CMP 7.10 by Key Media

profiled Colin Dreyer digs deep Realtor Rebuttal Letâ&#x20AC;&#x2122;s keep it real October 2012 / issue 7.10 / $6.95

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contents / issue 7.10 market matters

85 / 15

8| First Up CAAMP’s guidelines on SEO have rubbed some Internet savvy brokers the wrong way

Cover Story

10 | Realtor Roundabout Three of Canada’s leading Realtors explain what if anything brokers are doing to undermine referral partnerships 16 | Master Class Building a relationship with clients means more than offering them a good rate. Dustan Woodhouse, one of the CMP Top 75, has a ‘no-cost insurance plan’ guaranteed to get ‘er done

NEWS 20 | Product Roundup This month’s product and industry announcements, even before they come out of the proverbial box 23 | This Time Last Year We catch up with one broker who’s OK with the same mortgage rule changes he predicted a year ago

issue

7.10

FEATURES

30 | 2012 CMP Brokers on Lenders Is there a top performing lender you’ve overlooked, but other brokers are raving about. Read on, my friend. Read on

Interest Rates Commission structure Turnover times SERVICE

LEVELS

BDM Underwriter

24 | Digging Deep VERICO’s Colin Dreyer isn’t very good at skimming the surface. He digs deep for this Q&A on the industry’s future

0 90/1

42 | Debt Myths (Part 3) Why dispel myths about debt and its effect on credit scores when you can bust them. Eric Putnam does the latter 46 | Syndicate Success (Part 2) Brokers are having real success in syndicate referrals, but there is no such thing as easy money, warns one broker

MARKETING 54 | Employee mortgage benefits program: In his latest series, Doren Aldana explains how to hunt down a company decision-maker. Get your notepad

THE MORE YOUR DEAL LOOKS LIKE A LONG SHOT THE MORE WE LOOK LIKE A SURE THING.

Product Roundup

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contents / issue 7.10 profiles 60 | Industry FirstLine’s loss was to the gain of several lenders. But how did brokers make out?

columnS 62 | Guest Rate sites tried their best to win brokers over in last month’s issue. Hear one broker’s response. Or is that rebuttal?

NEW

regulars

21 Expert mobile half page ad_with border.pdf

58 | Stats This month’s roundup looks at the most recent data on residential new listings and resale activity

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61 | Favourite Things 64 | CMP Service Directory

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contents / Editor’s letter

Brokers on the backs of lenders? I think some lenders loosely translate CMP’s annual “Brokers on Lenders” survey to mean “Broker on the backs of Lenders.” Having read hundreds of responses, I think in a small minority of cases they have a point. But poring over those 450 broker questionnaires, the results of which begin on P. 30, I was reminded just how much most brokers appreciate their lenders. The ratings for those money men and women bear out my conclusions, with respondents upping their overall satisfaction numbers for such stalwarts as Merix and MCAP. At the same time they’re showing just as much enthusiasm for relative newcomers to the annual ranking Bridgewater Bank and RMG, the rebranded ResMor. Still, the survey results suggest brokers are equally passionate about wanting and needing to see real improvements in their relationships with channel lenders. High on the list are efficiency ratios and the desire to bring a more objective and dependable metric to that system. I’ll stop there and leave you to judge the rest for yourself. Lenders are also reading and, ahem, judging. Look for their response in the November issue. In the meantime, don’t overlook the many other things this month’s magazine has going for it. Start with the heart-to-heart chat three successful Realtors offer on P. 10. They’re all about mending fences with their chief referral partners and finding a more comfortable middle ground. And in keeping with CMP’s mandate to help you up your brokering game, read this month’s Master Class with B.C. broker Dustan Woodhouse (P. 16). He’s offering a tutorial in what he’s dubbed a “no-cost insurance plan” for clients. It’s also a no-cost way to outshine competitors – road reps and branches included. CMP is also continuing its series with broker network heads, this month with VERICO’s Colin Dreyer (P. 24). He leaves no stone unturned in explaining why exactly brokers have every reason to be optimistic. Yes, optimistic. So read on, and then drop us a note after you’re done. Look for some of those caustic comments in November’s “Letters to the Editor.” Warning, this month’s section doesn’t pull any punches either (Pg. 6).

COPY & FEATURES Editor SUB-EDITOR staff writer contributors

ART & PRODUCTION

connect

Contact the editor: vernon.jones@kmimedia.ca

4 | mortgagebrokernews.ca

Alicia Chin

gRAPHIC dESIGNER

SALES & MARKETING

NATIONAL SALES MANAGER Trevor Biggs Marketing and Communications Julia Comitale PROJECT COORDINATOR Jessica Duce

CORPORATE PRESIDENT & CEO Tim Duce OFFICE/TRAFFIC MANAGER Marni Parker Events and Conference Manager Chris Davis

Editorial enquiries vernon.jones@kmimedia.ca Advertising enquiries trevor.biggs@kmimedia.ca Subscriptions tel: 416 644 8740 • fax: 416 203 8940 subscriptions@kmimedia.ca KMI Publishing 312 Adelaide Street West, Suite 800 Toronto, Ontario M5V 1R2 mortgagebrokernews.ca 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.

PROFILED COLIN DREYER DIGS DEEP REALTOR REBUTTAL LET’S KEEP IT REAL OCTOBER 2012 / ISSUE 7.10 / $6.95

Vernon Clement Jones

Vernon Clement Jones Rachel Naud Nestor Arellano Jemima Codrington Doren Aldana Dustan Woodhouse Steve Fabian Rob Campbell Eric Putnam Mark David

MONEY MAKER OUTSHINE THE ROAD REP

BROKERS ON

LENDERS The industry's biggest-ever look inside the heads of brokers

conversations / Letters to the Editor

Letters to the Editor

TOP

COMMERCIAL BROKERS

Re: CMP Top 10 Commercial (CMP7.9) Commercial compliment

Mick Dragos

Thanks for that glimpse into commercial brokering. I understand the difficulties in getting over to that end of the business from here in residential, but I think some of the commercial guys have overstated how difficult it is. All good residential brokers who have been in the business for a few years have done some level of commercial-type deals, whether that’s a small office building or a four-plex. It’s not rocket science, guys.

Re: Mauris on… (CMP7.9)

Boy, this guy can talk

Alessander Rea

As a Verico broker who was very heavily pursued by DLC, I understand the kind of competitive environment that superbrokers are in, but I think that we all need to start toning down the rhetoric and start being a bit more like real colleagues.

MortgageBrokerNews.ca Reader Poll Is volume pooling bad for the broker channel?

Yes

57%

42%

Re: Seeing red or revenue? (CMP 7.9) Rate site reality

Ron Butler

We use the rate comparison sites and without question the type of clients who use these sites may not suit every broker. I will tell you this: many applicants on these sites are among the highest quality applicants in this country and think it is important for brokers to realize that if we think as a group we need to only work with people who need “help” we are limiting our market in a big way. While I know there are many brokers who specialize in working with high-end clients, I think sometimes some brokers believe our natural clientele is unsophisticated. I want our industry to market to everyone just as the banks do. Rate comparison sites attract a segment of mortgage buyers we should seek and not avoid.

Re: Bob Ord: A trail of innovation (CMP 7.8)

No spitting match

Paul Therien

Bob has been around for a long time, and has vast experience. Gary (Mauris) has turned our industry on its ear and has forced other companies to step up and do better. They both bring value in their own way, and they should both be commended for what they have thus far done for our industry.

Letters to the editor are welcome! Due to space considerations, priority is given to those 300 words or less. We reserve the right to edit, condense or reject submissions for accuracy, brevity, clarity, good taste and legal reasons. Writers must provide their full name, address and telephone number to verify authenticity. Please refer to article.

6 | mortgagebrokernews.ca

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First Up / Read between the lines

Reading Between

the lines: The charge some brokers use “unethical” search engine optimization touched a nerve with mortgage professionals last month as CAAMP released guidelines for using a competitor’s name to boost web traffic. The association did little to quell debate on what exactly constitutes underhanded behaviour. Indeed, it further ignited it, with some brokers suggesting

CAAMP may have breached its own rules. The association denies that. Jackson Middleton, veteran broker and owner of Highland Mortgage Partners in Regina, Sask., offers his Jackson Middle ton take on the CAAMP missive, sections of which are reproduced here.

port CAAMP ethics complaint re

an Internet advertising to make members aware of like uld wo tors iga est Inv eral complaints. CAAMP’s Ethics e of Ethics and has led to sev Cod ’s CAAMP late vio y ma practice that brokerage name as er’s name and/or member’s mb me r the ano ng usi of t tha other search engines. (1) The practice is rd insertions in Google and wo key ic am dyn in s term search engine in simply having the or brokerage name resulted e nam er’s mb me a of ult t member or member If the search res age appear with a link to tha ker bro or ker bro nt ere diff name of a ics issue. (2) uld not normally be an eth brokerage website, there wo Doe” of brokerage “XYZ for example, member “John es, rch Z sea er sum con a if , However ult shows “John Doe” or “XY keyword insertion search res ic am er dyn sum the con and the ”, es ges tak Mortga but with a link first line of the search result, Mortgages” in bold on the y also constitute a trademark ma It m. ble bsite there is a pro could lead to a to a different member’s we law tort of “passing off” and n mo com the of on lati vio infringement or a worse, a lawsuit. CAAMP ethics complaint or a described above amic keyword insertion as dyn of use the y, var y ma e While every cas Ethics Rules: (3) following CAAMP Code of the of on lati vio in be to has been found y and professionalism ivities with honesty, integrit act ir the t duc con not did Rule 1: Members truth, accuracy, fairness and intain standards of honesty, Rule 8: Members did not ma propriety in advertising h federal, provincial ivities in full compliance wit act ir the t duc con not did Rule 10: Members and municipal laws mber whose Internet ent agreement with one me tlem set a ting otia neg tly case is still under CAAMP is curren d these rules, and another late vio e hav to nd fou s wa advertising investigation. (4) lty of “passing off” (5) infringe trademarks or be gui to not re) (ca e tak uld sho Members when advertising.

8 | mortgagebrokernews.ca

A basic search on CAAMP’s website reveals that they use the keyword “Seneca College.” Is this in a poor attempt to capture some traffic from Google by tagging their competitor?

The thing about ethics is - ethics are not concrete and leave much to interpretation. I would say what CAAMP did is unethical, however, CAAMP has taken the position that it is not.

Not so fast now. What if I wrote an article for my website that compares my services to that of Brokerage XYZ? Would it be unethical to advertise this by using dynamic keyword insertion? Even if I included the name of Brokerage XYZ? I say absolutely not.

Is this an isolated incident or a pattern? How did the CAAMP member in questions respond to the accusation? Has the offending party even renewed his or her membership?

I agree with CAAMP that misrepresentation or “passing off” is wrong. A good rule of thumb is: Only tag or advertise keywords that are relevant to the article being promised. Your keyword should be tied directly to the subject of the article.

Service Driven? Definitely. In fact, every deal we make is driven by service. Unlike the big banks, our focus is serving brokers. So when they have questions or special requests, we’re nimble enough to get back to them fast with an answer. Our dedicated underwriters go out of their way to find solutions for brokers and their clients — no matter how challenging or unique the situation. To us, deals are more than just numbers on a page. They’re about turning a house into a home. We’d like to thank you for recognizing our efforts. By selecting Bridgewater Bank as one of the top three lenders in CMP’s Brokers on Lenders Survey, you’ve strengthened our resolve to provide unparalleled service excellence to brokers — Thank You!

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Market Matters / Realtor rejoinder

The Broker/Realtor

R undabout Realtors: You can’t live with them, but in a slowing market, you can’t live without them. Still, frustration is a two-way street, write three sympathetic and successful real estate agents 10 | mortgagebrokernews.ca

The relationship between a broker and Realtor has often been described as a two-way street – a rocky, pothole-filled, dirt road crawling with speed traps. But smoothing out that pavement means understanding exactly what drives real estate professionals and how to keep their referrals coming down the pipeline. CMP’s Jemima Codrington spoke to three Realtors to get the real deal on referrals, broker no-no’s and what can be done to speed up communication.

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Market Matters / Realtor rejoinder brokers can provide. “I find that mortgage brokers are far better positioned to build a long-term relationship and you don’t end up being just another number like at a bank,” he says. “At the end of the day, I deal with one mortgage broker because we align on so many different levels. This provides consistency and trust for our clients.”

I’m on your side Adam Brind Realtor, RE/MAX Condos Plus – Core Assets Unlike many Realtors, Brind works exclusively with a broker, and refers no business to a bank. It’s a tactic the entrepreneur feels is as beneficial for the client as it is for his Realtor/broker working relationship. “Firstly, I find that mortgage brokers can almost always provide a better rate for my clients. I find that banks only up matching broker rates a lot of the time, but rarely offer superior rates from the get-go,” says Brind. “Secondly (and more importantly), banks have such a high turnover at the branch level that your account manager is usually gone within a year or so. This makes it really hard to build a rapport with an actual person that knows your circumstances and understands your needs.” Many Realtors prefer to refer to a bank, as many key lenders offer commission on the recommendations they receive. Brind takes the more personal approach, feeling it benefits clients to have access to the options that

How brokers can improve From a personal perspective, Brind may have found his niche in working with a broker exclusively, but is quick to point out that the relationship only works successfully if both partners are focused on client needs – as well as loyalty. “Show some commitment to a few Realtors and forget about the rest,” Brind advises. “We don’t care about gift certificates, trips or prizes; we want to build our client base just as much as they do. Just focus.”

We want to build our client base just as much as they do. Just focus STATS

4.15/5 (2012) – Merix overall standing Source:

CMP

12 | mortgagebrokernews.ca

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Market Matters / Realtor rejoinder

Trust Me Vince Mirabelli Realtor, Re/Max First Choice Realty Vince Mirabelli has had several dealings with brokers – some positive, and some not so. For Mirabelli, the secret to Realtor/broker success is simple; treat clients how you’d like to be treated. “I have been fortunate enough to be surrounded with some really great mortgage brokers and specialists. The ones I work with are up-to-date on the market trends, treat my clients with the utmost professionalism, and they give me updates along the way through the mortgage and final approval process,” he says. “I surround myself only with mortgage brokers that carry these traits as I like my clients treated with the same high level of service that I provide them with.” Mirabelli also points to bad broker practices such as impatience or looking to secure the best deal for themselves instead of the client, resulting in him closing the door to repeat referrals. “I have had bad experiences with some mortgage brokers and my relationship shows this as I avoid sending them business. My colleagues and I don’t like when mortgage brokers are too pushy and are chasing after you for business.” How brokers can improve Mirabelli notes that a broker/Realtor relationship that lacks trust is unlikely to succeed. “My best working relationships are the ones where there is mutual respect between the broker and myself. A clear line of communication is key in this business.” Brokers must also be up on the latest goings-on in the industry and prepared to offer clients the best possible advantage amongst competitors to win Realtor referrals. “Knowledge of their products and what their competitors are offering is a big part of what impresses me the most. Mortgage brokers who do well by my clients and myself will ultimately win more referrals from me in any future dealings.”

My family is your family Steve Arruda Realtor, Century 21 Best Sellers Realtor Steve Arruda has played the broker field, and found that the most successful broker/Realtor relationship is one that utilizes similar work ethic. “I have used different brokers over the years,” he says. “The broker I refer the majority of my business to has the same work ethic as I do and is highly motivated to close any and all deals. It is extremely important to work with a broker who has a strong work ethic, has creative mortgage solutions, and most importantly respects the client and puts the client’s needs first. This winning combination in a broker is crucial to all real estate transactions.” A one-sided relationship won’t work out for either party, Arruda affirms, and neither will evading the assistance of brokers altogether. “Like any good sports team, all players must work together and do their part to ensure victory.”

STATS

4.07/5 (2012) – Home Trust underwriter support Source:

CMP

14 | mortgagebrokernews.ca

How brokers can improve Brokers should have the best interests of the client at heart, and give the Realtor referral the TLC that they would give their own client in order to garner repeat business. “To win my referrals, a broker has to treat my clients like family....make them feel important and appreciated,” he says. A broker may seek to impress Realtors and their clients by claiming to offer “great service” and “competitive rates,” but the trouble is, so does everyone else! A broker must be able to prove their intrinsic value in the real estate transaction – or risk not being a part of it. Arruda believes that going above and beyond for clients and coming up with resourceful, tailor-made solutions is most likely to impress Realtors. “A broker that has “creative” mortgage solutions and knows the right contacts is an essential part of the real estate equation,” he says.

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Market Matters / Master class

Broker

-to-

Broker

advice

Outshining a mortgage specialist can be as simple as offering a creative, ‘no-cost insurance plan,’ writes CMP Top 75 broker Dustan Woodhouse. Here’s his

16 | mortgagebrokernews.ca

Market Matters / master Class The following is a strategy that I’ve successfully offered to clients, and one very few mobile mortgage specialists or branch employees would even think to offer. The structure for this no-cost insurance plan creates a safety net for clients in that if they should ever need to, they can lower their payment with a simple e-mail or phone call. That’s without incurring any legal fees or mortgage penalties. The chief benefit for the broker is being able to take the edge off a client’s payments in situations of illness or job loss. You’ve got a no-cost, instant way to do that just because of the way you structured the mortgage at its inception. It should work with any lender that offers a match-a-payment/miss-a-payment program, although I tend to find that for a few other strategic reasons (relating to the sort of client who is in a position to pursue this) Scotiabank is the often best fit. So, first off familiarize yourself with Scotia’s match-a-payment/miss-a-payment program and then the client type who best fit the bill. He or she is typically above the age of 45, have less than 15 years to go on a mortgage, and is somewhat fiscally conservative. In fact, in harmony with this profile, working with an independent mortgage broker may already be taking the client to the edge of their comfort zone, and it’s simply one more reason I tend to bring these clients back around to a “Big Bank.”

Here’s the meat, of my ‘no-cost insurance plan: On paper, we take what’s typically the 15-year amortization back out to 30 years, and then we implement the match-a-payment option, doubling the baseline payment and putting the client back on track for the effective amortization they were after. For every payment they double up, which is easily done as we created a false low payment, they are able to miss a payment. Of course nobody ever plans to miss a payment, nor would you ever want to, however, this is like a sort of disability insurance policy that costs nothing at all to have.

The chief benefit for the broker is being able to take the edge off a client’s payments in situations of illness or job loss

Selling it

STATS

3.66/5 (2012) – RMG approval/ loan turn around times Source: CMP

There is often initial resistance on the part of the client, concerned that they are somehow taking their mortgage back out to 30 years. I ask the client to hear me out, though. I point out that there really is no downside other than for clients who opt for that lower payment and do not implement the double payment. That move is very unlikely for this type of client – if it were they would not be on track to be mortgage-free in 15 years or less. I present the following reasoning: “Mortgage payment and amortization have a symbiotic relationship, as you increase one, the other decreases, and vice versa. With this plan you (the client) are in the driver’s seat. Rather than being locked into a higher payment, you have effectively created a two-step buffer should anything in life change radically. And really via a simple email or phone call they can:

mortgagebrokernews.ca | 17

Market Matters / Master class

This is like a sort of disability insurance policy that costs nothing at all to have

Reduce a monthly payment by about 50 per cent, simply by reverting back to the original amortization.

Reduce a payment to zero for an equal length of time for which they have been making double payments ( within the term of the mortgage only, as the miss-apayment option resets to zero at the start of each new mortgage term) Another common theme within the applications of candidates for whom the strategy makes sense is they often have very low LTVs. Thus there is an opportunity to utilize a HELOC product, potentially increasing the size of the file significantly. Again, and this is something I point out specifically to these clients, a STEP or HELOC product is not for everyone. Yet when we review the typical applicantâ&#x20AC;&#x2122;s profile, we see that one of the key reasons they have significant equity in the property is they are risk averse and thus debt averse.

STATS

3.98/5 (2012) â&#x20AC;&#x201C; Bridgewater Bank overall service levels Source: CMP

18 | mortgagebrokernews.ca

News

aPPoIntments

They know how to manage their money and, more importantly, they know how to manage their debt. What is being presented to the client is simply a tool for them to use moving forward. That tool is access to the equity in their home – access which is increasingly more difficult to obtain. You might also incorporate into the conversation a few potential scenarios in which they may choose to access the equity: to top up an RRSP (not appointments so popular these days), invest in additional real estate, access down payment funds for recreational property, fund university educations for their Intelligence children, assist their children Mortgage with down paymentannounced that Heimbecker, Marg Green, monies for their own propertySteve purchases, etc. With Donna Ramsay and Concierge those examples, you further capitalize on your value Mortgage Group are joining to the client. the company. Do not simply plan to get theGreen clientin through this Ramsay in Mississauga, single transaction, do not be just an A-to-B solution. Orangeville and Heimbecker in owners in Take some extra time and talkWaterloo, about theare bigequal picture, try to be an A-to-Z solution. Concierge Mortgage Group. Concierge a new boutique But before you take the next step andispresent it brokerage firm that will focus on to a client, practice the dialogue with another elite and experienced brokers, broker, family member or whoever. need to be offeringYou exceptional needs-based able to articulate all of this clearly and you will The put goal is for customer service. yourself head and shoulders above the individual Concierge Mortgage Group to have throughout Ontario. that your clients spoke with atoffices their bank branch. Concierge operate as a In fact, often the clients have dealt withwill branch network any partner withSo, Mortgage representatives who failed to explain of this. Intelligence, developing its own really, presenting these types of comprehensive brand while taking advantage of mortgage strategies help to position youIntelligence’s as the Mortgage key superstar you are! resources like compliance, payroll,

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exclusive mortgage products, and marketing. “Mortgage Intelligence offers us competitive compensation and the support that Concierge needs to be successful,” said Heimbecker.

The point of this is to add value, not to overcomplicate things

Top: Steve Heimbecker Middle: Marg Green Middle: Donna Ramsay Middle: Gord Appel Bottom: Gerald Krahn

l a e Ownership that makes R sense.

TMG The Mortgage Group is moving three of its regional leaders up the corporate ladder, billing the move as in keeping with its philosophy of promoting from within. Effective Jan.1, 2012, Bud Jorgenson assumed the position of VP for the Prairie Region; Gord Appel, VP, Alberta Region; and Gerald Krahn, Ontario Region. “These three have already made positive changes in their respective regions,” said Mark Kerzner, president of TMG. “Their dedication to TMG agents and brokers is very important for the company’s long-term success. They are a great asset to the TMG family.” CMP

Call Ron De Silva at 877-677-7778 ext: 5 for more information

www.rmabroker.ca

News

News / Product RoundUP InternatIonaL

& PRODUCT u.s.

90.6% 52.1%

inspectors have found problems; appraisals showed a home was worth less than the bid; a buyer lost a job before the closing. U.S. housing market worse than thought More than two years after the recession The number of Americans who bought previously officially ended, many people can’t qualify for occupied homes rose in October. But the National loans or meet higher down payment Association of Realtors says it overstated more than requirements. Even those with excellent credit three million sales during and after the Great Recession, and stable jobs are holding off because they fear showing the housing market was weaker than Percentage of that home prices will keep falling. Sales are also previously thought. homeownership being hurt by a decline in first-time buyers, who The private trade group says sales rose four per costs, including are critical to reviving the housing market. cent in October to a seasonally adjusted annual rate of mortgage payments, Sales have fallen in four of the five years 4.42 million. That’s below the roughly six million homes utilities and property since the housing boom went bust in 2006. a year that economists say are consistent with a healthy taxes that take up a Declining prices and record-low Amortgage rates housing market. But it’s ahead of 2008’s revised sales, LAUNCHING typical household’s NEW haven’t been enough to PRODUCT? boost sales. now considered the worst in 13 years. monthly pre-tax At the same time, home construction has The trade group revised its sales from 2007 to 2010 Want it to be considered for income in Vancouver begun a gradual comeback and should add to the down 14 per cent, from more than 20.6 million to nearly inclusion on this page, send the and Toronto, economy’s growthto in 2011 the first year since 17.7 million. Among the reasons for the lower figures, details the for editor: respectively (RBC the Greatvernon.jones@kmimedia.ca Recession began in 2007. Last month, the Realtors group says: changes in the way the Census Economics Housing builders broke ground on an annual rate of Bureau collects data, population shifts and some sales Trends and 685,000 homes, the government said recently. being counted twice. Report) financing offered by some That was a 9.3 that provides upfrom to 3% (of property per cent jump October and The Realtors consulted with government and 100 per centAffordability credit unions since these lenders are notthe fastest pace value) to be used to cover closing cost, since April 2010. private housing experts, including the Federal Reserve, Most economists home prices will keep the Department of Housing and Urban Development, covered by federal rules. furnituresay purchase or simply as a least fivecushion per cent, through 2012. the Mortgage Bankers Association, the National One such credit union is Meridian, falling, by at savings Association of Home Builders, mortgage giants Fannie which recently announced that it will Many forecasts don’t foresee a rebound in prices until at least 2013. Mae and Freddie Mac and CoreLogic, a California-based continue to offer 5% cashback down What they say: “We believe that the five The high rate of foreclosures has made data firm that first raised doubts about the annual payment mortgage until its regulators per cent cashback payment resold homes cheaper thandown new ones. The is a great numbers earlier this year. instruct the lender to do otherwise. product for the right consumer,” median price of a new home is roughly 30 said per Rick CoreLogic has estimated that the Realtors group Here’s a rundown of some of the Arnds, senior manager for emerging cent above the price of one that’s been occupied overstated sales in 2010 by at least 15 per cent. before –markets twice the markup. are The changing numbers could affect how economists product’s important details: fornormal Meridian. “So Investors we will continue taking advantage of the discounts. view the trade group’s data. It could also affect companies • Ideal for borrowers with solid credit to offer 100 per cent financing until The facts: Bank-offered cashback down housing market is struggling even that use the figures forhas hiring and expansion plans. ratings, a good job and low consumer debt Thedirected not to do so by DICO (Deposit payment mortgages been slowly drying as the broader economy has improved in Sales are measured when buyers close on homes. • Comes with a competitive 4.73 per Insurance Corporation of Ontario).” up as federally regulated financial recent months. But many deals are collapsing before that point. cent rate “This product suited institutions outsaid OSFI’s stopone contract The economy grew at is anbest annual pacefor ofpeople two One-third of carry Realtors theyorders had atto least • Pays an 85 bps finder’s fee to brokers who are financially responsible but offering the mortgage product by the end per cent in the July-September quarter. Manyjust scuttled in October, up from 18 per cent in September. • Backed by Genworth Financial can’texpect put together 5 per centindown of October. economists slightly that better growth the Contracts are being cancelled for several reasons: quarter. Banks have declined applications; CMP because their money may be tied.” However, brokersmortgage can still tap into the home• Meridian also offers a 3% program October-December

NEWS

A bite-sized guide to the industry’s newest products as they come down the channel Who: Meridian Credit Union What: Cashback Mortgage

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28 mortgagebrokernews.ca 20 | mortgagebrokernews.ca

News / Appointments

Cherry on top He’s no broker, or even an agent, but he’s increasingly the public face of the industry Dominion Lending Centre reports that it has snagged Don Cherry for another three-year contract as their primary celebrity endorser. “We are thrilled to announce a three-year contract extension with Don Cherry, which enables all Dominion members to continue utilizing Don’s image and likeness until September 2016,” says Gary Mauris, president of DLC. “The Don Cherry TV campaign will strongly continue over the upcoming 12 months, however, a new campaign will take its place late in 2013.” Cherry’s original endorsement campaign, launched in 2010, has accumulated more than 500 million viewer impressions, according to DLC. The ad was used by thousands of DLC members across the country in car-wraps, print advertising, online marketing and life-sized cardboard cut-outs of Cherry. The new campaign will still have Cherry appearing on television ads, says Mauris, but DLC will also recruit another

celebrity. The campaign revamp also includes TV ads that feature new personalities, consumer focused education spots and new calls-to-action as well as ad time centred around news, comedy, drama, talk shows and home improvement programming.

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mortgagebrokernews.ca | 21

News / Canadian Mortgage Awards

the line starts HERE! The 2013 CMAs are bigger and better, with PwC as the official ballot accountants in a revamped nominations and judging process It’s admittedly a hard act to follow, but the 2013 Canadian Mortgage Awards are primed to eclipse all those before them, both in fun and formality, thanks to revamped categories and the influence of one of Canada’s largest professional services firms. Friday, May 10, 2013, marks the return of the awards to their old stomping grounds at Toronto’s historic Liberty Grand ballroom. Presented by CMP and MortgageBrokerNews.ca, the industry’s biggest and most comprehensive celebration of excellence has grown exponentially since its inception in 2005. As a result, for the second year running, PwC will join the awards as the official ballot accountants. “As the nomination, finalist, and judging process grows in size and complexity,” said Chris Davis, CMA events director, “we felt it was important to deepen the vetting power of a third party to verify the process and validate the results.” Nominations will be open starting Monday, November 26, 2012, and nominees will have three months to campaign. This year, CMP has created new “campaign kits” to help individuals canvass votes, which can be found on an invigorated CanadianMortgageAwards. com. Nominees can custom-create email signatures and templates to publicize their campaign, all with an eye to garnering the

22 | mortgagebrokernews.ca

support needed to win one of the mortgage industry’s most coveted statuettes. “It feels great to win,” said Fred Testa, this year’s winner of the MCAP Eclipse Award for Alternative Broker of the Year. “I’ve won different awards, but this is extra

special for me because it was from people in the industry, people that are your peers.” Winning a CMA continues to be the highest accolade for mortgage and finance professionals in Canada, a sentiment echoed by PwC. “As the official ballot accountants for the Canadian Mortgage Awards,” says Ryan Leopold, a partner in firm’s audit and assurance group, “PwC recognizes these awards are a significant opportunity not just to celebrate achievements, but also to recognize the strength and importance of the financial services industry in Canada.” With operations in 153 countries worldwide and with a Canadian presence for over 100 years, PwC is the official ballot accountants of many major Canadian award ceremonies such as the Gemini, Genie and JUNO awards. The Canadian Mortgage Awards are once again thrilled to work with its auditors on what will surely be another exciting show in May 2013. To learn more about the event – and the second annual CMP Mortgage Summit that precedes it – log onto the website, says Davis. He also points to the site’s award details, photos and those revamped award classifications. Delegates can find updated and in-depth criteria for nominees, as well as a stage-by-stage breakdown of the judging methodology and an FAQ about the awards process.

News / this time last year

Sticking to his guns There’s more good than bad in the new mortgage rule changes, says one broker, sticking to what he said this time last year ONE YEAR LATER A slower market for brokers notwithstanding, one industry veteran is sticking to his guns, suggesting the same mortgage rule changes he anticipated a year ago – those now taking root – were necessary. “Last year when we spoke, I stated my belief that household debt levels were rising unsustainably and that the federal government was right to take steps to address the issue,” David Larock, a mortgage agent with TMG The Mortgage Group in Toronto, tells CMP. “I still think the changes were in our long-term best

interest.” That’s not necessarily a popular position with brokers complaining about a slowdown deeper and more protracted than feared. Still, the rule changes, including a 25-year amortization cap and an 80 per cent LTV on refinances for insured mortgages, have made it tougher for marginal consumers to dig themselves deeper. And that, says Larock, represents “necessary short-term pain” for long-term gain. Now, that isn’t to say he hasn’t some misgivings.

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“I think high-ratio borrowers should have been given the option of setting their minimum payment using a 30-year (amortization),” says Larock. “There are many good (and prudent) reasons for doing this.” But on the whole, a softer housing prices may not be the catastrophe some reporters have dubbed it. “Much of the mainstream media predicted that a price correction in Vancouver will soon trigger a nationwide collapse in housing prices,” Larock says. “There simply isn’t any historic evidence of this happening.”

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mortgagebrokernews.ca | 23

Feature / Colin Dreyer

Digging

DEEPER There’s no skimming the surface with VERICO’s Colin Dreyer, who’s digging deep to explain the shifting landscape for brokers

24 | mortgagebrokernews.ca

Feature / Colin Dreyer

s both a founding director and current CEO for VERICO, Colin Dreyer isn’t very good at resting on his laurels. Taking it easy doesn’t jive with his plans for the network and for an industry hemmed in by uncertainty. Recently, the network head sat down with CMP for a frank and thorough discussion of those challenges – any and everything from a volatile real estate market to the financial realities guiding lender decisions. Believe it or not, there may be light at the end of the tunnel.

CMP: Some have suggested all of the big banks now in the broker channel intend to get out within the next five years. First, do you agree? Second, what does that say about broker commission levels and the channel’s competitiveness?

Dreyer: In today’s changing market, it’s very hard to predict what will happen in five years. What we do know is that a significant number of lenders have already left the broker channel due almost entirely to the 2008 financial and credit crises and the subsequent shift in regulations and market conditions that have occurred. More specifically, sourcing of funds for mortgages became much more difficult. MBS and corporate paper avenues are not as readily available as they used to be. Most importantly, new regulations such as the Basel Accord created new and more stringent global standards relative to capital adequacy and market liquidity risk. These regulations change the fundamental economics of the mortgage business for many lenders and managing the transition has taken time. Lenders didn’t exit the broker channel because of broker commission levels. The broker channel is just as competitive as it ever was. What has changed is the competitiveness of various lenders that serve the broker channel. Again, some lenders found the new market risks, regulations and funding sources a challenge. That being said, this is a shared problem. The changes caused by the financial crises changed the fundamentals for all lenders, and consequently, these changes will be passed down to mortgage brokers, and ultimately consumers in the form of tighter credit and

more stringent qualification requirements. All that being said, consumer credit needs are always going to be there, lenders are in the business to lend money, attract new consumers and make a profit, so the channel still has significant opportunity. The mortgage origination channel continues to mature and provide the expertise and choice that consumers want and need to make informed financial decisions. So, we see a very bright future for the mortgage channel for those that understand the nuances of the business and continue to provide value to the lending community. Will commissions decrease? It’s possible that a recalibration of compensation will take place in order to right size costs with the new realities that lenders now face. I am confident that if there are changes, then they will be incremental and reasonable adjustments over time such as what we have seen with First National recently. Expertise and value are always fairly compensated. The broker channel will continue to provide those components to consumers and lenders.

CMP: Broker network consolidation is on the minds of many. Is this really the direction the industry is headed

Expertise and value are always fairly compensated

mortgagebrokernews.ca | 25

Feature / Colin Dreyer in. Why? And what are the pros and cons for brokers?

Dreyer: Broker network consolidation has been happening for years. VERICO has consistently grown to become Canada’s largest mortgage organization. We don’t see that trend reversing. It’s possible that if the Canadian housing and mortgage market were to significantly adjust there would be casualties to that process. The consequence may be direct amalgamation of smaller and less successful brands – but what is most likely to occur is a natural coalescence of brokers around the larger and more successful brands such as VERICO and a few others. In our view, the pros for the broker industry include the obvious benefit of having strong national mortgage networks and franchises that support the growth of the industry. The economies of scale work in all industries. The mortgage-origination industry is, for the most part, a low-margin business; but with size and scale, companies like VERICO can offer all the tools, services, products, education and technology that owners and mortgage originators need to be competitive.

CMP: Volume pooling has been increasingly criticized by some lenders as an impediment to efficiency. Do you support volume pooling?

Submitting a mortgage vicariously through another agent, who may or may not be registered with another broker firm, result in anonymous agents – anonymous to the customer and to the lender. This can potentially lead to higher risks to the lender, mortgage agents, the broker of record, and for the customer. Quantified pooling with strict controls eliminates the challenges I just highlighted and ensures the lender continues to compensate originators competitively. The abuse of pooling was recently highlighted as one of the reason that First National changed their compensation. We need to be proactive with our lender-suppliers to ensure that we can be competitive with quantified pooling so it does not adversely affect the profitability of the lender and bring our channel under scrutiny.

STATS

55% – of brokers see compensation staying put Source: CMP

CMP: Looking at the banks and the new tighter lending guidelines, where is the broker channel headed? Back to alternative lending?

Dreyer: Alt-A and subprime lending certainly are a growing opportunity for brokers as many banks exit this niche. However, that in no way means that brokers will be less competitive or less active in prime mortgages. The bottom line is that mortgage brokers provide expert service and convenience to Canadian home

Dreyer: VERICO has never been in support of mass volume pooling among agents. The issue has not been as acute within our network. Our position is simple.

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Feature / Colin Dreyer buyers and borrowers. There will always be lenders who want to participate in an efficient and expert industry.

CMP: Are you optimistic about the broker channel and the growth of VERICO?

Dreyer: Definitely yes, and on both counts. I do not want to minimize the seriousness of world economic events that surround us today and be rhetorical with positive comments framed by rosecoloured glasses, but I have seen considerable market shifts during my career, and each time it has always resulted in a higher level of efficiency and opportunity. The fundamentals of our market are not going away: consumers will continue to purchase housing; consumers will need credit; lenders require consumers. We have the best opportunity to reach not only entry-level consumers, but the full spectrum of consumers by the service and multi-choice of the mortgage and financial products that we can offer. Our model will continue to evolve, but the opportunity to reach consumers in today’s market and make them raving fans of independent brokers is unlimited. This is our time to efficiently grow broker market share. As for VERICO, I am more optimistic than when we started the “mortgage network” phenomenon over eight years ago. Our model attracts the most respected companies and originators in the industry. We are the most cost-efficient in the industry. We provide all the resources companies and originators need to succeed and their success is our sole focus. Diversification of opportunity with consumers for VERICO members is our next plateau. Challenge inspires innovation; innovation creates opportunity; opportunity can be worked into success. That is what VERICO members are all about.

CMP: Brokers were again weighing in on

brokerages to really train and bring value. What are your thoughts on that key issue?

Dreyer: VERICO is a network of 195 independent broker firms across Canada with over 2,200 mortgage originators. As such, I enjoy the opportunity to observe many different broker business models. There are existing broker business models that focus on recruiting for a large sales force with a range of commission splits to smaller boutique-type companies that may offer a flat fee. I think this gets back to the consolidation question. We recognized over eight years ago this shift in agent compensation and the value of scalability. Our model offers small and large companies all the tools, education and competitive advantages of a national company, but with the autonomy and authority over their own brand and business strategy to grow into the business they aspire to be locally or regionally. CMP: Recently some high-level brokers packed up and moved to different broker network. Will we see more migration and why?

Dreyer: Yes, we are in a changing mortgage and real estate environment. Companies and individuals will look closely at who they are with and why. If the organization they are with provides them with the vision and the resources they need to be successful, then they should continue to support that company. If not, they need to examine the options that are available to them sooner rather than later. Over and over again, brokers and business owners who talk to us and explore the opportunities with VERICO come away surprised and impressed by what our network offers. Mortgage brokers will ultimately identify with companies that will provide them new and sustainable opportunities, and will make the shifts that are in line with their business.

MortgageBrokerNews.ca about how high commission splits for agents are unsustainable and don’t allow

Challenge inspires innovation; innovation creates opportunity; opportunity can be worked into success

28 | mortgagebrokernews.ca

COVER / Brokers on Lenders

Brokers ON

LENDERS CMP’s biggest-ever look inside the heads of brokers With a palette of nearly 500 responses to work with, the sixth-annual Brokers on Lenders survey paints a vivid picture of the factors driving funding decisions. At the centre of that canvas is where brokers are taking their clients and why, but also which lenders are moving to the forefront as others recede into the background. MCAP and Merix belong to that first group, the two monolines advancing their overall ratings and sharing the highest number of medals. Their feat bucks last year`s trend when broker ratings slipped, registering increased concern about a slew of factors, from turnaround times and interest rates to BDM and underwriter support. Still, overall standings for other leading lenders slipped this year, including those for TD and First National. New to this year’s list are RMG and Bridgewater Bank, each garnering the kind of overall broker satisfaction the channel’s big banks were left to dream of. Brokers registered their individual concerns online as part of CMP`s largest lenders survey, spanning two months and, ultimately collecting just short of 500 responses. Mortgage professionals took the time to answer questions and provide candid feedback on lenders in 10 categories: approval/ loan turnaround times, underwriter support, BDM support, broker support, transparency of commission structure, IT/ technology, interest rates, product range, overall service levels and overall credit policy. Grades were given on a scale of one (very poor) to five (very good). The overall response was so strong for many lenders, but to be included in this year’s final tally each had to have received at least 50 votes.

30 | mortgagebrokernews.ca

2012 Total Medal Standings Lender

2012

2011

Total

Merix

MCAP

Bridgewater Bank

First National

RMG

Scotia Mortgage Authority

Street Capital

Home Trust

National Bank of Canada

TD Broker Services

COVER / Brokers on Lenders

Overall standing

Rank

Lender

Score 2012 Score 2011

Gold

Merix

4.15

4.02

Silver

MCAP

4.14

4.03

Bronze

Bridgewater Bank

3.95

First National

3.94

3.98

RMG

3.88

Scotia Mortgage Authority

3.85

3.78

Street Capital

3.74

3.89

Home Trust

3.63

3.69

National Bank of Canada

3.20

3.23

TD Broker Services

2.93

3.23

85 /15 Interest Rates Commission structure Turnover times

Cracking the biggest concerns about lenders

53%

SERVICE LEVELS

BDM Underwriter

0 1 / 0 9 $

The move to efficiency ratio

29%

High volume requirements

fraud during originations

mortgagebrokernews.ca | 31â&#x20AC;&#x201A;â&#x20AC;&#x201A;

COVER / Brokers on Lenders

Approval/loan turnaround times Rank

Lender

Score 2012

Score 2011

GOLD

MCAP

4.27

4.05

SILVER

Merix

4.26

3.84

BRONZE

First National

4.22

4.34

Bridgewater

3.87

Home Trust

3.76

3.82

Street Capital

3.72

3.99

Scotia Mortgage Authority

3.70

3.84

RMG

3.66

National Bank of Canada

2.72

2.93

TD Broker Services

2.29

3.22

Where is broker compensation headed? Decreasing Staying put

55%

Moving to flat fees 2%

And the surveyed say… Christina Fisher, Surrey, B.C.

Some other lenders practically laughed at me when I asked for this, but MCAP did a four-hour turnaround from the application’s submission to conditional commitment to final commitment so we could remove subjects. They were the only one with that product who was willing and able to do it and it was an absolute make-or-break situation.

Rank

Lender

GOLD

Merix

4.36

3.89

SILVER

MCAP

4.28

4.22

BRONZE

Bridgewater

4.10

First National

4.07

4.02

Home Trust

4.07

4.05

Scotia Mortgage Authoritybank

4.01

3.97

Street Capital

3.91

3.95

RMG

3.59

National Bank of Canada

2.95

3.16

TD Broker Services

2.41

2.91

Toronto, Ont.

Turnaround times are more of a problem since the departure of FirstLine. It seems that the other lenders think we are held hostage to them and they don’t need to work extra hard to keep us. We will always have options, though. They should remember that.

Brandon, Man.

I understand that in the late summer all of us slow down, but the time it takes to get a response should not. We cannot afford to be lackadaisical, not if the banks are hungry.

Manitoba In Manitoba, we have tight financing deadlines 24 - 48 hours. We can’t wait for a monoline with a 48-hour turnaround. It limits lender choice in this competitive environment.

34 | mortgagebrokernews.ca

Increasing 8%

Underwriter support

Turnaround times

35%

Score Score 2012 2011

Underwriter support

And the surveyed say…

Calgary, Alta.

Merix is head & shoulders above the rest from this perspective.

Dartmouth, N.S.

Lenders need to communication with their underwriting teams that we are all in this together. Underwriters should offer choice, not declines, where at all possible.

COVER / Brokers on Lenders

Overall service levels Rank

Lender

Score Score 2012 2011

GOLD

MCAP

4.26

4.14

GOLD

Merix

4.26

4.05

SILVER

First National

4.00

4.08

SILVER

Home Trust

4.00

3.91

BRONZE

Bridgewater

3.98

RMG

3.87

Scotia Mortgage Authority

3.84

3.83

Street Capital

3.70

4.13

National Bank of Canada

2.88

3.09

TD Broker Services

2.24

3.05

Why banks and not monolines?

Interest rates

Overall service levels

And the surveyed say…

Prince George, B.C.

I have three lenders that I would say have outperformed the rest. Bridgewater, MCAP and Merix have all improved their service levels. I was a big user of a couple of others, but have found that they are becoming too rigid in their underwriting. BwB, Merix and MCAP I’ve found are looking for reasons to make deals happen rather than looking for reasons to decline deals.

Edmonton, Alta.

Service levels, getting back to us in a timely manner and the attitude to work together is how to make a deal work.

Kitchener, Ont.

I’d like to see the lenders hold the underwriters/fulfillment people accountable for their service levels. For example, with one bank in the broker channel, I will send documents in for review and then have to wait 72 hours to get an answer back? That is ridiculous, how come First National can respond same day? Also - I will send an email to an underwriter, no response so I send a second email the following day, again no response. I will have to call or email four or five times in order to get a reply back. Seems to me that they don’t want my business. If it wasn’t for my relationship with the local branch of TD, I wouldn’t send deals anymore.

Product offering: 42% Client preference: 25% Underwriter/ BDM service: 18% Rate: 13% Compensation: 2%

Rank

Lender

Score 2012

Score 2011

GOLD

RMG

4.29

SILVER

Street Capital

4.24

3.97

BRONZE

Merix

4.07

4.34

BRONZE

MCAP

4.07

4.01

First National

4.06

3.94

Scotia Mortgage Authority

3.85

3.78

Bridgewater

3.60

TD Broker Services

3.27

3.28

National Bank of Canada

3.24

3.52

Home Trust

3.12

3.16

Interest rates

And the surveyed say…

Tracy Valko, Kitchener, Ont.

RMG is competitive with their interest rate and I’ve been able to buy down rate with my commission when I really needed that option. That’s very important in this marketplace, to not only be able to service the client but to be able to get the client the best rate and product. RMG allows me to do.

Edmonton, Alta.

The lender matched a rate that RBC was offering without question or having to buy down the rate.

Ottawa, Ont.

If you’re going to lower rates, make sure you’ve got the underwriters on hand to fulfill the applications. Dah.

mortgagebrokernews.ca | 35

COVER / Brokers on Lenders

BDM support Rank

Lender

GOLD

RMG

Score 2012

Score 2011

4.59

SILVER

Merix

4.43

4.16

BRONZE

Bridgewater

4.15

MCAP

3.96

3.86

Street Capital

3.94

4.14

Home Trust

3.92

4.05

First National

3.73

3.93

Scotia Mortgage Authority

3.63

3.52

National Bank of Canada

3.37

3.29

TD Broker Services

3.31

3.29

Product Range

And the surveyed say…

Ottawa, Ont.

Here’s the only reason why I go to Scotia. Step it up monolines.

Kingston, Ont.

Scotia has greater product range with fewer restrictions than the other banks.

Product range Score 2012

Score 2011

Scotia Mortgage Authority

4.24

4.21

SILVER

National Bank of Canada

3.93

4.07

BRONZE

Bridgewater

3.88

MCAP

3.86

4.01

And the surveyed say…

Merix

3.83

3.85

Home Trust

3.59

3.66

First National

3.56

3.72

TD Broker Services

3.50

3.69

RMG

3.50

Street Capital

3.25

3.63

BDM support St. Catharines, Ont.

My BDM for Merix Financial wants my business and continually stays in touch to ensure that I’m aware of new offerings. They wanted to know what they could do to earn more of my business instead of assuming that I’ll send it to them.

Rank

Lender

GOLD

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Call your underwriter today. Call 866.382.9255 or visit www.fisgardmortgage.com

36 | mortgagebrokernews.ca Fisgard Capital Corporation | 3378 Douglas Street, Victoria BC V8Z 3L3 | www.fisgardmortgage.com

COVER / Brokers on Lenders

Satisfation with credit policy And the surveyed say…

St. John’s, Nfld.

The lender gave some clients who were struggling, but on the way up from a tough situation an opportunity to purchase their first home by taking a common sense approach and actually seeing the merits of the client. Not just fitting it into a box.

Calgary, Alta.

Here’s something all lenders should do. One of mine had approved an insured mortgage but missed one condition. They waived that condition and went ahead with the mortgage on an uninsured basis as it was their error.

Broker support

And the surveyed say…

Calgary, Alta.

Merix calls my clients by name and references me by name to my clients. Good stuff.

Edmundston, Alta.

Lenders don’t seem to care that we brokers are on deadline to provide finance letters and most times we write them without hearing back from our underwriters, and many times they give approvals without looking at documentation and we end up late closing deals or pulling them to go elsewhere. We are out on a limb here.

Victoria, B.C.

I’m sick of having to fight to remind the lenders that the client is at least half mine.

Satisfaction with credit policy Rank

Lender

Score 2012

Score 2011

GOLD

Merix

4.05

3.98

SILVER

Bridgewater

4.04

BRONZE

MCAP

Broker support Rank

Lender

Score 2012

Score 2011

GOLD

Merix

4.32

3.97

4.00

4.08

SILVER

MCAP

4.14

3.55

Scotia Mortgage Authority

3.81

3.87

BRONZE

Bridgewater

4.11

Home Trust

3.73

3.89

RMG

4.05

First National

3.63

3.81

Street Capital

3.89

3.67

RMG

3.62

First National

3.86

3.40

Street Capital

3.39

3.88

Home Trust

3.76

3.55

TD Broker Services

3.37

3.34

3.73

2.92

National Bank of Canada

3.36

3.19

Scotia Mortgage Authoritybank

National Bank of Canada

3.22

2.83

TD Broker Services

2.74

2.60

How long respondent has been in the business

Less than a year 1-2 years 2-5 years 5+ years

3% 7% 20% 70% mortgagebrokernews.ca | 37

RMG mortgages The RMG Mortgages team would like to thank our broker partners for their support in the CMP Brokers on Lenders Survey. Your confidence in our new brand won us gold medals in Transparency of Commission Structure and Best Interest Rates categories. Even more exciting, a gold medal for our Business Development Managers. We’re glad to know you appreciate how we help your business!

New Brand +Experienced Professionals

RMG Mortgages is all about keeping it simple... personal support, a clear compensation program and competitive market rates to benefit you and your clients. Our “back to basics” approach means personal service with a mortgage lender who believes in being straight forward and honest. It’s how we do business now, and it’s how we’ll do business in the future.

Find out more by contacting your local GOLD MEDAL WINNING Business Development Manager. You can find them all at www.RMGmortgages.ca RMG Mortgages is a division of MCAP Financial Corporation Ontario Mortgage Broker licence no 10600 & 10515 Ontario Mortgage Administrator licence no 11692 & 11790

[

Sometimes, it’s okay to brag a little When you bring home 8 medals — 3 of them gold medals — from the annual CMP Brokers on Lenders Awards, we think it’s okay to share the good news — especially when it was the confidence of the brokers that got you here.

Once again you’ve voted us the best in Overall Service, and that makes us proud. You also made us number one in technology for our industry-leading, interactive portal, Professor. We like to think we’re smart and reliable, and we’re glad you agree. We’re also glad you like us for our dedication to you, our strong position in the market and our ability to offer you the products you want for your clients. Our thanks to our brokers who once again voted for us — we will continue to work hard to earn your business and confidence. We’ll always be there for you when you need us, because we’re about more than a rate, we’re a better deal!

www.mcap.com MCAP Service Corporation Ontario Mortgage Brokerage #10515 Ontario Mortgage Administrator #11692

]

COVER / Brokers on Lenders

Transparency of commission structure

IT/Technology

And the surveyed say…

Warman, Sask.

MCAP - I love their technology and turnaround times.

Thunder Bay, Ont.

We need more technology. Get away from the paper, monolines. Streamline your legal docs as lawyers don’t like them compared to the banks.

Windsor, Ont.

IT/Technology Lender

GOLD SILVER

Sherwood Park, Alta.

Score 2012

Score 2011

MCAP

4.40

4.07

First National

4.15

4.13

BRONZE

Bridgewater

3.84

Merix

3.77

3.78

Scotia Mortgage Authority

3.76

3.61

Street Capital

3.49

3.39

RMG

3.38

Home Trust

2.98

2.91

National Bank of Canada

2.76

2.47

TD Broker Services

2.63

2.78

Number of lenders you deal with

Burnaby, B.C.

I think Merix does the best job of compensation, keeping upfront fees compelling yet offering compensation on renewal. It’s a good hedge. Also, their BDM is hands-down the best I’ve had. Rates are often some of the best and a good product range.

Windsor, Ont.

Xceed keeps adjusting its commission to sweeten the pot, but it only makes things more confusing. Do I get the same finder’s fees I did last week? Stick to what’s fair and stay with it. Brokers will thank you.

Transparency of commission structure Score 2012

Score 2011

RMG

4.26

SILVER

MCAP

4.18

4.26

BRONZE

Merix

4.16

4.35

First National

4.08

4.42

= 3%

Bridgewater

3.92

Scotia Mortgage Authority

3.9

4.29

= 14%

Street Capital

3.84

4.17

National Bank of Canada

3.59

4.12

TD Broker Services

3.5

4.13

Home Trust

3.37

3.93

= 2%

+ = 79% 40 | mortgagebrokernews.ca

If all lenders offered their underwriters the option to work on a commission structure, I think there would be better turnaround times and a clearer sense of “working together” to make files work.

The real problem is Filogix.

Rank

Burnaby, B.C.

RMG: they are easy to contact, commission structure is good and they listen to reason.

Rank

Lender

GOLD

Feature / debt

You’re It’s time brokers knew the truth about credit blemishes and credit scores! Eric Putnam is taking on the role of myth buster for this last instalment of a three-part series on debt-challenged clients A September 2012 Harris/Decima survey asked Canadians how confident they were about being able to raise $2,000 within a month if an unexpected need arose. Some 92 per cent said they’d have to consider borrowing to come up with some of the cash, and only 45 per cent said they’d never faced a debt problem. The poll results come as Canadian debt-to-income ratios sit at a record 152 per cent and officials issue warnings to start paying down

42 | mortgagebrokernews.ca

debt before interest rates rise. But those survey findings suggest consumers have been unmoved by warnings and that the resulting financial burden could sink some households. This is the third part of a CMP series regarding debt solutions. Based upon discussions our team has had with mortgage professionals across Canada, there are many myths regarding how debt solutions affect Canadians’ finances and their credit profiles.

Feature / debt  The truth on Debt Settlement

We hope to clarify these myths so as a trusted adviser you are better prepared to assist your clients.

Debt settlement firms have become active in Canada following their development in the United States. Alberta and Manitoba passed legislation pertaining to debt settlement firms after the U.S. Federal Trade Commission passed regulations in 2010 that banned upfront fees to protect consumers. Unless it is a “bad debt,” it is often unlikely a creditor will approve a settlement offer. Creditors can refuse to participate and still pursue legal action to collect. Impact on credit bureaus: If successful, a debt is reported by the lender as “settled” and rated as R-9 or I-9. As per Equifax’s and TransUnion’s purge rules, the debt will remain as a trade line for six years from the date that the final payment is reported as “received,” whether settled or not.

 The truth on Credit Counselling and Debt Management PLans Non-profit credit counselling agencies that offer “debt management plans” (or DMPs) generally collect fees of up to $49 per month from consumers for 36 to 60 months until 100 per cent of the enrolled debt is repaid. Each lender determines a “fair-share contribution” as a percentage of what is remitted by the agency. Creditors are not required to participate. Impact on credit bureaus: Enrolled debts are reported by lenders to credit reporting agencies as R-7 or I-7. As per their purge rules, Equifax will remove a debt in a DMP three years after completion and TransUnion will remove it two years after completion.

 The truth on Consumer Proposals To qualify for a consumer proposal regulated by the federal government’s Office of Superintendant of Bankruptcy (OSB), Canadians must be “insolvent.” The OSB defines insolvency as “the condition of

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mortgagebrokernews.ca | 43

Feature / debt being unable to pay one’s debts as they become due, or in the ordinary course of business or having liabilities that exceed the total value of assets.” (In simple terms a consumer proposal could be considered a court-protected form of debt settlement.) Consumer proposals have been an alternative to bankruptcy since 1992 in Canada. A trustee, licensed by the OSB, must show the consumer’s unsecured creditors they will receive more by accepting a proposal than a bankruptcy. If creditors representing the majority of dollars owed vote to accept the proposal all other unsecured creditors are bound under the same terms regardless of their vote. A mortgage or other secured loan cannot be “called” due to filing a proposal. Mortgages for those consumers in a proposal are most often renewed by the current lender as long as they are paid as required. Interest stops on filing and repayment can be for

Consumer proposals have been an alternative to bankruptcy since 1992 in Canada

44 | mortgagebrokernews.ca

a maximum of five years. Payments can accommodate seasonal income, commissions, etc. Sale of an exempt asset or assistance from family can be used to partially or fully fund a proposal. Unless co-signed, filing of a proposal does not affect a spouse. Impact on credit bureaus: Debts included in a proposal are rated R-7 or I-7 and remain on credit reports for three years after completion per Equifax and TransUnion’s purge rules.

 The truth on Bankruptcy Since September 2009, a first bankruptcy with surplus income as defined by the OSB guidelines is not discharged for 21 months. Canadians filing bankruptcy can keep assets exempt from seizure as set by the resident province or territory. Since 2008, RRSP contributions more than 12 months prior to filing any insolvency are exempt from seizure. Many are able to keep “non-exempt” assets by paying the trustee the asset value on a payment plan. A secondtime bankruptcy will not be discharged for at least 36 months. Impact on credit bureaus: Per Equifax and TransUnion’s purge rules, first-time bankruptcy remains on credit reports for six years from the date of discharge and a second bankruptcy remains for 14 years.

 The truth on Statute of limitations Each province’s statute of limitation determines how long a lender has to take legal action to collect consumer debt. For example, in Ontario and Alberta lenders cannot obtain judgment where nothing has been paid within 24 months prior. Other provinces vary from three to six years. Note the debt remains on credit reports for six years from the date of the last payment or activity per Equifax and TransUnion collection purge rules.

Feature / debt  IMPROVING CREDIT PROFILES Our team has seen countless Canadians try to “rebuild” their credit while still dealing with past credit issues that have yet to be completely resolved. This strategy is not wise as mortgage insurers require significant re-established credit obtained after credit counselling, or that a consumer proposal has been completed or bankruptcy discharged. Options exist to assist consumers to rebuild their credit and help achieve their goals, but it’s best to take that a step at a time and “not put the cart before the horse.”

About the writer: Eric Putnam, PFP, RQIC, is managing director of Debt Coach Canada – The Health Club For Your Wallet. Mortgage professionals across Canada can easily leverage their proven platform to further differentiate themselves by assisting clients to improve their finances. Debt Coach Canada has recently launched its unique Future Fund Credit Builder program in Ontario. Learn more at www. debtcoach.ca/brokers.

mortgagebrokernews.ca | 45

Feature / Syndicate mortgages

Full steaM ahead with syndicate referrals I think I can, I think I can. Itâ&#x20AC;&#x2122;s the mantra for a growing number of brokers turning their hand to syndicate referrals, writes Nestor Arellano

feature / Syndicate mortgages It took Christopher Molder a year to decide whether or not to dive into syndicate referrals, but it was only a few deals before he knew “his income diversification strategy” was a good fit. “I found it absolutely profitable,” says the Toronto mortgage professional, who has since facilitated many more referrals, although his main focus remains brokering with The Mortgage Centre – Tridac. “Syndicate referral allows you to maximize the use of your existing client database and at the same time offer customers exciting investment opportunities.” With a slowing housing market, more and more brokers are searching for ways to create alternative revenue streams. Most have hit on insurance and other financial services as the way to go, looking to bring insurance agents in-house or to get their own licenses. It’s a way of doing the kind of cross-selling banks are so expert at. Still, there are alternative ways to mine an existing book of clients for revenue opportunity, and collecting chunky finder’s fees for syndicate mortgage investment has emerged as another enticing option. Investors in mortgage syndicates are typically required to put $20,000 to $50,000 into a project, more

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mortgagebrokernews.ca | 47

Feature / Syndicate mortgages

Very often you will find homeowners who are just waiting for an opportunity to put some extra liquidity into some form of investment specifically the syndicate formed to lend developers and real estate ventures mortgage financing. Mortgage agents who refer clients to syndicate investment groups collect referral fees of around 2 per cent to 10 per cent of the client’s total investment in the fund. For professionals like Molder, who are focused on doing the math, it was a fairly straightforward calculation to determine the benefits of syndicate referral. It boils down to weighing the necessary inputs against the expected outputs; ie, compensation. “For example, with a 5 per cent finder’s fee,” says Molder, “I can make $5,000 in a single $50,000 investment. To make that same amount as a broker, I need to close a $500,000 deal.” But the syndicate deal, similar yet distinctly different from its Mortgage Investment Corporation counterpart, is an increasingly easy sell for Canadians looking to capitalize on one of the world’s most buoyant real estate markets. Molder also argues that what he’s offering is of value to the “right kind of client.” “Very often you will find homeowners who are just waiting for an opportunity to put some extra liquidity into some form of investment,” notes Molder, who carefully screens his client database looking for those borrowers who are best positioned to become mortgage lenders. ”With syndicate mortgages, I am offering something more exciting and better returns than typical investment vehicles like RRSPs.” That is, in fact, the thinking of many analysts suggesting the returns from Canadian real estate investment lead the TSX and most mutual funds. Although some clients have a reached a point where they are capable of purchasing property directly, joining a syndicate mortgage group provides them access to larger investment opportunities that would otherwise be out of their reach. Still, not all brokers are totally sold on the idea of acting as a go-between for syndicate funds. “I don’t know much about mortgage syndicates and I am not so sure it will be a fit with my business,” says Darin Bauer of Mortgage Intelligence. Like many others concerned about the cooling market, the Toronto-based broker is also investigating

48 | mortgagebrokernews.ca

alternative revenue streams. However, he is considering a more traditional approach. “I’d like to expand my product offering and I am looking into providing insurance services,” says Bauer. Indeed, many mortgage professionals have already added commercial and personal insurance to their product mix, either as a strategic move or a hedge against the softening economic environment. In addition to hiring a licensed broker to work under their firm’s umbrella, others have formed partnerships with insurance professionals. While Molder says branching out into syndicate referral has been lucrative, he warns that brokers need to carefully examine if such a move is gels with their existing business model. “Every business is different,” he cautions. “Entering into this when your business is not ready for it could mean you would just be stealing valuable time from your mortgage business.” Ideally, a broker needs to have a substantial client list of A-type client homeowners who have paid off their mortgages or clients that are in a financial situation to seek large investment opportunities. “Above all you have to protect your client,” Molder stresses. “Vet your projects carefully to make sure you are doing all you can to protect their investment.”

Building referrals: A broker’s checklist:

1) Measure twice, cut once – Do your homework. Research investment projects carefully to determine their viability and compatibility with your clients 2) Count on complying – Make sure you are compliant and working within the regulations and laws of the jurisdiction 3) Mind your marketing – Remember you are branching out into new territory and are now asking former borrowers to become lenders. Make sure your messaging is clear and that you convey to clients that they can trust you in this new venture

Have you heard this question recently?

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The Answer

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Feature / Commercial designation

a designation As commercial brokers see residential players join their ranks, many are asking if itâ&#x20AC;&#x2122;s time for a commercial designation

Commercial Mortgage Section Brought to to you by

50 | mortgagebrokernews.ca

Feature / Commercial designation ver the last several months, there has been a rising crescendo in the discussion of and the amount of ink spilled on commercial mortgages. The “Broker” community seems to be latching on to commercial transactions as the next wave to ride. Various proponents have suggested that the typical residential broker may be overwhelmed by the flood of information required to complete a commercial transaction and there should be a separate license for commercial brokers and agents. Others still suggest that residential brokers should NOT be handling any commercial transactions at all and should co-broker transactions with experienced commercial agents, who can ease the transaction along the long meandering river that is often a commercial transaction. No doubt many of you are already weary of the water metaphors, so I promise just one more. To paraphrase the late President John F. Kennedy, to say nothing of REMIC’s Joe White, “ A rising tide lifts all boats.” Far too often, the broker community fails to work corroboratively to better the industry. Thankfully many that are involved in commercial transactions are starting to see the benefit of PROFESSIONAL CO-BROKERING and the need for industry specialization. This is the first installment of what I’m told is CMP’s move to regularly chart the ebbs and flows of this specialized mortgage brokering segment and how we can all benefit from increased interest in it. Sorry I threw in one more water metaphor. I want to begin my conversation by addressing one of the topics on the tip of many tongues and that some wrongfully see as taboo; namely, the renewed call for a commercial mortgage designation. CGA, MD, P.Eng, LLB, MBA, PMP and CFA. All of these instill an immediate understanding of what the

I think that the industry is best served by the development of a commercial mortgage designation

person does and their qualifications. Can the same be said for the title “mortgage broker” or “AMP”? Sadly, I had to explain to my sister-in-law what a mortgage broker was, this after having been brokering for five years and having done their mortgage twice. She simply had no idea what the difference was between my role now and when I was still at a bank. CAAMP has tried but failed miserably, in my opinion, to have the AMP mean anything to the public at large or the industry. I say this as a CAAMP member and former AMP and sadly so. My 15-plus years in the industry, on top of my BA and MBA, mean a lot more than an AMP with no real qualifications. I think that the industry is best served by the development of a commercial mortgage designation with some real educational and experiential requirements. My argument departs from previous calls for the same in my belief that the broker channel will be best served in developing an industry-focused designation, in that it is developed where it means something to the industry not necessarily the public-at-large. Well, at least not yet. Initially the designation will tell those within our industry who is certified to complete a commercial transaction. Once the designation is known within the industry, it can be promoted outside. I’ve already listed some designations that are immediately recognized by the public-at-large such as MD and CGA. Many of the others, such as CFA, PMP or P.Eng may only be relevant to industry participants or when the layperson goes looking for meet a specific requirement, say having drawings done for a major renovation to their home, financed through a broker, of course. I think the Canadian brokerage market would be well served by an industry-specific commercial designation. The name or letters used are of little importance at this stage, but one proposal might be “CCM” for “Certified in Commercial Mortgages.” A CCM program with core financial, real estate, legal, evaluation and risk management courses, to

STATS

4.06/5 (2012) – First National interest rates Source: CMP

Mickey Baratz

FSC0 Lic.# M08000714

Phone: 416-483-8018 ext. 233 Cell: 416-986-3688 mortgagebrokernews.ca | 51 Email: mickey@vectormanagement.com

Feature / Commercial designation name a few, could become the benchmark for the industry. In the September issue of CMP, the article “The Final Word” criticized the increasingly prevalent “name-rank-and-serial-number” approach to commercial brokering. Sadly it couldn’t have been more correct. Too often we hear the comment that “the broker sent in a bunch of disjointed documents without a clear funding request.” There is often a massive disconnect between the lender and the unsophisticated broker. It is not elitist, arrogant or highbrowed to say there are different skills required to transact commercial transaction as opposed to residential deal; it is a matter of fact. The proposed designation would immediately identify the commercial broker as a specialist to all stakeholders in the transaction – whether that’s the lender, the residential broker looking to co-broker, the lawyer working to close the file, the investor looking to participate in a syndication or the borrower. The designation would assure the client that their broker does indeed conform to professional standards and that the transaction is being given proper analysis not “paper-pushing.” Of course in order for this to work, there would have to be buy-in and maybe even some incentives for industry stakeholders. Lender recognition is also key, as is professional delivery of the course work. The residential broker network that is looking to co-broker would feel safe in sending valued leads to true commercial professionals, with a clear understanding of the requirements around timeline, documentation, fees and pricing and, most importantly, client ownership. Unfortunately I don’t know if any of the current providers of designations could develop such a new designation as it would require one with real “teeth” and not simply dues. It would also have to be specific to mortgage brokers, meaning anyone other than a licensed mortgage broker (or equivalent title in their own jurisdiction) would not be eligible to obtain it. Some food for thought that needs to be, in my opinion, acted on sooner rather than later.

Commercial

Quick Tip: DCR uses the same information as TDS, but the numerator and denominator are inverted. If you do the math, you will see that there is a much higher tolerance for carrying debt on commercial income properties than individual borrowers for their homes. For example, the CMHC minimum DCR of 1.30 works out to 77 per cent TDS. The skill is in making sure you have accounted for the correct numbers in a standardized format.

About the writer: Toronto-based Steve Fabian is principal broker and VP of mortgage investments for Downing Street Financial Inc. He is also one of the 2012 CMP Top 10 Commercial Brokers and holds faculty positions at both Seneca College and the Real Estate and Mortgage Institute of Canada (REMIC).

Mickey Baratz

52 | mortgagebrokernews.ca

FSC0 Lic.# M08000714

Phone: 416-483-8018 ext. 233 Cell: 416-986-3688 Email: mickey@vectormanagement.com

Commercial Real Estate Capital Professionals with a unique “One Stop” hybrid position as lender, syndicator, administrator, brokerage and investment managers. We will place, fund and bridge your debt or equity requirement. Commercial mortgages are based on investment grade analysis. Our view is holistic not simplistic. We don’t push paper, we pre-underwrite and package information into a salient “investment grade” discussion paper. Co-Brokering you can rely on. Our approach is analytical, utilizing the same tools and resources as the largest institutions, but with a common sense and feet on the ground approach, only our specialized ”boutique” firm can provide. We DON’T compete with you, we DO Partner with you, whereby you no longer turn away commercial business or worse spend your valuable time chasing a dead end deal. We DON’T have Filogix access; we DO have access to institutional and private real estate capital in all its forms and intricacies. We quickly flush out deals and gather the relevant facts, yet also employ the time and resources necessary to provide tailored, realistic and manageable solutions. At Downing Street we have expertise in all commercial assets classes: Land and Construction, Multi-Residential, Retail, Office, and Industrial.

Contact Steve Fabian, Vice President Mortgage Investments, Principal Broker. sfabian@downingstreet.com 416-248-6206 ext 260. Downing Street Financial Inc. Brokerage #10962 Administrator #11957. 56 Aberfoyle Cres. Suite 500. Toronto,Ont. M8X 2W4

Business / marketing

Who you gonna call? No, not Ghostbusters, writes Doren Aldana. You have to pitch your employee mortgage benefits program to the right company exec

54 | mortgagebrokernews.ca

Business / Marketing

Step 2 - Call to Determine the Decision-Maker

Before you can present your program and get it approved, you must first determine who the key decision-maker is. This is usually the HR manager but in some cases, it may also include a group of executives within the company, such as the president, vice-president, CEO, etc. That might sound a bit intimidating at first, but once I train you on the words that work and the right approach, you’ll be armed and dangerous and ready to start calling on these decisionmakers with power and confidence -- no matter who they are!

Your primary objective for making these initial calls is threefold: 1. Determine the decision-maker(s) 2. Pique the interest of the decision-maker 3. Book a face-to-face meeting with the decisionmaker or send him or her an intro package via direct mail So, now that you know what your objectives are, let’s get into what to say and how to say it. For starters, here are a few “DON’TS” to be aware of: 1. DON’T start off the call by saying “Hello, how are you?” That screams, “Salesperson!” and will get you shut down faster than a New York minute. Instead, tell the reception or decision-maker your name upfront with an air of confidence in your voice. This gives the impression that you’re someone important, not a salesperson. 2. DON’T focus on getting a “yes” from the decision-maker. Attachment to immediate results will set you up for disappointment. Instead, focus on feeling upbeat, confident and happy right now. In other words, your goal is to FEEL GOOD and ENJOY the process. The better you feel, the better you’ll sound. The better you sound, the more likely you’ll get an appointment. Remember, it’s not just what you say but how you say it. 3. DON’T take “no” for an answer. I know that sounds like a direct contradiction to my previous point, but think about it. If you’re feeling upbeat and confident, you’re much more likely to be resourceful in the face of objections and resistance. You’re not going to give up at the first sign of defeat, you’re going to ask questions, stay curious and find ways to overcome their objections. With that mindset, a “no” does not mean rejection but it’s simply a request for more information. That’s a winner’s attitude! With that in mind, here is a proven script you can use to start smiling and dialing:

Live Call Script: Hi, this is (your name) calling, can you connect me with the HR department please? [HR Department]: Hi, this is (your name) calling and I’m looking to talk with the person in charge of your company’s employee benefits program so I can provide some helpful information on how to dramatically improve its value at no cost to your company or your employees. May I ask who I should talk to about that? (Get their name and title) [Decision-Maker]: Hi (name), this is (your name) calling from ABC Mortgage. I understand that you are in charge of the employee benefits program at (company name), is that right? OK great. Don’t worry, I have nothing to sell you. I just have a simple question for you. Did you have a brief moment? QUALIFYING QUESTION: If I could help your company provide an inhouse Employee Mortgage Benefits Program, which would allow your employees to save thousands of dollars when they go to buy or sell a home, at no cost to your company or your employees, would that interest you? May I make a suggestion? Use “Advance Script” on p.57.

mortgagebrokernews.ca | 55

Business / marketing

The script I’ve just given you, if it’s spoken with poise and confidence, has the power to open doors within companies like you never thought possible. However, I’d be remiss if I didn’t at least provide you with a few tools for overcoming the inevitable objections that will come your way. Here are the TOP 3 objections you will be confronted with and the specific words you can use to overcome them:

Objection #1: “We don’t have an employee benefit program and don’t plan on implementing one.” I can appreciate that. This may not be for you then. I don’t want to waste your time or mine so let me ask you this... If I could help you implement a highly valuable Employee Mortgage Benefits Program that helped you attract and retain top-producing employees, while improving company moral, and all of that could be done without costing your company a dime... would you be open to learning more? May I make a suggestion? Use “Advance Script” on p.57.

Objection #2 “We don’t have time for an employee benefits program.” I can appreciate that. This may not be for you then. May I ask you one question before I let you go? If I could help you implement a highly valuable Employee Mortgage Benefits Program that helped you attract and retain top-producing employees,

56 | mortgagebrokernews.ca

while improving company moral, and all of that could be done without costing your company a dime... would you be open to learning more? May I make a suggestion? Use “Advance Script” on p.57.

Objection #3 “We are not interested.” I can appreciate that. This isn’t for everybody. I’m just curious... may I ask why you’re not interested in a no-cost way to add value to your existing employee benefits package? So, if I’m hearing you right, your concern is _________. Is that correct? Ok, let me ask you this... If I could show you how... (key benefits)... without... (key concerns)... would you be open to learning more? May I make a suggestion? Use “Advance Script” on p.57.

If it’s spoken with poise and confidence, it has the power to open doors within companies like you never thought possible

Business / Marketing Provided you’re sufficiently impressed, we can discuss the next steps. If not, I’ll be the first person to advise you to pass on it. Fair enough? So there you have it. I’ve just given you the words that work for calling on companies, identifying the decision-makers and getting an appointment or at the very least, permission to followup after the introductory “Discovery Package” is mailed out. In next month’s article, I’ll teach you the critical components to include in your intro package, so that it “WOWS” the decision-maker and gets them open and eager to meet with you. Stay tuned…

ADVANCE SCRIPT

I’ve put together a little “Discovery Package” with a quick overview on how it works. Would you like me to send this package to you in the mail or would you prefer to have me present it to you for 20 minutes at your office? • Are you the only decisionmaker? • How do I spell your name? • (If applicable) What address should I use? • Do you have a direct phone number? • May I have your permission to followup with you in a couple weeks to see if you have any questions?

About the writer: Doren Aldana is considered by many to be Canada’s leading Mortgage Marketing Coach and recently won the “Best Industry Service Provider” award at the 2012 Canadian Mortgage Awards. Since 2005, he has been dedicated to helping mortgage professionals attract more clients with less effort, regardless of market conditions. For a free online workshop on “How to Launch Your Own Employee Mortgage Benefits Program,” visit: www.Done4UMortgageBenefits.com

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mortgagebrokernews.ca | 57

STATISTICs / RESIDENTIAL RESALE ACTIVITY

National picture

at-a-glance

This month’s roundup looks at the most recent data on residential new listings and resale activity Home sales in Canada fell sharply by 5.8 per cent between July and August 2012, marking the largest month-over-month decline since June 2010, according to the Canadian Real Estate Association (CREA). Actual (not seasonally adjusted) activity was down 8.9 per cent in August 2012 compared to the same month last year. This was the biggest year-over-year drop since April 2011. “While we always caution that housing market trends at the national level can-and do-run counter to trends in many local markets, the decline in activity in August was definitely the result of much of the country moving in the same direction,” said Wayne Moen, president of CREA. “That said, many smaller and more affordable markets bucked the national trend.” The number of home sales processed through the MLS systems fell 5.8 per cent between July and August 2012, marking the largest month-over-month decline since June 2010. Declines were reported in about two-thirds of all local markets representing 80 per cent of national activity. There were monthly sales declines in almost all large urban centres, including Greater Toronto, Greater Montreal, Greater Vancouver, the Fraser Valley, Calgary, Edmonton and Ottawa. So far, a total of 334,208 homes have traded hands this year. This represents a 2.8 per cent increase compared to levels reported over the first eight months of 2011, and a narrowing of the 4.5 per cent

lead for year-to-date sales activity in July. The number of newly listed homes fell 1.7 per cent in August compared to July. New supply was down in just over half of all local markets in August, but the 7.7 per cent month-over-month decrease in Greater Toronto by far contributed most to the national decline. The national sales-to-new-listings ratio, a measure of market balance, stood at 51 per cent in August 2012, down from 53.1 per cent in July. Based on a sales-to-new-listings ratio of between 40 to 60 per cent, about two-thirds of all local markets were in balanced market territory in August. Prices for townhouse and apartment units continue to see more modest gains, rising 1.7 per cent and 1.8 per cent respectively on a year-over-year basis in August 2012. These were also smaller gains than were seen in July. With previous changes to mortgage regulations, demand rose between the time changes, and were announced at their implementation. They invariably fell in the months immediately after being implemented, before recovering to long-term levels, according to Gregory Klump, chief economist for CREA. “By contrast, recent changes to mortgage regulations were in force more quickly after being announced, so home buyers had far less time to react,” says Klump. “As a result, demand didn’t pick up just before the changes took effect, while sales declined once they did.”

New Listings (year-over-year percentage change) Source: CREA British Columbia: -8.3 per cent

Alberta: -12.5 per cent

Saskatchewan: 1.6 per cent

Manitoba: -3.8 per cent

Ontario: -7.1 per cent

Quebec: -2.5 per cent

New Brunswick: 7.6 per cent

Nova Scotia: -6.3 per cent

Prince Edward Island: -22.0 per cent

Newfoundland and Labrador: -3.1 per cent

58 | mortgagebrokernews.ca

Northwest Territories: -17.6 per cent

Yukon: 3.4 per cent

STATISTICs / RESIDENTIAL RESALE ACTIVITY

Sales Activity

(year-over-year percentage change) Source: CREA

British Columbia

-17.9 per cent

Ontario

-11.1 per cent

Okanagan-Mainline Kootenay

35.1 per cent 28.2 per cent

Alberta

5.3 per cent

Simcoe and District Bancroft District Georgian triangle

34.1 per cent 29.2 per cent 18.4 per cent

Alberta West Lloydminster North Eastern Alberta Calgary

27.0 per cent 24.1 per cent 24.1 per cent 15.3 per cent

Quebec

-6.3 per cent

All other areas Montreal (CMA)

3.7 per cent -6.6 per cent

Saskatchewan

-5.6 per cent

New Brunswick

0.5 per cent

Northern Saint John

32.5 per cent 20.5 per cent

Prince Albert 43.9 per cent Yukon District 11.7 per cent South Saskatchewan 8.7 per cent

Manitoba

-2.0 per cent

Portage La Prairie Brandon

19.0 per cent 18.8 per cent

Nova Scotia

-10.2 per cent

Yarmouth Annapolis Valley

5.0 per cent -6.3 per cent

AUGUST 2012 Apartment Units Townhouse

+1.7%

+1.8%

mortgagebrokernews.ca | 59â&#x20AC;&#x201A;â&#x20AC;&#x201A;

News

industry / Brokers & lenders

Industry

Your trusted news source

FirstLine Footnote

Capital are among the most chuffed. Overall, Scotia led the pack posting a 20.2 per cent market share, with a 2.6 percentage-point rise year-over year. Not so for TD, with its share of broker business first-time buyers, or mortgages that under a have expanded their unsecured lending products. falling 5.7start percentage points, year over year, to come specific price (remember restrictions in 1992 when What our government fails to realize is that in at 7.8 per cent. the first-time buyer program was implemented? unsecured lending has a larger impact on cash The CMPWhen Brokers on Lenders survey captures Should we look at something similar?) “Red flow than mortgage lending. Particularly when some of the concerns brokers have about the Ed” Clark at TD was screaming for more home ownership has already been proven to be Here’s a roundup re-shuttling of market government controls on mortgage lending, what share. more affordable than renting in most areas he was police (Vancouver is currently a rare exception). What ofreally the topsaying four was that lenders “We arecan’t hearing a lot from lenders that their themselves. bank A will doturnaround the deal why can’t they (government) do see is the most powerful marketIfshare times are slower because of FirstLine bank B? winners: If Johnny jumps offclosing the bridge, would getting you more of that business,” lobby group in the country saying “it’s mortgage and they’re jump off a bridge? What kind of people do we have lending that is the issue.” penned oneculprit surveyinrespondent. “That’s not right.” The real – Paul Therien running our banking system? 1. Scotiabank A couple of months this whole mess is the least regulated and that is ago, CMP reported that +2.2 pps, YOY lenders started to court brokers with wellThe results are in, and big lenders, They just don’t get it, as doexpected, they? Economics 101,with says credit card debt. Put some sense back in the 2. First to FirstLine soon after CIBC began putNational the boots to theestablished credit cardties lenders, the conspicuous exception of TD, are successfully cool off a hot market by making it more difficult to system, understanding that it will impact thedown economy borrow, heat up a cooling economy by loosening +6.1 pps, YOY winding the company`s operations. divvying up FirstLine’s spoils. significantly, especially retail goods. Gradually upThe lending. We are cooling off report, in manyreleased markets, 3. Street Capital The rundown on market share for other lenders Q2 lender market share by tighten mortgage underwriting that were never asbroker hot as volumes Toronto and Vancouver. +1.5the pps, YOY follows: “standards” D+H, indicates that jumped by 8.2 that have been perverted over the last 10 years. Canadian institutional (read bank) mortgage 4. MCAP per cent for period 2011.roll, But, more be pain? No doubt about it. But an lending hasthe been on aover 10-year like drunks on a Will there +1.5 pps, YOY Home 5.6 per cent, +0.8 pps, YOY importantly for the channel’s biggest lenders, many pain now, beats anTrust: agonizing pain bender, abetted by their “drinking buddy” CMHC. I uncomfortable National Bank of Canada: 4.5 per cent, +0.3 pps, YOY of their gains came courtesy of FirstLine’s demise. later. agree that a 30-year amortization is too long a ING Direct: 4.1 per cent, +0.3 Scotiabank, First Street for time in general, butNational, maybe itMCAP shouldand be allowed – GTA Broker pps, YOY

CMP is weighing the aftermath of FirstLine’s wind-down, and CIBC’s loss has been someone else’s gain

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60 | mortgagebrokernews.ca

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profile / favourite things

Favourite things…

Sharie Marie Francoeur TMG The Mortgage Group Port Alberni, B.C.

NEW Mortgage Product:

Book: The Twilight Series

Merix’s Flexible Prepayment Privileges Food: Butter Chicken

NEW Mortgage Term:

Drink: Caesar Cocktail

Music: Country Music, Garth Brooks

year fixed

Vacation: Ko Phi Phi, Thailand

mortgagebrokernews.ca | 61

GUEST / column

WE WANT

YOU NO thanks,

writes Rob Campbell. Rate sites did their best in the last issue to rally the broker troops behind them, but many conscientious objectors still refuse to join their army

ate discount sites are a viable model that works. It fills the gap in that niche market, and Ron Butler as well as Dan Eisner have built successful businesses from that part of the market so a tip of the cap to them. Although it’s great to encourage any form of success in our industry, let’s make no mistake that there is a huge divide on this topic that will always remain. It’s hard to pat someone on the back for their model when not an ounce of you agrees with it. Although the web is a great place to cultivate leads from this model, it’s not one that I particularly want to ever be a part of. As I’ve stated before, it’s a slippery slope. I don’t think that the “Rate Shopper” is unsophisticated by any means. They know what they want (or at least what they think they want) and just want it done quickly without ever meeting the broker face to face. If that can be provided; expectations met. Great. I do, however, challenge the our-

62 | mortgagebrokernews.ca

business-has-quadrupled-type comment you hear when there’s an increase in website traffic. What matters here is closing ratio. Mortgagemarvel.com has a million visitors? Who cares. 1) How long has the site been up...a month...a year...two? 2) How many were unique visitors? 3) What was the bounce rate? 4) How long did they remain on the site? 5) How many actually requested more info or filled out a contact form? 6) How many made it to the application process? You get my point. Sheer numbers like “1 million visits” mean nothing. I can go and buy 100,000 Twitter followers for $300 and become “Canada’s #1 followed Broker on Twitter” overnight. But that’s useless because they are all non-existent people, just numbers. As long as we keep providing value for our unique markets and pushing our image to a higher level, we all win.

About the writer:

Rob Campbell is a Guelph, Ont., mortgage agent with Verico The Mortgage Wellness Group and a blogger. He’s also a former tradesman who prides himself on building strong connections with clients as a value-added mortgage professional.

Reach over 90% of the broker community Every day of every month CMP and Mortgagebrokernews.ca delivers top quality, relevant content that independent mortgage broker profeswsions use to improve their business - no filler - no fluff.

Maximize your marketing ROI with the leading independent voice of the mortgage brokering industry.

ContaCt: trevor Biggs 416 644 8740 x 236 trevor.biggs@kmimedia.ca

service / directory Broker Networks

Banks

MCAP www.MCAPBROKER.com Ph: 1 866 289 7389 Page 38, 39

B2B Bank b2bbank.com/mortgages Ph: 1.800.263.8349 Inside Back Cover

Centum Financial Group Inc. www.centum.ca Ph: 1 604 257 3940 Page 13

Merix Financial www.merixfinancial.com Ph: 1 877 637 4911 Page 41

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

Dominion Lending Centres www.DominionLending.ca Ph: 1 888 806 8080 Page 32, 33

Optimum Mortgage A Division of Canadian Western Trust www.OptimumMortgage.ca Ph: 866 441 3775 Page 57

HomEquity Bank www.homequitybank.ca Ph: 1 866 522 2447 Page 29

National Bank www.nbc.ca Ph: 1 888 483 5628 Page 23

Home Loans Canada www.hlcmortgages.com Ph: 1 866 452 1821 Page 3

RMAI Financial Group www.rmaifinancial.com Ph: 1 866 955 7624 Page 19

Peoples Trust www.peoplestrust.com Ph: 1 800 663 0324 Page 60

Non-Bank Lenders

Capital Direct www.capitaldirect.ca Ph: 780 868-0550 Page 26

Radius Financial www.radiusfinancial.ca Ph: 1 877 369 6398 Inside Front Cover

VERICO www.verico.ca Ph: 1 866 983 7426 Page 27 Technology & Software

Equity Financial Trust Company www.equityfinancialtrust.com Ph: 1 866 393 4891 Page 43

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

Tribecca Finance Corporation www.tribecca.ca Ph: 416 225 6900 Page 18 Commercial Lenders

Real Estate

Canadian National Association of Real Estate Appraisers www.cnarea.ca Ph: 1 888 399 3366 Page 20

ROMSPEN Investment Corporation www.romspen.com Ph: 1 800 494 0389 Page 1

Equitable Trust Company www.equitabletrust.com Ph: 1 866 407 0004 Page 5

Firm Capital www.FirmCapital.com Ph: 416 635 0221 Page 21

The Downing Street Group www.downingstreet.com Ph: 416 248 6206 ext 260 Page 53

Fortress Real Calpital www.fortressrealcapital.com Ph: 905 787 9266 Page 47, 49 Services

Insurance

Home Trust www.hometrust.ca Ph: 1 877 903 2133 Page 7

ING Direct www.ingdirectbrokerteam.ca Ph: 1 800 574 5629 Page 59

64 | mortgagebrokernews.ca

Compliance First Financial www.compliancefirstfinancial.com Ph: 1 800 380 7074 Page 45

Vector Financial Services www.vectorfinancialservices.com Ph: 1 866 483 8018 Page 52

Fisgard Captial Corporation www.fisgardmortgage.com Ph: 1 866 382 9255 Page 36

Associations

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

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

Canadian Association of Acredited Mortgage Professionals www.caamp.org Ph: 1 888 442 4625 Page 15

NEW NAME. SAME 100% BROKER FOCUS. [And 0% focus on competing for your business.]

A new mortgage lender is finally here. Well, we’re not really new, but our name is. You’ve worked with B2B Trust as the administrator of Laurentian Bank broker mortgages for over 10 years. Now we’re B2B Bank, offering our own suite of mortgage and credit products. One thing hasn’t changed though, and that’s our 100% focus on brokers. And, we still offer: • The same great rates, service, business development team, products and parent company (Laurentian Bank of Canada). • One-on-one service that helps you get your deals funded. • Adjudication decisions within 1 business day.

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Service to mortgage brokers in all provinces, except Quebec. Mortgage applications received by the B2B Bank Broker Mortgage Centre after July 7, 2012 will be funded by, and registered in the name of, B2B Bank. Mortgages and lines of credit are subject to credit approval by B2B Bank. Some conditions apply. B2B Bank is a wholly-owned subsidiary of Laurentian Bank of Canada. ®B2B BANK is a registered trademark of B2B Bank. ™BANKING THAT WORKS FOR BROKERS is a trademark of B2B Bank.

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