CMP 6.8 by Key Media

if the

Your trusted news source

NO. 16

guide Inside

model

ﬁts

Guide to broker networks www.mortgagebrokernews.ca

Going National THE POWER OF PR LEVERAGING THE MEDIA CAN GENERATE LEADS FOR FREE

TIME MANAGEMENT MAKE THE MOST OF STRATEGY SESSIONS

PROFILES CENTUM THE MORTGAGE PRACTICE VERICO PUBLICATIONS MAIL AGREEMENT #41261516

6.8_Guide_Cover.indd 49

11-08-08 9:14 PM

August 2011, 6.8

creditor insurance

reverse mortgages credit cards

HELOCs

Nation private lending

diversification

Expand your revenue stream

INDEPENDENCE Why some brokers opt to go it alone

PROFILED Montreal’s newest brokerage: North East Mortgages

MARKETING Web 2.0: Converting “fans” into “referral partners” PUBLICATIONS MAIL AGREEMENT #41261516

of an independent mind Independence: It’s long been the boast of brokers, but, as Vernon Clement Jones finds out, a growing number of mortgage professionals are backing up that claim by shedding their super-broker ties and opting to go it alone.

GUIDE 14

6. 08 issue

cover story

30 Diversification Nation Brokers are increasingly looking to diversify their revenue streams outside of the slowing number of originations. Vernon Clement Jones looks at what product offerings some brokers are employing as a means of boosting their bottom line

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contents

INSIDE

NEWS & COMMENTS

Guide to broker networks

8 Some of the best stories and comments from MortgageBrokerNews.ca: • Brokers rethinking Internet lead-generation strategy • Ontario broker lobbies for tighter ‘mortgage suitability’ regs • Brokerage head defends volume pooling as necessary retention tool • Brokerage name breaches Bank Act • Broker channel needs more one-year rate holds • Rate wars sending brokers to the B-Side • Brokers need to embrace creditor insurance

In CMP’s continuing series of guides, we look at national broker networks and brokerages and their appeal to independent brokers. Whether it’s back-office support or marketing that is attracting prospective brokers, this guide is not to be missed

18 Business Advice: Making mortgages motivating in a media age: Conclusion 26 News Analysis: The Big Story: A compilation of the top quotes from our weekly multimedia broadcasts on MortgageBrokerNews.ca

PROFILES

MARKETING 49 Web 2.0 marketing secrets for mortgage pros: In a new series, Doren Aldana explores some of the ways mortgage brokers can harness the power of social media to build referrals. Secret #4: Convert your Realtor “Fans” into “Referral Partners”

PROFILE broker profile Montreal broker Terry Kilakos is at the head of one of the city’s newest brokerages, and as Vernon Clement Jones explains, one of its fastest growing

59 Provider: myNext Mortgage has moved to expand its lending to ‘select brokers’ outside the company as a way to fill a funding gap left by the recent departure of two monoline lenders 60 Insight: Instead of just “passing through” people are beginning to call Fort McMurray home and that’s been a boon for brokers in town like Len Lane 62 Guest Column: Newer mortgage professionals in this country need more training in order to provide a valuable service to Canadians and Julia Krause believes this can be done by brokerages employing full-time trainers and coaches

regulars 21 International News 28 This time last year 63 CMP Service Directory

49 2

mortgagebrokernews.ca

Outstanding sales are only the tip of the iceberg. caluM Ross

Mortgage Professionals, Inc.

RichaRd Kitts

chRistoPheR Bisson

Tristar Funding

Complementary Real Estate Services

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lisa theRiault

MuRRaY GRoen

Mortgage Brokers Ottawa

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Mortgage Brokers Ottawa

lisa Yun

Gilkinson Financial

teRRY shoRt

Elder Mortgage

Advantage Financial Services

daRRen KecK

Michael haPKe

Mortgage Brokers Ottawa

Congratulations to all of our CMP Top 50 recipients. Your hard work, determination, and success have made you leaders and mentors in the industry. Another testament to the quality and integrity of you and the entire Mortgage Centre family. The Mortgage Centre is a division of CIBC Mortgages Inc., a member of the CIBC group of companies. 速 The Mortgage Centre is a registered trademark of CIBC Mortgages Inc.

Editor’s Letter

Best lender? Have your say Once again, CMP is looking to answer the question: Who is Canada’s most broker-friendly lender? While there’s no question that mortgage professionals depend on and support lenders in order to conduct business, the question remains: which lenders are equally supportive of their most important distribution channel, the mortgage professional? As part of our annual survey, CMP is asking brokers to take a few minutes to complete a short survey and share their opinions on whether or not the lenders they deal with are getting it right. This year three lucky mortgage brokers who fill out the survey will receive $4,500 each in free advertising in our sister publication Canadian Real Estate, Canada’s only monthly publication dedicated to Canadian real estate investors. This is your opportunity to provide candid feedback on lenders in 11 categories: • • • • • • • • • • •

Approval/loan turnaround times BDM support (training/information) Broker support Interest rates IT and electronic/technology Overall service level to brokers Product range Satisfaction Index on overall credit policy Transparency of commission structure Underwriter support Overall performance

To fill out the survey, simple visit www.mortgagebrokernews.ca and click on the Brokers on Lenders Survey button. In the September issue of CMP, find out if First National Financial can repeat as overall winner or if second-place Merix Financial or third-place MCAP can move up and take over first place. As always, I encourage you to contact us with any news related to the broker and mortgage industry or just to share your opinion about how we’re doing. It is an exciting time for our industry and we look forward to keeping you informed about the industry and your business. Cheers, John Tenpenny Editor john.tenpenny@kmimedia.ca

mortgagebrokernews.ca

6. 08 issue

B R O K E R F O C U S E D . B R O K E R L O YA L .

You’ve just met with your new clients. You need a lending partner, not a competitor.

More than ever, Canadians are shopping for mortgages. To provide brokers with a significant advantage, we offer: • Competitive rates • More compensation choices • Superior customer service • A broad range of mortgage products • Status programs with unique advantages As your lending partner, our job is to help you grow your market share. To learn more about how Street Capital can assist you, contact your local RVP today.

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Quotables

“I wouldn’t suggest a broker with less than five years’ experience with an aggregator look to go out on their own. Being a part of that system early on gives them access to necessary training and guidance and, of course, volume bonuses, which is key.” Marshall Spencer, owner of Prime Rates, discussing the merits of remaining independent and when it makes sense to do so. Page 42

“It’s a size thing. If you’re an independent you just can’t get the attention of our lender partners because there is not enough volume and we can provide an advantage to the lender by bringing in a lot more volume, more quickly. Lenders, by talking to a national network and brokerage’s management team they can achieve their objectives.” Gord Dahlen, executive vice-president of Dominion Lending Centres, talking about the reasons independent brokers should consider joining a national broker network or brokerage. Guide Page 2

August 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

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

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News Industry

Your trusted news source

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

Feds: Brokerage name breaches Bank Act The owner of a successful brokerage known for fighting the Big Five will now change the firm’s name rather than face the possibility of a hefty fine or jail time over what the law suggests is a misappropriation of the word “bank.” “It became obvious to us and our legal counsel that the federal government was digging in its heels on this despite the fact that it was the government four years ago that granted us a federal trademark on the name ‘Bankfighter’ issued under the category of mortgage broker,” said Darick Battaglia, broker/owner of Barrie-based “Dominion Lending Centres Bankfighter.” Effective July 31, it officially changed its name to “Dominion Lending Centres YBM Group.” “My lawyers felt that I had a good chance of retaining the name, but it may take a long time and the legal costs would be high,” said Battaglia, one of the industry’s top performers. “It was a very hard decision, but rather than fight the federal government I decided to change the name.” The move comes almost a year after the Financial Services Commission of Ontario notified Battaglia that it had received an official complaint, arguing his use of the name “Bankfighter” contravened the federal Bank Act and its restrictions on any and all use of the word bank by unregulated entities. More specifically, according to Subsection 983(3), “Every entity that acquires, adopts or retains the name of a bank-holding company and every person who uses the name or any identifying mark of a bank-holding company to indicate or describe a business in Canada or any part of a business in Canada, without being authorized to do so by this act or any other act of parliament, is guilty of an offence.” Subsection 983(2.1), applies the same warning to “individuals” deemed to have misappropriated the word. CMP

mortgagebrokernews.ca

What a huge waste of time, money and energy to go after a broker because they use the word “bank” in their name. It’s ludicrous to think the banks own the word bank. The resources spent on fighting a broker because of his name would have been better spent. How about spending it on educating the general public about ‘collateral mortgages’ or educating them about the pitfalls of ‘cashback mortgages’ which are pushed by the big banks for their huge profits. – Tracy Luciani If by holding oneself out to be a “bankfighter” implies that they are, in fact, a bank, does it follow that being a “crimefighter” makes one a criminal? This is pure and unadulterated cow-towing to the interests of Big Money. Shame on OSFI for its heavy-handed tactics and its lack of impartiality, let alone logic. With respect to the function and purpose of agencies of the federal government, it’s high time we complacent Canadians asked the pointed question: who is serving whom? – An Interested Observer What a joke, banks can’t handle the pressure so they go after the little guy. Quite obvious a bank is behind this and FSCO is kissing their ass. FSCO sure didn’t do anything about the RBC agent badmouthing brokers. I don’t know what it is going to take for us to drop our competitive issues with each other, form an organization (NOT CAAMP) that represents us and take a stand against issues, like this one. – ON Broker What a crock of $!#!@. Darick, I will pledge $500 right now to any legal fund you want to start to fight this. It has nothing to do with being a part of the same franchise. It has to do with standing up to the banks. I hope other brokers across the network will stand up here and fight this, be they a part of DLC or any other brokerage. – John Dearin, DLC Mortgages and More I am so sorry Darick Battaglia had to fight this on his own. This is the perfect chance for CAAMP, IMBA, and other organizations that say they represent the interests of the brokers to prove themselves. What about other organizations that use the work bank in their name? How about banning bankrate.com from using the name, or banning common expressions like ‘laughing all the way to the bank’, or ‘as good as money in the bank’. This is a perfectly good place to make a stand and fight for our rights as brokers. Am I right, or am I talking nonsense. Please let me know. If I use any of the above expressions will the banks come after me with a $5 million fine, or 10 years in prison? – Joe Broker Please be aware the complaint may even have come from another broker; jealous of Darick’s brilliant choice of name. Everyone should be aware that FSCO has turned their focus onto compliance re: advertising this year and we will hear more and more about problems with business names, the wording of ads and the fact that FSCO has decided that any reference to a “team” is totally forbidden. – Ron Butler

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I think this kind of lead generation misses the mark entirely, as well as Google AdWords or any other type of online billboarding for that matter. You cannot build a sustainable business with clients who are “no less inclined to refer a broker to friends or family if they’re satisfied with the service. Rate shoppers are not loyal and are never satisfied, period. We have all dealt with them and know this to be true. Why take less commission to buy a client who will most likely just leave you and rate shop upon renewal anyway? This makes no sense and it cheapens our industry and turns the competition on ourselves instead of trying to focus on taking the banks’ market share – @kiltedbroker The question of commission reduction in exchange for better rates is always guaranteed to create wild argument in the broker community. I think we all need to settle down and have a calm discussion on this issue. The Internet will continue to drive rate information at the consumer and mortgage brokers need to address the subject. – Ron Butler There are two reasons I won’t consider partnering with lead gen sites: 1) For brokers to achieve success with this model they need to buy down their rates and then pay a fee to the lead gen site on top. If you’re willing to cut your commission that much why not just work for a bank? They’ll give you more leads, you won’t be servicing rate shoppers all day and you’ll probably make more money. 2) If lead gen sites take off, they will hold the power in the relationship and that gives them leverage to take a bigger cut of your commission down the road. Essentially, you are helping to build a competitor that, if successful, will probably eat you one day. Nothing against the hard-working folks who are building these sites, I just don’t like the model for independent brokers. If you want long-term success, get with the 21st century – build a kick-ass website and generate your own online leads! – David Larock It’s unfortunate that brokers are destroying their business by buying down rates. It’s not a sustainable business model. Look at real estate agents. How many successful ones do you know that acquire business by offering the lowest commission? Brokers need to learn quickly, rate is important, but it’s not the only thing, otherwise brokers market share will decline in the near future through fierce bank competition and brokers’ undercutting each other. – Toronto Broker I agree. Live by the sword die by the sword. Rate as a single value proposition is a fool’s game and

mortgagebrokernews.ca

the banks have a bigger sword. Compete for customers by offering more! – Wane Davis The sad part is that the lead generation sites apply the same techniques in targeting the client whether they are trying to sell mortgages or bathroom supplies. Everyone who is familiar with this space knows that the best leads are generated when you truly understand your customer and what your customers are looking for. You can only optimize your campaigns once you have yourself generated the leads, spoken to the clients themselves, and are knowledgeable in the mortgage field. Then you begin to understand how far your leads go, which content produces an attractive ROI and which doesn’t. Bottom line, these sites are a waste of money, they breed the bottom feeders, and destroy broker integrity. – Marc

brokers rethinking Internet leadgeneration strategy Brokers looking to generate leads from the Internet may ultimately find it easier and, indeed, cheaper to hand the job to one of a growing number of online referral agents, suggest brokers now winning as much as a 50 per cent conversion rate. Still, even then, success largely depends on one thing: rate. “Like many other brokers, I initially started out paying for Google AdWords space,” Paul Poirier, a top 20 broker with Dominion Lending Centres – Eagle Group based in Toronto, told MortgageBrokerNews.ca. “While that got my site very high up on Google searches and people were clicking onto my landing page, the lead conversion rate was very, very small. Ultimately, out of a 1,000 clicks, I only developed 25 leads and one ended in a funded deal – I just broke even.” Poirier eventually opted to sign on with one of a growing number of online referral agents specifically focused on generating “quality leads” for mortgage-broker clients by offering Internet users a daily comparison of their clients’ rates and then linking them to an individual broker’s website. Fees are entirely based on leads and not just the number of clicks to the client’s landing page. Poirier is now working with relative upstart RateHub.ca, although he has been with two other agencies. His conversion rates have been as high as 50 per cent of leads, although the more recent average is closer to 30 per cent. “What we’re getting is fewer leads, but the quality of the lead is better,” he said. “They’re perspective buyers who are genuinely in the market for a mortgage.” Other brokers are reporting similar gains. “It’s a pretty effective tool, if they’re funeled through a Ratehub.ca or RateSupermarket.ca,” Theresa Shaw, broker of record at Finder Financial Services Ltd. in Vancouver, told MortgageBrokerNews.ca. “They’re educating users about the services of the broker channel and that helps us to close a deal. If they’re just going to your site because it is placed high on Google AdWords, then they may not have the knowledge base.” CMP

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Ontario broker lobbies for tighter ‘mortgage suitability’ regs The head of a large Ontario brokerage – and VP of the province’s mortgage broker association, IMBA – is lobbying for “better-defined” guidelines around “mortgage suitability” in the governing act, arguing it would help fend off competition from the banks. “It’s something that’s much talked about among brokers, many of who would like to see it removed from the legislation,” Glenn MayAnderson, principal broker for Dominion Lending Centres Alliance, told MortgageBrokerNews.ca. “But I would like to see those requirements kept and better defined as a way to ensure brokers are spending the time to not only fully understand a client’s specific circumstances but also to better draw a distinction between mortgage brokers and agents, on one side, and bank mortgage specialists, on the other. As a marketing tool it has a tremendous amount of potential.” It may, in fact, be a hard sell, but MayAnderson will attempt to make the case as part of a regulatory review process for the Mortgage Brokerages, Lenders and Administrators Act, 2006, tentatively scheduled for March 2012. The legislation lays out in minute detail most of the licensing requirements for brokers, agents and brokerages – from continuing education requirements to the use of fees. But specific regulations outlining a brokerage’s duty to determine a mortgage’s “suitability for the borrower” have been harder for brokers to nail down. According to section 24 (1) of Ontario Regulation 188/08, “a brokerage shall take reasonable steps to ensure that any mortgage or investment in a mortgage that it presents for the consideration of a borrower, lender or investor, as the case may be, is suitable for the borrower, lender or investor having regard to the needs and circumstances of the borrower, lender or investor.” May-Anderson will lobby for the addition of an explicit definition of the terms “reasonable,” “suitable,” and “needs and circumstances.” He would, in fact, like to see all mortgage professionals adopt a more extensive interview with new clients – something the more than 80 agents and brokers working under him already undertake. CMP

mortgagebrokernews.ca

While the idea of having more certainty in suitability guidelines seems a good one, we should be careful what we wish for. Generally more prescription causes more gaming of the rules and creates scenarios that seem arbitrary and possibly unfair.

– Steve Holman Steve, agreed. However, suitability is something the investment world has had to deal with for some time, and they do so routinely and successfully now. I would rather see guidelines than just an arbitrary “suitability” clause. You’re right though, it’s a balancing act.

– Glenn May-Anderson These suitability guidelines provide opening for new lawsuits. Is nobody taking personal responsibility anymore?

– Quan Le I still believe in freedom and the less regulation the better. In a free society, “all persons of full age and competent understanding shall be afforded the utmost liberty to freely contract, and those contracts, when entered into voluntarily, shall be held sacred and will be enforced by courts of competent jurisdiction.” That is, stop letting the “government” decide where to pigeon-hole everyone. There’s nothing wrong in being unique.

– Doug Pfeiffer

appointments

Ellen Watt

Martin Marshall

VERICO Canada announced that Ellen Watt has joined the company in the newly created position of National Manager Professional Development to the corporate office. Watt has over 25 years of business experience in the financial services sector, most recently as the Vice President of Sales - Broker Distribution at Macquarie where she was responsible for growth in the broker channel, strategic origination of business relationships and worked closely with operations, marketing and after sales services departments. Prior to Macquarie, Ellen was the Regional Vice President of The Mortgage Centre Canada from 2003 to 2007. Ellen has also held senior positions with FirstLine Mortgages, GE Capital Mortgage Insurance Canada and GMAC of Canada. “We are excited to have Ellen Watt join our corporate team. With her knowledge of operations, sales, and financial systems both on the broker and lender side, Ellen is the perfect candidate to lead our National Professional Development Program for the VERICO Network,” says Colin Dreyer, President & CEO of VERICO Canada. Martin Marshall also joined the VERICO corporate sales team furthering its presence in Ontario to meet the needs of high level mortgage brokers who are ready to take their business to the next level. Martin has over 25 years of experience in the sales, marketing, administration and underwriting areas of the mortgage industry. He began his career in 1980 and has held numerous top executive positions in companies such as SunLife Trust, Laurentian Bank and Mortgage Intelligence. CMP

Setting

THE STANDARD! ®

WINNERS of the CMP TOP 50 Gord Pipkey VERICO Real Mortgage Services Richmond, BC.

TOP 50 BROKERS

VERICO congratulates TOP 50 Mortgage Brokers IN CANADA

Dave Butler

Cindy Faulkner

Sharnjit Singh Gill

Jordi Browne

VERICO Butler Mortgage Inc. Missisauga, ON.

VERICO Coastal Mortgages Surrey, BC.

VERICO Superior Mortgage Inc. Surrey, BC.

VERICO Preferred Financing Inc. Chilliwack, BC.

Jason Singh

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Luisa Hough

VERICO The Mortgage Wellness Group Barrie, ON.

VERICO Exclusive VERICO COD Mortgage Professionals Financial Services Surrey, BC. Toronto, ON.

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Your Business. Your Brand. Your Way.

Please visit www.verico.ca/welcome or e-mail membership@verico.ca to find out more.

Sabeena Bubber VERICO Integre Mortgage Partners North Vancouver, BC.

News Industry

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Brokerage head defends volume pooling as necessary retention tool A veteran brokerage head is defending the controversial practice of pooling mortgage volumes as a key weapon for an industry fighting to retain promising but unseasoned talent. “What’s true for this industry, as for others, is that 80 per cent of the money is made by 20 per cent of the people,” said Kevin Power, president of Power Mortgages Inc., an independent 10-member team operating in the Kitchener-Waterloo market. “In a perfect world, that wouldn’t be the case and we wouldn’t need to pool volumes, but the fact is that it is really the only way that many brokers can afford to pay new agents top-end commission splits starting from day one and to secure an income for them that allows them to stay in the business while they learn and develop. They can’t do that getting 50 cents on the dollar in terms of commissions.” The comment answers growing calls from some brokers asking lenders to limit the practice or ban it outright. They argue it un-levels the playing field and ultimately erodes the reputation of mortgage brokers by propping up “poor performers.” On a more fundamental level, they see it as unfair. “The pooling of mortgage volume and the ability of lowproducing and part-time mortgage agents to access preferred pricing and greater compensation plans has to stop if we want to once again function in partnership with our lenders,” said Calum Ross, senior VP of The Mortgage Centre-Mortgage Professionals Inc., reiterating a recent post to MortgageBrokerNews.ca. “If we returned to a world where status was earned, the way it was intended to be, then lender capital Direct ad MAY2011_SYD_HR.pdf 1 5/3/2011 3:07:13 PM profitability and the need for brokers to achieve individual excellence would once again return to the market. There is no way that I should be given access to top discounts or top status with a lender I do little or no business with just because some person at my brokerage firm has top status.” CMP

80%

In my opinion, I believe that every borrower who uses a mortgage agent or broker should be entitled to the best rate a lender has to offer, so if pooling allows every agent/broker to do this then the borrower is the benefactor and this is how it should be. – Larry Gwynne I have to say coming into this industry two years ago I didn’t have many options for submitting to a lender on my own. Merix was the only lender who would take me on without having previous experience. Because of this I’ve now funded $4 million with them and they will be my first option before any other lender who wouldn’t give me the time of day. I think the issue is it’s really the chicken before the egg. How can you expect me to give you good deals without you giving me the best service and rates from the start? – New Agent in B.C. I know Calum is one of the finest minds and one of the very top performers in this business. I completely understand the direction he is coming from; when you have personally built up a massive, loyal client base it seems strange that a newbie can simply piggyback off a huge group of medium-producing agents funneling business under one name to achieve best rate results. That being said the consumer does not care about these issues and don’t we as an industry want more borrowers to get great rates from mortgage brokers. In the end it is the consumer who shapes trends in our business. We like to think we control our industry, but in reality our customers do. All the consumer cares about is good advice and competitive rates. –Ron Butler There is no loyalty from lenders to brokers left in this business. So I agree, let’s pool. It doesn’t matter that I have done $100 million with one lender over the past eight years. I’m only as good as my next deal. The majority of lenders have encouraged pooling. The lender has really reinforced or promoted the super-broker model of pooling resources and aimed their volume bonuses, preferred rates at that model. –Jerry

5.5%

6.5%

OFFICES IN VANCOUVER, CALGARY, EDMONTON, TORONTO & ATLANTIC PROVINCES

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12, 972 Rate wars

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average cost of home renovations completed in 2009 from an estimated 1.9 million households, surveyed in 10 major centres (CMHC Renovation and Home Purchase Survey).

sending brokers to the B-Side An increasing number of brokers are deserting the rate wars, deciding to move over to the B side, as a way of building a book less susceptible to the bullets of the banks and, indeed, other brokers. “It was just not competitive anymore because the banks were undercutting the rates I could access by so much that it didn’t make sense to stay solely in the A sphere,” Shawn Allen, owner of the independent Matrix Mortgage Global in Toronto, told MortgageBrokerNews.ca. “About a year ago, I decided to deliberately switch my emphasis to growing the number of B private lending deals. They’re now about 65 per cent of my business and growing.” He’s not alone, with more and more independent brokers now changing gears and moving toward subprime mortgages, specifically financed through private money. What they’re leaving behind, according to Allen, is a battlefield where the opposing side – the banks – are wielding unsustainable, loss-leader rates as a weapon in order to retain and attract clients. Some are even eating their own interest rate differentials if existing clients are threatening to break mortgages and accept a broker-arranged deal. “It really is getting highly competitive on the A side,” Michael Marini, a mortgage agent with Dominion Lending Centres Funds in Toronto, told MortgageBrokerNews.ca, “and it’s for that very reason that I’ve grown the B portion of my portfolio substantially over the last while, as well as commercial. I have a referral relationship with banks where they send me their turn-down business and I’m taking those clients to the B side for a short-term loan, one or two years, and then placing them back, usually with the same lender later.” He’s also actively growing what is already an extensive database of individual private lenders, who he can take a deal to, another way of meeting the demand from subprime clients. He remains very active in the prime space as well. CMP

mortgagebrokernews.ca

SHHHH! Please don’t let everyone know what I’ve been doing for 10 years. Let 90 per cent of the brokers and agents compete with the banks for A business and leave us 10 per cent alone who quietly yet efficiently can handle the B business. – Pete I enjoyed the article and have been contemplating such a move myself these past few months. But don’t worry Pete, we’ll just keep the B side advantage between the three of us! – Dave Well, I actually have taken quite the opposite approach to building my business. After working a couple years trying to place any business that came into my office (A, B, private and just plain ugly) I realized that I was only closing about 15 per cent of my B business. Sure, I was getting paid more for the deals that did close, but it also meant that 85 per cent of my work was for nothing. My answer was to refer all my B business to a B specialist for a small referral fee. This left me considerably more time to market myself to potential A referral sources. I am not against B business. However, rather than the “rate wars” driving brokers to B business, I wonder if A brokers would do better in dropping B business entirely while spending their time creating better relationships with influential referral partners? Wouldn’t this develop a more loyal A client base? – @kiltedbroker

MortgageBrokerNews.ca Reader Poll Do you think brokerages should be allowed to pool volume bonuses from lenders? 80 70 60 50 40 30 20 10 0 Yes

62%

38%

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Broker: Channel needs more one-year rate holds A boom in construction permits for Ontario and Quebec is highlighting the need for greater access to one-year rate holds, says the head of a leading Montreal brokerage, arguing mortgage professionals are hamstrung in their efforts to capture a bigger share of condo sales during construction. Nationally, the value of building permits in May rose 20.9 per cent to $6.4 million, led in large part by residential construction plans in Central Canada, according to StatsCan’s latest numbers. Ontario’s intentions for multi-family dwellings, in fact, increased 23.1 per cent to $1.6 billion, following a 31 per cent decrease in April. Quebec posted the largest month-over-month advance, up 45.8 per cent to a record-high $1.7 billion, driven by a mixture of some commercial but, again, dominated by plans for large multi-family developments. That’s good news for brokers prepared to go after some of the thousands of originations those permits represent, but it should and could be great news, said Terry Kilakos, a chartered mortgage broker and owner of North- East Mortgages in Montreal. “I get very excited when I see numbers like this because it forecast lots of increased activity,” he told MortgageBrokerNews.ca. “But the numbers also point to the need for more broker channel lenders to offer one-year rate holds to help brokers attract the business as clients are putting down deposits on condos. We do have access to the rate hold, but through a personal relationship at the branch level of a bank and not a non-bank lender through the channel.” The extended rate holds are aggressively used by the banks, which generally fund large-scale condo developments with the understanding they’ll be allowed to set up shop in a developer’s sales showroom. The arrangement has discouraged some brokers from aggressively pursuing leads at that stage of the buying process, in large part because of the dearth of product available through their lenders. Still, Kilakos acknowledges that it may be harder for non-bank lenders to follow suit, arguing those agreements expose smaller players to higher levels of uncertainty, especially given industry consensus around the likelihood of a Central Bank rate hike sometime in the next six months and the volatility of the bond market. CMP

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I agree. A huge part of our market it pre-sales, and the licensed brokers don’t get to tap into this as we only have a six- month maximum rate hold with national banks. Builders are using TD, RBC, etc., who offer the lowest discounted rate for over one-year periods for pre-sales. If a bank were to step up and offer the broker channel something similar, we would be able to service a whole other market and bring back a considerable amount of business.

– B.C. Mortgage Broker I just picked up a build file today that is possession for April 2012. A one-year hold sure would be nice in this situation. I agree, it sure would be a nice product, even at a higher rate.

- @kiltedbroker

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making mortgages motivating in a media age In the final instalment of the series, Carla Wood says you must understand your business’ true value proposition in order to integrate social media into your marketing mix

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s far as life advice goes, it has often been said that one must first know who they are in order to best determine where they are going. The same is true for marketing and business. And it is perhaps even truer in a newer realm of marketing such as social media. You, as a mortgage professional, must first understand your business’ true value proposition in order to effectively integrate social media into your marketing mix. Earlier this year, in the “Business Fingerprint” series I walked you through how to discover, implement and communicate your value proposition. In this current series on social media we have arrived at the final instalment of the series, after seeing true results from fellow mortgage professionals and making decisions on social media considering the potential return on investment. This third session wraps up the past five issues of reading to culminate on integrating all five Business Advice articles to drive results for your business that are tangible and intentional.

Let’s start with the assumption that you have made the decision to integrate social media into your marketing mix. If you are going to invest time and money into a social media strategy, there are a multitude of choices, but we need to begin with the non-negotiable.

NON-NEGOTIABLE Business website If you are pursuing a social media strategy, having your own business website is a must. It is highly advisable to have not only a web page, but your own URL or domain name that is memorable, searchable and professional. This will help you in search rankings as well as in the simpler issues such as adding a link to your website in your email signatures or including your URL on your business card and advertising. Often business owners spend a significant amount of financial investment on the branding and the look and feel of their website. This is

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Tired of searching multiple mediums to get the latest mortgage information for your business?

absolutely important, but my rule of thumb is this: what is the return on your branding investment if you have the greatest website in the industry but no one is visiting your site – or worse, no one you are targeting is visiting your website. Far too often, businesses use their website simply as an e-brochure and miss the opportunity to generate qualified leads through the site. Consider this: being found can generate leads, but having quality content and branding can improve the conversion rate of your leads, and spending your budget prioritizing these opportunities is a matter of financial accountability. So before you are caught up in attractive layouts and graphics, learn about the best platform for building your website, and understand how to increase the search optimization of your site from a layout, formatting and content perspective. And, of course, invest in a site that has growth potential. Even if you are not ready to integrate video today, for example, be sure you won’t need to build a brand new site if in 12-18 months from now you want to add that option to your site. Consider also the long-term maintenance costs of time and dollars in updates to your site. Will your internal team be able to make updates or do you need to pay your designer to make every little change? What do your budget, timing and skill set allow for? Message The message you communicate will continue to dominate your priority list as you pursue social media: • • • • • • •

What is it you have to say? Who are you saying it to? What do they value? Why should they want to listen to you? How can you engage with them? How can they engage with you? What is your objective with social media?

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The No. 1 mistake mortgage professionals make as they leap into the world of social media is failing to understand their message and purpose for being there. Take the time to determine the most effective message and most results-driven purpose for your value proposition in each social media avenue. This is a significant piece of what will drive results from your investment.

Carla Wood

Search Engine Optimization Whether your business hires a Search Engine Optimization (SEO) company to drive your search ability factor online or you invest the time to become self-educated and take this responsibility in-house, it is essential to understand the basics. Having your website, your business, your social media pages and your name rank on the first page of Google or Yahoo when key value proposition driven search terms are searched will increase traffic to your website. More traffic to your site means very little unless it is the right traffic, so choosing the driving keywords is a significant decision. Free tools such as Google Adwords can help with this, as can a paid SEO company. If you effectively integrate SEO with a SEOfriendly website with clear messaging on your website and through your other social media tools, you will begin to reap the benefits in three to six months in increased traffic, increased leads and ideally an improved conversion rate.

NEGOTIABLE

The methods of social media beyond your website, message and SEO are plentiful. Here are some terms and opportunities to investigate and invest some time into learning. Remember to solidify your business fingerprint before you start, so that you know the message you are after. And then,

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“ so before you are caught up in attractive layouts and graphics, learn about the best platform for building your website, and understand how to increase the search optimization of your site from a layout, formatting and content perspective. ” depending on your target market for each chosen social media platform, tweak your message to reflect the culture and purpose of the community with which you engage, all the while honouring your business values. (See chart below.) There are countless other options and new ones will be popping up daily/weekly/monthly. It is not necessary to be an expert in every one of these. Fortunately the results from each of these can be highly measurable and specific which allows for rapid assessment of impact and opportunity for quick response to changing markets. Making mortgages motivating in a media age is ultimately up to you as industry leaders. You can choose today how to motivate online consumers towards their next mortgage decision through your business. You simply need to choose to put the investment into your business fingerprint and your social media strategy. Carla Wood, MBA, MSRE – Managing Director, EDI Implementation Engineers (www.edicoaching. com / Twitter: @allstrategy) CMP

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u.s. U.S. new home sales fall in June, prices rise New U.S. single-family home sales unexpectedly fell in June, but a sharp rise in prices and declining supply suggested the market for new houses was starting to stabilize, a government report showed. The Commerce Department said sales fell one per cent to a seasonally adjusted 312,000-unit annual rate as sales in the northeast tumbled to a record low. Sales were also pulled down by a sharp drop in the west. May’s sales pace was revised down to 315,000 units from the previously reported 319,000 units. Economists polled by Reuters had forecast sales at a 320,000unit rate. In the 12 months through June, new home sales rose 1.6 per cent. Despite lean inventories, recovery in the market for new homes is being frustrated by a glut of previously owned homes, which are currently selling well below the cost of new construction. There were a record low 164,000 new homes available for sale in June. That compares to about 3.77 million used homes on the market in June, plus properties that are in foreclosure. The scarcity of new homes is encouraging builders to break ground on new projects. Data last week showed housing starts rose to a six-month high in June. The Commerce Department report showed the median sales price for a new home increased 5.8 per cent last month to $235,200. Compared to June last year, the median price rose 7.2 per cent. The rise in prices is the latest hopeful sign that home values are starting to stabilize. Data also showed the median price of an existing home increased 0.8 per cent to $184,300 from June last year. At June’s sales pace, the supply of new homes on the market fell to 6.3 months’ worth, the lowest since April 2010, from 6.4 months’ worth in May. CMP

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australia Arrears spike may continue Mortgage delinquencies are expected to rise in the coming decade, and Australian house prices may be unsustainable, Moody’s has indicated. The ratings agency has undertaken a review of the methodology by which it rates Australian RMBS following similar moves by Fitch’s and S&P. Moody’s senior credit officer Ilya Serov said the agency expects arrears and defaults to rise in Australia. “Default and delinquency rates in the mortgage market are likely to be both variable and, in our view, on average higher over the coming decade than in the past,” Serov commented. Moody’s said the sustainability of Australian house prices was in question, and stated that massive increases in value over the past decade were “only partially explained by fundamentals.” “We consider the possibility of major regional house price drops to be a material risk for the Australian market,” Serov said. The agency argued that high levels of mortgage debt pointed to vulnerability within the Australian financial system. The review came as ratings agency Fitch changed Queensland’s outlook from stable to negative. Fitch said the downgrade was due to the slow pace of the state’s budgetary recovery. CMP

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Bozic: brokers need to embrace creditor insurance As brokers clamour for more ancillary products from channel lenders, Boris Bozic is suggesting they’ve largely failed to capitalize on one available to them for more than a decade: creditor insurance. “They haven’t grown that portion of the business because they haven’t focused on it,” the Merix Financial president and CEO told MortgageBrokerNews.ca. “It was introduced more than 10 years ago to brokers and they simply haven’t significantly built on the level of business they were doing then. I think it would be prudent to do that.” The comments answer, in part, the growing call for broker channel lenders to deepen their product pool as mortgage originations slow sending brokers scrambling for ways to maintain, if not grow, their revenue streams. Industry insiders have also suggested that strategy as key for monoline lenders now grappling with the triple whammy of tight spreads, growing competition from the banks – both in- and outside the broker channel – and compensation obligations. Banks have, in fact, been able to undercut monoline rates in large part because of their ability to cross-sell a host of other ancillary products to mortgage borrowers, said John Bargis, head of broker network Mortgage Edge, pointing to credit cards, insurance and other banking services. Those offerings have freed banks up to offer mortgages as a sort of loss-leader, a luxury that those lenders all but limited to mortgages do not have. While brokers are increasingly asking for more of those types of product offerings as a way of diversifying their own utility to clients and claiming ownership for themselves as well as broker lenders, Bozic argues that they simply haven’t demonstrated the willingness to hawk those wares, given that less than 25 per cent of their originations include creditor insurance deals. Other channel lenders, pointing to lackluster credit card sales through mortgage professionals, back up his criticism. Still, brokers are willing to expand their sales efforts for the right product, said Wayne Mah, a Vancouver broker and 16-year veteran of the rate wars. “It really depends on the product and the lender,” he told MortgageBrokerNews.ca. “Offering Visa cards can be beneficial and I’m open to products from lenders who offer renewals because that demonstrates to me that in cross-selling on their behalf they will be inclined to share the client more so than the banks or lenders who don’t offer renewals.” CMP

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Any broker that truly looks after their client’s best interest would never sell creditor insurance. It is a far inferior insurance product than even a standard life term policy. I refer all my clients to three different insurance/financial advisers. My clients have better insurance coverage and the business I get back from those three referral sources way exceeds any commissions paid on creditor insurance. No need to bring up the show Marketplace did two years ago on creditor insurance, not a good product. – Ottawa Broker Brokers don’t sell creditor life insurance because it’s a lousy product. – David Larcok Completely disagree with you Boris. You sell them creditor insurance which is paid on a declining balance with an institution you are now tied to if your health deteriorates over the term of your mortgage. Add to that, instead of receiving a lump payout in the event of a death, you have your mortgage paid off which may not be the first priority of the survivor. I would rather see my clients receive a lump sum, probate fee, tax-free. Selling creditor insurance is flawed and you are much better to refer on to a third-party insurance agent. – Paul As a high-producing mortgage broker in B.C. since 1997, I cannot support creditor insurance enough. For those of you in business for any length of time, you will have a call one day that one of your clients has passed away, and did they take insurance? If presented properly, the product is good and worthwhile for all your clients. For those of you with life insurance broker referral sources you should not avoid the creditor programs. These insurance brokers will only close 25-50 per cent of your clients at best and if the file is under $500k, most insurance agents don’t want the headache of going through the process for a couple of hundred dollars in commission. All creditor programs can be cancelled at any time, so sign up your client and then refer to an insurance agent. At least they will be covered over the three to six months it takes an insurance broker to bind a client for coverage. I would also challenge any insurance broker to provide better disability coverage at the same cost as the creditor programs available, especially for lower income clients who need it most. It can’t be done. – B.C. Broker To B.C. Broker: Give your head a shake! What happens if one of your clients is one of the 15 to 20 per cent of annual claims that is not paid by the group creditor insurance companies? Great PR for you and your firm? If a mortgage brokerage wants to set up a subsidiary insurance brokerage and sell “real” life insurance, go for it. “Referring to the appropriate professionals” and receiving mortgage referral clients, great...But selling “garbage” group creditor life, where the risk is underwritten when a claim is made (the borrower is dead) instead of as in “real” life insurance where the risk is underwritten when the policy is written (less chance of the insurer denying the claim) is the less problematic way of acting in your client’s best interests. In my personal opinion selling group life is akin to selling snake oil and it’s is just about as useful. – David O’Gorman

$2.1 billion - value of building permits for single-family dwellings in May, down 4.9 per cent, following two consecutive monthly gains (StatsCan)

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Broker worried rent-to-own gains may cost industry A 400-per-cent increase in business for a rent-toown lender is raising concerns among brokers, worried the industry is opening itself to future litigation by placing clients in those deals. “I think every mortgage broker in this country needs to think very carefully about referring a client to essentially ‘quit claim’ their home and start paying the new homeowner, or landlord, rent with a plan to get the house back,” mortgage broker Ron Butler, with Verico Homeguard Funding, told MortgageBrokerNews.ca. “The fact the broker receives a referral fee pulls the mortgage broker in to something that may result in litigation in the future. Let’s face it, when we arrange a mortgage, it is a transaction with a 100 years of history, case law and disclosure behind it. This kind program needs another two years before anyone actually knows the results. Tread carefully.” The comments follow news that year-to-date, Home Owner Soon Inc. realized a “400-per-cent

growth in the value of its funded deals,” compared to the year-ago period, company president Guy Lew told MortgageBrokerNews.ca. The two biggest drivers of that growth spur, he said, “have and continue to be that we are gaining name recognition and a following with brokers, but also that the economy continues to present a challenge to many Canadian families. The truth is so many of us are only a paycheque away from losing our homes.” Lew and his team of six BDMs, scattered from coast to coast, are actively promoting their rent-to-own model as an alternative to eviction, relying on brokers to hawk their wares – a requirement set down in legislative changes both in Ontario and other regulated provinces. The strategy is paying off, said Lew, pointing to growing broker buy-in for his refi buy-back – accounting for 80 per cent of his business. Under the terms of that agreement, brokers access 100 basis points in finder’s fees for referring clients, who, in turn, agree to sell their homes for “fair market value” to one of Lew’s private investors. CMP

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For someone that is going to need to get a new high-ratio mortgage to buy back the home in a few years how does any rent to own program help if all the former derogatory debts are not paid out and sufficient new credit obtained that is reported to Equifax or TransUnion to meet the insurers’ guidelines? Is it not better for the homeowner to sell the home, resolve old debts that are hanging over them, rent an affordable home for a few years an affordable home and rebuild their credit so that after a couple years they can then buy a home without all the costs of a rent to own program. The basic question is what if they don’t qualify in a few years and the landlord is not willing to hold out for a longer time? Where does that leave the consumer? – Question

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Mortgage Revolution addresses need for bank ‘specialist’ regulation The Mortgage Revolution is gaining momentum, with the man behind the grassroots campaign pointing to a Calgary meeting bringing together mortgage professionals and lenders to address industry shortcomings and challenges. “We had a full house of mortgage brokers who truly care about our ‘channel’ and want to make a difference,” said Axiom Mortgage Solutions CEO Mike Cameron, pointing to the July 19 meeting. “As brokers, we need to take responsibility for our distribution channel. The key message from the sessions was that ‘It all starts with you’, and ‘It’s time to speak up and start talking about the issues’ and ‘It’s time to say no more.’” That event, the second in what Cameron has dubbed The Mortgage Revolution, mirrored the first with its candid conversation on ethical and integrity challenges facing brokers. More specifically, speakers like past AMBA president Gary Siegle explored the need to move beyond selling rate, while others voiced concerns about accountability and the need for greater communication between competing brokers. Discussion also touched on the importance of lobbying for the regulation of bank mortgage specialists, said Cameron.

“This one came up and RECA conceded that this is on their radar, and there will be a discussion paper coming out on this issue,” he said. “My understanding is that legislation needs to change for this to happen, but it appears we are making an impact.” Brokers also bandied about the idea of developing a marketing fund to create better consumer awareness about mortgage professionals. “We discussed the possibility of taking one basis point per deal to allocate to a broker awareness campaign,” said Cameron. “I think it is a positive concept but we need to improve the product before we advertise it.” The Calgary discussion, which drew Street Capital’s Paul Grewal and AMBA President Paul Bojakli, helped steel Alberta brokers now grappling with an increasingly competitive market and fears of a price correction like that experienced in 2007/8. Values have yet to bounce back to pre-recession levels, something that may have exacerbated integrity and ethical lapses, argue some brokers. “We ‘the good guys’ need to band together and say ‘there’s no room for unethical behaviour in our industry,’” Cameron said. CMP

“Mortgage Specialist” now there’s an oxymoron! How can any individual be a specialist when you offer one bank’s products. Better word might be “Order Taker.” To ur understand the TD’s and the RBC’s are losing market share – so their answer is to hire more road warriors. Please do as the more you hire, the more they screw up and the more deals for the quality brokers in the neighbourhood. Key word here is “quality” and not the fly-by-night or the ones only two or three years in the business. – S Ont Broker

This is what CAAMP should be doing. I think we all need to put some pressure on them. They have the budget and power to lobby this but as members we need to push them to regulate the banks. – Chad

Unfortunately, I can’t see the banks ever conceding to regulation of their mortgage specialists. They have the funds and resources to ensure this never happens. I think it’s irrelevant considering the specialists are employees of the financial institutions. How they are regulated is completely internal to the individual banks. The focus of our industry should not be on how to control or regulate employees of the banks, but how we can better serve our client base and continue to educate the public on the benefits of our services. – Crystal Lucuik

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I was in Calgary and attended the Mortgage Revolution. I think it was definitely a step in the right direction for the broker channel. I am excited to see where this goes. I want to see the broker channel take market share from the banks, but we can only do that if we have quality brokers doing quality business. - @kiltedbroker Why would we pay 1bp per deal for a marketing fund? It is a great idea, but should that not be the responsibility of CAAMP. You look at the insurance brokers industry and their governing body does a great job of advertising for them. Why does CAAMP not do this for us? Everything we are dealing with right now in our industry should be dealt with by CAAMP, not by individual brokers forming committees to address issues. Thanks to those brokers, but they should not have to do it, our governing body should. – Ottawa Broker

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volume bonus pooling for brokers Calum Ross: “There is no question that myself and my team have profited a lot from the idea of volume pooling working with a national mortgage brokerage. There is also no question that the vast majority of us who do work with the super-brokers have benefited from volume bonuses at the national level. My concerns are with several things, including the ‘know-your-client rule.’ I don’t disagree with pooling of volume bonuses when there are efficiencies tied to lenders, but I have major concerns when brokers start submitting deals under other people’s keys when they’ve never personally met the client and don’t know anything about them. There is potential for documentation to be misrepresented and huge potential for mortgage fraud to occur. I think all too often people are put into mortgage products by very junior mortgage agents who are doing a product or promotion based on the volume that is pooled through the lender or the way that the broker of record submits deals and I don’t think that is in the best interests of clients. When mortgage professionals themselves submit deals that have low default rates, they submit complete files early and they also make sure that process is

as hassle-free as possible for the lender, not only does it make the business relationship much more efficient, it also means that the overall cost to manage and service those loans is lower. Those efficiencies I believe should be passed on to the mortgage originators who are, in fact, realizing those efficiencies and making it more profitable to do business with the lenders. We have to remember as mortgage originators that whether a $10 million or a $100 million producer, we’re just a rounding error in the big picture of the lenders. The lenders control the power in our market and we need to understand that if we want to look after the long run of our business we need to make sure that it is profitable for lenders to do business with us as a broker channel. We need to make sure that not only are we getting paid more, but we have to make sure it’s a profitable relationship with the lenders. When we get too selfish and pooling of mortgages starts to generate extra commissions to people who haven’t earned them, then we’re potentially compromising the future of our industry and I don’t want that to happen.”

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might be about the hundreds of deals you might get from that client.”

One-year rate holds Michael Marini: “Are one-year rate holds advantageous for mortgage brokers? Yes and no. A single-family residential property typically is built within one year. So if a client walks into a new construction sales office and obtains a one-year rate hold they will most likely be able to use that rate hold. Brokers can still be competitive because there are still some channels they can use and still get a one-year rate hold, however those rates are generally posted minus one per cent, so it would still be a good idea for the broker to still maintain the relationship with the client within that timeframe because oftentimes we can offer a better rate than posted minus one per cent. In the new construction condo market typically the timeframe for a condo to be built is two to five years and in that timeframe they won’t be able to get that one-year rate hold. What the banks will offer them, usually from someone representing the bank in the condo sales office, is a one or two-year rate hold with the promise of posted minus one per cent after that. Brokers can be at a disadvantage if they feel that the bank is stealing their business and going after that client, but the truth is that there may not be any retention program from the bank to follow up with that client in the future. That leaves the door wide open for brokers to still go after that business and beat a posted minus one per cent rate. Now that rate could be cheaper than the rate you are able to offer your client four years from now because we really can’t tell where the market is going to go. If that’s the case, then the best thing might be for your client to take that rate, in which case you will be able to obtain referrals from that client for being truthful. It’s not always about getting the business for yourself on that one deal, it

On the topic of …

Developing your alternative lending portfolio Michael Marini Shawn Allen: “About a year-and-ahalf ago we noticed we were losing market share to the banks in our A business. They were undercutting our mortgage broker rates and thus keeping the clients. I was forced to look at my business strategy and converting to the more traditional mortgage broker model which was looking at the B business. In doing that I’ve found that I’ve increased my Shawn Allen market share in the B business and am now doing about 60 per cent B business. I’m still doing A business by focusing on the B side. I’m getting a lot of my B business from real estate agents who’ve had clients in the past and now want to re-finance or consolidate debt and who don’t fit into the traditional A business model or the traditional bank model, so they come to me. Another good source of business, which I’m finding is working for me is real estate lawyers. They are an excellent source for sub-prime financing or private-sector mortgages, especially from one of the lenders who are no longer in existence. We consolidate debt with a second mortgage and potentially move those clients to an A bank once those debts are settled. Accountants are also a good source. They know people who are having financial issues and they refer business to us as well. CMP

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2010

this time last year First-time homebuyers in B.C. more likely to buy a condo First-time homebuyers in British Columbia are more likely to buy a condo instead of a house, compared to the rest of the country. Thirty-seven per cent of British Columbians who bought a home in the past two years or intend to buy in the next two said they bought or will buy a condo, according to a TD Canada Trust report. This compares to 21 per cent of those surveyed nationally who bought or planned to buy a condo. Also across the country, 58 per cent expected their first home to be a detached house, while in B.C., only 36 per cent of respondents bought or intended to buy a detached home. “In B.C., it’s all about lifestyle and affordability,” said Barry Rathburn, manager of mobile mortgage specialists with TD Canada Trust on Vancouver Island. City residents often want a condo to be near work or have a water view, added Rathburn. The price range of detached homes in Vancouver average nearly $800,000, which makes buying a house a difficult task for most first-time homebuyers. One year later The cost of buying and owning a home in British Columbia is so high that about half of first-time-homebuyers are looking for a property with a rental unit to cut costs, according to a new survey. The strong interest is likely a reaction to the average price for a home in Vancouver, which is up 25.7 per cent year-over-year to reach $831,555.

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Some 56 per cent of residents in the province are looking for a home with a rental unit, according to the 2011 TD Canada Trust First Time Homebuyers Report. “Taking in a tenant can be an effective way to supplement your income and pay off your mortgage faster,” said Barry Rathburn, manager of residential mortgages for TD Canada Trust. A vast majority, about 85 per cent of first homebuyers in the survey, think a rental unit will generate $500 to $1,000 a month, and 67 per cent said the extra income will go towards paying their mortgage. The report showed B.C. first-time homebuyers have also been saving longer – 57 per cent have been saving for three years or more, compared to 47 per cent nationally. A greater number of B.C. first-time homebuyers need a mortgage for their purchase as well 93 per cent versus 87 per cent nationally. Rathburn suggested those first-time homebuyers considering a home with a rental unit choose a mortgage with flexible options. “These products allow you to pay more towards your mortgage when you can afford to and give you the peace of mind of knowing that if something changed financially (for instance, your tenant moved out during the same month that your furnace broke down), you could miss payments with no penalty,” he said. CMP

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Diversification Nation

Reverse Mortgages

Helocs

Private Lending

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tion Expand your revenue stream

Creditor Insurance

Credit Cards

While brokers scramble for ways to keep their revenue streams flowing, ancilliary service providers are re-jigging their offerings, hoping, Vernon Clement Jones finds out, that brokers will take notice. mortgagebrokernews.caâ&#x20AC;&#x201A;â&#x20AC;&#x201A;

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ast month, when brokers began to complain about a dearth of ancillary products to hawk – something to make up for the even bigger dearth of originations – Merix’s Boris Bozic was the first to raise an eyebrow, a furrowed eyebrow. “Sorry, what dearth?” He suggested, even if he was too tactful to say it. “Creditor insurance was introduced more than 10 years ago to brokers,” he said instead, “and they simply haven’t significantly built on the level of business they were doing then. I think it would be prudent to do that.” While many brokers disagree with that last statement, most, in fact, acknowledge that there are several mortgage-related products available to consumers through the broker channel. They’re increasingly looking to sell them as a way of diversifying their revenue streams outside of the slowing number of originations and, even, refis. Creditor insurance is perhaps the best known, although credit cards, offered by Home Trust and MCAP, among others, are right behind it. And brokers continue to turn their hand to nontraditional and secondary mortgage solutions, with lenders pointing to steady increases in the number of mortgage professionals now presenting applications for reverse mortgages, home equity lines of credit and, even, rent-to-own products.

“ the two biggest drivers of the growth have and continue to be that we are gaining name recognition and a following with brokers, but also that the economy continues to present a challenge to many Canadian families. ”

who, in turn, agree to sell their homes for “fair market value” to one of Lew’s private investors. They then lease back that residence for an amount largely in line with an appraisal’s rental value assessment, he said. About 20 per cent of rent gets directed into a down payment account, which is then applied to the buy-back, often after a three-year term. The homeowner – now renter – also agrees to pay commitment, activation and credit rebuilding fees along with a security deposit, equal or greater than 10 per cent of the home’s appraised value. Those costs add up and have raised concerns with some brokers who’ve advised clients to sell their homes and move rather than enter into rent-to-own deals, with often uncertain outcomes. “ Those types of programs aren’t new to the creditor insurance was industry, said Ron Butler, a broker with Verico introduced more than 10 years Homeguard Funding in Ontario. His insights come from past work with a similar company no ago to brokers and they simply longer in business offering a similar plan. haven’t significantly built on “It seems to me that while a very small the level of business they were minority of the clients came out the other end happy,” he told CMP. “The vast majority – 80 per doing then. I think it would be cent to 90 per cent – were financially damaged prudent to do that. and angry with the company. I learned this early ” with that company and ended my relationship with them years ago.” “We’ve seen a 400 per-cent growth in the value Lew’s growing portfolio – entirely dependent of funded deals this year compared to the same on broker referrals – suggests a growing number year-to-date period in 2010, said Guy Lew, of mortgage professionals are nonetheless president of Home Owner Soon Inc., a private prepared to take on those deals. lender but doing business across the country. “The Reverse mortgages have largely escaped that two biggest drivers of the growth have and kind of controversy, as the industry’s leading continue to be that we are gaining name player expands and adjusts the product offering to recognition and a following with brokers, but also better appeal to its referral channel members, that the economy continues to present a challenge including brokers. to many Canadian families.” It’s worked. Under his and similar plans, brokers access 100 “Over the last five years, we’ve experienced an basis points in finder’s fees for referring clients, up-trending in business through the broker

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Still, the lender is facing competition, with brokers increasingly looking to arrange home equity lines of credit for clients of all ages looking to liquidate some assets in order to meet moreimmediate cash needs. With a new report from CAAMP suggesting HELOCs represent 22 per cent of all Canadian mortgages, or a whopping $215 billion industry – almost all of that going directly to the banks – brokers are increasingly looking to claim some of that business for themselves. “A lot of brokers are looking to differentiate channel,” Greg Bandler, Senior VP of HomEquity themselves,” Mary Hayes, product manager for Bank, Canada’s leading provider of reverse mortgage. Laurentian Bank’s broker arm, B2B. “Our HELOC This spring the company paved the way allows them to do that.” for greater broker referrals by lowering the B2B is, in fact, reporting a significant uptick eligibility age for homeowners to a spry 55. That in demand for its home equity lines of credit, one move alone is set to raise broker referrals by most likely new business for brokers and not as much as 10 per cent, HomEquity president merely the re-routing of clients normally bound for Steven Ranson told CMP, pointing to client the refi market. demographics for brokers that skew younger “May was the single best month in HELOC than his own traditional customer base. By sales ever, representing a combination of new lowering the eligibility age to 55, HomEquity purchases and HELOCs on existing mortgages” Bank also positions itself to capitalize Mark Zochowski, VP of business development at on the growing number of well-heeled baby B2B, told CMP, attributing the growth to a boomers planning early retirement, a type of number of factors. Chief among them, he said, is client increasingly on the broker’s radar screen the flexibility of the offering, the rate – prime + 25 as well. basis points – and the collective impact of lender This spring, HomEquity also made official its advertising campaigns hawking HELOCs. longstanding willingness to go up to a loan-to-value The B2B product, a Laurentian-branded of 50 per cent, another enticement for brokers HELOC, is one of only a handful made looking to diversify revenue streams as new home available through the broker channel, purchases slow across much of the country. Here something limiting broker participation in again, Canada’s aging baby boomers are also that end of the mortgage market. spurring interest among brokers looking to better “We have a limited offering compared to bank tap into that lucrative market. Under HomEquity’s branches and their mobile specialists, especially on CHIP Home Income Plan, accrued interest on the the East Coast where the number of lenders are reverse mortgage gets tabbed onto the loan’s reduced compared to other provinces such as balance as the mortgage grows. When clients die Ontario, Alberta and British Columbia,” Leslie or sell their homes, that money is then paid back to HomEquity. “ Broker compensation at 50 basis points reflects the “the more modest demands we place on brokers May was the single best in terms of the application process compared to month in HELOC sales ever, conventional mortgages,” said Bandler. Brokers representing a combination of may increasingly agree, with HomEquity poised to improve its 2010 originations numbers. As a group, new purchases and HELOCs on mortgage professionals, represent 134 firms, existing mortgages. brought around 700 leads last year.

“ broker compensation at 50 basis points reflects the more modest demands we place on brokers in terms of the application process compared to conventional mortgages. ”

”

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Top: Boris Bozic Bottom: Ron Butler

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Penney, VP of business development at APlus Mortgage, told CMP. “With a select few lenders offering HELOCs, it’s clear as to why our market penetration is minimal.” B2B’s success at attracting brokers to the product comes despite concern among others about collateral charges associated with HELOCs. While readvanceable mortgages allow clients to re-borrow the principal they’ve paid off on their mortgage, up to 80 per cent of the value of the property, and to avoid upfront legal costs, they also allow the lender to register a collateral charge on the home usually for 100 per cent of the value. That effectively means the mortgage must be entirely discharged in order for a borrower to transfer it to a new lender at renewal or for refinancing. Most monolines and banks – as well as private lenders – refuse to accept the transfer of collateral mortgages, forcing homeowners to pay additional fees to register a new conventional or collateral mortgage in order to move the loan from the lending institution. While, HELOCs aren’t for all clients, “they do have a place in the broker arsenal of products,” said Gord McCallum, owner of First Foundation Residential Mortgages in Edmonton. “It’s important that the broker really understands the client’s needs in order to determine if the HELOC is appropriate.” Another industry veteran agrees, although broker training around more complex transactions is absolutely imperative, said David O’Gorman, broker/owner of MortgageLand Inc. in Markham, Ont. It’s an across-the-board concern being raised as brokers move to diversify their product offerings. “It’s great to see a broker-oriented financial institution like Laurentian/B2B bring a product to market that meets a need,” O’Gorman told CMP. “However the reality is the vast majority of

“ the vast majority of agents in Ontario are graduates of a less-than-rigorous, provincial government-approved, five-day educational program, so most don’t have the experience to be able to understand the risks and future costs in a collateral mortgage. ”

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mortgage agents in Ontario are graduates of a less-than-rigorous, provincial governmentapproved, five-day educational program, so most don’t have the experience or the education to be able to understand the risks and future costs to the borrower inherent in a collateral mortgage. They see a ‘cheap’ product offering a quick payday.” O’Gorman is suggesting broker/owners need to take on a leadership role here, advising their agents about their responsibilities to clients as well as highlighting the ins and outs of collateral mortgage deals. “To my principal broker colleagues, I would recommend that they ensure their agents/brokers a) develop an approved “script” to explain verbally to their borrowers the risks, limitations and potential future costs of a collateral mortgage and b) have a written disclosure, specifically for collateral mortgage loans, that clearly details the costs and risks to the borrower of a collateral mortgage and have the borrower sign and acknowledge the disclosure,” said O’Gorman. But even as brokers increasingly look to overcome those challenges in order to sell HELOCs, efforts to win a bump-up in the creditor insurance sales has generally been harder to come by. That’s despite the growing need to maximize revenue from each and every mortgage transaction. “Many reasons may be given,” Kelly Price of Bensure told CMP, in explaining why broker buy-in for creditor insurance, including her company’s MPP product line, remains stalled at 10 - 25 per cent, “but one thing more than any other seems to hold brokers back when it comes to maximizing their revenue from creditor insurance. It’s the prevalence of the view that it is someone else’s job.” That is starting to change. “Our network of active brokers has grown 15 per cent in the past year,” Price told CMP, “and about 1,000 individuals are now taking advantage of our new ‘no charge-back’ compensation plans.” Earlier this year, the industry leader, along with another competitor, moved to remove one of the stumbling blocks for brokers hesitant to sell their clients on that insurance. “Something that has become very clear to us over the years, is that brokers have a wide range of objectives when it comes to the compensation they receive from us,” David Self, VP of marketing & distribution with MPP, told CMP. “That’s why we offer a variety of choices: trailer fees, full up-front payments and a hybrid version

Top: Greg Bandler Bottom: Kelly Price

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as well. Now, with our no charge-back plan, we can address one more objective, which is the need to eliminate the risk associated with the unknown future cost of charge-backs.” Under the terms of most creditor insurance plans, brokers collect full upfront payments within the first 60 days of a policy and a client’s home purchase. Under that model, brokers take as much as 11.25 times the monthly premium on a MPP policy. But not so fast. The payment is subject to a 100 per cent take-back if the client cancels the policy in the first 12 months or fails a medical evaluation, which, in some cases, includes a paramedical screening. This latest MPP program largely reduces the consequences of that premature lending, although it trims broker compensation to four, seven or nine times the monthly premium and delays payment until after the client’s 60-day money-back guarantee has expired. The mortgage professional also agrees to have remuneration broken up into two instalments, the last paid only after the first year of the policy. The program is similar to one introduced by Propel Insure and is expected to help brokers diversify their income streams at the same time even out cash flow. About 30 per cent of MPP’s broker database is now on one of its “trailer” compensation plans which ultimately, what Price chalks up to “a significant proportion of brokers now taking the longer-term view and no longer being interested in just the quick-hit that the upfront options provide.” MPP’s top earner, in fact, takes home as much as $10,000 some months, its top 10 broker-partners regularly earning closer to $5,000 for that same pay period. “For someone who is actively supporting us,” said Price, “$1,500 - $3,000 per month is typical, but there is lots of untapped potential reflected in that figure. We believe that the average mortgage broker could easily double his insurance success rate. Many brokers remain skeptical, not of the income potential, but of the product itself. Their hesitance was largely shaped and reinforced by a CBC Marketplace examination of creditor insurance, which cast doubt on the benefit for policyholders. Benesure recognizes the PR challenge in winning higher broker participation. “We never really had to deal with this concern until (that Marketplace) came out in

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“ $1,500-$3,000 per month is typical, but there is lots of untapped potential reflected in that figure. We believe that the average mortgage broker could easily double his insurance success rate. ” 2008,” a candid Price told CMP. “It highlighted a few dramatic cases of creditor insurance claims being denied, and created the impression with viewers that creditor insurance is inferior to other types of life insurance. First of all, “creditor insurance” just means that the benefit is tied to a loan or a mortgage. It doesn’t tell you anything about the product itself, or about how it is underwritten. Today, there’s more diversity out there than ever, so broad generalizations are tough to make. Mortgages aren’t all the same – mortgage life insurance products aren’t either.” Still, almost all policies are contingent on physical examinations, like most life insurance policies available outside the broker channel and most often referred to clients by their brokers. “As soon as you provide any sort of health information, you’re effectively guaranteeing that it is complete and accurate,” said Price. “And, if it’s not, an insurance company always has certain rights to retro-actively cancel the policy if material misrepresentation or fraud has occurred. “If a policy is deemed never to have existed in the first place, obviously no claims can be made.” In industry lingo, that’s called “recision.” “It is not ‘post-claims underwriting,’ because when recision occurs it means there was non-disclosure during the up-front underwriting process, whatever that process may be; it can vary widely.” Benesure asserts that its recision rates, as a percentage of claims “is not significantly different” than that for traditional life insurance policies, specifically, term policies sold by insurance agents. It points to feedback from the reinsurance industry,

Top: John Bargis Bottom: Koby Carleton

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“ we understand that insurance is not a broker’s business. It only makes sense to leave it to the specialists who are trained for it and generate that income at the same time. ” which looked at the underwriting and claims practices of a number of Canada’s largest life insurance providers. Creditor insurers like Benesure still have their work cut out for them, with some brokers still ambivalent about the product itself, arguing their role as mortgage brokers effectively restricts them from endorsing a limited number of creditor and life insurance products — those available through the broker channel. That thinking comes at a cost, said Bozic: “If you have a moral dilemma relative to certain products then you have to accept that, that business is going to go elsewhere.” His comments answer, in part, the growing call for broker channel lenders to deepen their product pool as mortgage originations slow sending brokers scrambling for ways to maintain, if not grow, their revenue streams. Industry insiders have also suggested that strategy is key for monoline lenders now grappling with the triple whammy of tight spreads, growing competition from the banks – both in and outside the broker channel – and compensation obligations Banks have, in fact, been able to undercut monoline rates in large part because of their ability to cross-sell a host of other ancillary products to mortgage borrowers, said John Bargis, head of broker network Mortgage Edge, pointing to credit cards, insurance and other banking services. Those offerings have freed banks up to offer mortgages as a sort of loss-leader, a luxury that those lenders all but limited to mortgages do not have. While brokers are increasingly asking for more of those types of product offerings as a way of diversifying their own utility to clients

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and claiming ownership for themselves as well as broker lenders, Bozic argues that they simply haven’t demonstrated the willingness to hawk those wares. Brokers have been willing to refer clients on to insurance brokers in order to strengthen their referral networks. Some creditor insurance providers are capitalizing on that broker strategy. Broker Plus Insurance focuses on offering a full-service referral program, allowing mortgage brokers to capture some of this potential income without having to arrange the sale of it. “We understand that insurance is not a broker’s business,” said Koby Carleton, business development manager of Broker Plus. “It only makes sense to leave it to the specialists who are trained for it and generate that income at the same time.” CMP

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Independent Brokers

Independence: It’s long been the boast of brokers, but, as Vernon Clement Jones finds out, a growing number of mortgage professionals are backing up that claim by shedding their super-broker ties and opting to go it alone.

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independent W

hen James Shinners was ready to leave his aggregator, he looked at the other super brokers and then looked inside himself. “We had just gone through all the various ‘super-broker’ options – from those offering a fee-split arrangement to those offering a set fee but asking for minimum volume requirements,” the Halifax-based head of Mortgage Managers Brokerage Inc., tells CMP. “I then digested it and realized it was either a case of us not wanting to part with 15 per cent upfront or being unable to meet volume requirements, which for us being in Atlantic Canada, where the home values are generally lower, was a real challenge.” The veteran broker then considered the many aggregators offering franchise

opportunities – a proposition he’d ultimately reject as it was out of step with his own designs on taking the brokerage national. Having drawn an “X” across all those choices, Shinners opted to go independent. It wasn’t a hard sell. “We made the move about two years ago and we’ve never looked back and we’ve never had a moment’s regret,” he says. “Having been with a super broker, we had never been assisted with advertising and marketing ourselves and so there was no real benefit to marketing the super broker’s name. Going independent, we were able to focus on promoting our own name.” It was just one of the benefits of choosing to go it alone. There have been others, although Shinners isn’t the only broker in a position to extol those virtues. Of the 365 brokerages that the Independent Mortgage Brokers Association of Ontario draws its thousands of members from, says Meghan Delany, co-ordinator of education and membership services, only about 107 are network affiliated. The number suggests that the majority, or as much as 259 of the province’s broker firms, are flying solo in Canada’s largest mortgage market. Specifically, that’s without Centum, Argentum, Dominion Lending

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Independent Brokers

“ comparing the super-broker models to what I have now, I prefer to stay where I am. There are too many mouths to feed in the super-broker model. I think I’ve hit on a more streamlined model, which cuts through the head office mandates around staffing and overhead. ” Centres, The Mortgage Centre, TMG The Mortgage Group, Axiom, MortageBrokers. com, Mortgage Architects, Mortgage Alliance or even Verico or Real Mortgage Associates. The number of those independent brokerages is being added to as mortgage professionals look to transfer experience they’ve garnered while under the wing of a broker network to a business entirely of their own. Shedding that connection is easier for brokers now focused on Alt-A and B clients, although everything is relative. “It’s tougher now to be independent than it was when we first opened up for business 28 years ago,” Frances Blau, president of Abacus Mortgages in Toronto, tells CMP. “But in private lending, we don’t need a super broker: They can’t tell us what to do. You’re dependent on your reputation with lenders and your ability to come through for them, and at Abacus, we have a lot of private investors, and they like to deal with us because we do come through for them and the client. We’ve also been actively involved in the industry, in IMBA, and know our stuff.” An increasing numbers of brokers are escaping the rate wars that mark the A sphere and followed Blau down that private lending path. It’s a way of escaping the vagaries of the prime market and the competition around rate that often trumps everything else. Their move to the B-side often makes a super-broker affiliation redundant, argue some independents, running one- or two-broker shops and

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without the payroll challenges that might recommend an aggregator’s assistance. Still, most brokers looking to eventually restrict themselves to alternative lending will, nonetheless, log time with aggregatoraffiliated brokerages in the A sphere. “I wouldn’t suggest a broker with less than five years’ experience with an aggregator look to go out on their own,” says Marshall Spencer, owner of Prime Rates. “Being a part of that system early on gives them access to necessary training and guidance and, of course, volume bonuses, which is key.” The last on that list is increasingly the glue binding brokers and super brokers together, says Spencer.

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Top: James Shinners Bottom: Jim Tourloukis

“If you consider that there might be 100 basis points on the table in volume bonuses, by being independent you might be able to sleep better at night, but you could be accessing only about threequarters of that. A lot of people don’t want to leave that quarter on the table and that’s why they remain with the conventional super-broker model.” Spencer is no longer one of them, having moved to an aggregator that allows him to access top-tier volume bonuses but frees him of much of the branding, marketing and other administrative requirements that make leaving the super-broker model attractive to many. “Comparing the super broker models to what I have now, I prefer to stay where I am,” says the mortgage veteran, in the business for 28 years. “There are too many mouths to feed in the super-broker model. I think I’ve hit on a more streamlined model, which cuts through the head office mandates around staffing and overhead.” One of the industry’s top performers is prepared to go even further. In fact, Jim Tourloukis did go further, ending his relationship with his super-broker partner three years ago. He has since rebuffed the invitations of the several other networks, which have and continue to knock on his door. That isn’t to say the Unionville, Ont., broker didn’t benefit from that past relationship. “I did,” he says, “but if being with a super-broker was able to garner me any value, I’d still be with one. By my

“ by my calculations, being independent earns me an extra $250,000 a year in bonuses and savings. If a super-broker is willing to cover that loss, I’d consider the one or two of the offers I get each week. ”

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“ if you consider that there might be 100 basis points on the table in volume bonuses, by being independent you might be able to sleep better at night, but you could be accessing only about three-quarters of that. A lot of people don’t want to leave that quarter on the table and that’s why they remain with the conventional super-broker model. ” calculations, being independent earns me an extra $250,000 a year in bonuses and savings. If a super-broker is willing to cover that loss, I’d consider the one or two of the offers I get each week from networks asking me to join them.” Just as maximizing earnings is now the primary driver sending mortgage professionals into broker networks, it effectively drove Tourloukis away from his. As a major factor, he points to the growing emphasis on individual efficiency ratios as a key component in calculating bonuses. With one of his primary lenders, having already made the switch to efficiency ratios, Tourloukis benefits from both his personal 98 per cent approval rate and a corresponding 90 per cent funded rate. As the CMP Top 50 Broker for Ontario in 2010, he arranged a staggering 548 deals that year. The sheer volume means he has top-tier status with all the lenders he partners with, which dispenses with the need for pooling through a broker network in order to max out volume bonuses. In fact, remaining with an aggregator would have undercut his individual

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Independent Brokers

efficiency ratio, with lenders using a network average to establish bonus levels. “That would effectively bring down my efficiency and cost me bonus money,” said Tourloukis, who has only two support staff in his office, neither of whom write loans. “If I did remain with the network, that would, on the other hand, raise their volume and efficiency ratios,” he says. “I went independent because I didn’t want the inefficiency of other brokers to pull me down.” Going independent is a strategy more of the industry’s highest performers are expected to adopt as they cotton on to the potential benefits it relays to their respective bottom lines. “If they’re using the lenders that are starting to award bonuses based on efficiencies, they may already be starting to do the math for themselves,” says Tourloukis. Those calculations are different for brokers with small portfolios and originating anything under $30 million a year, argues the five-year veteran: “They’re better off with a super broker because of the volume bonus and if they have staff, the back-office and payroll support, along with training for agents, which is valuable,” says Tourloukis, who has several corporate contracts, allowing him to access hundreds of potential residential clients in the GTA, an area marked by one of the highest home prices in Canada. As a broker in Nova Scotia, Shinners isn’t nearly as lucky. Like many in Atlantic Canada and other markets where home prices consistently fall below the national average, his firm’s individual volumes

“ no, we’re not a top-tier volume bonus brokerage with all the lenders, but we’re also not paying out 15 per cent from our deals to a super-broker for that privilege, either. ”

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“ if I did remain with the network, that would, on the other hand, raise their volume and efficiency ratios. I went independent because I didn’t want the inefficiency of other brokers to pull me down. ” Marshall Spencer

simply aren’t enough to earn it top-tier bonuses with its lender partners. It’s something he accepts and it was never enough to keep him from striking out on his own. “No, we’re not a top-tier volume bonus brokerage with all lenders, but we’re also not paying out 15 per cent from our deals to a super-broker for that privilege, either,” says Shinners. “So, ultimately, we’re not losing or gaining: it’s a wash.” Going independent also allowed him to be more flexible in creating the firm’s own compensation model for brokers, innovation that just wouldn’t have been possible under a super broker. Loosely based on the EXIT Realty formula, Shinners’ model rewards his agents with residual income for bringing other successful agents into the fold, specifically, a 10 per cent bonus on every deal the new agent closes. As a recruitment tool, the system attracts high-calibre prospects, with agents focused on signing up mortgage professionals with the connections and drive to perform, says Shinners. But even as an independent, the firm, working Halifax’s regional municipality, is prepared to arm those newbies with the tools and training they’ll need to succeed. Brokerage heads often cite professional development and technology concerns in opting to join an aggregator. “We’ve done more in the last year in terms of getting our agents before BDMs and insurers to do training than we did before going independent,” says Shinners. CMP

if the

NO. 16

Guide to broker networks

model

fits

www.mortgagebrokernews.ca

Going National The Power of PR Leveraging the media can generate leads for free

Time Management Make the most of strategy sessions

Profiles Centum The Mortgage Practice VERICO PUBLICATIONS MAIL AGREEMENT #41261516

Microsoft Dynamics CRM TM

Setting

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contents cmp guide no.16

NO. 16

Guide to broker networks

2 11

Getting in the Media

Leveraging the media can be an effective way to raise the profile of a firm and generate new business leads for free

Independence maintained Victoria’s Mortgage Depot is one of the latest independent brokerages to join Verico. Vernon Clement Jones finds out why from President John Zieman

Going National National broker networks and brokerages continue to make the case that they hold the keys to success for independent brokers. CMP finds out from several of these “nationals” why they think they’re the answer

Time waits for no one

Fitting everything into high-level meetings can sometimes seem impossible. Find out how to make the most of strategy sessions

Mortgage sustainability Everything Centum Financial Group does is geared towards building its franchise network and its franchisee’s businesses in a way that adds value to the business

The evolution of the mortgage brokerage

Innovation continues to drive The Mortgage Practice to new heights, as the company founded by Ravi Punnia branches out by offering a new model for licensed brokers mortgagebrokernews.ca

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Broker Networks

National broker networks and brokerages continue to make the case that they hold the keys to success for independent brokers. CMP finds out from several of these “nationals” why they think they’re the answer

Going National 2

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Broker Networks

Colin Dreyer, president & John Kelly, COO VERICO Canada

Colin Dreyer (left) and John Kelly

When business partners Colin Dreyer and John Kelly first assessed the Canadian mortgage landscape in the mid-2000s, each recognized an opportunity. “No one had established a brand for the elite level of brokers. No one was bringing together the top echelon of the industry. We looked at the industry and realized that this opportunity was untouched. So, we developed a value proposition around this niche and created a space for the top-performing mortgage broker firms. We wanted a network of the best of the best,” says Dreyer. To attract the top percentile of the top performing mortgage agents and mortgage firms in Canada, VERICO set out to offer a unique value proposition. “We believed that quality brokers want to work with the best. We believed that brokers want to build equity into their own brands and business. We also recognized that equally important to the success of our brokers, is a great partnership with lenders; and this was how the ’Mortgage Network’ concept was born,” says Dreyer. “We don’t sell VERICO; we explain the opportunity to individuals and companies; they take a look at that opportunity and say ‘that’s where I want to be, that’s where I want my future to be, those are the people I want to be associated with.’ So we don’t really compete against anybody in our niche. VERICO is the No. 1 network when it comes to elite mortgage originators.” The coveted reputation of the VERICO Network was even acknowledged in 2010, by an independent

report conducted by Deloitte, which recognized VERICO as having captured the niche of the “high-end mortgage broker.” Today, VERICO is Canada’s premiere network with 190 brokerage companies with over 2,000 agents that generate over $10 billion in mortgage volume. Dreyer says that the success could not have come without partnerships with lenders. “We’ve developed tremendous relationships with lenders and we thank them for believing in our vision six years ago. Our partnerships help us to continually develop new products that better meet the needs of Canadian consumers.” “Our strength is our commitment to VERICO firms; along with our talent for developing innovative ideas and businessgenerating initiatives that add value for our members,” says Kelly. “We have continued to develop industry firsts in the areas of technology, mortgage products, marketing and business systems.”

“ VERICO offers a wealth of tools that support our brokerage companies and we continue to add new products to help owners grow their business under their brand. ” Those programs include the Brand Corporate Customization Program, which enables each brokerage to re-brand almost all of VERICO’s systems and technology so that it reflects their corporate colours and logo, as well as video and social media communication tools like VERICOTAlks, a network-wide linked-in system and VERICO TV, a monthly video communication, and VERICOmagazine. “VERICO offers a wealth of tools that support our brokerage companies and we continue to add new products to help owners grow their business under their brand,” says Dreyer. “One of our key products, the Corporate Customization Program, is

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Broker Networks

young college grads flocking to industry Lifestyle and income potential are helping the industry attract an increasing number of university grads fresh out of school, despite a slowing real estate market, growing bank dominance and a decline in mortgage-specialist defections, according to RMAI CEO Ron De Silva, hitting on the trend during the company’s aggressive recruitment campaign. “It’s definitely what we’re seeing and it’s encouraging for the future of our industry,” he said. “It’s evident from our numbers that more are considering our industry as a career option immediately after graduating from university or college. They are pointing to the way the industry meshes with their lifestyle preferences in terms of flexible work schedules, the ability to work from home and, in this day and age of social media, the ability to work within and serve their own social networks.” The observations come as the company ramps up a recruitment campaign focused on identifying prospective new mortgage agents for Real Mortgage Associates (RMA) and its existing team of 245 mortgage professionals. Those Ontario hopefuls, largely drawn from outside banking and financial services, then undergo a REMIC mortgage agent course, arranged by RMA, before applying for an agent’s licence and committing to further training with the company. That program, led by a regional manager, is focused not only on imparting brokering fundamentals but on the ins and outs of a new D+H API, now being developed for RMAI. The first of those recruitment classes graduated from the REMIC course in June, with projected enrolment for the second – which was slated for late July – set to more than double that earlier number. All graduates, once licensed, are placed with a mentor of sorts in the underwriting unit to help guide them through their first 30 deals. The interest the program has generated among generation Y twenty and thirtysomethings may bode well for an industry grappling to maintain, if not grow market share in the face of increased competition from the banks and the growing importance of the Internet and other technologies to generate leads. “Some of the same reasons that these young people are being attracted to the industry also position them to help our industry grow market share,” said De Silva. “This group grew up with technology in the home and in the classroom. An industry that gives them the ability to access homebuyers, clients and their workplace through technology is an attractive proposition.” The social aspect of a job focused on sales is also a lure. “The gen-Ys rely heavily on social proof in making buying decisions,” De Silva said, touching on that phenomenon of peer persuasion. “The growth of social media and its impact on our business is further evidence of the direction our industry is taking. Our industry requires that new blood, new thinking, we need new people who are prepared to engage people socially in order to win their business. That’s not necessarily someone who is already doing mortgages at a bank branch and is ready to retire.”

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representative of our position when it comes to branding. This program specifically helps independents to offer cutting edge VERICO tools under their brand and identity. We are also looking forward to launching Verico Dynamics, which is an end-to-end, enterprise class business management system for mortgage brokers and owners. Verico Dynamics will revolutionize the way we work and is the type of technology that could only be offered by a network of our scope.” “VERICO is not for everyone. In order to keep the integrity of our value proposition, we have a stringent application process in place to ensure that those who join the VERICO network are able to offer Canadian consumers the expertise and great service levels that only comes from being an elite member of the industry,” says Kelly.

“ VERICO remains the only national network to give independents the opportunity to maintain control of their business and identity while accessing all the tools and services that they need to compete. ” “Collectively as a network, VERICO is setting the industry standard and we have positioned ourselves as the brand of choice for higher-performing mortgage brokers who share our commitment to professionalism, advocacy, and ethical conduct.” “Looking at our network now, we have succeeded in what we wanted to do. We are so proud of what we have built and we are excited about the quality of the people that have joined. “We will continue to deliver on the commitment that we’ve made to our members, which is to support them in their business by providing the tools and services that help them drive business,” says Dreyer. “VERICO remains the only national network to give independents the opportunity to maintain control of their business and identity while accessing all the tools and services that they need to compete. As

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Broker Networks

competition accelerates it can be costly for independents to effectively offer large scale, industry products and services that help mortgage brokers in their everyday business and to build and maintain technology platforms that are required by originators. The Verico Network helps independents bridge that products and technology gap while supporting their independent business and identity; and we continue to be the only national brand that offers this unique value proposition.”

Gord Dahlen, executive vice-president Dominion Lending Centres “The independent broker is going to have a tougher ride as time goes on, because there’s too much advantage to being with a national network or brokerage,” says Dahlen, who recently joined Dominion Lending Centres, with more than 20 years of experience in the mortgage industry. “It’s a size thing. If you’re an independent, you just can’t get the attention of our lender partners because there is not enough volume and we can provide an advantage to the lender by bringing in a lot more volume, more quickly. Lenders, by talking to a national network and brokerage’s management team they can achieve their objectives. Everything – branding, tools and support – comes down to economies of scale, according to Dahlen. “It’s also about how the lender views us,” he says. “The independent automatically gains better discounting and better commissions – usually increased commissions as a result of volume, because they’re with the national network or brokerage.” Is the independent a dying breed? “I don’t think it has to be a negative,” says Dahlen. “In order for the broker channel to stay strong we will see more consolidation. The broker channel has to be organized and I don’t think being a bunch of independents holds us in good stead with our lender partners.

“ what I would say to an independent broker, is that at the end of the day, he or she is the one in their community meeting people, networking and getting referrals and that doesn’t change if you’re independent or with a national network. ” The reality is that every industry has seen consolidation. Think about 30 or 40 years ago when there were a lot of independent grocery stores and now there are fewer but larger ones because of efficiencies. We have to consider the fact that in order to remain viable, there has to be consolidation. In terms of the lenders and their view, if you look at the monoline lenders, which are broker-specific, their margins are tight and they have to get the most bang for their buck and they get it from the super brokers.” Does joining a national broker network or brokerage mean a loss of independence? “What I would say to an independent broker is that at the end of the day, he or she is the one in their community meeting people, networking and getting referrals and that doesn’t change if you’re independent or with a national network or brokerage,” says Dahlen. “What we do is allow the independent to do what they do best and that is to go out and be mortgage brokers. What we provide is scale in terms of the tools and the support. You sell yourself first and then we augment you. We give you that extra level of support that allows you to build your business. And if you don’t do that, you will fall behind.” Dominion Lending Centres operates a franchise system for broker/owners and agents “For the independent owner we help you build your business,” says Dahlen. “We employ franchise development people that are on the job every day finding brokers/agents to join your franchise. If you’re an agent, we’re fitting you in with the right owner. We’ll find you the right place

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from independent to national network: David Armstrong Mortgage Architects is now counting River City Financial – in Alberta’s Heartland – as its first franchise, a deal coming less than two months after the company signaled its intention to welcome partners focused on maintaining their independence at the same time gaining access to the company’s exclusive lender. “The franchise model at Mortgage Architects allows me to take advantage of their technology, compliance and payroll, while keeping the investment I have in my own brand,” said David Armstrong, who started his independent brokerage in 2004 in Edmonton and has since expanded its coverage area to nearby Fort Saskatchewan. “Access to Mortgage Architect’s exclusive lender, MyNext, also allows us to differentiate ourselves from other brokers.” Armstrong’s River City Financial becomes Mortgage Architect’s first franchise since the opportunity came available in March. It will now operate under the name “River City Financial Your Mortgage Architect.” The franchise relationship was necessary to meet Alberta licensing requirements and allow Armstrong to retain the brokerage moniker he’s invested time and money developing. The deal will also give the Alberta firm and its team of five brokers ready access to Mortgage Architect’s exclusive lender myNext Mortgage, its increasingly popular trailer fee model. River City also gains the back-office might that comes courtesy of Mortgage Architect’s economies of scale. “They have excellent people and the best professional reputation in the industry,” said Armstrong, who will now concentrate on further developing his own. “I’m thrilled that David Armstrong and River City Financial have joined Mortgage Architects as the company’s first franchise,” said Meini Ickert, VP of national sales for the Canadian-owned brokerage. “Armstrong has exceptional financial services experience and River City Financial is a very well-established brand in the Edmonton market. It’s exciting that our new franchise models now allow us to attract an independent brokerage like River City that is looking for the support and value programs that Mortgage Architects offers, while maintaining the reputation and recognition of their own brand.” Armstrong’s relationship with Ickert’s team will be different from that of Mortgage Architect’s lead and associate planners. While the latter operate under the Mortgage Architect banner, River City will maintain its own branding and the hard work that’s gone into building it. “I’ve done a lot of marketing around the name River City,” said Armstrong. “This new franchise model allows me to be a member of the Mortgage Architect family, but continue to advertise under the company name River City Financial Your Mortgage Architect. It’s a bit long in print, but on radio, where we do a lot of our advertising, it reads very nicely.”

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to be where you will get support at a local level as well as on a national level. Dahlen says marketing and branding are vital to broker success and Dominion Lending Centres’ is second to none. “We are the only company reaching out to the consumer through our celebrity endorsement campaigns.” These are just some of the things Dahlen says brokers should be looking for when thinking about joining a national broker network or brokerage. “Any prospective broker/owner or agent should be asking, ‘What are you offering in terms of ongoing training? What are you offering in terms of ongoing communication?’ We’re all about training and communication and we’re constantly looking for new ideas to move our businesses along. We’re also constantly working on things to communicate with our brokers and our customers, with things such as Facebook and Twitter.” Training at DLC involves several things, including owner universities and online training that is constantly being updated. Dahlen says DLC also takes advantage of the fact that its leadership group is made up of highly successful sales people, who look for every opportunity to share their knowledge with DLC brokers and agents. “We are constantly talking to our owners through such things such as ‘President Calls,’ where Gary Mauris talks to broker/ owners about how to sell in a tough environment and how to single yourself out and to be successful.”

Mark Kerzner, President TMG The Mortgage Group Canada Inc. “We believe that mortgage brokers and agents across Canada, regardless of where they work, represent the best option for consumers who are seeking mortgage financing,” says Kerzner. “What that means is that we believe in this channel and the value proposition that our channel presents to consumers.

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Broker Networks

TMG is a full-service national brokerage. We offer centralized services, such as payroll and compliance oversight, back-end CRM and marketing tools, access to custom websites and multi-media tools like videos and automated newsletters. We have phenomenal mutual respect with our lender partners, which has resulted in increased choice and access for brokers at TMG.” Grant Thomas, who along with his wife Debbie, founded TMG 21 years ago, recently spoke at the CMP Canadian Mortgage Awards while accepting the National Broker Network of the Year Award and in his speech he thanked everyone in the TMG network and anyone who had ever touched the TMG network even if they were now working at other companies. “His comments were a reflection of how we look at the industry. We have deep respect for the broker channel and recognize that different models appeal to different people,” says Kerzner. “I believe we have the best executive team in the industry,” says Kerzner. “TMG employees just like the TMG mortgage professionals that we have attracted to come and work with us are second to none. Our company is very open to bringing in the best knowledge players from across the industry – as a result we have formed a very effective team. Over the past year-and-a-half we have welcomed some new executives who have really complemented the existing partnership and leadership in the company. But the cornerstone of TMG would be Grant and Debbie, who are still very much active and involved in the business. They truly represent the best of the culture within the company. When we talk about culture, the words we hear from people are family, openness, transparency, best interests of the brokers. One comment from a TMG broker in B.C. summed up the TMG culture neatly by

“ our company is very open to bringing in the best knowledge players from across the industry - as a result we have formed a very effective team. ”

“ one of the most important things that we provide and I think is extremely important to brokers, given the changing landscape of the industry, the uncertainty and the concerns that people have over the channel itself, is lender and industry relationships. ” saying, ‘Going to TMG functions is like going to family reunions, but better because only your cool cousins show up.’ Even though all the regions have their own personalities, there is still that central cultural vibe that runs through TMG and I think even people who have left TMG still feel an association with TMG because of that culture. One of the most important things that we provide and I think is extremely important to brokers, given the changing landscape of the industry, the uncertainty and the concerns that people have over the channel itself, is lender and industry relationships. The end customer you’re arranging the mortgage for is No. 1, but 1A is lenders and we also look at the lenders as our customers – they provide us with product and compensation. We have a unique mindset in that we have a national, consistent view of how we look at our partners’ industries, including our insurer and technology partners and all the suppliers in the channel. Whether it’s access to credit unions or national lenders or competitive rates and compensation, I believe TMG offers brokers the best fit. We invest of a lot of money and resources into our back-end technology, such as our video and broadcasting capabilities, which includes an HD green screen studio. Our scale, industry knowledge and resources enable us to deliver really superior training programs. Debbie Thomas, is also the head of training. We’ve got an industry leader and

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Broker Networks

visionary heading up our training programs and she delivers it using the technology that we have available to bring it to everyone across the country. We complement that with regional training symposiums and regional leadership, who focus on helping their brokers succeed. I think our industry is a very dynamic industry and there’s probably room in our industry for all sorts of value propositions, as long as at the end of day, the professionals who are arranging those mortgages have the tools that they need to present the customers with the best options. TMG continues to attract like-minded people who want to benefit from what we have to offer. In a changing environment like this, working with partners that have extraordinary industry relationships, access to multiple options for their customers is key. And TMG ranks very highly in all of those areas. The way I look at TMG, is that it has the strength and stability of 21 years of experience and remains incredibly innovative and flexible and that’s a pretty incredible combination.”

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Dan Putnam, President Mortgagebrokers.com “Super brokers are able to offer the value of economies of scale,” says Putnam. “For instance, if you’re an independent broker you have all of these things to do, like developing and maintaining your own website, so you don’t get any economies of scale. But if you go to a super brokerage, these things have already been done, so it’s plug-and-play and the cost has been divided amongst far more people so it’s far more cost-effective. According to Putnam, two of the cornerstones of the mortgage business moving forward are going be innovation and technology The challenge for independent brokers in Putnam’s opinion is that technology costs money.

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Broker Networks

“You can’t as an independent brokerage firm or agent have a CIO (Chief Information Officer) or a team of technology people, whereas a super brokerage does. In our case, we have a technology team of six at Mortgagebrokers.com. We are able to develop our own proprietary technology and we’re able to then modify it on the fly. We looked at an off-the-shelf CRM, but it didn’t have the functionality we required, so we decided to build our own from scratch. It took us a year, and when we rolled it out to our team, they made some suggestions for improvement and in two or three days we delivered a virtual assistant that automatically notifies our brokers at key points in the life cycle of their mortgage customers. Technology is the platform for innovation moving forward for us. You have to have a team that is constantly looking at technology and is familiar with things like social media, search engine optimization and meta-tagging. You talk to your average broker and they just don’t know enough about these things to be able to use them effectively. I’m the head of a super

brokerage and learn about technologies that are new to me on a regular basis but if I owned my own mortgage brokerage, I most likely wouldn’t know about them. We have a small team that manages compliance and payroll for our brokers and the reason it’s small is that we’ve perfected the process utilizing technology. They don’t do this once or twice a week, they do it every day. We’re able to provide that service at a much more reasonable cost than an independent broker would be able to. All of this automation of technology and process has such a huge impact on the productivity of our mortgage specialists. Our company believes that if our team of mortgage specialists and franchises are not building relationships and/or selling mortgages, then we should do everything we can to off-load these other tasks through automation or to a centralized team that can manage it for an entire network. If you have an independent broker who is paying for that infrastructure and they join us, they can virtually off-load that cost or re-deploy that person to a higher and better use.

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Broker Networks

from independent to national network: Cheryl McMurdo After working in the mortgage industry for for over eight years, with two brokerage firms, Cheryl McMurdo was looking for something more. She says she’s found it with Mortgagebrokers.com, which she joined just three months ago. “I considered a number of national brokerages prior to actually making the move,” she says, “And I was most impressed by Mortgagebrokers.com and their unique business model.” McMurdo says she was looking for several things, including; access to more of the lenders providing niche products within the industry; continued education and up-to-date information on changing lending practices and guidelines; advertising and marketing support as well as support for her team-building efforts. MBRecruit encourages team-building, she says by offering numerous tools such as tips on hiring practices, employee retention, and “matching individual profiles to organizational culture and specific needs.” It’s that team atmosphere that McMurdo really appreciates. “I enjoy being part of a team,” she says. “I am amazed by the fact that ‘the higher-ups,’ namely Stewart Eadie, (regional VP) and president Dan Putnam, are actually real people who are easily accessible, personable and willing to do everything possible to help each broker/agent build and grow our business. Who could ask for anything more?” McMurdo cites such things as an “unbelievable” CRM program and other in-house technologies as another factor in making her decision. She also draws attention to the fact that the company gives each agent personal support. “Antoniette Doria in our Central Services Office, is an experienced broker, who will assist us with commercial and difficult-to-place-deals,” says McMurdo. “When I first entered the mortgaging business, I considered myself to be extremely fortunate to have had the opportunity to work with Antoniette. She went out of her way to provide direction to me and I truly believe that I would not be where I am today without her help.” Mortgagebrokers.com also offers an exclusive website that offers brokers and agents information on lenders, with product comparisons, niches, guidelines, contact information and current rates. Marketing tools, such as easy-to-set-up web pages, continuing education, agent monthly reports to help keep track of progress and customer satisfaction surveys that McMurdo says allow her to garner feedback from clients and produce testimonials are also available. “I truly appreciate the educational, advertising, marketing and technological advantages and I was genuinely impressed to find that Mortgagebrokers.com offers all of this and so much more.”

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“ our franchise agreements allow for joint marketing. What we see is that it’s important for brokers to have their own identity and in our business we are always pushing their brand in cooperation with ours. ” For independent brokers, we can help take their business to the next level by offering all of these services at virtually no cost. And we can also up the ante in terms of the value proposition they’re offering customers and referral sources. For example, our CRM can categorize customers so we know, for example, if they’ve taken a variable or fixed-rate mortgage and if they have a variable-rate mortgage our CRM communicates to them vastly differently than those with a fixed-rate mortgage. They all receive, a week in advance of each Bank of Canada interest rate announcement, information about what the market and industry pundits believe the Bank will do. It’s a customer-for-life approach. There are always going to be independent mortgage brokers, and we’ve recognized that accordingly, offer several different ways to plug into our value proposition, such as being an agent, managing partner or franchise owner with Mortgagebrokers.com. And our franchise agreements allow for joint marketing. What we see is that it’s important for brokers to have their own identity and in our business we are always pushing their brand in co-operation with the brand of Mortgagebrokers.com. We’re always promoting that you need to make sure that your name is out there – you are key – and we’re in behind you as the brand that’s supporting you. I think mortgage brokers are independent, period. They may be carrying around business cards with the name of a super brokerage, but these folks are all fiercely independent, and they’re simply working with companies to do joint branding because they’re getting value in return for it.” CMP

Guide

The Power of PR

Leveraging the media can be an effective way to raise the profile of a firm and generate new business leads for free. Matt Paterson from our sister publication MPA explains

unning in alignment with an advertising campaign or in isolation, a PR program should be integrated into every brokerage’s marketing plan in order to generate interest among the firm’s target audiences. Importantly, an effective campaign doesn’t always necessitate the need for big budgets, with the key ingredients required being time, effort and know-how. Like the mortgage broker industry, the media is evolving at a rapid pace. The Internet is playing an increasingly important role in the delivery of news and you would have undoubtedly heard terms such as 24-hour news cycle, digital media, social media and the like bandied around. While it’s true the media is quite different to days gone by, the fundamentals involved when approaching the media remain largely the same. So don’t be deterred by the jargon. The following are some general tips to guide you in getting your face in the media. In addition to these, the best piece of advice is to read and understand the media that you want to target. Read it with a more quizzical eye to better understand what makes news and what information will be of interest to the journalist. While the best approach to getting your face in the media will vary depending on the type of media you are targeting, the following are some general tips that will assist in your efforts for exposure in both industry and mainstream media, regardless of the medium (press, radio or TV):

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The Power of PR

Be proactive It can be a lonely exercise waiting for a journalist to cold call to speak about your business or ask for a comment on an industry issue. You need to be proactive and engaged in the process. Generally speaking, it’s only dubious operators or the proactive who make headlines. Be available and responsive The media is a deadline-driven industry, so if a journalist makes a request for a comment or information, you need to act promptly. Ask the journalist the timeframe for the response and make sure you meet it. If you can’t assist them, let them know immediately so they can try elsewhere. Deliver what you promise You don’t want a journalist to form the view that you’re unreliable. There are plenty of people vying for media exposure and journalists favour those who assist them to do their job. They have long memories. Figures, statistics and research The media loves them as they qualify views and opinions. Pick up today’s newspaper and count how many stories are based on research findings, figures or stats. Poll your customers or quantify your statements where you can. Understand deadlines Deadlines, deadlines, deadlines — make sure you understand them. Don’t call a daily newspaper journalist at five o’clock to pitch a story or for a discussion about a development in your business. They will be busy putting their stories to bed and you could, quite possibly, be met by the sound of a dial tone. Similarly, if it’s a weekly column or monthly magazine, make an effort to understand the editorial cycle and make your approach a timely one. Target your approach Target the media outlet(s) where your news or story concept will best sit. Is it an industryfocused issue, or does it have broader appeal? Also, target the right journalist. Do some research and find out which journalists have covered a related angle in the past, or simply call the publication or media outlet and ask them who the most appropriate person is to contact.

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“ you would have undoubtedly heard terms such as 24-hour news cycle, digital media, social media and the like bandied around. While it’s true the media is quite different to days gone by, the fundamentals involved when approaching the media remain largely the same. So don’t be deterred by the jargon. ” Images and vision If you plan to be active in the media, then it’s worth having professional shots taken. Mainstream media generally don’t accept supplied images. If you are targeting TV; then think about how a story will translate visually — ‘no visual, no story’ is the saying. Mode of approach Does your news angle warrant a press release? Sometimes a targeted email highlighting the key points is the best way forward — it subtly implies exclusivity. Once you have determined a topic or issue that warrants media coverage, consider how best to communicate with the media you have identified. It’s editorial — not advertising Just because something is of interest to you or your company doesn’t necessarily mean it will be to those outside it. Try to expand the media appeal of your development by linking it in with broader industry trends or issues. Remember, it’s the role of advertising, not editorial, to flog your wares, so you need to be subtle. Cultivate relationships This doesn’t mean you have to embark on a circuit of boozy lunches with journalists. Relationships are largely formed on trust and this comes through supplying them with accurate, trustworthy and timely information. Matt Paterson is a partner at Six Degrees, a PR firm specializing in the mortgage broker industry. CMP

Guide verico

independence maintained Victoria’s Mortgage Depot is one of the latest independent brokerages to join Verico. Vernon Clement Jones finds out why from President John Zieman

John Zieman

hen Mortgage Depot signed up with Verico in January, the B.C. independent brokerage had had 21 years of doing things its own way. That isn’t expected to change, says the 25-year veteran at its helm. “I’m not Verico as far as the public is concerned,” company president John Zieman tells CMP. “We remain Mortgage Depot. A number of things led us to Verico – a certain level of collective bargaining, access to technology, in terms of website, marketing matters and database mining, and training for agents, which is a challenge for independents. But what was really attractive about its model was the autonomy it afforded us in terms of branding and marketing. I would not have joined a group that would have caused me to re-brand.” As an original partner in the Victoria-based firm, Zieman relied on his own skills, industry knowledge and shoe leather to get out there, track down leads and grow a book, now one of the largest in the region. That heavy lifting was accomplished without the benefit of one of the industry’s large super-broker names pinned to his own. “We’ve now built up a brand that is recognized and has its own identity,” he says. It has also built up its own following, now able to draw in prospective leads for Zieman and his team of agents and brokers. That won’t be compromised by the decision to join Verico, with Mortgage Depot continuing to market itself under its name. The parameters of the new relationship address the concerns of independent brokerages that have already developed name recognition under their unique brands but have grown to the size where turning to a super broker has the potential to significantly add to those successes. Despite its existing size, Mortgage Depot was, with Verico’s collective originations volume, able to grow the number of lenders it can turn to for top-tier status, says Zieman, pointing to a key factor for many independents attracted to the super-broker model.

Still, it wasn’t Zieman’s overriding concern, the broker pointing to an expanding sales force and the need to provide the kind of high-level training and professional development his team is now accessing through Verico. “Some lenders are moving away from the volume bonus model to what in many, many cases is an individual volume bonus metric,” says Zieman, a former VP of mortgages in the banking sector. But being part of a network like Verico has also allowed the brokerage, focused on the middle-to-upper-end of the A market, to hand off some of the small but significant duties that have very little to do with originating mortgages, freeing up time and resources for that primary work. “Verico has given us access to newsgathering capabilities, allowing us to post new feeds to our website for clients,” says Zieman. “It’s just one of the benefits that attracted us.” B.C.-headquartered Verico is among several competing networks that have beefed up CRM and other software programs for brokers, a way of retaining their existing brokerage partners but of also attracting new ones. But increasingly networks are looking for ways to answer industry concerns about the educational limitations of agents. Calls for tougher licensing standards and testing have challenged super brokers to deliver go-at-yourown-pace training, accessible outside the classroom and anytime of the day. Its newly launched “Verico Academy allows agents to access continuing education tutorials through a combination of videobased and one-on-one personal coaching approaches, covering everything from business development to coaching and accountability,” says John Kelly, chief operating officer for Verico. “It’s not enough to work harder. In this environment you have to work smarter and we’re committed to continuing education and setting the standard for our industry.” Those kinds of tools are harder for independents to access outside of a broker network, argue fans of the super-broker model, yet are key to growing the expertise of agents in a slow market. While he remains an independent thinker, Zieman agrees. CMP

mortgagebrokernews.ca

Guide

Time Management

time waits

for no one Fitting everything into high-level meetings can sometimes seem impossible. Paul Lahiff, from our sister publication MPA, discusses how to make the most of strategy sessions

icture this real-life situation. Board members are finishing off their monthly meeting when a number of directors begin to discuss strategy. There is never enough time, they say, at the meetings to really discuss the big strategic issues facing the organization. So an agreement is quickly reached on spending some quality time on the future strategy of the organization and they ask their CEO and his senior management to plan an off-site session to undertake this very important activity. Dates are set, an agenda is established, and a location decided upon. Unfortunately when the board looks back on it afterwards, there is general agreement that it had materially failed to deliver. What went wrong? Successful strategic planning sessions inevitably have a number of critical elements in place that we will discuss. Allocate the time Trying to fit the future of the company into half a day is never going to work. Directors and management need to be prepared to put in at least a day-and-a-half so that all of the big issues get sufficient time and clear actions are developed to address them. A solid first day is vital so that by the time the group convenes for dinner, there is a general consensus that the key items have been nailed with the following morning left for wrapping up the loose ends. Involve the senior management Board-only and/or management-only strategy sessions are usually a recipe for failure. All parties with a legitimate interest in the future of the organization need to be present. Preparation is key Analysis, assembling the data, developing the agenda and ensuring all participants arrive having thought about the major strategic items are all vital aspects of a successful session. Focus on the bigger picture Many strategy sessions end up biting off more than

mortgagebrokernews.ca mortgagebrokernews.ca

they can chew. There are usually five or six strategic areas which will determine the success (or otherwise) of the session and the organization itself. Keep the agenda to this number — in this case, less is decidedly more. Hone in on the strategic In high-level meetings, operational matters should be put to one side and strategic topics concentrated on. An issue is strategic if: • it has a material impact on the balance sheet and/or profit and loss statement • it has a medium to long-term perspective • it involves risk • it provokes healthy debate Ensure follow through It is critical that all participants have a clear understanding of what is required of them — both individually and collectively — before the session wraps up. Monitor performance Having developed the strategy and the actions that will deliver it, directors should ensure that management reports back on a regular basis on performance. Keep it simple The compelling vision that comes out of a successful strategy session should be capable of being articulated in 20 words or less to somebody who wasn’t at the session — staff, members, regulators and suppliers will all have an interest in the strategy of the organization and unless it can be described in simple-to-understand terms, they won’t sign up for it. CMP

Guide Centum

Everything Centum Financial Group does is geared towards building its franchise network and its franchisee’s businesses in a way that adds value to the business

mortgage sustainability Y

ou hear the word sustainability a lot in business circles and it doesn’t just refer to thinking before you print that latest email. It also means building a business to last and that’s exactly what Centum Financial Group is aiming to do. “In order to remain competitive with the banks, it is up to us to change the way we do business to be able to move forward and be sustainable,” says Paul Therien, director of business development for CENTUM. “Everything we do has to be geared towards building our franchise network and building our franchisee’s businesses, but we need to do it in such a way that it adds true value to the business. It is not just about the latest technological offerings, such as smartphone applications. There is only value there if the business has value. “We’re building CENTUM in such a way to ensure that it is sustainable, we want it to be here a long time. The Charlwood Pacific Group has experience building internationally recognized brands and that’s exactly what we’re doing,” he says, referring to CENTUM’s parent company, which also owns Uniglobe International, Century 21 Canada, Century 21 Asia Pacific, and Real Canadian Property Management. Therien says it’s about brokers building equity into their business. “The broker industry today is challenged because for most people who own a brokerage, that business is built based on them and there are very few brokers out there who have a model, such that if they were to walk away from their business tomorrow that they would be able to sell it for hard coin. “Nine times out of 10, when the broker leaves, the customers go away, because their comfort is in dealing with the broker, not the business. “What we’re looking at with everything that we’re offering is building a business, something that has actual equity in it, so that in the event you want to sell, you have the ability to do that.” Therien points to the concrete example of its Saskatchewan franchises, which were purchased by Conexus Credit Union. According to Therien, everything a business does needs to be measurable. “We in the brokerage

community believe that we, individually, own our clients, which we do, but if I own a brokerage, my brokerage should also have a relationship with clients. The customer should be dealing with my business. I may be the foundation of that business, but my clients need to have comfort dealing with a strong brand and the overall operation. “Brokerage owners have to intentionally build their brokerage as a business with that in mind if they want to have the ability to sell it down the road.” To that end, Therien say CENTUM provides its owners with cutting-edge technology, such as its Online Office, which is much more than a CRM program. It’s also about strategic partnerships, such as the one recently completed with Four Pillars Consulting Group, which will allow CENTUM brokers to offer their clients better advice. “The idea is that if a customer walks into a CENTUM office, irrespective of whether or not they have A credit or no credit at all, we can assist them. There’s something we can do, whether it is credit counselling or alternative funding,” says Therien. Training is another key component of CENTUM’s plan to help owners build their business. “[Our training program] is light years ahead of what we see out there in the industry because it does more than just teach brokers about how to take an application or read a credit bureau report,” he says. “This training teaches them things like how to generate leads effectively, how to track and determine how much volume you need to produce in order to live the lifestyle you want to live.” These programs are free of charge to the CENTUM Network, says Therien – no monthly fees. “We don’t believe that charging a fee to use a program is what we should be doing. We believe that ultimately it should be built into the ownership of their franchise. We are working very hard to achieve this wherever possible.” CMP

Paul Therien

mortgagebrokernews.ca

Guide

The Mortgage Practice

the EVOLUTION of the mortgage brokerage Innovation continues to drive The Mortgage Practice to new heights, as the company founded by Ravi Punnia branches out by offering a new model for licensed brokers

or brokers thinking about opening their own brokerage, but are hesitant because of the costs associated with running an office, there is now another option. Verico The Mortgage Practice (VTMP) is now offering licensed brokers in Ontario the freedom of having a fully supported back office. According to The Mortgage Practice President and CEO, Ravi Punnia, the program – “YOUR MORTGAGE BACKOFFICE” – is being launched for brokers who want to become a brokerage but do not want the operational headache of all the back office support required to support their agents. “These brokers will be able to have their own brokerage under VTMP for a small fee and they will not have the headache of managing their own payroll, compliance, HR, training. They will also have access to all VTMP products and policies and procedures,” says Ravi. “By removing the overhead/operational costs they can concentrate on their own sales and recruiting their own people.” Punnia says this program is very exclusive and will only be offered to selected brokers. The goal with this program is to give brokers the freedom to run their own brokerage focusing on recruitment of agents and sales. “TMP has always managed to exceed their targets, now this is the next step,” says Punnia. This program originated from Punnia’s challenges as an agent—broker—and now president and CEO of VTMP. “I saw the need for this type of liberty for brokers in the marketplace and now I am delivering.” At the core of his own success is Punnia’s strong management team, which includes his partner, Minnie Punnia who acts as executive director, and recently appointed vice president Gurjot Sandhu, who

mortgagebrokernews.ca mortgagebrokernews.ca

manages VTMP’s operations. As value-added to VTMP’s support team, they have recently taken on a dedicated agent support personnel and dedicated centralized underwriter. Another hallmark of Punnia’s success has come from his continuous extensive training methods. Through monthly, internal training programs, TMP agents are educated about FSCO rules, Equifax reports, underwriting and marketing strategies, to name a few. New agents are required to attend the monthly sessions and are assigned a senior consultant to help them reach their first $5 million in volume. Punnia also conducts his own one-on-one multi-hour training session with all new VTMP recruits. “I provide practical mortgage training to all agents who join VTMP. This training educates agents about the real-world mortgage industry versus theory-based training that they have already received from completing the FSU 101/ Introduction Canadian Mortgages course. I provide training on simple scenarios that agents may encounter when meeting potential clients. For example, when you come across to a potential client, how do you market yourself by providing them with basic information on what mortgage amount can they possibly qualify for, without referring to computer or any application or going back their office to provide such information.” According to Punnia, education and training are key components of a successful workforce. On this very principal TMP has expanded from 0 agents in 2007 to almost 100 to date. Agents/brokers appreciate the professionalism, education and training VTMP provides and in turn always refers TMP as their choice of brokerage to other reputable agents and brokers. Punnia says “competitors always ask me how we grew so quickly, and I always tell them, if you keep one agent happy he or she will refer you to another agent/broker, and so your number of agents grow. Our goal as a brokerage is not just be one of the highest producing brokerages but also to be the most reputable brokerage.” Punnia is expecting over 100 per cent increase in revenue this year thanks to these factors and the bolstering of their workforce. Seven years removed from giving out mortgage advice at a flea market, Ravi Punnia is poised to be an established top player in Ontario’s mortgage industry for a long time thanks to his thorough training, strong supporting players and good reputation and the support of his management team. CMP

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”

CENTUM Gets You Noticed

Gain instant notoriety with your own personal website, blog and RSS news feed when you become a CENTUM Broker.

www.centum.ca | Join us to get the CENTUM Advantage Allison Taylor at 1.888.928.1338 or allison_taylor@centum.ca The CENTUM Network is Canada’s Premier Mortgage Broker Organization and one of Canada’s largest networks with over 260 locally franchised offices with more than 2,500+ mortgage professionals on Centum.ca. Independently Owned and Operated. ® ™ trademarks of Centum Financial Group Inc.

Business

Marketing

web 2.0 marketing secrets for mortgage pros

” Fans “ r o alt r Re artners” u o y rt lP conve “Referra into

mortgagebrokernews.ca mortgagebrokernews.ca

Business Marketing

In a new series, Doren Aldana explores some of the ways mortgage brokers can harness the power of social media to build referrals

n last month’s article, we talked about how to build a herd of Realtor fans on Facebook. So, now you’ve got fans, we need to find a way to engage them so they’ll watch your videos, “Comment,” “Share,” “Like,” and ultimately, send you actual referrals that close. It’s not enough just to have “fans,” the secret to getting more referrals is dependent on your ability to convert more of your Realtor “fans” into “partners.” Here’s how: 10 Tips for Turning Your Realtor “Fans” into loyal “Referral Partners” Tip #1: Share quality, relevant content – at least weekly, if not daily. When it comes to getting people raving and commenting on your Fan page, content is king. Content is what causes people to either turn up the volume or change the

channel. Make it short, punchy, and most importantly, something “remarkable” – worthy of a remark. As a quick reminder, here are the top five most compelling topics for Realtors: 1. How to attract more quality listings 2. How to sell their listings fast and for top dollar 3. How to generate more qualified, motivated buyer leads 4. How to improve their success rate at their listing presentations 5. How to attract more referrals and repeat business If you can teach them how to improve in any one or all of the above areas, you’ll get their attention. Tip #2: For status updates, try ending it with a specific question. In other words, rather than ending with a statement, end with a question. Questions hook the mind and invite people to interact with you. Invite your Realtors to share their thoughts, feedback, ideas, tips, etc.

We think outside the branch.

100 95

The Mortgage Group Canada Inc.

For over 20 years, The Mortgage Group has built a reputation on expertise and integrity with over 700 Mortgage Professionals across Canada.

In fact, our No Sweat approach to mortgage

solutions has helped over a quarter million

Canadians. From our vast lender network and leading-edge

100

tools to innovative training and unparalleled

support, we take pride in what we do, where we work and who we work alongside.

25 5 0

www.mortgagegroup.com TM

National Mortgage Broker Network

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Business

Marketing

Tip #3: Reply to your own questions to get the ball rolling. If there is a comment linked to a particular post, people will be inclined to read it. When they see that your comment is asking for feedback, they’ll be more likely to oblige. This can often create positive momentum to tip the scales of fortune in your favour. All you have to do is say something like this: “Hey, what do you think?” Often times that’s all it takes to get the ball rolling. Tip #4: Reply often to your fans’ comments/ questions. When people comment or pose questions, you want to jump in there as soon as possible and reply back with your comments. If there are multiple people commenting, be sure to put “@Name” at the beginning of your comment so people know who your message is intended for. For example, if you’re replying back to Ralph, you would start your comment with “@Ralph.” Make sense? Tip #5: Respond to their comments quickly. Unless you’re on vacation, set a goal to respond within a day or two. Ideally, reply the same day. Responding to comments in a timely fashion lets people know you’re interactive, responsive, and “plugged in” to the conversation – not distant.

“ responding to comments in a timely fashion lets people know you’re interactive, responsive, and “plugged in” to the conversation - not distant. ” Tip #6: Ask questions about a photo. This is a great way to elicit feedback and comments. I learned this clever little trick from my buddy Carl White, who’s an absolute marketing genius. Upload a photo of yourself with some easily recognizable landmark in the background (i.e. bridge, tower, sign, etc.) and then ask, “Where am I in this photo? The first 10 people to respond with the correct answer will win free movie tickets for two!” Then invite the winners to come to your office to pick up their movie tickets, scheduled 15 minutes apart. What a great way to build rapport and cultivate a relationship with more Realtors! Tip #7: Give a prize for the best comments. It’s amazing how fun and effective this strategy is!

License #11127

mortgagebrokernews.ca

Business Marketing

“ if you don’t tell your audience exactly what you want them to do next, chances are they won’t do it. That’s why it’s so important to have a clear, concise call to action at the end of each video. ” And yes, I learned this one from Carl too. One time Carl posted a photo of two sexy ladies who were dressed up in skin-tight police uniforms. In the photo, Carl is being arrested with his hands handcuffed behind his back. With his head turned to look towards the camera, you could see a sheepish grin on his face. It was priceless. It makes me smile just thinking about it. Along with the photo, he wrote a little note asking his fans to come up with a “caption” for the photo and announced that the best submission would win a video camera. As you might imagine, he got a tidal wave of comments on that one. Tip #8: Put a call to action (CTA) at the end of every video tip. If you don’t tell your audience exactly what you want them to do next, chances are they won’t do it. That’s why it’s so important to have a clear, concise call to action at the end of each video. For example, if the video teaches your Realtors how to profit from expired listings, your CTA might sound something like this: “As an added-value service, we can provide you with a free, completely done-for-you Expired Listing Campaign that’s battle-tested and proven – so you don’t have to go through the hassle of doing all this stuff yourself. This offer is only available to a limited number of qualifying Realtors, on a first-come, first-serve basis. To see if you might qualify, call us today!” Tip #9: Offer done-for-you tools in your CTA. As the previous example depicted, offering a ready-made template can make your call to action even more irresistible. Now they have an even bigger reason to contact you because you’re going to hand them a valuable template or tool they can use to grow their business. This can really turbocharge your results! Tip #10: Deliver the done-for-you tools at the face-to-face meeting. Remember, the whole point of offering your tools and templates is to get a face-to-face meeting with your Realtor. If you just give the tools away by email without requiring a meeting, they now have one less reason to meet with you.

mortgagebrokernews.ca

Here’s a little script you might find helpful: “If I could sh quality list ow you how to attra ings and se ct more top dollar, ll would you them faster for with me fo b r 30 minu e open to meeting tes in the or two? W next week ha week or n t works better for y ou, this ext week? Which da prefer, ___ y would y day or ___ ou know, the day? Just pri so meeting w mary purpose of th you ou is about you ld be to ask you qu estions r business so we can how, and d if, I can h elp you gro etermine business. w your Fair enou gh?”

So there you have it. I’ve just given you 10 proven strategies for converting your herd of Realtor Facebook fans into loyal, committed referral partners. In next month’s article, I’ll teach you how to use “Consumer Tip” videos to explode your repeat and referral business. 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. Among Aldana’s latest innovations, is a completely done-for-you video marketing solution that allows you to instantly deploy powerful videos through social media that attract mortgage clients like crazy. To see a free demo, visit: www.Done4UVideoMarketing.com. CMP

Gro Subscripup t Availablions e

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SESSIONS TO LOOK FORWARD TO… Canadian financial market – Forecast 2012 Trying to predict markets is never easy. So CRE has enlisted a reputable expert to look into the future, discussing matters of national importance such as how global economic uncertainties continue to affect the Canadian economy and real estate market? And do interest rates need to rise in order to stabilize the real estate market?

Canadian hotspots for 2012 Where are the best places to invest in Canada in 2012? How do you know when it is a good time to invest? What types of investments will be most beneficial for certain areas? And how can you discover up-andcoming opportunities and prepare yourself for them?

Property Management, Properly Managed The relationship between a property management firm and investor, which hinges on trust, communication and an understanding of realistic expectations, is an interesting one. But how can it be a profitable one? This discussion will harness these precepts and many others to offer investors a tangible set of cues to maximize the property management relationship.

Legal Matters Are you weary – or even wary – of the fine print when it comes to your real estate investment transactions? Don’t get bogged down. Get informed! The CRE legal discussion at the Investor Forum will focus on current legal trends and happenings in the West that real estate investors need to know now.

Regional Economic Forecast Boom? Bubble? Bust? What does the near future hold for British Columbia real estate investment? You won’t want to miss this discussion as it focuses on the major economic variables that will impact on Canada’s western-most (and most dynamic) province!

Getting the Money Secrets – Uncovering Unlimited Funds for Deals

#1 Secret to getting all the money you’ll ever need for the deals • The you want to do

to present your deals without being “salesy” and without • How feeling like you’re asking for money. • Getting maximum results with no pressure persuasion tactics

Finding The Right Property – A Guide To Multi-Family Investing Get insight on what you need to know before taking the next BIG step into Multi-Family buildings. You will learn how to analyze a multifamily apartment building to determine it’s worth and potential future value.

The Authority Formula How do the world’s top entrepreneurs and business owners rapidly create success, reach millions with their message, and live life on their terms? Discover How You Can Quickly Become The Trusted Authority In Your Market And Grow Your Business Quickly!

Leveraging Social Media to Grow Your Portfolio What the heck is this Twitter thing? Is Facebook a fad? Is Blogging for bums? Learn some of the quick and easy strategies that will help you grow your portfolio! Also learn what so many investors do wrong when wading into the murky waters of Social Media.

What Investors Need To Know About Working with Realtors Your relationship with your Realtor is critical to your success as an investor. Learn the secrets Investors need to know about working with realtors and how to maximize their relationship to create success! With many more to come including: Rent to Own Strategies for Investors Building Your Investment Team Funding Your Investment Regional Housing Outlook

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In addition to these exclusive seminars, you can also visit the Verico Mortgage Clinic for free one-on-one consultations with mortgage experts!

EARLY BIRD TICKET OFFER ENDS SEPTEMBER 29, 2011!

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Profile Brokers

Montreal broker Terry Kilakos is at the head of one of the city’s newest brokerages, and as Vernon Clement Jones explains, one of its fastest growing.

Brokerage or bust! C

ertain lenders are officially off limits to Montreal brokers – whether their “no entry” signs are in French or in English. But the key word there is “officially,” leaving Terry Kilakos, broker/ owner of VERICO North East Mortgages (NordEst Hypothèque), just enough wiggle room to present a deal at Desjardins Credit Union or, even, RBC – two lenders that officially avoid the broker channel like the plague. There is, however, a big “but.” “It’s really something I’ve done only as a last resort and if my client has a relationship with that lender, which has given them access to a rate that I can’t match,” he tells CMP. It’s through personal relationships at the branch level that I’m able to take the deal to RBC and still get 50 basis points for referral. At Desjardins, I’m able to get in there and actually broker the deal and earn 80 basis points. But, again, it’s a sort of last option and I still manage to retain the client afterwards.” The strategy relies on equal parts know-how, tenacity and charm and has helped grow North East into one of Montreal’s fastest developing mortgage players. Kilakos has more than tripled his sales team in the last year, the growth setting him on trajectory to claim as much as $100 million in funded volume this year – a 150 per cent rise over the $40 million in 2010. The numbers are all the more impressive given Montreal’s relatively low home values. Much of that growth should come from Kilakos’s inroads into the majority Francophone community, building on the 20 per cent of the firm’s files coming from that market, which some argue is already super-saturated with mortgage brokers. That hasn’t deterred Kilakos, both a former financial planner and marketing specialist. “It’s the dominant market, but many Anglophone and Allophone brokers have not been able to tap it,” says the Montreal native, a member of the city’s large Greek community. “But what we’ve done here at North East is bring onboard four Laval brokers from the Francophone community. They are already focused on servicing the needs of the community there.”

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With a price tag of $285,000, the average North East origination is more than $130K above the area average. It’s also more likely than not to be on a house in a predominately English-speaking West Island, also home to a large Greek community. “I didn’t do my first deal for a fellow Greek client until three years after I was licensed as a Chartered Real Estate Mortgage Agent,” says Kilakos, a bit like a prophet in his hometown. “But then I developed a bit of a name for myself as a broker who really knew what he was doing and I was being interviewed by the local media a fair bit and that really helped to grow my business in the community.” Kilakos is now a go-to personality for both radio and television producers looking for a mortgage business to help navigate consumers through Montreal’s increasingly complex market. Kilakos’s marketing background has helped him to promote the firm and the brand he created in May 2007, before officially joining forces with Verico in July. While the business name changed, Kilakos held onto the goodwill he’d created while operating under the old banner. “I’ve always marketed my business under my name,” he says, “It’s something that will never change and it helped me when I decided to go independent.

Terry Sotirios

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In fact, I conducted my own market research with my clients to make sure that it wouldn’t affect my business. It hasn’t.” Leaving the broker network system behind, and creating an entirely independent brokerage, was also an option, industry veterans advised him against. “I was already producing enough volume with most lenders to receive top-tier volume bonuses and I knew that we would very soon be able to win that with all the lenders we deal with after going independent,” Kilakos, 35, tells CMP, “but the argument advisers made in encouraging me to join Verico was that I could access those volume bonuses from day one on joining Verico. Why wait three months? They were right.” North East is one of only four brokerages in Verico’s Montreal family. There are four others throughout Quebec, most attracted to the network for the same reasons Kilakos points to – back-office and technological support for both the brokerage and its agents. Kilakos brought his expanding team to the broker network after first meeting with Verico executives in B.C. He’d later join them in Las Vegas in the summer for their Business Forum. The resulting meeting of

the minds was helped along by the Verico training support North East brokers will now access, what Kilakos views as another way of distinguishing his team from more than 2,000 competitors. “Unfortunately, our industry struggles with a large number of unqualified people, who have tarnished the industry’s name,” he says. “There are just too many of them out there fighting for business.” Now with just under five years in the industry, Kilakos has now put some distance between himself and that often maddening crowd. With the move to establish his business as a full-fledged brokerage, he will in fact leave much of the lead generation to his agents, relying on his own bulging book of 500 clients to generate new business for himself. “I’ve now been in the business long enough that many of my original clients are renewing or needing refis or making new purchases,” he says. “In fact, by coincidence, the first client I ever had was also the first client for North East Mortgages. It was touching to know that they’d returned to me and would start me off in my own brokerage.” Coincidence aside, Kilakos resists calling it “luck.” “People say I’m lucky,” he tells CMP, a grin on his face, “but I find that the harder, I work the luckier I get.” CMP

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profile

PROVIDER

myNext Mortgage has moved to expand its lending to ‘select brokers’ outside the company as a way to fill a funding gap left by the recent departure of two monoline lenders

filling the

gap L

ender myNext Mortgage is now extending its reach outside Mortgage Architects and MortgageBrokers.com to the rest of the broker channel, its CEO suggesting the move will help fill the funding gap left by two recent defections. “With the recent announcements of lenders leaving the marketplace, we feel that the timing is perfect,” said Alex Haditaghi, alluding to the departure of both Macquarie Financial and Concentra. “It is never good for our industry when a lender closes shop. Brokers need a strong selection of lenders and now they have a new option to present to their clients.” The lender’s distribution channel now gets pushed out to “select brokers outside of the Mortgage Architects and MortgageBrokers.com group of companies in B.C., Alberta and Ontario,” says Haditaghi. The vetting standards haven’t yet been released, although myNext is pointing to “certain qualifying hurdles” for those brokers, who must also be “interested in a long-term partnership of mutual benefit.” “It’s a good decision,” said David Armstrong, broker and general manager for River City Financial Your Mortgage Architect – MA’s first franchise, launched this spring. “It’s not like it’s a surprise that they needed to increase their funding, and the timing helps make the point to brokers that they need to be focused on competing with the banks and not with each other.” Still, brokers within the corporate family will retain benefits from funding deals through

myNext that their counterparts outside the network won’t. Haditaghi is confirming the coming launch of a trailer fee option, exclusive to MA and MortgageBrokers.com agents and offering 105 basis points upfront (volume bonus and finder’s fee) plus 18 bps each year for the life of the mortgage. “There will also be reward points on top of the 105 upfront,” Haditaghi told CMP, “and, again, the program is exclusive to MortgageBrokers.com and Mortgage Architect brokers and agents.” Armstrong is also pointing to incentives that offset partnership fees as another reason why brokers within the current network aren’t likely to feel slighted. Broker buy-in has, in fact, been very strong, said Haditaghi. “We have consulted with many of our brokers from Mortgage Architects and MortageBrokers.com and they have been largely supportive because they are very supportive of the broker channel,” he said. Haditaghi has already focused on diversifying the lender’s reach into the broker channel, this spring announcing it was going “conventional,” by moving to offer “prime conventional mortgages” through its Mortgage Architects and MortgageBrokers.com distribution channels. it is also an approved lender with both CMHC and Genworth Financial, and earlier this year, myNext Commercial Mortgages Inc. was launched, focused on industrial, commercial or investment real estate deals ranging from $1 million to $100 million-plus. Residential deals, nonetheless, remain the foundation for the lender, even as originations slow across key markets following the introduction of new mortgage rules this spring. An increasingly aggressive sales strategy at the banks has also challenged the broker channel to retain and win new clients now being offered loss-leader rates at the Big Five. Still, that volatility may accrue to the benefit of myNext as it makes its push deeper into the broker channel. The company announced new regional VPs for business development -- Jim Fitzgerald, assigned to Ontario (Toronto and West), and Dave Mercer, who’ll head efforts in Alberta. Two other appointments, for B.C. and Eastern Canada, are soon. CMP

Alex Haditaghi

“ we have consulted with many of our brokers and they have been largely supportive because they are very supportive of the broker channel. ”

mortgagebrokernews.ca

Profile Insight

Instead of just “passing through” people are beginning to call Fort McMurray home and that’s been a boon for brokers in town like Len Lane

Putting down roots A

broker working a market once notorious for its lack of client referrals says brokers are now benefiting from a sea-change as Alberta’s roughest but richest frontier town puts down community roots. “It may be hard for some people to believe given its past reputation, but Fort McMurray is a family town,” Len Lane, broker/owner of Verico Brokers For Life, told CMP. “It means that most of my business now is through referrals, with past clients still living there and providing referrals to friends, family and their kids. It’s no longer the case that people come to work for a short time and then head back home. They’re calling Fort McMurray home.” Len Lane The oil-sands boom town has both Alberta’s highest GDP per capita and cost of living – more than $20,000 above the average family in Calgary or Edmonton. Average home prices also dwarf the rest of the province with well-paid oil workers shelling out $400,000 for a mobile home and a whopping $730,000 for the average single-family dwelling. While much of the rest of Alberta brokers grappled with stagnant sales volumes and values, home prices rose eight per cent in May, compared to the year-ago period. Verico Brokers For Life is on track to duplicate last year’s performance, up 10 per cent from 2009 levels. That kind of growth may be nothing new for the “urban service area,” but what has changed, said Lane, is the willingness of oil workers to stick around longer than four or five years and to raise families. According to local labour market statistics, almost half of current residents have called the community home for at least 10 years; some 25 per cent have now lived there for 25 years. That has created client referral opportunities for brokers, which simply didn’t exist in the Fort McMurray marked by a transitory population. Lane’s firm is also benefiting from having a dedicated team of brokers in the burgeoning community, giving him an edge over brokers working remotely from other parts of Alberta or Canada. Gerry Orr, a Calgary broker largely depending on employer and Realtor referrals to score business in “the Northern Light” has seen business this spring decline by as much as 20 per cent from last year, he says. Lane has for years split his time between Edmonton and Fort McMurray, formally part of the Wood Buffalo regional municipality. “It used to be that even if a client stayed for a while, their kids would leave,” said the brokering veteran. “Now they might be leaving for a while but they’re coming back for the higher incomes and the community life. We’re getting that referral business as well.” Brokers across the country are now turning to existing clients, looking for refinancing and other post-purchase opportunities as new home sales cool across most major Canadian centres. Young brokers without established portfolios and the referral power attached to them are exposed to the full brunt of that slowdown. According to Lane, mortgage professionals in Fort McMurray say community growth is now insulating them against that economic uncertainty. CMP

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You’ve heard all the hype about Twitter, Facebook and LinkedIn. You know that online video is an inexpensive yet powerful marketing tool. You’ve been told that blogging, podcasting and tweeting will propel your business to new heights. During this session learn:  How to create a social media strategy that will work for your business  How to identify where your audience is and engage them there  Which social media tools will work for your business  How to manage your time, so social media doesn’t become a time suck  How (and what) to measure to determine your ROI

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The Alt-A/Sub-Prime Market – Back to Business! Presented by: Albert Collu President of Argentum Mortgages  What has occurred? What is occurring?  Client & Lending Characteristics – what are the consumer trends and how have they impacted mortgage lending?  Understanding the opportunity this client segment presents the Mortgage Professional

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For more information about this event please visit www.mortgagebrokernews.ca to download the full brochure For registration and sponsorship/exhibiting opportunities please contact Sarah Habib at 416-644-8740 Ext. 249 or email sarah.habib@kmimedia.ca

Guest Column

coaching

commitment W

hen I became a licensed mortgage professional back in 1996, I was ‘lucky’ in a way because I already knew the actual real-life job of being a mortgage broker from three years of assisting mortgage brokers. In 2005, an opportunity came my way to join a mortgage training company, and for about three years, I travelled back and forth across Canada giving training sessions for mortgage brokers. I discovered my passion for teaching/training, and it went together well with my strong belief that mortgage brokers offer a valuable and important service to Canadian consumers. I discovered other things as well, such as just how little practical, real-life training is available for newer mortgage professionals, and how the national mortgage companies focused more on recruitment than training. People were entering the mortgage industry from all kinds of unrelated professions, with no financial services experience whatsoever, and the provincial licensing courses simply don’t prepare them for the actual job of being a mortgage professional. Some of the national companies and provincial associations have made a good effort to help with practical training, but just like the courses I used to give, it’s not enough. The fact is that every deal is different and has its own set of challenges. Providing reading material and the accepted ‘mentoring’ system, obviously aren’t working. If they were, more than 33 per cent of Canadians would be using a mortgage broker by now, rather than still going straight to a bank, especially with the increased number of mortgage brokers in Canada since we first reached that 33 per cent mark. I believe it’s time for the national brokerage companies to consider having a full-time, salaried, on-staff ‘deal coach’. A person who knows the business, knows the lenders, and Julia Krause knows ethics. A person

mortgagebrokernews.ca

“ for newer brokers, this would provide invaluable real-life training; an actual person they can turn to for help and advice on individual deals. ” not motivated by money, who wants to help other brokers succeed and offer the best quality service possible to mortgage clients. For newer brokers, this would provide invaluable real-life training; an actual person they can turn to for help and advice on individual deals. And for experienced brokers, a second opinion on a deal wouldn’t hurt, right? This would improve the industry for all mortgage professionals in so many ways: • New brokers will learn faster and not lose deals and disappoint clients, clients who then go on to tell their friends what a terrible experience they had with a broker; • New brokers learn from someone who isn’t all about ‘get the deal done no matter what’ and in the process, learn about ethics in the industry; • Eliminating the ‘trial and error’ method of submitting files will improve relationships with lenders because of the improved quality of deals they receive, improved closing ratios, and decreases in default/foreclosures; • More deals close successfully, which means more income for everyone; • Brokers won’t get frustrated and leave the company they’re with, thinking the ‘grass is greener’ at another company; • 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. CMP

Newer mortgage professionals in this country need more training in order to provide a valuable service to Canadians and Julia Krause believes this can be done by brokerages employing fulltime trainers and coaches

service directory

Insurance

Banks

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

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

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

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

Merix Financial www.merixfinancial.com Ph: 1 877 637 4911 Page 47

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

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

Peoples Trust www.peoplestrust.com Ph: 1 800 663 0324 Page 23

Mortgage Protection Plan www.mppbroker.com Ph: 1 866 677 4677 Page 17

Broker Networks

Centum Financial Group Inc. www.centum.ca Ph: 1 604 257 3940 Page 11 & Guide Outside Back Cover

Resmor Trust Company www.resmor.com Ph: 866 809 5800 Page 41

National Bank www.nbc.ca Ph: 1 888 483 5628 Page 29

Non-Bank Lenders

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

Equitable Trust Company www.equitabletrust.com Ph: 1 866 407 0004 Page 39

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

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

The Money Source www.mymoneysource.ca Ph: 416 699 2274 Page 51

Home Loans Canada®

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

Commercial Lenders

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

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

Mortgage Architects www.mortgagearchitects.ca • Ph: 1 877 802 9100 Page 33

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service directory

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

Verico The Mortgage Practice Inc careers@vtmp.ca Ph: 905 458 4222 Guide Inside Back Cover

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

VERICO www.verico.ca Ph: 1 866 983 7426 Page 13 & Guide Inside Front Cover

Real Estate

The Mortgage Group www.mortgagegrp.com Ph: 877 899 1024 Page 50

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

Reach your target market with affordable advertising solutions

Real Estate Institute of Canada www.reic.ca Ph: 1 800 542 7342 Page 58

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

Please contact Trevor Biggs at 416-644-8740 x236 trevor.biggs@kmimedia.ca

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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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