CMP 6.10 by Key Media

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October 2011, 6.10

Lenders on

y l p e r Brokers

2011

f o t h g ri

SPECIAL FOCUS The broker-BDM relationship

PROFILED Reginaâ&#x20AC;&#x2122;s Jackson Middleton

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to be or not to BDM As brokers grapple with a slowing market, many are finding relationships with BDMs are also in flux. As Vernon Clement Jones finds out, that may be by design

6. 10 issue

cover story

30 Lenders on Brokers 2011 Last month’s issue saw brokers give their verdict on how lenders fared over the past year in serving and supporting the channel. In this issue, the lenders appraise their performances and tell CMP what they got right and what went wrong

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NEWS & COMMENTS 8 Some of the best stories and comments from MortgageBrokerNews.ca: Mortgage Revolution takes on AMP designation; More mortgage rule changes may be necessary; Overheated markets push brokers to trailer fees; Brokers help lift Scotia’s falling market share; RBC adds to its ranks for the rate wars; Government has left the refi building; Time for channel to help subprime orphans 18 Mortgage Forum 2011: CAAMP unveils bigger and better annual conference and expo 24 News Analysis: The Big Story: A compilation of the top quotes from our weekly multimedia broadcasts on MortgageBrokerNews.ca

FEATURE 56 Time to talk testing: Brokers looking to raise the bar in the mortgage industry are taking aim at agent testing standards, Vernon Clement Jones reports

MARKETING 62 Realtor Marketing Secrets: In the first instalment of his latest series, Doren Aldana explores some of the advantages for mortgage brokers of attracting Realtors as referral partners. Secret No. 1: Develop your unique value proposition

mortgagebrokernews.ca

BROKER PROFILE When it comes to the unorthodoxly dressed Jackson Middleton, it should come as no surprise that he has no use for traditional marketing, instead relying on social media to build his successful brokerage

PROFILES 66 Insight: Sharing best practices with brokers to help build the profile of the industry and gain market share is the proposition of The Lion’s Share Group 72 Provider: News that a new A lender – MonCana – will be joining the broker channel is a shot in the arm for the industry after the loss of two lenders earlier this year 74 Insight: A Toronto broker looks to convince lenders that until now have been reluctant, that hotel-condo projects may be worth a second look 78 Guest Column: Helping eliminate debt as fast as possible for your clients is a win for brokers, says Greg Stanley, who uses cash management software as a tool to offer a service the banks don’t

regulars 27 International News 28 This time last year 76 Favourite Things 79 CMP Service Directory

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Editor’s Letter

The other side of the story Listening is sometimes an underrated skill. Taking the time and taking a step back to allow your customers to share their opinions concerning your products and service is an important part of any business blueprint for success. Now in its fifth year, CMP’s annual Brokers on Lenders survey has evolved such that Canada’s lenders now sit up and take notice. For the third time, we have solicited mortgage channel lender response to the survey asking them to share their thoughts about what they did right and what, quite frankly, they may need to improve. What is clear from this year’s responses is that lenders take what brokers have to say very seriously: “We are very pleased to see that implementing recommendations from feedback sessions has given us such a strong lift in the standings by our broker partners. We listen to our broker partners and we’re very proud to see that they have rewarded us with this recognition.” “It is important to receive feedback and recommendations from the broker community on how we can continue to evolve and support the needs of the broker in this ever-changing mortgage market.” “Success in this business is about trust and true partnership. We need to work as one in order to drive growth to the broker channel. 2012 will be challenging for all of us, but I also believe it will be extremely rewarding if we unite our efforts and work together.” This dialogue between brokers and lenders is exactly the kind of communication the industry needs in order to find a way forward during uncertain economic times. Sometimes we’re all guilty of not being aware of what’s going on outside our own sphere of influence, so it’s important that we take the time to pause and listen to what the other side has to say. That includes those of us here at CMP. So, as always, I encourage you to contact us with any news related to the broker and mortgage industry or just to share your opinions on how we’re doing. It is exciting times for our industry and we look forward to helping you and your business navigate them. Cheers, John Tenpenny Editor john.tenpenny@kmimedia.ca

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6. 10 issue

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Quotables

“Social media is not an extension of traditional advertising. Social media is about socializing and putting yourself out there and if people like you then chances are they will do business with you, because people do business with people that they like and that they trust.” Broker Jackson Middleton talking about how social media has become the cornerstone of his brokerage’s marketing plan. Page 68

“I would say to the industry to strongly consider joining us for the conference because it is not only different from previous years but it still promises to deliver timely and relevant information designed to help attendees succeed. And equally important, come with an open mind, take in the entire experience. If attendees do that, I think they will walk away saying ‘my attendance at Mortgage Forum 2011 was a good investment.’” Boris Bozic, CAAMP Conference Chair, discussing the association’s revamped annual conference. Page 18

October 2011 Publications Mail Agreement #41261516 Postmaster: Return undeliverable addresses to KMI Publishing, 312 Adelaide Street West, Suite 800 Toronto, Ontario M5V 1R2

EDITOR Senior Staff Writer

John Tenpenny Vernon Clement Jones

NATIONAL SALES MANAGER

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SUB-EDITOR

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DESIGNER PRESIDENT CEO

SALES MANAGER, Mortgagebrokernews

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The past month has seen a lot of broker discussion of articles posted on MortgageBrokerNews.ca. Here we collect some of the most commented on stories and the reaction they garnered from the mortgage broker community. To read the full stories or to make your own comment visit: www.mortgagebrokernews.ca

broker: gov’t has left the refi building New quarterly financials from CMHC are confirming the fears of many brokers, worried the government’s latest mortgage rule changes effectively signalled its exit from the refinance business, now down 40 per cent and expected to stay there. “It’s a repeat of what we saw when the government increased the down payment requirements for CMHC insurance on rental properties,” said Curtis Cannon, a sub-mortgage broker with TMG The Mortgage Group in Prince George, B.C. “By decreasing its maximum loan-to-value to 85 per cent from 90 per cent, the government is basically saying, ‘We’re out of the

The change was at a time when the government could pretend like it was doing something to protect the consumer during an election. If the government was serious about helping consumers, it would have gone after the predatory banks. This is what happens when the big banks lobby government. The government has zero backbone. The banks should handle their own retention issues, not lobby government to help them. Why tie the hands of the consumer? – AB Mortgage Broker

refinance business.’ That’s regrettable because CMHC seems to have forgotten what they’re there for – to put and help keep Canadians in their homes.” This week the Crown corporation announced that its insurance activity for refis fell 40 per cent for the quarter ended June 30, compared to “pre-implementation levels.” Moreover, the report adds, that activity has “continued to remain around this level.” That translates into bad news for broker clients, who through no fault of their own, need to pull equity out of their homes in order to cover debts racked up by a death in the family, divorce and/or illness, said Cannon, concerned the government has abdicated its responsibility to aid those Canadians in its move to keep consumers from “using their homes like an ATM.” “I don’t think that the new refi rules are good, at least not across the board in that the difference between accessing a LTV of 85 instead of 90 per cent may force someone who is in a tough situation out of their home,” said Cannon. CMP

The new risk is not far around the corner when homeowners are forced to sell their home to recapture equity. Real estate bubble? – Math Doesn’t Add Up

I am overwhelmed by what the government thinks they are doing is helping the consumer. They have stated they are helping the consumer out. But in reality they are cutting the consumer’s hand off in situations that would help them out. By refinancing this can help cut total costs for high interest loans, credit cards, lines of credit that the consumer can easily attain with little to We have a client whose house is valued at nothing in the form of ability to pay back. If the $200,000. CMHC now limits the refinance to 85 government truly is out for the consumer then per cent or $170,000. Assuming this is a 25-year they should work with mortgage brokers and amortization, CMHC will charge our client $2,550 lenders and not against them. Plus if they are (1.5 per cent) for mortgage insurance. A year ago, this client would have qualified for 90 per cent or a looking out for the consumer’s best interests then they should be looking at ways to help them mortgage for $180,000 which CMHC would have charged $3,600 in premiums. So, for the additional by going against the credit card companies and loan companies offering the consumer loans with five per cent LTV, CMHC would have earned an outrageous interest rates and fees. Come on who additional $950. Technically, CMHC would have earned 1.5 per cent on the first 85 per cent and 9.5 is the government really looking out for? per cent on the last five per cent. Where is the risk? - Jim

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Brokers: More mortgage rule changes may be necessary A surprising number of brokers are echoing the sentiments of a leading bank economist, suggesting the government would and should ratchet down mortgage rules yet again – but only if consumer debt levels creep back up and only if they’re phased in. “I agree with RBC’s chief economist: If debt levels start increasing rapidly again, more changes to mortgage rules are inevitable,” David Larock, a mortgage agent with TMG The Mortgage Group in Toronto, told MortgageBrokerNews.ca. “The Bank of Canada won’t raise rates to slow borrowing if the broader economy still needs the stimulus – that could trigger a recession at the worst possible time. Instead, Finance Minister Flaherty will tighten mortgage rules to reduce the risk of a credit bubble. If that happens, though, my hope is that these changes will be phased in over time.” “I don’t believe that they’re going to do another tightening of the rules,” said Mark Goode, a high volume broker with Mortgage Architects in Orillia, Ont. “It would slow down the market even slower, and that would be ill-advised.” But Larock and a growing number of industry insiders suggest another government clamp down, if required, would work for the long-term sustainability of the industry. “To date, every time the federal government has made mortgage changes, mortgage brokers have shouted their disapproval from the rooftops,” said Larock. “Unfortunately, I think our collective response to the mortgage rule changes to date has left us mortgage brokers looking like a bunch of self-interested whiners who can’t appreciate the value of short-term pain for long-term gain. Any mortgage broker planning to still be in this business five years from now has to recognize that preventing a credit bubble is in their best interest. Furthermore, our collective response has made it easy for other stakeholders to dismiss our views and we have missed the opportunity to play a meaningful role in shaping the changes.” CMP

Jason Strandlund

It is time for the government to look at consumer borrowing in areas other than mortgages. We don’t have a mortgage problem in Canada, we have a consumer debt load problem. This is being caused by the banks, credit card companies and other lenders, basing credit on beacon scores or other internal credit approval criteria. Lenders are in the business of building their book of business, so they offer interest only or extremely low payments on secured or unsecured lines of credit. There is no debt retirement programs being built into consumer credit and that is where consumers are getting into trouble. Consumer debt level is where the real problem is on debt load. – Kevin J. Power It’s ludicrous to blame consumer borrowing on the mortgage industry. Canadian borrowers have the lowest default rates in the world. Perhaps if the government took a closer look at revolving credit (ie. credit card) rates and started placing limits on that area of borrowing I might be a little less skeptical about all the hype. I mean, really, when is a 29.99 per cent credit card with no real debt discharge date better than a three to five per cent refinance? – Adam Sutton I believe that both the real estate industry and the consumer debt load problem are equally important. In my opinion, our government should tighten up both areas at the same time to regulate and avoid a potential credit bubble. The Canadian economy is quite stable in comparison with America and Europe because we have the best banking system in the world and are closely regulated by our government. – Angela Wong-Liao

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It is great to hear that we are contributing to our lender’s successes. All lenders have their shortcomings. The biggest concern that I have with Scotia is their STEP product. Far too many mortgage agents do not understand the impact that this product has on their own book of business or that the “customer retention stronghold” this product gives the bank on the equity in the home and borrowers not easily being able to move away on maturity. Collateral Charge Term mortgage documents are registered for 100 per cent of the value of the property, which ties up all of the equity and these documents are not acceptable for switch transfer on maturity. Today’s 85 per cent max LTV on refinances makes it almost impossible for clients to leave. – Kevin Power I am surprised by Scotiabank’s success through the broker channel. Personally, neither myself nor any of my agents have sent a deal to Scotia for over two years. Scotia was the first lender to introduce the collateral mortgage and split-level mortgage, both products that are designed to limit the clients’ ability to switch their mortgage at maturity. They were also the first lender to require clients go to the branch to sign documents, which I feel is another ploy used by branch staff to discredit the broker. We in the broker community are now complaining about how lenders are trying to cut us out of the equation. Well, I say that we are to blame for this because we have been guided by greed, not by doing what is best for the client. My suggestion would be to deal only with lenders that allow the broker to complete and submit all documentation, and that don’t require the security to be registered as a collateral mortgage. – Max J. Cafissi I think that it is a failure of the broker channel to use Scotia. I had a Scotia rep in my office tell me that the initial mortgage origination alone is not worth Scotia being involved within the broker channel and that the only reason they lend is because they have the opportunity to cross-sell the client and retain them long term. With branch signings, this is pretty much common knowledge. The bank is our direct competition; I don’t understand sending clients there at all. How much stronger could our monoline lenders be if we redirected all the broker business currently heading to Scotia (and TD for that matter) to them? When was the last time Scotiabank sent you a referral? Complete failure if you ask me. –@kiltedbroker It’s ironic. If Scotia weren’t so draconian and impossible to underwrite with they could blow their quotas out of the water. I’ve tried and tried to work with them, but even A business is tough if it doesn’t fit their rules. And believe me they have a lot of them. I’m all for backing the monolines. Scotia hasn’t done me a single favour ever. – Matt Knowing what we know about the bank’s position regarding brokers, why then do brokers continue to send clients their way? Whatever their motive, could it be the banks have made it easier to deal with them in brokers’ efforts to get their deals approved? If so, what does that tell you about the mono-lenders approval process? Is there a message the mono-lenders, who are supposed to be brokers’ right-hand, should take away from this whole situation? Food for thought. – Dan P.

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brokers help lift Scotia’s falling market share Brokers – specifically, a bigger piece of their action – helped cushion the blow for Scotiabank in its third quarter even as its overall market share fell – a validation, say brokers, of their value proposition. “If they (Scotia) were smart, they would look at expanding their efforts to grow business through the broker channel as a more cost-effective way of originating mortgages,” Della Dwyer, an Invis mortgage professional in Barrie, told MortgageBrokerNews.ca. “I don’t know that they’ll do it, though.” The comments follow release of Scotia’s financials for the three months ended June 30. While the mega bank reported an impressive $2.5 billion growth in funding volume of residential mortgages, relative to the year-ago period, its overall market share fell from 20.40 per cent in Q2 2010 to this year’s 20.30 per cent. It suffered an even bigger slide in the last six months, having reached a 20.54 high in the first quarter of this year. Percentage gains and losses of even one basis point represent hundreds of millions of dollars for lenders prepared to undercut each other’s discounted rates in order to meet year-end targets, says analysts. That may help to put erosion of Scotia’s residential mortgage portfolio in perspective. The slip would, in fact, have been steeper were it not for brokers. Scotia was the broker channel’s No. 1 lender by volume for the quarter ended June 30, moving up from second position, according to CanadianMortgageTrends.com, citing a quarterly report from D+H. While a slowing real estate market clipped away at its originations even through mortgage professionals, the decline was less than those sustained by most other lenders using brokers to bring in business. CMP

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RBC adds to its ranks for the rate wars

It’s an indication of just how committed RBC is to winning this year’s rate wars, with the mega bank taking on 1,000 new branch employees in the last 14 months – a large percentage of them mortgage specialists and five times as many new workers as it took on the previous year. That strategy appears to have worked, with Canada’s largest bank recording an $11 billion gain in its residential mortgage portfolio over the 12 months ending July 31, according to its latest quarterly report. The performance helped cement its position as No. 1 among the “Big Six” in terms of mortgage market share. The growth in its human resources, including mortgage specialists, also validates the concerns of mortgage brokers, fighting to retain their own market share against this year’s onslaught of bank competition and the increasing aggression of mobile specialists and branch sales people. The result has been their willingness to match and, in many cases, undercut even the broker channel’s lowest rates. Many brokers have responded by buying down rate in order to retain business. Canada’s only big bank to have never used the broker channel – and its specialists – may, in fact, be using the same strategy. The ramp-up in its sales force may be over for the year, with the first tentative signs that the banks are starting to rein in on deep discounting, specifically on some of their ARMs. Brokers, at least, hope that is the case. “If the major banks are going to be reducing their discounts off of prime, it’s starting to make credit unions, monolines and other broker channel lenders rect ad August2011_SYD_REVISED.pdf 1 8/30/2011 10:51:41 AM – that generally haven’t followed suit – look really attractive to consumers,” said Darcy Doyle, a mortgage agent with The Mortgage Centre Mortgage Evolution Yaletown. “And that allows brokers to be a lot more competitive today than they were yesterday. It seems that the rate wars are slowing and/or the banks have achieved their year-end targets.” CMP

In my opinion, in the absence of value there is price (ultra-low rates). Mortgage advisers or mortgage planners must strive to add more value to the relationship. RBC seems to be going the rate way that may work in the short term but it is not a good long-term option. – Mortgage Calculator RBC has been the No. 1 mortgage originator in Canada for over a decade, so I don’t understand how their approach is “not long term.” I have also been hearing from other brokers that RBC writes “bad business” for the 15 years I have been a broker but their default rate is really no different than the other Big Five banks. Why don’t we all just admit the truth: they are the most powerful competitor, end of story. Suck it up and fight, don’t cry, there’s no crying in the mortgage business. – Ron Butler Let me tell you a secret about RBC. If you want to beat them, do as I do. I had clients where I could not properly prove their down payment. Royal Bank had no problem with the down payment. The client told me that RBC would give them the mortgage but at a higher rate than I was able to offer, as much as one per cent higher; the client said he had no choice. I told the client to go ahead and take that mortgage. Two months later I was able to rewrite the mortgage as a refinance and got the client the rate he was looking for. The penalty to break the mortgage was very little, because the way RBC calculates the pre-penalty. You want to beat RBC? Learn everything they do including how they calculate their pre-penalty and once you know and tell clients how they calculate the pre-penalty, the client will think twice before going with them. Education is the key. Learn, observe and you will win. – Alberta RBC can hire as many road warriors as they want. They are so far from being “specialists.” Any of the big banks will take our best rate deal and send it to the powers to be and have it matched. They will never do what we do - they only wish. If clients want to wait for seven to 10 days for approval - let them, because that’s what the Big Five do – make them wait. – SW Ont. Broker

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CAAMP’s chair is acknowledging, and even welcoming criticism of the AMP designation, and its qualifying standards, at the same time pointing to real progress – past and present – in strengthening it. “This discussion about the AMP is great because it shows how much the industry is engaged,” Joe Pinheiro told MortgageBrokerNews.ca. “The bar has increased over the last year based on input from the AMP taskforce and it makes sense to continually raise that bar. We are moving ahead with a plan to do that, to improve the designation. While I understand criticism about the pace of that process, the truth is that it can’t be done overnight.” The comments answer a torrent of criticism unleashed with a MortgageBrokerNews.ca article outlining concerns about the designation. Mike Cameron – head of broker network Axiom Mortgage and the “Mortgage Revolution” – argued the barrier to entry around the AMP is simply too low to promote industry professionalism. “I applaud all the work CAAMP has done in terms of lobbying for the industry, especially around the HST and GST,” he told MortgageBrokerNews.ca. “But around the AMP designation, I’m disappointed and have been waiting for seven years for it to mean something. Unfortunately it doesn’t and it’s time we start putting some pressure on the association to do something about it.” Pinheiro largely rejects that criticism pointing to substantive changes introduced last year and

446,700

CAAMP chair answers AMP critics

the number of existing home sales forecast for 2011, essentially the same level as in 2010 (CMHC)

meant to ensure a higher level of broker knowhow and professionalism. Chief among them was the move to mandate four of the 12 continuing education units required for annual AMP renewal. “Those four credits deal with professionalism and include topics such as fraud avoidance, consumer protection and agency law,” Pinheiro said. “They also speak to raising the professionalism of the AMP designation. As well, all new originator applicants must be licensed and carry errors and omissions insurance. New applicants without a minimum two years’ experience must also pass a strenuous 10-step equivalency course, what CAAMP calls its “Fundamental Mortgage Principles Program.” That course focuses on essentials, including regulatory compliance, fraud avoidance, housing and mortgage economics and advertising and marketing standards. “It’s a very difficult course, something reflected in the failure rate, which is comparable to other qualifying tests,” Pinheiro told MortgageBrokerNews.ca, “and the expectation is that the AMP taskforce, along with the association, will continuously look to raise the bar.” CMP

I sure don’t see much advertising about AMP in Kelowna. I’ve been in the biz 10 years and used to be an AMP, but felt the value was less than minimal and was a money grab so I stopped. I still take lots of courses; I agree with keeping up on my industry but the money I put out has to give me a positive ROI. – Dave Lytton Actually the AMP application states that an “originator” must be licensed OR have completed the “equivalent education requirements.” The

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application allows you to choose. “underwriter/lender” as an option, which I assume Road Warriors are. Therefore, how is the AMP just for brokers? It seems to me that any CAAMP members can be AMPs, which means that our competition, the banks, have the same competitive edge as us when it comes to the AMP designation. Ads say choose an AMP. Well, that can be a banker. Using my membership fees to support my competition isn’t helpful. – Johnathan I am glad to hear CAAMP’s view, it is key to have a balanced discussion. I think it is important to not make this into a ‘bash’ session but to find productive ways to accomplish an end result. I think everyone agrees on the value of a professional designation. We need to make sure that all of ‘Our Channel’ are working together to make this work. If we remain fragmented and competitive then we are in for some real problems. My intent was never to discredit or condemn any organization but rather to open the discussion and voice concerns publicly so that they can be addressed. I’m glad to see that is happening. We have a fabulous industry that provides exceptional career opportunities for those that view it as a profession. Let’s continue to work together in a productive, respectful fashion to make the kind of industry that I believe we all strive for. Do your homework, read the annual reports, discuss initiatives with industry leaders and voice your well thought out opinions. – Michael Cameron

appointments ING Direct announced the promotion of Frank Giacomini to senior manager operations, broker sales. He will report directly to Kim Luxton, director, broker sales.

Frank Giacomini

Dan Pultr

TMG The Mortgage Group Canada Inc. announced Dan Pultr as director of sales for British Columbia. Most recently, as a business development manager for a non-bank lender, his territory included Victoria and Vancouver Island. “As a BDM I spent the majority of my time working closely with brokers to help improve their business and to ensure that their clients were satisfied,” said Pultr. “I believe my diverse background on the lender side will ultimately help the brokers I work with form stronger relationships with their BDMs and underwriters, and provide their clients with a better overall customer experience” CMP

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Message received says CAAMP, as it unveils a host of changes, which makes their annual conference bigger and better than ever before

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t’s an oft-repeated mantra that planning for next year’s conference begins as soon as the current one is over. That’s certainly true for the Canadian Association of Accredited Mortgage Professionals (CAAMP) 16th annual mortgage conference and Expo - Mortgage Forum 2011, to be held in Toronto, Nov. 20-22. It began with conference survey feedback from association members and conference delegates about what they wanted to see from the event and evolved from there, says Mortgage Forum Chair Boris Bozic, AMP. “The transformation really started last year in Montreal,” said the president of Merix Financial who will also be assuming the role as the next chair of CAAMP. “The survey results were clear. The conference was a great networking opportunity, but the conference itself had become a little stale.” “After 15 years of doing things a certain way, there was a necessity to change things up. And kudos to the staff at CAAMP for embracing all the different ideas and having a willingness to implement the suggested changes.” What the surveys indicated, says Michael Ellenzweig, AMP, CAAMP’s VP of Member Services, was a craving for something new. “What [conference delegates] wanted was very rich content when it came to sales and marketing and branding and business planning. All the kinds of things that help you compete in a very competitive marketplace.” “The national conference should be the Super Bowl event of the year,” says Bozic. “It should be something that cannot be emulated on a provincial level. It should be an event where the experience is superior to what the industry has become accustomed to.”

“ the survey results were clear. The conference was a great networking opportunity, but the conference itself had become a little stale ”

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“This year, we have implemented more changes than at any other time,” says Ellenzweig. One of the most significant changes is that CAAMP has partnered with The Art of Sales for a full-day of sales and marketing sessions on the Tuesday, the third and final day of the conference. “I thought this was a great opportunity for both organizations to work together as we both have the ability to attract high-level speakers and a large list of potential attendees. We determined that by combining our efforts we could hope to make this year, our best conference ever,” says Bozic. The Art of Sales sessions will be presented by sales and marketing heavyweights such as Barbara Corcoran of TV’s Shark Tank, Ben & Jerry’s founder Jerry Greenfield and renowned speaker and author Seth Godin. The partnership also provides the opportunity to attract some new people. “We’ve asked [Art of Sales] to invite Realtors and appraisers and lawyers and other ancillary industries that have a direct impact on mortgage brokers and the mortgage industry,” says Bozic. “This way we could introduce people to some of the brands that they may not be familiar with and to give them a certain degree of comfort.” The conference opens on Sunday with the industry Expo and Mortgage Hall of Fame Awards. Added to the Sunday schedule will be a new initiative aimed at attracting new prospects to the mortgage industry. A Career Day is planned where university and college students will be invited to the Expo to experience the industry first-hand, says Ellenzweig. “We’re not doing enough to grow our industry from the outside organically. We want to introduce the industry to the next generation.” “The focus on Sunday will be on the individuals who want to learn more about the mortgage industry,” says Bozic. “So hopefully the exhibitors can talk to these individuals about possible careers in the mortgage industry. “I think it’s critical that we do this to ensure organic growth in the future as well as always trying to attract the brightest and those with the spirit of entrepreneurship to our industry because that’s how we will grow in the long run.”

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“ I would say to the industry to strongly consider joining us for the conference because it is not only different from previous years but it still promises to deliver timely and relevant information designed to help attendees succeed ” On Monday the focus will be solely on the mortgage industry. “We’re going to provide attendees with a foundation – where your business is at and where it is going,” says Ellenzweig. Included will be a pair of roundtable panels, moderated by CBC News personality Amanda Lang. The first session will be an economic roundtable featuring economists, while the second session will be an industry-branding panel featuring executives from related industries, including the head of the Insurance Bureau of Canada. “It will be good to hear from an association and an industry that’s undertaken the branding challenge already,” observes Bozic. Also speaking will be Rob Daniel of Maritz Canada, who will present original research from both an industry and consumer perspective. Former Canadian Prime Minister, the Rt. Hon. Joe Clark will address attendees at a macro level, according to Bozic, discussing how Canada fits economically with the rest of the world. “We’ve never had such an illustrious lineup. We’ve really gone all out to bring in the best speakers,” says Ellenzweig. Another big change is the Monday night event, which Ellenzweig described as “a party where people would come and go. “Instead, we wanted to organize a Monday night event where we would attract people who would want to stay for the duration,” he says, referring to CAAMP COMEDYFEST, which will be headlined by Canadian comedic legend Howie Mandel with special guest Gerry Dee. Described as “the industry event of the year” both Bozic and Ellenzweig feel the bar has been raised as far as quality and quantity of conference content go and eagerly await the reaction from conference delegates. “From a value perspective, I think this year’s conference bar none, far exceeds any other conference we’ve ever had,” says Bozic. “I would say to the industry to strongly consider joining us for the conference because it is not only different from previous years but it still promises to deliver timely and relevant information designed to help attendees succeed. And equally important, come with an open mind, take in the entire experience. If attendees do that, I think they will walk away saying ‘my attendance at Mortgage Forum 2011 was a good investment.’” CMP

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mortgage revolution takes on AMP designation The head of a national broker network – and the “Mortgage Revolution” – is ramping up lobby efforts to increase qualifying standards for the AMP designation, arguing the barrier to entry is simply too low to promote industry professionalism. “I applaud all the work CAAMP has done in terms of lobbying for the industry, especially around the HST and GST,” Mike Cameron, managing partner of Axiom Mortgage, told MortgageBrokerNews.ca. “But around the AMP designation, I’m disappointed and have been waiting for seven years for it to mean something. Unfortunately it doesn’t and it’s time we start putting some pressure on the association to do something about it.” That is, in fact, something he has already moved to do, planning to take his concerns to CAAMP directly. He’ll sit down with members of its leadership team this month. Cameron’s concerns mirror those of many of the hundreds of mortgage professionals he’s dialogued with as part of his Mortgage Revolution, a grass roots campaign focused on addressing the ethical and integrity issues facing the channel and, in many ways, keeping it from moving forward. While the movement has its roots in Cameron’s Edmonton market, it has now spread to mortgage professionals across the province as well as brokers in B.C. and Saskatchewan. Putting “some teeth” into the AMP designation figures prominently among those industry players, he said. “In the last seven years since I first took out AMP designation, we have really only added the requirement to carry E & O insurance,” Cameron told MortgageBrokerNews.ca. “If you look up my AMP online you will notice it will say AMP since 2007. That is because I let my AMP lapse when CAAMP re-introduced the grandfathering clause and did not raise the bar back in 2006. As head of a national network I re-instated it in 2007 to continue supporting what I still believe is a worthwhile concept.” Cameron’s research and analysis suggest a continuing erosion of professional standards compared to the official designations of other finance experts, more specifically, the Financial Planning Standards Council’s CFP designation. In fact, Cameron recently had a conversation with Council President Cary List, focused on gaining insights into beefing up AMP certification. “I am a big proponent of raising the bar within our industry and taking us to a level of professionalism equivalent to that of other industries,” said the Edmonton broker, “I think that the CFP designation is an obvious place to start.” CMP

As far as I’m concerned, the AMP designation is just another money grab. It’s way too easy to get. The sub-brokers’ licence in B.C. is also too easy to get as well and the UBC course should be revamped to include more relevant course material. Also, I have almost completed the diploma in Urban Land Economics at UBC and believe that it should provide a specialization in mortgage brokering as well and that the diploma be required to enter our industry as a mortgage broker as it offers way more relevant information than the current requirements. – KED As I have said in the past ... we need a broker organization that is by the brokers, for the brokers. When you have “bank” representation at the table, at over 50 per cent, something is not right. CAAMP is not a true broker-driven organization; it is a bank-driven one. With all due respect, the banks have never had our best interests in mind nor that of our clients. They are shareholder-driven organizations – and that is not bad – it’s a fact. We have a great industry and it is time for us to have a national voice. Remember we do not need CAAMP; they need us. – Mark Piers Forcing an expensive “continuing education” on brokers and making them pay dearly for it in money and time does not make a “professional” in any field. I was an AMP in 2004 but let it lapse because I did not/do not see any benefit in having to “educate” myself in things that I already know or have no interest in knowing. – Greg C. Funny, my AMP renewal form came in the mail today. The letter attached proudly states “CAAMP invests 90 per cent of all AMP dues

36% increase in new home sales in the Greater Toronto Area in July compared to July 2010 (RealNet Canada Inc.)

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directly into promoting the AMP.” I wonder if this is necessary? If CAAMP spends 90 per cent of dues advertising a designation that seems to mean so little for its membership and has basically no public awareness, what is actually being accomplished? I too would like to see a designation specifically for brokers, but will renew my AMP designation for the simple fact that it is the designation that what we have now and I am proud of the job that I do for my clients. On a side note, I wonder what CAAMP is doing in social media with regards to promoting the designation. The cost of that is far better than investing in traditional advertising that doesn’t work. Just my two cents - @kiltedbroker As a mortgage broker for the past 11 years, I recently let my AMP “designation” slide, simply because I no longer see it as having a perceived value. The standards required by the Appraisal Institute of Canada to earn and keep my professional appraisal designation require standards so far over the top of the AMP criteria, I don’t see the AMP designation as having true professional merit. I have tried several times to have CIMBL and then CAAMP raise the bar to achieve and make the AMP designation a sincere professional achievement, but to date the response has been: “it’s coming.” When CAAMP decides to significantly raise the bar so that real professionals can earn and wear the AMP designation with distinction and pride, I’ll jump back onboard. – J. Darren Ing

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I am not one to get bent out of shape about designations, if they make sense, are acknowledged as relevant by the industry and that they differentiate skill levels. The AMP does not do any of that. A broker/agent/associate with 10, 15 or 20 years of experience/knowledge/education has the same AMP as the “five-day wonder” has in Ontario. It obviously escalates the prestige of the “five-day wonder” while reducing the status of those with more experience/ knowledge/education...and an organization makes a lot more money, for a short period of time, because of the large number of “newbies” getting a designation as they pass through the business, at the expense of the others. Rather than putzing about with designations, why not just significantly raise the bar on licensing education? Having 40 or 50 hours “education” to be able to advise people on the largest debt they are ever likely to have, is the real credibility issue for the industry. Raise the bar all you want on designations that are non-mandatory; as long as you have a rigorous licensing education program, along with adding significant mandatory CE, and you will have an industry that will develop its own credibility. – David O’Gorman I was one of the first people in our area to obtain the AMP designation. I didn’t renew it the second year, as the quality of professionalism for a few individuals who obtained the designation after me, was questionable, I decided that I would set myself apart from them by not having the designation. I haven’t regretted it and it hasn’t hurt me. –Kevin J. Power

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Broker: Time for channel to help subprime orphans Broker channel associations and lenders must lobby government on behalf of homeowners effectively orphaned by fleeing subprime lenders and blocked from switching to A lenders because of the new refi rules, said a mortgage professional grappling to keep those borrowers in their homes. “Many of these borrowers have rehabilitated their credit,” said Michael Goss, a Mortgage Alliance agent working recession-weary southwestern Ontario, “but because they do not have CMHC or Genworth default insurance, they can’t just switch to an A lender now that their mortgage with a departed lender is closing. “Under the new mortgage rules they now have to qualify for a refinance, and that means the client has to meet the 85 per cent loan to value requirements introduced this year. That’s simply impossible for many of them.” Goss is now calling on industry associations – both national and provincial – to actively campaign on behalf of the hundreds of borrowers placed in subprime deals before the collapse of that niche market in 2007. “I believe brokers placed these clients in these deals in good faith, but I think the industry has a moral obligation to help these people by lobbying the federal government,” he said. “There will be a significant number of people who will lose their home because of that practice. I have worked with three cases in the last six to nine months and know of at least 20 in Sarnia, alone.” Under the terms of many high-ratio subprime deals, clients were handed mortgages for as much as 107 per cent of the value of their homes. That sum invariably included lender-back default insurance, which carried higher premiums and fees, but did not meet CMHC mortgage-backed securities standards. It means subprime clients now looking to switch their mortgages to an A lender are required to have CMHC, Genworth or Canada Guaranty insurance. In keeping with mortgage rule changes introduced this spring, those homeowners must have a minimum of 15 per cent equity in the home in order to make that happen. It’s an almost impossible dream for clients given the initial size of their mortgages and the value declines experienced by many housing markets across the country. Goss wants the federal government to make an exception to its new refinance mortgage rules, allowing A lenders to treat those subprime loans as switches and not refinances. That special treatment would remove the maximum 85 per cent LTV hurdle. CMP

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Unfortunately the issue of “orphaned” subprime mortgages has been around for several years. There was a committee of former subprime lenders that met with the federal government to create a fund to assist these borrowers with no success, obviously. To help differentiate themselves from the banks’ mortgage professionals can become more proactive in assisting consumers with financial challenges beyond just arranging a mortgage by taking a more holistic approach. By following proven strategies those borrowers that are declined today will become some of your most loyal longtime clients who will refer many others to you for mortgages. – Eric Putnam It is sad, but true that the government allowed these subprime companies to come to Canada and while a lot of these people have improved their credit and do qualify credit-wise and income-wise, they do not qualify for the loan-to-value ratio. Now the government thinks that is too bad, but if more people lose their homes the government is to blame as they could help these individuals. Remember that these homeowners are not asking for a handout they are just asking to be treated fairly. So yes, let’s see if we can put some pressure on the government to give these homeowners a fighting chance. – Alberta I have personally written Jim Flaherty, who sent back a political answer. Jim doesn’t get it. Personally, I think Jim is a puppet and someone else is pulling the strings. What the big banks want, the big banks get. It’s just too bad it’s tying the hands of the consumer. – AB Mortgage Broker It is a truly unfortunate that this has happened and the fingers can be pointed in many directions. When these products were introduced and only available through a major national brokerage, I asked the question of some agents about what would happen at maturity of the term on these mortgages. No one had an answer and there did not seem to be much concern about it either. – Kevin J. Power

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Every week, MortgageBrokerNews.ca rounds up influential figures to discuss the major issues in the mortgage industry. You can watch these videos online in the Broker News TV section of our website, but here we bring you the highlights from last month’s clips

the

big story

On the topic of …

broker exclusivity agreements Paul Mangion: “My opinion on exclusivity agreements or as we call them ‘customer representation agreements’ is that they are very adaptable to our industry and we use them on every file – it’s mandatory in our office – and we have never had customers object to using them. Ultimately, I think if the industry adopted something like this and they practised it across the industry, we might have less problems with poaching and banks stealing deals at the last minute. Professionalism would increase because you would be promising the customer that you would represent them and look out for their best interests. I know many brokers object for various reasons, but in my experience it has always been that that paper sometimes saves the deal just by bringing it up. In other cases, most customers settle once they realize they are in the wrong. Using exclusivity agreements has not cost me a lot of time or extra effort at all. Ranjit Dhillon: “As we all know, our real estate friends have been using these type of agreements with their clients for decades and I think it’s time that we introduce them to our clients. The exclusivity agreement has a lot of benefits for the client, it’s just that the mortgage broker should know how to sell it to the client. The broker/agent should be introducing this agreement to the client in such a manner that shows them the benefits of signing the agreement. Brokers should tell

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the clients that it is a two-way commitment – it’s not just the client who is signing and committing. Now the broker is also committing to the client that they will do their best to provide the best terms and rate for the mortgage and that they will not walk away from the deal. Another benefit is that the broker now feels confident and will be responsible for providing the best possible service until the deal is closed. It provides clients with peace of mind.” Greg Williamson: “The people that are supporting this idea, I think, might be underestimating the difficulty and the amount of sales ability that would be required to get people to sign an agreement like that. I think that if we channeled that sales ability of the people that have the ability to do that and channeled that into a more useable format of adding more value, then I think it is better served. The people who are struggling with rate competition are probably the same people that will struggle with the idea of trying to sell people on an exclusivity agreement.” Ad Lakhanpal: “I think exclusivity agreements are a good

Paul Mangion

Ranjit Dhillon

Greg Williamson

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idea because it solves a major problem of clients walking away, but I think it would be a long dialogue because of consumer protection laws. To solve the problem, my suggestion is that once a client signs a commitment, it should be like a contract and that contract should be either enforceable or at least result in a penalty being paid if the client breaks the contract. Since this affects both lenders and brokers, we should put our heads together and come up with a system whereby an agreement is reached with the client at the time of signing the commitment that they will follow through with it otherwise there will be some sort of penalty. This will reduce the problem very quickly and to a large extent.” On the topic of …

sending business to the banks Michelle Brienza: “I’m a big fan of monoline lenders versus the big banks, the reason being that monoline lenders are now paying trailer fees. For me, as far as a long-term perspective of being in this business, I get rewarded for originating new business and bringing it to these lenders. And I would certainly hope that those monoline lenders are working as hard to renew those clients as the banks are because those monoline lenders are working on my behalf to make sure I get paid at time of renewal and I, in turn, when I’m signing my clients originally, will encourage them to renew with those particular monoline lenders. That frees up a lot of time as a salesperson to just originate all-new business and long term, as long as I’m filling up my pipe with new business, sending them to monoline lenders, getting paid on renewals and trailer fees, just allows for larger paycheques as the years pass.” Paul Mangion: “A potential trend that I’ve noticed over the last few years is the fact that brokers are not supporting, as much as I would like to see, our lender partners that really do support the brokers and don’t compete with us on a direct basis. I would like to see more people supporting them because ultimately, for this industry to survive we will need them. Having said that, lenders that do compete with us have a place in the industry and we can’t forget about them, especially if they are one of your lender partners, but overall, for the industry we need to be careful and support the people that have a big stake in this industry. Wojtek Kaszowski: “We have absolutely no problem referring the client to a bank because what determines where they go is their financial

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need and their need for the product a lender is offering. What will retain the client or what will determine the relationship we have with the client is ourselves. We keep in touch with our clients three to four times per year, make sure they keep us posted on the changes in their lives, keep them informed about the industry and what products are available and were 100 per cent confident that when the time comes, they will come back to us.” On the topic of …

Ad Lakhanpal

second mortgages Allan Kates: “I think it’s important for mortgage agents and brokers these days to look at the current market conditions when doing a refinance. With IRD penalties being so high based on the difference in the current rate compared to the client’s existing rate, it’s imperative that we determine what the penalties are when doing a refinance. Having a 2.2 per cent mortgage rate right now doesn’t mean anything if the penalty is $25,000. These days brokers must get the numbers before they send that deal to a lender because with cancellations being so important we must make sure that we have a live deal that makes sense for the client to move forward. Looking at the transaction, the second mortgage route might be better than doing a whole new first refinance. The key in doing refinances is determining the current savings for the client and seeing what the weighted interest rate would be for a second mortgage. If we’re not doing that, than we’re not doing our job for the client and we’re not putting their best interests first. The current economic conditions are a great opportunity for us to put our client in a lower rate mortgage than they currently have, but ultimately if the IRD is going to take away all the benefits, it might not make a lot of sense. CMP

Michelle Brienza

Wojtek Kaszowski

Allan Kates

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australia The Mortgage Finance Association of Australia (MFAA) has called upon brokers and industry members to push its MFAA-approved broker campaign as a benchmark for consumers. MFAA CEO Phil Naylor has previously said the campaign sought to position MFAA-approved brokers as an industry benchmark, and that consumers should naturally seek out MFAA members. Naylor has now called on brokers to push the campaign to consumers, saying its success is dependent upon uptake from brokers and industry players. “We’ve encouraged all members to promote the campaign. We can do our bit by using our resources to some extent, but the key to success is that all players in the industry leverage off of it,” he told CMP’s sister publication Australian Broker News. Naylor said the initial phase of the campaign focused on press advertising and online ads in 40 metropolitan and regional newspapers. He said the association is currently planning a further advertising push. “The upcoming stage will have a much more online and regional focus,” he said. The eventual goal of the campaign, Naylor said, is for consumers to ask whether brokers are MFAA-approved. While Naylor said the MFAA had yet to assess consumer reaction in the early stages of the campaign, he said MFAA members had indicated that consumers were starting to catch onto the messaging. “A recent survey of members indicated that this is starting to happen but at a fairly low level at this stage but the green shoots are starting to appear. Encouragingly, a large number of members are actively telling potential clients that they are an MFAA-approved broker and this is an important leveraging off our media campaign,” he remarked.

Brokerage Mortgage Choice has been one of the MFAA members leveraging off the campaign, a development Naylor said he was pleased to see. In its advertising to consumers, the company has promoted its franchisees as MFAA-approved brokers. Company spokesperson Kristy Sheppard said Mortgage Choice believes in the goals of the MFAA campaign. “Mortgage Choice has a close relationship with the MFAA, as do many other brokers, and have had a little input into the campaign. We strongly believe in the need for our industry to develop and promote its professionalism so more and more Australians are aware of the great value brokers provide,” she said. CMP

u.s. U.S. brokers cry foul over commissions U.S. mortgage brokers have called on the Obama administration and the U.S. Congress to encourage the nation’s Consumer Financial Protection Bureau to rescind its loan originator compensation rule. The rule, introduced earlier this year to help arrest problems partially responsible for the global financial crisis, means that mortgage loan originators may no longer receive compensation based on the interest rate or other loan terms. Previously, originators could be paid higher compensation or commission, based on the level to which a rate was dialed up for a consumer. Loan originators who receive direct compensation from a consumer are also now forbidden from receiving additional lender compensation, and originators may not ‘steer’ a consumer to a mortgage loan not in their best interest just to increase the level of their compensation. The National Association of Mortgage Brokers (NAMB) has said publicly that ever since the introduction of the Federal Reserve Board-inspired measure on steering and loan compensation, consumers have experienced “a dramatic increase in costs on their mortgages”. The association said in addition, “the expenses have increased for all mortgage companies and a great impediment has been placed on the vital service of mortgage lending throughout local communities.” The NAMB argues that regulators should focus on the problems caused by products and product design, rather than loan originators, likening the situation to penalizing pharmacists and doctors for prescribing and distributing pharmaceutical products later found to be damaging to health. CMP

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Two-thirds of repeat homebuyers buy again and again More than two-thirds of repeat homebuyers believe their next house purchase won’t be their last, according to a new survey by TD Canada Trust. Out of 1,000 participants, more than 23 per cent said they plan to move again within six years. One in five repeat buyers has owned more than five homes. The survey participants either purchased a home that was not their first within the past two years, or intend to purchase a home that is not their first within the next two years. Roughly half of Canadians will look for a smaller house, while the rest want to upsize. Most intend to find a fully detached home for their next purchase. One year later Two-thirds of Canadian repeat homebuyers are moving on to larger or more luxurious homes and many are moving earlier than they originally planned. The TD Canada Trust Repeat Home Buyers Report, which surveyed Canadians who recently bought or intend to buy a home that is not their first, found that seven in 10 Canadian repeat buyers were moving earlier than they expected (42 per cent) or had no intention of moving but now find themselves on the house hunt again (27 per cent). Further, the number of people intending to buy a home that is not their first in the next two years increased nearly 10 percentage points over 2010 (74 per cent versus 65 per cent in 2010). In this year’s survey, Canadians were more likely to say that investment opportunities and market conditions played a factor in their decision to buy another home (both at 21 per cent versus 15 per cent in 2010). The large majority (82 per cent) plan to sell their current home and of those who are selling, four in five expect to sell at or above asking price (78 per cent versus 66 per cent in 2010). UBS hopes to begin Canadian lending American-based UBS AG recently announced plans to offer lending to Canadian clients through its Canadian private-banking unit. “Now that [UBS CEO] Robert McCann has identified [mortgages] as part of the strategy to service the wealth-management clients, that gives us the impetus to initiate the offering in Canada,” UBS spokesperson Graeme Harris said.

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According to Harris, the company plans to explore the new market by either building a team internally, hiring mortgage specialists to run the business, or by coming to an agreement with another firm on outsourcing. UBS is in talks with several brokerages about possible arrangements and already has more than 40 advisers in Canada aiding affluent investors. One year later Private banking titan UBS has decided to take a pass on joining the Canadian residential mortgage industry, citing entrenched competitors and tight spreads, according to a report in The Wall Street Journal. The decision to forgo its entry to the Canadian residential mortgage market is based on a feasibility study conducted by the bank and soliciting the opinions of Canadian “several mortgage suppliers,” reads the article. Ultimately, that intelligence suggested the Canadian mortgage market was simply too competitive for the bank to win a strong foothold, says the WSJ story. The market also offered too little wiggle room for the international lender to grow profit margins and still win business. The adoption of IFRS accounting standards by the Canadian government also meant the bank would have to sink more capital into a Canadian operation than it wanted. UBS had looked at Canada as a way of growing its residential, single-family mortgage business outside of the troubled U.S. housing market. It will now refocus on that key market, where spreads allow it to claim larger profits than Canadian lenders. “We are focusing our mortgage lending services in the U.S.,” UBS spokeswoman Allison Chin-Leong told MortgageBrokerNews.ca. Still, the decision to only write mortgages south of the border may have come at the cost of brokers. In Canada, where UBS has 40 private bankers, the lender would likely have turned to the broker channel to send high net-worth clients its way after building its own sales team or outsourcing that business to an existing Canadian player. UBS recently combined its Canadian wealth management and asset management units, at the same time it parted ways with two of the executives leading that team. CMP

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Lenders on Brokers

2011 Lenders on brokers sponsored by

p e r f o t h rig

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Lenders on Brokers

Last month’s issue saw brokers give their verdict on how lenders fared over the past year in serving and supporting the channel. In this issue, the lenders appraise their performances and tell CMP what they got right and what went wrong

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ver the past five years, CMP’s Broker on Lenders survey has grown in stature to the point where lenders eagerly await the feedback you gave them about their products and service. It was great to see the responses to our fifth annual Brokers on Lenders survey. Nearly 400 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, IT and electronic/technology, interest rates, product range, overall service level to brokers, satisfaction index on overall credit policy, and overall lender performance. Grades were given on a scale of one (very poor) to five (very good). The overall response was so strong for many lenders, but a minimum requirement to be included on this year’s final tally was each lender had to receive at least 50 votes. New to this year’s list are National Bank of Canada and TD Broker Services. The number of lenders who received votes was nearly 30 in total, which shows that mortgage professionals certainly have a wide variety they feel comfortable to use. 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 recap for those of you who missed last month’s report, MCAP and Merix were this year’s big winners, capturing seven medals apiece, with First National Financial and Street Capital earning six and five medals respectively. Read on to see just what the lenders made of their showing, why they excelled in the areas they did and what was to blame for taking the eye off the ball in other categories …

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Lenders on Brokers

MCAP Categories (in order of importance)

2011

2010

Change +/-

Turnaround times

4.05

4.63

-0.58

Underwriter support

4.22

4.85

-0.63

Overall service

4.14

4.54

-0.40

Interest Rates

4.01

3.85

+0.16

BDM support

3.86

4.30

-0.44

Product Range

4.01

4.38

-0.37

Satisfaction with credit policy

4.08

3.77

+0.31

Broker support

3.55

3.40

+0.15

IT/technology

4.07

2.99

+1.08

Transparency of commission structure

4.26

4.85

-0.59

OVERALL

4.03

3.50

+0.53

MCAP

Gino Tieri, Vice-President, Sales We, at MCAP are extremely pleased with this year’s results and want to thank the broker community for their recognition of MCAP as the No. 1 lender of choice in the “Brokers on Lenders” survey. We continue to strive for excellence in the way we do business and the gold medal recognition for underwriting, service, credit policy and overall performance, is evidence that a streamlined simple, and high touch experience is what brokers that use MCAP

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value and experience on a daily basis. Keeping it simple makes it easier for brokers to deal with us. Brokers tell us that they are looking for ease and speed of doing business and MCAP strives to do just that. We also understand that it all starts with having the right people in place who understand the importance of servicing our brokers and are focused on delivering excellent service each and every day. I urge those brokers who have not done business with MCAP at this time to give us a try and experience what MCAP brokers enjoy on a regular basis. The next year will be filled with uncertainty as the global economy continues to be a challenge …particularly since it has a direct impact on consumer spending and household debt. This in turn will put pressure on the Canadian housing market and presents challenges to the growth of our industry. With this in mind, MCAP will continue to focus efforts on helping brokers drive business by adding more value to their efforts to promote and grow the broker channel. Brokers will see more programs coming to life under MCAP’s Bank on Brokers initiative, which was launched back in May of this year. The goal of the program will be to arm mortgage brokers with tools and skills to differentiate themselves. Some highlights will include marketing the benefits of using a mortgage broker (Choice, Advice, Service, and Savings), webinars on “How to build a social media site,” and soft skills sales training. MCAP is committed to the broker channel and will continue to invest in it for years to come. In addition, MCAP will continue to focus efforts on ensuring rates are competitive, product offerings are diverse, and brokers are compensated fairly for quality business In summary, success in this business is about trust and true partnership. We need to work as one in order to drive growth to the broker channel. 2012 will be challenging for all of us, but I also believe it will be extremely rewarding if we unite our efforts and work together.

Gino Tieri

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Lenders on Brokers

Merix

Boris Bozic, President

Boris Bozic

Overall performance In terms of overall performance, first of all I want to congratulate MCAP for the tremendous strides they’ve made. We placed second and we’re proud for our overall efforts considering the challenges we had in 2011, and quite frankly the challenges our industry faced over the last 12 months. Merix is pleased with our results and will continue to strive to make sure our performance is always improving to ensure greater customer experience in 2012. Interest rates In terms of interest rates, the results surprise me. We monitor industry interest rates very closely, both published and unpublished. Our desire is to offer our customers competitive rates but the reality is that at times our competitors will attempt to buy market share, which forces us to stand aside when there’s irrational pricing in the market. If brokers recognize Merix as being the absolute best in terms of interest rates, I’m flattered, but I think they may have been mistaken. Broker support We’re very pleased to capture the gold medal. To me this encompasses an umbrella of services that a lender provides. We have always tried to put the customer first while being able to respond to changes in the industry. It is extremely important to give the brokers the necessary tools so they can compete in a very highly competitive marketplace. BDM support We’re delighted again to be recognized as having the best team of business development people in the industry. Our team works diligently to ensure they bring value to our customers. We have always prided ourselves as being different from the competition. Every visit and phone call that Merix makes is to identify business opportunities not only for Merix

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Financial, as a lender, but for you, our customer. We will continue to focus on providing value to your business going forward. We are very thankful to be recognized by the industry as having the best business development team in the field. Transparency of commission structure We are very pleased for the tremendous growth in this category. A core component of Merix, and how we present ourselves to the market, revolves around transparency of commission, long- term growth and future business value for the originator. I think the market is finally coming to the understanding

Merix Categories (in order of importance)

2011

2010

Change +/-

Turnaround times

3.84

4.23

-0.48

Underwriter support

3.89

4.48

-0.59

Overall service

4.05

4.21

-0.16

Interest Rates

4.34

3.85

+0.49

BDM support

4.16

4.78

-0.62

Product range

3.85

4.41

-0.56

Satisfaction with credit policy

3.98

4.44

-0.46

Broker support

3.97

3.60

+0.37

IT/technology

3.78

4.54

-0.76

Transparency of commission structure

4.35

4.44

-0.09

OVERALL

4.02

4.44

-0.42

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that Merix is a lender who is truly trying to create value for the broker. Garnering these results, and knowing our customers have a solid understanding on how they can earn more money over the lifetime of the mortgage, is very rewarding to all the staff at Merix Financial. Overall satisfaction to credit policy Satisfaction to overall credit policy is a reflection on some of the changes which have taken place in the last 12 months. The world has changed in terms of ‘what is’ and ‘what isn’t’ a “Type A” mortgage. I think there is an education component, not only from the brokers’ standpoint or customer but from us as well. To receive the silver medal within this category is pleasing. Our customers and the market have identified that we have tried to integrate and identify the changes that have taken place and to do it in such a fashion where it is there for all parties concerned. Total medals We’re pleased with the overall results considering that 2011 was a year of transition for Merix. It was a year we introduced new technology, across our entire company including our partners at Paradigm Quest. It was also a year where significant changes were made in terms of staffing. Considering the amount of changes that took place, to be able to score and capture seven medals overall is pleasing. Clearly there are areas of improvement and certainly areas where we may have regressed. We will look to identify solutions on how we can improve and continue to meet the needs of our customer.

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Scotia Mortgage Authority Categories (in order of importance)

2011

2010

Change +/-

Turnaround times

3.78

4.27

-0.49

Underwriter support

3.97

4.50

-0.53

Overall service

3.83

3.86

-0.03

Interest Rates

3.78

4.58

-0.80

BDM support

3.52

4.17

-0.65

Product Range

4.21

4.17

+0.04

Satisfaction with credit policy

3.87

4.00

-0.13

Broker support

2.92

4.20

-1.28

IT/technology

3.61

3.86

-0.25

Transparency of commission structure

4.29

3.30

+0.99

OVERALL

3.78

3.45

+0.33

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Lenders on Brokers

First National Categories (in order of importance)

2011

2010

Change +/-

Turnaround times

4.34

4.85

-0.51

Underwriter support

4.02

4.36

-0.34

Overall service

4.08

4.52

-0.44

Interest Rates

3.94

4.25

-0.31

It is important to receive feedback and recommendations from the broker community on how we can continue to evolve and support the needs of the broker in this ever-changing mortgage market. We’d like to thank CMP for supporting the broker network and providing ongoing insights and opportunities for discussion. The CMP Brokers on Lenders Survey has truly established itself as a way for brokers to provide constructive feedback to their lending partners. Scott McKenzie

Street Capital

Paul Grewal, President BDM support

3.93

4.09

-0.16

Product Range

3.72

3.85

-0.13

Satisfaction with credit policy

3.81

4.11

-0.30

Broker support

3.40

4.32

-0.92

IT/technology

4.13

4.11

+0.02

Transparency of commission structure

4.42

4.48

-0.06

OVERALL

3.98

4.59

-0.61

First National Financial

Scott McKenzie, Vice-President, Residential Mortgages Delivering outstanding service is a founding principal at First National, and we are always honoured when our broker partners acknowledge our efforts. Time and time again, brokers have told us that response times are their No. 1 priority and are critical to ensuring they maintain a competitive edge. We are delighted they voted us their No. 1 lender in this category, and we thank you for this.

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Our underwriters, our regional vicepresidents and our management are continually looking to our broker partners for direction on increasing our overall service levels. For example, we make a point of working closely with our broker partner supporters by holding regular broker feedback sessions across Canada, which we find invaluable to building and improving Street’s service levels, products and programs. We are very pleased to see that implementing recommendations from these feedback sessions has given us such a strong lift in the standings by our broker partners. We listen to our broker partners and we’re very proud to see that they have rewarded us with this recognition. BDM support We’ve moved up considerably over this past year from a standing of eighth to a silver medal winner. We measure our sales team against our Service Level Promise (SLP) and ensure we meet or exceed our broker’s expectations. We also recently hired Greg Gray, executive vice-president, National Sales who brings a wealth of sales management and professional training experience to our organization. Broker support We are working to create value for our broker partners in providing them with support and training that assists them in growing their business. This past year we are quite pleased

Paul Grewal

Keeping you enlightened at every step of your deal.

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Street Capital Categories (in order of importance)

2011

2010

Change +/-

Turnaround times

3.99

4.27

-0.28

Underwriter support

3.95

4.10

-0.15

Overall service

4.13

3.00

+1.13

Interest Rates

3.97

4.55

-0.58

BDM support

4.14

4.06

+0.08

Product Range

3.63

3.20

+0.43

Satisfaction with credit policy

3.88

3.85

+0.03

Broker support

3.67

3.20

+0.47

IT/technology

3.39

2.91

+0.48

Transparency of commission structure

4.17

4.36

-0.19

OVERALL

3.89

3.41

+0.48

to have jumped from a standing of seventh to a silver medal winner. We have been able to broaden our training and information seminars since we are one of the few lenders to work with CMHC, Canada Guaranty and Genworth. By leveraging these resources, we believe we have become a valuable resource to our broker partners. Overall Service We couldn’t be more proud of our accomplishment in this category moving from tenth spot last year to a silver medal winner this year. We believe that our Service Level Promise (SLP) is an integral part of

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Lenders on Brokers

“ we strive to hire dedicated and service excellenceoriented senior underwriters that understand our broker partner’s business ” our value proposition for our broker partners which clearly states underwriting and business development service standards. In addition, we introduced Express 4.3 in January 2011, in partnership with D+H that enables brokers to have real time access to deal and condition statuses through Expert. Turnaround times Street understands that our broker partners have a client waiting for an approval and that we directly impact their ability to look professional to their clients. We strive to hire dedicated and service Categories (in order of 2011 2010 excellence-oriented senior importance) underwriters that understand our broker partner’s Turnaround times 3.96 3.56 business. We believe we’ve built the right team to provide Underwriter support 3.93 3.55 a fast and personalized underwriting experience for Street broker partners. Overall service 3.99 3.75

ING Direct

Interest rates We understand the competitive pressures our broker partners are facing. We’ve strived to offer the best rates to our broker partners balancing that with service excellence. We believe that by offering brokers rate specials on terms that may be more suitable for a client’s needs that we enable broker partners to grow their business.

ING Direct

Kim Luxton, Director, ING DIRECT Broker Sales 2011 has turned out to be another dynamic year in the mortgage industry. Canadian

Change +/-

+0.40 +0.38 +0.24

Interest Rates

3.76

4.54

-0.78

BDM support

3.93

4.25

-0.32

Product Range

3.65

4.25

-0.60

Satisfaction with credit policy

3.89

3.50

+0.39

Broker support

3.54

2.95

+0.59

IT/technology

3.40

2.87

+0.53

Transparency of commission structure

4.26

4.00

+0.26

OVERALL

3.83

3.28

+0.55

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Lenders on Brokers

First Line Categories (in order of importance)

2011

2010

Change +/-

Turnaround times

3.49

3.40

+0.09

Underwriter support

3.59

4.00

-0.41

Overall service

3.61

4.00

-0.39

Interest Rates

3.27

3.20

3.94

4.44

-0.50

Product Range

4.30

4.11

+0.19

Satisfaction with credit policy

3.67

4.23

-0.56

Broker support

3.59

2.93

+0.66

IT/technology

3.42

3.81

-0.39

Transparency of commission structure

4.22

3.55

+0.67

OVERALL

3.71

3.337

+0.34

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Kim Luxton

+0.07

BDM support

economic predictors are moving in a better direction, however, our mortgage market is still faced with uncertainty given our record of low interest rates, fierce competition, and tight profit margins. As a result, efficiencies and profitability will continue to be a priority as well as service and product enhancements. Mortgage Brokers can count on ING Direct’s commitment to our brand of “simple and transparent.” Our 2012 planning is well underway and I am pleased to see the results of this survey as it further validates that our priorities are aligned with what brokers are looking for. Our focus on service and enhanced credit guidelines has been

“ Canadian economic predictors are moving in a better direction, however, our mortgage market is still faced with uncertainty given our record of low interest rates, fierce competition, and tight profit margins ” instrumental in supporting our goal of making it simple and easy to do business with ING Direct.Communication is another factor to our success that we are proud of. We have introduced deal tracking automated emails along with a new menu of training programs. It’s all about delivering the “wow” factor so that brokers and agents can pay forward that same service. We are also setting up regional underwriters, starting with the relocation our existing Quebec underwriters currently housed in Ottawa and moving them to Montreal. We are thrilled that ING Direct ranked in all categories again this year. We have made significant gains in many of the categories from the 2010 results. Receiving a bronze in Satisfaction Index on Overall Credit Policy as well as achieving a fifth place ranking in Overall Performance is a great honour for us. We take your feedback seriously and strive to be your No. 1 choice for mortgages. This year we have added some great products and enhancements and we are not done yet so stay tuned. ING Direct would like to thank our valued broker partners for their feedback and support. As an extension of our sales force, we are committed to helping you grow your business. Mortgage brokers have set the bar high for delivering quality products and services to consumers and it is that

Martin Reid

Can you spot the MERIX Mortgage Originator?

As well as providing innovative products and lending programs, and an industry-leading compensation structure that builds a book of business with ongoing value, Merix Financial has an exclusive status program for approved Originators. The MERIX Centre of Xcellence offers you a host of privileges and special benefits, such as a dedicated senior underwriter, express solicitor instructing, Quarterly Bonus reflecting your status level, and much more.

Find out how rewarding partnering with MERIX can be. Call 1-877-637-4911 or email info@merixfinancial.com today.

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Home Trust

awarded medals for our underwriting and BDM support is extremely rewarding. It reinforces that our ongoing commitment to servicing our brokers’ needs really makes a difference.

Categories (in order of importance)

2011

2010

Change +/-

Turnaround times

3.82

4.16

-0.34

Underwriter support

4.05

4.40

-0.35

Overall service

3.91

3.46

+0.45

Interest Rates

3.16

3.86

-0.70

BDM support

4.05

3.44

+0.61

TD Broker Services

Product Range

3.66

4.07

-0.41

Categories (in order of importance)

2011

2010

Change +/-

Satisfaction with credit policy

Turnaround times

3.22

3.89

3.70

+0.19 Underwriter support

2.91

Broker support

3.55

3.46

+0.09 Overall service

3.05

IT/technology

2.91

4.04

-1.13

Transparency of commission structure

3.93

4.23

-0.30

Interest Rates

3.28

OVERALL

3.69

3.42

+0.27

BDM support

3.29

Product Range

3.69

Satisfaction with credit policy

3.34

Broker support

2.60

IT/technology

2.78

Transparency of commission structure

4.13

OVERALL

3.23

customer-centric philosophy that makes ING Direct and brokers the preferred mortgage choice.

Home Trust

Martin Reid, President As one of the few lenders focused primarily on alternative lending, we are very pleased to have been recognized in all categories of the CMP Brokers on Lending Survey. To be

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Underwriter Support Underwriter support was voted the second most important criteria in the survey, so Home Trust is thrilled to have received a silver medal in this category. Our underwriters are among the most experienced in their industry, which is critical as there are often grey areas in the

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877.499.4076

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alternative lending market. This, plus direct access to a dedicated underwriter really helps strengthen our relationship with broker-partners. BDM support Home Trust was praised for providing unmatched support from BDMs, moving from 10th place in 2010 to an outstanding third place finish this year. With newly appointed National Sales Manager Vince Agozzino at the helm, there is a continued focus on building BDM presence in the marketplace to improve our broker support. We continually strive to improve on what makes Home Trust unique: our common sense approach to lending in the alternative market. Our recent efforts focused on streamlining internal systems, providing educational webinars, and rebuilding a strong sales team. As we look to the future we will be implementing innovative new technology solutions to provide greater access, support, and tools for broker partners.

National Bank

Mark Squire, Director, National Bank Broker Services National Bank is very pleased to be recognized in the Top 10 broker lenders in Canada for 2011. Over the past year we have experienced significant growth in our market share, and appreciate the support and loyalty we have received from brokers throughout the entire country. We won a bronze for the category of product range, and we are extremely proud of this recognition. National Bank continuously strives at offering innovative and marketleading products for all of our clients. From the award-winning National Bank All-in-One to our cash-back offerings and rental program, these are only some of the niche products that are available to our broker partners to help you grow your business. These and other products are unique offerings that support brokers in building strong relationships with their clients by being able to offer choice and flexibility for virtually all deal types. Looking back on fiscal 2011, many lenders and brokers have had challenges and

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National Bank Categories (in order of importance)

2011

2010

Change +/-

Turnaround times

2.93

Underwriter support

3.16

Overall service level to brokers

3.09

Interest Rates

3.52

BDM support

3.29

Product Range

4.07

Satisfaction with credit policy

3.19

Broker support

2.60

IT/technology

2.78

Transparency of commission structure

4.12

OVERALL

3.23

Mark Squire

successes. Placing in the top 10 is a great success for us but so is our 56.1 per cent broker market share growth in a market that has contracted. We could not have done this without the support of the brokerage community and our own internal partners. National Bank is committed to the broker channel. We will continue to strive for ways to enhance our products, servicing and partnerships with our brokers. All of us at National Bank thank you for your support and we look forward to working with all of you for many years to come. CMP

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Business Development Managers

to be or no 48

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Business Development Managers

ot to BDM mortgagebrokernews.caâ&#x20AC;&#x201A;â&#x20AC;&#x201A;

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Business Development Managers

As brokers grapple with a slowing market, many are finding relationships with BDMs are also in flux. As Vernon Clement Jones finds out, that may be by design

hen Equity Financial Trust launched in March, its CEO Nick Kyprianou quietly embarked on a little experiment. Could an upstart lender jump out of the starting blocks, attract and retain broker business, and do it all without the power of a Business Development Manager (BDM)? Sales numbers for the alternative lender provide a clue to the outcome. “April was a successful month for us and we hit our target,” the top executive told CMP, pointing to a book split between refinances and new purchases. That growth continued into the rest of the lender’s initial quarter, with Equity Financial recording just over $20 million in originations. Commitments to fund another $14 million were also in play. “We did quite well without a BDM,” he said. “The way the BDM is today, I don’t see them as adding a value proposition, or rather, it’s not a measurable, verifiable value proposition.” The thinking places the industry veteran in the increasingly vocal minority of lenders and brokers now questioning the role of business development managers, who have over the last 10 to 15 years become all but indispensable players in the mortgage process. That isn’t to say the silent majority aren’t making themselves taking note of the ways lenders

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“ for my business, at least, a relationship with the BDM is very important, and the ease of access to that BDM is very important. But despite the promises that you hear from pretty much every BDM about being there to help a deal if it gets into trouble, I haven’t found that to be the case with many of them anymore. I’m now bypassing the BDM and going to the underwriter ” are switching up the mortgage originations process. The re-jigs – most notably, transferring key BDM duties to underwriters and minimizing their mediating roles – are all about trimming costs and maximizing their support for brokers now fighting in the trenches of the rate war. Some of those changes haven’t sat well with brokers, pointing to a growing number of BDMs less willing or, in fact, less able to intercede on their behalf if a deal comes up against the brick wall of underwriter objections. “Relationships with BDMs have changed as much as the BDMs have themselves changed,” said Bradley Shearling, a branch executive for Centum One Financial in Toronto. “For my business, at least, a relationship with the BDM is very important, and the ease of access to that BDM is very important. But despite the promises that you hear from pretty much every BDM about being there to help a deal if it gets into trouble, I haven’t found that to be the case

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Business Development Managers

with many of them anymore. I’m now bypassing the BDM and going to the underwriter.” That may, in fact, be the plan of some broker channel lenders, looking to streamline their operations and attract new brokers to make up for falling funded volumes in several markets. It’s a chief reason why Kyprianou is advocating for a sea-change in the way BDMs are deployed, a suggestion many other lenders, both A and alternative, seem to be taking to heart. “We don’t use them now,” Kyprianou told CMP, “but we are planning to introduce BDMs next year. But their duties will be focused on where they are really needed: bringing in new business and troubleshooting in cases where we see a significant drop-off in deals being submitted by an existing broker partner and need to find out what we need to do to change that. In all other cases, our underwriters will deal with existing broker clients directly. “What the BDMs won’t be doing is visiting those brokers that we already have good existing relationships with – those where the broker is sending in a good flow of business each month. Where is the value proposition in having the BDM going to see that client?”

“ there are individuals out there who don’t necessarily see business development managers as adding value and, erroneously, they’re thinking cuts can be made to BDM teams without sacrificing deals. But as a seasoned BDM, I know that brokers continue to remain very loyal to their BDMs, so when that relationship is severed, the broker has to make a decision about whether to follow that BDM or to stay with the lender. They’ll often go with the BDM, unless their relationship with the underwriter is a very strong one ”

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That hasn’t yet become the thinking of most lenders, where BDMs remain a key go-between for the broker and the underwriter. Still, that relationship is changing at some institutions, if not his own, said Harry Singh, residential sales manager at Equitable Trust. “There are individuals out there who don’t necessarily see business development managers as adding value and, erroneously, they’re thinking cuts can be made to BDM teams without sacrificing deals,” he told CMP. “But as a seasoned BDM, I know that brokers continue to remain very loyal to their BDMs, so when that relationship is severed, the broker has to make a decision about whether to follow that BDM or to stay with the lender. They’ll often go with the BDM, unless their relationship with the underwriter is a very strong one.” That may, in fact, explain what, if any, move there is to reduce the reliance on BDMs to prevent pipeline disruptions. By promoting direct underwriter-to-broker relations, some lenders may more effectively retain ownership of their brokerclients and minimize their defections given the increasingly short turnover rates, brokers are increasingly concerned about. “There are lenders that seem to be going through BDMs like water,” said Shearling, in the business for just under five years – long enough to pick up on the trend. “Turnovers of 12 months, or even shorter, are becoming more common.” Brief stints may be a reality not only for BDMs but also underwriters, said Chris Hoeppner, the regional VP of sales for Street Capital in British Columbia’s Fraser Valley and the interior. More than three years at the monoline, he doesn’t fit that bill. “In the case of BDMs leaving a lender, it’s often a case of a lender’s product having changed and it losing its relevance and then being harder to sell,” Hoeppner told CMP. “Or it could be a case of the territory being difficult to sell in based on the local competition or product mix – that’s another factor that might contribute to the turnover the industry has seen in this position.” While not specifically speaking to turnover rates, Toronto broker Calum Ross suggested BDM performance is often affected by those same conditions and remuneration should be as well. “I am very fortunate to have worked with competent BDMs who are generally responsive and proactive in their approach to problem resolution,” Ross, the senior VP of The Mortgage CentreMortgage Professionals Inc. “I think one of the biggest challenges for the management of BDMs is the need to align their compensation with performance metrics that are within their control. Many exceed, or fail to meet, performance targets

Nick Kyprianou

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Business Development Managers

based on working in the right territory and/or a change in pricing or policy by the lender they represent. I also believe BDMs should be given discretion to make exceptions on mortgage deals but only if they are also held responsible if the mortgage ends up in default.” Few lenders have taken that tack. Still, Street Capital has resisted the move to restrict the intermediary role of BDMs, still called upon for help by brokers grappling with the underwriting on a particular file. “As I see it, the goal is still to help brokers fund more business and help Street fund more quality deals,” he said. It means both Hoeppner and Singh still act as go-betweens, fielding broker calls about funding decisions, querying them with underwriters and escalating those challenges when necessary. “It’s a balancing act,” said Hoeppner, who actively interacts with all 40 of his main accounts. “You have to see it from both sides.”

Still, ultimately, that intermediary role has the power to place a wedge between underwriter and broker, said Kyprianou. “If anything, it could screw up the relationship the broker has with the underwriter if the BDM is over-promising something that they can’t deliver,” he said. “It creates a lot of ‘us versus them’ mentality and that creates friction between the broker and the underwriter.” Under the model Kyprianou plans to implement next year, most existing clients will deal exclusively with his underwriting team. Where disputes arise, brokers can themselves ask for a supervisory review of a funding decision. His underwriters will also take responsibility for more proactive communication with brokers, creating the kind of relationships more commonly associated with broker-BDM relations. That is, in fact, the idea. But replacing BDMs with underwriters may not be that easy.

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Business Development Managers

“ underwriters and brokers don’t tend to speak the same language. BDMs do a good job of translating: they understand the perspective of the broker; they know the brokers; they have an interest in seeing the broker fund deals; they also know the lender’s underwriting guidelines and what the underwriter needs to approve the deal ” “Underwriters and brokers don’t tend to speak the same language,” said Singh. “BDMs do a good job of translating: they understand the perspective of the broker; they know the brokers; they have an interest in seeing the broker fund deals; they also know the lender’s underwriting guidelines and what the underwriter needs to approve the deal.” There are other considerations: “BDMs make themselves available outside of business hours to discuss deals whereas underwriters are generally done at five.” Singh added. “That would translate into lost business for companies relying only on underwriters to receive deals. And as the number of lenders increases in the marketplace, companies operating without BDMs struggle to market

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themselves against companies that have BDMs actively calling on existing and new clients and able to keep abreast of industry developments and competitor actions. Underwriters are in the office.” Hoeppner echoed the sentiment. “We still have BDMs that spend just as much time with the existing clients as with the new ones on account development,” he told CMP. “BDMs tend to be outgoing personality types, like brokers, and that helps, too. “The role of the RVPs is to solicit new broker accounts and identify new target brokerages/agents to develop business with, set targets with each account, assess brokers’ level of satisfaction and raise concerns with management, and provide all product, underwriting and marketing info to brokers.” While industry lenders have traditionally relied on extroverts to reach out to brokers, build relationships and keep deals coming their way, those traits aren’t exclusive to business development managers, said Kyprianou, pointing to an industry in the early 1990s that functioned without those dedicated salespeople. “There are underwriters who have the necessary communications skills to reach out to brokers and to understand where they’re coming from,” said the industry veteran,

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Business Development Managers

“ there’s danger in undervaluing the BDM’s role. I think a lender looking to cut out BDMs would need to hire twice as many underwriters to maintain and grow their business. If somebody has a very good relationship with their underwriter, the loss of a BDM won’t cause them to move, but a very good relationship with a BDM can certainly play a key role in broker loyalty ”

himself an underwriter between 1986 and 1995. “So they have those skills and also the knowledge about underwriting guidelines, (which) often BDMs don’t have.” Even in the drive to manage costs and streamline the originations process, the industry might compromise profitability with any move to phase out BDMs, suggested Hoeppner. “There’s danger in undervaluing the BDM’s role,” he told CMP. “I think a lender looking to cut out BDMs would need to hire substantially more underwriters to maintain and grow their business if the role of sales and underwriting were to fall on one individual. If somebody has a very good relationship with their underwriter, the loss of a BDM may not cause them to move, but a very good relationship with a BDM can certainly play a key role in broker loyalty. “Our role and mandate is to be a trusted professional to our mortgage brokers.” CMP

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Broker Education

Timeto talk testing

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Broker Education

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Broker Education

Brokers looking to raise the bar in the mortgage industry are taking aim at agent testing standards, Vernon Clement Jones reports

Top: Angela Wong-Liao Middle: Kevin Power Bottom: Joe White

hen Angela Wong-Liao came over to the broker side in 2001, she crammed her years of banking experience into a bag and brought it with her. Considering she’d toiled for nearly three decades as both a branch and mortgage development manager, she may have needed a porter to lift it. “You can’t spend 28 years in the banking industry and not learn a thing or two,” says the Toronto Invis mortgage agent, “so I brought that experience to the industry when I came. Few of the people now being licensed as mortgage agents have that kind of related experience. In fact, there are many that have no related experience whatsoever.” Wong-Liao isn’t the first to make the observation. She’s also not the first to suggest the industry and its regulators need to do something about it. The mortgage professional is among those seeking real changes to the way hopefuls – young and old – gain a license to practice in Ontario and other provinces now regulating the industry. While most want to see the testing and class-room instruction doubled or even tripled from the current standards, others – Wong-Liao included – want to see the first barrier to entry put in place well before students hit the books. “I would like to see a prerequisite put in place that mandates that candidates need to have at least one year’s experience in a related financial position in order to get their license,” she tells CMP. “Being able to come to mortgage brokering without any related experience is a bit of a joke.” Under Ontario’s Mortgage Brokerages, Lenders and Administrators Act, 2006, and regulations, would-be mortgage agents must be 18 or older, Canadian residents, “authorized by a Mortgage Brokerage to deal in mortgages,” and “work for only one Mortgage Brokerage.” They’re also required to meet mortgage agent educational requirements, generally a 42-hour course, in-class or online, focused on providing an “understanding of the mortgage brokerage industry and an ability to perform the agent’s role in the mortgage application process.” Class subjects run from a primer on the relevant legislation to consumer protection and

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“ I’m not saying it needs to be three months of solid testing, but testing has to be a big part of it, because it filters out the individuals who should not be in our industry. And there are a lot of them ” ethic. Regardless of the course provider, all programs culminate in a final examination, usually three hours. Pass rates vary from institution to institution, although critics charge those figures suggest what testing there is needs to be more rigorous. “Is a three-hour exam good enough? I don’t think so,” Bruno Pileggi, broker-owner at The Mortgage Centre - YNMP, tells CMP. “Anyone can take a three-hour test, and in keeping the bar that low, you’re opening the door to anyone just coming into the business. It has to be a little more extensive. I’m not saying it needs to be three months of solid testing, but testing has to be a big part of it, because it filters out the individuals who should not be in our industry. And there are a lot of them.” Brokers across Ontario, Alberta, Saskatchewan and British Columbia, are saying much the same thing, although legislative requirements in those provinces remain the highest in Canada. Like Pileggi, they’re lobbying for a written testing requirement that would likely follow those of other regulated financial services professions, mandating a series of written examinations. The tests would escalate in difficulty, each the prerequisite for the following exam. Several industry veterans back adoption of the chartered accounting model, which not only requires articling, an undergraduate degree and, in most provinces, additional education, but also a three-day “Uniform Evaluation.” Its pass rate also varies from province to province, with the

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 An experienced REMIC instructor delivers  Course Length: From 1 week to 6 months the course Your new agent can complete the course in as  Course Length: 1 OR 2 weeks little as one week, or take up to six months

 Day 1: In-class This session provides your potential new hires  Textbook RMAC provides students with the best selling with an in-depth understanding of the industry, text, Mortgage Brokering in Ontario, Agent product types and options, the regulatory Edition, Sixth Edition, online. Students can environment and sets the framework for the literally begin reading as soon as they enroll! remainder of the course. Your potential new We then courier a hard copy of the textbook to hires will have easy access to the instructor the student. throughout the course, ensuring quick answers to any and all questions.  Day 2 – 6: Online Online video tutorials, discussions, quizzes assignments. These activities ensure that information is understood and identifies areas that require extra attention by instructor.

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2010 figure for Ontario sitting just above 70 per cent for first-time test-takers. Still, beefing up Ontario’s mortgage agent licensing standard may be only part of the solution, concede critics, suggesting that brokerage hiring standards also have to be put under the microscope. “First of all, regardless of who’s teaching the course and whether it’s a week in school or one day a week for 12, 13 or 14 weeks, nobody comes out of the course with knowledge of what it really takes to make a success of it in this business,” says Kevin Power, president of Power Mortgages Inc., an independent 10-member team operating in the Kitchener-Waterloo market. “They’re basically just going to come out with basic knowledge around debt service ratios. Most of the serious learning is really done on the frontlines.” It suggests that brokers are largely responsible for the kind of knowledge gaps evident in many young mortgage professionals, he says. It also suggests that principal brokers have some work to do. “I do most of the agent training myself, everything including helping agents package deals, underwrite them, sign commitments, collect documents and meet lender funding requirements,” he tells CMP. “I don’t think additional training is going to help people to be more prepared when entering into the industry. What would really help is if brokers give new candidates and agents that kind of hands-on guidance. It’s a commitment.” A leading industry trainer is also asking brokerages to up their collective game in order to advance the viability of the average mortgage

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agent’s career. It’s too often begun and ended in the same year. “Each provider must test students on FSCO’s Mortgage Agent Qualifying Standards (MAQS), and from REMIC’s perspective, our exam is very thorough and demanding,” Joe White, president of the Real Estate and Mortgage Institute of Canada, tells CMP. “Our 47-hour course incorporates all of the MAQS, and prepares students not just for the exam, but for their career. “When it comes to hiring agents, brokerages that do their due diligence, including undertaking a rigorous interviewing process, can choose the candidate that they feel meets their needs. Simply because an agent is on commission doesn’t mean that they shouldn’t have to go through the same rigorous hiring process as a person applying for a salaried position. By incorporating a thorough interviewing process the industry will increase the level of professional agenvts.” Wong-Liao is advocating for the same kind of active screening of prospective candidates – above and beyond educational prerequisites and tougher testing for agents. “I always encounter young agents who are just lost,” she tells CMP. “They don’t know how to network. They have no concept of how to be a self-employed business person and they’re coming to mortgage brokering because they may have lost their job and it’s easy to get qualified as an agent. I think that brokers need to start using an aptitude test for those looking to become agents to make sure they have what it takes to go out and attract work for themselves and manage their businesses.” CMP

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Contact. Scott Clarke 416 644 8740 x 237 scott.clarke@kmimedia.ca Trevor Biggs 416 644 8740 x 236 trevor.biggs@kmimedia.ca

Business Marketing

In the first instalment of his latest series, Doren Aldana explores some of the advantages for mortgage brokers of attracting Realtors as referral partners

Realtor marketing secrets W

hen it comes to attracting referral partners, you’ve got lots of options. There are financial planners, accountants, lawyers, etc. So why bother marketing to Realtors? That’s a good question. Here are five unique advantages worth considering: 1. They have high referral capacity According to a recent survey, 70 per cent of the homes sold in the Canada are sold through a Realtor. Furthermore, at least 70 per cent of homebuyers need a mortgage. What does it all mean? Simply put, Realtors hold the keys to the castle when it comes to capturing purchase business. They’re in direct contact with more buyers than any other referral partner out there. Think about it for a moment. What other potential referral partner do you know of that has a higher capacity to send you more purchase business than Realtors? Exactly. Not to mention the fact that if you don’t partner with Realtors, your only other option for capturing purchase business is to market directly to consumers – which usually involves the much more costly, painstaking process of mass marketing, otherwise known as “spraying and praying.” 2. They have high influence They’re the go-to trusted adviser for homebuyers and are in a position to endorse and recommend other service providers – such as yourself – who that client may need to complete the transaction. Since these clients are referred to you, the chances of them “rate shopping” go down dramatically.

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develop your uniqu e val ue proposition

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3. They are contacted first Homebuyers usually call the Realtor before they call their mortgage professional. Put another way, the Realtor is a little bit higher up on the totem pole in terms of the order in which your respective services are utilized. If it were the other way around, Realtors would be banging down your door to work with you. 4. They have “buyer bait” What are homebuyers looking for? They’re looking for properties for sale! Who has properties for sale? The Realtors! So the super-bait for a motivated homebuyer is, and always will be, listings. Let’s take it one step further. What if you could help the Realtor increase their listings? Increase not only the number of listings but also the quantity of buyer leads for each listing. Now you no longer have to wait, hope, and pray for the odd crumb to be thrown your way. Instead, you’re a “partner” who has full permission to follow up on every single buyer lead who inquires on the Realtor’s listings. Now that’s working smart! 5. They need YOU Every Realtor – especially top producers – need a mortgage professional on their team to help them gain more control of their clients’ experiences. They need a mortgage adviser who knows what they’re doing, who doesn’t just meet expectations but exceeds them and

consistently creates raving fans who send more referrals and repeat business. The Realtor needs you – a true professional who can get the job done, while providing counsel and advice every step of the way. As you can see, the purchase market is the most reliable source of mortgage transactions. And out of all the other referral sources, Realtors are the highest leveraged, most profitable source of hot, motivated homebuyer leads and therefore, provide an unparalleled opportunity to penetrate the purchase market with the least amount of time, energy and money. The question is, how do you capitalize this opportunity? Well, before we get into all the finer details on exactly what to do, let’s take a moment to address the elephant in the room: Why Realtors hate mortgage brokers and how to set yourself apart as an irreplaceable team member. It’s true. Most Realtors are absolutely repulsed by the typical mortgage broker who shows up unannounced at their open house or calls them up cold asking for referrals. They’re sick and tired of the same old song and dance about “great rates” and “great service.” They get the gag reflex every time a mortgage agent shows up at their office with rate sheets and doughnuts. It’s a classic case of marketing incest: everyone’s doing the same thing with ever decreasing results. If you’re starting to feel used and abused by bossy, arrogant Realtors who only send you a crap

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Business Marketing

“ today’s Realtors are looking for a mortgage professional with more than just great rates and excellent service – that’s a baseline expectation. They want someone who understands their biggest challenges and is willing to go the extra mile to deliver unique solutions ”

your door to do business with you and endorse you to all their clients. What a refreshing change that would be. Ok, are you ready for me to hand you my very best, most effective Realtor marketing tools, systems and strategies, guaranteed to generate a flood of red-hot Realtor referrals? If so, let’s giddy up and get going…

How to win Realtors’ hearts and coveted referrals for life Throughout this article series, I am going to share several powerful strategies on how to set yourself apart from the pack and become an irreplaceable asset on your Realtor’s team. You’re going to learn how to be a refreshingly welcome guest (instead of deal every once in a while (which are almost an unwelcome pest) and have Realtors be open and impossible to close) and still expect you to be on receptive to you, eager to hear you out, compelled call 24/7, then it’s high time you started providing to work with you, and most importantly, some unique value. Think about it for a moment. committed to send you referrals. Give me one reason why a Realtor should As I mentioned earlier, today’s Realtors are recommend you over any and every other mortgage looking for a mortgage professional with more than professional out there? I got news for you: great rates and excellent service. That’s what they If you don’t have a clear, concise, wellexpect as a minimum standard of performance. articulated unique selling proposition, you are by default, a replaceable commodity. Today’s Realtors are looking for a mortgage professional with more than just great rates and excellent service – that’s a baseline expectation. They want someone who understands their biggest challenges and is willing to go the extra mile to deliver unique solutions. Now, the question begging to be asked is, “What is the No. 1 biggest challenge every Realtor faces?” No, it’s not that they need better financing options, lower rates, snazzier feature sheets or a better economy. The single most important factor to their success in any market is their ability to attract quality listings and sell them fast at top dollar – period. That’s it. As simple as that sounds, very few Realtors ever unlock this mystery. The rare few who do, become the envy of the entire industry, enjoying an income most only dream about. What if you – the mortgage professional – could address this No. 1 challenge by providing your Realtors with a selection of highly effective tools, systems and templates, specifically designed to help them attract more quality listings and sell them fast, for top dollar? Would that set you apart from the pack? Would that give you a greater position of strength? Would it make you irreplaceable? You better believe it baby. In fact, if you’re able to provide this kind of unique value, you’ll have Realtors banging down

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Marketing

They also want someone who understands their biggest challenges, someone who takes the time to ask them the important questions, and digs deeper than the service level to identify their pain points, challenges, frustrations, and the things that keep them up at night. It’s important that you find out, first and foremost, what those challenges, frustrations, anxieties, and pain points are. Next you need to provide unique solutions to resolve those challenges for them. Realtors want someone who is eager, able, and willing to help them attract more quality listings and sell them fast, for top dollar. Let’s face it, if a Realtor is serious about making big money, the path of least resistance will always be through attracting and selling quality listings. Yeah, you can make a few bucks being a buyer’s agent, but the big money is in having and selling listings. That is where you have control of the transaction; that’s where you’re able to make double-end commissions. That is where you’re able to attract a slew of buyer leads that can be monetized as buyers and/or sellers. The lion’s share of the cash has always been and always will be in having and selling listings. You will win the hearts of Realtors if you’re able to help them to first, attract more quality listings and second, get more buyer leads for those listings so they’re able to sell them faster for top

dollar. Based on the law of large numbers, the more buyer leads they generate for each listing, the higher the likelihood they will stimulate a bidding war and get a quick sale at – or above – asking price. If you’re able to show them how to do that more effectively and efficiently, then I don’t care if they’ve been married to their mortgage broker for 20 years, they’re going to be eager to hear you out and in many cases, do business with you. Now the pregnant question is, “How the heck do you help Realtors attract and sell more quality listings?” I’m glad you asked. In my next article, I’ll reveal the four best ways to capture buyer leads and how you can set up an automated marketing system to fill your pipeline with more buyer leads than you can handle! Stay tuned… About the Author: Doren Aldana is considered by many to be Canada’s leading Mortgage Marketing Coach. Since 2005, he has been dedicated to helping mortgage professionals attract more clients with less effort, regardless of market conditions. For a free online workshop on “How to Turn Your Realtors’ Listings into a Flood of Red-Hot Mortgage Leads,”visit: www. UltimateRealtorMarketingSystem.com. CMP

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Profile Insight

Tricks of the trade Sharing best practices with brokers to help build the profile of the industry and gain market share is the proposition of The Lion’s Share Group

“Y

ou can’t just sell rate, you need to add value in order to keep a client.” This is a line that has been gaining in popularity for some time but what does it mean? Sure, it means you need to bring something else of value to the table in order to make a client want to sit at it with you...but what? This is one of those high level nuggets that make everyone think, but nobody explains the ‘what.’ Enter...The Lion’s Share Group. Claire Drage, founder and CEO of The Lion’s Share Group is sharing her best practices with her peers in order to help build the profile of the broker industry and gain more than the 25 per cent market share currently owned by mortgage brokers. “To do that we need to build on our profile in the mortgage market, streamline our professionalism and create a value proposition for our clients that leaves them no choice but to use a broker/agent.” “When asked, most mortgage broker/ agents will tell you exceptional customer service is the way to add value. We couldn’t agree more but the challenge is defining exceptional service and executing it. The Lion’s Share Group provides workshop attendees with communication templates and a process to use in day-to-day dealings with clients, both before, during and after funding that provide a consistent experience for every client. Creating a process that can be followed with every client is imperative as we believe that each and every client should be treated like your first, last and only client. You can

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only do that if you have a strong infrastructure and process in place. This also ensures that you can actually leave your office and take time off, and know your support team has a well-defined system in place that continues to grow your business.” According to Drage, there is a gap in the market for hands-on, practical training. “There are great programs available with a coaching, sales and/or motivational themes, but little that show you exactly how to maximize every lead and convert them into not only a funded mortgage but a long-term referral relationship. Our programs are focussed on how to track your leads and how to execute on a foundation for your day-to-day activities when dealing with those leads.” In an industry notorious for not sharing tricks of the trade, some might question why The Lion’s Share CEO is training her competition. “I don’t see it that way at all. As long as the broker community doesn’t hold the majority of the market share, our competition is the major financial institutions, not each other. The best way for our industry to grow, is to grow together and not individually. Build on our industry profile in the consumers’ eyes and provide the kind of value that not only makes it impossible for them not to want to use a mortgage broker but also encourages their friends, family and colleagues to do the same.” The Lion’s Share Group and its programs were not created overnight. “I’ve been in this wonderful industry for over 13 years as a mortgage agent and in executive roles at a national lender and brokerage. I’ve put all of my experience into these processes. Of course not all have been successful immediately. The key has been to learn from mistakes and make things better. The Lion’s Share Group programs are the culmination of years of trial and error that have helped my mortgage

Claire Drage

Profile

Insight

business grow into a well-oiled lead generating and funding machine putting me in the top one per cent in Canada.” The Lion’s Share Group doesn’t just talk the talk, they walk the walk too. Their approach with clients is built on the same premise as their programs; adding value is a constant process not just a one-time thing. “Attendees at our workshops aren’t just given the materials, taught the programs and sent on their way. They become members of the Lion’s Share Group that are constantly provided with new material, cut-and-paste client communications and are invited to join in on bi-monthly power webinars that cover a wide range of business and process development topics.” When asked exactly who should consider attending a workshop, Drage says that “We have Lions Share members that

are anything from one month in the industry to 30-plus years and they have all benefited. We often receive feedback from those that have been in the industry five-plus years who comment that “they only wished they had this program when they first started, as their business would be in a totally different place right now!” After a very successful startup, the limits seem endless for The Lion’s Share Group. With more programs in development, continued growth in demand for workshops, phenomenal feedback and expansion into provinces outside of Ontario happening well ahead of plan, Drage says she has only just begun. Her passion for the business is infectious and what she is providing to the broker community in unparalleled in her opinion an believes that as The Lion’s Share Group grows, broker market share will grow right along with it. CMP

License #11127

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Profile Brokers

When it comes to the unorthodoxly dressed Jackson Middleton, it should come as no surprise that he has no use for traditional marketing, instead relying on social media to build his successful brokerage

mortgage broker

to the k-ilt W

hat do kilts, flavoured coffee syrup and Tweetups have in common? If you’re Jackson Middleton they all have a role to play in building one of the most successful mortgage brokerages in Saskatchewan. “I wear a kilt to the office every day,” says the broker/owner of Highland Mortgage Partners in Regina, “It puts the clients at ease right away.” The kilt is also how Middleton is known amongst followers of Twitter – @ kiltedbroker – something he sees as being integral to his success, because when it comes to marketing, Middleton is looking ahead, not back. Even before he hands them a bottle of Jones Soda labelled with his business card, Middleton has already added the client on his Facebook page. “Social media is not an extension of traditional advertising,” he says. “Social media is about socializing and putting yourself out there and if people like you then chances are they will do business with you, because people do business with people that they like and that they trust. “I think most people don’t understand social media. Some people say, ‘I’m on Twitter,’ but they really aren’t. People don’t understand that it’s about engaging.” To make his point, Middleton recalls a query on Twitter asking where someone could purchase flavoured coffee in the city. “I responded with some suggestions and she added me as a friend and a couple of months later she had a mortgage question and she came to me. [Twitter is not] an immediate return, but it’s such a long-term play. “I mean how often does someone really need a mortgage broker?” It’s that philosophy around social media that informs Middleton’s business model, along with a healthy grounding in Jim Collins’s seminal business tome Good to Great. “I see business a little bit differently than the standard broker. Traditional advertising and traditional media just don’t work for me,” he says, pointing out that you won’t ever see his face on a bus bench advertising or billboard. What drives his marketing is one simple goal: to be the most referred mortgage brokerage in Saskatchewan. “I’ve really refined my business to straight A business referral-only,” he says. And to help him reach that goal, Middleton has borrowed a page from the lenders’ playbook. “I asked myself, ‘how do they go out and acquire business?’ Well, they have business development managers. I’ve had a business development manager for the past two-and-a-half years. We deal with Realtors. That is our primary target market and my BDM goes directly to Realtor offices and works with them to get us leads.

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Profile Brokers

“Rather than spending money on advertising, I’ve said that I want to build my business on relationships. So I would rather pay the salary of somebody who can build relationships with referral partners. To me, relationship and referral is everything in this business. I’m not interested in doing business with clients that don’t know me and don’t trust me.” To prove the point, Middleton offers that if a deal comes into the office and he doesn’t know where it came from, he won’t personally take it, instead passing it on to another agent in his office. The independent streak Middleton displays in his business outlook has always existed he says, going back to his involvement in an entrepreneurship class during high school, where among other things he wrote a business plan for opening a coffee shop in his hometown of Regina – something he actually did after graduation. “I’ve always been an entrepreneur,” he says. “Working for somebody just doesn’t work for me.” After the foray into serving hot beverages, Middleton moved on to managing bands and eventually running a delivery service, which had him driving all over the city and lead to his entry in to the mortgage industry in 2007. “I’m driving around town and I realized that properties were really cheap,” he recalls. “I ended up buying four properties and the market then went through the roof – my properties could have burned to the ground and I would have made money.” Gaining entry into the house-flipping business required Middleton find a business partner after being turned down by both a mortgage broker and a bank. That experience along with the realization that he was “better with a calculator than with a hammer” led him to a career in arranging financing that began at Mortgage Alliance. Three years later, in January 2010, Middleton opened Highland Mortgage Partners, part of the Axiom network, which now has six agents. In just the past six months, Middleton has added four associates who are currently undergoing training. And to further push his social media agenda, he has hired a full-time social media director, whose job will be to train Realtors how to use social media effectively, as a way to generate referrals for Highland, which for him are all about trust. “A referral is basically borrowed credibility. How that’s important is that client trusts you.” Using social media successfully for Middleton means doing something that would seem counterproductive to most brokers: toning down the self-promotion. “Being successful on social media is not about promoting myself, but rather having others do it for me,” he says.

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“ rather than spending money on advertising, I’ve said that I want to build my business on relationships. So I would rather pay the salary of somebody who can build relationships with referral partners. To me, relationship and referral is everything in this business. I’m not interested in doing business with clients that don’t know me and don’t trust me ” “It’s not me getting the lead, it’s people I’ve established relationships with and built trust with. If I’m always out there saying ‘I’ve got the best rates,’ I’m just noise and nobody listens to noise anymore. It’s not about asking for the referral, it’s about being referable, there is a huge difference.” It’s all about having fun, according Middleton, who refers to a recent event Highland organized via Twitter, called a ‘Tweetup’ that he describes as a “gathering of people who know each other on Twitter who finally meet in person.” Approximately 40 people gathered a local pub after Middleton co-promoted the event with an insurance broker using #YQR (Twitter for Regina). It wasn’t aimed at mortgage clients specifically, he says, but rather just another way of engaging people and giving everyone the opportunity to meet one another. Which was exactly what Middleton had in mind when he organized the event. “Social media to me is just an extension of who I am.” Engaging people for the sole purpose of interacting on a personal level also shows up on Highland’s Facebook page, where mortgages take a backseat to things like ticket giveaways to Saskatchewan Roughrider football games. “We do it because we realize that you don’t always need our services, but when you do, you’ll come to talk to us,” says Middleton. Communication is the essence of his social media marketing, something not everyone in the mortgage industry recognizes, especially those of an older generation. “Tell a broker, who is say 55 or 60, that you’re putting on a seminar about business communication and they’ll show up,” says Middleton setting the stage. “But if you say ‘I’m putting on seminar about social media’ they’ll say ‘I’m not into that.’ “Social media is just effective business communication. In five years this is where everyone is going to have to be or you’re done.” CMP

Your Business Development Manager Team Bruno Valko, AMP

Director, National Sales cell (866) 735-4303 x3504 e-mail bruno.valko@resmor.com

BrunoHatcher Valko, AMP Tania

Director, National Island Sales & Interior British Columbia, cell (866) 818-3884 837-8919 cell (250) e-mail tania.hatcher@resmor.com bruno.valko@resmor.com e-mail

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Mary Neary Corbett Connors

South Alberta cell (403) 880-3447 650-7965 e-mail mary.neary@resmor.com corbett.connors@resmor.com

Corbett Connors Bruno Valko, AMP

South Alberta Prairies & Alberta North cell (403) cell (866) 650-7965 837-8919 e-mail e-mail corbett.connors@resmor.com bruno.valko@resmor.com

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

Terrianne Young, AMP

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profile PROVIDER

News that a new A lender will be joining the broker channel is a shot in the arm for the industry after the loss of two lenders earlier this year

New kid on the block T

he coming addition of a new A lender to the broker channel is a very intentional shot in the arm for that origination model, says the man behind the bank, ahead of its final regulatory approval. “We have our bank licence and are hopeful that we will receive our last approval – our order to commence and carry on business – as soon as the end of October,” said James Clayton, president of MonCana Bank of Canada. “We will be headquartered in Calgary, with a broker-service office in Toronto. We will be very brokerfocused and will service everything that we originate.” MonCana represents the latest broker channel incarnation for both Clayton and CFO Gerry Wagner. The two also headed Resmor Trust before selling it to GMAC. This new lender will focus entirely on A business, says Clayton, canvassing brokers from one end of the country to the other. MonCana’s entry may serve to lift spirits among brokers grappling with the fiercest competition from the commercial banks in years. Those rate wars were largely blamed for the departure of both Macquarie and Concentra earlier this summer, effectively squeezed out by tight spreads and that heightened competition with the Big Six. Monolines have been particularly challenged given their primary focus on mortgages and the fact many are without the cross-selling opportunities of the big banks, which are increasingly using home loans as a loss-leader in order to sell clients their many other products. MonCana’s bank status effectively provides it the same ace in the hole. Clayton, in fact, plans to take advantage of it by offering a host of other products to clients – from RRSPs to tax-free savings accounts – through financial advisers and other “deposit brokers.” “We will be a deposit-taking institution,” he said, “and that will provide us with cross-selling opportunities, which is part of our business plan. But we’re coming into the market at a fairly low point, so we think that there is going to be fairly good growth over the next three years.” CMP

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Profile Insight

A Toronto broker looks to convince lenders, that until now have been reluctant, that hotel-condo projects may be worth a second look

tilting at windwills W

Wojciech Pianka

ojciech Pianka is a latter day Don Quixote. The windmills he is tilting at are broker channel lenders unwilling or unable to fund hotel-condos. The Mortgage Alliance agent – looking to use Toronto’s growing condo-hotel market to carve out a niche for himself – has his work cut out for him. He’s finding a dearth of channel lenders willing to write mortgages on those suites, which spend most of their time in a rental pool. “These new projects are going to be registered as hotel-condos because most of the suites remain in the hotel pool for rental,” says Wojciech Pianka, a Toronto mortgage agent with Mortgage Alliance. “This is technically a commercial designation as no long-term lease tenants will really be staying, and the suites will be subject to different tax laws. So banks are reluctant to lend on them. For one, they do not fit into the lender’s guidelines; another is if someone defaults how do you really sell that property?” They’re questions that broker channel lenders may not yet have answered for themselves. Pianka has contacted as many as 15 in the last month in an effort to arrange financing for what he hopes will be the first in a long line of clients looking to buy into any one of a number of high-profile development projects now under construction. Those developments bring the hotel-condo concept to downtown Toronto, and the millions of tourists and business travellers who visit it each year. The three most prominent projects – the Trump Tower, the Four Seasons Residences and ShangriLa – have a combined 1,800-plus units. There are several more in the works, each allowing buyers to occupy their units for a portion of the year, usually as a vacation property. The rest of the time those

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suites are used as hotel rooms, leased back to the management company, with a portion of the proceeds going to the owner. While terms vary, most agreements mandate that units spend some time in that pool of suites. The requirement is problematic for brokers trying to arrange residential A deals for even qualified clients, said Pianka. “Of the A lenders I’ve contacted on behalf of my client, all said ‘No.’ Hotel-condos, as a concept, represent a relatively new risk and one that many of our lenders may not have considered previously. It may simply be that they haven’t yet developed enough experience around the product.” Pianka’s own search has yielded tentative interest from a credit union, which is now weighing the possibility of extending a conventional mortgage based on a significant down payment. There is still, however, the question of whether the deal can be treated as an owneroccupied property. Still, his persistence may ultimately pay off given the success American brokers have had in arranging purchases for foreign as well as domestic buyers in key markets across the States. But those deals remain relatively complex – with lower success rates. They are also more likely to be scuttled by small concerns around square footage and the perceived difficulty in disposing of a default property. But the law may be keeping Pianka from getting his deals done. Generally, Ontario’s Superintendent of Financial Institutions prohibits lenders from writing residential mortgages in commercial hotel rental situations, said one 35-year veteran of the industry – a Don Quixote of an earlier time. CMP

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Profile

Favourite Things

Gwen Dimen + Associate Broker, Highland Mortgage Partners + Regina, Sask.

Food My favourite guilty pleasure is two cheeseburgers minus the pickles and a small fry from McDonald’s

Favourite Things Place to be Nothing beats summers in Regina. Any other month … give me sun and a beach and I couldn’t be happier.

Book The Hunger Games trilogy.

Celebrity Larry David – he never fails to make me laugh Drink A glass of cabernet sauvignon

Sport To watch? None really. To play? My lack of coordination leads me to say swimming Vacation Santorini, Greece. The sunsets there almost rival ours on the Prairies Movie The Shawshank Redemption. No matter how many times I watch it, it never fails to bring a tear to my eye.

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HOBBy Hard to pick just one! I love to spend my time shopping, travelling and meeting new people.

Music Currently on high rotation is anything by Metric, Kings of Leon, Adele, The Black Keys and a little Jay Z to even it out.

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Guest Column

a new evolution Helping eliminate debt as fast as possible for your clients is a win for brokers, says Greg Stanley, who uses cash management software as a tool to offer a service the banks don’t

ou have a client coming in since his last renewal three years ago. How old is your data in the file? Probably like the rest of us – three years old. You don’t know how he has fared since you last saw him. Will he be further into debt with credit cards or other debt? You won’t know until he comes in tomorrow to tell you. Instead, wouldn’t it be nice if you could know, continuously each year, that your client was indeed on track with eliminating all debt quickly from their lives since you last placed a mortgage with him? This is now possible if you combine your mortgage solution with a cash management software system that can track your client’s day-to-day budget with actual expenses. All you need to do is all agree on the goals desired between now and the next renewal date and the software will monitor and manage your clients for you (all on auto-pilot and hands-free from your end). In my practice we created the “5 Steps to Mortgage Planning” – a process that came from my certified financial planning practice. Here are the steps and then I’ll explain them. First you talk about short-term and long-term goals, second you gather data, third you develop a mortgage plan strategy, fourth you implement the plan and fifth you monitor the plan. The first thing I do with a new client is calculate their current mortgage freedom date. You figure this out by taking his current age and then add the remaining years of amortization on his mortgage loan. People are often shocked to find out that their current path will have them in their 70s or even 80s and still making mortgage payments. Not much of a plan. So much for bad bank advice. That is why they need to see me. I can show that, without changing their current budget, I can package a software program that manages all their day-to-day finances with my mortgage solution. The result on average is that their current mortgage freedom date is improved by 16 years

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and will save over $100,000 in unnecessary interest costs. The important thing is that a client will be debt-free and own their own home Greg Stanley well before retirement age or usually within 12 years; whichever comes first. The client’s software file is passwordprotected but they can give the broker a temporary pass to look at their progress online at any time. The evolution is that a mortgage broker evolves into an adviser that manages the elimination of all debt in a client’s file quickly and efficiently. The program’s algorithm focuses on paying off all debt faster from a household budget. It speeds up the process at least 50 per cent faster with the software. The cost to add software in your solution package is nominal and cost is never an issue with your clients. You as a broker can develop and open up new networking relationships with Realtors and financial planners who will see the advantage of their clients building up net worth faster and improving their cash flow dramatically. You will be a hero in the eyes of your client and your new found referral partners. The cash management software I use is called Smart Equity and I find that I can package it into a solution for less than $10 per month difference between having it or not in the solution. However, by having it 192 mortgage payments on average are saved. Your practice will grow when you eliminate debt as fast as possible in your client’s lives. Banks benefit by keeping borrowers in debt. That means that you win as a broker giving a service that the banks will be unwilling to give. It is a necessary broker evolution that guarantees competition survival from the banks. CMP

service directory

Banks

Bridgewater Bank www.bridgewaterbank.ca Ph: 1 888 837 2326 Page 9

HomEquity Bank www.homequitybank.ca Ph: 1 866 522 2447 Page 35

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

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

Fisgard Capital Corporation www.fisgardmortgage.com Ph: 1 866 382 9255 Page 10

The Money Source www.mymoneysource.ca Ph: 416 699 2274 Page 67 Commercial Lenders

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

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

Home Trust www.hometrust.ca Ph: 1 877 903 2133 Page 37

Insurance

National Bank www.nbc.ca Ph: 1 888 483 5628 Page 47

Canada Guaranty Mortgage Insurance Company www.canadaguaranty.ca Ph: 1 866 414 9109 Page 25

ING Direct www.ingdirectbrokerteam.ca Ph: 1-800-574-5629 Page 41

Associations

CAAMP ACCHA

Canadian Association of Accredited Mortgage Professionals (CAAMP) www.caamp.org Ph: 1 888 442 4625 Page 29

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

MCAP Eclipse Ph: 1 866 289 7389 Page 39

Broker Networks

Non-Bank Lenders

Capital Direct www.capitaldirect.ca Ph: 780 868-0550 Page 14

Equitable Trust Company www.equitabletrust.com Ph: 1 866 407 0004 Page 23

Firm Capital www.FirmCapital.com Ph: 416 635 0221 Page 16

Merix Financial www.merixfinancial.com Ph: 1 877 637 4911 Page 43

Centum Financial Group Inc. www.centum.ca Ph: 1 604 257 3940 Page 11

Peoples Trust www.peoplestrust.com Ph: 1 800 663 0324 Page 53

Resmor Trust Company www.resmor.com Ph: 866 809 5800 Page 71

Dominion Lending Centres www.DominionLending.ca Ph: 1 888 806 8080 Page 15

Home Loans Canada®

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

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service directory

Mortgage Architects www.mortgagearchitects.ca • Ph: 1 877 802 9100 Page 51 Technology & Software

MortgageBrokers.com www.mortgagebrokers.com Ph: 647 680 9384 Page 45

Services

The Lions Share Group www.lionssharegroup.com Ph: 1 866 726 5159 Page 17

D+H Limited Partnership www.dhltd.com Ph: 1 866 345 6449 Page 2

Strategic Information Technology (SIT) www.stratinfotech.com/ Ph: 905 640 0808 Page 33

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

The Mortgage Group www.mortgagegrp.com Ph: 877 899 1024 Page 55

Real Estate and Mortgage Institute of Canada www.remic.ca Ph: 1 877 44 REMIC Page 59

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

Canadian National Association of Real Estate Appraisers www.cnarea.ca Ph: 1 888 399 3366 Page 27

Would you like to see your company name here? Please contact Trevor Biggs: trevor.biggs@kmimedia.ca

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Do you hav have a e news to share? r Hav Have ave you you heldd a recent event v or made d a new w appointment? pp If so,, CMP W WANTS ANTS to hear ffr from om you. Send us your newsworthy submissions and photos, and you may find your story printed in a future issue of CMP. Send your news to: vernon.jones@kmimedia.ca

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