CMP 6.11 by Key Media

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November 2011, 6.11

4th

annual superbrokers survey

super

brokers

See how Canadaâ&#x20AC;&#x2122;s national broker networks stack up SPECIAL FOCUS Broker coaching

PROFILED Broker/author Blair Anderson

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game plan With education and training for mortgage brokers continuing to be a hot topic of discussion in the industry, CMP asked four broker coaches about how they counsel clients, what needs to be done and why this issue is so important to the brokering community

6. 11 issue

cover story

32 Superbrokers 2011 After giving brokers and lenders the opportunity to provide feedback on each other the last two months, CMP turns to the national broker networks in an effort to hear what they have to say about the issues facing the mortgage industry and to examine their latest figures

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contents

NEWS & COMMENTS 10 Some of the best stories and comments from MortgageBrokerNews.ca: • OSFI echoes broker concerns about Big Six lending • Xceed to brokers: We have returned and here’s why... • ‘Escalating lender incentives’ for Realtors troubling, say brokers • Broker: Time to give BDMs approval power • Agent: Re-licensing could cull broker numbers by 10% • CAAMP: online re-licensing course ‘free’ for members 24 News Analysis: The Big Story: A compilation of the top quotes from our weekly multimedia broadcasts on MortgageBrokerNews.ca

FEATURE 58 Recruitment: Hiring your first employee can be a daunting task for the independent broker. Andrea Cornish of our sister publication MPA explains the process and how to avoid some common mistakes

MARKETING 62 Realtor Marketing Secrets: In the second instalment of his latest series, Doren Aldana explores how brokers can get Realtors to work with them so they can get more buyer leads for their listings

mortgagebrokernews.ca

BROKER PROFILE With a new book aimed at educating consumers and new agents, Blair Anderson hopes to do his part in raising the public profile of mortgage brokers

PROFILES 67 Provider: Service has always been the key in the lender-broker relationship, but for Todd Poberznick and Bridgewater Bank, that message needs to come across a little more clearly 70 Insight: In a move to earn its brokers more referral fees, Dominion Lending Centres is launching a commercial division 72 Insight: Brokers have always yearned for piece of their brokerage’s action, but RMA is now offering its brokers considerably, Chief Executive Ron De Silva tells CMP 78 Guest Column: Some may not know that the first mortgage application system was on an Apple computer. Broker Bruce Davison, a 35-year broker veteran, recalls the impact Steve Jobs had on the Canadian mortgage market

regulars 29 International News 30 This time last year 76 Favourite Things 79 CMP Service Directory

Celebrating a life lived. Mr. Art Connor July 29, 1945 – October 2, 2011 On October 2nd, 2011 at home in Markdale with his wife by his side, Arthur Donald Gorge (Art) Connor died at the age of 66. Art was a beloved husband to Jody Connor (nee Garner), loving father to Barb Hansen and Craig Connor, and proud grandfather of seven grandchildren. A proud owner of The Mortgage Centre’s Owen Sound office for over 20 years, Art’s attitude was always positive and he represented The Mortgage Centre with the utmost enthusiasm and professionalism. Art will be missed by our network, lenders, partners, and industry colleagues.

Messages to the family may be made online at:

www.woodfuneralhome.ca

The Mortgage Centre is a division of CIBC Mortgages Inc., a member of the CIBC group of companies. ® The Mortgage Centre is a registered trademark of CIBC Mortgages Inc.

Editor’s Letter

Super brokers Not everyone likes the term. Call them national superbrokers or broker networks, in the end they each offer their own unique value proposition to their brokers. And that’s kind of the point. Every broker thinking about joining or switching a broker network has to consider their own needs and wants when making this important decision. With our fourth annual Superbrokers survey, CMP presents, what we believe is, a comprehensive look at the Canadian mortgage industry’s national broker networks inner workings. Whether you’re independent or not, the superbroker should apply to everyone in the industry as they try to be just that for their clients. While independent brokers may be on the decline in the current wave of industry consolidation, some remain steadfast in their chosen path. One such broker is Blair Anderson, who has also written a book (Ask Your Mortgage Broker) aimed at mortgage consumers as well as rookie mortgage agents in an attempt to give both parties a better understanding of the industry. As he writes in the preface to his book: The problem is, in the nineteen years since I began my career, I expected the fog to clear and consumers to gain a better understanding about mortgage brokers. The sad truth is, as an industry, we have failed to adequately educate the public about our role. This is one of the reasons why I decided to write this book. There has been, and still remains, very little written about this misunderstood and under-used resource in a Canadian context. In the end, anything that helps promote the mortgage broker to a wider audience is a step in the right direction and it is encouraging to see more and more people in the industry taking the initiative. In an effort to toot our own horn, the staff here at CMP and MortgageBrokerNews.ca are proud to announce that we were the recipient of a Canadian Online Publishing Award this month, receiving the Silver award in the category of Best E-newsletter as well as earning a finalist nomination in the category of Best News. “Receiving this award is an honour and it just confirms what our readers have been telling us – that MortgageBrokerNews.ca gives brokers the news and information that they need and want,” said KMI Publishing president and CEO Tim Duce. “I would like to thank the dedicated editorial and sales team at CMP and MortgageBrokerNews.ca for all of their efforts in making our website best in class.” 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

mortgagebrokernews.ca

6. 11 issue

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Quotables

“I think as a mortgage broker one of the things that is a constant struggle for us is not only getting the client, but closing that client and getting paid. It’s in our nature to want to close every single deal that comes through our door in the span of a week or a month, but I think sometimes, especially with alternative or B clients, we have to step back and say ‘is the mortgage we’re getting them today setting them up for success in the future.’”

“I’ve had some lenders cut me off because I had sent them very little business, but anything I ever sent them closed, and I have a hard time understanding why they would want to cut me off. If I had to speculate, I would suggest that they might be trying to influence our behaviour. That is, by enforcing minimum volume requirements, brokers are losing their ability and willingness to shop around for the best deal in order to maintain their active status. From an economic perspective, I think efficiency ratios are all that matter.”

Broker Brad Compton talking about when private lending shouldn’t always be the first option for alternative clients. Page 24

Blair Anderson, expressing his concerns about minimum volume requirements from mortgage lenders. Page 68

November 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

Trevor Biggs Scott Clarke

OFFICE MANAGER

Marni Parker

SUB-EDITOR

Rachel Naud

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DESIGNER PRESIDENT CEO

SALES MANAGER, Mortgagebrokernews

DESIGN MANAGER

Angie Gillies

Advertising enquiries trevor.biggs@kmimedia.ca

Vivid Design Solution Tim Duce Mike Shipley

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

Editorial enquiries john.tenpenny@kmimedia.ca Printed by Solisco imprimeurs-printers www.solisco.com

KMI Publishing 312 Adelaide Street West, Suite 800 Toronto, Ontario M5V 1R2 mortgagebrokernews.ca

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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

OSFI echoes broker concerns about Big Six lending RBC, BMO and the rest of the Big Six, consider yourselves warned: The Office of the Superintendent of Financial Institutions (OSFI) has its eye on you, moving to increase its scrutiny of your lending practices to ensure prudence isn’t sacrificed for volume. “What we are doing is stepping in to increase the monitoring of that portfolio,” OFSI head Julie Dickson told reporters recently. “I think the concern is that the conditions are such that there would be tremendous pressure on banks to loosen those standards.” Brokers are increasingly voicing the same concerns as the rate war presses, charging that RBC and other big banks are actively undercutting broker channel rates, most often at the branch level and as a way of retaining and growing clientele as the housing market slows.

I am not surprised to read this. I lost a B deal to BMO and even if the client had managed to improve his credit a bit in the couple of months before the closing, they still had a lot of unpaid property taxes and other issues. Ah well, that is the business. Do not forget the unofficial tied selling. My sister was told she could get a better rate at RBC on a LOC if she had had other business there, hint, hint. – Andrea Thanks to the platform provided by MortgageBrokerNews.ca to highlight concerns of the brokers. I am glad to see that OSFI has taken notice of this situation. I agree that we are in a capitalist society, but we have rules that should be applied uniformly. Banks are powerful enough as it is, but on top of that,they are not being held to the same standards of customer care as brokers are. The bank mortgage specialists are not being held to the same standards of ethics, education and responsibility as the broker community is. We will gladly compete, but all we are asking is that the playing field should be leveled. – Ad Lakhanpal

mortgagebrokernews.ca

Ostensibly, razor-thin margins have exacerbated the need to increase volumes, a strategy focused on making up for the dwindling profit on individual mortgage deals, suggested Dickson, echoing the analysis of industry veterans. That lenders may be ignoring their own lending guidelines in order to meet their mortgage sales target is something OSFI is pledging to look into. Anecdotally, brokers are pointing to banks increasingly willing to accept deals at prime rates they would otherwise have rejected. Still, Canada’s big lenders have so far been prudent in their practices, said Dickson, at the same time warning them that any significant move to let standards slide would attract regulatory censure. CMP

The banks are our competitors. Get over it. I have met mortgage agents who are licensed and cannot even spell “mortgage,” so get over saying we are all more ethical, more professional and more educated than bankers. Let’s get over RBC being some kind of demon if their default rate is the same as all the other banks. It’s a competitive business guys and crying about the competition is non-productive. – Ron Butler Strong points have been made about what is obvious to the vast majority of brokers and agents, but seem to be blindly ignored by our provincial and national associations: the banks are the competition. When the brokerage stream has only 30 per cent of market share we shouldn’t need to be competing with each other. Take the bread off the banks’ table and give the business to the monoline lenders who helped make this industry grow and we will grow as well. But what do we do collectively? We take business back to the banks! Makes absolutely no sense for the long-term survival of a brokerage or an industry. – David O’Gorman

1.1% decline in the output of real estate agents and brokers, caused by softening in the home resale market in July (StatsCan)

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Xceed to brokers: We have returned and here’s why...

It was out and now it’s back in. Xceed has returned to the broker channel after “suspending” originations through external mortgage professionals in January, the monoline’s new strategy focused on befriending a select number of agents and brokers. “We never doubted that Xceed needed to partner with the mortgage broker industry,” Gleb Loussoufovitch, director of sales and marketing for the non-bank lender, told MortgageBrokerNews.ca. “But we wanted to be a good partner ourselves. We are now working with mortgage agents again, what we call ‘friends of Xceed.’ They’re called friends for a reason – they had very successful relations with Xceed before and it was based on that that we approached them to re-establish those relationships.” Xceed quietly began reaching out to those agents and brokers about a month ago, more than seven months after it ceased using external brokers on Jan. 14, 2011 – its chairman, Ivan Wahl, citing the cost of originating insured mortgages through the channel, among other reasons for the decision. The timing of this latest move is directly “correlated” to the company’s $1.7 million settlement with HSBC on August 21, Xceed Mortgage disposing of the bank’s claim that it allowed borrowers to refinance when, in fact, they should have ushered them on to foreclosure. Ostensibly, an end to that legal battle has now freed the company to focus on rebuilding its book, although Xceed continued to originate A mortgages through its internal sales force even after it closed rect ad August2011_SYD_REVISED.pdf 1 8/30/2011 10:51:41 AM the door to broker channel deals. That door is now open. “We have just under 50 individual agents now registered with us,” said Ioussoufovitch, pointing to individual agents the company dealt with before January 2011. “We are open to other mortgage agents contacting us, but we are very interested in knowing exactly who we are partnering with.” CMP

Just my personal opinion here, but as brokers/originators, when the going gets tough, we don’t just say ‘OK, that’s it, I’m out’ and then when things get better it’s ‘OK, I’m back.’ We are in it for better or for worse, and personally I find it very difficult to support a lender who might disappear when the going gets tough again. This is a business of ups and downs, that’s a given. Definitely not a business for fair weather lenders or originators. – Julia Krause I disagree with Julia. The lawsuit is not that there was a fraudulent account, that is not what the lawsuit was about. If Xceed wants to come back, please come back, we need as many choices as possible. We need Xceed as much as Xceed needs us. Welcome back Xceed. It is nice to see you again. – Alberta While we never want to see lenders exit the market, I will have to agree with Julia on this one. Brokers, lenders, insurers and Xceed employees were all affected by this. Who knows what will happen next? – Ontario Broker I disagree with Alberta broker. I do not welcome Xceed back. Xceed is no different than the fly-by-night agents we have in our industry. We don’t need as many lenders as we can get, we need prudent lenders that will dig in for the fight and help us combat the Big Five, not a lender that was not prudent, thus causing a lawsuit to be brought against them. Just as it goes for agents, it goes for lenders. We don’t need volume to gain market share, we need quality. Sorry, but in my opinion, Xceed does not fit the criteria. – Ottawa Broker We don’t need any more vanilla “A” lenders that are in then out. Being in southwestern Ontario there are many lenders that think Canada stops at London. What we need is a B lender or an A that will do business all over the country. – V.L.

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‘Escalating lender incentives’ for Realtors troubling, say brokers The apparent “escalation” of lender incentives for Realtors is raising broker concerns around disclosure and the potential dangers for clients. “Nominal incentives or gifts I can understand,” Ad Lakhanpal, with Mortgage Alliance in Oakville, Ont., told MortgageBrokerNews.ca, “but there seems to be an escalation in the incentives that some lenders have started paying to the real estate agents, with at least one now offering direct commissions, and not just points. That escalation is a real concern because that kind of commission needs to be disclosed to the client by either the bank or the real estate agent. Also is it going to be in the best interest of the client?” The cautionary note comes as lenders enter the home stretch in the race to close mortgages and meet year-end targets. An Ontario mortgage manager at one of the Big Six is now circulating a flyer offering a referring Re/Max “broker office” 50 basis points on every residential mortgage that moves to closing. That compensation “conforms to RECO’s guidelines,” reads the offer, while highlighting a $1,500 commission on a $300,000 mortgage. The flyer also offers another incentive, this time to the client, in the form of $1,200 in cash back at the time of the closing for mortgages approved between Sept. 1 and Oct. 31 of this year. The amount on that loan must be a minimum $150,000. CMP

5.5% increase in the average inflationadjusted existing home price year-over-year in Canada. One of only three (France and Switzerland) out of nine major developed markets to record a positive real price growth (Scotia Economics)

Interesting that mortgage brokers are held to a higher level of accountability and responsibility in ensuring a client is making the right choice in their decision to suit their current situation and their future. While RECO may confirm that this is compliant, how many Realtors are disclosing the relationship and the fee and how many are going to be led down the garden path for the sake of an additional dollar in a Realtor’s pocket? Makes you wonder where the Ministry stands on this issue? There goes the playing field tilting again! – Brian Matthey There is no doubt this is a problem. You all know as well as I that if we as mortgage professionals started to sell houses, that OREA and CREA would be all over us. If real estate agents are that greedy that they need their five or six per cent commission and money from a lender, it’s all nonsense. Are they putting their clients first? Absolutely not. Do they know what is best? Absolutely not. And all of them have no idea what to do on a good day as far as a mortgage goes. Most of them come to us. Many Realtors have bought mortgage brokerage franchises – greedy or what? I find it hard to believe that FSCO would allow this to happen !!! National started this years ago (they obviously had to go direct as their broker biz was suffering) and now we hear TD is getting into this game. Boys and girls – you are looking up the wrong skirt. – SW Ont. Broker

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Can we mortgage agents, through the broker channel, simply refer the client to our lender of choice (that best meets the clients needs) and in return receive 50bps FF? Meaning the lender does all the work from inputing the deal, collecting documents, structuring the deal, etc. I would entertain that option. Given the work that goes into placing a mortgage from start to finish, I can’t imagine that this is a profitable move for the lenders or one that they can sustain. – Mark Piers I understand your concerns, In Québec it has been this way for years. Realtors have become serious competition for brokers; they will go as far as discouraging clients from using a mortgage broker. Realtors are accustomed to that referral fee and expect to make their sale commission plus their referral fee from the bank. To top it off, sales reps from banks pay the Realtor, so they make the perfect team to keep the client away from mortgage brokers. The business I have to rely on is my existing clientele and the good words they provide for me to their friends and family. – Valérie Whissell 1) I am disappointed in my fellow Ontario brokers and agents ignorance of the MBLA Act. What the Realtors are receiving is a “simple referral” as defined by our act. It is not greed, it is smart business. All real estate agents have in excess of 300 hours of education, mortgage agents in Ontario have 40 hours. If you want to pay, study and pass at least six exams you can sell real estate, too. 2) This arrangement between this bank and this real estate franchise has been in existence for about 20 years. Bank pays master franchise 100bps, split 34bps for master franchise, 16 bps for the real estate brokerage & 50bps for the referring real estate broker/ agent. Piers has it right; support the monolines who support us and don’t compete with us. If you work for a large national broker, voice your opinion. Of course the large national brokers are getting the larger volume bonuses from the banks, so they don’t care. – Mike Dawson Guys, last time I checked, we live in a capitalist economy. Stop crying like a bunch of babies. Why shouldn’t Realtors get paid if they own the client. Would you not want to get paid if you were in their shoes? Absolutely you would. I actually welcome this movement. I don’t deal with Realtors at all, as they are one step below used car salesmen. Hopefully this move will push many marginal mortgage agents out of the mortgage biz and back to their taxi cabs. Serves you right for being stupid enough to rely on Realtors for business. – Sam

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Broker: Time to give BDMs approval power A leading Toronto broker is asking lenders to consider returning limited approval power to BDMs, at the same time making those front-line reps more accountable for their underwriting decisions. “I am very fortunate to have worked with competent BDMs who are generally responsive and proactive in their approach to problem resolution,” Calum Ross, senior VP of The Mortgage CentreMortgage Professionals Inc., told MortgageBrokerNews.ca. “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.” The suggestion is being echoed by brokers across Canada as they look to streamline an approvals process, which many argue has become increasingly bogged down in red tape. Some have also registered concerns about underwriter rejections that are ultimately resolved only after being escalated, usually at the urging of a BDM. Even with a successful resolution, that process usually costs the broker and the client valuable time. Ostensibly, returning even limited vetting power to BDMs would speed up approvals on relatively straightforward and sound applications. Holding them accountable for future defaults would continue to protect broker channel lenders from potentially fraudulent and inherently weak files.

Any lender’s move to beef up the BDM role would run counter to the growing trend to further remove BDMs from the underwriting and appeals process, argue some brokers. Many lenders have, in fact, moved to strengthen the direct broker-tounderwriter relationship, reducing the need for an intermediary. That effectively frees up BDMs to focus on chasing down new business, leaving existing broker-clients to deal directly with underwriters. When an impasse is reached on an application, mortgage professionals must then ask the underwriter to escalate the file, not the BDM. “We are planning to introduce BDMs next year,” CEO for newcomer Equity Financial Trust, Nick Kyprianou, told MortgageBrokerNews.ca. “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 sending in a good flow of business each month. Where is the value proposition in having the BDM going to see that client?”

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Regardless of whether lenders hand their BDMs more vetting power, Ross wants to see those financial institutions get a better handle on how they evaluate the performance of their BDMs. “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,” said the high-volume broker. “Many exceed, or fail to meet, performance targets based on working in the right territory and/or a change in pricing or policy by the lender they represent.” CMP

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I couldn’t disagree more. I have never thought this was a good practice. There is a commission upside, let’s not forget. And to be held accountable for deals that default on top of that, is preposterous. – Liz I disagree. Give more discretion to the BDMs in regards to underwriting, but they should have some discretion in regards to pricing to match competitors. I love the system of Scotiabank and I deal with their broker relationship manager who will look after my deals from beginning to end. The broker relationship manager is experienced and reasonable who alway tries her best to make the deal work. The Scotiabank BDM will focus on marketing and promoting the bank to other mortgage professionals, which I think it is very streamlined and effective. – Angela Wong-Liao I love how some brokers run to the BDM when we don’t hear what we want to hear on our ‘straightforward’ deals. So the suggestion 80 deals (if they’re not is to muscle them into approving questionable getting approved then something is questionable) and then expect 70 about brokers them to take the heat when it goes south? How develop open dialogue with our underwriters, who should know the parameters of their80 lending guidelines, and 60 empower the underwriter to decide to escalate? Then you can go have a beer. 70 – V. McH 50 60

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broker: we’ve earned renewal fees from Scotia, TD It may be the broker equivalent of, “If you can’t beat ‘em, join ‘em.” But an industry veteran studying the channel’s growing use of the big banks says brokers have now earned renewal fees from those lenders. “I don’t know what they’ll do or won’t do,” David Hetti, an Invis agent in Oshawa, told MortgageBrokerNews.ca, “but if the banks that use the broker channel are willing to talk about it and do move to offer renewal fees of even 15 basis points, that will strengthen their relationships in the broker channel, where the monolines already benefit from higher broker loyalty.” The suggestion is a tacit acknowledgement of the strong pulling power both Scotia and TD exert on brokers. It’s a more overt acknowledgement of the strong client retention those lenders already enjoy at renewal, whether the borrower comes by way of the broker channel or the branch. Brokers are generally cut out of that equation, something a 15-bps renewal fee would change. “It would also encourage brokers to work with the banks at renewal instead of against them,” said Hetti. “It would also reward us for bringing in that business initially.” The co-operative approach is something several monolines have already adopted, with others moving to introduce trailer fee options for their

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brokers. The model Hetti is proposing represents a slight departure, although it also hinges on brokers staying in close communication with clients both before and during renewal time. There may, in fact, be growing incentive for banks to co-operate with brokers, as those mortgage professionals increasingly look to switches – both at and between renewals – to lift sagging bottom lines. In offering renewals Scotia and TD would reduce broker attempts to move clients to other lenders, in the process minimizing the competitive forces that mandate lower interest rates. Renewal fees would also acknowledge the very real helping hand brokers are now extending to their Big Two as home purchases across much of the country slow. 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. “If they (Scotia) were smart, they would look at expanding their efforts to grow business through the broker channel as a more costeffective way of originating mortgages,” said Della Dwyer, another Invis mortgage professional, in Barrie. “I don’t know that they’ll do it, though.” CMP

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Banks paying a trailer fee. Let’s look at how the banks work. First, they lend the money at discounted rates to get the client in. Then at renewal, they offer the client posted rates. If we are to believe statistics, 80 per cent of clients renew with posted rates. Will you as a broker advise your client to renew at posted rates? Is that ethical? And for this you will get 15 basis points? Isn’t this the perception the public has of us? Why not work with the monolines who always have better renewal rates? Why not keep in touch with your clients and be honest with them? Tell them if they are getting a good deal and if their lender won’t budge on the rate, work with them to get that better deal. This, in my opinion, is better then holding your breath waiting for the banks to pay you a trailer fee. 5.39% for five years versus 3.39%? Which would you offer for 15 or 100 bps? No contest, as I see it. – Dennis Rajewski Our job is to counsel the client on what their best options are at the time of renewal. These agents should perhaps consider becoming mobile mortgage specialists – if you can’t beat them join them right? Although, I’m amazed that given low margins you would think that more lenders would embrace a trailer fee model and pay the agent as long as the deal is on the books on a declining scale. This would help build loyalty and strengthen relationships while giving agents a book of business that’s worth something. We have to focus on delivering added value to the client and continue earning their business, not sit back in our chairs waiting for the lender to throw more money at us. Besides, I think those days are coming close to an end anyways. – E.

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I know I would send more business their way if they had renewal fees. I have moved most of my book over to monoline lenders that are willing to work with me in the future to maintain my client relationship – and not steal it. I would like a win/win with the big boys, but they want the deal and then want to push us aside. – Steven B. I am a big fan of Scotiabank because I have invested 28 years of my financing life with them prior to becoming a mortgage professional in 2001. It is my pleasure seeing Scotiabank’s growth and improvements over the past 10 years from the bottom of the list to the No. 1 lender in the mortgage broker channel. I notice that Scotiabank offers competitive pricing to their clients at renewal time and they do not charge a renewal fee. Yes, it is very difficult to switch out a Scotiabank mortgage to another lender at renewal time. I am more successful in refinancing versus switching. – Angela Wong-Liao

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agent: re-licensing could cull broker numbers by 10 per cent Re-licensing requirements for Ontario could instantly decrease the number of mortgage professionals by as much as 10 per cent said a new agent, although the loss of young entrants discouraged by the slow economy and tight market may be a good thing. “As an agent who’s been in the business for only 16 months, I think re-licensing requirements may be the thing that pushes a large number of new agents who have been struggling or are already inactive over the edge,” Leon Blackman, with Verico The Mortgage Practice, told MortgageBrokerNews.ca. “Having to pay for the course and having to take it may be just enough to discourage agents who are ambivalent about the industry from renewing. But that loss may be a good thing in the sense that those people are obviously not committed, otherwise, they would take the re-education.” Blackman is pegging that possible loss at eight per cent to 10 per cent of Ontario’s current roster of mortgage professionals. That number stood at 11,581 in April, representing a 27 per cent jump from the year-ago period. It’s from those ranks of new agents that the industry is most likely to see shrinkage, he said. While brokers four or more years in the business have weathered the economic slowdown affecting most of the country, new agents have borne the full brunt of that tighter real estate market as originations become fewer and farther in between and young mortgage professionals find themselves without the kind of established portfolios needed to grow refis and switches. Those challenges have exacerbated difficulties for new agents, said Blackman, suggesting many are prepared to leave the business rather than commit to a re-licensing course and pay re-licensing fees by March 31, 2012. It also means the province may see a net loss of agents for the first time in five years. CMP

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It may ‘cull’ some of the ‘old breed’ as well who never had to pass a course in the first place to obtain a licence and an AMP accreditation. – Christopher It is sad to hear such comments regarding new agents reduction as a good thing. It is the old agents that never took any course to be licensed that need to take this course and be re-educated on provincial laws and ethics in the business. CAAMP and IMBA should focus on getting the bank mortgage specialists to follow provincial laws and be licensed too. – Joe Salloum When you do business long enough, keep your customers happy, make a few mistakes, abide by the rules and make enough money to stay in this business long enough to be part of the ‘old breed,’ you to can consider yourself a success. – Old Breed There is too wide an educational disparity between being an agent and a broker. Agents who chose not to complete the mortgage broker’s course within a timely fashion should lose their licence to practice. FSCO has made it far too easy for the lowest common denominator to hold themselves out as mortgage professionals. – L. Rachlin

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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 …

the broker-underwriter relationship Mark Kerzner: “The way I would characterize the relationship and the current state between brokers and lenders would be fair. At the first level I would look at the relationship between brokerages and lenders and say that those relationships are by and large pretty good. One level down, when you look at the brokers and the agents and their relationship and the underwriters, the reason I would say it’s fair is because on the one hand you have your experienced brokers and agents who’ve been in this business a long time and they have figured out how to work really well and efficiently with their underwriters. Those relationships, especially in a trying market like we’ve had, are pretty strong. It’s the relationships with the new agents – and we’ve seen a lot of new agents come into our industry over the last few years – where they may not have the same access to lenders or have the same experience with dealing with lenders and packaging deals for those lenders. They may be able to utilize some of the tools that their brokerages have, but on an individual underwriter basis, [the relationship] is only as good as their access and their experiences with those agents and probably not as good as it otherwise could be.” Nick Kyprianou: “The challenges in improving the broker-underwriter relationship is really the mortgage broker and the underwriter understanding what each person’s role is. The mortgage broker works very hard

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at getting the business and sending it to us and we work very hard at underwriting that business, but what the mortgage broker has to understand from the lender’s perspective is what kind of business the lender is doing. We’re doing B business, so they have to appreciate the fact that the rates are going to be higher, there’s going to be fees involved because these deals can’t get done at a bank because the clients have credit and income challenges. I think if the broker has a better understanding of what the lender is looking for and the underwriter has a better idea of what the broker is trying to do, then we’ll be on the same page and there won’t be so much back and forth and it will work a lot smoother.”

Mark Kerzner

On the topic of …

the private lending option Brad Compton: “I think as a mortgage broker one of the things that is a constant struggle for us is not only getting the client, but closing that client and getting paid. It’s in our nature to want to close every single deal that comes through our door in

Nick Kyprianou

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the span of a week or a month, but I think sometimes, especially with alternative or B clients, we have to step back and say ‘is the mortgage we’re getting them today setting them up for success in the future.’ Basically it comes down to making sure that client is going to be in a better position after they deal with you then before they met you. Sometimes I’ll have clients with credit and debt issues and their first instinct is to get a loan or mortgage to pay it off and as a broker the only mortgage I’m going to be able to get them is a private mortgage in most cases. The problem with a private mortgage is that they’re not going to be any better off a year from now than they are today. A lot of the times we count on that client being able to repair their credit in the span of a year and being able to refinance them into an A mortgage and I think we all know that in many cases that’s not going to happen. I’ve met with several of these types of clients who after visiting a mortgage broker last year are now looking for another private mortgage because they weren’t able to repair their credit. If that mortgage broker would have taken the extra time and maybe resisted the temptation of being paid right away, they could have counseled that client on how to repair that mortgage a little quicker, maybe working with one of their referral sources such as a credit counselor who can get them on the road to credit recovery much quicker, instead of just delaying it another year. At that point you’re in a much better position to refinance or consolidate their mortgages into one A deal and setting them up for a successful future.” On the topic of …

Vancouver’s increasingly competitive market Peter Kinch: “I think the Vancouver market for mortgage brokers over the next year is going to take on a different look. In fact, what I see happening is that the biggest danger to our industry is twofold. No. 1, the banks are going to continue their aggressive attack on rate and be focused on rate and my concern is that a lot of mortgage brokers who recently got into the business only focus on rate and they will need to figure out what is the value-add proposition that they bring to the customers. Because if they live by the sword they’ll die by the sword. If they focus on rates, they’re going to lose business to the banks.”

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Trish Pigott: I don’t think the market has challenged us at all being overheated. We had an extremely busy spring market, which created a mountain of opportunity with new buyers and generated a lot of preapprovals. The summer did slow down a little bit, but we’re already starting to see that ramp back up with our pre-approvals from the spring coming live now. The real estate market itself has created a wide range of opportunities for us as mortgage brokers. The challenge that we have faced is our competition – not necessarily mortgage broker competition, but major banks and the branches – and trying to retain those clients. And most clients that we’re trying to retain come from a rate mentality rather than a understanding what the true value of a mortgage broker is. So, we’re overcoming that by educating on our value proposition and also giving every single client absolutely the best service whether they’re new clients or existing clients.”

Peter Kinch

On the topic of …

online lead generation Trish Piggot

Drew Donaldson: “The way online lead generation works for us is that it is a good marketing program because it does get our name out there and generates more leads to our website, but at the end of the day the leads come in and you really have to be experienced at that because the clients that you’re working with, they immediately see rate. That’s the first thing they say when they get on the phone with you, so you have to educate the client, you have to look at what are their goals, to really map out a financial plan, that’s not just about the mortgage. We financial planners look at the entire financial situation of the client and then come up with the right mortgage solution to fit their needs.” CMP

Drew Donaldson

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Appointments

appointments Ron Swift was appointed CEO of overall group operations for Pacific Mortgage Group. “The appointment of Ron Swift to lead our continuing growth at Pacific signals the achievement of a great milestone for our company, our shareholders and for myself personally,” said Alex Haditaghi, the company’s founder and former CEO, who now moves to a key support role as executive vice chair. “I have admired and respected Ron’s accomplishments for many years and am extremely pleased that he has agreed to lead our company forward. This is a great day for me, and for all of our brokers, employees and shareholders.” Swift has held a variety of leadership roles at a leading mortgage industry company. In the last 10 years, he has served as MCAP President, overseeing broker channel sales and mortgage originations and servicing and sub-servicing. “I am pleased to take on this exciting challenge at Pacific at this point in its history,” said Swift. “Our industry is going through another remarkable period of change, with a whole range of new opportunities presenting themselves. Pacific is the perfect platform for me to apply my company-building experience, with a real focus on expanding our market footprint and optimizing shareholder value.” Merix Financial announced Jason Kay has joined the company in the position of Vice President, Corporate Development and Sales. As an industry veteran, Kay has over 15 years of business experience in the financial services sector, most recently as the Vice Present, Strategic Relationships at Macquarie Financial. “We are excited to have Jason Kay join our leadership team. As an innovative and strategic thinker, Jason brings a wealth of knowledge and industry experience. Jason is the perfect candidate to assist Merix with the goal of creating long-term value in Top: Ron Swift originator’s businesses” said Boris Bozic, President and Middle: Lori Smith CEO of Merix Financial. Bottom: Jason Kay Lori Smith has joined FNF Canada as director, business development – broker services, a part of a new broker service delivery strategy that it is unveiling in the new year. Smith, an AMP with a many years of experience in lending and the broker segment, has taken on accountability for creating and executing an innovative new model to deliver a new standard of service excellence to brokers nationally. “The appointment of Lori Smith to lead our broker strategy is instrumental to improving and redefining the service experience of the broker and their customers. It signals the commitment of our company to introduce change within our existing programs and build a leading model that is based upon the unique needs and expectations of the broker community,” said Reta Coburn, the company’s president. CMP

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CAAMP: online re-licensing course ‘free’ for members CAAMP will offer the online version of Ontario’s mandatory re-licensing course free to its members – an effort, said its CEO, to “promote member value.” “This is an added benefit of being a member of CAAMP,” Jim Murphy told MortgageBrokerNews.ca, just after making the announcement. “There will be a fee for in-class courses as we have to cover costs such as rooms and lecturers. There will also be an online fee for non-members. However, for CAAMP members the re-licensing fee will be included in their membership.” The move comes ahead of any pricing announcements from the three other course providers approved by the Financial Services Commission of Ontario to offer the mandatory program, focused on improving broker compliance with provincial laws. All four are pledging to offer both online and in-class instruction. To be completed by March 31, 2012, the course will bring Ontario mortgage brokers and agents in line with counterparts in Alberta and British Columbia. They already submit to similar education requirements as a condition for license renewal. “We are approved in Ontario to offer the re-licensing course only,” said Murphy. “We would offer same pricing if approved in other provinces.” In Ontario. CAAMP, IMBA and industry trainers REMIC and Seneca College are all pledging to begin their respective programs as early as Nov. 1. CMP

I was wondering how long it was going to take the rest of the country to wake up and look at CAAMP subsidizing Ontario members at the expense of the rest of the country. Even I don’t think it’s reasonable, but thank you anyway. – Ontario Broker Is it not now obvious that CAAMP overcharges for membership, its CE courses, etc? And, if they can give a subsidy of $40 or whatever for the RE course costs, then they should refund everyone that same amount in every other province. Or, and here’s an idea, use the money to promote brokers! – Bob Duneidan If you are offering the Ontario brokers the course for free because it is included in their membership fee and if you won’t be offering me the re-licensing course then my fee for membership should be reduced because there is no way I’m going to pay for the Ontario members to take their course for free. So, if you r educe my fee and you charge the Ontario member for the re-licensing course in their membership guess what? It isn’t free! Plus it is not free for all CAAMP members in Ontario you are charging for in-classroom sessions. My question is, are you a national association? If you answer yes

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to this question then get on with being a national association and let the provinces do their job and you do yours. Quit creating chaos in the industry. – Alberta Broker I’m in Ontario and think it’s great that since the credits are mandatory by FSCO, CAAMP didn’t take advantage and make the price ridiculously high knowing brokers would have no choice! Re-licensing education in B.C. is over $100 and you have to take two, and you have no choice of who to get the education from. The article said that if they were allowed to offer re-licensing in other provinces, it would be free for members there too. It’s too bad that Alberta and B.C. have shut the door on letting more than one company offer the course. At least in Ontario we have a choice of providers. If you don’t like CAAMP then you can take it from another company. I’m not saying CAAMP is perfect but I think this is a step in the right direction. – Sylvia

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Consumer Protection Act blocks broker ‘independence’ claims An amendment to Australia’s National Consumer Credit Protection (NCCP) Act has dictated that brokers can no longer describe themselves as ‘independent’ in advertising their services to clients. The amendment restricts the use of the terms ‘independent,’ ‘impartial,’ ‘unbiased’ or any other words with similar connotations. The amendment dictates that licensees cannot use the words unless they do not receive any commissions not rebated in full to the borrower, do not receive any other gifts or benefits from lenders, are not subject to any restraint in product offerings and are not subject to any conflicts of interest. Gadens Lawyers senior partner Jon Denovan told Australian BrokerNews the restrictions see the mortgage broking industry become subject to the same rules governing the financial planning industry. “The same restriction is there for financial planners. They can’t call themselves independent,” Denovan commented. Denovan confirmed that brokers will not be able to use the terms in their marketing, or advertise their services as “independent”. “To be independent you would have to have no upfront and no trail from the lender,” he stated. However, Denovan predicted the industry will find a way to adapt. “I think the industry will find a way around it somehow. We’ll find another word, like ‘we’re on your side’ or, as Aussie said, ‘we’ll save you.’ It kind of says the same thing as ‘independent,’” he said. Denovan indicated brokers who use any of the terms will have to rethink their marketing strategy. “They probably should never have used those terms as they are very high standards to live up to, and very hard to prove in a court if you receive different commissions from different lenders,” Denovan said. CMP

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2010

this time last year Carney remains positive about Canadian housing market While Bank of Canada Governor Mark Carney says he’s concerned that a sudden drop in home prices could add to the already excessive debt levels of many Canadians, he doesn’t see the chances of that happening as very likely, reports the Globe and Mail. The housing slowdown is unfolding much like the Bank expected, given the changes in mortgage rules and the record-low interest rates, Carney told the House of Commons finance committee Oct. 26. He did, however, warn the law-makers that there is a possibility of a further slowdown in the Canadian housing market and such turn of events would undoubtedly lead to smaller economic growth than the Bank’s latest forecasts. “One of the important downside risks to our projection is the possibility that there is a more abrupt correction in the housing market than we’re anticipating,” Mr. Carney told MPs in Ottawa. “We’re not forecasting an abrupt correction, but it is a possibility, given two factors: the speed with which house prices rose and, secondly, the absolute weight of debt in the economy that is tied to housing.” One year later Resale housing activity in August remained stable for the second consecutive month, according to new stats from The Canadian Real Estate Association, although brokers in Toronto and Ottawa benefited from an uptick in sales. “It’s been a good quarter in Ottawa, a very good quarter,” Grant King, president and owner of Ottawa-Carleton Mortgage told MortgageBrokerNews.ca. “Barring a government threat of layoffs and a referendum, this is always a solid market.” That hasn’t necessarily been the case across other major urban centres, with new CREA stats pointing to August declines in Calgary, Montreal and Vancouver. They may, however, have been the exception.

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A total of 324,030 homes have traded hands on Canada’s MLS system so far this year, says CREA President Gary Morse. While this stands only marginally above levels in the first eight months of last year, it also marks the first time this year that year-to-date activity has pulled ahead of 2010 levels. Nationally, sales activity was stable from July to August, but posted another big year-over-year gain reflecting weakened demand last summer, and on the heels of a buying spree ahead of new tougher mortgage qualifying rules. “The housing market in Canada remained on a firm footing in August when compared to volatile financial markets,” said Morse. “Through their actions, homebuyers are showing that they remain confident about the stability of the Canadian housing market, and recognize that the continuation of low interest rates represents an excellent opportunity to buy their first home or trade up.” That is primed to change with the first tentative signs that Canada may be among the first developed nations to officially slip back into recession – even ahead of the beleaguered U.S. bank economists who have now trimmed their outlooks following the economic contraction 0.4 per cent in the second quarter and the very real threat of a similar pullback in the third. That has the potential to slow even King’s traditionally buoyant market, where brokers enjoy as much as a 30 per cent share of mortgage business. “If the government does come out with even the threat of 5,000 or 10,000 layoffs,” the brokerage head told MortgageBrokerNews.ca, “that means we’ll then have 60,000 civil servants doing nothing, buying nothing – not cars, furniture or homes.” Should those job cuts come, King would prefer the government to move quickly to identify the affected workers, a way of preventing the kind of pause in activity that would quickly get transmitted to his team of more than 20 mortgage professionals. CMP

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Broker Networks

superbrokers See how Canada’s national broker networks stack up 32

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Broker Networks

After giving brokers and lenders the opportunity to provide feedback on each other the last two months, CMP turns to the national broker networks in an effort to hear what they have to say about the issues facing the mortgage industry and to examine their latest figures

he trend of brokers joining national broker networks continued unabated this past year, as “superbrokers” continue to strengthen their hold on the industry. With lenders putting more pressure on brokers and brokerages to increase efficiency and volume, more brokers seem to be jumping on board as well as switching allegiances. For CMP’s fourth annual survey of Canada’s national broker networks, we invited 15 of them to participate and answer a series of questions

covering topics such as compensation, brokering model, compliance, ancillary services and lead generation. Eight brokerages chose to respond, with some answering every question and others providing partial answers. Each brokerage also provided comments about how they’ve helped their brokers over the past year, what their plans are for next year and what issues they think will impact the industry in 2012.

CMP superbrokers survey Compensation • Commission splits – What splits are your brokers/ agents paid? If you have different splits available, please specify.

Ancillary Services • What ancillary services do you offer to your brokers/agents (including white-label products, home and automobile insurance, creditor life insurance, wealth management, etc)?

• Volume bonus splits – How do your brokers/agents share in your volume bonus program? What does the company do with its portion?

• What percentage of your brokers/agents takes advantage of these ancillary services?

• Trailer fees – Is your brokerage aligned with any lenders in order to take advantage of trailer fee commissions for your brokers/agents? If so, do the trailer fees follow the brokers/agents if they switch companies? Why or why not?

Lead Generation • Do you offer lead generation for your brokers/agents?

Brokering Model • Do you offer franchise opportunities?

• If so, how are the leads generated and distributed? Compliance • What does your compliance system entail?

• If so, what does it cost to purchase a franchise?

Payroll • What does your payroll system entail?

• Will you help brokers/agents purchase storefront locations?

• How often are your brokers/agents paid commission?

• Do you encourage the storefront model? • What are the stipulations stated in the contract your brokers/agents must sign upon joining your firm? • How many brokers/agents/locations do you have? • In what Canadian jurisdictions do you operate? • What was your brokerage’s funded volume for 2010? • What is your expected volume for 2011?

• How quick is your turnaround – ie, when you receive payment from a lender, how long does it take you to turn it over to your brokers/agents? Comments • What have you done in the past year to help your brokers increase their businesses? • What are your plans for 2012? • What do you think will be the major issues/factors influencing your business in 2012?

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Cover

Broker Networks

CENTUM FINANCIAL GROUP Number of agents: 2,600

Established: 2002 • Royalty plans start at five per cent. • Commission and volume bonus splits vary between brokers and agents.

Compensation

• Trailer fees can follow broker/agents, this can be dependent on individual franchise /agent or lender agreements. • National independently owned and operated franchise network • Storefront model is required.

Brokering Model

• 260 locations • Operate in all jurisdictions • White-Label Products • Online Office • Underwriting Administration Service • Personal Debt Restructuring

Ancillary Services

• Internal and External Training Available • Creditor Life Insurance • Customer Product Adviser • Commission Advance Program • Automated consumer marketing newsletter generated monthly.

Lead Generation

• Partnership with a leading national real estate website that receives 800k+ hits per month. These lease are distributed geographically

Compliance

• Individual licensee is responsible for all provincial and federal compliance requirements.

Payroll

• Franchisees are paid daily

• Additional potential leads through independent agent websites

What have you done in the past year to help your brokers increase their businesses? Introduction of monthly leadership calls to ensure all franchise owners are aware of current market conditions. Launch of enhanced Centum Online Office, launch of AGF (Agent Financial Tool) Partnership and launch of REMIC (Real Estate Mortgage Institute of Canada) Partnership and launch of 4 Pillars Personal Debt Restructuring Inc.

Paul Therien, Director, Business Development

What are your plans for 2012? Increased visibility via search engine optimization to generate viable leads. Enhanced IT tools and training for new and existing franchise owners to maximize engagement of consumer relationships of which will ensure long-term sustainability of our franchise owners’ businesses. Launch of

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Productivity Enhancement Program for maximizing productivity and lead generation for agents and franchise owners. Increased presence in the broker and lender community to ensure there we are increasing consumer awareness as to the value of utilizing the services of a mortgage broker to assist in increasing our market share. What do you think will be the major issues/ factors influencing your business in 2012? Rates and the inevitable increase of the same will likely be the major issue/factor for the first half of 2012. Consumers will be more cautious and therefore it is essential that our franchise owners and agents are well educated and apprised of the market conditions and all of the options that are available to them and their clients.

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Broker Networks

Dominion Lending Centres Number of agents: 2,000+

Established: 2006 • All franchise owners receive a 95/5 split. How they choose to pay their agents is completely up to their own business plans.

Compensation

• We run our internal network based on the five per cent we make, including all tools, systems, programs and expertise we offer through head office to help our agents run and grow their businesses. • We have white-label offerings where agents can earn trailer commissions. As long as an agent is still a registered mortgage professional – regardless of which company they work for – the trailer fees will follow them. We don’t believe in holding our agents hostage – if they want to leave, they can, and they do not risk losing trailer commissions that they’ve worked hard to earn. • The cost to purchase a franchise is $20,000, but for an existing team with volume exceeding $40 million, this fee can be absorbed by head office. • We help identify and secure storefront locations for our agents.

Brokering Model

• Yes, we are strong supporters of bricks and mortar storefront locations. But we are unique in that agents who do not have their own location can partner with other agents to have a meeting location with their clients at a nearby DLC location. This affords all of our agents with a professional environment in which to meet clients and referral sources. • We have more than 2,000 mortgage professionals located in more than 350 locations across the country. • We are located in every jurisdiction across the country. We recently opened our first franchise in Quebec. • We funded $9.6 billion in mortgage transactions for 2010 – making us the largest brokerage in Canada according to Filogix. • We expect to write more than $11.5 billion in 2011 • We offer an exclusive line of white-label products – through The Dominion Mortgage suite. This offering provides among the most competitive rates and commission pay-out – including both upfront and trailer commissions – in the industry.

Ancillary Services

• We were the first mortgage brokerage to also offer equipment leasing through our mortgage professionals. We purchased a successful leasing company in 2008 and rolled it out across the country. Our mortgage professionals love the opportunities this ancillary offering is providing – including excellent opportunities to accommodate both mortgage and leasing requirements for the same customer, as well as receiving top-notch compensation for both leasing and mortgage brokering. We even have our own internal credit department to handle the leasing side of our business, and help agents with their deals. Our new leasing referral program offers a referral fee to our agents simply for providing a name and contact details for a leasing deal that successfully funds. • Our agents offer creditor life insurance to their clients via the Mortgage Protection Plan (MPP). This is another excellent opportunity for our agents to receive both upfront and residual income as long as a plan remains in place. • New this year is our Dominion Lending Centres Commercial Division, which pays our agents a 25 per cent referral fee for simply providing a name and contact details for a commercial deal that successfully funds. In addition, for every new deal that arises from that referred client, the referring agent continues to receive 25 per cent of the fees. And if a residential deal arises from any of the commercial referrals, that residential deal is sent back to the referring agent.

Lead Generation

• As part of our extensive ongoing national advertising campaign, including out Dominion Lending Centres Don Cherry endorsement deal, which reaches local marketplaces across the country, we drive consumers to our corporate site – www.dominionlending.ca – where they can search for agents or offices in their area. Any leads that come into our head office are distributed to our agents on a rotational basis free of charge.

Compliance

• Our focus on compliance ensures every mortgage professional in every region of the country has access to ongoing education and up-to-date compliance information from regulators and industry associations. We communicate this information via various means including network-wide or province-wide communications (depending on the issue), the DLC Intranet, DLC Weekly Bulletins and the monthly Dominion Opinion internal newsletter.

Payroll

• We have a complete reporting system set up for franchise owners and offer very detailed compliance procedure training. All of this is, of course, overseen by head office. • Typically within 48 hours of head office receiving payment from lenders, agents receive their commission.

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Broker Networks

Gary Mauris, President

What have you done in the past year to help your brokers increase their businesses? Our extensive line of business-building tools is ever-growing to ensure our agents have access to everything they need to continue building their own businesses – and all these tools are available on our internal Intranet. We offer an abundance of free ready-to-use templates, including articles, advertisements, client and referral partner letters and forms, website banners, and PowerPoint presentations that we’re always updating to serve the needs of our network, as well as live weekly webinars on a variety of new topics. We also offer free custom work for advertising and communications. In the past year, we’ve also introduced a new commercial division (see above), new multilingual agent websites (instant translation into more than 50 languages), new white-label products and the inaugural Dominion Lending Centres National Sales Conference, which was held in Las Vegas in May. We also continue to offer our Dominion Lending Centres Owner/Manager Universities and Agent/Broker Universities to help our network build and grow their businesses. We’re also very focused on lender efficiencies – something we’re told that many other brokerages have not paid close attention to. By being efficient, we’re building lasting relationships within the industry that helps our clients receive the best possible rates and products targeted to their unique needs. It’s our goal to always remain ahead of the competition and it has worked for us. We’re often the

first company to introduce a service and watch others try to catch up. We never adopt a “me too” mentality. What are your plans for 2012? We expect 2012 to be a strong year for our industry thanks to the current low interest rate environment, which is expected to flow into most of 2012, as well as the added tools and services we’re continually offering our agents to ensure their success in any type of market. From a network perspective, we’ll continue to identify and implement new revenue streams for our agents and owners, and focus on cross-selling opportunities so that we can build lifelong relationships with our customers. We’ll continue to focus on our brand awareness campaign that educates the Canadian public on the fact that Dominion Lending Centres Mortgage Professionals are the best equipped to save the consumer time and money when negotiating their mortgage needs. Our Nationwide Television Dominion Lending Centres Don Cherry campaign will make more than 250 million viewer impressions to Canadians in 2011. What do you think will be the major issues/factors influencing your business in 2010? We always expect issues to arise in business and 2012 will be no exception. We constantly evaluate the changing landscape of our industry including consolidation, federal regulations, consumer awareness, broker market share and privacy challenges.

MORTGAGE ARCHITECTS

Alice Chan, Senior Vice-President

What have you done in the past year to help your brokers increase their businesses? We always keep our planners informed about industry and economic trends that impact their business. We organize annual conferences to train our planners on lenders’ products and guidelines. Our RVPs assist our lead planners in their business plans and marketing plans. We implemented a centralized streaming desk by offering our planners access to preferred interest rates and turnaround service with a number of lenders so our planners can stay competitive in their service offerings. Our own lender Radius Financial launched a commercial mortgage division last year, which enabled our planners to expand into commercial mortgage business. We launched a proprietary HTML CRM program, which automatically sends informative and appropriate information to our customers based on their mortgage profiles. This helps our planners to stay top of mind with customers. We help our brokers to embrace social media as part of their marketing strategy to reach out to their clients and potential customers. Twitter, LinkedIn and Facebook are integrated into our brokers’ personal websites. Our marketing group developed seasonal

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and timely campaigns that are featured on our corporate site as well as our brokers’ personal site to generate new business. Our planners/brokers receive support materials; i.e. articles, advertorial flyers, HTML emails etc., which they send to their CRM database and referral database to generate new leads or repeat businesses. What are your plans for 2012? Our plan is to grow organically as well as through acquisition. Technology will be a major differentiation factor as we continue to enhance our CRM programs with proprietary tools. We are also working to complete our mortgage planning program, which will help our planners increase their business. We also plan to leverage on our lender, Radius Financial, to stay competitive in the residential and commercial mortgage space. What do you think will be the major issues/ factors influencing your business in 2012? Lack of consumer awareness of the services provided by the broker industry and consumers’ emphasis on rates versus products that most suit their financial needs.

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Broker Networks

Number of agents: 370

Established: 2006 • We have three compensation models available to our lead planners (LP); depending on the level of services and support they require. Our full-service model provides lead planners with a 90/10 split. We also have two franchise models – 95/5 and 93/7 • Associate planners get their split from their lead planners.

Compensation

• We share our volume bonus with our lead planners at the same percentage split level chosen by the LPs for their finder’s fees. The company uses its portion to deliver the values outlined in our service offerings. • We support all lenders that our planners choose to do business with, including lenders that offer trailer fees. We will pay all commissions – VB & trailers to the submission agents even after they decide to leave since they originated the business and it is the only fair thing to do. • There are no initial fees to sign up for a franchise with MA. We don’t want a fee to get in the way of recruiting quality franchises. We don’t charge any advertising fees or renewal fees. • Yes, on a case-by-case basis with approval of their business case. Certain conditions apply. • Yes, provided it fits the lead planner’s market strategy and business plan. The storefront model is not for everyone. • All agents and brokers must comply with our compliance and marketing guidelines. We have a zero tolerance policy when it comes to compliance to maintain reputation and integrity of our brokers.

Brokering Model

• 60 offices • We are licensed in all provinces. • Approximate $4 billion. • Similar to 2010. • We have our own lender, Radius Financial. Other ancillary services include: our own Points rewards program; group creditor life program; CRM programs; competitive group benefits coverage, corporate discounts with other service providers like cellphone and rental services.

Ancillary Services

• Depending on the service, participation varies from 15 per cent to 100 per cent. Lead Generation

• They are generated via our corporate website www.mtgarc.ca and clients select the brokers they want to do business with.

Compliance

• It is a paperless system where our agents submit their compliance documents electronically through our secured Internet portal. The submitted documents automatically go into the work queue of our compliance officers where they are reviewed and signed off. Deficiencies are also resolved via our secured Internet portal. • It is a paperless system and the calculation/ distribution of commission splits are fully automated based on the profile of each agent.

Payroll

• We pay our agents weekly every Friday. • If payment is received by Monday and file is signed off by compliance, the agent will get paid same week.

MortgageBrokers.com

Dan Putnam, President

What have you done in the past year to help your brokers increase their businesses? We have successfully streamlined our compliance and it is now fully electronic, negating the need for paper storage by our brokers/agents and drastically improving turnaround times for compliance sign-off and ultimately payroll. This state-of-the art technology is proprietary to us and was designed, and is managed, in-house. This is in keeping with our philosophy of providing best-of-breed technology solutions to our network that is directly controlled by us, eliminating any reliance on outside providers where and whenever possible. The result is that

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we can implement broker and agent improvement suggestions, often in a matter of days, without having to consult outside suppliers. We have introduced a management dashboard for all brokers/agents that provide one-click views of their individual and team business, including: ranking by volume and units, upcoming renewals, submission to approval ratios, fixed versus variable mix, lenders by volume and units etc. This is especially beneficial for our senior brokers and franchise owners that manage a team of agents, ensuring that they are in touch with all key facets of their business and team members at all times. We have expanded our

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Broker Networks

Number of agents: 350

Established: 2005 • Commission splits depend on volumes and type of agreement with MortgageBrokers.com. We are typically a 90/10 brokerage for our full-service offering to qualified agents, but also offer franchise options at 93/7 and 95/5. Our two franchise options allow for self-serve compliance and payroll (95/5) or to have this performed by head office (93/7). • These commission splits can be adjusted upwards based on the percentage of business funded through our own mortgage lender, Radius Financial.

Compensation

• Volume bonus split is the same as above and the company’s share is utilized in our normal operating revenues. • Trailer fees are offered exclusively by our proprietary mortgage lender while the broker/agent is still associated with our firm. Additionally, our brokers are free to deal with any external lenders that offer the trailer fee model. • At MortgageBrokers.com there are no initial franchise fees, advertising fees or renewal fees associated with our franchise offering. • We would consider helping brokers/agents purchase storefront locations on a case-by-case basis, with a full understanding of the franchise business plan and where market conditions are favourable to do so. • Dependent upon the type of engagement such as mortgage agent, managing partner or franchise, but typically includes data ownership, fraud protection and volume levels as well as adherence to our policies and procedures manual are all key components of our agreements.

Brokering Model

• Approximately 20 locations • Operate in the Atlantic provinces, Ontario, Alberta, BC, and Saskatchewan. • We have our own mortgage lender – Radius Financial. This is a fully operational mortgage lender, not a white label, and is available to all of our brokers/agents.

Ancillary Services

• Our supplier of choice for creditor insurance is MPP. • The majority of our brokers and agents use these services.

Lead Generation

• Generated via the website www.mortgagebrokers.com and assigned to senior brokers based on geographic proximity to customer.

Compliance

• We manage compliance electronically through our own proprietary technology. All closed files must be signed-off by our national compliance office prior to payroll processing. The compliance team is managed by our National Compliance Manager. • Once a file is signed-off, then we manage all appropriate splits and automatically deposit weekly. • Weekly, both for regular commission and volume bonus.

Payroll

• If payment received by a Wednesday and the file is compliant, automatic deposit is made on that Friday.

proprietary contact management system to include referral sources. Our Eximius CRM system is automated and intelligent and is provided at no-charge to our broker/agents. Components of our Eximius CRM provide: • Timely and relevant electronic reminders for key dates such as birthdays and maturities; • Fully templated and personalized emails positioning our brokers and agents as educators and trusted advisers; • Automatically generated emails based on the criteria of the mortgage. For example, a variable-rate mortgage client is messaged differently than a fixed-rate mortgage client;

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• The ability for each broker and agent to generate ad-hoc emails in a straightforward, user-friendly process; • The recording of all contact management activity for each contact; • The ability to sort client files by date range, maturity date, rate bands, file status etc. • Automatic ingestion and refresh from D+H Expert, negating the need to re-key data. Our Eximius CRM ensures that our brokers and agents are constantly front-of-mind with clients, prospects and referral sources, resulting in increased repeat business and referrals. Our

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Broker Networks

brokers and agents tell us unequivocally that our Eximius CRM, designed and managed in-house, is peerless in the industry. The additional revenues provided to our broker/agents through Radius Financial provides an additional competitive advantage. Not just a white label, Radius Financial is a full-service mortgage lender and we are excited about the new products and services that will be available to our network in the near future. The addition of our Streaming Desk allows broker/agents to attain top-tier rates and commissions with lenders that they do not regularly deal with, or are unable to achieve the required personal volume levels with in order to offer their customers these benefits. This is provided at no cost to our brokers and agents and the Streaming Desk is staffed by an experienced, licensed mortgage broker. Mortgagebrokers.com has excellent senior management bench strength. We don’t just spin the story to get brokers interested in us; once on our team, we provide excellent street support to our network, leveraging our years of experience in sales effectiveness, overall industry know-how and operational experience. As president, I am actively engaged engaged with our national network. Another industry veteran, Dong Lee, vice-president of operations nationally, brings sound operational effectiveness to the smooth running of the head

office support team. Dan and Dong are supported by Stewart Eadie, regional vicepresident, Ontario who works with the Ontario brokers and agents on a day-to-day basis and Glen Ward, regional vice-president of Network Development, Atlantic Canada. What are your plans for 2012? To continue to enhance our Eximius CRM and technology offerings to allow our broker/agents to concentrate on the sales side of their business. For us it is all about minimizing the non-revenue generating aspects of the job for our brokers and agents, so that they can continue to build a true and lasting business of value. What do you think will be the major issues/ factors influencing your business in 2012? The need for increased visibility and consumer awareness of mortgage brokers in general. Continued price competition from bank branches and lender sales forces will continue to put increased pressure on the broker channel. We believe that the tools that we provide our brokers and agents, specifically our CRM and ongoing senior management support will best position our brokers and agents as lifetime advisers to their clients and centres of influence.

THE MORTGAGE CENTRE CANADA

Tim Rye, Chief Operating Officer

What have you done in the past year to help your brokers increase their businesses? MCC has made considerable strides in the past year building on increased exclusive product offerings through CIBC and PCF. Leveraging a multi-million dollar advertising campaign for the CIBC Switch program, our brokers have been able to raise awareness of the MCC brand, its connection to CIBC, ultimately resulting in more volume. To ensure our agents kept funding more than twice the industry average, we worked with our market lending partners to bring lead generation program into the franchises, working with franchise owners to facilitate referral-based training programs and bring quality leads in. Our franchise growth strategy defined simply as “growth through quality acquisition” keeps the integrity high within our network. This strategy bolsters our positioning with our lender and business partners, allowing our network opportunities that don’t exist with other brokerages.

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What are your plans for 2012? In 2012, we will continue our commitment to strategic growth through unique product offerings, quality franchise recruitment, and the introduction of new training, sales, management, and connectivity solutions. Our growth has always been measured and a symbol of our 20-plus years in the business. With customized connectivity solutions each franchise will be equipped with the business tools to increase their footprint in the markets they serve. What do you think will be the major issues/factors influencing your business in 2012? We believe the biggest issue facing our industry as a whole is the economy, ongoing changes on the lender side and the evolution of the broker/agent/ house and lender relationships. We believe more and more it does matter which firm you represent, it is no longer about just volume. Quality matters and at MCC we are confident that all of our lender partners see the value in continuing to expand our relationships. To see this in practice simply take a look at our product lineup, leading commissions and overall quality of our network.

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Broker Networks

Number of agents: 1,000

Established: 1989 • The Mortgage Centre does not charge a commission split. Instead we collect a nominal royalty fee based on the dollar volume funded and the lender. Our typical royalty is 50 per cent less than the average industry commission. With our unique royalty model; 100 per cent of additional revenue earned through volumes, efficiencies, or other objective targets are directed to franchises. • The Mortgage Centre does not charge on private lending. Any private lender deals where you charge broker fees to the client(s) or earn a lender commission are exempt from royalties. • At the agent level, our independent franchise owners negotiate various commission splits directly with their agents based on experience, quality and volume.

Compensation

• The franchise gets 100 per cent of the volume bonus and finder’s fee. • With our exclusive royalty model, franchises keep 100 per cent of any bonuses they earn, including but not limited to; volume bonus, efficiency bonuses, or trailer fees. • Franchise gets 100 per cent of the trailer fee. We do not get involved with how the franchise owners treat trailer fees or negotiate with their agents. • Mortgage Centre Canada is an independently owned and operated franchise network. As such, any arrangements for trailer fee transferring when an agent moves on is negotiated between agent and franchise owner. As described in our business model, franchises collect 100 per cent of trailer fees earned, which move with them should they switch networks.

Brokering Model

• $16,500 plus HST for a defined territory protecting the franchise owner from over-saturation. The defined region provides a tangible value for future succession planning. • We offer a full analysis of any given market to help our future or expanding franchises maximize their exposure in a territory. Because our business model is relatively inexpensive, we do not provide any monetary aid. We also have access to a large variety of partners and suppliers facilitating great pricing incentives. • Yes, we believe in order to maximize our networks exposure and brand visibility we ask that part of the criteria to qualify for franchise ownership is that you have a public visible office or retail location. • It is a five-year mutual commitment. • 110 franchises, 165 office locations, 1,000 agents • Coast to coast except Quebec.

Ancillary Services

• We have the unique ability to offer CIBC and PCF products. This year we have expanded our offer to include referral programs for additional CIBC products. • Mortgage Centre Canada (MCC) is a division of CIBC Mortgages and Lending, allowing us the unique ability to offer exclusive, niche CIBC and PCF products to our network. We feel these easily recognized and trusted products outweigh any need for MCC to create white-label products. This upcoming year we will be expanding our offerings to include CIBC unsecured products. • MCC has a relationship with Mortgage Protection Plan, allowing our agents to earn commissions on this ancillary service. • We have had some tremendous uptick in selling the CIBC Switch Product which was heavily marketed by CIBC from coast to coast this year and we have seen our network take advantage of this product as well as the Wealth Builder product, which allows the client to build savings. • Our PCF 12-month cap mortgage and the PCF secured offering has continued to allow our network to compete in the construction financing and small second mortgage market at prime rates

Lead Generation

Compliance

Payroll

• Yes, via our website • Distributed to the franchise in the market the lead comes from, proximity to postal code • Because our franchise owners are independent, they have the ability to customize their own compliance according to the regulators in each province. Our network has been very accommodating in sharing best practices which has helped our franchises understand what’s needed in order to optimize its compliance process and diminish liability. In accordance to legislation, franchise owners in various provinces have access to a Policy and Procedures Manual which was created to assist in the compliance process. • We offer multiple payroll services with plans for further options as we go forward, we offer flexibility to meet the needs of our network partners • Commissions collected from lenders are paid out weekly to the franchise, via EFT. • One business day

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Broker Networks

REAL MORTGAGE ASSOCIATES INC. (RMA)

Ron De Silva, CEO

Number of agents: 500+

Compensation

What are your plans for 2012? RMA’s compensation model of giving them 100 per cent of all available money allows our brokers to build their own business. In 2012, we will be launching a software system that will allow brokers to manage their client file from the web-originated prospect stage to the funding stage in one easy system. In addition to managing their day-to-day work efforts, the system will allow our brokers to engage in marketing to clients right from their desktop.

In 2012, we are also giving our brokers shares in RMA via a unique ownership vehicle. In addition to being paid annual dividends, tangible value for the organization will be established by tying the shares into a commercial real estate portfolio. Our objective is to achieve $10 million in net asset value for RMA by 2016. This is a unique approach to creating wealth for our broker base. It’s ownership that makes real sense.

Established: 2006

• Our senior agents get paid 100 per cent of the finder’s fees and 100 per cent of the volume bonuses. The senior agents / brokers pay us one flat fee that covers themselves and their team of agents. • Our senior agents get 100 per cent of the volume bonus that is paid by lenders. The senior agents / brokers pay us one flat fee that covers themselves and their team of agents. • Yes, trailers follow the senior agents if they switch. • Yes we offer franchising opportunities for our model. • There is no cost to purchase our franchise. They are free. • If a business case can be made for the purchase, then yes. • Yes

Brokering Model

• 500+ Brokers/Agents • 91 Locations • ALL Provinces • $1,566,323,144 • $2,000,000,000+

Ancillary Services

• Creditor life

Lead Generation

• There is a total of 34 websites that are optimized for search engines. When a consumer is searching for a mortgage broker in their respective city, our websites appear on the first page of Google in most instances. (eg: a search for “Hamilton Mortgage Broker” brings up www.HamiltonMortgages.com on the first page) These sites all have our agent roster within where a consumer can search and select one of our agents to contact. We promote our agents at no cost to the agents. Any mortgages resulting from these web leads are handled by the brokers with no deduction to their commissions.

Compliance

• All files are audited to ensure guidelines are met. • Automated system with direct deposit into accounts

Payroll

• Twice weekly • Three to five days

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Broker Networks

TMG THE MORTGAGE GROUP CANADA INC.

Mark Kerzner, President

TMG The Mortgage Group is an innovative, fullservice, national mortgage brokerage – unique in its longevity in the industry. Since 1990, TMG has been growing its presence in the market place from humble beginnings in British Columbia to more than 700 mortgage professionals across the country. Earlier this year, the founders of TMG, Grant and Debbie Thomas along with the entire network were honoured when TMG was named Broker Network of the Year for 2011. The TMG culture of promoting professionalism in a family-oriented environment is not by accident. From the outset, the driving principle is supporting the client. All of TMG’s programs, systems, training and technologies are tested against that principle: Does it support a broker in their business and does it assist a client? It starts with lender relationships. TMG has developed some of the best lender relationships in the industry and TMG agents and their clients reap the benefit. This stems from a corporate philosophy that lenders ought to be treated like customers – after all they are supplying us with both product and compensation. “We are a special company,” said Mark Kerzner, president of TMG. “So much of our success is based on the relationships we have developed with our brokers, lenders and industry providers. We continually look for ways to enhance a broker’s value with the end consumer.” As a full-service brokerage, TMG also encourages its brokers and agents to develop their business in a way that will help them grow, whether it’s choosing a storefront business model or leading teams. TMG has seen tremendous growth over the past three years. Volume has nearly doubled and more agents and brokers have chosen to partner with the company. Not only is TMG a model for success, the company has developed a number of initiatives to help mortgage professionals continue to grow their businesses. These include TMG Branded Mortgages, the company’s popular white-label mortgage product; various insurance products; TMG Leasing; TMG Pre-Paid Visa; and customized broker websites.

The company’s ground-breaking training programs are delivered through its secure website. TMG has built its own training facility with full HD, Green Screen broadcasting capabilities. Recently, TMG offered a webcast on estate planning to brokers and agents and also gave their clients access. Aside from training programs, brokers have the option to produce their own personal videos to assist in their marketing plans. These videos can go on their websites or as part of their e-mail signature. TMG’s CRM system includes a media centre, collateral information, automated monthly newsletter distribution, contact management and an automatic inbound inquiry capture and response system. An extensive library of lender information and marketing materials allows TMG agents and brokers to customize flyers, brochures, advertisements and other forms of traditional collateral materials. BrokerNet is a unique feature of TMG. It offers extensive back-end support to agents and brokers. Files are uploaded to Doc Central, which is a completely electronic interface creating a paperless environment. “Our system is integrated with payroll and ensures that all deals are compliant with each province’s compliance standards,” explained Grant Thomas, TMG founder. “Payroll is centralized and electronic with weekly direct deposits.” TMG continues to attract high calibre professionals in the industry and offers strong, quality management in every region. “Our management teams are proactive industry advocates and thought leaders,” Kerzner said. “We recently hired additional key management personnel who have already added tremendous value to our company.” Growing the TMG Brand has been a key strategy in the past two years with a focus on social marketing. In the upcoming year, TMG will continue to develop programs to assist brokers and agents, always keeping the same principle in mind – that the client comes first.

VERICO What have you done in the past year to help your brokers increase their businesses? VERICO Canada offers new and existing members a full suite of comprehensive business products, services and technologies to start, grow and advance their business. We looked at the industry and at the changing marketplace at the beginning of the year and recognized an opportunity to offer our network the tools and information that would help them further their success. We decided to embark on a strategy to build a technology solution for our members that

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would help grow their business and capture more of those valuable leads. Much of 2011 was spent building the foundation to this new suite of technology. We also recognized that information and education was crucial to helping our mortgage brokers. We have redesigned the VERICO education program and will be introducing Verico Academy before the end of the year. Verico Academy will offer our members, at all experience levels, tactical tools to increase their business and meet their business goals.

myNext Mortgage Company is now

Radius Financial. We’ve made a bold, strategic decision to change our name. Radius Financial is a reflection of who we are as a company and what we stand for: our clients. Always at the centre; the most important component of our business. Radius Financial is committed to delivering products that meet the diverse financial needs of Canadians. We’re pleased to announce that Ron Swift has joined Radius as our new CEO. Ron has been an industry leader for many years and we’re excited about our new direction.

Ron Swift CEO 416.366.4321 x588 ron.swift@radiusfinancial.ca As the CEO of Pacific Mortgage Group Inc., Ron Swift is responsible for the overall group operations for Radius Financial and Mortgage Architects. Recognized as a Canadian Mortgage Hall of Fame inductee, Ron is a respected member of the Canadian mortgage industry with a proven executive management track record and almost two decades of experience in a variety of leadership roles. Prior to joining Pacific Mortgage Group Inc., Ron served as President of MCAP’s residential mortgage origination, broker channel sales and servicing business for over 10 years. Formerly a Mortgage Broker and native of Vancouver, Ron brings a wealth of knowledge of the Canadian retail mortgage market to the operations at Pacific Mortgage Group.

Introducing the Radius Sales Team Jim FitzGerald RVP, Ontario West 416.705.9900 jim.fitzgerald@radiusfinancial.ca

Dave Mercer RVP, Alberta 403.837.7733 dave.mercer@radiusfinancial.ca

Raj Singh RVP, Ontario East 416.728.7180 raj.singh@radiusfinancial.ca

Sonny Saran RVP, British Columbia 604.809.7456 sonny.saran@radiusfinancial.ca

Cover

Broker Networks

Colin Dreyer, President

What are your plans for 2012? 2012 will be a very exciting year for the VERICO Network. We will be rolling out a suite of new technology that will be one of the cornerstones of our strategic direction – Verico Dynamics Verico Payroll and Verico Academy. This suite of technology will change the way mortgage brokers do business. It is an end-to-end leads generation, business management and CRM system built specifically for the needs of mortgage brokers using enterprise class technology. What do you think will be the major issues/factors influencing your business in 2012? The Canadian economy has done very well in spite of worldwide economic unrest. However; evolving economic issues in the U.S and other parts of the

world will have an influence on the Canadian economy….positive or negative. Any economic influence can affect the decision-making policies of our lenders and insurers which, in turn, directly affect the mortgage industry. Uncertainty is a factor that affects consumers who ultimately directly affect our business. That being said, we all understand that some form of change in any environment is certain, as are competitive forces, but we believe that this is also a great opportunity for VERICO members to continue to provide consumers with the information and service that they need to make informed financial decisions. VERICO members have the experience, expertise and professionalism to excel in their chosen profession and they will continue to take advantage of all the opportunities in the marketplace.

Number of agents: 2,100 (190 broker/owners)

Established: 2005

Compensation

• 100 per cent commissions; 100 per cent volume bonus; each licensee determines agents’ splits • We offer trailer fee programs through our partnership with lenders. • The trailer fees always follow the licensee. Each licensee determines how the trailer fees follow their brokers. • We are a brand licensing network company and there are membership opportunities. • There is no cost to join the VERICO Network, however, there is a stringent application process to ensure that the calibre of our members reflect the high standard of VERICO’s reputation. As part of our membership qualification process, we discuss all details on a confidential basis with each applicant.

Brokering Model

• VERICO Canada assists licensees in all aspects of their business. • Using a storefront model is a decision that our licensees make and we will support it as we do all our licensees in their business growth. • Brokers/ licensees 190, agents 2100, locations 250 plus • All provinces. • Exclusive lender relationships • Trailer fees

Ancillary Services

• VERICO insurance for mortgage life protection and critical illness • In-house preferred suppliers • Corporate leasing • Wealth Management • Corporate Referral Programs

Lead Generation

• Generate leads through referral partners, which comprise of large national companies • Verico Dynamics, a lead management tool, will be launched in 2012.

Compliance

• Individual licensee is responsible for setting standard • Part of licensee agreement • Lenders pay directly to licensees

Payroll

• Individual licensee is responsible for their office • Launching Verico Payroll system in 2012 CMP

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t n a I w r e n t r a P o t . u o y with

The unmortgage is the complete package. Everything about it has been designed to help your Clients save money by offering them competitive rates, industry leading prepayment options, and a variety of payment frequencies. Now what about you? Glad you asked. Because the unmortgage was also designed for YOU, with: • Fast turn around times • One of the best finder’s fees in the business • Great service • Competitive rates And we’re just getting started. We’ve worked hard to be a leader in the industry and to provide you the best mortgage products, and at the 2010 Canadian Mortgage Awards, ING DIRECT received 7 nominations, including Best Service Industry Provider. We are honoured by the recognition and want to share this success with you, after all, a great mortgage product and service like this needs great brokers like you. Sound like the right match for your business? Find out more about becoming a designated unmortgage broker, and what it can do for you and your Clients at: ingdirectbrokerteam.ca

® A registered trademark of ING Groep N.V. “save your money” and “unmortgage” are registered trademarks of ING Bank of Canada.

Feature

BROKER COACHING

With education and training for mortgage brokers continuing to be a hot topic of discussion in the industry, CMP asked four broker coaches about how they counsel clients, what needs to be done and why this issue is so important to the brokering community

Chris Johnstone www.cwjstone.com

Did you know that 97 per cent of your customers now do research online before buying locally? Technology is moving at breakneck speed. In just five short years we have seen our customers completely change the way that they go through the buying process. Your mortgage customer is going to the front page of the search engines to research getting a mortgage and to find out who the most trustworthy mortgage broker is in their local marketplace. As a broker in this ever-changing marketplace it can be overwhelming to keep up with all the different tasks that you need to be an expert at. After keeping up with constant changes with regulations and lender guidelines you have to followup on all your leads, keep in touch with your database and countless other tasks. At the end of

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the day it is incredibly hard to focus on learning and implementing online marketing. It is impossible to be an expert at everything, which is why having an expert online coach is a necessity for successful companies and brokers. The mortgage business has seen massive growth in its need for online marketing and social media coaching. New tools are introduced almost daily and it is has ended up being easier to get overwhelmed with information than it is to find something that works. A marketing coach tests all the online marketing methods available and cuts through the massive volumes of information to find techniques that actually work for generating leads, deals and paycheques. An effective coach and trainer finds and tests tools finding the ones that work. They are then able to turn those tools into a system that their students and peers can profit from without feeling confused or overwhelmed. That is where I am seeing the greatest demand for my services. When I am consulting, speaking, or working with my broker customers I always make sure that my marketing systems are clear to understand, effective and easy to implement. Now here is the really big secret in the mortgage world. When our future customers go to do their research online, Google and the other major search engines are showing them search

Feature

BROKER COACHING

results based on where they are searching from. They are then placing the brokers with the most amount of five-star ratings and reviews on the front page in their local market. • 97 per cent of customers do research online before buying locally; • Only 14 per cent of customers trust an advertisement – Your old website; • Over 80 per cent of customers trust a Peer Review – your social proof website. This is where the massive demand for my coaching and marketing systems is coming from. Our customers are overwhelmingly choosing to go online for their information on which mortgage broker to choose. The search engines have changed to show local brokers on the search engines with their social proof ranking beside their profile. Coaching students that work with me have all of the techie work done for them to get them to the front page of the search engines. We then focus on building my social alchemy system into their business to make sure they get and continue to receive a flood of five-star ratings, reviews and testimonials for their business.

Julia Krause

www.jkrausemortgageservices.com My coaching philosophy Every deal is different and has its own set of challenges. Providing reading material and the accepted ‘mentoring’ system, obviously aren’t working. A newer broker needs his/her company to provide an accessible individual, an actual human being, to go to for unbiased help and advice, preferably an experienced, knowledgeable broker who is also capable of teaching and training. Ethical behaviour is taught during the process, on a deal-by-deal basis. For the trainer, there must be compensation that is not tied to the deal itself. A trainer spends a great deal of time educating a new broker about why a particular deal can’t be done, and there is value in imparting that knowledge.

quality of deals they receive, improved closing ratios, and decreases in default/foreclosures. (4) New brokers won’t get frustrated and leave the company they’re with, thinking the ‘grass is greener’ at another company. (5) Lender BDM’s are being used to ‘train’ new brokers, but what new brokers learn from one BDMs is what not to say to the next lender they talk to or submit the deal to. The result? Fraudulent transactions. (6) The reputation of the whole industry would improve. Canadians will see that using a mortgage professional is the best option, regardless of competition from the banks. Why the need for it has grown recently in the industry The need for it has always been there. It’s just the rapid growth of the ‘superbroker’ companies over the last six years that has made it more obvious. We are in a relatively new industry, yet it’s an industry fraught with fraudulent transactions. The number of brokers entering the industry since 2005 and the market share mortgage brokers have in Canada do not correspond. I believe this is because new brokers aren’t provided with proper training in both the practical aspects of arranging mortgages for individuals, and in ethical behaviour. This is taking a toll on how consumers view mortgage brokers today.

Top: Chris Johnstone Bottom: Julia Krause

Greg Martel, Owner/broker Dominion Lending Centres - Harbour View Mortgages, Victoria, B.C. www.gregmartelcoaching.com

Well, I have to say that this is one of the best times to be a mortgage broker. Now, I realize many brokers would completely disagree with me on this statement. But, I believe hands down it is true. I’ve heard repeatedly that the reason our industry struggles is because banks are squeezing us out and becoming more aggressive offering lower rates. The latest 2011 CMHC consumer survey found mortgage brokers have only a 23 per cent share of the market. I see this as a huge opportunity right now for mortgage brokers across Canada and Why I think it is important to the industry instead of focusing on the challenges we face with (1) New brokers will learn faster, and they won’t banks becoming more aggressive, I am focused on lose deals & disappoint clients who then go on to tell friends and family what a terrible experience it finding new ways to add value and provide my clients with services that banks are not offering. was using a mortgage broker. (2) New brokers We all know that mortgage brokers bring learn from someone who isn’t all about ‘get the tremendous value that banks just can’t offer. We deal done no matter what’ and in the process, offer homeowners more personalized services that learn ethical behaviour. (3) Eliminating the ‘trial help them manage their mortgages, which in most and error’ method of submitting files will improve relationships with lenders because of the improved cases ends up saving my clients a substantial

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BROKER COACHING

amount of money no matter what the banks are offering. This leads me to why it is so important that our industry’s training standards need to improve. The basic licensing requirements just don’t help brokers learn the appropriate skill set to be successful in this industry. I talk to brokers every day and I hear very similar stories about why they are struggling. However, in the midst of the economic challenges we face and banks offering more attractive rates, I personally am funding more than I ever have. I mention my personal success, not to brag, but to demonstrate the real issue. Let me explain it this way, in business the playing field changes and when it changes you have to change too. You have to do things differently and adjust to the situation. Yes, it is true that these are difficult economic times and yes it is true that banks are offering consumers very low rates. I am not disputing that. However, what is also true is now more than ever, there are many ways to reach consumers, gain their trust, and provide added value services they will love. We need to educate our consumers and show them the direct benefits they will receive from working with a professional mortgage broker.

This is why additional training for brokers is vital to the success of the individual mortgage broker, our market share, and the consumer. My coaching philosophy is simple: the same old way of doing business in the mortgage industry just doesn’t work. As in any business, it comes down to two things: marketing and innovation. Steve Jobs said, “Innovation distinguishes between the leaders and the followers.” If you look at Apple, they don’t just innovate with their products, they also innovate with their marketing. Now is the time for our industry to educate themselves, not only on the products we can offer our clients, but also on how we can more creatively share this information with consumers as well as become more innovative on what services we provide them with. When we do this as a whole our market share increases.

Greg Martel

Greg Williamson

www.180degreesacademy.com I think banks are looking to steal your business. 2012 will mark the beginning of a new and dangerous era in the mortgage broker industry.

Real Estate Institute of Canada Institut canadien de l’immeuble A finance designation from REIC can help you climb to the top of the career ladder! Contact Us Today! Toll free: 1-800-542-7342 infocentral@reic.com www.reic.ca

REIC is the Pre-eminent National Association for Real Estate Professionals! 56

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Feature

BROKER COACHING

Here’s what I think may happen: Banks will offer more Realtor referral commissions, and larger payouts to them; they’ll cut interest rates and hire more mobile mortgage reps. However, there is a silver lining to this dark cloud ahead for me…but only if I know how to add value to my referral sources and clients by using new tools, systems and marketing techniques to beat the banks. People from all corners of our industry are screaming “Add more value and don’t just compete on rates.” Basically the message is “Be Better.” All at the same time brokers’ share of the market is slipping away and it’s no secret banks are already cutting their interest rates, and paying Realtors directly for business. I often let my mind drift to a place where I never have the best interest rate. I ask myself how would the conversations with my referral sources and clients change? How would my marketing material change? How would my business change? In my coaching community I am driven to provide mortgage brokers with tools to help them get to the customer first and add the most value, real value, not old word fluff disguised as value…

and those who can’t, will be dead in the water. OK, so how can we, as an industry, add more value and be better to beat the banks back? We have to change the conversation and the role we play with our referral sources and clients from a servant position to a leader position. The need to expose mortgage brokers to new marketing tactics, selling processes and lead generation tools has never been more apparent or important to me. What if you had a systemized sales process that bonded, created a need, excited, and clearly explained a solution to a problem your referral source or client didn’t even know they had? What if you could help your Realtor win listings and add value to their past clients? What about having a system of developing online referrals and charging Realtors a commission for that business? This is a conversation that other mortgage brokers and bank reps are not having. What are you doing now to disrupt your business before someone or something else does? Nothing ever stays the same. I continue to challenge myself to learn more and to be better. Shift small and live big. CMP

Greg Williamson

mortgagebrokernews.ca

Feature Recruitment

Hiring your first employee can be a daunting task for the independent broker. Andrea Cornish of our sister publication MPA explains the process and how to avoid some common mistakes

plus M

one

any brokers maintain that hiring their first employee marked a major turning point in their career. Choice Capital’s Nick Caple says when he took the plunge it felt like a massive decision, but turned out to be a great thing for him and his business. He initially only wrote commercial and construction finance and it was his PA who suggested they write home loans. “I said I didn’t want to bother and so she asked if she could and that’s how we started writing home loans — it was sort of an accident,” he recounts. “It was a funny way for it to happen, but now we’re writing $150 million a year in residential loans.” According to Advice Centre Consulting’s David Fox, one of the major benefits of hiring someone is not only the ability to distribute the workload, but it’s the opportunity to bring a new perspective to your business. “As a sole business proprietor, you think you’re the only one with all these problems,” he says, “but when you’ve got someone else, you’ve got someone to talk to about these issues, they can help you, they can provide a different perspective. Good, talented people that can help you grow the business and share your enthusiasm and vision are a fantastic asset.” Fear factor If you’re questioning your ability to make the leap from solo broker to “plusone,” you’re not

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Recruitment

alone. Toowoomba Home Loans’s Paul Taylor hired his first employee in 1998 and described it as “a real terror.” “I was plagued by a number of concerns,” he says. “Can I afford them? Will I pick the right person? What if I train them and they start up in opposition?” While a daunting decision, Taylor says he came to the realization that he couldn’t do it all by himself, and if his business was to grow then he would have to learn to rely on others. “You must take risks in order to grow and learn,” he says. But you can mitigate some of the risk by getting your financials to a level where taking on an employee won’t bankrupt you. Daniel O’Brien of PFS Financial Services says he expanded his monthly trail to a point that could pay for his mortgage, his office and cover the wages. “Once I hit this goal it did alleviate a lot of the stress and worry in making that big step of growing the business:’ he says. “Getting my trail to pay for core expenses was the best thing I could have done. It meant working my butt off for a few extra months, but at least the business was at a level that warranted a second person:’ While having financial assurances in place makes sense, Fox suggests that mortgage brokers don’t always need to wait until they can afford an employee. “My view is that very often you will never be able to afford an employee if you take that approach,” he warns. “Once you’ve made that decision that you want to move towards having a business that is bigger than just yourself, that is the time to employ someone and then to arrange whatever funding is necessary.” Regardless of which approach you take, the next big question is: what next? STEP-BY-STEP: Step 1: Plan the role According to Fox, mortgage brokers need to sit down and think about the role they want their employee to fill. “The most important thing and something that is really not done well is to get clarity around what this role is,” he states. “It’s not only the tasks involved in the role, but also what the role needs to achieve and what the criteria of success are. Typically, brokers are not very good people managers and therefore they would employ someone to do 10 different tasks, but if that person has some talent they will not stay around for very long. They need to employ someone for a future role as well. So that person will be able to develop into that.” Step 2: Deciding remuneration Once you’ve outlined the job description and are clear about what you want your employee to do, it’s important to research appropriate remuneration levels. Just as important is developing an incentive structure

for your employee, Fox says. This will help retention and keep your employee motivated. Step 3: Finding someone There are a variety of ways to find an employee — the most obvious being through advertising, networking, recruitment agencies or via referral. But the most important aspect of this part of the process is to not choose the first person who walks through your door. According to Fox, you should take the time to find someone who is not only capable, but is a good cultural fit. He also advises brokers to look for someone they can mentor and coach into a more senior position. “A lot of brokers will be employing someone for that support role and that’s the end of the story,” he says. “But if you want to grow your business, then you need to employ someone who is capable of moving into a more senior position. Getting a younger person who is enthusiastic and willing to learn over time is usually the best choice.” Step 4: The Interview Questions in the interview should reflect the job description you developed in step one. Ask candidates how they meet these criteria and for examples from their previous roles that demonstrate they would be capable of fulfilling the job role. Most importantly, familiarize yourself with discrimination legislation. Questions relating to age, marital status, race and religion are just a few areas you’ll want to avoid. Step 5: Checking up You can avoid some nasty surprises by thoroughly checking the applicant’s referrals. In addition to providing verification of the applicant’s identity and proof of former employment, the referral source should be able to indicate whether the candidate has demonstrated skills in previous roles that are transferable to the role you are offering. Step 6: Put it in writing Once you’ve made an offer to your new employee and they’ve accepted the role, make sure you put it in writing. Have your solicitor look over your employee contract. It should include a start date, salary, benefits, details of the job and working conditions. Step 7: First day Be prepared for your employee’s first day. They will need an appropriate workspace and equipment, as well as somewhere to keep their lunch and personal belongings. Make sure you spend enough time training your employee so they are comfortable completing the tasks you’ve set out for them. Make sure your new employee takes their lunch break or, better still, take them out to lunch. CMP mortgagebrokernews.ca

WE SUPPORT YOUR NEEDS

Verico The Mortgage Practice is NOW OFFERING licensed Brokers the FREEDOM of Having a Fully Supported Backoffice “Let VTMP support your back office needs”

Business Marketing

In the second instalment of his latest series, Doren Aldana explores how brokers can get Realtors to work with them so they can get more buyer leads for their listings

Realtor marketing secrets N

ine times out of 10, a Realtor’s main priority when they get a listing is to go out and to promote that listing, and sell it as fast as possible. After all, like you, that’s the only way they get paid – when the deal closes. So obviously, they’re going to want to put together a marketing plan with this objective in mind. Perhaps they will start mailing some “Just Listed” flyers, set up a “Take-One” box, put a For Sale sign on the lawn, place an ad in the Real Estate Weekly newspaper, etc. And in most cases, everything pertaining to their marketing initiatives, whether it is print ads, postcards, flyers or open houses, is driving traffic to their cellphone. Unfortunately, by driving all the inbound inquiries to the cellphone, Realtors are unwittingly enslaving themselves to an electronic leash that tows them around by the nose 24/7. If you’ve ever had a face-to-face meeting with a Realtor you know what I’m talking about – you’d be lucky to go five consecutive minutes without being interrupted by an inbound email, text or phone call on their “Crackberry” or iPhone. They’re like crack-addicted rats – they only last a few minutes until they need their next fix. This obsessive, compulsive, overreliance on the cellphone causes them to be “busy” but not necessarily “productive.” With that in mind, let’s circle back to the Realtor’s primary challenge: they don’t have enough qualified buyer leads for their listings, and without enough buyer leads the property is often slow to sell and of course, they have a delay in getting paid. The bottleneck in the whole equation comes down to buyer leads. If they can just increase their buyer leads, the Law of Large Numbers will work in their favour to increase the chances of selling the property, and in many cases, attract additional buyer and seller clients as well.

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Sec ret

No 2

Help Your Realtors

Gener ate b uyer

leads

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Marketing

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Business Marketing

But until and unless they have enough quality buyer leads, that property could be on the market for months. If you’ve been talking with your Realtors lately, you know that it can be a real challenge getting these properties sold quickly at the right price. So here’s the bottom line: if you don’t bring a unique solution to them to help sell these properties faster and for top dollar, they’re going to continue losing precious sleep (and dollars) because they aren’t getting paid until those darn listings sell. And some of your Realtor friends are going to have skinny kids and skimpy bank accounts because they’re not getting paid for months on end. With that said, how can we deliver real, valuable, workable, proven solutions? Here are the top four most effective strategies for generating buyer leads: Strategy #1: Withholding Price This is perhaps the most controversial of the four strategies. Realtors typically are very resistant to withholding price on their listing promotional materials. However, if they’ll actually put this strategy to the test, in many cases it can increase their buyer lead generation by over 200 per cent. Here’s how it works: STEP 1: Take your Realtor’s default listing ad or For Sale sign and remove the asking price. STEP 2: Then add a headline that says something like, “Get free instant property info by text message. Text “Buy124” to 79564 to receive more info including price and financing options.” Then of course each listing would have a unique text code so all the buyer has to do is enter the property code and then they instantly receive a text message with more information on the property including price. NOTE: Every time someone requests property info via text message, you and the Realtor just generated a hot new buyer. Now you can followup via telephone on behalf of your Realtor to see if they need help getting pre-approved with a mortgage and/or if they’d like assistance from a top-notch buyers’ agent. If they’re already preapproved, you can ask them if they’d like a “free, no obligation cost-of-borrowing analysis” to ensure they are getting the best mortgage with the best rates and terms available. Strategy #2: Withholding Financing Option So in this case, you would disclose the asking price upfront but you would include something like this in the call to action: “Get free instant property info

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by text message. Text “Buy124” to 79564 to receive more info including financing options.” In most cases this won’t generate as many buyer leads as disclosing the price but will usually pull better results than the typical Realtor ad. Strategy #3: Offering 24-hour Free Recorded Tips This strategy can be used in combination with any of the other four strategies to improve results. Here’s how it works: STEP 1: Activate your own 24-hour Call Capture Hotline. You’ll understand why in step No. 2. You can get a hotline for as little as $20 per month – they’re not expensive. STEP 2: Record a selection of “free consumer tips” that can be made available to people when they call your two-hour hotline. These tips should answer common questions people have when it comes to buying a home or securing financing. Once these audio tips are recorded, you now have a series of marketing assets that work while you’re not working. All you have to do is just set it and forget it. STEP 3: Add your “free consumer tips” recorded messages to your Realtor’s listing promotional materials. This will add additional “buyer bait” to their advertising, thereby increasing the chances of buyers calling in for more info. When a buyer calls in to listen to a recorded tip, you just generated a hot new lead. Here’s an example of what your tips might look like in the actual ad (below). Strategy #4: Offering Free Reports or Consumer Awareness Guides These are informative guides that educate the homebuyer on mistakes to avoid and important

Business

Marketing

information to ensure a stress-free home-buying experience. Here’s an example of what this might look like on the back of your Realtor’s Just Listed Card (right). Now let’s get into how this is going to benefit you, the mortgage professional. I’ve already alluded to some of the benefits, but here’s the essence of it. You’re going to partner with a Realtor because you know the Realtor’s biggest challenge. No matter where you are, no matter what market you’re in, their perennial challenge is generating enough quality buyer leads for their listings, so they sell them faster and for top dollar. If you can help them do that using this “Call Capture” and “Text Capture” strategy, boosting their buyer lead generation on every listing they have, and on top of that, prequalifying and pre-approving every buyer lead, that’s a huge advantage for them. Thanks to you, they’re going to get more buyer leads, pre-screened, and pre-qualified so they don’t have to sift through all the gravel to find the gold nuggets. PrintAd2.pdf 1 10/27/11 11:34 AM

This is one of the best times ever to be a mortgage broker. C

Don’t believe me? I’ll explain in my free report: www.GregMartelCoaching.com

CMY

Plus, I’ll be traveling throughout the country this winter teaching the same techniques I have used to become one of Canada’s top producing brokers. Check the site for dates/times and to reserve your spot.

Greg Martel Coaching

Accelerated Growth InYour Business mortgagebrokernews.ca mortgagebrokernews.ca

Business Marketing

And what if you offered all of this to your Realtor for free? How’s that for a unique value proposition. You can pre-approve those prospects so that when they make the offer, the Realtor has more control over the quality of the transaction – with success-certain financing in place. This will ensure the property sells on time. Everyone in the transaction is going to be happy. You can even go to a new Realtor you’ve never worked with before and offer them all of these unique advantages for free, provided that, when they set up a listing, they allow you to prequalify all the buyer leads. For example, you would invite them to give you just one of their best, most appealing listings that they want to sell fast and ask them to allow you to integrate one or more of the above four strategies into their marketing campaign. You would also recommend ways to promote that listing in other neglected and/or underused media that the Realtor hasn’t already tapped into. As buyer leads start coming in for each listing, you can now followup using a magnetic calling script to find out if they got all their questions answered, to qualify them as a

License #11127

mortgagebrokernews.ca

motivated buyer and ideally, to get them pre-approved for a mortgage. And here’s the cool thing. Regardless of whether they buy that initial listing or another Realtor’s listing, when it comes time to buy a home they’re going to need a mortgage. By using these four lead generation strategies, you will be able to get your Realtors emphatically eager to work with you so they can get more buyer leads for their listings. As they market their listings using these best practices, you will be able to turn every listing they promote into a little 24-hour lead machine, filling your pipeline with a steady stream of red-hot purchase leads. How cool is that. In my next article, I’ll reveal why it pays to partner with top-producing Realtors and the six critical criteria for qualifying them so you don’t waste your time with the wrong people. 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

Messa g in a ba e nk

Service has always been the key in the lender-broker relationship, but for Todd Poberznick and Bridgewater Bank, that message needs to come across a little more clearly

Todd Poberznick

here is a new mantra at Bridgewater Bank. “We are a trusted business partner to our brokers,” says Todd Poberznick, assistant vicepresident, B2B Solutions. “Our success is based on the overall strength of our partners. We succeed only when our brokers succeed.” In truth, Bridgewater Bank has always emphasized its broker focus, and throughout 2011 Bridgewater strengthened its commitment to this important business channel. “I think we already provide great service and support to our brokers,” says Poberznick. “But there are times when people need to hear the message a little more clearly. This is one of them.” In fact, excellent service is a concept Poberznick believes some in the industry may have forgotten. With the recent disappearance of several lenders, cutbacks at other agencies, a possible looming recession combined with an uncertain housing market, Poberznick feels the pain of the brokers trying to succeed in a tough market. “At times like these you need to rely on your support base. By providing top-notch service we hope to exceed the expectations of our brokers” Bridgewater Bank prides itself on listening to the needs of brokers. This past April, the bank launched the “BwB All Star Portal” after brokers requested a secure electronic gateway allowing them to quickly and efficiently manage deals from start to finish. Anticipating broker needs, the bank posted a series of short, informative online videos illustrating how a deal moves through the portal. Bridgewater has also expanded its suite of mortgage products. Its new three-year adjustable rate mortgage (ARM) currently features one of the lowest rates in the country. In launching a new B product, the bank conducted extensive market research to ensure its competitiveness. In fact, the

profile

PROVIDER

bank has formalized the process of rate-matching through its competitive rate policy which rivals or is better than rates offered by other B lenders. Perhaps one of the better indications of its commitment to supporting brokers is Bridgewater Bank’s Power Broker program, which rewards participants by paying all fees upfront. Preferred brokers enjoy the ability to buy down rates at their discretion in addition to gaining access to exclusive products, such as the B-Smart mortgage and Draw Mortgage program. Summarizing, Poberznick says “We have increased our product range while rewarding our most productive partners. That says service if you ask me.” Rounding out Bridgewater’s broker focus is its team of business development managers (BDMs) who support local brokers by facilitating communication between underwriters and brokers and offering advice on deals. Where possible BDMs also facilitate webinars and provide market intelligence for select partners. Strong relationships such as these have helped Bridgewater Bank grow since 1997 when it was a residential mortgage lender offering a single product in just two provinces. Almost 15 years later, and now a Schedule 1 bank, Bridgewater’s reach is nationwide (excluding Quebec) and it has a portfolio of over $3.5 billion. Bridgewater is a wholly-owned subsidiary of the Alberta Motor Association (AMA) and is Alberta’s largest member service organization with over 908,000 members. It offers a robust suite of mortgage products and has expanded into a deposit line of business. In 2010, Bridgewater Bank became a MasterCard issuer and the exclusive provider of Canadian Automobile Association (CAA) MasterCard credit cards to eight of nine CAA clubs and continues to pursue other white label opportunities. In summing up 2011 and looking to 2012, Poberznick is blunt. “From our underwriting team to our BDMs, we’ll make every effort to make your deals happen. In short, your success is important to us.” CMP mortgagebrokernews.ca

Profile Brokers

With a new book aimed at educating consumers and new agents, Blair Anderson hopes to do his part in raising the public profile of mortgage brokers

Author Anderson B

lair Anderson didn’t set out to become a published author, it just sort of happened. But, once he decided to write about the Canadian mortgage industry, he discovered he had a bit to say. The owner/broker of Anderson Associates Mortgage Brokers in Burlington, Ont., says he wrote most of Ask Your Mortgage Broker: The Most Practical Guide for Canadian Homebuyers and Homeowners during 2010. Why undertake the task? Because as far as the industry has come in the 19 years since Anderson began working as a broker, it still has a long way to go in terms of consumer awareness. As he writes in the book’s preface: When I sit down with clients in my office, or speak to them by phone, I routinely educate them on my role as a mortgage broker and the benefits of using me. Why? Most of the time because I get questions such as, “Are there any hidden costs for using a mortgage broker? How are you paid? Why shouldn’t I deal directly with my bank?” These are all good questions, which I am only too happy to answer. The problem is, in the nineteen years since I began my career, I expected the fog to clear and consumers to gain a better understanding about mortgage brokers. The sad truth is, as an industry, we have failed to adequately educate the public about our role. This is one of the reasons why I decided to write this book. There has been, and still remains, very little written about this misunderstood and under-used resource in a Canadian context. He also hopes it can be used as a primer for new mortgage agents getting their start in the industry. “It can be a difficult start for a new agent to get established in the industry,” says Anderson, who founded his independent company in 1998. “You’re kind of left to your own devices and there’s not a lot of literature out there. I thought this book could be a good opportunity to help that new broker starting a career. I would have liked to have had a book like this

mortgagebrokernews.ca mortgagebrokernews.ca

when I got started. It would have helped to know what you were getting into and what was going on.” As an independent business owner, Anderson also knows writing a book can only enhance his credibility with clients. “As I push forward with my business, it’s just one more accomplishment that could help raise my credibility in the eyes of the public.” Credibility with lenders is something else Anderson sees as an issue as he looks to the future of the mortgage brokering business, specifically what lenders are asking of brokers. “Now you’re essentially signing contracts with lenders as a broker to make sure that everyone knows their responsibilities and that’s great,” says Anderson. “It spells out what the requirements are, specifically things like efficiency ratios or conversion ratios that from a lender’s perspective only make sense. I don’t know why it took them so long to focus on things like that, because no one has money to waste. “But as much as I’m happy to see them incorporate some to these metrics into their protocol, there are some other things that I do take issue with, such as minimum volume requirements. They’ve taken such a draconian stance, and I’m not sure why, but a lot of them now won’t work with you unless you sent them a certain amount of business.” For smaller shops, such as Anderson’s, who want access to as many lenders as possible, being told “You have to send me $5 million a year or we’re cutting you off,” is something he takes umbrage with. “I only do so much business a year and I can’t throw it around to everybody,” he says. “I know they could all stand to benefit from focusing on productive brokers that understand them, but if I send you one deal a year and it closes, that should be OK. “I’ve had some lenders cut me off because I had sent them very little business, but anything I ever sent them closed, and I have a hard time

Profile Brokers

understanding why they would want to cut me off. If I had to speculate, I would suggest that they might be trying to influence our behaviour. That is, by enforcing minimum volume requirements, brokers are losing their ability and willingness to shop around for the best deal in order to maintain their active status. From an economic perspective, I think efficiency ratios are all that matter.” When it comes to his status as an independent broker, Anderson is equally steadfast. “I’m pretty hard core when it comes to my independence and it’s something that would be pretty tough for me to move away from.” For him, it is also related to how he does business. With a background in accounting, Anderson feels operating as an independent plays to his strengths. “I’m as good or better as an administrator as I am a salesperson. And that may be a little abnormal as you have a lot of people in the industry who are great salespeople, but not so good administrators,” he says. “I haven’t felt the need to forge an alliance with any of these bigger companies that can provide me all of this back office administrative support. I do a good job of that on my own. I’m also writing more private and subprime deals every year which would not favour the larger brokerages value propositions

vis-à-vis shared volume bonuses, which can be dependent on many things, such as, lenders used.” In line with his book’s goals of increasing consumer awareness, Anderson also founded www. MortgageResource.ca three years ago as a news aggregation and website to the mortgage market. “It’s neutral,” he says. “The site is supposed to be a place where consumers can comfortably go and feel that there is no bias and get all the information they want, including picking the right mortgage originator to work with. If they want to take the ultimate step and apply for a mortgage, the website offers the only directory of originators, across all channels, and they can apply directly with the originator of their choice. The site encourages people to invest more time before they apply. “I don’t care what business you’re in, you’re always trying to think like the consumer. And if I stepped back as a consumer and looked at the various places to go to get a mortgage, whether it’s a bank or a mortgage broker, I think it’s confusing seeing so many different rates, and little or no objectivity. I thought that like a Consumer’s Report, it would be nice to have a place to go that seemed unbiased, neutral and had contributions from everyone in a culture of education, collaboration and innovation.” CMP

Blair Anderson

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Profile Insight

Going commercial In a move to earn its brokers more referral fees, Dominion Lending Centres is launching a commercial division

LC is moving to ensure its brokers and agents get a piece of the commercial deals banks are now chasing, launching a new division offering referral fees. “Many DLC agents come across commercial transactions while going about their day-to-day businesses that they simply can’t handle due to (their limited) access to specialized commercial lenders, lack of experience or fierce competition from experienced commercial companies such as RBC, BMO, Canadian Western Bank, and so on,” said David Beckingham, of DLC Commercial Capital Inc. Rather than have brokers take a pass on those deals, DLC is asking them to pass them on to either Beckingham’s team, handling deals west of Ontario. Dale Bilton at DLC Commercial and Residential Mortgages Ltd, will take deals from Ontario and east. In referring a client, DLC mortgage professionals earn referral fees if those leads result in closed transactions. Referring clients to those expert partners is the best way of ensuring their deals are funded, asserts DLC, pointing to the growing interest of the Big Six. While corporate Canada and even small business ramped up construction building and capital investment this summer, the banks have been especially aggressive in going after those deals, said a leading commercial broker in Toronto. Borrowing plans to build commercial properties like strip malls, office buildings and industrial space also speaks to just how readily available financing is at the Big Six and other lenders, said Dave Forster, VP of Murray & Company, a full-service financial advisory specializing in commercial deals. It’s an indication that commercial brokers may face increased competition to capture their share of this burgeoning pie. “The residential market may be showing signs of cooling, but the commercial market is

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“ the residential market may be showing signs of cooling, but the commercial market is very liquid in terms of capital now and from that perspective it’s a healthy market, a good market – it’s not overheated ” very liquid in terms of capital now and from that perspective it’s a healthy market, a good market – it’s not overheated,” he said earlier this summer. “But, from a broker’s perspective, (this isn’t) necessarily the best market, where there would be more volatility in terms of liquidity and banks wouldn’t be quite as keen.” Many residential brokers are also operating from a deficit position in terms of their commercial knowledge base, argued Beckingham. “Commercial finance is very specialized, has an average closing period of months and the large institutions compete ferociously to maintain their relationships. Most residential agents who have tried to do commercial transactions become very frustrated and disappointed after spending large amounts of time trying to assemble an application only to be taken out by a more experienced commercial agent with established institutional and niche lenders.” Under DLC’s program, that process has been significantly streamlined for referring agents nonetheless looking to broaden their revenue streams. Submitting deals is quite straightforward, said Beckingham, with mortgage professionals simply sending off emails detailing their deals. A member of his or Bilton’s team then keeps them in the loop throughout the process. CMP

Profile Insight

ROI for RMA brokers Brokers have always yearned for a piece of their brokerage’s action, but RMA is now offering its brokers considerably, Chief Executive Ron De Silva tells CMP

eal Mortgage Associates continues to garner industry attention. In addition to seasoned brokers, with more than 500 now under the RMA/RMAI banner, the company’s growth is centred on identifying professionals with the raw sales and customer service skills to be successful. But, Chief Executive Ron De Silva tells CMP the company is just as committed to growing wealth for its brokers. It’s now introducing a new ownership model to facilitate it. De Silva explains. Brokers are increasingly looking for ways to better secure their financial futures. What is RMA doing to help them? When RMA launched in 2006, our emphasis then, as it is now, was on bringing value to our agents and brokers. A large part of that was the introduction of the flat-fee compensation model. Our senior agents get paid 100 per cent of their finder fees and 100 per cent of their volume bonuses. That flat-fee model has since been adopted by several other brokerages across the country as a key way of helping brokers take control of their income and build wealth and their financial futures. RMA is now taking that further with what we know will be the next trendsetter for our industry, by inviting our brokers to secure their futures through an investment in the company’s real estate portfolio. We plan to bring that investment opportunity to market in mid-December, and we’re as excited as we are confident that it represents the most tangible form of investment a broker can make in his or her brokerage. Our objective is to achieve $10 million in net asset value for RMA and RMA Real Estate

mortgagebrokernews.ca mortgagebrokernews.ca

Holdings by 2016. This is a unique approach to creating wealth for our broker base. It’s ownership that makes real sense. How exactly does the investment work? We spent the last two years preparing RMA for this day. It’s very straightforward. We will be issuing shares in RMA to brokers and agents, who also invest in RMA Real Estate Holdings. Those dividend-yielding shares are specifically focused on property acquisition, and more specifically, on commercial premises that will include the corporate headquarters for RMA/RMAI, in addition to tenanted properties. The return on investment for shareholders will come not only from rental income creating an annuity, but also annual dividends from RMA’s brokerage operation and, of course, the escalating property values in urban Ontario. Also this unique structure of ownership in RMA is designed to minimize any capital gains taxes for the brokers. What has been RMA broker response? The interest from RMA brokers has been tremendous, and that appears to be for two very significant reasons. First, our flat fee-based compensation model gave brokers the additional resources to invest in and grow their own niche markets. As a result, many RMA brokers have developed a solid book of sustainable business. Beyond their personal business, many of our brokers have consistently asked for the opportunity to add to their wealth creation by investing in and owning a piece of the action, a piece, if you will, of RMA. This represents that opportunity. A second appeal for our brokers has been the nature of the investment itself. The concern around investing in a mortgage brokerage has always been, how do you evaluate a business where the assets, essentially, have feet? That is, a brokerage relies on the strength of its brokers, who can and often do have fluctuating productivity cycles. In the case of the RMA share offering, in addition to the brokerage, brokers are also investing in bricks and mortar, which don’t move, and more importantly they appreciate in value. That’s especially true in southern Ontario, which continues to realize value gains, even in these less certain times.

Profile

Insight

That appeals to brokers, who are increasingly looking to secure their economic futures and to diversify their income streams outside of their individual efforts as mortgage professionals. And certainly, what we’ve heard from brokers is that this opportunity promises to increase their pride of ownership. Has RMA identified a specific property market for its portfolio investments? Our primary investment objective is to obtain properties that generate positive cash flow. Our preliminary research indicates several Ontario cities that fit the criteria. To start, RMA has identified the Hamilton, and surrounding, area as

its target. We’re already headquartered just east of there in Burlington and have relied on the area’s close proximity to the GTA as a base of operations. In its annual survey, Site Selection magazine identified Hamilton as second only to Toronto in terms of attracting investment. It is also second in terms of attracting Ontario building permits. In 2010, over $1 billion in building permits were issued for the first time in Hamilton’s history. But unlike Toronto, Hamilton’s commercial property prices still allow investors the opportunity to buy inexpensively and generate positive cash flows. CMP

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Profile

Favourite Things

Music I mainly listen to country, Tim McGraw & Kenny Chesney with a little rock mixed in

Jason Zailo + Mortgage Expert, Dominion Lending Centres-Modern Mortgage Group + Sooke, B.C.

Favourite Things Place to be On my boat in the summer at Shawnigan Lake with friends

Sport Hockey “Go Leafs Go” Food Steak & seafood Movie Good Will Hunting and The Godfather

Book I like reading all books that help grow my business, whether it is about sales or leadership

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Vacation Santa Monica and Santa Barbara, California

HOBBy Playing hockey and golf

Drink Ice cold beer, nothing better in the summer

Thank you

Columbia to all who joined us in Vancouver, British for Investor Forum Vancouver 2011 ble to join us, networking conference or you were una and l ona cati edu day 2 this yed enjo you If 2! -coming InvestorForum events for 201 then be sure to make note of the up-and

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Guest Column

Some may not know that the first mortgage application system was on an Apple computer. Broker Bruce Davison, a 35-year broker veteran, recalls the impact Steve Jobs had on the Canadian mortgage market

the core of the system A

Bruce Davison

s one of the first Equity Centre owners, later to become The Mortgage Centre, what attracted me to the concept, apart from starting a national franchise with the first no-fee brokerage service, was the “system” of the mortgage application, processing and submission process that was being developed and that ultimately revolutionized our interaction with lenders. David Chapman, an ex-Re/Max broker, felt in 1986 there must be a better way for the public to do business with mortgage lenders. He assembled a couple of programmers and developed “The Equity Centre” with specialized software we called The Mortgage Market and his team chose Apple computers, because the developers liked the ease of initial programming and the simplicity for adding on and improving the system over time. From a mortgage broker point of view, our little boxed computer (the SE in 1988 and later the SE 30) with a screen no bigger than the current iPad, was a shock to me, as to how easy it was to use. All I had to do was point the mouse at items, use multiple drop menus, drag files and drop them into master files, and type where indicated. Better still was the fact that a client could come into my office and I could turn the (tiny) screen and show them various payment options, calculations and amortizations. At $4,000 each, with a large 20MB hard drive, I quickly bought five for my first office, in Mississauga. The developers tried to link our computers into the lenders’ (PC) world, but it was too complex to make happen, so David simply put an Apple computer into each of our lender’s head offices, where dedicated personnel reviewed our applications as they came in. Amazingly, I could type in an application, send it over the phone system to London, Ont. where it was sent off to the various lenders (TD bank was one of the seven initial lenders) who looked at our application, hit approved and typed in the details, (with drop down

mortgagebrokernews.ca

menus) related to their terms, and privileges, and four hours later it showed up on my tiny computer. As our initial system also provided for bidding by our small group of lenders, my client could come back in that day and be looking at multiple approvals. In December 1988, I dropped into a RBC branch to see how it processed its applications. The application was handwritten (or typed on its office computer), printed and faxed to head office, who input it again, approved the loan, typed out a commitment and faxed it back to the branch, where the customer could come back in several days (or a week) later to accept it. But the branch was not able to manipulate the client’s application or show how the various options impacted the mortgage, as the RBC screen was just a blank application form, used for submission. Moving forward, Chapman separated The Mortgage Centre brokerage from the software development – called Centric Systems – and opened access to other (non-Mortgage Centre) brokers through what was called LSS (excluding the proprietary Mortgage Centre Bid software). Again, to be a part of this incredible technology, brokers were required to buy Apple computers (by then iMacs and Powerbooks). The final evolution came when Filogix purchased Centric Systems. Filogix wanted to make the move from a linked system to a webbased format allowing more lenders, suppliers and brokers to participate. But Filogix was very conscious then and has made it a priority since, of making sure the evolved software is user-friendly for the broker and for our client interactions, rather than just mechanically sound and efficient. Steve Jobs’ impact on the Canadian mortgage market may have been indirect, but for us nontechies, I am sure glad to have been a part of his Apple world, both for my business and my toys. CMP

service directory

Banks

Commercial Lenders

Bridgewater Bank www.bridgewaterbank.ca Ph: 1 888 837 2326 Pages 8 & 9

Fisgard Capital Corporation www.fisgardmortgage.com Ph: 1 866 382 9255 Page 18

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

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

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

Vector Financial Services www.vectorfinancialservices.com Ph: 1 866 483 8018 Page 22 Insurance

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

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 53

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

MCAP Eclipse Ph: 1 866 289 7389 Page 39

Canadian Association of Accredited Mortgage Professionals (CAAMP) www.caamp.org Ph: 1 888 442 4625 Page 31

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

Canada Mortgage and Housing Corporation www.cmhc.ca Ph: 1 888 463 6454 Page 49

Associations

CAAMP ACCHA

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

Non-Bank Lenders

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

Peoples Trust www.peoplestrust.com Ph: 1 800 663 0324 Page 73

Mortgage Protection Plan www.mppbroker.com Ph: 1 866 677 4677 Page 27

Broker Networks

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

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

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

Radius Financial www.radiusfinancial.ca Ph: 1 877 369 6398 Page 51

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

The Money Source www.mymoneysource.ca Ph: 416 699 2274 Page 66

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

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

INVIS www.invis.ca Ph: 1 866 854 6847 Page 71

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service directory

Services

Home Loans Canada®

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

Mortgage Architects www.mortgagearchitects.ca • Ph: 1 877 802 9100 Page 45

Verico The Mortgage Practice Inc careers@vtmp.ca Ph: 905 458 4222 Pages 60 & 61

Best Points Travel www.bestpointstravel.com Ph: 1 800 551 8786 Page 57

VERICO www.verico.ca Ph: 1 866 983 7426 Pages 12 & 13

CWJStone.com www.cwjstone.com Ph: 519 362 9389 Page 20

Technology & Software

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

HV Mortgages www.gregmartelcoaching.com Ph: 250 477 7555 Page 65

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

RMAI Financial Group www.rmaifinancial.com Ph: 1 866 955 7624 Page 29

The Mortgage Group www.mortgagegrp.com Ph: 877 899 1024 Page 69

Canadian National Association of Real Estate Appraisers www.cnarea.ca Ph: 1 888 399 3366 Page 28

Real Estate Institute of Canada www.reic.ca Ph: 1 800 542 7342 Page 56

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

Teranet www.teranet.ca Ph: 1 866 237 5937 Page 41

Got news? Y Your

news n ews is our news!

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

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