CMP 5.9 by Key Media

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the Guide to Industry Broker agebrokern

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September 2010, 5.9

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SPECIAL FOCUS Working with Alt A Clients

FEATURE Brokering in the Atlantic Provinces

PROFILED Yves Cormier – Small Town Broker PUBLICATIONS MAIL AGREEMENT #41261516

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the Guide to ustry Ind Broker

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LIFE

www.mortgagebrokernews.ca

SEPTEMBER 2010, 5.9

36 brokering down East has its unique challenges Heather Li takes a look at the mortgage market in Atlantic Canada and what the differences may be compared to other parts of the nation

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SPECIAL FOCUS WORKING WITH ALT A CLIENTS

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PROFILED FEATURE 22 Brokers on Lenders YVES CORMIER â&#x20AC;&#x201C; BROKERING IN THE CMP once again pooled TOWN brokers to get their views SMALL BROKER ATLANTIC PROVINCES on the good and not so good about lenders. The PUBLICATIONS MAIL AGREEMENT #41261516 results are in and compared to last year there are a few surprises. 9/2/10 12:01:06 PM

Romspen Investment Corporation

Toll Free 1.800.494.0389 www.romspen.com COMMERCIAL LENDING Romspen Investment Corporation is a non-bank mortgage lender specializing in commercial real estate across Canada. We offer customized mortgage solutions for term, bridge and construction financing from $2M to $60M. Lic.# 10172

contents 8

54 Profile: CMP talks to Yves Cormier who is thriving in a small market in Eastern Canada

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

58 Provider: Being an alternative lender entails flexibility when it comes to underwriting loans for a wide range of credit profiles. Equitable Trust has discovered the most effective way to offer a “customized approach” to lending

NEWS 11

News: Mortgage fraud, Street Capital, financial fitness, Invis and MI celebrate, Benesure expands and more

30 Niche Series – Alt-A lending: Over the next few months CMP magazine will explore a variety of niche markets and how mortgage professionals can work within this these areas to increase their business

Inside

49 The truth about post-claims underwriting: Until recently, the term “post-claims underwriting” was rarely heard outside of the insurance industry. An episode of CBC’s Marketplace changed all that, and even though it’s been two years since the program first ran, its impact can still be felt

In CMP’s continuing series of guides, we talked to the heads of the brokerages to get their views on some of the challenges the industry is facing. We also take a look a look at appraisals and valuations and how brokers can protect themselves and their clients from fraud.

PROFILES 52 Insight: As an auditor and branch manager at a finance company, Sean Binkley of Mortgage Intelligence had the background for the mortgage industry but learned a lot about networking and building relationships with clients

mortgagebrokernews.ca

Guide to the Broker Industry

60 Guest Column: Vittorio Oliverio from Centum Professional Mortgage Group Inc. in Lethbridge, discusses the importance of training

regulars 12 International News 20 This time last year 63 CMP Service Directory

Editor’s Letter

Keeping the lines of communication open I had a conversation recently with a top lender in the industry. We talked a lot about the industry and the changes that were happening, specifically the practice of brokers pooling their deals. He told me there needed to be better communication between brokers and lenders, perhaps even a face-to-face forum of some sort so that both sides could really understand what’s going on and why. Only through this type of communication would both brokers and lenders be able to find a way to transact business that works for all parties. He made some good points. The closest we have right now for that type of dialogue is in this issue of CMP. Our annual Brokers on Lenders survey highlights some of these issues and lets lenders know what brokers find challenging with the hope that lenders might address these and come up with a way to resolve them. If we’re to open up communication then it must go both ways. So next month lenders’ will respond to what the brokers see as their challenges so that brokers might get a clearer picture of the lender’s challenges. Further to that, we spoke to a few broker heads, which is a feature in this month’s guide, to hone in on what they find challenging in the industry and offer some ways to address them. Until such time as someone in the industry or we at CMP come up with another venue for this type of open exchange, and we are making plans for this in 2011, we can offer the pages of this magazine and our website to keep the dialogue open and moving. ‘Til next time, Gina Monaco Editor Gina.monaco@kmimedia.ca

mortgagebrokernews.ca

5. 09 issue

“

The word is on the Street. Street Capital works with us to get our deals done. They make us feel like valued clients and partners. Andrea Wadden Bedford, NS, CEO Status

Street Capital is broker friendly and broker exclusive, they are very supportive and a valued partner for INVIS. Kevin Boucher Newmarket, ON, CEO Status

”

Street Capital is a big reason for our success during our first year and will be an integral part of our brokerage’s aggressive goals for the foreseeable future. Whether it’s underwriting, sales support or the efficiency of the closing department, Street Capital truly understands how to help us grow our business. Bottom line: Street Capital gets it. Glenn May-Anderson Belleville, ON, President Status

Talk to your RVP for more details, including how to become a Street approved mortgage professional. Vince Agozzino

Paul Grewal

Vice President, Eastern Canada Sales Vince.agozzino@streetcapital.ca

President Paul.grewal@streetcapital.ca

www.streetcapital.ca Click Contact Us – National Sales

Trademark of Street Capital Financial Corporation. FSCO License No. 11428

Quotables

“Many lenders will not lend in rural P.E.I….The property has to be somewhere within so many kilometres of Summerside or Charlottetown, the Island’s only two cities. So even though somebody lives in downtown Charlottetown with a certain credit rating can get a property financed, the same person sitting on a similar type of property outside of the lending area can’t get financing.” - Darren Ings, a Charlottetown-based mortgage broker on lending practices in Atlantic Canada. Page 36

“Know the client, know the deal. Believe that what you’re giving the client is the right thing. You’ve got to advertise no matter what. On your website, include that you’re an alt-A specialist if that’s the case.”

“We will often provide a service, a piece of advice or some of our time at a stage when there is no proposal involved –without any cost to the client. You would be surprised by how many times that investment has been returned to us via another referral.” - Peter Millett weighs in on how to keep clients for life. Page G11 correction Recently, Stan Falkowski has been promoted to lead sales efforts in Eastern Canada at Invis and Mortgage Intelligence, and Jim Rawson was appointed sales leader for Invis Ontario.

- Victor Peca, Mortgage Broker with MorCan on how to work with alt-A clients. Page 30

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

EDITOR

Gina Monaco

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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Editorial enquiries gina.monaco@kmimedia.ca Printed by Solisco imprimeurs-printers www.solisco.com

Andrew Davies

OFFICE MANAGER

PRESIDENT

Vivid Design Solution

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Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as CMP magazine can accept no responsibility for loss

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Readers Write Web comments

CIBC faces serious claims If these allegations are proven to be even partially true what does that say about a) chartered accountants generally, and specifically about the firm who signed off on CIBC’s audit and financial statements? B) Why didn’t OSFI, the Office of the Superintendent of Financial Institutions, the supposed regulator of banks, catch the problem? Ever notice how many past superintendents of OSFI were former senior partner CAs responsible for bank audits? Are our FIs really as squeaky clean as their publicity machine claims? - Mike from Marmora Mortgage fraud in Calgary Fraud is the dark side of the financial industry. That does not necessarily taint the whole industry. I guess I can say that exceptions prove the law. - Sudip Adhikari DLC signs Don Cherry People...I suggest if you work for DLC then good for you but do not say that DLC is a household name in mortgages. Remember it is not the name of the company you work for but the service as a mortgage professional that makes you well known in your community. - Sally from Toronto

Mortgagebrokernews.ca newsletter survey I like the site and the information. I appreciate the comments, even those diametrically opposite of mine. I don’t think I have seen a low-blow posting here. Keep up the good work, both the publishers and the respondents. - John Trouble times ahead The big players are out of the real estate market and new mortgages will decrease at record pace. This will be a brutal time for CMHC and the people that bought over their heads. We are looking at a market crash this country has never seen before. - Bruce Corell RBC cuts mortgage rates I like to hear what the competition is doing and RBC is one of my competitors. On another note I have heard all sorts of numbers being thrown around....RBC is the biggest....TD is the cheapest....Verico does 20 trillion...DLC does 20.005 trillion. I know the numbers come from the companies themselves but is there any way to verify? Oh by the way, my brokerage is the largest in Canada, doing 50 billion all by ourselves. - John CMP

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MP 1/3

CMP_Third_page.indd 1 mortgagebrokernews.ca

12/21/2009 8:54:45 AM

Scott McKenzie

Vice President, Residential Mortgages First National Financial LP

WE ARE PASSIONATE ABOUT THE SERVICE WE PROVIDE. “As the hallmark of our organization, service is the number one priority at First National. The opportunity to partner with an organization that shares our dedication to providing exceptional service has been instrumental in meeting the needs of our broker partners. Canada Guaranty's commitment to having all calls answered by an underwriter allows us to address the needs of our brokers that much sooner.” – Scott McKenzie, Vice President, Residential Mortgages

Canada Guaranty Mortgage Insurance Company 877.244.8422 I www.canadaguaranty.ca

ACE Glen Ward is a man with a reputation. In the Atlantic Canada Mortgage Industry, we think he’s the Ace. Five star. The best of the best. That’s why we’re flying high with the news that Glen will be our new Regional Vice-President for Atlantic Canada & Eastern Ontario. Glen has spent the last ten years building and developing the brokerage market in the Atlantic region corporately, and on important industry and government committees. His results have been impressive; his reputation, stellar. Glen has worked hard to earn the respect, loyalty and admiration of brokers, lenders and insurers. And now Glen will help our Planners in the Atlantic and the Ottawa and surrounding areas achieve their goals. He’ll be rolling up his sleeves to learn their businesses, their unique needs, and ensuring that they get the most out of the best value programs that are only available at Mortgage Architects. He’ll also be talking to top broker talent about joining Mortgage Architects, because they, too, have the highest standards in the industry. We invite you to share our warm congratulations the next time you see Glen. Want to fly your career with the A-team? If you’re interested in becoming a planner with Glen’s exceptional team, give us a call. Ask to speak with the Ace. He’d love to hear from you.

Glen Ward Regional Vice-President Atlantic Canada & Eastern Ontario

The power of value.

News

Industry

3.5% Growth expected in Canada for 2010 by the Bank of Canada

CIBC faces serious claims $12-million mortgage fraud uncovered in Calgary A $12-million mortgage fraud was discovered by police in Calgary that involved 22 homes and eight banks. A team of men allegedly convinced naive “straw buyers” to use their names to obtain mortgages as an investment. The buyers were told after six months, the mortgages would be taken over by the men, and were supposedly given $3,000 to $5,000 in return. “Most of (the buyers) were fairly young, as far as residential buyers, with their ages ranging from 20 to 28,” said Kevin Forsen, inspector of the Alberta Law Enforcement Response Teams, to the Canadian Press. The men supposedly gained a large amount of money from the mortgages and walked away afterward, leaving the buyers responsible. Ali El-Sayed, 31, is charged with extortion, and 23 counts of fraud over $5,000, which affects his company, Ramses Holdings Inc. Christos Fotopoulous, 28, surrendered to police and was charged with three counts of fraud over $5,000. An arrest warrant has been issued for Russell Kilba, 34, and he is wanted on 10 counts of fraud over $5,000. The banks involved include Scotiabank, TD Canada Trust, ATB Financial, First National Financial, CIBC, Merix Financial, Royal Bank and MCAP Financial. CMP

CIBC allegedly failed to properly disclose its exposure to subprime mortgages in a move that misled the market and CIBC investors alike, according to testimony from Rotman School accounting professor Gordon Richardson. In his 65-page review of CIBC, Richardson writes CIBC failed to comply with GAAP disclosure requirements and that information provided concerning credit risk was deceptive. Richardson is calling for CIBC to restate income from the last three quarters of 2007 and the first quarter of 2008 claiming original figures were overstated. “CIBC denies these allegations and plans to vigorously defend this action. CIBC is confident that, at all times, its conduct was appropriate and that its disclosure met applicable requirements,” said CIBC spokesperson Rob McLeod A second testimonial from a securities valuation firm in the U.S. reports CIBC investors lost a maximum of $6.6 billion between 2007 and 2008, the period the lawsuit covers. The case, part of a class-action suit, is expected to come before the Ontario Superior Court for certification in March 2011. CMP

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News

International

u.s. NYC launches mortgage fraud prevention program New York City’s Finance Department has launched a new program to help prevent mortgage fraud. When someone tries to steal another person’s property holdings with a phony deed or a bogus mortgage, the department will send a notification by e-mail, text message or letter. Owners simply have to sign up for the program by filling out an online form at nyc.gov/finance. “It’s free and it’s a major step in our attack on this pervasive fraud,” said finance commissioner David Frankel to the New York Daily News. “If you’re notified of an unauthorized transaction, immediately call 311 and the matter will be referred to the appropriate law enforcement agency.” Eighteen months prior to this new program, a Daily News reporter transferred the Empire State Building deed from the rightful owners to his own bogus corporation to show how easy it is to commit deed and mortgage fraud. The new deed was accepted and recorded by the city register’s office without problem, though the notary and witness listed were fake. CMP U.S. Genworth expects slower sales in later half of 2010 Slower sales are expected in the second half of 2010 at Genworth Financial Inc., the mortgage guarantor and life insurer, said its executives. Based on historical patterns, “delinquencies generally trend up about eight per cent in both the third and fourth quarters,” said Patrick Kelleher, Genworth CFO. He added that the firm will “take a more conservative view” about its U.S. mortgage insurance business in the second half. On Thursday, July 30, Genworth dropped by US$2.21, or 14 per cent, to US$13.58 in the New York Stock Exchange Composite Trading, the most its fallen since May. But even with the decline, the company has gained 16-fold since the March 2009 low for U.S. stocks, making it the best performer in the Standard and Poor’s 500 Index, according to Bloomberg Businessweek. CMP U.S. mortgage applications up Mortgage applications in the U.S. rose by seven per cent, which is good news after U.S. home sales dropped by 33 per cent at the end of May.

The Mortgage Bankers Association (MBA) conducts a survey on 50 per cent of all mortgages each week. It is likely consumers are re-entering the market because of record low mortgage rates. “As more homeowners locked in to these low rates, the level of refinancing applications increased to a new 13-month high,” said MBA vice-president Michael Frantantoni in a press release. However, property sales are still on the decline, as in June, purchase applications declined by nearly 15 per cent from May. At the time of this printing, the U.S. average 30-year fixed mortgage rate is 4.67 per cent. CMP

u.k U.K. banks approve fewer mortgages than expected U.K. banks approved fewer mortgages in June than economists predicted earlier as housing demand dropped due to stricter lending conditions and weaker consumer confidence. Lenders granted 47,643 loans to buy homes, compared with 49,461 in May, which was the lowest in four months and less than the 48,800 median forecast of 18 economists in a Bloomberg News survey. The U.K. housing recovery has slowed as consumers anticipate the government’s budget to reduce the record deficit. House prices fell in July for the first time in five months, according to the U.K.’s Nationwide Building Society. Recent data “are basically saying the party is over for the U.K. housing market,” said Alan Clarke, an economist at BNP Paribas in London. With fiscal policy expected to tighten and planned public-sector job cuts, “one can understand why households are not falling over themselves to go out and move house,” he said. CMP

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News

mortgages in the press

Industry

Street Capital offering mortgage insurance

Canadian homeowners financially fit

Street Capital Financial Corporation recently announced that it’ll now offer mortgage insurance through Canada Guaranty Mortgage Insurance Company. “[Canada Guaranty’s] solutions-oriented approach and passion for service excellence makes [them] a perfect fit for Street Capital and, more importantly, our mortgage broker partners,” said Paul Grewal, Street Capital president. According to Canada Guaranty CEO Andy Charles, the partnership with Street Capital offers mortgage professionals more choice among service providers. Canada Guaranty is owned by a private Canadian investor group and is the second largest private mortgage insurer in Canada. CMP

Canadian homeowners appear to be more financially fit than others in Canada, as 65 per cent pay off their credit balances each month compared to 48 per cent of non-homeowners. A quarter of the homeowners with mortgages have also made a lump sum payment or accelerated their mortgage payments in the past year, according to a survey sponsored by Genworth Financial Canada. Forty-four per cent of homeowners paid all their bills and saved money in the past year, suggesting a strong correlation between homeownership and financial fitness. “Homeownership is an achievable goal for those who are prepared,” said Peter Vukanovich, president and chief operating officer of Genworth. “Homeownership helps people focus on their financial situation and get their fiscal house in order.” The survey was conducted in partnership with the Canadian Association of Credit Counselling Services (CACCS). “A mortgage is easier to manage when people have good personal finance skills,” said Henrietta Ross, CEO of CACCS. CMP

Top Toronto mortgage broker joins Avison Young One of Toronto’s top mortgage brokers, David Scott, has been hired as a mortgage agent in Avison Young’s Toronto mortgage brokerage division of the Capital Markets Group. Scott has worked in commercial mortgages for more than 25 years, and includes underwriting with Standard Life, MetLife and CIBC Mortgages Inc. Scott has experience in financing traditional and non-traditional income-producing properties and land, as well as opening a branch for a private mortgage brokerage. “I look forward to integrating into Avison Young’s Capital Markets Group and contributing my real estate financing background and knowledge to the growth of the company,” said Scott. “I believe that the team vision evident at Avison Young will continue to allow the company to offer the best integrated equity, property management, leasing and debt solutions to its clients on a uniformed platform.” Avison Young has grown from 11 to 21 offices, and from 300 to more than 700 real estate professionals. CMP

mortgagebrokernews.ca

$331,600

National average home price for 2010 expected by the Canadian Real Estate Association

Invis and Mortgage Intelligence celebrate decade of quality service This year marks the 10th anniversary of Invis and Mortgage Intelligence, two of Canada’s leading mortgage brokerage firms. “For the past 10 years, our two companies have aimed to set the standard for customer service in the mortgage industry. Building and growing relationships is at the heart of what we do,” said Gord Dahlen, president and CEO for Invis and Mortgage Intelligence. “By offering our brokers all the advantages of working for a full-service brokerage, including superior lender relationships, they can focus on what they do best – delivering competitive mortgage options along with outstanding service.” Also, Invis and Mortgage Intelligence hosted four golf tournaments for brokers and industry partners this summer. Events in Vancouver, Calgary, Winnipeg and Toronto raised money for the Angels in the Night homeless shelter project, Children’s Hospital in Calgary and the Sick Kids Hospital in Toronto. CMP

News

community

In the community Left Centum Professional Mortgage Group, in Lethbridge, Alta., raised more than $35,000 for Kidsport in its third annual charity golf tournament held at Paradise Canyon Golf Resort. The event included lunch, dinner, cash prizes and a special silent auction. Vittorio Oiliverio, broker/owner of Centum Mortgage Professional Group with Malcom Kano from Kidsport in Lethbridge. Right Jodie Hiebert, an associate with Centum, sponsored a hole.

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mortgagebrokernews.ca

INVIS AND MORTGAGE INTELLIGENCE

Celebrating 10 Years of Industry Leadership

Saying You’re #1 Is Easy… Being #1 Takes Effort. At Invis and Mortgage Intelligence we lead the Canadian mortgage brokerage industry in volume, volume per agent and income per agent, as noted by Filogix. While it’s great to be #1, we’re working hard to stay #1. Whether they’ve been with us 10 months or 10 years, our brokers receive unparalleled backing – efficient weekly payroll, the industry’s best compliance, expert deal support, free customized marketing, competitive compensation, a great corporate culture, the list goes on and on… In short, we’re all about real support from real people. We really enjoy what we do – helping our brokers achieve greater success. Now that’s something to celebrate!

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.

ADVERTORIAL

A decade of Broker Excellence 2010 marks the 10th anniversary of both Invis and Mortgage Intelligence. The celebrations come as Invis and MI lead the Canadian mortgage brokerage industry in production volume, as noted by Filogix.

mong major brokerages, Invis and MI are not only number one in total mortgage volume, they also lead the pack when it comes to volume per broker. “These results confirm our status as the preferred home for Canada’s most professional, dedicated mortgage brokers,” says Gord Dahlen, President and CEO of Invis and MI. Invis and MI have distinguished themselves with a full value offering to brokers. “Whether they’ve been with us 10 months or 10 years, our brokers receive a line-up of support services that add up to solid value for today’s time-stressed mortgage professional wanting to take their business to the next level,” observes Bryan Devries, EVP of Sales and Operations. “Real support from real people” is how Dahlen sums it up, noting that brokers can literally pick up the phone and talk to the company’s in-house team to get assistance quickly. “The support we offer is more than a self-serve arrangement with a third party – we invest in our brokers to equip them to be the best, which benefits our brokers, our company and our industry,” asserts Dahlen.

Some of the faces of Invis and MI through the years (clockwise from top left): Gord Dahlen, Rich Oenema, Rob Hafer, Andrew Moor, Liz Hynes; Art Trojan; Ilona Bronson; Annie and Dieter Peschman; Patrick Mulhern; Paula Roberts and Kelvin Seepersad.

Real Support from Real People

A Proud Heritage

“While it’s great to be #1,” says Dahlen, “we’re working hard to stay #1.” Here’s a sampling of the benefits that Invis and MI deliver, to stay at the forefront of the industry: Efficient Weekly Payroll – Prompt and accurate payroll via weekly direct deposit, a real time saver for busy brokers. Experienced Regional Managers – Full time professionals who offer knowledgeable advice on tough deals, business planning, and reaching out to clients and referrals. Free Customized Marketing – Hundreds of templates, professional graphic designers and copywriters, and expert marketing advice. Effective CRM Programs – State-of-the-art CRM programs to keep in touch with clients: professionally, automatically, and with zero effort. Compliance Support – “We offer the industry’s best compliance support, to protect our brokers’ reputations in our communities and our industry,” notes Dahlen. Exclusive In-House Offerings – Great commissions, and ongoing trailers as an option, on private label mortgages, leasing and insurance products. Prompt I.T. Support – Knowledgeable and friendly I.T. experts to keep core systems up and running. Submission Desks – Easy, preferred access to a range of key lenders; enjoy top-tier compensation on every deal. Competitive Compensation – Earn top dollar on every file: highly competitive finders fees and volume bonuses our lenders offer, even on the first deal. A Clear-Cut Contract – No restrictive contracts, like ones that lock a broker in for a multi-year term, contain non-solicitation clauses, or even charge high monthly fees for advertising.

“In many ways, our continued success is the fulfilment of the vision of our early founding entrepreneurs including Art Trojan at Norlite and MI, and Dave Nichol at Invis,” comments Stan Falkowski, SVP, who has been with MI since the beginning. “Fast forward to ten years later, and many of our Whether they’ve been with brokers have remained with us 10 months or 10 years, our us from the start. It’s a loybrokers receive a line-up of alty that speaks volumes.”

Mortgage Brokering: It’s a Team Sport

support services that add up to solid value. . .

Invis and MI have lively company cultures that celebrate excellence. Brokers have a strong voice, and feel part of a cohesive group of professionals who share ideas and information. “We work for the broker,” asserts Dahlen. “We believe in them. We worry about them, we care about them. No one else in our industry holds the broker in such high regard. These are values that permeate the cultures at Invis and MI.” At a variety of team-building and social events for the rest of 2010, Invis and MI brokers will celebrate a job well done for the last 10 years. They’ll also look forward to another great decade as they work hard to grow their businesses with Invis and MI, and have a good time together while doing it.

10 01 NUMBER

YE ARS

News

Appointments

appointments

Benesure expands B.C. mortgage protection plan team Mortgage Architects Benesure Canada Inc. announces new announces the appointment of Jessey Camara as the regional VP for mortgage protection plan service manager in the Atlantic Canada and British Columbia region. Camara has over 15 years experience in eastern Ontario financial services, and over

half that time has been spent in the mortgage servicing sector. With a high degree of familiarity with the details of how a mortgage transaction works, he is amply equipped to help Benesure’s broker clients smoothly integrate MPP into their daily routine. This appointment reflects the company’s new regionalization strategy, moving resources and decision-making power closer to broker clients across the country. CMP

Mortgage Architects appoints industry veteran Glen Ward to regional vice-president of Atlantic Canada and eastern Ontario. Ward will provide core support to the Mortgage Architects’ network of lead and associate planners within the region, and will assist with recruiting qualified planners to the Mortgage Architects team. Ward currently sits on the government relations committee with CAAMP and is part of the government panel that is rewriting the Mortgage Brokers Act in Nova Scotia. CMP

Angela Coyne has accepted the role of regional manager for GTA West and Ontario South West at Invis. Coyne returns to Invis from a competitor brokerage. She will focus her efforts on building the Invis presence and brand in GTA West and Ontario South West, and on delivering the industry’s best support to our brokers in that region. At Equitable Trust, Vanessa Wong joins in the role of residential mortgage officer. Lucy Tseng has also been appointed to residential mortgage officer. The Mortgage Group Ontario welcomes Romana Bozic as a mortgage agent to the team. CMP

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ISSUE 4.9

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this time last year TMG launches TV station Last year, The Mortgage Group had just launched a weekly Internet broadcast called TMG TV to connect brokers nationwide and provide them training. “Some of our brokers are in remote areas or small towns where they can’t come to see speakers in different cities, so we wanted to reach members across the country so they could have the opportunity to listen to the speakers without travelling,” said TMG communications director Malcolm Collett. Guest speakers had already appeared from a number of banks and brokerages discussing new products and broker-related issues. If no speaker was scheduled, the network filled the time with a training session. One year later, The Mortgage Group still puts out broadcasts through TMG TV but is on hiatus until September. The format is still the same with guest speakers being the focal point of the seminars. According to communications director Malcolm Collett, within the past year, viewership has increased thanks to TMG’s new service initiatives and its lineup of guest speakers. TMG markets the service through its brokers as well as through its website. Collett says feedback has been very positive since a lot of brokers who aren’t able to come to the studio can just log in and provide their own input from miles away. TMG TV has added a new feature this fall - a new facility for brokers to come in and produce their own videos for their clients will be part of the expanded broadcast. CMP

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Xceed to switch client base This time last year, Xceed Mortgage Corporation was moving forward with plans to become a federally regulated Schedule One Bank. Xceed CEO Ivan Wahl said that becoming a bank would provide Xceed an additional source of funding that could be put toward mortgage orientations. “The majority of mortgages we used to do were high-ratio uninsured mortgages and that, of course, is not permissible if we’re a bank,” Wahl said. Wahl added that they’ll shift to dealing more conventional loans (80 per cent LTV or less) which meant going after a different market. Two years ago, the company switched from the non-prime to prime mortgage lending arena. One year later, Xceed was hesitant to comment on the ongoing process but public relations director Richard Wertheim is optimistic approval is forthcoming. “We don’t know when they will do so. We are expectant that they will approve it but, of course, this is ongoing and there’s just nothing we can say about it,” he said. Last September, Xceed shareholders voted overwhelmingly to convert the company into a bank and the decision now rests with the Office of the Superintendent of Financial Institutions Canada (OSFI). “[We’re going through] the normal procedure. OSFI’s got a lot on its plate, as you can imagine, over the past year or so. While it’s taking somewhat longer than we’ve hoped, there’s nothing unusual about the process,” Wertheim added. CMP

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Cover

brokers on lenders

s r e k o r b n lenders o

eed? t n a r a n Gu o i t c a f s Sati

CMP once again pooled brokers to get their view on what’s good and not so good about lenders. The results are in and compared to last year there are a few surprises.

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hen CMP polled its database of brokers, the market had just rallied, no doubt spurred by the introduction of the HST on July 1 for Ontario and British Columbia. Sales were brisk and the mortgage market was hot. It has calmed down a bit and brokers can expect to see a steady flow of business but certainly not the downturn from two years ago. Tightened credit, funding ratios, and pooled deals have brokers worried that the big banks are trying to take back market share. Interest rates are relatively low but house prices are on the rise in the short term. All indicators suggest that the market will balance itself in the coming months. It was great to see that the responses to our fourth annual Brokers on Lenders survey. Approximately 350 mortgage professionals took the time to answer questions and provide candid feedback on lenders in 11 categories: approval/ loan turnaround times, underwriter support, BDM support, broker support, transparency of commission structure, broker training, IT and electronic/ technology, interest rates, product range, overall service level to brokers, satisfaction index on overall credit policy. Grades were given on a scale of one (very poor) to five (very good). The overall response was so overwhelming for some lenders – and so

Cover

brokers on lenders

underwhelming for others – that the minimum requirement to be included on this year’s final tally was the same as last year -- each lender had to receive at least 50 votes. After that we took the top 10 from each category. Not only does this make the final list easier to manage and read, but it ensures that the scores given represent a fair sample of mortgage professionals from all different areas in multiple provinces, rather than being based on only a few scores. To further clarify the diversity of this year’s response in total, mortgage professionals from nine provinces participated. And while this year’s respondents are a definite reflection of the Canadian demographic of mortgage professionals, they also possess a vast amount of knowledge and expertise in both the lending and mortgage brokering fields. Out of the total number of those who replied, 65 per cent have been brokers for more than five years, while 53 per cent have also been lenders at some point. Of those 53 per cent which were lenders, 80 per cent of them were for more than five years. What this all means is that this year’s responses are coming from a well-seasoned group who understand both sides of the broker/lender relationship, and can be considered a fair representation of the country. CMP would like to thank everyone who participated in this year’s survey, and we hope you find the results interesting. Don’t forget to check out our next issue when we give the lenders a chance to respond.

2010 total medal standings Lender

Total

Merix

First National

MCAP

Scotia Mortgage Authority

FirstLine Mortgages

Home Trust

ING Direct

Macquarie

ResMor

Street Capital

which criteria are most important to brokers? 150 142 Votes

Approval/ loan turnaround times

120

90 Votes

Underwriter support

68 Votes

BDM support

24 Votes

Product range

16 Votes

Overall service levels to brokers

10 Votes

Broker support

0 mortgagebrokernews.ca

Approval/ loan turnaround times Rank

Lender

Score 2010

Score 2009

Change

First National

4.85

4.48

+.37

MCAP

4.63

3.60

+1.03

Merix

4.32

3.33

+.99

Street Capital

4.27

Scotia Mortgage Authority

4.27

Macquarie

4.2

3.39

+.81

Home Trust

4.16

3.52

+.64

ING Direct

3.56

FirstLine Mortgages

3.4

ResMor

3.4

3.33

+ .01

BDM support (training, information) Rank

Lender

Score 2010

Score 2009

Change

Merix

4.78

3.91

+.87

FirstLine Mortgages

4.44

3.59

+ .85

ResMor

4.32

MCAP

4.3

3.44

+.86

ING Direct

4.25

3.45

+ .8

Scotia Mortgage Authority

4.17

First National

4.09

3.76

+ .33

Street Capital

4.06

Macquarie

3.77

Home Trust

3.44

-3.44

Score 2010

Score 2009

Change

4.32

3.44

+.88

Scotia Mortgage Authority

4.2

Merix

3.60

3.21

+.39

Home Trust

3.46

2.98

+.48

MCAP

3.4

2.93

+.47

Macquarie

3.2

3.13

+.07 +.05

Broker support Rank

Lender

First National

Street Capital

3.2

3.15

ResMor

3.2

ING Direct

2.95

FirstLine Mortgages

2.93

3.42

-.49

Approval/ loan turnaround times The importance of approval and loan turnaround times to a mortgage professional has always been second to none in terms of relationships with lenders, and this year is no different. When asked to rank which criteria was most important, approximately 142 out of 350 voted for it. There are a few newcomers on the list who must have been doing something right this past year. In a few cases, lenders improved their scores from last year so they are definitely on the right path. MCAP made the most gains in this category. “I get very fast approval at MCAP – usually it’s one day,” wrote one broker, “They consistently over deliver and are flexible with their underwriting policies.” BDM support BDMs play a key role in any mortgage, and as such, having a good BDM was a most important factor for this year’s respondents. When asked what he would like lenders to improve on in the next six to 12 months, one broker said, “BDMs who return phone calls and e-mails.” Merix did very well in the category and seems to have hired the right BDMs. “I’m still pretty new to the industry and the BDM support I get from Merix is wonderful,” said one broker. “My BDM takes the time to answer all my questions and helps me to resolve any issues I have.” Other lenders were praised as well. “BDM support from both MacQuarrie and Merix is excellent – they go beyond the call of duty – are always personable and always ready to help.” Broker support (training, information seminars, etc) Though not as important to this year’s respondents as some other categories, broker support, in terms of training and information seminars, are still a valuable asset (at least when there is time to attend them). This is the third year in a row for First National, earning Gold status each time. Scotia Mortgage Authority is new to this list and has been making inroads on all the polls. “First National is consistent in their service and their Merlin system is fast and amazing,” said one broker. Brokers also commented on other lenders. “My BDM at MCAP gave me more training than my own office,” a broker commented. “MCAP is my first choice if the deal fits and the rate is competitive.”

Interest rates Rank

Lender

Score 2010

Score 2009

Change

Scotia Mortgage Authority

4.58

3.43

+1.15

Street Capital

4.55

3.64

+.91

ING Direct

4.54

3.87

+.67

First National

4.25

3.80

+.45

Home Trust

3.86

3.50

+.36

MCAP

3.85

3.95

-0.1

Merix

3.85

3.94

-.09

ResMor

3.77

Macquarie

3.5

3.64

- .14

FirstLine Mortgages

3.2

3.51

-.31

IT and electronic/ technology Rank

Score 2009

Change

4.54

3.43

+1.11

4.11

4.38

-.27

Home Trust

4.04

Scotia Mortgage Authority

3.86

3.33

+.53

Lender

Merix First National

Score 2010

FirstLine Mortgages

3.81

2.99

+.82

MCAP

2.99

3.60

-.61

Street Capital

2.91

ING Direct

2.87

3.03

-.16

ResMor

2.83

Macquarie

2.5

2.91

-.41

Overall service level to brokers Rank

Lender

Score 2010

Score 2009

Change

MCAP

4.54

3.45

+1.09

First National

4.52

4.22

+.3

Merix

4.21

3.60

+.61

FirstLine Mortgages

Scotia Mortgage Authority

3.86

ING Direct

3.75

3.51

+.24

ResMor

3.72

Home Trust

3.46

3.61

-.15

Macquarie

3.2

3.48

-.28

Street Capital

3.47

-.47

Interest rates Interest rates, surprisingly, aren’t as crucial to mortgage professionals as things like BDM support and turnaround times, with fewer brokers responding to the question. Of those who did, there were a lot of surprises over last year’s results – the top spots went to Scotia Mortgage Authority and Street Capital ousting MCAP and Merix. ING Direct kept its third spot. That said, these lenders definitely get the phones ringing when potential clients look to save money. IT and electronic/ technology Perhaps the least significant of all categories, technology didn’t receive many votes from respondents when asked what the most important criteria are to them. That could also explain why this category posted a low average score. However, kudos to Merix for making huge gains. Among the comments we recived was this: “I would like to see an improvement in technology for most lenders. I like a user-friendly portal for tracking deals, tracking document reception and to review and upload documents.” Overall service level to brokers It’s no coincidence that the top three in this category, MCAP, First National and Merix, also finished in the top three overall. This category was first introduced last year and the response from brokers was overwhelming – they all had something to say about lender service levels. This year it appears that lenders have made some improvements. However there are still problems. Here is a sampling of comments: “One lender’s BDM was clearly irritated with new brokers, whom he considered to be needy. Well, everyone was new once. He often didn’t get back to me for days – once I waited a week. I finally just gave up and don’t submit there anymore.” “I don’t like underwriters who lie to buy time when they haven’t done their job. “I just got this deal” one told me two days after submission. He asked, “When did you send it in? I haven’t seen it” when the allocator has told me that it was sent to that particular underwriter two days earlier.” “Volume challenges,” another broker wrote. “The volume targets are very unreasonable for smaller brokerage houses located in smaller urban areas, or anywhere for that matter. We are being pushed towards joining super brokers in order to be able to maintain our lending relationships.”

Product Range Rank

Lender

Score 2010

Score 2009

Change

Merix

4.41

3.34

+1.07

MCAP

4.38

3.41

+.97

Macquarie

4.27

ResMor

4.25

ING Direct

4.25

Scotia Mortgage Authority

4.17

3.85

+.32

FirstLine Mortgages

4.11

4.06

+.05

Home Trust

4.07

3.36

+ .71

First National

3.94

3.35

+.59

Street Capital

3.20

Satisfaction Index on Overall credit policy Lender

Score 2010

Score 2009

Change

Merix

4.44

3.38

+1.06

FirstLine Mortgages

4.23

First National

4.11

3.87

Scotia Mortgage Authority

Street Capital

3.85

3.31

+.54

MCAP

3.77

3.65

+.42 +.27

Rank

+.24

Home Trust

3.7

3.43

ResMor

3.6

ING Direct

3.5

3.42

+.08

Macquarie

3.3

Transparency of commission structure Rank

Lender

Score 2010

Score 2009

Change

MCAP

4.85

3.83

+1.02

First National

4.48

4.26

+.22

Merix

4.44

Street Capital

4.36

3.73

+.63

Home Trust

4.23

3.73

+.5

ResMor

4.1

ING Direct

FirstLine Mortgages

9 10

-.13

4.13

3.55

Scotia Mortgage Authority

3.3

3.68

-.38

Macquarie

3.2

3.74

-.54

Product range This category was dominated last year by the banks. Obviously a lot has happened because the non-bank lenders dominate this year. “Our team loves to deal with Merix Financial because they have all the products and very competitive rates,” said one broker. “I like Scotia’s wide range of products,” said another. Satisfaction index on overall credit policy While the category ranked low in overall importance, it has made inroads from last year when the average score was 3.28, showing that this is an area that has improved. “First National lending policies are great. Their staff has great communication with us and remains in constant contact until the deals are done.” “Street Capital performs the best due to their aggressive rate structure but more importantly, the knowledgeable, versed, and efficient underwriters that they have brought on board. They provide outstanding service levels on a consistent basis.” Transparency of commission structure Based on the high scores, it seems that a lot of mortgage professionals are satisfied with lenders’ treatment of this issue. However there were a few suggestions: “I would like to see commission structures that are easier to administer within my office. Generally there are too many payments associated to one file.” “I would like to see lower threshold targets for enhanced rates and commissions. The current levels are too high and most brokers pool deals in order to participate. Current models are not driving the desired behaviour and frustrate independent firms/individuals.” “I would like to see more lenders offer to pay trailer fees.” And still on the topic of trailer fees, another broker wrote, “ I would like a trailer fee, or some other type of unique compensation for not ‘moving’ my client on renewal.”

Underwriter support Rank

Lender

Score 2010

Score 2009

Change

MCAP

4.85

3.45

+1.4

Merix

4.48

3.51

+.97

First National

4.36

4.22

+.14

Scotia Mortgage Authority

4.5

3.33

+1.17

Home Trust

4.4

3.72

+.68

Street Capital

4.1

3.55

+.55

FirstLine Mortgages

ING Direct

3.55

3.54

+.01

ResMor

3.3

Macquarie

3.2

3.44

-.24

Score 2010

Score 2009

Change

First National

4.59

3.98

+.61

Merix

4.44

3.54

+.9

MCAP

3.50

Scotia Mortgage Authority

3.45

Home Trust

3.42

3.39

ResMor

3.42

Street Capital

3.41

3.42

-.01

Macquarie

3.39

3.37

+.02

FirstLine Mortgages

3.37

ING Direct

3.28

3.45

Overall Performance Rank

Lender

+.03

-.17

Underwriter support Considering they are on the front line between lenders and brokers, underwriter support ranked extremely high on the overall importance chart. And it also provided some lively commentary from some very satisfied and some very dissatisfied respondents. “There isn’t just one skill an underwriter needs. They have to have two -- manners and common sense.” “I think the best ones have the ability to see the deal in its entirety and if there is a solution to a shortcoming on the deal, communicate it.” “I’d like more communication from them. They could explain why certain policies are the way they are, and why they differ from other lending institutions. It’s important to treat brokers well as we bring them business.” “I would like them to look at a deal and take a common sense approach to it. It is very crucial for an underwriter to call me when they have an issue or don’t understand. I find most underwriters these days just send back a decline instead of asking questions.” Overall performance Once again, the overall performance leader this year was First National, with Merix and MCAP in the same positions as last year. “First National seems to come out on top time and time again during broker conversations. The reason for this success is the turnaround times but they are still known to be “weird” when it comes to certain situations.” “First National has a speedy turnaround time, and underwriters willing to listen and they have good website support.” “Merix has absolutely great underwriters and their BDMs are also very helpful. They helped any time I had questions and made completing my transaction very easy for both myself and my client.” “Merix is our No. 1 lender lender. They care about my business. I feel like they are a partner.” “With MCAP I am able to better understand why if not approved and they give me options and exceptions when a particular doc can’t be handed in. Their underwriters and closers are very good at making sure I understand why something is done or not.” And praise for a lender who didn’t make the top three. “Street Capital steps out above most, in my opinion. They have great BDM support. The underwriters are experienced and efficient. The turnaround times are great. The interest rates are very competitive and often better than anyone else.” Until next year. CMP

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NICHE SERIES Alt-A Clients

understanding product availability and criteria will help you with

alt-a clients 30

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NICHE SERIES

Alt-A Clients

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 alt-A clients. Nick Lypaczewski spoke to a few brokers to find out what is the most effective way to reach and work with this market

Wayne Barnes

Commercial Mortgage Broker, The Mortgage Group, Vancouver, B.C.

CMP: How does a broker’s approach with an alt-A client differ from a broker dealing with prime clients? And subprime clients? If a client comes in to us because they saw one of our advertisements showing our very best rates and they’re looking for that rate, then at that point we have to tell them that they may not qualify for that rate. We have to make them understand that in order for them to qualify for the best rate; they may have to jump through some hoops. With today’s products, we have

lenders, for example, who will let us lend without proving that the client doesn’t owe any taxes. If the alt-A client comes in and says he or she hasn’t filed a tax return for the last two years, we immediately have to tell them to do one of two things: Either file a return or accept the fact that they may have to be put into a lower category.

CMP: What are some of the problems brokers face when dealing with alt-A clients? Mainly, the additional cost to the client due to the fact that most alt-A programs require mortgage insurance and the program features are more restrictive.

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NICHE SERIES Alt-A Clients

CMP: What tips can you offer brokers to get clients looking for alt-A lending through the process?

Sabeena Bubber

We run seminars from time to time. We’ll put ads in the newspaper saying we’re going to have a first-time homebuyer seminar. We run those every two to three months. You see a lot of young couples particularly and alt-A buyers. They’re there to try to structure something prior to going out there and making offers with a Realtor. At the seminars, we like to emphasize credit maintenance. Most lenders will categorize the people based on their credit score.

CMP: How does a broker’s approach with an alt-A client differ from a broker dealing with prime clients? And subprime clients?

CMP: What are some of the problems consumers experience when using alt-A products? They all offer different pre-payment privileges on loans. For instance, if you’re a first-time homebuyer and you think you’re only going to live in this place for two years and then turn around and sell it, those become issues. You’ve got to make sure you’re not locking your client into something where two or three years from now they can’t do anything without paying a huge penalty for paying out that mortgage. You need to make sure you’re not putting your clients into the wrong mortgage product.

President and Managing Broker VERICO Integre Mortgage

The approach differs because the clients are not necessarily using income to qualify in terms of what they declare to the government. So usually what I do is ask them what is reasonable based on their field and what their gross income is for their company and what their income drawings are. We will then take what’s reasonable based on the growth income of their company and sell it that way.

CMP: What are some of the problems brokers face when dealing with alt-A clients?

These days, one of the issues we face is with financial statements. Quite often lenders want us to refer to financial statements to see if a client is declaring a certain income. Lenders want to know if the income is reasonable for the field the client works in and if not, do the financial statements reflect what is reasonable based on what they’re declaring. With financial statements, when there’s a loss showing or CMP: What are some of the problems brokers showing no retained earnings in the company, it’s experience when selling alt-A products? difficult to explain to a lender why it is they should be providing money to these clients. There If you’re with a small brokerage firm, not getting was once a day where we didn’t have to provide enough training can present a problem. I’m not alternative income sources but now we do and saying that a broker in a small house isn’t smart that’s creating some issues for clients in terms of enough to look after his client, but percentage-wise, whether they have the ability to pay. Proving if you’re dealing with larger firms, you’re going to their ability to pay can be complicated. see that the brokers have more training. We’re CMP: What tips can you offer brokers to get constantly training our brokers on what the new clients looking for alt-A lending through products are, what’s good for what type of client, the process? etc. Also, if you have a client coming through the door thinking they’re entitled to the very best For people who are purchasing, having a threeproduct you’re advertising and he’s not getting it, month history of the down payment is critical you have to be able to show him why he’s not and showing the source of the funds is also getting it. A lot of times, as much as you’d like to always important. It also helps to show that they put your client into that product, you can’t. have assets over and above what they’re putting CMP: What are some of the issues for for a down payment so they can show good net alt-A clients? worth. If a client is not showing income, we want to see that they’re at least showing some They have to meet financial criteria that can be sort of savings habits. Good credit is always proven and then, of course, their beacon score is a extremely important. good indicator as to their credit worthiness. All these credit issues play a part, then there’s also job CMP: What are some of the problems consumers experience when using alt-A products? stability and the amount of debt to be considered.

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www.hometrust.ca

NICHE SERIES Alt-A Clients

Typically, when dealing with the banks, there’s a lot of product choices out there for alt-A clients and dealing with a mortgage professional can give them a lot of options in terms of the various products offered by various lenders. So we can take the client and match them to the various institutions. I specialize in alt-A cases and end up with a lot of clients who have been declined by their banks because their banks just don’t understand the client or the product well enough. Whereas we have a detailed understanding of who can do what at what institution.

CMP: What are some of the problems brokers experience when selling alt-A products? I haven’t had any issues. Generally we haven’t had any issues selling the premium or anything like that. These products allow clients to get financing when 10 years ago they didn’t exist.

CMP: What are some of the issues for alt-A clients? When their taxable income on their tax return is not a true reflection on what their ability to pay is. When you’ve got a self-employed client who doesn’t necessarily show a lot of their income on their tax return but they have the ability to service the payments through their business. In those cases, it may not necessarily reflect on their personal income taxes that they have the ability to afford a mortgage payment.

Victor Peca

Mortgage Broker, MorCan

CMP: How does a broker’s approach with an alt-A client differ from a broker dealing with prime clients? And subprime clients? It depends on the broker and their thoughts on alt-A products. The way I look at an alt-A product is as a no-income qualifier. The first thing I look at is the loan-to-value on the deal and that the down payment is from their own resources. If they’re self-employed and they’re less than three years we can go through CMHC. I look at that deal as a prime deal anyways; I don’t look at it any different from a regular five per cent deal with salaried income. They should be getting the same rates as a prime-A deal. If they do fit the guidelines of CMHC or even Genworth, it doesn’t differ to me at all.

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CMP: What are some of the problems brokers face when dealing with alt-A clients? As long as you have the correct business licences, no problem. It’s just a matter of them being able to make the payments. Just because someone has a business licence, the problem I have, again, is: are they going to be able to make those payments with the mortgage? So the only problem I have is with my own conscience: is this right? Just because they have the business licence should they get a mortgage approval?

CMP: What tips can you offer brokers to get clients looking for alt-A lending through the process? Know the client, know the deal. Believe that what you’re giving the client is the right thing. You’ve got to advertise no matter what. On your website, include that you’re an alt-A specialist if that’s the case. Do it the same way you’d get business from prime clients. Just let them know products still exist and you can help the selfemployed alt-A client through different avenues. Let them know that there is hope, there is light at the end of the tunnel, that they can get a mortgage with us. Make sure that when your broker is speaking with a client that they really understand the alt-A product.

CMP: What are some of the problems consumers experience when using alt-A products? The only problem I see sometimes with clients is they automatically think that if they’re selfemployed, they can’t get a mortgage and if they’ve only got 10 per cent down, they can’t get a mortgage because of the new changes as of April. It’s important that we educate them on that. Other than that, they may have too high a rate. Some brokers might take advantage of the situation and instead of giving them the best discounted rate they might give them a little higher rate to get higher commissions. CMP: What are some of the issues for alt-A clients? They’ve got to fit the guidelines. Again, know the product. There are so many different points to it that it’s hard to build into one scenario. To me, an alt-A client is a self-employed person that is making money that has a down payment from their own savings, a great beacon score, has shown the ability to pay back their debts. Then I look at their company and check its legitimacy. CMP

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Atlantic Canada

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Atlantic Canada

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Atlantic Canada

Heather Li takes a look at the mortgage market in Atlantic Canada and what the differences may be compared to other parts of the nation

e all know Canada, because of its sheer land size, has regional differences from the West Coast to Ontario and from Quebec to the eastern provinces. If you’re from Vancouver, travelling to Prince Edward Island can feel like you’re visiting another country. Newfoundland and Labrador, New Brunswick, Nova Scotia and P.E.I. make up Atlantic Canada, and we take a closer look at what the mortgage market is like on the East Coast and what the differences may be compared to other parts of the nation.

“ what may be the one difference is that in the Atlantic cities, the housing market is stable and doesn’t experience the boom-andbust bubbles that much of Canada is always preoccupied with ”

Mix of city and rural In 2009, the Atlantic provinces’ population totalled more than 2.3 million, which is just under Toronto’s 2.5 million. This makes the region a considerably smaller market comparatively. Much of it is considered small town but brokers living within the major city centres, such as Halifax in Nova Scotia; Fredericton, Moncton and Saint John in New Brunswick; and St. John’s in Newfoundland, don’t find working there that different from other fair-sized Canadian municipalities. What may be the one difference is that in the Atlantic cities, the housing market is stable and doesn’t experience the boom-and-bust bubbles that much of Canada is always preoccupied with. “You don’t get the ups and downs. Things are very

consistent,” says Don MacVicar, president of the Premiere Mortgage Centre, based in Halifax, with brokers in Nova Scotia, New Brunswick, Newfoundland and Labrador and Ontario. He continues speaking specifically about Halifax with a population of more than 370,000: “It’s the centre of government here. We have four universities, research centres and major hospitals. The military is based here -- the Navy, Air Force and Army. There are a lot of institutions that provide stability here.” While Halifax is a service-oriented, government- and military-based economy that keeps the market level, smaller areas throughout the region tend to be one-industry towns, focused on agriculture and fishing; and some are

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Top: Andrew Libby Bottom: Don Macvicar

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New Brunswick: A bilingual province

manufacturing hubs, making them more susceptible to macroeconomic swings. Brokers here understand their clients may hold seasonal jobs and require a different type of planning for their mortgage payments than the traditional full-time, steady paycheque work that is seen more in big-city markets. Lenders don’t get it One problem brokers in all provinces spoke about was they don’t have access to as many rate and product options from lenders as their counterparts in Toronto, Calgary or Vancouver do. “Clients will see an interest rate on the Internet and I will make a very strong and clear statement to them that I have the best rates but you may find a better rate applicable only for Toronto or Vancouver,” says Keith Stapleton, a mortgage broker based in St. John’s, Nfld., with more than 22 years experience in banking and mortgages with mortgagebrokers.com. “That’s something they need to be mindful of if they’re comparing financial options, opposed to what’s available here.” Brokers and clients are also hemmed in by lending area restrictions. “Many lenders will not lend in rural P.E.I.,” says Darren Ings, a Charlottetown-based mortgage broker with 10 years of experience. “The property has to be somewhere within so many kilometres of Summerside or Charlottetown, the Island’s only two cities. So even though somebody lives in

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One of the unique challenges New Brunswick faces in the mortgage market is that it is the only bilingual province in the country. “In the southern part, you’ll get your three large centres: Fredericton, Saint John and Moncton. The south is primarily English. In the north, we have French,” says Andrew Libby, president and CEO of The Mortgage Makers based in New Brunswick. “The homes are different, the lifestyle is different, the way of living is different.” The East Coast, rural French lifestyle is keen on building relationships with the people who help them buy their homes and manage their money. “They want to see you, feel you,” says Libby. “When you sit down with them, they want to know who your parents are, how long you’ve been in the area. They want to build that relationship before they give you their business.” When working with lenders, the language difference can be a barrier. Since most national lenders are based in Toronto and Vancouver, the lenders don’t seem to have enough support staff who speaks French. “So collections or delinquency in the French region is actually much higher than anywhere else,” says Libby. “And it’s not because they don’t want to pay. It has nothing to do with seasonal employment. It’s the language barrier and properly asking people to make the right arrangements.” So with this additional barrier and because the relationship is that much more important in the French region of New Brunswick, brokers need to emphasize from day one that their clients can contact them if there is any trouble with their mortgage after the deal has been made. “If I have a problem with my car insurance, I don’t call the insurance company,” says Libby. “I call my agent to say, ‘I have a problem. I need some help on this.’ The broker needs to be seen the same way.”

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downtown Charlottetown with a certain credit rating can get a property financed, the same person sitting on a similar type of property outside of the lending area can’t get financing.” This is true not just of P.E.I. but in all the other Atlantic provinces as well. These lending restrictions essentially come down to where the lenders are based, which is mostly Toronto and Vancouver. The common consensus among Atlantic brokers, including the ones who’ve lived and worked in Ontario, Alberta and B.C., is that the lenders simply don’t understand the East Coast provinces.

“ the common consensus among Atlantic brokers, including the ones who’ve lived and worked in Ontario, Alberta and B.C., is that the lenders simply don’t understand the East Coast provinces ” “They don’t understand the marketplace that’s here,” says MacVicar, who is originally from Nova Scotia but worked for nearly 20 years in Toronto till he decided to return home in 2005 and start Premiere with his brother David MacVicar. “They’re not getting a ton of volume relative to what they get in Toronto and in the markets they understand, so they would just rather wait until the general markets stabilize. As the economy

overall improves, they’ll come back again and expand their territories.” For the lenders, it is all about the money. The average mortgage in Atlantic Canada ranges from $125,000 to $200,000, while Toronto and Calgary easily see mortgages at $300,000 and more, and a normal mortgage in Vancouver likely starts around $500,000. Not much can be done to change the lenders’ perceived risk on the region, and it is just a matter of time for the economy to fully

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recover and their desire to expand their market areas. But it is not a huge problem for Atlantic brokers. As far as they see it, the lenders who do work with them are supportive and provide the best service they could hope for. Battling image and banks No matter where you work in Canada, a common issue amongst brokers is how they are viewed by the consumers. Brokers are constantly fighting a reputation that they are the choice of last resort. The market share for financing homes for brokers in most Canadian provinces is no more than 30 per cent, except for Quebec, where it’s roughly 50-50 between banks and brokers. The Atlantic provinces came even later to brokering, and market share may be only around 10 per cent. “We are seen as a bunch of crooks,” says John Dearin, mortgage broker for eight years in St. John’s, Nfld., with his own franchise, Dominion Lending Centres Mortgages and More Mortgages and More Ltd. “You come to us

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“ in Atlantic Canada, people need to trust you, they need to look you in the eye and know you well for them to want to do business with you ” because you have bad credit. You can’t get a loan with the banks so you come to us. That is the perception here.” MacVicar also finds Atlantic Canadians hold a fierce loyalty with their banks. “In Greater Toronto, people are looking for the best deal,” he says. “Here, there’s a lot of loyalty to their current mortgage provider, current bank. So when you’re competing for a client, if they have an established relationship with their bank, they are not very easy to move. In Atlantic Canada, people need to trust you, they need to look you in the eye and know you well for them to want to do business with you.” So when it comes to competition in the mortgage industry, brokers find that the banks are still gods, so they are keen on supporting one another to promote the brokers as a first choice. “If we have a client who recently talked to another mortgage broker, we try to encourage them to go back to that broker,” says James Shinners, broker based in Hammonds Plains, N.S., with Mortgage

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Managers. “I don’t think you necessarily see that in Toronto where it’s a lot more competitive. There’s more co-operation here.” Regulation, or lack thereof The other issue that is creating difficulty with the mortgage broker image is there is virtually no legislation in place in any of the Atlantic provinces to standardize the profession. “In Nova Scotia, to obtain a mortgage broker licence, you simply go down to Service Nova Scotia and pay your $250,” says Shinners. “I assume they do a criminal background check, and as long as you haven’t killed anyone recently, your licence shows up in your mail four weeks later.” In P.E.I., there is no licensing required at all. Anyone can print up business cards with the mortgage broker title on them and start working. Currently, the Canadian Association of Accredited Mortgage Professionals (CAAMP) is pushing the agenda with the Nova Scotia and New Brunswick governments to enforce legislation that would ensure brokers receive adequate education and training before becoming licensed. The hope is once that comes into place, the Newfoundland and P.E.I. governments will follow. “In the larger provinces, such as B.C. and Ontario, you have the independent associations as well,” says MacVicar. “What we really need here is an Atlantic Canadian association so we can push this agenda to get some better regulation.”

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Prince Edward Island: mini homes In P.E.I., a popular housing option is mini homes. Mini homes are pre-fabricated houses that are like a house but not as wide. Unlike mobile homes, mini homes are built on a wooden frame and they can be moved in their entirety to the desired location. They cost around $60,000 and are energy-efficient. Darren Ings, a Charlottetown mortgage broker for 10 years, says he only knows of one or two lenders who will finance a mini home. “Lenders are very wary of them because there’s not a lot of them in Toronto, and if you’re not very familiar with lending on them, you don’t want to take the risk,” says Ings. “Except it’s not a risk. It’s a different mindset based on geographical issues and economically related issues.” Mini homes aren’t commonplace throughout P.E.I., but they do make up a small portion of the market, and are popular in other Atlantic provinces as well. The lack of understanding of different housing types, and essentially fearing the unknown on behalf of the lenders, is yet another example of how regional and separated the eastern provinces can be from the rest of Canada.

In the meantime, as more seasoned banking and finance professionals begin to see the potential of the mortgage industry and enter into Atlantic Canada, they inevitably bring with them the encouragement of experience, education and mentorship. Mortgage Managers in Nova Scotia has

partnered with the Maritimes Business College to offer a week-long mortgage course that covers the basics for those new to the business who are interested in becoming a broker. Home sweet home While there are particular challenges to the mortgage market in the East Coast that you don’t see as much through the rest of Canada, all brokers agree the best part about working in the Atlantic provinces is that it is much more laid-back. “The people in Atlantic Canada are the best people in the world,” says MacVicar. “I’ve travelled a lot and Atlantic Canadians are wonderful, salt-of-the-earth people, and family and loyalty means a lot here.” The majority of Atlantic Canadians, including the brokers, were born and raised in the regions, and while some have travelled and lived elsewhere, it is ultimately home for them. CMP

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The State of the Industry

Demystifying Appraisals and Valuations

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contents cmp guide no.12

NO. 12

Guide to the Broker Industry

6 2

The State of the Industry What does it take to become an Elite Broker? CMP talks to the sales leaders in the mortgage industry to learn how and what they do on a daily basis that got them where they are today

Clients for life Looking for customer loyalty? Veteran brokers in Australia talk about lifelong clients and what they did to earn their allegiance

Demystifying Appraisals and Valuations: The increasing concern over home valuation fraud means different processes for brokers and lenders ordering appraisals. CMP looks at the growing role of appraisal management companies in Canada and what you need to know about the changing home valuation landscape

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Guide

State of the Industry

For the mortgage brokerage industry to thrive in the future – particularly navigating through trying times – it will take strategy, common sense and, perhaps most of all, unity. Shane Buckingham examines the primary challenges facing brokers and talks to some who are prepared to meet them

come together T

he challenges facing the mortgage broker industry, as it ventures into a new era of competition and a tough economic season, are many – but they aren’t unsolvable. Still, it is widely believed if mortgage professionals are to overcome these difficulties, they must rise above internal competition and join together to promote the industry as a whole. Canadians, who tend to know very little about mortgage professionals, don’t necessarily need to hear why one brokerage is better than the other; they need to understand – first and foremost – the advantage an independent broker can offer in general. To convey this message, many believe the industry must create a unified identity that will show Canadians an independent broker, over mobile-mortgage forces or bank branches, can provide better value, better flexibility and, of course, better service. Once the public knows this, it will be up to them to decide which particular business they go to. The next step, after identifying the problem, is determining how to solve it. Commonly, mortgage brokers’ businesses suffer from widespread misconceptions among the public, which, for example, purport that brokers charge hidden fees and only work with people who have bad credit. Clearly, this is an issue of education. How to address it, to a large degree, is a matter of opinion. One option is a national consumer-awareness campaign – something Dominion Lending Centres (DLC) has already begun by bringing on Don Cherry to speak directly to consumers in their living rooms.

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While individual companies’ efforts to educate consumers are a great start – and more should follow suit – it’s also going to take a unified national advertising campaign to really market the generic identity of the independent mortgage broker, DLC President Gary Mauris says. “The industry itself hasn’t come together and developed a very strong proactive direct-to-consumer awareness campaign. Everyone knows what a Realtor is, but only 30 per cent of Canadians know what a broker is.” Mauris suggests industry leaders should work together to develop a common message that the industry as a whole can deliver to consumers. Whether it’s done through the Canadian Association of Accredited Mortgage Professionals (CAAMP) or another organization is something that needs to be worked out by the industry, he adds.

Guide

State of the Industry

“I think CAAMP has a voice, but I think a real voice begins when there’s organic growth within a message. And that means that every agent, individually, needs to take it upon themselves to do their part to sing that same message,” he says. “So it starts with us getting more organized as an industry and, together, coming up with grassroots solutions to educate the consumer directly.” The need for a concerted effort to raise awareness is more important than ever, says Colin Dreyer, chief executive officer and president of Verico Financial Group Inc, adding that the faltering housing market, and increasing competition from banks, should give brokers all the incentive they need to work together, regardless of brand. “It’s not about brands; it’s about the industry itself,” he says. “We all, collectively, have to ensure that we’re interacting with consumers in the proper way and that we’re making sure when they’re thinking of making financial decisions, they’ll consider an independent mortgage broker.” Mortgage professionals can take their cues from the real estate and the insurance industries, which both have created an identity that is continually promoted by their national

“ fostering relationships with existing customers in a technological age can be done easily enough by sending e-mails to past clients ” associations, the Canadian Real Estate Association and Insurance Bureau of Canada. “We have no branding as independent mortgage brokers,” Dreyer says. “Each company ... is out there trying to promote their own brand, but that doesn’t promote the industry ... What we need to do is promote the brand of an independent mortgage broker, and that helps everyone in the industry.” He says what’s lacking, to achieve this end, is a national strategy that entrenches the role of an independent mortgage broker in the Canadian housing market. “I believe as an industry – all associations – we should all have a concentrated strategy, collectively organized, so that we can promote our industry collectively to consumers,” he says. “If CAAMP wants to take that initiative on – which I think they do in that forum – then we should support that.” CAAMP’s Accredited Mortgage Professional (AMP) designation has begun to create a general

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identity for mortgage professionals, but it still only has 17 per cent public recognition, says Mark Kerzner, president of The Mortgage Group. So relying on the AMP designation alone, he says, is not the answer; it’s just one piece of the puzzle. To supplement that effort, Kerzner also believes, the broker community needs to join together to initiate a “mainstream-awareness campaign” that demonstrates that a mortgage agent’s services are “second to none.” But how to get that started is something that needs more exploration. While CAAMP has made some headway, for the most part brokerages have been left to their own strategies and resources to do it themselves. A unified approach, by contrast, would help all mortgage brokers gain market share. But in order to gather the momentum required to propel the industry forward, brokers should first focus on developing relationships with their referral sources and, more importantly, their existing clientele, says Daniel Putnam, president of MortgageBrokers.com Financial Group of Companies Inc. “This industry has done a poor job in maintaining contact with customers over time,” Putnam says. “If mortgage brokers over the last 10 years really dedicated themselves to very close communication and building tight relationships with past customers, I don’t think we would be having a market share conversation in the same way we are today.” Fostering relationships with existing customers in a technological age can be done easily enough by sending e-mails to past clients, he says. But the sad reality is it’s just not happening enough. In fact, today’s mortgage brokers, on average, collect less than 20 per cent of their customers’ e-mail addresses, Putnam says. “The fact that we’re under 20 per cent, as an industry, is abysmal when you stop to consider that the most effective way – from a cost perspective – to stay in touch with the customer is via e-mail. So we’re only able to stay in touch with 20 per cent of the customers we help on an annual basis – which is ridiculous. So I think mortgage brokers have to view this business differently. “We, as an industry, need to really focus on and hunker down and manage our customer base because I think most of the renewal business we get is by the grace of God. I don’t think it’s because we’re doing a good job with CRMs.” His business is even advocating that customers’ e-mail addresses are included as a mandatory part of the Filogix application. That way the industry would be compelled to adopt e-mail address collection as best practice. “I think the biggest message for me is let’s stop the talk and let’s start working our customer bases hard because if we do it will pay dividends, and it will help us through these times when real estate is slowing down.” CMP

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Guide Feature

Demystifying appraisals and valuations The increasing concern over home valuation fraud means different processes for brokers and lenders ordering appraisals. CMP looks at the growing role of appraisal management companies in Canada and what you need to know about the changing home valuation landscape

How it happens. A tale of two types: criminal and appraiser fraud According to Steve Coull of the Canadian National Association of Real Estate Appraisers (CNAREA), there are two kinds of fraud. There is criminal fraud involving many parties from lenders to appraisers, and then there is appraiser fraud, which involves the real estate appraisal in a traditional real estate transaction. While the criminal variety is sensational and headlinegrabbing, criminal fraud usually involves so many parties that traditional real estate deals will not typically be involved. Appraiser fraud, however, is something that everyone at each level of the transaction should be looking out for. It may be something as simple as a human mistake in paperwork or an attempt to jockey numbers to make a deal work. While mistakes are easily corrected, manipulation of numbers is more deliberate and something that appraisers, professional associations, lenders and mortgage brokers police themselves for. Who perpetrates appraisal fraud? There is the kind of appraisal fraud mentioned above, where appraisers give into pressure from various parties to meet a predetermined value from any one of the parties involved in the sale. This kind of fraud is exceptionally rare, and appraisers who do this face the consequences of

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top tips for spotting appraisal fraud 1. Slow it down George Hugh of ING says that the best way to stop appraisal fraud is to slow down and take the time to properly go over the paperwork. Lenders, borrowers and appraisers are offering and expecting appraisals in the time it takes to put together a fast-food takeout meal - great for closing deals, but speed creates an environment in which mistakes can be made. 2. Go with the gut If paperwork looks out of place or numbers don’t seem right, chances are good that they are not. If they are, the time taken to double-check is not wasted. 3. Google & MLS Two electronic tools that are right at your fingertips are photos on MLS.ca and Google Earth. Guy Bantleman from Solidifi suggests that photos from MLS should be examined to ensure that what is on the report lines up with the photographic evidence from the MLS listing. Then, use Google Earth Street View to check out the surrounding neighbourhood; a grand house may be located right next to a gas station or a rundown building that will significantly affect the property value. To download Google Earth, go to . http://earth.google.com/ 4. Check the sender Craig Rowsell, EVP Lending Services and Tom McCormick, president and CEO of NAS state that their software places a red flag on any file that does not originate from the appraiser’s e-mail address. If the name and the e-mail do not match the original appraiser, contact them by phone to verify the values on the document. 5. Is the appraisal in line with the area Is the value given on the appraisal in line with values in the immediate vicinity? If not, this should be substantiated in the report.

Guide Feature

being penalized by their certifying bodies and stricken off lender-approved appraisal lists, thereby destroying any future in their chosen career. As a result, it is not very likely that any professional appraiser would willingly engage in this conduct. Sheila Young, past president of the Appraisal Institute of Canada (AIC), says that these frauds are usually perpetrated by an intermediary on behalf of a shady buyer. This intermediary intercepts the report, alters values electronically, and sends it off to the lender, keeping the appraiser’s signature intact. In the 80s and 90s, white-out and faxes were the weapons of choice. George Hugh, vicepresident of treasury and broker sales for ING Direct, reports that one case of recent fraud was only noticed because the letterhead was one pixel off; to get an idea of how small that is, look at the period at the end of this sentence - most are one pixel wide.

Since appraisers want to protect their professional reputations, they are highly cooperative in helping to stamp out fraud that involves their signature on a document, as are their professional associations. CNREA routinely does desk reviews and occasionally field reviews of members’ reports, and has engaged in a full-scale review of all of their appraisers to ensure that they are using proper industry standards and mechanics in their reports. The AIC also engages in similar procedures to vet their own appraisers. How often does it happen? Lenders, appraisers and appraisal management companies all report fraud as being extremely rare. However, the rarity does not eliminate the need to guard against it, as even one case of appraisal fraud carries a high cost to a lender. In the risk-averse economic climate that exists after the U.S. subprime mortgage crisis, Canadian lenders want to maintain their reputation as

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Guide Feature

global examples of how the mortgage process should work, and appraisal management companies are one of the means to that end. The growing role of AMCs While many appraisers prefer dealing directly with lenders, as stated by Young, appraisal management companies (AMCs) are being used, in some cases almost exclusively, by lenders to find appraisers. There are several reasons for the rise of the AMC, with the U.S. subprime mortgage debacle two years ago being just one, although it is the reason most often cited due to the fact that appraisals were a very important part of the underwriting process that began the entire subprime mortgage mess. Appraisal management companies (AMCs) defined An appraisal management company performs all of the same functions that major lenders used to perform in-house, including ordering the appraisals, managing the appraiser database and applying the lender’s rules to the appraisal forms. AMCs add an extra layer to this by providing secure electronic transmission of documents, often through their own proprietary systems, and applying their own rules to the appraisal process in addition to the lender’s rules. Use of an AMC streamlines a lender’s business model, since they are effectively removing most of a department from their operation. One prominent Canadian AMC, Nationwide Appraisal Services Inc. (NAS), was started in 1985 by Tom McCormick, an experienced appraiser himself. NAS developed the first broker portal in Canada, and counts former appraisers, lender associates and other real estate professionals among its ranks. AMCs prevent valuation fraud by removing any possibility of a personal relationship between a lender and an appraiser that can be abused in order to make a deal work. Some AMCs, like NAS, work on the basis of completely blind appraisals, meaning that the lender never knows in advance who will be doing the appraisal. Some will allow the lenders to work with a preferred appraiser list, but will still manage the entire process with a close thirdparty eye to ensure that nothing is amiss. Keeping appraisals at arm’s length Prior to AMCs, brokers, lenders and appraisers had more personal relationships that were

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AMC/AMV Listings Solidifi Phone: 1.866.583.3983 General E-Mail: contactus@solidifi.com Website: http://solidifi.com/ca_en/ NAS Phone: 1-888-477-9776 E-Mails: https://www.nationwideappraisals.com/ NAS/contact.jsp Website: https://www.nationwideappraisals.com Teranet Phone: 1-800-208-5263 General E-Mail: info@teranet.ca Website: http://www.teranet.ca/ FNF Phone: 1-877-526-3232 E-Mails: http://www.fnf.ca/en/about-us/contact_8. aspx Website: http://www.fnf.ca/ Centract Phone: 416 510 5300 E-Mails: http://www.centract.com/eng/about/ contactus.asp Website: http://www.centract.com

beneficial, but in the case of the subprime mortgage crisis, some of these relationships were used to perpetrate appraisal fraud. The AMC adds another layer of security to the transaction that protects everyone involved by insuring that the broker relationship is “armslength.” That being said, there was some backlash in the industry when AMCs first became the method of choice for large lenders simply due to the personal relationships that did exist, as they had positive as well as negative aspects. Hugh rightly states that “lenders take all the risk, so they have to make the call.” AMCs on the rise Young estimates that AMC use has increased among major lenders by as much as 50 per cent. All of the AMCs interviewed reported a substantial increase in business in the past two years. Guy Bantleman, executive vice-president of collateral services for Solidifi estimated a specific year-over-year increase of 150 to 160 per cent. Hugh reports that ING has adopted 100 per cent use of AMCs for all of their

Guide Feature

appraisal management business, and every major lender uses them to some extent. ING residential mortgage associates may only use one of three approved AMCs to order appraisals.

appraisers have to look at the marketing and management costs that the AMCs are saving them; they (the AMCs) also make up any difference on volume.”

Dollars and sense: demystifying AMC fee structures If a lender is dealing with an AMC for their appraisal needs that guarantees a full fee to the appraiser as some do, they are actually paying a bit more to the AMC since the AMC will charge a management fee on top of the appraisal. The lender, however, saves quite a lot of money by outsourcing their appraisal management to the AMC. The fee paid to the AMC on top of what they pay for the appraiser ends up being a fraction of what it used to cost for them to staff and run an appraisal management department. There are some AMCs that do not guarantee a full fee. Coull speaks to these fees: “The

Alternatives to AMCs While there are still sectors of the real estate market that use the direct lender-to-appraisal model, this model is gradually being phased out at all levels by the efficiencies and cost savings that AMCs bring. The same technology that gave rise to AMCs has also created automated valuation models, or AVMs. Hugh reports that the Canada Mortgage and Housing Corporation (CMHC) maintains an extensive database of products in Canada. Using the CMHC AVM, lenders can pull up recent appraisal reports and other data on a property simply by paying per record rather than paying for a full appraisal fee, in the fraction of the time that it takes to

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Guide Feature

order an appraisal. Appraisers are still a necessary part of the process, but if an appraisal has been done on the property within the past three years, an AVM request for that appraisal could feasibly replace a new order. AVMs are very accurate. To test their accuracy, ING ran a six-month test where they pitted full appraisals against their corresponding AVM records. Ninety-five per cent of them came within $5,000 of each other. Choosing reliable appraisers For those who are in a position to choose an appraiser over and above making an appraisal request through an AMC, here are a few tips for choosing reliable ones. Professional designations First and foremost, appraisers should be able to present one of the following professional designations under either the CNREA or AIC:

CNAREA - Designated Appraiser Residential (DAR) - Designated Appraiser Commercial (DAC) AIC - Canadian Residential Appraiser (CRA) - Accredited Appraiser Canadian Institute (AACI) Both organizations actively police their members for anything that may even be construed as fraudulent. They also offer professional development seminars and make sure that their members are up on the latest techniques fraudsters are using to put a fraudulent appraisal in the hands of the lender. If you are not dealing with an appraiser with a professional designation from either organization, back up and find one that has it. Buy local As with any real estate transaction, everyoneâ&#x20AC;&#x2122;s interests are better served by someone who knows the neighbourhood and specialty that they are appraising in. Be secure Appraisers who do not use secure methods such as special software or other methods to transmit their appraisal documents leave themselves open to fraud. E-mail is not a secure method of transmission for any important document and can be intercepted electronically. Conclusion Appraisal management companies like NAS and Solidifi are not only acting as firewalls against

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

valuation fraud in the Canadian mortgage industry, they are trying to cultivate their own relationships with appraisers through easy-touse software and full-fee guarantees. Lenders have adopted them wholesale, and the sangfroid that existed between appraisers and AMCs when they first started up seems to have evaporated in the collective realization that what they provide is a necessary service. Every professional in the real estate industry can guard against appraisal fraud in their own way. Lenders can use AMCs, brokers can be on the lookout for factors that may give rise to appraisal fraud and appraisers can ensure that they are up on the latest secure transmission methods for their reports. In the end, all of this diligence can only lead to better deals for everyone and a real estate industry that continues to be a global example of how business should be done. CMP

Guide Business

customers for life Looking for customer loyalty? Veteran brokers in Australia talk about lifelong clients and what they did to earn their allegiance

uilding lifelong relationships with professionals is not uncommon. Doctors, dentists and even hairdressers inspire loyalty that often transcends time and distance. But can brokers build that same rapport with their clients? CMP’s sister publication MPA talked to veteran brokers and a few industry experts to find out how to make customers for life. Possible or pipe dream? MPA spoke to 10 brokers who had over 100 years experience between them, and all of them agreed that it is possible to have customers for life. “I have many clients who started out with us as first homebuyers and have now built property portfolios. Some of our clients have even referred their kids to us,” says Brad Oliver, managing director of First Choice Home Loans. Hayden Folbigg, a mortgage consultant with Mortgage Force, says he’s still working with his first client and is just about to do some restructuring for him. It is that second deal that really seals the relationship for Wendy Higgins, owner of Mortgage Choice Glenelg East. “I think once we have done two transactions with clients we have them for life,” she says.

coaching tips • Understand the lifetime value of customers – how much do they mean to you? • Stay in touch more creatively – everyone sends Christmas cards, why not be different and send them a Happy St. Patrick’s Day card? • Remind them why they used you in the first place – did you win an industry award? Let your clients know! • Make them feel like they’re part of your office family – is someone in your staff getting married or expecting a child? Send an e-newsletter updating them. • Upgrade your customers – clients want to be part of the ‘special club.’ You can segment your customers and treat them accordingly. • Run investment/first-time homebuyer seminars and make sure it’s well catered – good food won’t win you business but bad food or a complete absence of food will lose you business.

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Guide Business

Satisfied Many brokers identified three simple ingredients to keeping clients satisfied: getting a good deal in the first transaction, regular contact and honesty. For Peter Millett, principal of Premium Private Finance, the secrets are: “being available seven days a week – even if only to listen; not being afraid to give advice; delivering the promise; being highly ethical and maintaining complete confidentiality – it’s always best to be a bit over the top on that one. I am a great believer in the yin and yang of things. We will often provide a service, a piece of advice or some of our time at a stage when there is no proposal involved –without any cost to the client. You would be surprised by how many times that investment has been returned to us via another referral.” Marco Meloni, Choice Home Loans Leederville, employs a simple maxim: Treat them how you would like to be treated regardless of the loan amount or commission. While reduced commissions and threats of re-accreditation fees have prompted many brokers to ‘vote with their feet,” Danny Mele, principal of the Loan Arranger, also says the secret to keeping customers for life is looking for the best deal, “not the higher commission, which I believe some brokers do.” Turbulence But any long-term relationship can have its ups and downs. Todd Haffner, principal of Mortgage Force Nedlands, says the few disagreements he has had with customers have been related to factors outside his control. Higgins has experienced similar grievances from clients. “If the lender takes longer and misses deadlines due to lender error, we are the one in the firing line with all parties. Despite all that we do to bend over backwards and get things escalated; it still appears as if we have not done our job properly. This is especially the case in the current environment. There are some who take the lender’s decision out on us. We are happy to let these go, but they often come back or refer us to someone else so it couldn’t have been that bad. It is usually the ones under financial pressure who give us the most grief. Most clients understand delays as long as they are told about them.” Millett says his clients usually respond well if the problem is dealt with promptly and honestly. But he says if the mistake was an error on his part, he admits to it and tries to resolve it. “It may involve a rebate of fees if it

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building brick walls Personality and performance go a long way to keeping clients for life. There are two other ways that Loan Management Centre’s Darren Murphy uses to instil customer loyalty. “A key to creating clients for life is to add layers to your interactions with them. By offering more services to your clients and having more reasons to be in regular contact with them, you are further enhancing your importance, relevance and credibility,” he says. One possible area of interaction outside of the mortgage transaction is insurance. “By successfully integrating insurance policies into your sales process and product offerings, you not only increase your revenue per client but you further embed your client into your business,” Murphy says. “As the insurance policy continues to get renewed, clients remain with you, ensuring increased opportunities for future refinances as their situation evolves over time. You will also generate additional referrals from that client because you now have two service propositions.” The second thing brokers can do is cross-refer clients to a trusted network of service providers in complementary fields such as real estate agents, conveyancers/solicitors, financial planners and accountants. This is known as “brick-walling” your clients. By actively seeking opportunities, and controlling the referral process to those professionals within your network, you will reduce the incidence of your clients leaving your organization for one of your competitors. “Be proactive with your clients -- don’t allow them to go off and find their own conveyance, agent or planner. Refer them directly to your trusted network. If you don’t, chances are that the professional your client chooses on their own will have their very own top notch.”

costs them money, but happy customers refer new customers.” One area where opinion is divided is whether some clients are too much effort for the return. “Some clients could be classed as overservicing,” says Steve Marshall, director of The Loan Arranger. “But we must remember that we have to provide a service and these people are seeking our help. There are many instances when there is no monetary value in the transaction.” Also, many brokers have had longtime customers cheat on them from time to time. Usually clients stray from them because friends or relatives have become new brokers, while others have gone directly to the bank.

Guide Business

“ maintaining contact with a person over a number of years and on a number of occasions throughout this time does by default create a more sociable conversation rather that just strictly business ” In the latter case, Oliver says clients have often gone back to the lender he set up for them in the first place. “I see this more as a failure on my part in not impressing upon the client that we are their first point of contact for anything that relates to their loan, including any increases or changes. The bank branches are still quick to steal them away.” And in instances where clients have strayed into the professional arms of family or friends

who have become brokers, Higgins has found that most paid enormous fees to get into debt reduction schemes with hefty break costs, only to find out there was no magic answer to getting their loan paid off. Sealing relationships Another way to develop your relationship with customers is to return the favour of doing business with them. “Where possible, I even try to do business with them. For example, our home extension is being done by one of our builder clients. Another has become my bookkeeper.” Long-term relationships often go beyond the professional level. “Many customers take an interest in my family life, and I do the same with theirs. Maintaining contact with a person over a number of years and on a number of occasions throughout this time does by default create a more sociable conversation rather that just strictly business,” Haffner says. CMP

License #11127

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Guide Profile

VERICO celebrates five years as a major broker network After operating for five years VERICO continues to pave the way for mortgage agents to own and operate their own businesses

ERICO came into the marketplace five years ago in 2005 and changed the way mortgage brokers did business. The company saw a need for mortgage originators to own their own businesses and be their own brand while continuing to have the support systems to grow. VERICO delivered on that promise. “The goal was to establish a network of top producing mortgage professionals who defined themselves in terms of quality, professionalism and integrity,” says Colin Dreyer, president and CEO. “VERICO provides the products, systems and business services that will assist mortgage professionals to grow their businesses and contribute to the Canadian mortgage industry. We continue to work directly with the lending community to provide consumers the best financial advice and choice.” The founders of VERICO, Colin Dreyer and John Kelly, are longtime industry advocates with over 50 years of combined industry experience. They turned their vision into reality and the VERICO network now consists of over 170 member offices, over 1,900 mortgage agents who are among the highest producers in the country. Other companies have tried to follow suit with similar business models, but VERICO maintains its lead in attracting some of the best mortgage companies in Canada and continues to set the standard in terms of quality and professionalism in the industry. “Having been associated with the VERICO network for several years we have watched the growth of both its numbers while strengthening its core values,” says Stefan Krepski, from VERICO Capital Mortgages Inc. in Ottawa, Ont. “The fact that we have a group of likeminded people looking out for our best interests,

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and being associated with brokerages that face the same challenges as Capital Mortgages, has only helped to increase our sense of making a very right and very valuable decision.” This year marked many new initiatives within the VERICO Network that have proven to be highly successful. Here are a few of the highlights: VERICO Mortgage Magazine (VMM); www. vericomagazine.com is an online magazine that offers mortgage professionals real-time access to breaking world, national, sports and entertainment news provided by The Canadian Press, Associated Press and Canada Newswire. Agents receive financial news and key financial data together with mortgage and housing statistics and analysis from Canada’s leading institutions and experts. It’s where VERICO members start their day. Corporate Customization Program: Grow your business, your brand, your way. VERICO’s CCP Program provides a full suite of businessbuilding tools customized with your brand logo for your team. Websites, your own branded intranet, rate sheets and BlackBerry calculators are just a few of the customized items available. VERIsite: A personal website development tool that will allow members to quickly create, modify and publish their own public website with fully customizable information, colours and logo. VERICO Coaching: A free monthly TV coaching series that inspires owners and agents with new tips and tools that assist in taking their business to the next level. VERICO Free CRM Enhancements: Free customized CRM with hundreds of templates available.

Guide Profile

VERICO Regional Days: VERICO Canada holds business-building sessions throughout Canada for members and their teams. This year proved to be a huge success by offering a combination of business tools, networking opportunities with referral partners and private coaching sessions. VERICO Licensee Retreat: Yearly retreat for business owners to network with peers, share business-building tips, hear keynote speakers and, of course, to have a lot of fun! ”Since joining the VERICO Network, we have already seen results and have advantages above and beyond what we anticipated,” says Marty Coubrough, from VERICO One Link Mortgage in Winnipeg, Man. “In a very short time, VERICO has successfully negotiated new and lucrative insurance products, attracted new lenders and mortgage products. It continues to develop new

technology products such as an intranet site, CRM system and other products for the benefit of the network. Our affiliation with VERICO has surpassed our expectations!” VERICO continues to listen to its members and has a national advisory council of members who get feedback on the needs of the network. “Being part of a network today is a must. One can no longer be on his own whether you have five, 10, 15 or more agents to support. Someone has to manage the new technologies and the client retention methods,” says JeanGuy Vanier, from VERICO Groupe Conseil Hypotheque GCH in Montreal, Que. “VERICO gives us multiple tools to ease our workload – a CRM, a personal website (even in French) and more. The size and the professionalism of the network provides so much synergy that the cost of being part of it is practically nonexistent compared to the benefits it brings.” CMP

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Guide Profile

Developing partnerships and introducing new technology solutions has positioned MortgageBrokers.com for future growth.

MortgageBrokers.com

continues to invest in technology

Dan Putnam

n the 18 months since Dan Putnam joined MortageBrokers.com as its president, he has been focused on developing relationships and introducing new technology solutions to help his broker partners generate business, increase efficiencies and position themselves for the future. “Our focus is simple - use technology to take away the many tasks that are not core to meeting with clients and closing mortgages,” said Putnam. As their businesses grow, brokers find themselves acting as CEO, CIO, and VP of everything - sales, marketing, HR, compliance, payroll, training and operations. “It’s not easy to bring on a new associate and get them up to speed, so we have an HR service that takes care of everything,” said Putnam. New associates are quickly connected to everything they need - their own website, intranet access, marketing templates, automated CRM, online training, compliance services, payroll, and all of the necessary management reports that show how these new associates are doing. “We want our brokers to minimize the administrative roles at their end, while still having their finger on the pulse of their business through our automated reporting, so they can concentrate on what makes them more money – sales!!” said Putnam. Throughout the technology-building process, MortgageBrokers.com has not considered any off-the-shelf programs.”We wanted our own technology, something that couldn’t be copied, and that allows us to make immediate changes when requested by our brokers,” said Putnam. Putnam refers to the company’s new Eximius CRM program as an excellent example of in-house technology. The program is completely automated so once a file is complete and the customer is put on the program, the communication stream begins automatically. The program has an intelligent logic filter so not all customers get the same communication stream. Messaging is determined by the customer’s specific mortgage parameters

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such as term, fixed vs variable, and loan to value. Pre-approval and pre-qualified clients are also enrolled in a 120-day communication program that provides them with regular economic updates and relevant information. In addition, the program provides regular calendar reminders such as notifications to call a potential customer after the first visit, to check in with warm prospects, and to call prior to a renewal. Eximius also offers comprehensive search capabilities. Participating brokers are able to slice and dice their client data any way they want. Putnam also believes the company’s experience is a competitive advantage. Putnam himself ran Mortgage Centre Canada for over 10 years; while the company boasts a team of other well known industry names - Dong Lee, Stewart Eadie, and Dave Mercer. “We don’t just spin the story to get brokers interested in us; once on our team, we provide excellent street support,” said Putnam. While franchising is very much a selfserve type of business, Putnam’s experience is that brokers still require expertise that they can rely on when needed. MortgageBrokers.com does not see the need to charge brokers an unnecessary monthly advertising fee. “TV and radio commercials are mass marketing. We believe the future is communicating directly with your customers,” said Putnam. “Today’s generation of homebuyers are not very influenced by commercials, they are very savvy about seeking out their options and are more apt to deal with a mortgage broker they’ve located on the Internet or were introduced to via social networking.” Another advantage MortgageBrokers.com offers with their franchise opportunity is access to their exclusive lender myNext Mortgage Company. “When you consider the value of having your own lender, franchise level compensation, strong technology-based value programs, and then add in no monthly fees for marketing or system access, we believe we are the best franchising option available in the marketplace today,” said Putnam. The 18-month investment in technology is beginning to pay off with the company’s brokers as per broker volumes continue to increase. And of course a technology focus fits with the company’s dot com name. “We should be the technology leader, that’s what our name says to brokers and their clients, yet we recognize this is still a business about people communicating with people” said Putnam. CMP

Your mortgage clients are everywhere. Fortunately, we are too. www.MortgageBrokers.com The mortgage industry is changing. Your person-to-person contact increasingly relies on technology. And homebuying clients across

“

Canada are knocking on your virtual door. Here at MortgageBrokers.com, we’ve built a business model that’s leading the industry into the future. We’ve invested in the kinds of technology and high-tech tools that will generate business, increase efﬁciencies and, most importantly, position you for the future. Your best client prospects are web-connected, and they’re looking for mortgage solutions at MortgageBrokers.com:

Web Trafﬁc Rankings in Canada According to Alexa.com*: MortgageBrokers.com, way out ahead!

MortgageBrokers.com in Belleville, ON: “We chose a

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see the need to contribute to a national advertising fund.

”

MortgageBrokers.com is a plug-and-play, high-tech operation with excellent

leadership under Dan Putnam. We’re right on track with our long-term business plan.

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Your mortgage clients are everywhere. We’ll bring them to you. Daniel Putnam President

416.884.6767 dputnam@mortgagebrokers.com www.mortgagebrokers.com

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Feature Insurance

learn the truth about post-claims underwriting Until recently, the term “postclaims underwriting” was rarely heard outside of the insurance industry. An episode of CBC’s Marketplace changed all that, and even though it’s been two years since the program first ran, its impact can still be felt. Is it really a valid reason to be concerned about offering creditor insurance? Kelly Price of Benesure Canada explores this concept so that you can make an informed decision

he Marketplace episode, titled In Denial, left viewers believing that mortgage insurance bought through a bank or mortgage broker is little better than a gamble -- implying that one doesn’t know if there is truly coverage until a claim has been made. Unfortunately for consumers, the program’s analysis was seriously flawed. Consider this quotation, which was featured prominently on the Marketplace website when the show was first aired: “It turns out a routine test at the doctor could be reason to deny your claim, if you don’t mention it. Had a cuff inflated on your bicep? That counts as being tested for high blood pressure.” That sounds pretty harsh, but it is also blatantly misleading. What’s really going on here? When applying for any type of insurance, whether for a home or a car, the insurance company puts a certain amount of trust in the applicant. For example, when a client applies for insurance for their home and says they live in a four-bedroom brick house, with two smoke alarms, and a fire hydrant just outside the door, the insurance company doesn’t send out an inspector to verify that this is true. The insurer trusts that they have been given accurate information about the risk they are accepting. The same principle applies to life or disability insurance. When information is provided about the state of an applicant’s health, the insurance company does not always verify. The benefit to this approach is speed and efficiency. Insurance coverage can be issued promptly and cost-effectively. Lower costs translate directly into lower insurance premiums, which is something everyone wants. At the same time, insurers have to protect themselves from the financial consequences that can arise if they were not told the truth. Without a mechanism to deal with undisclosed inaccuracies, the cost of those

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Feature Insurance

consequences would have to be recovered in the form of higher insurance premiums. Instead, insurers protect themselves by having the ability to void an insurance contract when they were given false information. In almost any insurance contract you can find a clause that says something like this: “This contract is based on the assumption that the information you gave us is true. If it isn’t, we have the right to void (or retro-actively cancel) the contract immediately.” Now, what MarketPlace would have consumers believe is that this is the entire story. If an insurance company catches a customer in a lie, no matter how small or insignificant, the consumers will suddenly find themselves without protection. That is simply not the case. By law, no insurance company is allowed to void a contract for misrepresentation (the legal term for “not telling the truth”) unless the matter is material. That means the information that the applicant failed to provide has to be so significant that, had it been known at the time, the insurance company would have declined the application, and never issued the coverage in the first place. So, let’s go back to the comment, “inflated cuff on your bicep.” Not telling an insurance company about a normal blood pressure reading could never be used as the reason to deny coverage, because if that information had been included on the application, the insurance company would still have approved the application. Similarly, failing to disclose a long-forgotten childhood ailment does not mean the insurance company can say “gotcha ” and avoid paying the claim. The thing to remember is that the rules don’t change over time. If the information wouldn’t have mattered back when the application was first completed, it won’t matter at claim time either. Everyone operates by the same rules Marketplace also failed to inform its audience that all types of life insurance operate by the same rules when it comes to misrepresentation. Typically, any life insurance claim where the death occurs within the first two years of coverage triggers a review of the health information provided with the original application. It doesn’t matter what type of policy it is, or how it was sold, whether by a licensed life insurance agent, a bank or through a mortgage broker. And, the sad truth is that all kinds of life insurance claims can and do get turned away because of a client’s failure to provide complete and accurate information about their health. But surely actual cases of fraud are very uncommon ... Yes, that is absolutely true. There are likely only a handful of cases every year where someone consciously sets out to cheat a life insurance company through dishonesty. What we see in case

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files is evidence not of “lying,” but rather of a tendency to provide information based on a preconceived idea of what is and is not important. Claimants will say things like, “My doctor didn’t prescribe any medication for that, so why does it matter?” Unfortunately, when people try to guess which health conditions matter, and which ones don’t, they get it wrong all too often. And that is why it is so important for consumers to err on the side of giving more information, rather than less, no matter what type of insurance they are applying for. Does post-claims underwriting actually exist? You might hear the process of re-evaluating an application at claim-time referred to as postclaims underwriting, but that is a misnomer. Post-claims underwriting is the practice of accepting everyone, regardless of their health, and then sorting things out if and when there is a claim. Normally this is done through extremely stringent exclusions relating to pre-existing conditions. For example, if the customer has a heart condition on the day they complete the application, they might never be covered for that condition, or they might only be covered after they are treatment-free for an extended period of time. This information, however, is generally found only in the fine print of the insurance form, leaving many people unaware of the type of coverage they have just purchased. All they know is that they were automatically accepted. Such plans often require the consumer to pre-pay 100 per cent of premium for the entire term of the loan. That’s easily hundreds, even thousands of dollars and it is generally added on to the principal of the loan, meaning the consumer pays interest on the premium as well. Not only that, but this type of plan tends to come with a heavy cancellation penalty. So if the consumer does change his or her mind and wants to cancel, there is a significant cost. So it’s definitely true that consumers need to be very wary of insurance plans that don’t ask them to provide any information about their health. Post-claims underwriting does exist, but is rare in Canada. Typically, it might be found in creditor insurance plans that are offered through auto dealers and other types of financing companies. However, Canadian mortgage protection insurance plans do not follow this practice – they all ask the clients to supply health information, and they evaluate that information before issuing coverage. And whether the client answers two, five or 20 questions about their health, the important thing to remember is that those answers are taken very seriously by the insurance companies. That means your clients should too. CMP

Kelly Price

CMY

Together, we can make home ownership a reality for your customers. We have mortgage lending solutions for your customers. Our team of professional mortgage and credit specialists are dedicated to providing mortgage brokers with unparalleled service. Weâ&#x20AC;&#x2122;ll work with you to assess applications on an individual basis, providing your customers with specialty mortgage lending solutions.

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Profile Insight

As an auditor and branch manager at a finance company, Sean Binkley had the background for the mortgage industry but learned a lot about networking and building relationships with clients

after a company layoff, Binkley changed career CMP: How did you begin your career as an agent? I was with a finance company for 10 years and never thought it would happen to me, but I was part of a mass layoff. I was there as a branch manager and auditor for 10 years. A good friend of mine, who was in the business, suggested I become an agent.

For sure. At the beginning I did a lot of stuff over the phone. I rarely do phone applications anymore; I like to get people in here face to face.

CMP: Do you have any tips for new agents? It’s not an easy business, but keep things simple. Don’t be afraid to ask for Sean Binkley business -- that would be CMP: Which parts came easy when you began? the best advice. Every transaction that you do I would say I did well right away because of my there’s potentially six or seven referral sources experience in the finance business. I knew how to within that transaction, whether it be the listing put a deal together. That’s not to say it all came to agent, the buyer’s agent, the lawyer or the client me right way -- I had to go out and get the business themselves. I’ve tried a lot of different advertising but I found that instead of looking for a reason to and the best thing is repeat business. It’s the turn the deal down, I looked for a way to get the little things that make a difference with a client deal done. I had knowledge of the technical terms, whether it’s calling them back on time or sending I knew how to read an appraisal, I understood debt them a handwritten thank you note. Also, get servicing, and the concept of loan to value. your name out there as much as you can. CMP: How long have you been brokering for? I joined a small independent brokerage in 2001 and about six months after that in January 2002, I moved on to Mortgage Intelligence.

CMP: Did you have problems picking anything up? What was difficult was getting my head around what an “A” deal was because I was used to dealing with subprime lenders. I had to grasp the CMHC rules. And I had to learn to network, which I didn’t have to do a lot of in my previous job. And just living on commission --that was totally new for me. CMP: According to your mini-biography on the Mortgage Intelligence website, you interview clients to find out their financial goals and risk tolerance. How does this affect the deal? What’s important in business is reading between the lines. What we forget is everybody’s financial situation is different. What I tell people is: there’s a difference between qualifying and affording. We’re very careful to work with clients on budgeting -and we did that long before the “know your client” rules. CMP: Do the personalized interviews affect your rapport with the client?

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CMP: You can be found on K-Rock 105.7 in Kingston. How did you end up on the radio? I pay for that. I offer advice and then we draw a name of a K-Rock rewards member and then somebody wins their mortgage payment and I pay that right out of my pocket, up to $1,000. We’ve been doing that for two-and-a-half years now. It definitely attracts new clients. CMP: How else do you market your services? Facebook, Twitter and LinkedIn. It’s really important that if people aren’t on there, they have to get on. Not being on Facebook right now is like not having an e-mail address depending on how you use it. I advertise on all the radio stations. CMP: What are the key things to avoid when dealing with clients? Not listening enough. It’s important to listen to what the client is saying and, as I said before, read between the lines. CMP

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Profile Brokers

Broker finds success in small market

Mortgage business thrives for Yves Cormier in a city of 17,000 where the Trans-Canada Highway runs right through it.

n northwestern New Brunswick, the town of Edmundston is nestled in the Appalachian Mountains and shares a border with the United States. The Trans-Canada Highway runs through the city from Quebec to the Maritimes, making the mayor tout that it is the “true gateway to the Atlantic region of Canada.” With a bilingual population of 17,000, Edmundston seems like an unlikely place to found a thriving mortgage business, but that is exactly what Yves Cormier has done. Cormier recalls that in 2002 when he decided to leave the banking industry at 42 years old and open his own mortgage brokerage, his goal was to do one mortgage a day, five days a week for the year. “In the first year of operations, banks and credit unions thought I was a joke and thought I wouldn’t be able to survive,” he says in a French accent, New Brunswick being the only fully bilingual province in Canada. “They did not take me seriously. Right now, I’m doing about 300 mortgages a year and $30 million in funded volume.” Cormier happened to round out CMP’s Top 50 Brokers list at No. 50 with $30,438,559 in total funded volume for 2009. Cormier’s success was evident from the beginning. He began his firm independently in January 2002, and six months later, Invis came knocking at his door. David Yuzpe, who was an Invis regional manager at the time, played a direct role in hiring Cormier and became his mortgage mentor. “Yves was like a sponge, wanting to learn,” says Yuzpe, now partner and vice-president of Real

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“ in the first year of operations, banks and credit unions thought I was a joke and thought I wouldn’t be able to survive ” Mortgage Associates. “I spent a lot of time with him on the phone, coaching and training to help him achieve his goals. He’s a great self-learner as well.” Over the years, Cormier has proved that being in a small market doesn’t mean you can’t be a big player. “People can see you don’t have to be in Vancouver, Toronto or Calgary to compete in this industry,” says Yuzpe. “Yves is in a small town of 17,000 people. But just because the market is small doesn’t mean there aren’t still a lot of homes.” Yuzpe also knew Cormier would be able to make his business happen because he saw that Cormier is very customer-service focused, and that is something they considered when building the business plan. “There’s some other brokers who started in the area but they charged a broker fee to be able to compensate for their income,” says Cormier. “That does not give them too much leeway to work with because I don’t charge a broker fee—zip, natch, nadda. Dave and I decided at the beginning not to charge any broker fee to make sure the competition would not be able to bother us. They come and go, they come and go.”

Profile Brokers

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Profile Brokers

“ Cormier has proven that with his mortgage business, a small market doesn’t equate a small life ” Cormier continuously shows this dedication to his clientele because he knows that in a small community, word of mouth is how he’s accumulated most of his business over the years. “We got this philosophy, if the customer is happy, if we meet the customer’s goals then we are happy,” says Cormier. “Another one is, we don’t have any problem here—we always have solutions.” After eight years in the broker business, Cormier has brought his 23-year-old son Brian into the fold, and the firm is now with VERICO, called Cormier & Cormier Consultants. Cormier’s wife of 27 years, Line, also helps out with administration at the office now and then. She remembers when her husband first approached her with the idea of starting his own business that he actually suggested a collections agency. “But I wasn’t for that idea,” Line laughs. “When he came up with the mortgage idea, I was all for it. Lending people money is a lot more interesting than collecting money.” Knowing him for over 31 years, Line had complete faith the mortgage business in the hands of Cormier would succeed. “When Yves puts his mind to something, he gets what he wants. He’s a go-getter.” Cormier has definitely put in the hours to deserve it. Line says he gets into the office between 5:30 and 6 a.m. and won’t leave till 6:30 or 7:30 p.m. Though Cormier also knows how to enjoy himself and is equally devoted to his family, which also includes a 22-year-old son and 13-year-old daughter. A self-proclaimed skidooaholic, Cormier has achieved a balance between the two lives. “Like the saying goes, I work hard but I play hard also,” says Cormier. This balance is recognized by Yuzpe too. “One of the things that makes him strong as a broker is his strong commitment to his family,” says Yuzpe. “Even though he works crazy hours, he makes sure he does set aside time for the family. In order to be really good at what you do, there has to be an equilibrium in your life.” Now that Cormier has brought his son on to the team, his aim for next year is to hit $40

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million in funded volume, which can be tougher in a market where the average mortgage is $100,000. He is also planning to retire, or at least semi-retire in five or six years, at the ripe young age of 55. “I just turned 50,” he says, “so maybe not 100 per cent retire but maybe 80 per cent. That is not something most people are able to do at this age.” In this New Brunswick town, Cormier has proven that with his mortgage business, a small market doesn’t equate a small life. With commitment, hard work and a genuine love for life, he has managed to have the mountains around him, a family to dote on and a business to care for that will bring him to a retirement future many big city players would envy. CMP

Paul Grewal

President, Street Capital Financial Corporation

PROVIDING MORE OPPORTUNITIES MEANS FINDING THE RIGHT SOLUTIONS, SOONER. Street Capital now offers Canada Guaranty Mortgage Insurance. “The addition of a new mortgage insurer is a great opportunity for Street Capital to build upon the exceptional service we have established in the marketplace. Working in partnership with Canada Guaranty will assist Street Capital in providing a wider range of solutions to better meet the needs of our broker partners and their borrowers.” – Paul Grewal, President

Canada Guaranty Mortgage Insurance Company 877.244.8422 I www.canadaguaranty.ca

profile PROVIDER

Being an alternative lender entails flexibility when it comes to underwriting loans for a wide range of credit profiles. It takes listening to customers and analyzing an application beyond beacon scores to find a workable solution – whether it’s for purchasers or borrowers

looking beyond the beacon Equitable Trust’s personalized approach to lending

quitable Trust has discovered the most effective way to offer a “customized approach” to lending is by working with mortgage professionals who can share their understanding about customers’ needs, says Andrew Moor, the company’s president and chief executive officer. “The nature of our business is such that every loan we have has a story to it, so we need to have deep relationships with the mortgage broker community to understand those stories,” he says. “Our business takes a customized approach by looking at individual loan applications, working with the broker and understanding why the loan makes sense.” Equitable Trust’s service is the reason more than 1,500 brokers in Alberta, Manitoba and Ontario have chosen to do business with the company, Moor says. Equitable Trust has a team of 40 underwriters and mortgage officers who work directly with brokers over the phone to review their clients’ credit history and assess possible loan options with no set fees or rates. “This is a very personalized and customized approach to lending. This isn’t just looking at beacon scores. This is about opening up the loan file and really understanding the quality of the real estate and the quality of the borrower,” he says. Equitable Trust offers a broad spectrum of conventional mortgages for single-family homes and commercial buildings to assist brokers as they try to find the best option for their clients. In particular, the company has recently been providing a large amount of 85-per-cent loan-tovalue mortgages and one-year open mortgages for 4.99 per cent. Another reason brokers rely on Equitable Trust is its strong financial basis, Moor says. Founded in 1970, Equitable Trust is a publicly traded company listed on the Toronto Stock Exchange with more than $7 billion in mortgage and mortgage securities assets.

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Aside from issuing stocks, Equitable Trust raises capital by issuing Guaranteed Investment Certificates to back up mortgages. “Unlike other lenders, we’re very strongly capitalized. We have over $400 million in regulatory capital that supports the business even before considering our capital raised through GICs,” Moor says. “Every mortgage we have we’ve got a very good chunk of our money invested in it, and that’s what gives investors comfort in investing in the GICs that support the mortgage funding.” The company’s strength is also evident in its commitment to mortgage-backed securities. While many banks and insurance companies abandoned this business altogether, Equitable Trust continued investing in the CMHC-MBS Program. “Many banks through the financial crisis lost their appetite for it, but we continued to have a very strong appetite,” he says. “I think it is a demonstration of our financial strength that we were able to be very aggressive with that business through the worst of times.” Equitable Trust has also ramped up its expansion. For the first half of 2010, its familyresidential-mortgage volumes rose nearly three times, to $300 million, compared to the same period last year. Building on that success the company is launching a pilot program in B.C. and will be offering its service in the province by the fall. This is just another step to becoming a national lender – something Moor believes will happen in roughly five years. “Clearly we’ve been having some success. We have been growing very quickly over the past few years and brokers are pleased with our services. So for brokers who have not done business with us yet, maybe they should give us a try.” CMP

Andrew Moor

Quick Stats + 40 underwriters and mortgage officers + $300 million in single-family residential volumes during first half of 2010 + $7 billion in mortgage and securitizedmortgage assets + 171 employees

INVIS AND MORTGAGE INTELLIGENCE

Celebrating 10 Years of Industry Leadership

What our brokers have to say 2010 marks the 10th anniversary of both Invis and Mortgage Intelligence. Here’s what our mortgage professionals have to say about partnering with Canada’s top brokerages: I’m proud to say that I’m one of the original Invisians and remain so because Invis has allowed me to determine my own destiny as a mortgage broker and business person. I’m provided with branded mortgage and insurance products and the marketing materials to promote them. I’m provided with competitive compensation, group benefits, and accurate and timely payroll. I also enjoy the team spirit demonstrated by my colleagues as we share ideas and varied paths to success. All of this under the umbrella of a reputable and award-winning national broker firm. Bill MacDonald, Halifax, NS, Invisian since 2000

10 01 NUMBER

With 35 years in the mortgage brokerage business, I have seen it all, good times and tough times. The best move I ever made was to join Norlite in 1996 which eventually became MI. With the support I received from MI, and our great compensation package, I have had my most profitable years in the business. MI has been great for me, and I will never consider a change. Bryan Guertin, Mississauga, ON, With Norlite (which became MI) since 1996

Y E ARS

The support from MI such as regional manager support, idesk intranet, cutting-edge CRM program, etc. allows me to not have to worry about day-to-day administration and lets me concentrate on what I do best... assisting Canadians with their mortgage needs. It’s great to be part of such a special group of people. Randy Winger, Stevensville, ON, with MI since 2002

I chose Invis back when Dave Nichol was still CEO because it had a good balance between full-service corporate structure while still maintaining an entrepreneurial spirit. That culture is still evident today and is even more relevant in today’s marketplace. Arlene Demars, Red Deer, AB, Invisian since 2001

Let’s talk

These days, our industry is changing fast. Invis gives me the very latest info, tools and tips to help me improve my game. And they keep me up-to-date with regulatory changes. Mario Sita, Burlington, ON, Invisian since 2000

I recommend joining a team of professionals who not only are forward thinkers, but have the power of two very strong companies to assist you when competing for business. John Parato, Burlington, ON, with MI since 2006

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.

Guest Column

Well-trained mortgage brokers keep clients from turning directly to lenders To survive and thrive in the mortgage industry you must know your products better than anyone else. Vittorio Oliverio, from Centum Professional Mortgage Group Inc. in Lethbridge, Alta., discusses the importance of training

et’s get something straight about our mortgage the conversation they industry. If we want to survive and create elite are thinking about mortgage brokers then we have to be better trained more than one than any of the mortgage specialists from any bank. mortgage option that I remember when Bank of Montreal decided to get would suit the client. out of the broker channel. I’m sure they thought that If you do this you’ll once the other banks saw they had let go of the find out that your channel that other lenders would follow. BMO’s interview will go more reason was it wanted to focus on its own mortgage smoothly and the sales force. What it didn’t think through is that a client will feel more good remote mortgage specialist has to be the right confident when you person for the job. Sorry to disappoint BMO, but the are able to explain right person for the job is a mortgage broker. some of the challenges BMO, having lost some market share, must they may face. By Vittorio Oliverio realize it made a mistake, but instead of admitting its gaining their mistake and coming back to the mortgage channel, it confidence they will decided to throw more money at its remote mortgage tend to stop shopping and decide to work with you. sales force. While BMO decides what it is going to do, we as 3. Know your competition. Find out what RBC, brokers must show BMO and other lenders that BMO and other lenders are doing. By knowing working with us is the best and most cost-effective way their products, you can make sure your offer for them to originate mortgages. After all, some of the is better. After all, most lenders have best mortgage minds in the industry are brokers. limited mortgage products while you have I once said that I would pit my mortgage so many options. knowledge against anyone’s in the industry no matter how long they have been in the industry or who they 4. Do not be afraid to talk to other mortgage brokers work for. When I said this, it was not because I was or co-broker a deal with another mortgage broker. just bragging. I just knew that I took my job seriously I believe the biggest hurdle we face is the ability and learned everything there was to know about to share knowledge with each other especially mortgages; and I keep learning every day. When I when we have a deal that is not working. We came into this business, my employer told me that I don’t think that maybe someone else may have needed to know everything there was to know about a the answer. mortgage, which included learning about the competition. The most important thing they taught 5. I remember a customer contacted me in a panic once because they had only a few days left before me was not to talk to clients until I could answer 85 they took possession but could not meet a per cent of the questions without looking at a book. Guess who I worked for – BMO. That’s why, if you condition – their broker could not help them. After want to beat the competition and survive in this hearing what the problem was I knew how to business, training, training, and more training is the resolve it because I knew the lender. I didn’t want single most important thing you can do for yourself. to take the commission from the other broker and You can be successful with the right mindset. Ask asked the client to have the other associate yourself the following questions: contact me and I would be more than happy to explain how to fix it. After a five-minute 1. Are you in the right industry? I know this sounds conversation, the client had her mortgage. dumb, but why waste your time if you don’t like what you’re doing. 6. Do you market yourself all the time? You need to spend at least four hours on marketing per day 2. Have you learned everything there is to know when you are not that busy and 45 minutes on about the mortgage products you are selling? One marketing per day when you are swamped. thing I try to teach new associates is to make sure Clients like to work with businesses that are when interviewing a potential client that during busy. CMP

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FO P R ER T YO FE H U CT E R G CL I IE FT N TS

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Profile

Favourite Things

Steve Chittick + Mortgage Agent + Dominion Lending Centres Homestead Financial + Waterdown, Ont.

Favourite Things Movie Three Amigos with Steve Martin, Chevy Chase and Martin Short. I used to watch it so much when I was a kid that my mom hid the VHS tape. Haven’t seen it since.

Food and why I love pizza ... Who doesn’t? Deep dish, thin crust it’s all good to me.

Celebrity Steve Yzerman former Detroit Red Wings captain. He was named captain at age 21 and held that position for 20 years. He’s just all around a class act.

Sport Hockey of course. I have been playing since I could walk.

Hobby Sailing has been the new thing lately. Last year my father-in-law and I bought a 16-foot catamaran for the cottage. If you search “pitchpole” on YouTube you will see what our first experience was like! We still need some practice.

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Favourite vacation spot I don’t have a favourite in particular, I just love to travel. If I had to choose I would say Punta Cana Dominican Republic. Beaches are white and the water is aqua blue. It was a great spot for a honeymoon also.

Place to be Our family cottage on Mary Lake just outside of Huntsville, Ontario.

Book Last book I read was How to Become a Rainmaker: The Rules for Getting and Keeping Customers and Clients. It has a lot of applicable ideas.

Drink Harvey’s chocolate milk shake.

Music/band I like a lot of different music but one band that sticks out in my mind is The Fray. I saw them last summer at the Molson Amphitheatre and they were unreal.

service directory

Banks

Bridgewater Bank www.bridgewaterbank.ca Ph: 1 888 837 2326 Page 19

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

HomEquity Bank www.homequitybank.ca Ph: 1 866 522 2447 Page 43

Fisgard Capital Corporation www.fisgardmortgage.com Ph: 1 866 382 9255 Page 8

ING Direct www.ingdirectbrokerteam.ca Ph: 1-800-574-5629 Page 53

National Bank www.nbc.ca Ph: 1 888 483 5628 Page 25

Resmor Trust Company www.resmor.com Ph: 866 809 5800 Page 47

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

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

The Money Source www.mymoneysource.ca Ph: 416 699 2274 Guide Page 13

Home Trust www.hometrust.ca Ph: 1 877 903 2133 Page 33

Vector Financial Services www.vectorfinancialservices.com Ph: 1 866 483 8018 Page 48 Insurance

TD www.tdfinancingservices.com Ph: 866 694 4392 Page 51

Macquarie Financial www.macquariefinancial.com Ph: 1 877 462 3788 Page 45

Canada Guaranty Mortgage Insurance Company www.canadaguaranty.ca Ph: 1 866 414 9109 Pages 9, 35 & 57

Merix Financial www.merixfinancial.com Ph: 1 877 637 4911 Page 39

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

Non-Bank Lenders

Capital Direct www.capitaldirect.ca Ph: 780 868-0550 Page 38

Broker Networks

Concentra Financial www.concentrafinancial.ca Ph: 1 800 788 6311 Page 42

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

Firm Capital www.FirmCapital.com Ph: 416 635 0221 Page 11

Meridian Financial www.meridianfinancial.ca Page 7

Optimum Mortgage A Division of Canadian Western Trust www.OptimumMortgage.ca Ph: 866 441 3775 Guide Page 9

Peoples Trust www.peoplestrust.com Ph: 1 800 663 0324 Page 15

Centum Financial Group Inc. www.centum.ca Ph: 1 604 257 3940 Page 21

Dominion Lending Centres www.DominionLending.ca Ph: 1 888 806 8080 Guide Page 3

INVIS www.invis.ca Ph: 1 866 854 6847 Pages 16 & 17

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service directory

Nationwide Appraisal Services Inc www.nationwideappraisals.com Ph: 1 888 477 9776 Page 18

VERICO www.verico.ca Ph: 1 866 983 7426 Insert Inside Front Cover

Mortgage Architects www.mortgagearchitects.ca • Ph: 1 877 802 9100 Guide Inside Back Cover Commercial Lenders

Services

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

Mortgage Intelligence www.mortgageintelligence.ca Ph: 1 877 667 5483 Page 59

Best Points Travel www.bestpointstravel.com Ph: 1 800 551 8786 Guide Page 7

Technology/Software

Premiere Mortgage Centre www.premieremortgage.ca Ph: 902.429.4000 Fax: 902.429.6000 Page 41

CreditCRM

The Mortgage Group www.mortgagegrp.com Ph: 877 899 1024 Page 44

Credit CRM www.creditcrm.ca/cmp Ph: 1 877 256 8162 Guide Page 15

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

Real Estate

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

Canadian National Association of Real Estate Appraisers www.cnarea.ca Ph: 1 888 399 3366 Guide Page 5

Vanguard Law Group www.vanguardlg.com Ph: 1 866 420 4714 Page 31

Would you like to see your company name here? 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 o held e d a recent event ve t or o made ade a new w appointment? appo t e t? 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: gina.monaco@kmimedia.ca

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Our people make all the diﬀerence

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.