in 2011. The question is by how much. The U.S. Federal Reserve continues to keep rates low and its recent announcement that it would spend up to $600 billion buying up U.S.

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Cover

Year in review

Treasuries is expected to drive bond yields lower, which, in turn, will keep rates low. Speaking at the recent CAAMP Mortgage Forum in Montreal, CIBC World Markets economist Benjamin Tal said he believes that Bank of Canada Governor Mark Carney won’t let interest rates in Canada get too far ahead of U.S., so all indications are for modest increases in 2011. Canadian banks did recently raise fixed interest rates for the first time in six months, but since variable rates are linked to the Bank of Canada’s monetary policy, most analysts are not expecting interest-rate hikes until at least mid-2011. “We’re still seeing some aggressive pricing on the variable front, and [the Bank of Canada] has indicated that [rates are] going to be pretty much flat or see very nominal increases through to 2012, so that would tell me that in the long term – a year to a year-and-a-half – we’re still going to see low rates,” says Vince Gaetano, principal broker and owner of MonsterMortgage.ca. Mortgage Rule Changes In February, Federal Finance Minister Jim Flaherty announced three new rule changes connected to government-backed insured mortgages, saying at the time that the government is “taking proactive, prudent and cautious steps” to prevent a housing bubble. The broadest change was the requirement that all borrowers be qualified at a five-year fixed-rate mortgage even if they choose a shorter-term lower-interest product. The government also lowered the maximum CMP 5 5 CapitalDirect banner October 2010_V2.pdf 1 10/25/2010 11:24:48 AM amount qrtr Canadians could withdraw in refinancing their mortgages from 95 to 90 per cent, and introduced a minimum down payment of 20 per

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Canadian Mortgage Awards

Bridgewater Bank’s Todd Poberznick (right) and DLC’s Gary Meger.

Canadian Mortgage Awards

2o1o

The fourth annual CMP Canadian Mortgage Awards in April was fun-filled ‘60s-themed evening attended by more than 500 industry professionals. Dominion Lending Centres took home the biggest award of the night for Mortgage Broker of the Year, while Gary Meger – also of Dominion Lending Centres – captured the Mortgage Broker of the Year (national network) award. Congratulations again to all of this year’s finalists and winners. The 2011 CMAs are scheduled for April 29, 2011, at the Liberty Grand in Toronto and nominations are open until Jan. 21. Visit www.canadianmortgageawards.com for more details.

cent for government-backed mortgage insurance on non-owner occupied properties “for speculation.” The new rules took effect in April, just before prices hit an all-time high of $346,881 in May and Ontario and BC introduced the harmonized sales tax and suddenly the market came to an abrupt halt. But despite dire warnings that Canadians had taken on too much debt and that they would have trouble making their mortgage payments, rates actually declined and the housing market saw three straight months of increased sales. “I suppose in retrospect, the change had very little overall affect on the marketplace,” says Don Bayer, president of the Toronto-based independent mortgage brokerage MonsterMortgage.ca. “Given the low interest rate environment, having a qualifying rate which reflects historical averages

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Year in review

Bank of Canada raises interest rate to 0.50%, the first increase since April of 2009

Jun. 1

Feb. 16 Federal government announces changes to government-backed insured mortgages, including requirements that borrowers meet the standards for a five-year fixed mortgage and requiring a minimum down payment of 20 per cent for non-owneroccupied properties

Federal budget includes announcements on new regulations to standardize mortgage prepayment regulations and the elimination of the Insured Mortgage Purchase Program

Mar. 4

Big appointments Here were the movers and shakers of the mortgage industry in 2010: The provincial mortgage broker associations all appointed new presidents: Dean Koeller at AMBA, Margo Wynhofen at IMBA and Joanne Vickery at MBABC, who was also named regional vice president for Western Canada at Mortgage Architects. In the national broker network category, Jason Humeniuk was named vice president of Invis and Mortgage Intelligence. Steve Whitehead was appointed executive vice president for Atlantic Canada at TMG The Mortgage Group, while Glen Ward was named vice president for Atlantic Canada and Eastern Ontario with Mortgage Architects. Paul Therien was appointed Director of Business Development at Centum Financial Group. On the lending side, Martin Reid was named president of Home Trust and Nick Kyprianou was appointed president, mortgage operations with Equity Transfer and Trust Company (ETT). Rompsen named Bonnie Bowerman vice president, underwriting and Mark Moreau was appointed president of Home Loans Canada. At Street Capital, Callum Greg was named regional vice president (Vancouver Island) and MCAP appointed Gino Tieri vice president, sales. When Canadiana Financial Corp. was launched, Mike Linehan was named president and CEO. Among mortgage industry service providers, Andrea Twizell was appointed regional vice president for Ontario and Atlantic Canada at Benesure.

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May 15 Bank of Montreal files a lawsuit alleging hundreds of Albertans conned them out of as much of $30 million in falsely inflated mortgages

seems like common sense. It appears that all banks are following this policy which keeps peace in the marketplace. It has forced some clients into five-year mortgages which is frustrating for some. When you look at the speculative nature of some of the housing markets around the world, we have very little to complain about.” Broker channel news positive Recent reports on the state of the mortgage market in Canada also held some good news. The most impressive number was the fact that outstanding mortgages surpassed the $1 trillion mark for the first time. According to CAAMP’s annual report, this was up 7.6 per cent from last year and a 194 per cent gain over the past 15 years. More good news came in the form of Canadian homeowners being comfortable with their current mortgage debt and feeling they can handle an increase in the mortgage interest rate. “Canadians are being smart and responsible with their mortgages,” says Jim Murphy, CAAMP president and CEO. “They are building equity in their homes and making informed, long-term mortgage decisions. The survey results speak to the strength of our mortgage market, especially when compared to the United States.” According to the survey, 80 per cent of homeowners have more than 20 per cent equity in their homes, 35 per cent of mortgage holders either increased their monthly payments or made a lump sum payment in the last year and 84 per cent said they could withstand an increase of $300 or more on their monthly payments.

cover

Year in review

The federal Competition Bureau and the Canadian Real Estate Association reach a deal, which puts an end to a year-long battle between the two, and ensures that homeowners can pay a broker a flat fee to have their homes listed on the Multiple Listing Service

Oct. 25

Oct. 31 National average home price reaches $343,747, just one per cent higher compared to one year ago and marks the fourth consecutive month during which the average price roughly reflected levels experienced in 2009

CMHC announces that it expects housing starts in 2011 to decline, with the resale home market remaining balanced

Nov. 15

Aug. 31 Canadian residential mortgage market passes $1 trillion mark

Contrary to the U.S. mortgage broker market, which according to the president of the U.S. Mortgage Bankers Association saw a drop in the number of mortgage companies of nearly 85 per cent, the mortgage broker channel in Canada is strong and stable, according to a report by Deloitte. “The Canadian mortgage industry is undergoing another significant paradigm shift,” said Todd Roberts, consulting partner and leader of the corporate strategy practice.. “In the face of significant industry developments such as the recent credit crisis, industry consolidation and price competition, many banks and non-bank lenders are starting to seriously evaluate the economics involved in pursuing the mortgage brokerage channel. As

more and more of these lenders enter this business, Canadian mortgage consumers will ultimately benefit in the form of increased choice of products, value-added advice, and more convenient services.” According to U.S.-based National Association of Mortgage Brokers (NAMB), in 2006, mortgage brokers originated 65 per cent of U.S. mortgages. By 2010, U.S. broker share declined to a previously inconceivable 15 per cent. Well known reasons for this include, but are not limited to, applicants who weren’t properly qualified, homeowners who borrowed more than they could afford, less focus on credit quality due to careless securitization, mortgages with unrealistic rate resets, inaccurate ratings from credit rating agencies and lax regulation.

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Year in review

Comings and goings After Abode’s announcement at the end of January that it was close to negotiating a deal with a Torontobased purchaser, the lender quietly announced the end had come for its mortgage origination business on March 5. Then, just days after Abode Mortgage announced its permanent closure, a few of the lender’s former senior staff members announced they would take the helm at a new mortgage lending operation called Canadiana Financial Corp. Mike Linehan, former CEO at Abode was been named president and CEO of Canadiana. Pacific NA, a financial services company founded and run by MortgageBrokers.com CEO Alex Haditaghi acquired Mortgage Architects and its lending arm, myNext Mortgage Company. Mortgage Architects remains under the leadership of CEO and founder Bob Ord. ICICI Bank Canada entered the mortgage broker channel at the end of March through a partnership with Marlborough Stirling Canada, makers of MorWeb. Although the bank is national, the first phase of the launch only extended to mortgage brokers in the GTA. The name AIG United Guaranty is no longer. The Ontario Teachers’ Pension Plan and National Guaranty Mortgage Holdings Inc. successfully completed the acquisition of the private mortgage insurer in April and renamed it Canada Guaranty Mortgage Insurance Company. HSBC Bank of Canada stopped selling mortgages through outside brokers, following a move made by BMO in 2007. HSBC said they plan to concentrate on growing business through their network of over 140 bank branches. Industrial and Commercial Bank of China (ICBC), the world’s largest bank by market value, moved into Canada, offering a wide range of retail and corporate banking products, including mortgages and commercial loans. ICBC purchased six branches in Canada formerly owned by Bank of East Asia. The Mortgage Alliance network introduced Mortgage Alliance Commercial Canada as a new operation, strictly dedicated to the commercial segment of the market and specializing in projects ranging from $1.5 million to $100 million. This new division will be managed by Murray Wood, principal broker and managing director of Mortgage Alliance Commercial Canada, and his partner Michel Durand, president and managing partner of Multi PretsCommercial Quebec.

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By contrast, according to the Deloitte report, the future for the mortgage broker channel in Canada remains positive, although the scenario anticipated five years ago where mortgage brokers were expected to represent the majority of origination volume is unlikely. The channel will continue to stabilize, settling at approximately one-third of mortgage origination dollar volume. “Contrary to the U.S. market, the Canadian mortgage broker channel is strong, stable and established,” says Roberts. “While medium-term growth prospects are expected to be modest, the mortgage broker channel remains a fixture in the Canadian mortgage distribution landscape.” According to the Canada Mortgage and Housing Corporation’s (CMHC’s) 2009 Mortgage Consumer Survey, mortgage brokers represented 38 per cent of total origination transactions in 2009 (up from 26 per cent in 2003), including young Canadians and 44 per cent of first-time homebuyers. And notably, mortgage brokers sourced half (50 per cent) of their 2009 volume from the three Big Six banks still actively participating in the mortgage broker channel. “What stands out for me from a mortgage broker standpoint is how we have really been able to penetrate the first-time homebuyers market and have still managed to increase overall market share over the last 10 years,” says Martin Marshall, Ontario sales manager with Homeguard Funding (Verico) and chairman of the communications committee at IMBA. “What it tells us is that almost 50 per cent of Canadians who are buying a home for the first time are seeking out the advice of a professional mortgage agent or broker. Most importantly, for IMBA and its members, it shows that Canadians realize that there is a real advantage to seeking out an independent mortgage professional – someone that can offer them numerous choices.” Marshall points to the move by banks years ago to look to third-party referral sources as one reason for the shift. Another was the introduction of monoline lenders coming onto the market and looking to mortgage agents as a viable way to grow their business. “I think mortgage brokers have also done a much better job of portraying themselves as true professionals and bringing their expertise to the forefront in consumers’ minds,” adds Marshall. “Canadian consumers have also changed and you can no longer dictate to a consumer, the consumer now dictates the transaction, which is quite frankly the way it should be. Years ago you automatically went to your bank for a mortgage. Now, because of all the work we’ve done as an industry in improving the service aspect of getting a mortgage, most people know someone who knows a mortgage professional.” CMP

“Winning the 2010 CMA Award for Best Newcomer represents recognition of our accomplishments by colleagues, clients and lending partners, and has helped me gain presence and credibility in the marketplace. We proudly display the achievement in our office and frequently receive praise for it. Our brokerage’s long term goals include many more CMAs!”

Nick L’Ecuyer

Verico – The Mortgage Wellness Group WINNER: ThE GENWorTh FiNaNciaL aWard For BEsT NEWcoMEr (iNdiViduaL)

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Broker Team

Another event organised by

NICHE SERIES Reverse Mortgages

Identifying opportunities is the key to growing reverse mortgages as part of your business

CMP magazine continues its series exploring a variety of niche markets and how mortgage professionals can work within these areas to increase their business. This month we focus on reverse mortgages

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pportunities only exist to those who have the knowledge to recognize them as such. For mortgage professionals, this is certainly true for the niche market of reverse mortgages, a small, but growing revenue source for brokers. A reverse mortgage is secured by the equity in a home and unlike in a traditional mortgage, in which regular payments are made to the lender, a reverse mortgage pays the homeowner and no payments–principal or interest–are required until the home is sold. Homeowners can receive up to 40 per cent of the value of their home, which is based on the age of the owners, the location and type of home and the home’s current appraised value. The full amount only becomes due when the homeowners pass away, when the home is sold or if the homeowners move out and the amount owed is guaranteed not to exceed the home’s market value. There are also several options for homeowners when receiving the money, including lump sum payment or

planned advances over a set period of time. The money from a reverse mortgage is also tax-free. The homeowner’s costs associated with reverse mortgages include an appraisal, independent legal advice and closing legal and administrative costs, which can be deducted from the income provided by the reverse mortgage. “We describe a reverse mortgage as a solution that enables seniors to access the equity that’s built up in their home,” says Greg Bandler, senior vice-president, sales and marketing for HomEquity Bank, the only national provider of reverse mortgages in Canada. HomeEquity Bank originates and administers its reverse mortgages (accrued value of $985 million as of Sept. 31, 2010) under the CHIP Home Income Plan brand, which has been around for 25 years. Last October, CHIP completed the transformation to a Schedule I Bank. According to Robert McLister, a mortgage planner and editor of the website Canadian

NICHE SERIES

Reverse Mortgages

“ reverse mortgages offer houserich/cash-poor seniors a source of liquidity when no better options exist ” Mortgage Trends, “Reverse mortgages offer house-rich/cash-poor seniors a source of liquidity when no better options exist.” Identify potential clients Reverse mortgages are an important niche market for brokers because seniors are the fastest growing demographic in the Canadian marketplace. McLister says the use of reverse mortgages could significantly increase over the next 10-15 years, led not only by the increase in the senior population, but also by other factors such as insufficient retirement planning, lower return on equities, higher health-care costs and longer life expectancies. For Ottawa-area mortgage agent Dave Stevens of Mortgage Edge that is exactly the reason he decided to add reverse mortgages to his service offerings. It’s an area that is only going to grow going forward,” he says. “I don’t think it’s going to be much of a niche market 10 or 15 years from now. I think it will be more of a mainstream mortgage product.” Some might say that mortgage brokers tend to deal with first-time homebuyers who are certainly not the target group for reverse mortgages, but Bandler says the opportunities are there for those brokers who pay attention and are well informed as to the advantages reverse mortgages offer seniors. Stevens says he markets the product to seniors through various local organizations as well as through more traditional methods. “There are a surprising number of seniors online,” he says. Bandler says brokers’ existing clients can be the biggest source of referrals. “Mortgage brokers usually deal with younger clients, the children of seniors and if they have valuable dialogue with their clients, brokers will hear about parents who want to stay in their home and a reverse mortgage might be appropriate for them,” he says.

“This represents a tremendous opportunity for brokers who are really good at opportunityspotting and understanding the clients that this is an ideal fit for.” If clients are considering moving in the next year, then a reverse mortgage is probably not the best option says Bandler. But, if they want to stay for five to 10 years, which is the typical timeframe for most clients, according to Bandler, then a reverse mortgage makes sense. “As a broker, you want to be mindful that you are working with the client to make sure that [a reverse mortgage] is a suitable product for them,” says Stevens. Turnkey process for brokers Once a broker has identified an opportunity and recommended a CHIP Home Income Plan to a client, they send a referral form signed by the client to HomEquity. Then a Business Development Manager (BDM) from HomEquity will go through the education and fulfillment process with the client, including getting the mortgage commitment signed and collecting documentation. If the deal funds,

mortgagebrokernews.ca

NICHE SERIES Reverse Mortgages

Greg Bandler

the broker receives a referral fee of at least 50 basis points. “[HomEquity] has made the referral process simple and rewarding for brokers,” says McLister. “The compensation is roughly the same as a typical mortgage with far less effort required. That’s because CHIP does almost everything once you refer the client.” “What we like to do with our broker relationships is put that fully in the hands of our people because disclosure statements are quite different than conventional mortgages,” says Bandler. “So as the subject matter expert, our BDM manages that client through the process and keeps the broker well informed along the way.” Not only are HomEquity BDMs experts on reverse mortgages, but they are also very adept at dealing with seniors says Bandler. “They understand how [seniors] make decisions, which is quite different than say first-time homebuyers. It is a much more carefully considered solution and may take more time and involve more people, such as children or other relatives.” Education is also very important, for both the broker and the end client, says Bandler, because reverse mortgages are not as common as conventional ones. This includes clearing up some misconceptions about reverse mortgages.

“ there is the perception that over time the loan builds up to exceed the equity remaining in the home, which is absolutely not true ” “There is the perception that over time the loan builds up to exceed the equity remaining in the home, which is absolutely not true,” says Bandler. According to Bandler, over the long term, home equity increases at the same time that interest accumulates. For example, a client owns a $300,000 home and they opt for a CHIP Home Income Plan for $100,000. After 15 years there is still comparable equity remaining in the home based on a home appreciation rate of 5.20 per cent (the 15-year national average as reported by CREA as at August 2010) and a variable interest rate of 4.75 per cent for the CHIP Home Income Plan funds. “The clients have been able to enjoy the benefit of unlocking their home equity and putting it to work for them,” says Bandler.

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NICHE SERIES

Reverse Mortgages

For McLister there are some other things to consider when recommending a reverse mortgage, including whether to take a lump sum, invest it and write off the interest or take smaller planned withdrawals on a regular basis. “If a client entertains the lump sum strategy, we advise their financial adviser to run a simulation showing the best, worst and likely case scenarios,” he says. “One can then compare the after-tax cost of the lump-sum approach to taking smaller planned withdrawals on a regular basis.” Another thing to keep in mind, according to McLister, is compensation. “In many cases, it may be preferable for a client to draw from their CHIP account in planned withdrawals. While HomeEquity pays referral fees to

brokers on these draws, it’s obviously less upfront compensation than if the client were to take one lump sum. Obviously, brokers have a fiduciary responsibility to not let this impact their advice to the client.” As more and more mortgage professionals become aware of this niche market, Bandler sees the potential for dramatic growth and “we will continue to dedicate more resources to developing the broker side of the business.” And from what brokers are telling HomEquity, that growth seems certain. “One thing we hear from brokers about reverse mortgages is that it is a real turnkey process,” says Bandler. “They identify the opportunity, they’re kept informed along the way as to the success of the program and receive their referral fee.” CMP

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

CMHC/Conventional Financing Dennis Aitken 403-205-8203 Daniel Stewart 403-205-8202

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

Single Family Financing Tom Wollner 604-331-2210 James Pell 877-855-9750

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Business DIVERSIFICATION

The mortgage industry has evolved over the past few years, from delivering a specialized service to offering a more diverse product range. Our sister publication MPA looked at the benefits of providing property investment services to your clients

driving diversification W

ith commission cuts, consolidation, tighter lending policies, fewer lenders and the effects of the recent global financial crisis threatening their income, smart brokers are now diversifying their business to offer investment property solutions to clients. Diversification has been dubbed the panacea for enhancing the efficacy of business to offer investment property solutions to clients. Enterprising mortgage brokers are quickly recognizing diversification as an attractive option, with potential for increasing the return per transaction and generating an additional revenue stream simply by expanding their services. Tapping into new territories As residential lending remains firmly at the core of the industry, brokers are realizing they can perform better by cross-selling products that go hand in hand with home loan products, such as access to investment property opportunities through a research advice model. With property investment becoming an increasingly popular avenue for clients, it makes sense for brokers to be well versed within this market. In the present broker landscape, we see many brokers who have clients that are investing in property but are doing so without their broker’s assistance. As a result, advisers are missing out on this additional business and potentially losing their clients to other lending sources. And that’s something that no broker should dismiss. One of the reasons that a client engages a mortgage broker is to enjoy having access to opportunities and services that are not

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available to the mass market. Clients like to feel special. Therefore, in order for a broker’s business to not only survive but also thrive, brokers need to diversify and expand this service repertoire. As the future of mortgage brokering lies in the ability of the broker to evolve into a trusted adviser to clients, becoming a financial “general practitioner” on all wealth creation and finance areas not only enhances the broker/client relationship, but strongly diversifies the income streams away from a reliance on the banks. Post-crunch climate Normalization appears to be slowly returning to the marketplace. With interest rates still at all-time lows and housing prices stabilizing, property investors are weighing their options.. Certain credit criteria have also tightened, adding complexity – not to mention confusion – for would-be investors. Enter the role of the diversified mortgage broker. Recognizing the potential for increased value as a vehicle for delivering a range of financial services should be a natural progression for all mortgage brokers to implement, in order to stay on top of their game. Rather than just meet their clients’ financial needs, brokers should aim to surpass their needs and expectations in order to remain a ‘broker for life.’

what’s in it for the broker? • • • • •

Repeat business Referrals Retention of clients Differentiation from other brokers Peace of mind – smart decisions/investments

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Tania Hatcher

British Columbia, Island & Interior cell (250) 818-3884 e-mail tania.hatcher@resmor.com

Sach Desai, BSC

British Columbia, Lower Mainland cell (604) 328-6901 e-mail sach.desai@resmor.com

Quentin Warawa, AMP

Prairies and North Alberta cell (780) 446-4440 e-mail quentin.warawa@resmor.com

Mary Neary

South Alberta cell (403) 880-3447 e-mail mary.neary@resmor.com

Corbett Connors

South Alberta cell (403) 650-7965 e-mail corbett.connors@resmor.com

Steve Futyer, CIM, AMP

Southwestern & Northern Ontario cell (519) 575-8605 e-mail steve.futyer@resmor.com

Carlo Parise, AMP

GTA, Golden Horseshoe cell (647) 404-2297 e-mail carlo.parise@resmor.com

James Brinias

GTA cell (905) 334-5930 e-mail james.brinias@resmor.com

Julie Sanderson

Eastern Ontario cell (905) 925-2908 e-mail julie.sanderson@resmor.com

Terrianne Young, AMP

Atlantic Region cell (902) 240-2568 e-mail terrianne.young@resmor.com

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December 2010

Business DIVERSIFICATION

tapping into your client base Mark Mellick, a mortgage broker in Australia, set up his business in brokering, real estate and financial planning more than three years ago and has learned first-hand how diversifying his product range can generate significant additional income simply by tapping into an existing client base. “These days clients are looking for people that they can trust in relation to their financial affairs and if I am not looking after this, someone else will. Being a one-stop shop is definitely the way to go moving forward in this industry, and brokers should be seriously doing a SWOT analysis on their business, along with some long-term planning, he says. “My role is to educate clients and assist them in their strategy moving forward, so support from Blue Wealth has helped underpin my business model. People tend to buy where they live because that’s where they know. However, that doesn’t necessarily make it the right investment decision. Everything has to stack up.” Mellick believes buying at the right time in the property cycle, in the right area, in the right place and making sure that you are paying the right dollars are all crucial elements of the investment process. Infrastructure, government spending, population movement, age and resident demographics are also keys to making successful choices. “It’s simple: Knowledge is power. But even more importantly, it is how you use and execute that knowledge, which can make it even more effective,” he says. “Good news travels fast and bad news travels even faster. My clients who have attended these seminars have learned a lot from them and have thanked me for the opportunity. Because of this service, I have received referrals for further business opportunities,” he says. “Purchasing is a long-term journey and that’s the view that investors need to take. It’s not about getting a tax deduction because there are many ways you can go about doing that. Rather, it’s about long-term planning and having the right strategy and research in place before you invest.”

While the potential to generate extra remuneration is the obvious advantage of having a diverse product offering, other key benefits include maintaining a stronger client value proposition, saving your client both time and money, increasing loyalty and appreciation, the opportunity to strengthen existing relationships and add another

mortgagebrokernews.ca

dimension to the broker/client relationship, increasing retention rates and boosting word of mouth recommendations and referrals. With some banks shifting strategies to rival those used by mortgage brokers – such as greater emphasis on personalized service and customer relationships – the clear message is for brokers not to become complacent or rest on their laurels. The more brokers can satisfy their clients the easier it is to keep them on a long-term basis, and lessening their need to go elsewhere. One way brokers can diversify and strengthen their business is to work with a property investment company. Blue Wealth Property based in Australia is one such company – a research house studying the Australian property market and identifying growth markets and strong investment opportunities. Its acquisitions teams aims to secure the best investment properties and often negotiate exclusive opportunities for investors. Blue Wealth does not deal directly with the public, instead choosing to work with selected business partners, supporting them to provide investment property to their clients. Blue Wealth’s business partners include accountants, financial planners, real estate groups and mortgage brokers. “Mortgage brokers are a good fit for our business. They have clients who are buying property, and by working with us the broker can help their clients make informed investment decisions based on research,” says Tony Hayek CEO at Blue Wealth Property. “We believe it’s a win for the client and for the broker who creates a new source of income.” Competitive edge Clients want holistic financial solutions so there’s definitely a niche opportunity for mortgage brokers who can provide a range of services. Some brokers are comfortable recommending a property; others simply want to refer a client. Either way, there are companies who can help brokers grow and diversify their business. Blue Wealth supports brokers by providing training, regular seminars, research and education. The group has a national focus, which enables clients to invest, not only locally, but be privy to investment opportunities available nationwide, and in many cases they have access to the general public. They have a proven track record in identifying growth markets and investments that outperform the market. The responsibility of the mortgage broker is to provide the best advice in accordance with the duty of care and the industry’s professional code of ethics. Providing unique investment opportunities from a specialist dedicated to sourcing a gamut of new and interesting investments ensures the broker is doing just that. CMP

$100 billion of experience behind every mortgage In 2010 Invis and Mortgage Intelligence reached the milestone of $100 billion in mortgages funded… a new record in the Canadian mortgage brokerage industry. Our experience and expertise is why Canadians trust us. When borrowers turn to one of our mortgage brokers, they’re in good hands. When you become part of Invis or Mortgage Intelligence, you join a national team of mortgage professionals who are proud to deliver outstanding advice and attention to each of their clients. There’s 100 billion reasons to join us.

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Feature Saskatchewan

Wheat

kings 44

mortgagebrokernews.caâ&#x20AC;&#x201A; â&#x20AC;&#x201A;

Saskatchewanâ&#x20AC;&#x2122;s small broker industry has benefited from a provincial economic boom and is brimming with optimism. Heather Li explores the changes and the opportunities within this tight-knit community

Feature Saskatchewan

askatchewan has long been known for its golden wheat, but over the past decade, grain hasn’t been the only driver of the province’s economy. A worldwide increase in demand for key resources such as potash and petroleum or the three F’s – food, fuel and fertilizer – has pushed growth to record levels.“In the last three or four years, there’s been a huge paradigm shift of people’s perceptions of Saskatchewan,” says Daryn Young, broker with Mortgage Intelligence in Regina. Next, came a housing boom, which saw housing starts hit a 25-year high in 2008, followed by a 25 per cent jump in 2009. What this created was a huge opportunity for mortgage brokers to grow their business and their image with consumers. Bud Jorgenson, sales director for The Mortgage Group’s Prairie division, has been part of developing the province’s young broker industry for nearly seven years now. “Probably four years ago, our entire industry was 100 mortgage brokers serving all of Saskatchewan. Now, it’s more than double that. But as an industry, we’re still a very small community,” he says of a province whose population sits at just over 1 million. As Saskatchewan’s economy and population continue to grow, its mortgage broker industry attempts to keep pace.

“ probably four years ago, our entire industry was 100 mortgage brokers serving all of Saskatchewan. Now, it’s more than double that ” New rules The Saskatchewan Financial Services Commission recognized the growing mortgage agent trend and began working on new legislation to revamp the old broker rules. On Oct. 1, 2010, the Mortgage Brokerages and Mortgage Administrators Act took effect in Saskatchewan to replace the outdated Mortgage Brokers Act. It signaled the coming of age of the mortgage broker industry. Pam Gaunt, broker with Sky Financial of The

Mortgage Centre in Saskatoon, says the changes were achieved through dialogue amongst the various stakeholders, including the Canadian Association of Accredited Mortgage Professionals (CAAMP). “CAAMP was also very proactive in talking and dealing with Saskatchewan Financial, and trying to be part of that educational process so that there was some kind of parity between provinces,” she says. “Saskatchewan Financial was very diligent going to the broker community and asking for feedback.” The new act focuses on compliance rules for brokerages, such as errors and omissions insurance and implements a model that ranks brokers (similar to the agent versus broker distinction known in Ontario). There are also more explicit rules dealing with consumer disclosure, licensing and education. “We were in desperate need of a new act to cover off a lot of things the old act didn’t,” says Jorgenson. “It’s just another layer of protection for the consumer knowing that there’s some educational requirements people have to go through.”

Quick stats Saskatchewan + Average house price: $238,716 in August 2010, up from the August 2009 average of $233,106 (Canadian Real Estate Association) + Year-over-year housing start increase: 25 per cent from 2009 to 2010 (Canada Mortgage and Housing Corporation) + Unemployment rate: 4.9 per cent in September 2010 compared to the national average of eight per cent in October (Statistics Canada)

Consumer perception Though Saskatchewan didn’t have as strict a mortgage broker act as other provinces, people’s perceptions of the industry were mostly positive, even before the new rule changes. “Most people that have dealt with a broker here understand the value that we bring relative to going directly into a bank branch and dealing with an employee there,” says Young. “The awareness is there for sure, and I think the overall experience of the consumer is generally good.” Similar to the rest of the country, brokers in Saskatchewan were seen as the lender of last resort when people couldn’t qualify with a bank. But because of the province’s small population and forward-looking economy, word of mouth travels fast, according to Gaunt “Part of it is also economics. People have money to buy and they’re out shopping because consumers have become more aware and diligent so they’re not just relying on their bank to provide them with what they need.” Due to its size, Saskatchewan lacks a provincial association similar to the ones in place in British Columbia, Alberta and Ontario. Instead, Jorgenson says further consumer education will come from mortgage associates themselves continuing to provide the best service. “We see ourselves as mortgage experts that because of our knowledge are in a position

mortgagebrokernews.ca

Feature Saskatchewan

to help people getting a mortgage,” he says, referring to his own company, but by extension, his fellow brokers. “It’s more like a doctor. They’re not trying to sell me their service—I just know that I need help so I go in, tell them what my problem is and they solve it for me. As brokers, we focus on one product and we’re extremely good at it.” While the size of the market may prevent brokers from forming an association, it hasn’t discouraged an influx of new players, with many of the super brokerages having set up shop. And this growth goes hand-in-hand with a positive provincial economic forecast. Golden beyond grain It’s become a national story how far along this wheat province has come. Numerous statistics and reports have shown a slowdown in the housing market for the year ending 2010, but Saskatchewan has maintained its strength. “Because our monetary policy in Canada is basically set based on higher population areas, such as Ontario and B.C., when those areas struggle, interest rates comes down, which is what fuels the market,” says Jorgenson. “So as a result, bond rates come down, mortgage rates go down and as far as housing activity goes, in Saskatchewan we didn’t really have that downturn. We just have the benefit of the lower interest rate.” This is evident in its steady rise of average house prices. In August 2010, the provincial resale average was $238,716, up from the August 2009 average of $233,106, according to the Canadian Real Estate Association. Meanwhile, Saskatchewan continues to maintain a low unemployment rate, which drives interprovincial immigration. Statistics Canada reported that in September 2010 the unemployment rate was 4.9 per cent, compared to the national average of eight per cent. This may have something to do with the type of people choosing to live in the province. According to Young, the last four to five years has seen an influx of entrepreneurs. “It’s more of a tax-friendly place so you’re finding a lot of people here starting to locate with their businesses,” he says. The challenge behind the development of these new markets in a low population area is the ongoing lack of lender confidence. “We aren’t able to assist people with challenged credit because they don’t qualify under the standard

mortgagebrokernews.ca

rural lending in Saskatchewan Saskatchewan’s two major urban centres, Saskatoon and Regina, continue to maintain strong housing markets, which inevitably aids the burgeoning broker industry. But most of the province is still rural farming land, even with the huge mining sector, so mortgage agents should be aware of what lenders may look at when inspecting acreages of property. Jane Kulbida, associate vice-president of Concentra Financial, says there are some lending differences to watch for: 1. Farming land – Insurers tend to shy away from farms because the law in Saskatchewan regarding foreclosures favours the landowner. 2. Well and/or septic tank – When a property is serviced by a well or septic tank or both, lenders tend to stay away because there’s the extra step of obtaining a water portability certificate. 3. Out buildings – Acreages tend to have a lot of out buildings, such as a barn or storage shed, that doesn’t count toward value. Lenders often merely look at the house, garage and five acres of land even on a 40- or 80-acre parcel. 4. Location – If it’s a small town, research on how that town runs is advantageous. Are there any specific industries? Who is the major employer? How will the place fare if the big employer shuts down? Concentra is a national financial services trade association with its head office in Saskatoon. “With a company having Prairie roots, we understand rural lending and we’re not afraid to go there,” says Kulbida. “We have really good relationships with all of the brokers in the province. If they have a property they’re looking for financing on, they certainly are able to send us a deal or give us a call to talk about it.”

programs so that limits us from assisting those people in the marketplace,” says Gaunt. While it’s a small portion of her business, Gaunt says it’s a consideration when trying to finance mortgages in smaller towns and rural areas. “There are a number of lenders that do not want to lend if things are zoned agricultural, which many areas in Saskatchewan are.”

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Feature Saskatchewan

Growing the market’s lender reach capabilities comes at a time with the flourishing economy and population. “If there’s money to be made in the province, lenders will find a way to get here,” adds Gaunt. “Everybody’s got everything on a short leash right now, still from the setbacks that they’ve had. But I do see things starting to open—the leash is getting a little longer.”

Top: Bud Jorgenson Middle: Daryn Young Bottom: Pam Gaunt

The banks’ leash As the broker industry has grown in Saskatchewan, banks have started to tighten their own leash around consumers. “They know we’re around,” says Young. “The banks are trying to retain the business and in a lot of ways, probably trying to prevent business from coming into our brokerages. You hear on the street a banker talking to a potential client who is rate shopping saying how brokers, won’t give them the service; to stick with the bank and keep their loyalty there.” In response, brokers are sticking together, viewing the big banks as their competition instead of each other. This close-knit, friendly community impresses brokers who have relocated from Alberta to Saskatchewan. The high-density population areas are infamous for broker “poaching,” and while some brokerage switching is inevitable, Jorgensen says everyone has a high level respect for one another’s business. “I know that it sounds too good to be true, but we have a really solid group of mortgage professionals. “I don’t see them as my competition. Everyone is really doing a good job for the industry.” Young couldn’t agree more. “The optimism is pretty high in Saskatchewan. There are naysayers saying interest rates may go up or there’s a potential real estate bubble, but here people are buying,” says Young. “I don’t think they’re too concerned that property values are going to pull back too much if at all in Saskatchewan. If you become disciplined enough to do what you need to do in business, you could be quite successful here.” At the moment, Saskatchewan’s broker industry looks to be one of the healthiest in the country. With a strong economy, a steady housing market, camaraderie among mortgage professionals, and steadily increasing consumer education and awareness of mortgage broker value, the industry reflects the growing confidence of Saskatchewan’s populace. “Before you never felt it as much,” says Young. “Being born and raised here, you always felt that you had to get out. Now I’m finding a generation coming out of high school and university who don’t want to move. People are actually proud of living in Saskatchewan.” And wherever people are proud to live, a mortgage broker is sure to be there to help. CMP

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1 (866) 454-3631 mortgagebrokernews.ca

NO. 13

Guide to alternative lending www.mortgagebrokernews.ca

the

story of the home

equity loan

Knowing Your Alt-A Clients

Becoming an expert speaker

Q&A Lester Shore Brian Thompson Pino Decina PUBLICATIONS MAIL AGREEMENT #41261516

t.ca trust.ca ometrus w.home www.h ww t.ca trust.ca ometrus w.home www.h ww

contents cmp guide no.13

NO. 13

Guide to Alternative Lending

2 6

Renewed Commitment For more than 30 years, Home Trust has dedicated itself to serving the alternative client. CMP talks to Pino Decina, vice-president of mortgage lending, about how the company is continuing its service to this select market and partnership with brokers

Knowing Your Alt-A Clients Working with an alternative client means understanding a different kind of consumer behaviour. CMP shows what you can do to build your self-employed business niche

The Story of the Home Equity Loan: Knowing your home equity loan options will help you serve the self-employed, credit-challenged and other unfamiliar scenarios. Heather Li talks to alternative lenders for insight into the choices you can offer your clients

Attracting More Brokers with MCAP eclipse MCAP eclipse brand is designed for mortgage agents to assist the B consumer. CMP speaks to Brian Thompson, director of business development for MCAP eclipse, about the company’s experience with alternative lending

Talk the Talk Delivering information seminars for consumers on alternative lending is a great strategy to build new business. Andrea Cornish from CMP’s sister magazine Mortgage Professional Australia talks to the experts on how you can become an expert speaker

What’s New in Alternative Lending? CMP speaks to Lester Shore, manager of Optimum Mortgage, a division of Canadian Western Trust, about the upcoming year in alternative lending and his advice for brokers dealing with this niche market

mortgagebrokernews.ca

Guide Feature

the story of the

home equity loan 2

mortgagebrokernews.ca

Guide Feature

Knowing your home equity loan options will help you serve the self-employed, credit-challenged and other unfamiliar scenarios. Heather Li talks to alternative lenders for insight into the choices you can offer your clients

ost of your business is likely made up of A clients, the ones with great credit and a steady full-time job. It’s easy getting them a mortgage with a bank at a low interest rate. But in our society where more and more people are choosing the self-employed route, there’s a cache of consumers to serve that don’t qualify with traditional financial institutions. Instead of turning these alternate-A, and even B (the credit-challenged), clients away, familiarize

yourself with alternative lending products that tap into home equity for loans rather than strictly examining income and credit. “I understand why some brokers may be afraid of it,” says Ron Cuadra, vice-president of national sales at Home Trust. “It’s not inside-the-box lending, unlike A lending, where credit is good, income is provable and the story is straightforward.” Home equity loans act exactly the same as a traditional mortgage for the consumer with some subtle differences. But the broker needs to be more thoughtful when recognizing why a client requires alternative lending. The story behind the home equity loan A woman enters your office or calls you on the phone. She started a baking company a few years ago and rode the trend of fancy cupcakes to success. She began the project out of her city apartment rental and now feels financially comfortable to purchase her first home. But she invested most of her revenue back into the business and claimed little income when filing her taxes—or didn’t file at all. “A lot of people who are business-for-self haven’t filed their taxes for maybe a year or two,” says Paula Hutton, business development manager at Capital Direct, a private alternative lending company. “Or even a lot of regular people haven’t filed their taxes. And if you don’t declare enough money the bank says, ‘You don’t make enough money,’ and you won’t qualify for a home.” Another example of this is a firefighter who works his full-time job but has a side job where he receives cash and doesn’t claim it. To obtain a mortgage, he would need the combination of his full-time salary and side income. So a home equity product on the alternative lending side looks at a client’s story instead of just rigid criteria.

mortgagebrokernews.ca

Guide Feature

when a client uses a home equity loan There are so many different cases where a client may need a home equity loan from an alternative lender. Though the details vary, the most common reason is the client can’t prove income. Here are some people you may run into: 1. Business-for-self persons who failed to file their taxes, or didn’t declare enough income because they reinvested most of it back into the business. 2. Someone with a full-time job but also working a side job for cash that she doesn’t claim. Only the combined income would qualify her for a mortgage but since she has no proof of the extra income, a bank won’t take her. 3. Sometimes culture prevents people from sharing personal finances. But you can still have a conversation with them and suggest an alternative home equity loan. 4. A credit-challenged client may have become seriously ill for a few months, went through a messy divorce or had a ridiculous fight with the phone company. There’s a story behind the low Beacon score. The alternative lending route always wants to know what the story is about. And so should you.

Generally, the only qualifier for a home equity loan is proof of how much equity exists. Typically, when you submit the application, the lender will send a certified appraiser to walk through the home to assess its worth. “The appraiser sees if there’s mould damage or a grow-op in the basement,” says Hutton. “Or it has high-end appliances, beautiful floors and everything is just top-notch, and it’s going to be a lot more valuable home than the guy next door who maybe lived there for 50 years, has old cabinets, old linoleum and has never done any upkeep on the home.” Another qualifier that an alternative lender may examine to some extent is the client’s ability to make the loan payments. The lender could ask for the past three months’ bank statements to show that the client has enough money to pay back the loan. A client’s credit report also acts as a gauge of

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personal financial behaviour. But circumstances do arise where the client doesn’t want to submit any official documentation. Hutton has seen cases where certain cultural groups consider finances sternly private and won’t budge on releasing that information. “They may not want to tell you about the nine properties they own with a brother or a sister,” she says. “They’ve got three companies, a house here and another house there, but they don’t want to go into those particulars.” As the broker, it’s your job to extract as much information as you possibly can through conversation. “You have to know your client,” adds Hutton. “You want to know how much of the home they own or are going to own, whether they’ve paid their taxes—unfortunately you do have to find that out—and the purpose. You want to know what they want the money for.” Having that discussion means you can suggest a home equity product since an appraisal suffices for qualifying in most instances. Alternative lenders can do this because the remaining equity in the home mitigates the risk. As long as there’s equity available, it’s not very challenging for the client and often the path of least resistance when you see a non-income qualifier. So, home equity loans work well for the credit-challenged client, too. One common instance is a divorced couple where during the last year of marriage, both partners thought the other was paying the bills. Instead, neither was and it dropped both of their credit scores. This is a classic case where there’s a story behind the credit report that a bank won’t consider. Home Trust’s Cuadra stresses how alternative lenders do concern themselves with the story because the risk falls on them. “At the end of the day, we have the remaining equity as a backup if the client runs into trouble paying the mortgage,” adds Cuadra. “We price to risk. If we have to take over that property, we have enough equity out there to mitigate any losses.” How a home equity loan differs for the client Though obtaining a home equity loan is an easier process for the client than a traditional mortgage, the rate is often higher and additional fees can apply. So if your client can qualify for A lending, you want to take them where the rate is lower. The other minor advantage to a client who qualifies for A lending but looks at the alternative route is that a home equity loan is processed

Guide Feature

much more quickly. If your client needs something to take place extremely fast, these types of mortgages are processed smoothly because all it requires is an application being submitted, a commitment signed, an appraisal done and checked by a lawyer. Another aspect of alternative lending you would advise consumers on is what would happen if they don’t make their payments. Since this loan is considered higher risk, private lenders are more diligent in following up on the client’s status when a mortgage is in arrears. “We have a very highly trained collections department,” says Cuadra. “We don’t hesitate to follow up with the client when they fall behind in payments. Our goal is to offer solutions by working with them. If no solution is possible internally, we refer the client back to the broker to see if they can help.” Aside from these minor points, a home equity loan functions like a normal mortgage for the consumer. Length of term, rate, amount and frequency of payments are all established to work best for your client. If you’ve dealt mostly with A clients but want to help anybody who comes your way, start building your alternative lending knowledge.

more client options Alternative lending can accommodate more than just the purchase of a regular home or a refinance. Paula Hutton, business development manager at Capital Direct, cites a few examples: • Raw land – if your client has 40 acres of raw land stashed away, a mortgage can be obtained to finance building on the property • Builders’ mortgage for construction of a home – even if you don’t have raw land, the home you’re building has its own equity • Mobile homes – many traditional banks don’t recognize the value in this kind of home • Small towns – another higher risk area that banks often don’t touch So if a client approaches you with an unusual or unfamiliar scenario, figure out the story, contact the lender and have a talk about what can be done.

Knowing your options Knowledge is power and the best way to use alternative lenders is to learn as much as you can about their products. Generally speaking, whenever you become more educated on a product, it gives you the confidence to present to the client. Once you see a product such as this exists, you’ll see it as an opportunity that many other brokers are taking advantage of right now. Alternative lenders are typically brokerfriendly and want to help you. “With Home Trust, we specialize in brokers that don’t know a

“ knowledge is power and the best way to use alternative lenders is to learn as much as you can about their products ” lot about alternative lending,” says Cuadra. “Our underwriters and salespeople, and as a company, we’ve all been trained to work with brokers and invite those who are unfamiliar with this type of lending. We help them along the way and work in conjunction with them to get the deal done.” Though a home equity loan requires less documentation—the only essential paper is the application then an appraiser inspects the home—Cuadra understands that it takes more thought and effort when packaging the deal. It makes sense to use the business development manager, such as Capital Direct’s Hutton. Her job involves hosting seminars on the private lending products and establishing relationships with brokers. “I get 20 or 30 associates a day calling, asking, ‘I’ve got a deal. I want to run it by you. Is this something you guys will do?’” she says. And often, the answer is if the equity is in the home, the client will qualify for the loan. Broadening your business to alternative lending can be challenging but is a benefit to you and consumers. The role of the mortgage broker is ever evolving and keeping on top of product knowledge functions as your biggest asset to build, grow and last in this industry. The unknown is always scary at first, but fortunately, alternative lenders want to help you as much as you want to help your client. CMP

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Guide

Home Trust

Renewed commitment For more than 30 years, Home Trust has dedicated itself to serving the alternative client. CMP talks to Pino Decina, vice-president of mortgage lending, about how the company is continuing its service to this select market and partnership with brokers CMP: What’s new in alternative lending for Home Trust? Pino Decina: From our perspective, Home Trust has a renewed sense of commitment to alternative lending. Over the past couple of years, we’re the only national lender that has continued offering an alternative suite of lending products. In the fall over 30 days, we held broker appreciation events across Canada to thank our brokers for their ongoing support and commitment to the partnership with Home Trust. We also want to reassure them that we are committed to our core business line into 2011 and beyond.

CMP: For any broker unfamiliar to alternative lending, what is Home Trust’s core business line? PD: What’s been our bread and butter for the past 30 years is the underserviced portion of the Canadian marketplace—the individual that can’t or is not able to obtain the credit they need or deserve from their main financial institution. The numbers are constantly changing, but historically, about 20 per cent of the market was underserved by their main bank. That number seems to be increasing slightly probably into the mid-20 per cent

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“ over the past couple of years, we’re the only national lender that has continued offering an alternative suite of lending products ” range and it’s a market that Home Trust knows and understands very well. The majority of these individuals could be self-employed and may not have income documentation behind them to satisfy the mainstream bank. But these are clients we’ve dealt with for the past 30 years and understand well. And have the products to service them.

CMP: Home Trust has been in business for over 30 years. What significant changes in alternative lending has it seen in that time? PD: It’s been interesting the past five years or so. Historically, these clients weren’t able to obtain an A-type mortgage, perhaps we’re not able to gain acceptance by any of the main insurers in the country. But in the past five years, the insurers are bringing out state-ofincome type products. A lot more of this

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Home Trust

“ you can put out a product suite, you can put out a matrix but every deal is different. Every deal makes sense in its own way ” clientele was able to obtain an A-type mortgage—that sort of changed earlier in 2010. And it seemed the tightening occurred to the self-employed individual as far as income documentation goes. So it is a sector of the market where I guess it is always moving. However, selfemployed individuals probably make up a good 75 to 80 per cent of our business. The 20 to 25 per cent would be individuals with bruised credit, new to the country or may not have any credit at all.

CMP: What new products has Home Trust recently debuted? PD: Nationally, we launched our one-charge mortgage product, another alt-A product, where the borrower can combine an alt-A first mortgage with a Home Trust one with an equity line Visa all under one charge, one registration. So it saves them registration and appraisal costs, etc. Instead of paying twice for everything, it’s all under one fee. In Ontario, we introduced the credit assist product. It’s a purchase and refinance alternative mortgage where the borrower can obtain up to 85 per cent loan-to-value for Beacons in a lower range, 520 plus. Based on feedback from the broker community, this is a space that has been underserved, especially in the past year. This is a little different than what we normally do, but it’s for the individual with verifiable income who doesn’t have the credit. So the credit is bruised for whatever life issue that has just occurred and they need an 85 per cent mortgage in order to wrap everything up whether it be a full consolidation putting everything under one payment. What we’re finding with these clients, immediately once that need is served, for instance, in case of a consolidation, that Beacon score is going to increase.

They’re all on one-year terms so at the end of the one year, the broker coming back and offering the client an A mortgage is very possible.

CMP: After your broker appreciation events, what can mortgage agents expect from Home Trust in the new year? PD: It’s interesting the feedback you receive coast to coast. But one thing I noticed that was consistent among the broker community was the need to have a one-stop mortgage lender like Home Trust and a partnership with a lender like Home Trust. Brokers across the country are sort of seeing their market share diminishing slightly to the banks. But with Home Trust, when a client is sent to us through the broker, that client is of the broker’s not of Home Trust. So even though we’re here to service them and meet their needs, at time of renewal, we always look to the broker to see if there’s anything else they can do for that client. Is the client able to obtain an A-type product because either the credit is graduated or improved or they have income documentation now behind them that satisfies a main bank? Either way it gives the broker an opportunity to repackage a deal to do what’s best for the client.

Pino Decina

CMP: What does Home Trust offer the mortgage agent who is unfamiliar with alternative lending? PD: We give them the ability to pick up the phone and call one of our underwriting staff, business development managers and we would be more than happy to deal with them one-on-one on every single alternative deal that they have. The best way to get into the alt lending business if they’re new to it is deal by deal. That’s the way we’ve operated for the past 30 years. You can put out a product suite, you can put out a matrix but every deal is different. Every deal makes sense in its own way. The alternative space can be a tricky one so mortgage agents need to make sure they partner with a lender that’s confident, that understands it and will be around when it comes time to fund their deals. CMP

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Guide

Alt-A Clients

Working with an alternative client means understanding a different kind of consumer behaviour. CMP shows what you can do to build your self-employed business niche

knowing your

Alt-A

clients S

tatistics show that nearly 20 per cent of all income earners in Canada are now self-employed—a group that has traditionally found it more difficult to qualify for a mortgage. The biggest issue they face is not showing enough income because creative accountants do what they can to reduce income to lower tax liability. Unfortunately it’s this income that a mortgage underwriter uses to determine the borrower’s eligibility. While there were previously existing programs that allowed for no documentation or low documentation and no income verification loans, many of those were eliminated under the new financial rules. Now the insurer, Canada Housing and Mortgage Corporation (CMHC), is virtually out of the alt business. However, there are still options available for alt clients outside of the banks and CMHC. Banks as referral partners Terri St. Jacques, broker and owner of Dominion Lending Centres Mid Island Financial in Port Alberni , B.C., has worked with this niche clientele for over 16 years.

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She first established a relationship with one private lender, then offered the banks her services for self-employed customers who the bank couldn’t help. It was a winwin situation. “The main issue with self-employed clients is they write off a lot of their income to save taxes,” says St. Jacques. “Banks need documentation, tax returns and a higher down payment. So if a bank says, ‘No, I can’t help that client right now,’ I’ll take them to an alternative lender. Then when the mortgage comes up for renewal, it’s more likely I can then place it with that first bank.” When St. Jacques first started as a broker, she worked in Courtenay, B.C. Word started

Guide

Alt-A Clients

to spread she was partnering with bank branches. One broker took her out for coffee and essentially told her to leave town. “So I decided to focus on private lending,” she laughs. Today, 98 per cent of her business comes from bank referrals and she now has a pool of private lenders to choose from. She advises new brokers that this is a niche requiring a different level of knowledge and experience. Before entering the mortgage industry, St. Jacques worked as a legal assistant in corporate law and she was the sales administrator for a local Century 21 real estate office. When she decided to become a mortgage agent, she was fully prepared to understand how to assist her clients.

10 common self-employed traits 1. Highly independent 2. High energy 3. Willing to risk money and security 4. Able to inspire and energize others 5. Strong-willed 6. Able to learn from failures 7. Devotes a disproportionate amount of time to their business 8. Fiercely competitive 9. May lack some business skills 10. A “never, never, never quit” attitude

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Guide

Alt-A Clients

Top: Annette Hutcheon Bottom: Terri St. Jacques

In the alternative space, the risk is greater for private lenders so a broker needs to carefully look after the consumer. “You have to protect your investor, so you have to know what their comfortable with and know your deal,” she says. “Each deal is different and each lender is different. Ideally, I would like to train a few new brokers so I can pass this knowledge on.” In the first 14 years of business, St. Jacques only had two foreclosures. In the past three years, she has experienced six, yet she assures “this is still a small percentage compared to the banks.” Part of her job is also to ensure her clients have an exit strategy because private lending can be costly and is often only used in the short term. “Alternative lending like institutional lending is still about equity,” she says, “and there has to be a way out for the client.” If a client’s credit rating is bruised then St. Jacques devises a plan to improve it. If the client was negligent in filing tax returns, she stresses the importance of completing those documents to establish income. Knowing the ins and outs of taking a client from alt lending to A lending is more complex than primarily assisting A clients. But the added challenge can create a more interesting career too. “I love what I do,” says St. Jacques. “In all the years I’ve worked, this is the only job I enjoy doing every day.” Know your client’s business Marketing to the self-employed niche is easy for Anne Hutcheon, managing partner with mortgagebrokers.com in Etobicoke, Ont. “Once you’ve done a few, taken good care of your clients and solved their problems, then word gets out very fast and your reputation starts to build, along with your business,” she says. Hutcheon stresses, like St. Jacques, to know and understand the business-for-self model. “You start with their credit rating, which

five things to know for alt-a success 1. Your client 2. Lender requirements 3. Insurer’s requirements 4. How to package the deal 5. The exit strategy

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determines if they are an A or B or even C client. Once you have that information then you can start asking the questions the lender would ask,” she says. “Is income verifiable? Are there any assets? Are they a first-time homebuyer? If they are a repeat buyer, what has been their past mortgage payment history? Even after all that has been answered, expect surprises because there usually are a few.” The self-employed tend to fall into a certain personality type. “They are ultimate risk-takers with a vision of their future,” says Hutcheon. “When they see an opportunity, they go for it but they’re not successful every time. They understand the cost of doing business and may be willing to pay fees and higher rates to get the job done.” So take a look at the overall picture. Is there a corporate structure or is it two guys in a truck? Both scenarios create the need to step outside the box for financing. “It’s not unusual to see some with previously poor credit situations or previous business failures and divorce,” says Hutcheon. “Yet, they will rise above all of these obstacles. And when they find a good broker, they tend to be loyal.” Since many often can’t verify income and must state it, Hutcheon ensures that they can manage the debt. “In one way, you have to be a lot like your client,” she adds. “You have to know them, and know your lender so you can present a clear picture. You have to keep your clients informed; always letting them know what’s going on each step of the way. And you have to stay focused and confident, just like they are. When you can do that, and get them their mortgages then you’re a person who knows what they’re talking about and the referrals will start to flow.” Marketing techniques While word of mouth is the No. 1 marketing technique, Hutcheon also networks with companies or individuals who work directly with the self-employed, such as accountants, lawyers and banks. Once established, many of her clients have morphed from obtaining residential mortgages to purchasing commercial and investment properties. The market is always changing so maintaining your knowledge base is the key to continued success. “New agents should start with the simple stuff, such as regular A clients, and learn what they can about that market before venturing into the alt market,” she says. “Even then they should start with alt-A clients before venturing into the more challenging B and C clients. Knowledge and experience is what counts.” CMP

Guide

MCAP eclipse

Attracting more brokers with MCAP eclipse MCAP eclipse brand is designed for mortgage agents to assist the B consumer. CMP speaks to Brian Thompson, director of business development for MCAP eclipse, about the company’s experience with alternative lending

Our service commitment just doesn’t stop after the file closes. Brian Thompson: MCAP’s ability to offer an All MCAP eclipse alternative product allows us an additional customers receive the opportunity to grow our business by tapping into same great customer care this profitable market sector. We work with our and mortgage privileges broker partners to provide financing solutions for as our A clients. those customers who do not qualify for a mortgage Eclipse deals count under traditional underwriting parameters. toward MCAP’s broker Typically, these customers are self- employed or compensation, have experienced a life event that has negatively partnership program and affected their credit. In the past, our brokers would volume bonus. have to place these customers with a private Brian Thompson CMP: In 2007, many B mortgage holder or another lender. lenders dropped off the scene. How have you seen CMP: How does MCAP eclipse separate itself competition evolve in the marketplace? from competitors? BT: There’s only about five of us now and it’s more BT: MCAP eclipse focuses on the real estate competitive than it’s ever been. But that’s good for first. So if the real estate is solid and marketable, the borrower and the broker because it drives we can mitigate some challenges with credit more aggressive pricing and better service. and income. CMP: How long has MCAP eclipse been Our underwriters’ first priority is to research established? the marketability of the real estate. It’s the cornerstone of our security. Our underwriters BT: We’ve been at this since 2002, so we’re not utilize several tools to evaluate the pledged security prior to issuing a commitment. Automated rookies. We were originally created to help our broker customers with more of their clients. Our valuation models (AVM), title searches, and broker customers were sending us A business but Google Maps are just some of the tools we use in they were getting B loans as well so they had to order to help us understand whether this is a leave us to place those loans somewhere else. Our property we are able to lend on. The upfront research also allows us to intercept focus is on our mortgage broker customers and MCAP eclipse helps those broker customers do any undisclosed title issues. Brokers highly value their next B deal with us, without having to leave. our underwriting process as it translates into fewer underwriting conditions, higher funding CMP: How has the brand been received by the ratios and less last-minute closing issues. Eclipse broker customer? is continuously working to improve our service levels. Our underwriters specialize in full case Our core base is our broker customers who use us underwriting, which translates into smooth, efficient closings for our brokers. We have some of and support us, but we’re also finding that having the eclipse brand is helping us attract new brokers the most experienced staff in the business. This to MCAP. New brokers means brokers who either type of underwriting requires tenured staff for specialize in B or might have A business out-of-the-box thinking. Every client’s situation is different, which requires customized underwriting somewhere else. It’s really been a successful run and we’re excited about 2011 and beyond. CMP and pricing.

CMP: MCAP supports A and B lending. What does alternative lending mean to the company?

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Guide

Public Speaking

talk the 12

talk

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Guide

Public Speaking

Delivering information seminars for consumers on alternative lending is a great strategy to build new business. Andrea Cornish from CMP’s sister magazine Mortgage Professional Australia talks to the experts on how you can become an expert speaker

nless you’re planning on speaking at a nudist camp, imagining your audience naked won’t provide the confidence needed to give a great seminar. This age-old advice leads to distraction for obvious reasons. Instead, there are more sound and practical tricks available to aid in conquering fears over public speaking. According to Australian communications expert Brett Rutledge, the most important tool is practice. “Prepare,” he says. “The more you know your material, the more likely you are to overcome nerves.” Rutledge knows his way around a podium. In 1998, he became the youngest World Champion of Public Speaking, and one of only five to hold the title outside of North America. Mortgage brokers don’t need to be elite communicators to host an informative seminar. But over time and with practice, you can capitalize on this additional approach to reaching out to consumers and expanding your clientele. Here are a few tips from people experienced in charming a crowd. Dealing with nerves According to Shyness and Social Anxiety Treatment Australia, the most commonly reported social phobia is public speaking. Though most mortgage agents talk to people for a living, the communication usually happens one on one. Stepping in front of an audience, whether they are potential clients or a group of peers, is a nerve-wracking experience for anyone—even the pros. But a little anxiety can work to your advantage. Experts say that nerves are actually beneficial. It lends your presentation energy and you avoid sounding like you’re droning through a lecture that you’ve given a hundred times before. Judith Field, founder of Direct Speech, is another one of Australia’s foremost public speaking gurus. She agrees with Rutledge that practice makes perfect. “This is obvious, but most people spend 90 per cent of their time writing their presentation and 10 per cent practicing. It should be 50/50,” she says.

Field suggests practicing as if you’re in front of a real audience. Use friends and family as a guinea pig, and even when practicing by yourself, speak out loud. The word pacing in your head differs from oral speech. Field also reminds people to breathe deeply and evenly. The increased flow of oxygen calms you down and keeps you focused. Lastly, she advises the steady breathing can help eliminate the critical voice in your head. “This is the most important tip,” she stresses. “When you breathe in you are acknowledging the fear, and when you breathe out you are deciding to let it go. As a result, you can focus on what you are saying and not things like, ‘They are all looking at me,’ or ‘What if I go blank?’” Communication breakdown To build on public speaking skills, you need to understand the basic foundation of what comprises valuable communication. Rutledge finds that it comes down to four main factors: the audience has to understand you; agree with you; care about the message; and take action. “All four things have to be there for you to be effective,” he says. Often, people don’t respond well to facts alone. “No one gives a toss what an interest rate is,” he says. “They only care what it means to their mortgage.” Facts are important because it substantiates what you’re trying to tell a client, but to get consumers to care you need to show why and how an interest rate affects them. When personal interest is invested and explanations are forthcoming, you establish a trust with the audience. Another part of the communication mix that is sometimes misunderstood is the emotional element. Brokers should try to read the audience’s feelings as well as demonstrate their own. “If you want people to be excited, you’ve got to be excited yourself,” Rutledge says. In some cases, acting too professional and rigid works against you. When you conceal your emotions, people tend to assume you don’t care,

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Guide

Public Speaking

case study: Raymond Teh In Australia, Mortgage Choice broker Raymond Teh has been running seminars from his office since May 2005. He admits that standing in front of a crowd was terrifying at first, but after he hosted a few seminars, it became second nature. As a new business, the seminars were a valuable tool to help Teh build his database. However, Teh says brokers should not expect an immediate increase in business. “The lead time in running a seminar and reaping the benefits could range from six months to two years,” he says. “For instance, a first-time homebuyer may attend your seminar but not commit to purchasing for a while due to lack of savings, unsuitable properties, and a variety of other reasons.” Teh runs seminars on a monthly to bi-monthly basis. In the beginning, he attracted 50-plus attendees. But a decline occurred due to oversaturation in his area. So he started collaborating with strategic partners by hosting seminars with buyers’ agents, real estate agents and property developers. Teh says to ensure people who register actually attend, send an automated e-mail on the day of registry, and a reminder e-mail two days prior to the seminar. After the event, send a followup e-mail with details on upcoming info sessions. Teh also recommends choosing an appropriately sized venue. “If you aren’t expecting many attendees, it can look embarrassing if you have a capacity for 100 people and only two people show up,” he says. With site choice, you also want to consider parking, transit access and proximity to a well-known landmark.

become suspicious that you’re up to something, or both. “During the global financial crisis, every broker should have been telling their customers how frustrated they personally were,” he says, as an example. Though consumers are looking for your knowledge, support and guidance, people are drawn to authenticity. Finally, symbols, metaphors and analogies are the best way for others to understand what you mean. Tell stories in your seminars. Give examples. People are more likely to remember a great story over a great interest rate quote. Be yourself According to Rutledge, Cate Blanchett is an Academy Award-winning actress because she doesn’t look like she’s acting. But for the layperson, focusing too much on skill and technique becomes a problem. “Most people are not that skilled,” he says. “But that’s OK as long as you’re just yourself. That’s the only thing you can pull off with any credibility.” He advises brokers to be genuine when providing information to consumers. Even if you consider yourself a shy person, examine your strengths and draw on that confidence when speaking in public.

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Humour is a positive element in communicating but no one expects you to be a comedian. Often, funny moments emerge when you are behaving naturally. “There’s a place for humour in everything,” says Rutledge, “even at a funeral.” You don’t need to turn to a joke book for wisecracks but even a warm smile shows the human side to the person who will put consumers in the most debt of their lives. The key to humour is making it relevant. Don’t tell a joke just for the sake of it. A better way to incorporate humour is through a story. A smidge of self-deprecation is also appreciated. “I often say that the fastest way to make friends is to make fun of yourself,” adds Rutledge. Inevitably, the service you provide as a mortgage agent matters the most. So do as much as possible to prepare and practice a speech, but don’t be hard on yourself if it doesn’t go well the first few times. “When a mortgage broker gets up in front of an audience, the people know it’s not what they do for a living,” Rutledge says. Avoiding distractions The best way to keep a presentation running smoothly is to save questions for the end. If you answer specific queries during, you risk losing the attention of other audience members. Some brokers serve light refreshments at the end so people have a chance to chat with them afterward. This is the part where you likely feel the most comfortable answering questions and winning over a client. Shyness and Social Anxiety Treatment Australia also recommends that speakers remain calm if they’re presenting challenging or unfamiliar information. The association finds that saying thank you when an audience member raises a difficult question or comment can ease tension. In the face of harsh criticism, resist becoming defensive and argumentative. Instead, try to find the common ground as it’ll show you’re openminded and flexible. For handout material, Rutledge says save it for the end. Giving people fact sheets and information before a seminar opens the door to “cognitive overload,” he says. “The brain tends to choose the visual over the audio.” And you want people to listen to you rather than analyzing your typos and graphic choices. Rutledge also advises against PowerPoint because the attention isn’t on you. If PowerPoint is a must, use bullet points on the slides and expand in your speech so it doesn’t look like you’re repeating words on paper. And how do you help yourself avoid distraction? Picture all the attendees fully clothed. CMP

Guide

Optimum Mortgage

What’s new in

alternative lending? During this time, we saw the alternative borrower return to the marketplace but they suddenly had fewer lenders to choose from. Those lenders who remained in the market also became more conservative with tighter terms and underwriting criteria than they were in 2007. The latter part of this year has seen a return to expected levels of mortgage activity given the CMP: How would you summarize the current state stage of our current economic recovery and more of affairs with alternative lending? normalized property values. So we are now seeing new lenders enter the marketplace. Competition Lester Shore: This year has presented some brings more choice and eventually more favourable challenges for everyone in the mortgage industry— terms for borrowers. All of this is positive for us, brokers, customers and lenders. The anticipation the broker channel and borrowers. of tightening insured lending criteria, and the CMP: Have you seen a shift in what you consider unnatural stimulus in the real estate markets in to be your typical borrower? British Columbia and Ontario from the HST introduction, resulted in a strong market in the LS: Absolutely. Originally when Optimum first six months of the year, both in application Mortgage began business more than six years ago, volumes and property value increases.

CMP speaks to Lester Shore, manager of Optimum Mortgage, a division of Canadian Western Trust, about the upcoming year in alternative lending and his advice for brokers dealing with this niche market

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Guide

Optimum Mortgage

we primarily served self-employed individuals with stated income. Today, our brokers are seeing more and more clients with a GDS/TDS situation that slightly exceeds a traditional bank’s requirements. We are also seeing an increased demand from borrowers who are struggling with the burden of high interest rates on consumer debts. Debt consolidation, at what are arguably the lowest rates ever made available to an alternative mortgage borrower, is a good solution for many.

CMP: What differentiates you as an alternative lender from a traditional bank? LS: Our parent company, Canadian Western Bank, is predominantly a mid-market commercial bank so we understand the non-traditional income reporting of the business-for-self client. Further, the fact that we understand that “life happens” allows us to make common-sense lending decisions. Will the borrower be better off after the transaction? If the answer is yes, and if we’re comfortable with the real estate then we typically approve the transaction. Things like not having voice mail, having underwriters and BDMs (business development managers) who care and a flexible mortgage product that permits portability and early payout, subject to penalty, also form part of our competitive advantage.

CMP: With increased pressure on brokers to achieve target close ratios, what can brokers do to close those really tough deals? LS: My first suggestion would be to ensure, as much as possible, that the client is committed to the transaction. For example, try to get prefunding documents upfront, as that may be a good early indicator as to their commitment level. Help the borrower understand that they are not in the A world, and satisfy yourself that the payment is going to be affordable to the customer. Sell the solution, such as: “We have a lender that wants to proceed with your mortgage, and the payments will be X dollars.” Remember that for most alternative borrowers, it is mostly about providing a solution and an affordable payment. Sell your customer on payment affordability, and if they balk at the interest rate, remind them this may be a shortterm solution with a long-term plan to move them back into the A space as their credit situation improves. As real estate values have risen and fallen this year, and in some cases within the same

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neighbourhood or marketplace, take a moment to do an MLS search or call a local appraiser to get your own sense of the home value. Both brokers and lenders are seeing too many deals collapse because the anticipated equity just isn’t there. My last suggestion would be for the broker to pre-qualify the client’s home—just as they prequalify the borrower. Ask about the age of the home, if any renovations have been done, has the roof been replaced, are there any problems with water leakage, etc. All of these questions will need to be answered before funding can take place, so try to anticipate any concerns the lender may have with the property.

CMP: What are some of the important considerations when choosing an alternative lender? LS: I would say to brokers, know your lender. As we witnessed even here in Canada, many lenders abruptly abandoned the alternative lending space. Are you sure your lender will have the ability to offer your client a renewal when their term is up? What we’ve seen over the last year with non-renewals for borrowers who are current with their mortgage payments is a huge injustice to the client and an embarrassment to our industry. Make sure your lender has the necessary financial strength—and a strong balance sheet—so your customer doesn’t end up in this predicament. Also, not all mortgages and lenders are the same, so make sure you understand your lender’s payout options and what accelerated payment terms are available to your customer.

CMP: Any final thoughts? LS: Here at Optimum Mortgage, we deal only with brokers, so we are entirely focused on helping our brokers meet the needs of clients within the alternative lending space. Based on what we’ve seen in the past few years, and on current economic conditions, we only envision an increased need for alternative lending. So we recently developed an accredited training program on the specifics of alternative lending, and are in the process of rolling that out to our broker base right now. We recognize the need for brokers to gain more comfort with this population segment, and for brokers to position themselves for their own future business. Helping brokers close their deals is what we do best. We like this segment of the market and are committed to remaining here for a long time. CMP

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Marketing

six referral mortgage marketing mistakes : 2 # e k Mis t a i ng r o B g n Be i

that make you work harder, not smarter

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Business Marketing

It has been reported that over 80 per cent of mortgage professionals fail within their first two years. That’s a staggering statistic. Doren Aldana explores some of the reasons why this happens and how new brokers can help themselves succeed in the second of a six-part series

f you were a farmer driving down a country road and you saw a cow, chances are you wouldn’t think anything of it. I mean why would you? It’s just a cow. But what if you happened to come across a pink cow? Would you stop to take a look? Of course you would. Not only that, you’d probably go all around town telling people about this strange pink cow. Why? Because it’s remarkable – it’s worth making a remark about. It’s got what I call “wow factor.” The truth is, most mortgage professionals’ marketing is just plain old boring. Let me prove it to you. As an experiment, try flipping through the “mortgage” section in your local Yellow Pages and review the ads. What do you notice? A plethora of plain-Jane ads all saying essentially the same thing: “best rates and best service.” True? I once heard this described as marketing incest: everyone doing the same thing, and getting dumber and dumber.

“ I once heard this described as marketing incest: everyone doing the same thing, and getting dumber and dumber ” When customers or prospects aren’t responsive, it’s natural to chalk it up to many different things – recession, rates, competition, customer stupidity, ineffective media, etc. But maybe you’re just boring. Remember, marketing is a contest for people’s attention. Thirty years ago, people gave you their attention if you simply asked for it. You’d interrupt their TV program, and they’d listen to what you had to say. You’d put a billboard on the highway, and they’d look at it. That’s not true anymore. This year, the average consumer

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“ this year, the average consumer will see or hear one million marketing messages – that’s almost 3,000 per day ” will see or hear one million marketing messages – that’s almost 3,000 per day. No human being can pay attention to 3,000 messages every day. Let’s face it, you’re in the fascination business whether you like it or not. Today’s consumers have way more choices than they used to, and way less time. And in a world with too many choices and too little time, the obvious solution is to tune out anything “average.” Now, if not utterly fascinated, consumers are utterly bored and disinterested; there’s no in-between; they are in a desperate search to be incessantly fascinated. What once was considered “very good” is now just considered “average.” That’s why the single biggest sin in marketing is being boring – because if you can’t capture attention and ignite interest, you’re a dead duck. So, how can you stand out from the clutter, command attention and get more people raving about your mortgage services? Answer: Create more wow factor in your business. Here are three surefire tips for wowing the socks off your clients: Under promise, over deliver. I know you’ve heard this before, but are you doing it? You don’t truly “know it” unless you’re actually “doing” it. For example, if you think it will take 14 days to close the deal, tell them 17 days. If your voice mail message says you’ll be replying to calls at 4 p.m., call them back at

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3:30 p.m. If you tell them you’ll give them an update via e-mail, send the e-mail as promised and then pick up the phone and call them as well. It’s all about setting the expectations – and then engineering your business to exceed them.

“ it’s all about setting the expectations – and then engineering your business to exceed them ” “Handwritten” greeting cards. Joe Girard, “The World’s Greatest Salesman” (Guinness Book of World Records) sent over 10,000 handwritten greeting cards to past and current clients every month. As a result of that effort, Joe became the No. 1 car salesperson in the entire world for 12 years straight. Almost all his sales came from referrals. (But, he had to hire an entire staff just to write his notes.) If you’re like me, the idea of having to physically write hundreds of greeting cards sounds about as enjoyable as a root canal. But

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let me ask you this: What if there was a system that allowed you to send out personal, heartfelt, greeting cards with a single click of your mouse? No printing, collating, envelopestuffing, stamp-licking or mailing – it’s all done for you. Not only that, it’s dirt cheap. For a free video tutorial showing exactly how to do this, go to: www.SendMortgageCards.com. Surprise gifts. What better way to break through the monotony of someone’s day than with a little surprise gift. It doesn’t have to be extravagant or expensive to wow someone either. Here are a few examples: • After someone inquires about your services, you could send them a “Coffee On Me” greeting card with a Starbucks or Tim Hortons gift card enclosed. • After closing, send a thank you card with a gift basket tied to helium balloons, delivered to your client’s workplace. Imagine the expression on your client’s face when a courier arrives unannounced at their workplace, and hands them this gift. Just think what kind of buzz that’s going to stir up in the office. Do you think, by chance, you might get a few referrals? • As a referral reward, send a dinner-for-four certificate. One of the tricks to getting more referrals is to reward your valued referrers. In doing so you reinforce the positive behaviour. It’s like pouring gasoline on the fire – it really heats things up. Rather than simply giving them cash or a gas card, I would recommend giving them an extraordinary experience. Remember, when it comes to referrals, memories are always

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Marketing

better than money. What better way to give them a special experience than to send your referrers (and their spouse), along with a guest couple of their choosing, to a stellar restaurant? Who do you think they’ll be talking about at the dining table? You, of course. I could keep going all day but you get the idea. Remember, wow factor doesn’t happen by accident – it’s a choice. It requires a conscious choice to transform your mortgage business from “average” to “remarkable” – to something worthy of making a remark about. So, starting today, write down at least three things you will do in the next 30 days to become more wow-worthy.

About the Author: Doren Aldana is considered by many to be Canada’s leading mortgage marketing coach.

“ remember, wow factor doesn’t happen by accident – it’s a choice. It requires a conscious choice to transform your mortgage business from “average” to “remarkable ” Since 2005, he has been dedicated to helping mortgage professionals attract more clients with less effort, regardless of market conditions. Aldana is also the author of a new 3-disc DVD/ CD set titled, “7 Secrets to Attract More Referrals on Autopilot.” To pick up your free copy, visit: http://www.freereferralsecretscd.com. CMP

License #11127

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profile PROVIDER

Instead of sending clients with damaged or non-existent credit on their way, mortgage brokers can now refer them to a secured MasterCard® program through Peoples Trust to get them back on track – and earn referral bonuses in the process

securing a better future H

Chloe Gagnon

aving zero credit history or damaged credit – which translates into a low beacon score – not only makes it hard to get a mortgage, it can make it difficult to get a credit card, something that is a key component of building (or re-building) a credit score. This common problem helped spur the idea behind the secured MasterCard program from Peoples Trust Financial, a subsidiary of the mortgage lender Peoples Trust Company. The card gives people with credit problems and discharged bankrupts, as well as those who have never had credit or loans or no credit history in Canada (i.e. new immigrants or international students), a way to establish credit or bring their credit scores up from previously low levels. “The program allows people to rebuild their credit because once we work with these individuals on a secured basis, we’re able to give them a whole fresh start,” says Chloe Gagnon, administration manager for the Peoples Trust Secured MasterCard, adding that most of the referrals to the program come from mortgage brokers.

in about 12 to 18 months, to apply for an unsecured credit card. “It’s been very popular,” she says of the program, which the company launched in 2005. “It’s not only good for customers who are able to re-establish credit, but we’re able to help these individuals so down the line they can look at getting a mortgage or better mortgage rates. That’s one of the key things.”

Mortgage broker referrals Because a person’s credit is scrutinized during the mortgage application process, many clients in the program are referred by mortgage brokers. This paved the way for the broker referral program where brokers earn $35 per approved application for a secured MasterCard through Peoples Trust. If a broker refers more than 50 people in a month, they’ll make $40 per referral. According to Gagnon, more than 600 brokers have referred clients to the program. She thinks that number can only go up, as more people become aware of secured cards. “A lot of people still don’t’ know about secured credit cards because prepaid cards are so popular and many are confused, thinking prepaid cards help their credit score, when in fact, they don’t.” “We can supply the applications and make them available to their clients and all applications are virtually guaranteed approval,” she says, adding that brokers can also set up a feature on their websites where a client can click to go to an online application for the credit card. Once a client has improved their credit score The rebuilding process through the Secured MasterCard, Gagnon says Once a client applies and is approved for a Peoples they can go back to the mortgage broker who Trust Secured MasterCard – which is available in referred them to the program to either get a better all provinces, including Quebec – they put down a interest rate upon renewing their mortgage or get security deposit between $500 and $25,000, which a new mortgage (which may have been previously is then transferred into a GIC to earn annual unattainable for them). interest. The credit limit for the card is 100 per “In a way, the broker is becoming like a cent of the security deposit. consultant, directing their client in the proper Peoples Trust reports a client’s payment history direction to get a mortgage or a better rate,” she to both Equifax and TransUnion on a monthly says. “It’s a goodwill gesture that will enhance basis. Gagnon says clients who stay on top of their the relationship between the mortgage broker card payments and consequently build up their and his client and will likely result in future credit rating can go back to a major bank, generally business.” CMP

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Real support from real people For many broker companies it’s all about the broker… that is, until they hire the broker. Then it becomes all about the next broker. It’s difficult to say that you offer full service support when your HR, Marketing and IT departments are the same person. At Invis and Mortgage Intelligence we are all about the broker... all of the time. Whether you have been with us 10 months or 10 years you’ll receive the info, tools and programs that enable you to stand out and succeed. We’re all about real support from real people, including reliable payroll, an innovative new CRM program, customized marketing, prompt IT help, a proven national brand, and resourceful regional managers. We also have a unique broker-centred culture that celebrates excellence and gives back to our communities – our brokers have raised over $1.5 million for the Angels in the Night homeless shelter project, $1 million for the Chair in Thoracic Surgery at McMaster University, and funds for other local charities. Call us today and discover what makes our brokers so successful. It’s your career, your business, and we’re here to support you.

Let’s talk

Learn more about joining our broker teams at www.invis.ca & www.bettersupportcanbeyours.com Head Office: 5770 Hurontario Street, Mississauga, ON L5R 3G5. Invis FSCO 10801 | MI FSCO 10428.

Profile Brokers

Elfie Hayes (second from left) and her staff at Mortgage Intelligence Oshawa (left to right): Carmela Knight, Corinna McKnight, Kelly Kozar, Michael Kozar and Jacalyn Cook.

lights, camera, action! By embracing social media and the Web, Elfie Hayes was able to expand her business during recessionary times. Heather Li looks at how she translated personality into online success

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hen you come across Elfie Hayes’s office in downtown Oshawa, Ont., you may be surprised to encounter a red brick home with a front porch painted white. The warm, welcoming feeling continues upon entering, as Wade Ferguson discovered when he dropped in on Hayes unannounced one day. “When I first met Elfie, it was amazing,” says Ferguson, account manager of Durham region at Genworth Financial. “She treats you like family right away. She offered me homemade pie, and I think she treats everyone like that.” The homemade food comes from the kitchen Hayes left intact when she bought the residence in 2009, and converted the space into offices for her and five full-time staff members of Mortgage Intelligence Oshawa. She cooks lunch each day for everyone, understanding the importance of how much time is spent there and keeping healthy. Hayes, 57, is a natural people person and is as comfortable networking in real life as she is on YouTube. In 2009, when most mortgage brokers were reeling from the economic recession and many were leaving the industry, Hayes increased her business by 33 per cent. She also hired on a number of new staff to serve her growing clientele. She attributes much of this growth to the investment she

made in social media and establishing her online presence while other brokers were cutting back on marketing efforts. A visit to Hayes’s website is what originally spurred Ferguson’s decision to spontaneously drop in. “Elfie understands that the future is technology, so she’s invested a huge amount keeping up with Twitter and blogging, and making sure her website is everywhere,” says Ferguson. “And it looks the best and is the most interactive, which is huge in today’s age because everyone, not just younger generations, is all over the Internet.” Hayes has been a mortgage professional for nine years and branched out to start her own mortgage firm in November 2007. But prior to that, she spent more than 20 years as a real estate agent. Her years of experience have undoubtedly contributed to her understanding of people and growing her business along with how the world develops. She was enthused to have taken on a new career at age 48. “I’m renewed by the sheer challenges that are out there,” she says. “It’s exciting, and we always embrace change at our office. Someone was saying the other day, ‘If you change you grow, if you don’t you rot,’ and we’re not ready to rot here.” She first jumped into the industry because of her husband, Harry Hayes, who owned a real estate

Profile Brokers

agency and needed a new in-house mortgage broker. It was initially a difficult transition because she was at the top of her game in her real estate career. Though the two fields are linked professionally, it was embarking on a completely different path. “I was the new kid on the block,” she says, “but I had support of great people around me, and my biggest fan was always my husband. He believed in me at the start even when I didn’t.” After working seven years in various mortgage roles, Hayes finally felt comfortable to start her own business. Two months after she launched, she met Kelly Kozar, who had been in the industry for 11 years at that time. They soon realized they would make excellent business partners. “When I first met Elfie, I knew her and I would work so well together because we both have the same work ethic that the client is first,” says Kozar. “That is our primary concern always—that we do the best job that we can, and her professionalism is beyond anything I’ve ever seen before.” From there, they started making a name for themselves among Durham residents and in the three years, the company grew to a total of six people. Hayes, Kozar and Carmela Knight are licensed agents, based at Hayes’s Mortgage Intelligence office in Oshawa. Jacalyn Cook also works on-site as the receptionist, maintains the office’s Twitter accounts and blogs and is now a licensed mortgage agent as well. Corinna McKnight works remotely from Whitby as a mortgage specialist dealing with private lenders, while Kozar’s husband Michael is off-site as the manager of leasing for the Durham Mortgage Solutions team. Hayes accredits her expansion in tumultuous economic times to an industry magazine article that she still has on file. “The article said that during a recession, if a person were to stay focused and committed, and throw more money on marketing that the business should grow,” she says. “A comment was made about the recession in 1981-1982: ‘The study noted that despite concerns about the recession, over 70 per cent of marketers indicated that they would either maintain or increase their marketing budget.’” So in late 2008 when the recession started showing its effects, Hayes and Kozar decided that was the time to engage in social media and invest as much money as possible in strengthening their online presence. Around that time she also met Ann Harwood at a networking event hosted by the Durham Chamber of Commerce, one of many local groups Hayes is involved with. Then Harwood was still thinking about how to develop her consulting business, which creates online opportunities for small businesses. Hayes recognized Harwood’s potential over three months of meeting her for a coffee and having phone chats. “She kept pursuing me, only as Elfie can do,” laughs Harwood. “But she does it in the best way. She brings out the best in everybody and really wants the best for them.” Finally, Hayes told her, “I need to hire you.” Now, they’ve been working together for a year and a half. Hardwood calls Hayes her “lab.” “Every time I

want to test something for another client or something new on the Internet to see what really works for people, Elfie and Jacalyn are the first ones to try it,” says Harwood. “Elfie is really organized and will ask questions if she doesn’t understand something. She keeps going until we get it to the point.” Aside from keeping up with Twitter and blogging, Hayes also records two-minute mortgage news and advice videos for YouTube, which can be found on the team’s site www.lowrate.ca and on YouTube under the username, mylowrates. When Harwood first mentioned the idea, Hayes was uncertain video was for her. But she soon heeded her own advice that when you embrace change, you grow. She stepped into the spotlight and now has her newsletters on video. “Some people think they can spend a couple of hundred dollars and that will keep them up on the search engines,” adds Harwood. “Elfie understands that you have to be involved in social media, respond to other people and engage in conversations.” Since the team started tracking their client sources from March 2010 to September 30, 2010, 13 per cent of business has come through the Internet. The company has four websites. Lowrate.ca is the main site. Then there are three companion niche sites: Durham Region Mortgage Doctor serves people who need credit repair; Low Rate Leasing for equipment leasing; and the most recent is geared toward debt settlement. None of this happened on a whim though. Hayes is a strong believer in business plans, and creates one every August to prepare for the lenders’ fiscal year, beginning in November. She designs the plan with discussion and input from her team, and ensures everyone signs it in agreement. “I practice inclusive management, which means everyone has a say in their destiny,” says Hayes. “Without team members who are fully engaged, there’s no way to achieve this kind of growth. Without them, it’s just me sitting here with an idea.” To keep on track, they review the plan every month to see what’s working, what isn’t, and what needs to be changed. One part of Hayes’s business plan that is unlikely to change is how much she loves to work. “Kelly and I have joked regardless of what the rest of them do, she and I will become old ladies, and we’ll still be in the industry and be here forever,” she says. “Retirement for me just means doing what you love.” Her view on embracing change has helped steer her through what many would see as a late time in life to switch careers. Though work is essential, it isn’t the only thing that matters. Hayes also makes time to travel with her husband and they have visited five continents over the years. “We just try to enjoy some time together when we’re not working because of our business demands,” she says. She also loves to garden, design, study art and cook. From preparing daily lunch for her team to connecting with clients through YouTube, Hayes embodies how growing with life leads to growing a successful mortgage business. CMP

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Profile Insight

a 180˚ career turn Erin Hamilton talks about her shift from training as a cop to becoming a young mortgage agent with MortgageBrokers.com and why she enjoys the business

Erin Hamilton

Why did you decide to enter the mortgage industry? I originally went to school to be a cop. Then I went on a trip with Mackenzie Financial [an investment company offering bond and equity funds]. The company had a four-day seminar down in San Diego and I went as a guest. I had an amazing time and realized I liked that lifestyle. A really good friend of mine at the time told me I should get into the mortgage business. The comparison he made was, “How much are you going to make doing that?” I told him. And he said, “Well, you can make triple that doing this.” That’s when I went back to school and did mortgages instead. Going from being a cop to a mortgage agent must have been a difficult transition. How did you find it going back to school? It was brutal. Absolutely brutal. I’m terrible with math and it was just concepts I never considered before. I didn’t know anything about money before going into it. I didn’t know anything about business before going into it. It was a very sharp learning curve.

What are some things you enjoy the most about working in mortgages? You have to love the ones who think there’s no way they’re going to qualify and then you get them into their first house. That’s exciting. Also, the schedule. You do what you want. The thing that’s kept me going is you get paid based on how much work you do. It’s not just $20 an hour regardless if you’re the best or not. You’re paid by results. You were first working in Toronto and now you’re back in Sarnia where you grew up. What differences have you seen working in mortgages between the two places? I got a taste of what Toronto is like and now that I’m back in Sarnia, in the London, Ont. area, it’s a lot more relaxed with a small-town feel. So when it comes to dealing with Realtors for referrals, the difference between the two is in Toronto, you need to constantly hustle and be all over people, whereas out here I found that coming in slowly and not acting like they owe me anything really worked. I ask Realtors what I can do for them? How can I help? How can I help both of us grow at the same time? It’s not just, “Give me referrals, give me referrals.” That’s like asking for free money, really.

What have you brought from your past training to the broker business? I also have a degree in psychology so I just feel like I can read people a little bit better. So So how did you overcome those difficulties? whether I approach them immediately and say, I worked as an assistant first, which I think “Let’s get this application done,” or maybe I everyone should do because you always have should just get to know them a bit first. If they’re someone there to ask questions. Basically, you a chit-chat person, or if I can jump right in and have to keep your ears open and talk a lot with get it done. I definitely learned how to treat your underwriter. people better that way. From the police training, a lot of it has to do You became a mortgage agent in 2008. How has with having a good work ethic. I’m the type of your career progressed so far? person who if it needs to be done, I go and just get It’s been going extremely well. It just takes time for it done, especially if you’re self-employed like this. your name to spread and that’s all I’m working on You can sit at home all day, every day if you want, -- getting my name out there. but you’re not going to make any money. CMP

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Profile

Favourite Things

Cheryl Wiebe, AMP + Mortgage Consultant + Invis + Winnipeg, Manitoba

Food Too many to mention. Least favourite or hate actually – green peppers.

Favourite Things Hobby Cooking. Right back to the food question again

vacation spot Anywhere the snorkeling is fabulous. One of my most favourite things to do

Celebrity Barack Obama. Need I say more?

Place to be Exploring new places I haven’t been before

Movie Indiana Jones trilogy. I just love adventure Sport Running. It is so much fun to watch other people do it....OK, I run a little, too

Book What Got You Here Won’t Get You There by Dr. Marshall Goldsmith. Because there is always room for improvement

Drink Vodka, soda, lime. Low cal and refreshing Music/band Here is where it gets hard. I love everything from country to classic...just no rap please mortgagebrokernews.ca

Guest Column

The recent television commercials featuring Canadian icon Don Cherry have garnered a lot of discussion. DLC broker Catherine Evel explains why this kind of endorsement will help all mortgage brokers in the long run

The power of celebrity I

n late October, Dominion Lending Centres launched its first Don Cherry television commercial across Canada. The commercial is just one of many ways DLC agents across the country will be recognized as a household name. We also have access to Catherine Evel everything from life-size cardboard cutouts of Cherry, print advertising templates, car wraps, HD videos for our individual websites, rink boards, bench signs, and so on. The benefits of the Don Cherry celebrity endorsement deal stretch much further than just Dominion Lending Centres. This campaign is reaching into the households of Canadians and educating them about what a mortgage agent/broker can do for them. It’s sending a clear message that there are other viable options available besides the consumer simply going to their bank. The entire mortgage brokering industry is benefiting from the marketing campaign being run by DLC. Don Cherry is, by far, the most influential commentator and is one of the most recognizable people in Canada. He’s best known for being the ‘flamboyant yin’ to Ron MacLean’s ‘yang’ on the popular Coach’s Corner segment on Hockey Night in Canada, which is the most watched sports telecast in the country.

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Cherry was recently named one of the top 10 Canadians of all time in the nationwide CBC program, The Greatest Canadian, which polled the Canadian public at large. He was also ranked in the May 2010 issue of Reader’s Digest as one of the most trusted Canadians – the perfect image required when educating Canadians about using mortgage professionals for all of their financing needs. The Canadian public’s fixation on celebrities has reached epidemic proportions in mass media. This enchantment gives celebrities the ability to connect with the buying public with persuasive power. Celebrity endorsement is like a trusted friend telling us about a great service or product, and Dominion Lending Centres decided to capitalize on this public recognition.

“ if each mortgage brokerage in Canada spent even a portion of the money DLC is spending on marketing and advertising, our market share would most definitely expand ” If each mortgage brokerage in Canada spent even a portion of the money DLC is spending on marketing and advertising, our market share would most definitely expand. We’ve all been working hard over the years to educate the public about what mortgage professionals have to offer them in the grand scheme of mortgage financing. However, it is going to take big thinking to move the industry forward together. CMP

service directory

Banks

Insurance

Bridgewater Bank www.bridgewaterbank.ca Ph: 1 888 837 2326 Page 15

Canada Guaranty Mortgage Insurance Company www.canadaguaranty.ca Ph: 1 866 414 9109 Page 11

Home Trust www.hometrust.ca Ph: 1 877 903 2133 Page 23 & Guide Inside Front Cover

ICICI Bank Canada www.icicibank.com Ph: 1 800 ICICI CA or (1 888 424 2422) Page 7

Macquarie Financial www.macquariefinancial.com Ph: 1 877 462 3788 Page 47

HomEquity Bank www.homequitybank.ca Ph: 1 866 522 2447 Page 9

MCAP www.MCAPBROKER.com Ph: 1 866 289 7389 Guide Inside Back Cover

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

Mortgage Protection Plan www.mppbroker.com Ph: 1 866 677 4677 Page 48

Broker Networks

National Bank www.nbc.ca Ph: 1 888 483 5628 Page 39

Optimum Mortgage A Division of Canadian Western Trust www.OptimumMortgage.ca Ph: 866 441 3775 Guide Outside Back Cover

Canadian Mortgages Inc. www.canadianmortgagesinc.ca Ph: 1 877 385 7005 Page 22

Non-Bank Lenders

Capital Direct www.capitaldirect.ca Ph: 780 868-0550 Page 28

Equitable Trust Company www.equitabletrust.com Ph: 1 866 407 0004 Page 29

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

Firm Capital www.FirmCapital.com Ph: 416 635 0221 Page 31

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

Resmor Trust Company www.resmor.com Ph: 866 809 5800 Pages 40 & 41

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

The Money Source www.mymoneysource.ca Ph: 416 699 2274 Page 53

Dominion Lending Centres www.DominionLending.ca Ph: 1 888 806 8080 Page 25

INVIS www.invis.ca Ph: 1 866 854 6847 Page 55

Mortgage Intelligence www.mortgageintelligence.ca Ph: 1 877 667 5483 Page 43

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

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service directory

Commercial Lenders

Technology/Software

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

Filogix Limited Partnership www.filogix.com Ph: 1 866 345 6449 Page 2

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

The Mortgage Group www.mortgagegrp.com Ph: 877 899 1024 Page 18

Real Estate

Canadian National Association of Real Estate Appraisers www.cnarea.ca Ph: 1 888 399 3366 Page 36

Applied Business Software www.themortgageoffice.com Ph: 1 800 833 3343 Page 17

Services

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

GoMax Solutions www.gomaxsolutions.com Ph: 1 877 492 5164 Page 10

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

Investment Planning Counsel www.ipcc.ca Ph: 1 877 212 9799 Page 20

Best Points Travel www.bestpointstravel.com Ph: 1 800 551 8786 Page 19

For service directory listing please contact Trevor Biggs: trevor.biggs@kmimedia.ca

Got news? Y Your

news n ews is our news!

Do you hav have a e news to share? r Hav Have ave you you heldd a recent event v or made d a new w appointment? pp If so,, CMP W WANTS ANTS to hear ffr from om 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: john.tenpenny@kmimedia.ca

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In today’s rapidly changing environment it can be difficult to stay informed. Trust Genworth Financial Canada to keep you updated on products, legislative changes and professional development. We provide you with the tools, training and resources you need to be successful while delivering superior customer service. Our team of mortgage professionals are dedicated to helping you get the winning edge in a competitive market. To experience the Genworth difference, call us at 1-800-511-8888 or contact your local account manager.