CMP 10.10 by Key Media

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LENDERS RESPOND Brokers sounded off on lenders in the last issue – now it’s their turn

DEBT SETTLEMENT Why it might be the best option for your clients

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REAL ESTATE LAWYERS VERSUS MONOLINES Tips for staying above the fray

FACT CHECK Setting the record straight on private lending

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ISSUE 10.10

CONTENTS

LENDERS RESPOND COVER STORY

In the wake of last issue’s Brokers on Lenders survey, a few top lenders offer their take on the results

OppOrtunity is Often simply a matter Of seeing it first. Romspen Investment Corporation is a non-bank mortgage lender specializing in commercial real estate across Canada and the United States. With over $1.5 billion under administration, we offer customized mortgage solutions for term, bridge and construction financing from $4M to $100M. Blake Cassidy | 800 494 0389 | www.romspen.com

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ISSUE 10.10

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CONTENTS

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UPFRONT 04 Editorial

Why it’s a good time to be a broker

FEATURES

IS BILL 55 WORKING?

A look at how the new law addressing debt settlement is affecting consumers

WHY FEARLESSNESS LEADS TO FAILURE

Find out why the best leaders have a healthy dose of fear

INDUSTRY ICON

Cameron Strong, the CEO of Invis Mortgage Intelligence, on how he expects the industry to evolve

Demystifying private mortgages

08 Head to head

Thoughts on the recent CBC snafu

10 News analysis

Caught in the middle between lawyers and monolines

12 Commercial update

Tips for making the move from residential to commercial

14 Private lending update Educating the public about private deals

16 Opinion

How to deal with bad-news appraisals

FEATURES PEOPLE

06 Statistics

HOW TO OVERCOME EXCUSES

Six tips for learning from your failures

FEATURES 38 The persona process

Discover the key to forging more profitable client relationships

PEOPLE 36 Broker profile

Jennifer Gaudet broke into a tight mortgage market by positioning herself as a ‘military relocation specialist’

47 Career path

Bryan Jaskolka’s entrepreneurial drive carried him from the tech industry to mortgages

48 Other life

Finding balance with Sherisse Hume

FEATURES

IS YOUR BUSINESS SUITABLE FOR FRANCHISING? Before you start thinking about branching out, read this advice

MORTGAGEBROKERNEWS.CA CHECK IT OUT ONLINE

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UPFRONT

EDITORIAL

www.mortgagebrokernews.ca ISSUE 10.10 EDITORIAL

Betting on brokers

orporate warriors fighting for control of a small broker-channel lender – as little as two years ago, that scenario would have strained the imagination of even the most creative mortgage professionals. At the time, lenders were more interested in leaving brokers behind than they were in vying to get their attention, let alone their business. But that’s changed now – and the duelling corporate bids for CFF Bank are proof positive. Shortly after Home Capital Group, Home Trust’s parent company, moved to make an offer for the upstart ‘broker-owned bank,’ another suitor, Westbridge Mortgage REIT, stepped forward with its own offer to acquire controlling interest and take the lender public. The competing bids meant shareholders, many of them brokers, were left with a choice: place the bank in the hands of a winning lender with decades of experience in the channel, or install another industry stalwart and a former CFF exec – James Clayton – in the bank’s C-suite.

Brokers, and their business, are once again a hot commodity

Editorial Director Vernon Clement Jones

SALES & MARKETING Associate Publisher Trevor Biggs

Senior Writer Justin da Rosa

General Manager, Sales John Mackenzie

Writers Olivia D’Orazio Donald Horne

Marketing and Communications Claudine Ting

Executive Editor – Special Features Ryan Smith Copy Editor Clare Alexander

CONTRIBUTORS Josh Balner Dustan Woodhouse Dan Gregory Kieran Flanagan Dan Waldschmidt Stefan Kazakis

ART & PRODUCTION Design Manager Daniel Williams Designer Loiza Caguiat

Project Coordinator Jessica Duce

CORPORATE President & CEO Tim Duce Office/Traffic Manager Marni Parker Events and Conference Manager Chris Davis Chief Information Officer Colin Chan Human Resources Manager Julia Bookallil Global CEO Mike Shipley Global COO George Walmsley

Production Manager Alicia Salvati Traffic Manager Kay Valdez

EDITORIAL INQUIRIES

Home Trust would ultimately prevail, but brokers on all sides were left with one inescapable conclusion: They, and their business, are once again a hot commodity. It’s easy to understand why. For all lenders, rock-bottom interest rates have exacerbated the fight to maximize mortgage volumes in the most competitive market in years. A stable economy and a seemingly unquenchable thirst for home buying in key regions suggest that the mortgage war will continue unabated. The heightened competition means lenders are increasingly prepared to leave no stone unturned in the quest to find new mortgage business. Their pursuit has everything to do with tight spreads and the reduced profitability on each and every mortgage that gets added to their balance sheets. It also renews interest in the broker channel – a growing number of industry analysts suggest members of the Big Five banks are actively exploring ways to get in. The more conventional route has been to fund mortgages through existing players in the space, but there’s also been talk of originating loans branded with their own big-bank names. For brokers, who’ve seen more big lenders leave than arrive over the last five years, their newfound popularity is overdue – and very much appreciated. Vernon Clement Jones, editor

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UPFRONT

STATISTICS

Much ado about private mortgages The world of alternative mortgages has been yanked into the limelight as brokers point to the growing value-add of non-bank lenders THERE IS a real misunderstanding about the mortgage industry – that brokers push clients into shady ‘private’ deals that can only end in arrears. Brokers have worked hard to show the public that, in fact, most non-traditional loans aren’t ‘private’ at all. Still, the prevalence of non-bank deals is increasing – and so is brokers’ market share,

33.7%

The average Canadian’s down payment, as a percentage of the home’s purchase price

$1.29 trillion The amount of outstanding residential mortgage credit in Canada

WHERE CANADIANS GET THEIR MORTGAGES Mortgage brokers know that homebuyers have a number of options when it comes to securing a loan. Of course, some of those options are more popular than others – namely, chartered banks, which made up almost 75% of all outstanding residential mortgages in 2014.

suggesting many brokers and agents are educating their clients about the benefits of moving away from bank lenders. Meanwhile, those clients are putting down, on average, a third of a home’s purchase price and requiring a smaller chunk of borrowed change, perhaps making the idea of going to a non-bank lender more attractive.

13%

The percentage of homebuyers who purchase the home with no debt

$931.8 billion

72%

Chartered banks

The percentage of Canadians who choose a fixed-rate mortgage Source: CAAMP, June 2015

BROKERS VERSUS BANKS Brokers have increased their market share by 2% since 2013, and the increase in the number of homebuyers seeking loans from outside a bank has certainly helped that. But banks still hold more than half of the mortgage market in Canada.

SHOW ME THE MONEY

55%

Personal savings: 40% Financial institution: 28%

30%

RRSP: 12%

15%

Gift from parents: 11% Loan from parents: 6%

The average Canadian collects around a third of a home’s purchase price for a down payment, but where do they get that kind of capital? Turns out, it’s a lot of hard work saving – and maybe a small gift from Mom and Dad.

Other: 3% Brokers

Banks

Other Source: CAAMP, January 2015

Source: CAAMP, January 2015

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$161 billion

$41.9 billion

$24.8

$15.1

billion

$13.2

billion

$10.4

billion

Trust and mortgage loan companies

Life insurance companies

Pension funds

National Housing Act mortgage-backed securities

Credit unions and caisses populaires

Special purpose corporations Source: StatCan, September 2015

THE RISE AND FALL OF PRIVATE MORTGAGES

AVOIDING ARREARS

Most clients who turn to alternative lending do so as a temporary fix for an unforeseen circumstance – an economic crisis, for instance, like the one the country faced in 2008, when the dollar value of non-bank mortgages peaked at almost $24 billion.

Since the CMHC moved to tighten its lending rules, the percentage of Canadian mortgages in arrears – both through traditional and alternative lenders – has steadily declined. That trend also could be a result of brokers’ involvement in educating clients and keeping them on track.

$25 billion

0.43% 0.41%

$20 billion

0.34%

0.31%

0.28%

$15 billion

$10 billion

2008

2009

2010

2011

2012

2013

2014 Source: CMHC, June 2015

2010

2011

2012

2013

2014 Source: CMHC, June 2015

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UPFRONT

HEAD TO HEAD

Are brokers’ private deals to blame for bad PR? A CBC report lumping brokers and shadow lenders together may have eroded years of work to lift the industry’s reputation

Samantha Gale

Jennifer Coy Mortgage specialist Invis

Mortgage broker Campbell Mortgage Brokers

“Shadow banking connotes a sense of mysterious, perhaps even nefarious individuals lurking in a dark background, lending money to hapless victims in a clandestine, illegal fashion. However, the term lacks clarity and does not do justice to the various alternative mortgage lenders in the Canadian marketplace. [Alternative lenders] make a massive contribution to the economy by providing mortgage funds ... through mortgage brokers. Who is caught in the shadow banking net, and the value of the mortgage loans they fund, needs clarification and quantification in order for there to be any meaningful dialogue on this subject.”

“Mortgage brokering can be a misunderstood profession. That lack of under standing, paired with word-of-mouth communication or more formal reporting, can result in dim light being shed on our industry. Recent regulatory changes have created a need for flexible lending options. Many consumers will experience a circumstance to which alternative lending can offer a short-term solution, placing them firmly back on their feet. These alternatives also might help someone self-employed, or in employment where consistent income is not readily provable, to begin building equity.”

“The increase in private deals stems from the tightening of mortgage rules. I’ve identified a number of transactions since 2012 that could once have qualified for an A deal but wouldn’t now. Like most brokers, I want the best deal for my customers, and sometimes that means going to a private lender. While it’s pricier than an A deal, it is certainly more attractive than other options that are often available to those clients, such as selling their home. Private deals are also temporary for most people. It’s just to get them from point A to point B.”

Executive director Canadian Mortgage Broker Association

Wayne Campbell

BROKERS ARE JUST MISUNDERSTOOD When a CBC analyst erroneously lumped mortgage brokers and alternative lenders into the same category as shadow lenders, the news agency’s reputation took a hit. However, mortgage brokers’ collective character – which the broker channel has worked hard to positively promote – also felt the impact. Some have suggested that’s at the fault of brokers, who are often the only bridge between the home-buying public and lesser-known means of securing a loan. But brokers are instead pointing the finger at the media and other forms of public outreach that not only misuse the term ‘private lending’ but also promulgate an inaccurate picture of what mortgage brokers really do.

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UPFRONT

NEWS ANALYSIS

An unfulfilling fulfilment process Brokers are increasingly caught in the middle between angry real estate lawyers and monolines undertaking their due diligence. Should closing any monoline deal be this challenging? THE CHALLENGE of working with monoline files at closing – from slow response times to finicky paperwork requirements – is something real estate lawyers have long alleged. Some lawyers even add on extra fees or go so far as to ask clients to switch lenders to avoid having to deal with monolines. It’s something brokers hear not just from lawyers, but also from the disgruntled clients they share with them – clients who often feel bushwhacked by the experience.

instructions “because they’re not familiar with them, and they’re used to having a very small document pack versus what some monolines send out, which is apparently represents quite a substantial amount of work for them.” Indeed, whether the confusion is in the presentation of those monoline closing documents or, more fundamentally, in the nature of monoline fulfilment demands, broker clients are increasingly receiving the brunt of lawyer frustration.

“The relationship I have with monolines trumps the difficulty in working with a frustrating lawyer” Kent Farnsworth, Simply Mortgages Mortgage Alliance “For about 20% [of my clients] … the lawyer will complain or mention that the bank is a preference and [ask] why they didn’t go to a regular bank instead of a broker,” says industry veteran Kent Farnsworth of Simply Mortgages Mortgage Alliance. “That sort of thing can cause a lot of grief.” Too frequently, he says, brokers are having to walk lawyers through some of the monoline

That’s led not only to costly delays, but also additional fees in some cases. A recent MortgageBrokerNews.ca article has drawn attention to a controversial practice by some real estate lawyers, who are charging homebuyers an additional $100 or more for overseeing the closing process for a monoline file. Those legal professionals cite monoline closing instructions that require more

paperwork verification than a similar bank file might. But brokers must shoulder a portion of the blame, at least in some cases, says one industry player. “If the broker does what they’re supposed to and does their due diligence early, then there shouldn’t be any issues down the road on either side of the fence,” says Marianne Hobson, a broker with Dominion Lending Centres Homestead Financial. “I actually was a legal assistant for six years before I went into this business, and as long as the paperwork is done ahead of time, well in advance, then there shouldn’t be any hiccups down the road.” The snafus for real estate lawyers often centre on missing documentation, such as employment letters or other means of income verification. But they also crop up around lender instructions to verify any and all aspects of a property, from condo board status reports to past incidents of water damage.

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A LEGAL OPINION According to one practising real estate lawyer in Toronto, not all law firms are created equal. In fact, Mark Morris says his office has become more proficient at handling contracts that involve alternative lenders – to the point where the fee is the same as for traditional bank mortgages. “When we explain to our industry colleagues that we do not charge variable fees based on the lender supplying funds, they often wonder why, given the extra work involved with monoline products – products that, to be clear, involve substantially more work for our clerks,” Morris wrote on MortgageBrokerNews.ca. He points to certain factors – namely, an unclear ID or PAP form – that make monoline files particularly challenging. “If a lawyer is starting out, runs a disorganized practice or is otherwise unfamiliar with the above requirements, delays on these financial advances are an almost inevitable result,” Morris says.

While banks demand the same due diligence, broker-originated files are often characterized as needlessly complex and onerous. The perceived discrepancy is raising broker eyebrows, as well as debate about the relative pros and cons of using monolines versus the big banks still operating in the channel. Still, brokers such as Farnsworth remain loyal. “The relationship I have with monolines trumps the difficulty in [working with a frustrating lawyer],” says the New Brunswickbased broker. “But I’ve had some lawyers from time to time who were really problematic. There’s one lawyer in this city, and if the client wants to use that particular lawyer, I’ll send them elsewhere. It’s that bad.” Farnsworth wonders if the fuss on the part of lawyers isn’t a disguise for their reservations about brokers as a whole. “I don’t know if it’s just mortgage brokers that they don’t like, or they don’t like working with the monolines,” he says, “but there are

“If the broker … does their due diligence early, then there shouldn’t be any issues down the road on either side of the fence” Marianne Hobson, Dominion Lending Centres Homestead Financial some lawyers specifically who make it really frustrating to be on the other end of a mortgage with.” Brokers do have a role to play as ambassadors for monolines, argue other mortgage professionals, who point out the need for an emissary in light of the growing number of broker-channel deals borne out of a hot market and the superior pricing that increasingly defines monolines. “I would never, ever think twice about sending a deal to a monoline,” says Hobson, who works in the busy Hamilton, Ont., market. “In fact, in [most] cases … they have better rates, they have better prepayment

privileges – 20% compared to 10% with some CIBC – and products like free home warranty … that no bank would offer.” Spreading the word about that clear value-add is something proselytizing brokers have been eager to do. Farnsworth often shares TD’s outsourcing of fulfilment services to First National as an example of the good monolines can bring to that process. “TD Canada Trust used to be a nightmare to deal with,” he says. “They would send tick sheets out that didn’t make any sense. You’d [struggle] to explain it to a lawyer. But … now that they have a new system with First National, it’s great. It’s like using First National.”

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UPFRONT

COMMERCIAL UPDATE NEWS BRIEFS Commercial leases dip between July and August

The Toronto Real Estate Board’s commercial network members reported a combined 193,443 square feet of leased commercial space in August 2015, down from 323,761 in July. “On a month-to-month basis, the number and size of commercial transactions can be volatile simply because many of the deals are more complicated and can take time to get done,” said TREB president Mark McLean. “With this said, it is also important to note that economic growth in Canada has been down for the last two quarters, which could have prompted some firms to put their property investment decisions on hold.”

The most soughtafter type of commercial real estate

Commercial brokers in the GTA are best served to focus on properties that are within walking distance of transit, as 60% of those properties are showing higher average rental rates and lower vacancy rates. “Only 45% of all office space in the GTA is within walking distance of a rapid transit station,” said Colliers International market intelligence coordinator Shawn Gilligan, who authored a new report on Toronto rapid transit and commercial real estate. The report found that employees are increasingly looking to abandon their cars in favour of transit when commuting to work.

Chinese economic problems impacting Vancouver market

Economic turmoil in China “is an issue that’s clearly being focused on by my mining and mining services clients,” Bart Corbett, SVP of office leasing

at Cushman & Wakefield, told the Vancouver Sun. “They are very closely tied to demand for commodities and getting those commodities out of the ground. If that demand falls off, which it … has been doing for the last three or four years, their demand for office space in Vancouver either stays flat or in fact drops off by way of letting contract workers go and giving back office space.”

Calgary commercial investment drops in second quarter

Total dollar volume for commercial sales in Calgary fell 57%, to $347.7 billion, in the second quarter of this year. During that time, the city saw 82 transactions for properties valued at least $1 million. Meanwhile, industrial land sales dropped by 28%, to $95.4 million. “The effect of external market conditions has begun to influence investment activity in the greater Calgary area,” said Paul Richter, research director for RealNet Canada. “This is evidenced by the lack of both high-dollar transactions and a slowing of deal velocity.”

Election promise tailor-made for brokers? Commercial brokers may come out the real winners if the Liberals’ election promise of a tax break encourages landlords to renovate existing properties. The federal Liberals want to eliminate the GST on all new rental builds in the country, while giving up to $125 million a year to landlords renovating aging rental units. The party is also proposing allowing Canadians a second chance to dig into their retirement savings plans to pay for a home in certain circumstances, such as job-based relocation, divorce, the death of a spouse or taking in an elderly relative.

The keys to commercial success A commercial broker shares tips for residential brokers interested in adding commercial deals to their business Residential brokers interested in delving into the commercial mortgage space may not know where to start – but the first thing they should know is that it won’t be easy. “It’s hard to break into the commercial space; there are only a few brokers who concentrate on the space,” says Stephane Prevost, a broker with Opulent Mortgages. As difficult as it is to excel in the residential mortgage industry, the commercial side presents its own challenges. Appraisals have long been a frustration for residential brokers, who often complain about inaccurate and out-of-date appraisals. Those frustrations can be magnified when it comes to commercial deals. “Appraisals have been an issue; clients have a certain expectation, brokers have a certain expectation, and sometimes the appraisal doesn’t meet those expectations,” Prevost says. “The cost is also a lot higher. The average is $1,200 to $2,500 for smaller-scale commercial projects. I’ve seen appraisals that cost as much as $3,800.” According to Prevost, the appraisal process takes much longer for commercial deals. While appraisals for residential files are sometimes turned around within a day, it isn’t unheard of for clients and brokers to wait three to six weeks for an appraisal on a commercial property. The reason for the delay, Prevost says, is the lack of appraisers who work on commercial deals. Appraisals aren’t the only thing that takes longer on the commercial side. It’s well-known that commercial deals often take months to

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complete, which is due in large part to the extra requirements of each application. A residential mortgage application is often 40 pages or less, Prevost says. Commercial applications, on the other hand, often contain as many as 1,500 pages. Another challenge for newcomers in the segment is the lack of mentorship available. “There is a lot to learn, and the brokers doing it already just don’t have the time to explain the process,” Prevost says.

“There is a lot to learn, and the brokers doing it already just don’t have the time to explain the process” Still, those who have the drive and determination to excel as commercial broker certainly can do so. After all, some of the same rules that apply to residential mortgages hold true on the commercial side as well. “I find if clients are organized and they listen to the broker and are attentive, things tend to go smoothly,” Prevost says.

Q&A

Steven Walters Vice president of business development FIRST SOURCE MORTGAGE CORPORATION

Years in the industry 30 Career highlight “I really enjoy taking a loan opportunity from A to Z. Each closing is a high point.” Biggest challenge “Like everyone, trying to figure out where the economy will be in a year.”

Lenders need to pick the right challenges How would you characterize the commercial space right now? Interest rates remain at an all-time low, fuelling acquisitions of devel opment land and income-producing properties. The TSX is down [at the moment], about 12% over the year, and investors who have stuck it out have been on a major roller coaster ride this year, making investment in real estate a hot commodity. As a private lender, we are seeing a great deal of business and activity in our sector. Is it a good time to be in the space? Great question. Over the past five or six years, it would have been difficult not to achieve a great return. But this upward trend eventually has to flatten out and head the other way. I believe it has been too long and it can’t be sustained. What challenges or opportunities are presenting themselves to lenders right now? Inherent in nearly all challenges are opportunities. A private lender just has to pick the right challenges. Be creative, protect investment capital with proper and intelligent underwriting, price the loan accordingly, and opportunities will emerge. Preservation of capital is our guiding investment philosophy, where the primary goal is to invest wisely for above-average returns and limit, as best we can, the possibility of losses in our portfolio. What about the future? How can commercial lenders keep pace with the changes? Read. Read as much as you can. Who is saying what to whom? What does the research suggest? What are senior economists predicting, and what can you read between the lines? It is imperative you stay informed in order to keep pace with changes. What’s the most important thing going on in commercial lending right now, in your opinion? I believe more emphasis is being placed on the borrower than ever before. In the event of a downturn or a stalled project, can the borrower weather the storm and continue to pay the monthly interest due? And if so, for how long? Are there any overarching economic trends particularly affecting the commercial space right now? The drop in the price per barrel of oil, coupled with unemployment, can really slow down the general economy, resulting in people not spending so readily. The economy remains fragile, and several hiccups may foreshadow a drop in real estate values as companies retreat from their expansion plans and housing starts drop. A private lender must be cognitive of the many economic influences that affect our industry.

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UPFRONT

PRIVATE LENDING UPDATE

Who’s responsible for educating clients? It’s up to brokers – and the media – to properly inform clients about various lending options, including private mortgages

media can reach a larger audience, so they must make the effort to learn the terminology and use it correctly.” Attention was drawn to the issue after a CBC radio segment seemed to paint all non-bank lenders as high-interest, last-resort options. During that segment, CBC business commentator Armine Yalnizyan appeared to lump all non-bank lenders – including brokers and their monoline partners – into the same category, drawing ire from brokers across the country.

“The media can reach a larger audience, so they must make the effort to learn the terminology and use it correctly”

There are plenty of misconceptions among consumers about the various lending options in the Canadian mortgage marketplace – just consider how many clients think a 20% down payment is an outright necessity. And those misconceptions are exacerbated by erroneous information. “The term ‘private lending’ is one that is often used incorrectly, and that’s a big part of the problem,” Ad Lakhanpal, a broker with Mortgage Alliance Company of Canada, recently told MortgageBrokerNews.ca.

NEWS BRIEFS

“Mortgage brokers need to correct clients who think all non-bank lenders are shadow lenders. We need to explain that alternative lenders – including monolines, B lenders and even some private lenders – are all legitimate and regulated places to get a mortgage.” And while it’s a broker’s job to explain the various options to a client, the media must also play a role, Lakhanpal argues. “Some of the responsibility must also fall on the media,” he says. “Mortgage brokers can only educate one client at a time, but the

Private lenders return to the US market

After the 2008 global financial crisis, American providers of subprime loans tucked tail and went home – but with the loonie hovering around US$0.75, the stage is set for their return. “[With] the strength of the US dollar and the money they would make on the exchange, it would be a phenomenal deal for them,” said Mickey Baratz, the director of finance and principal broker of Vector Financial. “I don’t know what the regulators would say about that, but for the first time, US banks are co-lending in Canada.”

Yalnizyan later appeared on CBC’s Metro Morning to correct the mistake after talking to mortgage brokers. “[Brokers] felt – and I think reasonably – that I didn’t capture the full breadth of what it is that they offer to the market, and that they do offer better deals to some people, particularly if you don’t need to find a great deal,” Yalnizyan told Metro Morning’s Matt Galloway. “If you’ve got great creditworthiness in the eyes of the banks, they can probably make life better for you.” The story certainly drummed up a lot of debate among brokers online; see Head to Head on page 8 for more opinions from brokers on the issue.

Regulations highlight need for flexible lending

Tighter regulations are pushing the envelope for creative lending options, especially for clients with bruised credit. “Recent regulatory changes have created a further need for flexible lending options,” said Jennifer Coy, a mortgage specialist with Invis. “Many consumers will experience a circumstance to which alternative lending can offer a short-term solution, placing them firmly back on their feet. These alternatives may also help someone self-employed, or in employment where consistent income is not readily provable, to begin building equity.”

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Q&A

Hali StrandlundNoble

Private lenders renew focus on valuations

SVP of residential mortgage investments and broker relations FISGARD ASSET MANAGEMENT CORPORATION

Years in the industry 26 Career highlight “Every day I’m helping mortgage brokers create solutions for their clients. You’re kind of an investigator; you’re kind of a solution-maker. It’s very exciting”

Is it a good time to be in the private lending space? I believe it’s an excellent time. There’s a lot of opportunity. There’s a lot of cash flow, and there’s a lot of money in the market. Recent rule changes … in the real estate market have opened up huge opportunities for private lenders. Clients that used to be bankable, because of these rule changes, are now our clients. Because of this, we have a higher-quality client than we used to.

What are the challenges or opportunities for private lenders right now? Certainly there are challenges relating to the Prairie provinces with regard to valuations. There’s some economic instability with what’s happening in the real estate market. Valuation is key. Depending on where you are – specifically, for us, Alberta, Saskatchewan and Manitoba – we’re watching those markets very closely. That doesn’t take away from markets in Ontario and British Columbia – especially in Toronto and Vancouver – that are very hot. Those high-priced, expensive homes can drop dramatically in price when things go sideways. So valuation across the board is probably what keeps me awake at night, along with some of our own regulatory changes in the mortgage investment world.

Brokers not pushing back on interest rates

There is pressure for private lenders to lower interest rates, but it isn’t coming from brokers, according to one player in the space. “We’re not necessarily getting pushback from the brokers in terms of our pricing, but we have lowered our pricing in the last year,” said Rajan Kaushal, president of Tribecca Finance Corp. “We’ve done it to be as competitive as we can be – because there is a lot more competition in our industry.” That translates into as much as 1% to 2% on a typical product, Kaushal told MortgageBrokerNews.ca.

What should private lenders focus on to position themselves for future success? There was a time when we would just rely on our appraisals. But almost every deal we do now in the residential side has a Realtor’s current market value as well. A current market value is just that – a current value based on historical trends and data – whereas we need to look at what’s happening going forward, and a lot of our local Realtors can provide information about those communities at a grassroots level. So we really rely quite heavily on local Realtors.

What’s the most important thing going on in private lending right now, in your opinion? It’s pretty cool to see a change in the mortgage broker’s mindset. From 2002 to 2008, they were very much ‘A’ brokers, pushing big banks. Now they really understand the value of having some professional private lenders in their back pocket to rely on. It’s a very important product that they can provide to Canadian mortgage consumers. We’re not the lender of last resort. Private lenders – sophisticated, formal private lenders like Fisgard – are an integral part of their mortgage business. It’s opened up opportunity to thousands of mortgage brokers all over the country.

Private, alternative lenders educating consumers

After years of pressure from Ottawa to create more fiscally responsible Canadians, the alternative lending space is stepping up. While providing loans to those who are being turned away from the prime space, they’re also teaching these clients to become better money managers. “Credit is money,” said Christine Xu, a mortgage broker, private lender and advisory council member at Mortgage Architects and MoneyBroker. “If you keep a good credit rating, you can have access to cheaper money.”

New hope for ‘hopeless’ clients?

Clients once considered to be beyond help for mortgage loans are now within reach, thanks to new credit repair options. Brokers are boning up on legitimate debt settlement and abatement programs and the benefit they present for all parties involved. “If you are a broker and your customer has bad credit, what do you say to them?” said Jayson Zilkie, director of sales at Refresh Financial. “The only thing you [could] do is tell them, ‘Go get a secure credit card and come back to me in a year.’ We know that just doesn’t work, and it isn’t effective.”

www.mortgagebrokernews.ca

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UPFRONT

OPINION

GOT AN OPINION THAT COUNTS? Email mortgagebrokernews@kmimedia.ca

Low appraisals not the problem Canada’s housing market might be on the up-and-up, but lenders still prefer more conservative appraisals, making refinances difficult. But that’s not what’s costing brokers business, writes Dustan Woodhouse PROBLEMS WITH a property’s appraised value rarely arise with a purchase, which is typically a clear representation of fair market exchange. Instead, issues tend to come about more consistently with refinance transactions, the valuations for which involve opinions, metrics based on past sales and speculation about what an informed buyer might be willing to pay. Nailing down fair market value in a refinance is, by definition, more difficult. We have the speculation of the client, the speculation of the broker and the educated analysis of the appraiser, who must stay within industry standards for valuation. Often in a refinance transaction, arriving at a specific value is the linchpin holding the file together. But you’re not likely losing clients over appraised value. There are always exceptions, but in 99% of cases, the broker lost the file when he or she lost control of client expectations. You know the adage: Clients view their homes as mansions; lenders view them as woodsheds. The broker must balance the reality prior to an appraisal and avoid viewing value solely through the lens of ‘what it takes to make the deal work.’ I always inform clients that the appraiser is chosen by the lender, who will prefer a slightly more pessimistic valuation. Real estate agents will likely advise clients that the property is worth more, but appraisers cannot use current listings as comparables, only completed sales.

So what’s a broker to do when the value comes in lower than anticipated? Again, manage expectations. Before informing the client, it’s a good idea to have an intelligent and polite conversation with the appraiser to understand their valuation. At the very least, you will come away with key points to pass on to your client. Perhaps the home would benefit from a massive clean-up, or maybe it backs onto a

the broker to temper the client’s expectations. Often, all you can do as a broker, especially in a heated market, is wait for some completed comparable sales. Those completed sales will give the appraiser the ammunition he or she needs to find a value closer to the magic number you and your client were expecting. Still, brokers should avoid begging for or demanding that number. Many appraisers will tell you that, when there are challenges to a property’s value, it is consistently the same brokers calling and pleading for more value. An appraiser is not left with any material reason to continue a conversation with a broker who ‘needs’ a certain value. Neither a client’s nor a broker’s needs are a fundamental component of the market valuation. It’s also a good idea to consider an appraiser’s qualifications – among them, a four-year undergraduate degree, a two-year appraisal program and one year of postgraduate articling. That’s compared to most brokers’ armchair appraising and many homeowners’ ‘having lived in that house for 20 years.’ Before you enact a war over appraisals, think about these qualifications. You also can use the online valuation tools

“Often in a refinance transaction, arriving at a specific value is the linchpin holding the file together. But you’re not likely losing clients over appraised value” cemetery that you hadn’t noticed before. Communication is key. Sometimes there are steps clients can take; other times there aren’t. Relaying an appraiser’s suggestions to your client will likely take the shape of a difficult conversation. However, in my experience, it’s also resulted in, for example, a 40-foot trash bin being dropped on the client’s driveway and loaded to the brim before asking the appraiser to revisit the property. In some cases, client expectations have been skewed by an earlier – and more generous – appraisal. In other instances, the client’s expectations are set soaring by media reports of a skyrocketing real estate market. But is there demand for the client’s specific type of property in that particular area of the city? Again, it is up

available to you. These reports, such as the MLS, provincial assessments, Purview and – in BC – Landcor, can offer perspective for you and your clients. The reality is that the individual with the most education and the most experience – that is, the appraiser – is the definitive authority. Take your clients’ claims of fair market value with a grain of salt, do your own research in advance and, more than anything else, manage expectations.

Dustan Woodhouse, a mortgage broker since 2008, has ranked on CMP’s Top 50 Brokers list since 2010, most recently sharing the number 8 spot, the result of $100 million in annual mortgage volume for 2014.

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www.lendwisemortgages.com www.lendwisemortgages.com 05/10/2015 11:13:22 AM

7/10/2015 6:01:05 AMAM AM 05/10/2015 05/10/2015 11:13:22 11:13:22

PEOPLE

INDUSTRY ICON

THE WAY FORWARD Invis Mortgage Intelligence took home the 2015 CMA award for National Broker Network of the Year – and quite understandably, CEO Cameron Strong has some ideas about how the industry will evolve

CAMERON STRONG, CEO of Invis Mortgage Intelligence, comes from the accounting world – and it was that industry that helped him recognize the potential of the mortgage industry. “I received a call from the Institute of Chartered Accountants, and they identified the mortgage broker industry as an emerging trend – they identified it early, back in 2000,” Strong says. “I was intrigued, and without knowing much about it at first … [I] began to research this opportunity. I had no fear of start-ups, and the principals were serious. We began an enterprise that we believed would benefit the consumer greatly.” Despite his limited experience with the industry, Strong jumped right into the role of CFO with what would eventually become Invis Mortgage Intelligence, one of the country’s largest mortgage brokerages. “I liked the concept; I liked the idea of giving Canadians choice and education,” he says. “I thought there was a real lack of that in the marketplace 15 years ago.” A decade and a half later, Invis Mortgage Intelligence is still going strong. When your company is recognized at the Canadian Mortgage Awards not just as Broker Network of the Year, but also for Best Marketing Effort of the Year, people take note.

Industry evolution Having been on the frontlines as the industry has grown, Strong has some ideas about how it will continue to evolve. One trend he believes will continue to define the industry is consolidation among the large mortgage brokerages. “I would predict definitely more consolidation of mortgage broker firms – Mortgage

array of insurance products, both creditor life and property and casualty products. [We] started down this path 13 years ago.” A number of other major broker networks are also offering their own diversified product options, including consumer credit, insurance and bank accounts. And all these extra products and services are drawing more attention to the industry, Strong says.

“I would predict definitely more consolidation of mortgage broker firms ... Declining margins for houses, heightened compliance requirements and rising technology costs will push firms to consolidate” Architects and Mortgage Centre are recent examples of sales in progress or completed,” Strong says. “Declining margins for houses, heightened compliance requirements and rising technology costs will push firms to consolidate.” And those broker networks will continue to offer more products that just mortgages, Strong argues. “Mortgage firms will continue to diversify. In our case, we are positioned with a deep

“Mortgage brokers may achieve recognition as a profession recognized by other legitimate professional bodies,” he says. “Mortgage brokers have all the same quantum of liability that other professions do, provincial regulatory bodies to account to and are meticulous in their work – so a designation that is earned is inevitable and deserved as the channel evolves.” As the industry has evolved, so too has the modern mortgage broker.

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PROFILE Name: Cameron Strong Company: Invis Mortgage Intelligence Title: CEO Years in the industry: 15 Career highlight: “Invis Mortgage Intelligence winning both the CMA for Best National Broker Network and Best Marketing Effort in our 15th year, and my being present to accept the awards, along with a large group of brokers and staff. The atmosphere in the room was electric and euphoric!” Career lowlight: “The passing of Dave Nichol, one of the original founders of Invis, in April 2008. It was his lingering vision, pioneering spirit, warmth and passion for the brokers and staff that inspired all of us in the company to continue to achieve greater heights and later merge with Mortgage Intelligence.”

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PEOPLE

INDUSTRY ICON CAMERON STRONG’S CAREER TIMELINE

“I’m pleased by the calibre of people who are being attracted to the industry,” Strong says. “We’re seeing many more educated, younger people coming in who are social media savvy. That’s going to help them hugely – having the education behind them.”

resonates with potential clients. “Mortgage brokers, like all small businesses, want to grow their business by finding ways to bring in new customers,” Strong says. “Many leverage existing networks, referrals and networking. Finding the time to invest in these activities is a big

“Using online interfaces, we are giving Canadians calculators, planning tools, blogs about new homes and videos on many, many subjects – more information than ever before” Tapping into the next generation As for how the industry will continue to grow, Invis Mortgage Intelligence has homed in on millennials and is aggressively targeting them through the mediums most utilized by this tech-savvy generation. To help with that, Strong takes cues from his three sons. “Mortgage brokers have evolved from rate shoppers to trusted debt and home advisors,” he says. “The 18- to 34-year-olds – 85% of them own a smartphone in Canada. They access the Internet more through their phone than via a computer.” For the past two years, Invis Mortgage Intelligence has been teaching its brokers how to advertise to and become a trusted advisor for millennials through social media by using blogging, their corporate Facebook, their own websites, Twitter, Linkedin and Youtube. “Using online interfaces, we are giving Canadians calculators, planning tools, blogs about new homes and videos on many, many subjects – more information than ever before,” Strong says. Indeed, it’s no secret that brokers have taken to social media as part of their marketing initiatives. It’s cheap, it’s effective, and it helps them cultivate a brand that

challenge.” The Internet will continue to be a great way to reach clients. According to a consumer sentiment survey conducted by CMHC this summer, online research is the most popular method homebuyers use to gather mortgage information; 78% of consumers search online prior to attaining a mortgage. Of those, 56% accessed lender websites, 24% visited broker websites and 15% used both. What’s more, 20% of Canadians searched through mortgage information through social media channels such as Facebook, LinkedIn and YouTube. While there are reasons to be optimistic about the future of the industry, it also faces its share of challenges. According to Strong, the main frustrations brokers face are challenging lender policies and response times. Indeed, brokers have aired those same complaints recently, and many have argued that lenders are understaffed. That, coupled with the busy season, has forced many industry players to wait longer than usual for deals to close. In today’s increasingly competitive market, everyone from brokers to the heads of major networks agree that the industry needs to address these issues.

1986 Is certified as a chartered accountant

1990-2000 Holds CFO positions in pharmaceutical, data and automotive companies

2000 Joins Invis as its CFO

2008 Leads a management and broker buyout to purchase Invis from HSBC

2008 Becomes chairman of the board and a director when Invis merges with Mortgage Intelligence

2012 Earns a Chartered Professional Accountant designation

2013 Promoted to CEO

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FEATURES

COVER STORY: LENDERS RESPOND

LENDERS RESPOND Last month, we asked brokers how they felt their lenders were performing, and many had some sharp criticism. This month, we invited lenders to respond to that feedback

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LAST MONTH, we reported on the results of our ninth annual Brokers on Lenders survey. In that survey, we asked brokers to rate their lenders’ performance in several key areas. We combed through hundreds of ratings to find out how lenders were performing in 10 key areas:

Turnaround time Underwriter support Overall service levels Interest rates BDM support Product range Satisfaction with credit policy Broker support IT/technology Transparency of commission structure

This month, we wanted to give lenders the opportunity to respond to the survey, so we reached out to them for their input. Several lenders wanted to let brokers know their thoughts on the survey results. The big winner this year was Lendwise, which placed first in seven categories. Boris Bozic, founder and CEO of Lendwise and Merix Financial, said the company was honoured by brokers’ support. “We are very pleased with our results in this year’s survey and want to thank our supporters who took time out of their busy schedules to cast votes on our behalf,” Bozic said. “This is a reflection of the extraordinary group of people we have the privilege of doing business with, who support both Merix and Lendwise. Both brands have experienced tremendous growth in the last 12 months, and a Lendwise victory is a Merix victory, as both brands have the same people, same policies and same products. Placing first in seven categories is not only a

reflection of our efforts, but also a reflection of the depth of our working relationship with our supporters. We are humbled and forever grateful for their support.” RMG also made a good showing, earning medals in six categories. “The six medals in various categories that RMG earned this year are indicative of the successful team approach used,” said Bruno Valko, RMG’s director of national sales. “Our main driver is brokers, and they remain the centre of our focus in everything we do. We appreciate the brokers’ recognition of our efforts and thank them for their ongoing support.” Home Trust, meanwhile, was one of the top alternative lenders in the survey. “Home Trust is honoured to be recognized as a top alternative lender by those whose opinions matter most – our partners within the broker community,” said Pino Decina, executive vice president of residential mortgage lending at Home Trust. “Everyone at Home Trust is grateful for this continued support, and I would like to express my personal gratitude to the many brokers who turn to Home Trust each day as they help Canadians realize their homeownership dreams.” Decina also said that even though Home Trust was recognized as one of the top three alternative lenders, the company is still striving to improve its service. “[This] has proven to be a pivotal year for Home Trust, capped by the launch of our HIP+ initiative earlier in the year,” he said. “HIP+ is a total transformation of our processes and systems. The goal of HIP+ is to position Home Trust to not only better serve our broker partners today, but also well into the future. Of course, any major change can lead to short-term hiccups, and we appreciate the patience brokers have

A NOTE FROM BRIDGEWATER BANK Bridgewater Bank sends sincere congratulations to all the lenders who made a strong showing in the 2015 edition of the CMP Brokers on Lenders survey. We are pleased to have received an honourable mention, having received better than average scores in several categories. Since we are 100% broker-focused, we are happy to know our hard work has been noticed, and we are thrilled to learn our efforts are benefiting our broker partners by helping them close challenging alternative deals faster. We spend a great deal of time listening to the broker community to understand what works and what they need from an alternative lender. With our Gateway Mortgage Program, we have reduced turnaround times for those more difficult deals, and with our 3-2-1 prepayment charge, we have made it easier to understand how the charge is calculated. Customers also can switch lenders with no penalties or fees once construction is completed with our Gateway Draw Partner Program. The entire team at Bridgewater Bank looks forward to continuing to work our partners to meet their needs by soliciting feedback and refining our operations based on that information.

www.mortgagebrokernews.ca

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News

InternatIonaL

FEATURES

u.s. COVER STORY: LENDERS RESPOND 90.6%

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 demonstrated as we work to complete this transPercentage of that home prices will keep falling. Sales are also previously thought. formation. On behalf of every one at Home Trust, homeownership being hurt by a decline in first-time buyers, who The private trade group says sales rose four per please accept my thanks for your understanding costs, including are critical to reviving the housing market. cent in October to a seasonally adjusted annual rate of and onceThat’s againbelow making the homes mortgage payments, Sales have fallen in four of the five years 4.42 for million. theHome roughlyTrust six million utilities and property number-one volume alternative since the housing boom went bust in 2006. a year that economists say arelender.” consistent with a healthy taxes that take up a Declining prices and record-low mortgage rates housing market. But it’s ahead of 2008’s revised sales, typical household’s haven’t been enough to boost sales. now considered the worst in 13 years. TURNAROUND TIME monthly pre-tax At the same time, home construction has The trade group revised its sales from 2007 to 2010 Brokers rated lenders’ performance on turnincome in Vancouver begun a gradual comeback and should add to the down 14 per cent, from more than 20.6 million to nearly around time as merely satisfactory. With an and Toronto, economy’s growth in 2011 for the first year since 17.7 million. Among the reasons for the lower figures, average of 3.71 out of a possible 5, lenders respectively (RBC the Great Recession began in 2007. Last month, the Realtors group says: changes in the way the Census scored ondata, turnaround time than Economics Housing builders broke ground on an annual rate of Bureau lower collects population shifts andany some sales Trends and other except IT/technology. Lenders 685,000 homes, the government said recently. being category counted twice. Affordability Report) did perform marginally better the categoryand That was a 9.3 per cent jump from October and The Realtors consulted withingovernment the fastest pace since April 2010. private experts, including the Federal Reserve, than lasthousing year, but that marginal improvement Most economists say home prices will keep the Department of Housing and Urban Development, didn’t seem to impress brokers, a third of falling, by at least five per cent, through 2012. the Mortgage Bankers Association, the National whom pointed to turnaround time as the main Many forecasts don’t foresee a rebound in prices Association of Home Builders, mortgage giants Fannie Boris Bozic, Lendwise area where they’d like to see lenders improve in until at least 2013. Mae and Freddie Mac and CoreLogic, a California-based the months. The high rate of foreclosures has made datanext firmsix that first raised doubts about the annual Lenders got the loud and clear. resold homes cheaper than new ones. The numbers earlier this message, year. Home Trust – has which scored below theRealtors overall group median price of a new home is roughly 30 per CoreLogic estimated that the cent above the price of one that’s been occupied overstatedatsales least 15 per cent. category in next year’s survey.” aggregate 3.24in–2010 said by it at was serious about before – twice the normal markup. Investors are The changing numbers could affect how economists bringing that score up. view the trade group’s data. It could also affect companies “Home Trust is very aware of the importance UNDERWRITER SUPPORT taking advantage of the discounts. The housing market is struggling even that use the figures for hiring and expansion plans. of this category, and improving our turnaround Brokers thought their lenders were doing as the broader economy has improved in Sales are measured when buyers close on homes. time is a specific goal of the HIP+ recent months. But many deals are collapsing beforeinitiative,” that point. fairly well when it came to underwriter the company said. said “We’ve made several support; they rated lenders at an average of The economy grew at an annual pace of two One-third of Realtors they had at least one contract enhancements to up our internal processes 3.89 out of a possible 5, the third-highest of per cent in the July-September quarter. Many scuttled in October, from 18 per cent in September. economists expect slightly better growth in the Contracts are being cancelled for several designed to reduce turnaround times, and wereasons: any category. The big winner in this October-December quarter. CMP Banks have declined mortgage applications; home fully intend to win the highest approval in this category was Lendwise, which snagged the

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gold with a score of 4.39. “Taking home gold in this category is a reflection of our company-wide commitment to provide our supporters with exceptional service on every level,” Bozic said. “A willingness to work with customers regardless of deal structure is what sets one lender apart from another. Our underwriting team has grown, and our support levels have grown with it.” That’s not to say all brokers thought their lenders’ underwriting was perfect. Many survey respondents said their lenders’ underwriting practices needed work – and lenders agreed. While Home Trust scored fairly well in the category, the company said it had plans to improve underwriting even more. “We are proud of the dedication and professionalism of our underwriting teams. At the same time, we know that the role of the underwriter is, at its core, a service-based role, and accessibility is a crucial element in delivering service excellence. To this end, we have developed new procedures and redefined associated roles in order to streamline efforts to increase the availability of the underwriting team.” Equitable Bank, meanwhile, was justly proud of its score of 4.10 out of 5. “It’s most rewarding to have our broker partners recognize the underwriter support they receive from Equitable Bank,” said Brian Leland, Equitable Bank’s vice president

of residential credit. “In an increasingly challenging brokering and lending environment, Equitable remains committed to providing consistent, knowledgeable and responsive underwriting support to find solutions to work through deals together.”

OVERALL SERVICE LEVELS Lenders are also doing a satisfactory job when it comes to overall service levels, averaging 3.78 out of a possible 5 – but that was still the thirdlowest rating out of the 10 categories. Many survey respondents sharply criticized their lenders’ service levels, complaining that ignored emails and unreturned phone calls were all too common elements of dealing with lenders. Frankly, this was a sore point for many brokers. Several lenders ended up with ratings barely above 3.10, and one lender’s average didn’t even make it to 3. Clearly, many brokers think service levels need work, and lenders realize this. Home Trust, which scored a 3.45 in the category, vowed to raise that score on next year’s survey. “While overall this year’s survey is a very positive result for Home Trust, we recognize there is work yet to be done,” the company said. “As such, these survey results will help inform our continued efforts to improve on our offering, and it is our collective goal to increase next year’s survey scores.”

Equitable Bank, which handily beat the average with a score of 3.98, said its focus on service was a core reason for its overall success. “I feel this category encapsulates many of the other lender attributes reviewed by the brokers, and to have been recognized so strongly by our broker partners is very rewarding,” Leland said. “Our commitment to the broker channel and responding to what our broker partners need to run a successful business remains our top priority.”

INTEREST RATES Brokers seemed pretty satisfied with interest rates overall this year, rating lenders at an average of 3.85 out of 5. Home Trust – the top-scoring alternative lender in this category – said good interest rates, while important, were just part of the package. “Home Trust certainly understands the importance of competitive interest rates, and it is gratifying that our broker partners recognize our ability to offer some of the industry’s best rates. However, rates are just part of the total solution needed by our brokers to serve their clients, and we remain committed to continuous improvement in all categories.” Lendwise once again earned the gold in the category. “We are dedicated to maintaining compet itive interest rates and are honoured to place

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FEATURES

COVER STORY: LENDERS RESPOND

first in this category,” Bozic said.

BDM SUPPORT Lenders did very well overall when it came to BDM support. Brokers rated their lenders at 3.99 in the category – the second-highest rating lenders achieved, and a tie with 2014’s performance. Lendwise earned yet another gold in this category, an accomplishment Bozic attributed to the talent and work ethic of the company’s BDMs. “We have made a commitment to our business partners to provide them with the best possible support,” he said. “Two of the most important qualities that our BDMs have are hunger and humility. They always want to do more, but if a mistake is made, they’re the first

to raise their hand and take respon-sibility. Our BDMs genuinely care about their customers and always look for innovative ways to help grow their businesses. It is truly an honour for our BDMs to win gold in this category, and we will continue to strive to provide our supporters with the best possible service.” Equitable Bank also blew past the average in this category, scoring a 4.29 out of 5. “Our strategy and focus in the value proposition we offer to brokers appears to be wellreceived by our broker partners,” said Harry Singh, Equitable Bank’s director of national sales. “Developing cohesive relationships with our brokers by going deep and wide has proven to be mutually beneficial and leads to long-lasting relationships.” Home Trust also scored well in the category. “Home Trust is very fortunate to have some of the industry’s most knowledgeable BDMs,” the company said. “Many of our senior people have decades of industry

4.29 out of 5. “We try to be clear and open about our product range across our brands,” Bozic said. “Placing first in this category means we are able to provide mortgage solutions for all types of homeowners. We want to help our supporters grow their businesses and partner with them to find the right solution for each customer.” With a score of 3.84, Home Trust comfortably beat the average score, and took the top score among alternative lenders in this category. “We are delighted to have earned the top honour in this category, as it reflects the efforts Home Trust has made in recent years to expand our product offering,” the company said. “While Home Trust is widely known as an alternative lender, we also have products for prime clients, as well as financing options for residential renovation and commercial construction projects.”

Any major change can lead to shortterm hiccups, and we appreciate the patience brokers have demonstrated as we work to complete this transformation” Pino Decina, Home Trust experience, and in this era of constant change with mortgage rules, our BDMs’ experience will help brokers navigate these changes. In recent months, we have realigned territories by geographical location to make BDMs more accessible and build further on existing relationships.”

PRODUCT RANGE When it came to product range, brokers were pleased with lenders overall, awarding them an overall score of 3.81, although they definitely saw room for improvement in some cases. Lendwise once again dominated in this category, chalking up an average score of

Equitable Bank, which scored a respectable 3.71 in the category, said it was committed to offering a wide variety of products. “Equitable Bank recognizes that a onesize-fits-all solution does not always work for brokers,” said Kim Kukulowicz, vice president of sales and partner relations. “Each client’s needs are different, and we look for ways to provide appealing, flexible products designed to meet the needs of our brokers and our brokers’ clients. Beyond our alternative mortgage product offering, our HELOC/ mortgage combination product and Prime Evolution suite of products enhances and expands the range of products our broker

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partners have to appeal to their clients.”

SATISFACTION WITH CREDIT POLICY Lenders also did well when it came to broker satisfaction with their credit policy, scoring an average of 3.80 in the category, significantly higher than their 2014 performance of 3.73. Lendwise was pleased with its first-place finish, but also acknowledged that credit policies can be tough to deal with. “We are proud to place first in this category, but the real praise rests on our mortgage brokers; they’ve been extremely patient under the reality of today’s credit policy environment,” Bozic said. Equitable Bank also wrecked the curve for

We are thrilled to learn our efforts are benefiting our broker partners by helping them close challenging alternative deals faster” Bridgewater Bank many other lenders, handily beating the average with a score of 3.89. “Together, brokers and lenders are working in an increasingly complex operating environment, trying to find the perfect balance between meeting regulatory requirements

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FEATURES

COVER STORY: LENDERS RESPOND

work, are recognized and appreciated.” Brokers still saw room for improvement from many lenders, however. The good news is that finding ways to serve underserved borrowers is becoming increasingly important to lenders – especially those on the alternative side. “It has been almost 30 years since Home Trust redefined mortgage lending for those underserved by the major banks. We take great pride in this fact,” the company said. “We also take great pride in our ability to adjudicate each deal on a case-by-case basis. Our goal is to, wherever possible, work with the broker to arrange a positive result for their client.”

BROKER SUPPORT While brokers were basically satisfied with the support they receive from their lenders, this year’s average of 3.85 did present a slight decline from last year’s score of 3.87. Obviously, this is an area that’s important to brokers, and they weren’t shy about calling out lenders that they felt were falling short. Many lenders, however, were well-regarded by their brokers in this area. Lendwise took home yet another gold in this category with a score of 4.39. “Winning gold in this category means we excelled in many disciplines, ranging from sales to credit, from compensation to servicing and everything in between,” Bozic said. “We

Our main driver is brokers, and they remain the centre of our focus in everything we do. We appreciate the brokers’ recognition of our efforts and thank them for their ongoing support” Bruno Valko, RMG believe that this is the most important category for our supporters. We are dedicated to maintaining our high level of broker support and helping our business partners grow.” Equitable Bank, which also received an above-average score, said it shows its commitment to broker support through numerous tools and programs to help brokers do their jobs better. “With our depth of knowledge in the industry, we’re able to directly engage with our partners to help grow and enhance their

businesses through meaningful sponsorships and educational programs, ranging from complimentary Broker Sales Tool Kits to educational YouTube videos and ongoing seminars during the year,” said Susan Carter, senior director of marketing, communications and investor relations. “Popular networking opportunities for brokers include our broker appreciation events and family and cultural days, in addition to supporting industry-wide events.”

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FEATURES

COVER STORY: LENDERS RESPOND

category – just 3.63 out of a possible 5. That’s a significant jump from last year’s score of 3.53, but brokers feel there’s still room for improvement. Not too many respondents mentioned technology as their biggest concern, but lenders are still making it a priority. “We are making significant enhancements to Gateway – our broker portal – and expect to have these in market by early 2016,” said RMG’s Valko. Home Trust, meanwhile, is launching its own online portal. “Home Trust is currently implementing a web-based broker portal,” the company said. “This new utility, which is expected to be released in beta form for the November 15th CAAMP conference, will dramatically improve the way we communicate with the broker community. The portal will also

make it easier for brokers to upload supporting documents and to access in real time the updated status details on all submitted deals.”

TRANSPARENCY OF COMMISSION STRUCTURE Brokers rated their lenders higher on the transparency of their commission structures than any other category. Overall, brokers seem to feel that most lenders’ compensation models are fair and well-designed. Still, this year’s average score of 4.03 was quite a slide from 2014’s score of 4.14, and not all brokers were happy with the way their lenders are structuring commissions. Some lenders are taking note. Lendwise scored a 4.54 in the category – the highest individual score of any lender in any category.

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“We are proud to finish first in this category and will maintain our efforts to uphold a high level of transparency in our commission structures,” Bozic said. Although it was the highest-scoring alternative lender in this category, Home Trust said it was still making improvements to its commission structure. “Taking the top score in this category speaks to the importance Home Trust places on operating in a fair and open manner,” the company said. “Later this year, we plan to further enhance our broker compensation structure with the addition of a broker loyalty program that will equally reflect Home Trust’s commitment to transparency and overall support of the broker channel.” FSCO Brokerage License #10119 FSCO Administrator License #11209

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FEATURES

DEBT SETTLEMENT

Is Bill 55 working? Five years in the making, this bill addressing debt settlement practices has finally become law. Now, three months in, are the new rules benefiting consumers? Josh Balner, owner of Strategic Credit Solutions, explains

ON JULY 1, the Ministry of Consumer Services Protection Branch wrapped up five years of deliberation on Bill 55, “an Act to amend the Collection Agencies Act, the Consumer Protection Act 2002 and the Real Estate and Business Brokers Act 2002 and to make consequential amendments to other Acts,” implementing it into law. The legislation is meant to address mounting concern about the legitimacy of the debt settlement practice and define this growing market as its own industry. The truth about debt settlement is that it is the most beneficial way to reduce balances on outstanding collection items and judgments for a very specific candidate: those with some equity in their home or the ability to raise a lump sum. While extremely beneficial for consumers with the access to lump sums of money, this structure is detrimental to a vast majority of people: those without the means to raise between 40% and 80% of the total debt load.

The danger of consumer proposals Although arguably the most practical solution for homeowners, debt settlement was veiled within the mortgage industry by the presence of unlicensed companies and the prevalence of alternatives like consumer proposals and credit counselling. According to Consumer-Proposal. org, the number of consumer proposals filed has been steadily rising on an annual basis

since 2007, up to 53,000 filed last year, while bankruptcy enrolment has been steadily declining, down to just over 60,000. Some may construe this as a favourable trend; however, most consumers have a very limited understanding of the consumer proposal process, and end up hastily agreeing to often unfavourable conditions. What the majority of Canadians don’t know is that a consumer proposal has a very similar effect to a formal bankruptcy on their credit, lasting three years beyond the date of the last payment made on the proposal as a public record item for up to eight years. In addition to the adverse effect on credit, if the consumer has a home or any other form of tangible asset, it must be claimed and will adjust the cost of repayment to the creditors. In certain cases, filing a consumer proposal as a homeowner will result in creditor repay ment to 100% of the debt on an interest-free payment plan. Consumer proposals like bankruptcy, credit counselling services and debt settlement are a niche solution, primarily for those without any assets. For mortgage professionals electing to service the high-risk segment of the industry, sourcing money from private investors and high-risk institutions can be costly to their clients, often causing them to lose faith in their representative and seek alternative advice. To present the client with a more appealing

solution, some of these brokers have been undertaking negotiations on behalf of their clients to offset the costs. Bill 55 has removed any ambiguity on the matter, and now more than ever, it is important for these mortgage professionals to be cognizant of legitimate debt settlement programs and the benefit they present for all parties involved.

Debt settlement basics In the face of more stringent lending legislation, fear of rapid inflation and no foreseeable end to high consumer debt, it seems the demand for debt rescue programs will continue to grow. It has been widely speculated that debt settlement is the solution to an economy plagued by inequality, as it allows sizeable relief for a debt-riddled consumer, while allowing the creditor to recover a large percentage of their losses within 30 days. A well-coordinated debt

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IS DEBT SETTLEMENT RIGHT FOR YOUR CLIENT? There are a few quick and easy questions that can determine whether debt settlement is the most viable option for debt-laden consumers:

In the face of more stringent lending legislation, fear of rapid inflation and no foreseeable end to high consumer debt, it seems the demand for debt rescue programs will continue to grow settlement results in a consumer who begins their credit rehabilitation immediately after paying a substantially reduced amount to their creditors, making them a suitable candidate for credit or placement with a conventional low-interest mortgage within a year. Finding a reputable debt settlement company can prove to be the most challenging task facing a mortgage broker, but can again be reduced to three very important questions. First, does the company hold a licence? In Ontario, any third party that is not a barrister or trustee that wishes to engage in creditor

negotiations on behalf of another person must be licenced with the Ministry of Consumer Services Protection Branch. (The governing body varies by province.) The fees for licenced debt-settlement companies working without a lawyer have been capped at 10% of the clientsâ&#x20AC;&#x2122; total debt, a dramatic reduction from the pre-Bill 55 average rate of 17% of the total debt, reducing any potential for referral fees. The next question is one the consumer will undoubtedly pose: How is compensation earned? Are there any upfront fees, is the fee based on the total debt listed or solely

Is the consumer receiving calls from collection agencies or lawyers?

Is there quickly accessible cash through available equity in their home, insurance policies, RRSPs or holdings?

Does the consumer have any plans to rehabilitate their credit?

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FEATURES

DEBT SETTLEMENT The new legislation has finally removed the grey space that so many ‘debt experts’ have been inhabiting, and has set proper ground rules ... on a savings-only contingency base? Using a company that charges a fee as a percentage of the total debt creates a possibility – however remote – that the client might end up paying more than what he or she originally owed. Finally, if your proposed debt settlement partner uses a trust account to pool funds, be wary of the legitimacy of the company. Pooling funds is considered by many authorities to be the most dangerous way to attempt a debt settlement. Money is held in a joint account, while small contributions are made monthly

from consumers. As the pool grows, so does the interest on the outstanding debts – and the probability of the creditors litigating. Because the client has signed over the responsibility of dealing with their debts to the debt pooler, they may not even be aware that drastic measures such as garnishment, liens or foreclosures are being considered until it’s too late. This particular concern has been greatly diminished since Bill 55 was enacted, banning upfront fees and forcing most of the debt poolers to close their doors.

Like any industry, there are true authorities on debt settlement, as well as purported prophets of the credit world who have a limited understanding of the very fundamentals of this process. One thing is certain: The new legislation has finally removed the grey space that so many ‘debt experts’ have been inhabiting, and has set proper ground rules for this rapidly growing industry. As the global gap between rich and poor continues to grow, deciphering who can be trusted to represent the average working man’s interest in the economy will no doubt become much more interesting subject. Josh Balner is the owner of Strategic Credit Solutions, which has been providing informal debt settlement administered by a law firm to the mortgage industry since 2011.

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PEOPLE

PROFILE

Serving those who serve the nation Even Canada’s bravest need a mortgage broker on their side – and Jennifer Gaudet, a ‘military relocation specialist,’ has stepped up to the plate WHEN JENNIFER GAUDET decided to leave behind a career in television and radio production, it was to better provide for her growing family. Now, after many years in the mortgage business, the Nova Scotia-based broker keeps the families of her military clients top of mind when helping them find the best mortgage, whether they’ve been posted into or relocated out of the province. But the mortgage industry wasn’t exactly her first choice. Gaudet initially found a job as an assistant to a financial advisor and earned her mutual fund license shortly thereafter. “Once I became a financial advisor, I realized I liked advising people and helping people, but I didn’t like the investment side of it,” she says. “My next goal was to get a job at a bank.” Gaudet found work at Scotiabank, where she enjoyed working with people on their mortgages. From there, she earned her broker license with the intention of becoming self-employed. “I had two small children, and I climbed the ladder very quickly for being a single mom with two little kids,” she says. “But I knew I had to have the flexibility to be there for them as well.”

So she went back to the drawing board and found an underserved population: members of the military and their families. That niche made sense, especially as Gaudet lives about 10 minutes outside of the 14 Wing Greenwood military base, the largest Canadian air force base on the country’s East Coast. “I went to the Canex Mall, which is located right on the military base, and they had an office for rent,” she says. “I told them I wanted to rent that office, and that’s how it all started.” Gaudet’s office is located right across the hall from Brookfield IRP, the military’s relocation centre, and from SiSip, the military’s benefits and investment centre. The office is also sandwiched between a military barbershop and the local military museum. When military members are posted into or out of the Greenwood base, they have to visit the relocation centre – and now they usually stop by Gaudet’s office, too. “I’ve essentially created a walk-in business, which I get 80% of my clients from,” she says.

“I’ve essentially created a walk-in business, which I get 80% of my clients from”

Families first Carving out a niche Entering the mortgage market – especially in a small region like Greenwood, NS – wasn’t easy. Gaudet approached local real estate agents, but found their loyalties were already with more established brokers.

Gaudet’s shift to a military relocation specialist was hardly an accident. In fact, the idea to serve that market first came to her while she was working at the bank. Gaudet found that her clients – many of whom were military members – were more attracted to the mortgage

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OPERATING AS ONE The 14 Wing Greenwood air force base was first established in 1942 as part of the British Commonwealth Air Training Plan, and was used as a training base during World War II. Today, the base houses three of the Canadian Air Force’s operation squadrons: CP-140 Aurora Long Range Patrol Aircraft, 404 Long Range Patrol & Training Squadron, and 413 Transport and Rescue Squadron. The 14 Air Maintenance Squadron also operates out of the base. The crews stationed at the base routinely conduct sovereignty and surveillance missions over the Atlantic Ocean, and maintain rescue operations 365 days a year. The base also puts its motto (“Operate As One”) to good use, running a recreational facility, including a pool and arena, for the hundreds of military members and their families.

rates she could offer than the relationship she worked to build. That discovery certainly impacted the design of her office at the Canex Mall. The rate of the day is posted in one of the large windows of Gaudet’s storefront, effectively attracting clients to her business. She also advertises her familyfirst attitude, promising to offer clients the best advice – whether that’s with her or another broker. “Honesty and integrity are a huge part of my business,” says Gaudet, who in 2014 was named the top mortgage broker in Atlantic Canada by TD Bank. “I would rather see clients walk out the door, being given the correct information, than try to get their business when I know it’s not the right thing to do.” Specializing in the military, though, has also made Gaudet an expert in another area of mortgages: penalties. “[Discussing penalties] is the first conversation we have when they walk through my door,” she says. “[I don’t] even touch on rate until we’ve talked about the penalty.” From there, Gaudet and her clients decide which lender would be best, and then the conversation turns to the best rate available. Even outside of mortgages, Gaudet has her clients and their families’ best interests at heart. In her spare time, she manages the base’s hockey team and sponsors several youth sports teams, both on and off the base. “It’s a lot of money for parents to pay out for kids for sports, and it’s something my family and I really enjoy,” she says. “If we can give back to the community in that way, we really enjoy it.”

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SPECIAL PROMOTIONAL FEATURE

CLIENT RELATIONSHIPS

The persona process Building successful client relationships comes down to asking the one right question, writes Emily Boyce of FCT ARE YOU sitting down? aspirations well beyond what she’s PERSONA PROCESS VALUES GRAPH Recent research indicates nearly doing day-to-day – and the key two-thirds of mortgage applicants question is, is this house a means STABILITY dealing with a broker want to to an end (inexpensive enough that make a friend in the process. Louise has free time to pursue her That ‘make a friend’ statistic photography), an expression of suggests that understanding why a that creativity (will she apply her person has brought their business visual skills to add to the property to you is key to tracking the value?) or both? BELONGING INDEPENDENCE process not just to funding success, Visualize where Louise is on but also to building a sustainable the persona graph. Aspirationally referral network. (what she wants from life that So how do you do this? By she may not share in more than using the persona process – apply hints), she’s more about mastery MASTERY a little human insight into every and independence than stability client touchpoint, and you’ll see and belonging; she’s her husband’s Where to start your business grow. Clients will be quietly business partner, but she’s much more than Ask your client a question designed to elicit a impressed that you understand them and that that. story – then you analyze where that story fits on you took time to communicate on their terms. Ask one or two gentle questions about her We all speak a particular emotional simple four-way graph (shown above). aspirations, and you’ll get gold. Acting on her Humans balance four emotional consid language; client personas are shorthand for answers –Louise is now engaged by the process, that client’s most likely emotional language. erations in every decision we make: stability, not inhibited by it – you’ll not only be able to independence, mastery and belonging. The The beating heart of the process is revealing share very specific deal insights and advice hidden human factors and gently putting persona process captures the competing desires on her terms, but she’ll also see that you’re for stability (“We want this house because the those factors front and centre during the deal genuinely interested in the dream of a new granny suite is for Mom, who’s got dementia”), house as an expression of something intensely process. The persona process works because it independence (“I saved from my university personal to her. (We’re not excluding Rick or his encourages us to relate to clients by sharing job for this down payment”), mastery (“We’re hopes and dreams in this, by the way, but he’s our stories in a directed way. Software user going to rent this house when we move up”) and following his wife’s lead here.) experience designers rely on client personas belonging (“The schools and neighbours are The bottom line? The persona process just what we’re after”). to create user interfaces that actually work; builds connection. The better the human Meet Louise, 29, who’s in your office to market researchers create personas to identify understanding between you and your client, specific customer behaviours they want their negotiate her first house purchase with her the greater the likelihood that your client will husband, Rick, 31, who runs a landscaping network on your behalf for future new business. communications to interact with. The persona process uses storytelling to business. Louise is the decision-maker of the Understanding and judiciously applying two – but the key to understanding Louise isn’t engage your client’s social and emotional personas will build loyalty right into your client her financial leadership skills, but rather her patterns. With a little application and relationships. confidence born of practice, you’ll have a passion to photograph nature on weekends. She’s a visual artist masquerading as her valuable new means of connecting with your Emily Boyce is a marketing strategist of residential lending clients, and bringing home not just a deal, but a husband’s office administrator. solutions at First Canadian Title Company Limited. So now we know something key – Louise has relationship that will grow your business. Insurance by FCT Insurance Company Ltd. Services by First Canadian Title Company Limited. The services company does not provide insurance products. This material is intended to provide general information only. For specific coverage and exclusions, refer to the applicable policy. Copies are available upon request. Some products/services may vary by province. Prices and products/services offered are subject to change without notice. ® Registered trademark of First American Financial Corporation. ™ Trademark of First American Financial Corporation.

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FEATURES

LEADERSHIP

Why fearlessness often leads to failure

In this extract from their book Selfish, Scared & Stupid, Dan Gregory and Kieran Flanagan reveal how being fearless – while idealized to a great extent – can lead to sloppy mistakes and poor decisions

to settle within a short drive from where we grew up. Also, we are mostly inclined to base our judgment on past experience instead of speculating with the new, however compelling. In truth, we love to look at the adventurous road, but mostly from the comfort of the safe path. But is that such a bad thing? Can fear be a factor in achievement? And is the favouring of heroism and persistence over contrary data and good judgment actually a formula for success or simply a way to have stories told about you in the past tense? As is the case with many such questions, it kind of depends.

Fear is one of the reasons we have survived THROUGHOUT HISTORY, the headlines and accolades have always belonged to the fearless. We celebrate the heroic souls who dismiss personal safety and stride forth into the fray against odds that seem insurmountable. St. George and the dragon, Jason and the Argonauts, Odd and the Frost Giants – almost every culture has its myths and legends lionizing bravery and self-sacrifice. So, what is it that we find so enticing about bravery and fearlessness when most of us, in reality, prefer lives of relative safety and comfort?

Certainly, part of it has its origins in our evolutionary history: Adrenaline in correct doses is a highly addictive substance, hence our obsession with horror films and roller coasters. However, one of the more significant reasons the fearless are so admired is that they very much represent the outliers in the human experience. Few of us regularly seek out truly risky situations. For instance, most of us prefer job security to the unknown of the entrepreneurial lifestyle, and though many of us do travel, most of us prefer

Fear, it turns out, is actually quite a useful emotion when it is appropriately applied. An overly curious nature mixed with naivety and overconfidence can be a recipe for disaster. Sending a canary into a mine to test for the presence of gas, while cruel, is actually a pretty savvy thing to do. In this case, fear not only ensures the survival of many miners, it also increases the chances of eventual success while reducing costs – miners are rather more expensive than songbirds. What’s more, many of our latent fears – spiders, heights, water – are based on our survival; all have their origins in some pretty

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rational concerns. Where fear can undermine leadership is when it becomes paralyzing, when judgment is replaced by constant evaluation and data-seeking. The truth is, in any decision we make, we never have the complete picture or enough information. This, it turns out, is why good judgment is so critical to good leadership.

order to generate the behavioural change we so desire? How can we generate an opposite fear, one that is linked to not changing? TEDx speaker Kelly McGonigal and other health psychologists assert that, contrary to popular belief, not all stress (which is essentially a fear of possible outcomes) is necessarily bad. They further state that stressful experiences can be used to promote adaptive responses, and that individuals can be

Rebalance the fear This is perhaps the most important point. We are not advocating that you ignore your fears or throw yourself at them as part of a midlife extreme-sport crisis, nor are we suggesting they are all irrational and imaginary. What we are suggesting is that they can be useful for driving change and shifting behaviour, and this relies on shifting the balance of the fear equation from one side to the other.

Fear can be an aid to judgment One of the things that particularly defines leadership is a willingness and ability to make decisions and back them up. What this really means is embracing ownership of the results. One of the burdens of leadership is that when you do achieve success, it’s your team who won, but should failure be the outcome, only you lost. This makes good judgment one of a leader’s key accountabilities, and fear must necessarily be a part of this equation. It has us identify and weigh risks, and consider more than just the possibility of success and account for it. One of the criticisms we often make of strategic business plans is that the margins allowed for error are so slim. In other words, success is only guaranteed if everything goes exactly according to plan. Of course, this is statistically unlikely, and a far better approach is to stack the odds of success in your favour by implementing systems and processes that allow for success, even on those days when not everything goes as it should. Failure is often cited as being critical to success. But this is far more than a twee catchphrase of the eternally optimistic; it is a recognition that failure, rather than being a result, is a constant feature of the results we produce daily, and should therefore be accounted for.

See fear as a lever for positive change If we accept that fear has a lot of downsides, how can we turn this around and use fear as an asset in achieving positive change, in

One of the burdens of leadership is that when you do achieve success, it’s your team who won, but should failure be the outcome, only you lost trained to think of stress arousal as a way of maximizing performance. The long and short of it is that reframing fear as an asset can not only remove impediments to performance, but can actually serve to heighten and lift it. Fear (and its close cousin, stress) is suffering from some bad PR and really needs some rebranding. We all need reminding that sometimes fear has been the good guy, and it has certainly been a considerable asset in the armoury of social change. Rory Sutherland, vice chairman of Ogilvy Group UK, famously tells the story of Atatürk, a military leader in the then Ottoman Empire and later the first president of Turkey, who, in an effort to stabilize the food supply, added an additional carbohydrate to the mix – in this case, potatoes – flipping the fear of eating potatoes into a fear of not eating them. In fact, by decreeing them a ‘royal’ vegetable that no commoner was to eat, he ensured that not only was the fear flipped, but a desire to eat them was achieved. Rather than seeing fear as one-sided, these examples show that, by seeking to defeat or decrease the fear that was limiting them, people found that a better, or more compelling, strategy was to increase the fear on the other side of the equation.

For instance, if you are afraid to go for a jog because you’re looking a little soft around the middle and are scared that people might laugh at ‘the fat guy in tight-fitting exercise gear,’ that’s one side of the fear ledger. But if a chainsaw-wielding madman were storming through your house, you would not only jog, but hurdle, parkour, long-jump and sprint, all while dialling for the emergency services. (And if anyone did choose to criticize you at this juncture, you would happily use them as an obstacle to slow down the chainsaw-wielding maniac.) Next time you’re quaking in your boots and wishing you had picked up that ‘clinical strength’ antiperspirant, stop to consider fear not as a barrier to success but possibly as one of the most overlooked and underutilized motivators we have for driving us to success. Then set about reframing your fear. The trick is to see fear – when appropriate – as a useful tool of leadership rather than as something to avoid. Kieran Flanagan and Dan Gregory are behavioural researchers and strategists. Flanagan is chief creative officer at The Impossible Institute, while Gregory is president and CEO of The Impossible Institute.

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FEATURES

MOTIVATION

How to overcome excuses Great people throughout history have often failed, quite miserably, before finally reaching their goals, writes international business strategist Dan Waldschmidt

Not everything needs to be done in place of sleep. If you work for a boss, then you owe them solid time. You can’t cut that out. You can, however, cut out television time, meetings and anything else that gets in the way of achieving your goals. Replace entertainment with activity toward your goal.

Refuse to let yourself wallow in self-doubt

You’re alive to succeed. Stop comparing your current problems to your last 18 failures. They are not the same. You are not the same. Here’s something to remember: Your entire life has been a training ground for you to capture your destiny right now. Why would you doubt that? Stop whining. Go conquer.

Ask yourself, “What can I do better next time?”

And then do it next time. If you spend a decade or two earnestly trying to be better, that’s exactly what will happen. The next best thing toward doing something amazing is not doing something stupid. So learn from your mistakes, and use the lessons to dominate.

Proactively take time to do things that fuel your passion

Exercise is a great example. Living in the moment requires you to live at peak performance. A huge part of mental fitness is physical fitness. A sparring or running partner is a great way to refresh physical competition. Physical activity accelerates mental motivation. VAN GOGH sold only one painting during his lifetime. Winston Churchill lost every public election until becoming prime minister at age 62. Henry Ford went bankrupt five times. Albert Einstein was a terrible student and was expelled from school. Sigmund Freud was booed from a stage. Ideas, brilliance, genius – they all mean nothing without the guts, passion and tenacity necessary to make your dream a reality. But often, people fall back on excuses and give up on trying to reach their goals. Most of us have dreams – and many of us have big ones – but few of us actually see them through.

Here are six tips for jumping off the excuse train and forging the path to your goals.

Avoid the need to blame others for anything

Mean, small-minded people know that they suck. That’s why they’re so cranky and eager to point out others’ mistakes. They hope that by causing others to feel inadequate, everyone will forget how woefully off the mark their own performance is. Don’t blame anyone, for any reason, ever. It’s a bad habit.

Stop working on things that just don’t matter

Apologize to yourself and those around you for having a bad attitude Do this once or twice, and you’ll snap out of your funk pretty fast. When you start genuinely apologizing for being a bad influence on those around you, you learn to stop whining and start winning. Dan Waldschmidt is the author of Edgy Conversations: How Ordinary People Achieve Outrageous Success (www. edgyconversations.com). He is an international business strategist, speaker, author and extreme athlete. His consulting firm solves complex marketing and business strategy problems for savvy companies all over the world.

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FEATURES

FRANCHISING

Is your business suitable for franchising? With the right foundation, franchising your business can be a very effective way of expanding your reach and growing your brand quickly, according to Stefan Kazakis

WHILE FRANCHISING has slowed down in recent years from the rapid rates seen in the 1990s to early 2000s, it is an exciting method to grow your business. But the decision to travel down this route is often a more ‘bright shiny light’-driven campaign rather than a well-thought-out plan. And this, in turn, ends in failure. However, if done correctly, franchising can be a very effective way of expanding and growing your brand quickly. For well-run businesses with systems and processes, procedures and rules, franchising will provide benefits and satisfaction for all parties. However, be under no illusion. This is

not an easy path to take. Establishing a business model that can be considered for franchising has to be undertaken with education, skill, patience and, not surprisingly, capital. And I have one bonus tip that I will explore a little further in the article – you simply must have a defined target market. So, what should business owners do if they believe their business has what it takes to become a franchise opportunity? You need to be assertive but fair, and clear on the vision. Who needs to do what by when? You will continue to work harder with even greater focus. You’re accountable to other

IS YOUR BUSINESS READY? How do you know when your business is ready to be considered for franchising? Here are my top seven tips: 1 Proof of concept, establishing a franchise system

and preparing it for market can take as long as three years. The business needs to be making a healthy predictable profit – this is non-negotiable.

4 You have a predictable operations procedure with

good systems and ‘how-to’ manuals for all tasks, including testing and measuring for all activities. 5 You have a proven lead generation system that

2 The business should be making a positive cash flow

without key/critical staff being present. Having the right management structure is also non-negotiable. 3 There needs to be uniqueness – but not extreme

uniqueness. The best uniqueness is often found in a customer delight system.

delivers leads within a cost-per-lead budget. 6 You have a progressed and defined sales system to

ensure a 60% conversion on all leads, regardless of the sales skills of the person selling. 7 You have a culture of open, honest communication.

business owners buying into your vision. You must have strong ownership of the brand and the ability to share it with a new network of business owners who must and will embrace it as their own. You are OK with not having all the greatest ideas in your business, and more important, you are OK with encouraging this. You will have taken legal advice and have a franchise agreement that has been developed with an authentic reputable franchise development and legal team. The investment for this is a minimum $70,000. You will develop a training arm for all franchisees composed of internal and external consultants/trainers. You must have a recruiting system for franchisees that is more about de-selection than selection. Before anyone invests in your franchise, you need to be absolutely sure that you can define who your target markets are. You need to be clear about who will buy the product and why. You need to be able to identify them with great clarity. If you are a bookstore owner and are considering a franchised bookstore, it’s no good to simply say, “I know there are plenty of book lovers out there, so I’ll be fine.” There’s no room for vagueness, guessing, crossing fingers or hopeful estimations when it comes to this stuff. The skills and tools required to create an idea are very different from the

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earn? Are they married? Are they single? ? WHERE do they congregate in their greatest concentration? Where are they being influenced? ? WHAT is their desired Big Outcome? What is the problem you solve for them? ? WHEN is their highest level of frustration? When will they say, “I need to buy this”? One in 10 of your future clients is not ready to buy right now, but is thinking about doing so. When do they say, “Now is the time”? ? WHY will they choose you? This is one of the hardest questions to answer. Whatever your product or service, your potential ‘A’ clients have other options available to them. ? HOW do you expect them to do business with you? How do you expect them to communicate with you, contact you and correspond with you? How can they let you know they are interested in your services? Will this be online, face-to-face, over the phone or a combination? In our modern, highly connected world, it’s more important than ever to make it easy for people to interact with you and buy from you.

skills and tools required to grow market share. It’s the same for someone who is considering a coffee shop franchise in the city centre. If the extent of their strategic planning is that lots of people come into the city, and lots of people like coffee, so if they open a nice coffee shop in the city, they should be fine, then that’s not great market research. In fact, that isn’t market research at all, but you’d be surprised how often franchises get started like this. You won’t be surprised to know they don’t last long if the owner doesn’t wake up real fast. Having made the decision to franchise your business, your franchisees are going to want to know that this will provide them with a product or service that they think other people or organizations want to buy. But thinking this and knowing how and why it will happen are two very different things. At some point in their busy lives, with all sorts of other options available to them, you want people to look at the product and say, “Yes, this is what I need.” These people or organizations are referred to as

the target market, and you and the franchisees need to know exactly who they are, and how you’re going to grow and service them. Why is this so important? Because if someone is investing in a franchise, they have to focus on how they can serve your target market; they cannot be everything to everyone, or they will actually be no good to anybody.

So, who is your target market? Now that you know why it’s so important to find out who your target market is, let’s have a look at how you go about doing it. There are six questions you must be able to answer about your target market. If you can’t answer all of these questions, you won’t be able to meet the needs of this market. ? WHO is the person or organization you wish to serve? You need to be able to define them in detail. For example, ‘parents’ is not a well-defined target market. What age are they? How many kids do they have? Where do they live? How much money do they

The more you understand the who, where, what, when, why and how of your target market, the better you’ll be able to shape your franchise. So how do you tell when your business is suitable for franchising? When you know your business inside out! Your business is ready when you are not motivated by the initial capital investment of a franchisee. Ultimately, you will be ready when you already have enough money in your bank account; you will continue to invest in the training of your franchisees, ensuring the reputation of your brand and concept continues to grow relevance. The most important thing I ask my clients who ask about franchising is, “Are you ready?” Keep in mind that even the best-laid plans will result in failure if the underlying business model is not ready for franchising.

Stefan Kazakis is a renowned business strategist, sought-after presenter and founder of Business Benchmark Group. He is also the author of From Deadwood to Diamonds.

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THE CHOICE IS YOURS WITH

MAGAZINE-EMAG

WEBSITE-ENEWSLETTER-MULTIMEDIA

CMP magazine features a series of industry reports recognizing the achievements of key individuals and businesses as well as providing the latest in business best practice. Access every emag from our website or download on your iPad from the iTunes store for access anywhere, anytime.

Mortgage Broker News is an online industry hub committed to delivering the latest industry news, opinion and analysis for todayâ&#x20AC;&#x2122;s sophisticated mortgage professional. Subscribe to the exclusive e-newsletter and get up-to-the-minute broker news delivered to your inbox daily.

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PEOPLE

CAREER PATH

THE ENTREPRENEUR When Bryan Jaskolka sold his successful web development company, he turned his sights to the mortgage industry – and beyond 2014

EXPANDS TO BRITISH COLUMBIA Jaskolka also has made a point of expanding his business across the country, collecting licenses in Ontario, Alberta, Manitoba and, most recently, British Columbia

“We’ve always been more nationally oriented. We have clientele in other provinces, so it’s important to be compliant and licenced in those areas” 2015 ADDS A MORTGAGE INVESTMENT CORPORATION Jaskolka continues to look for opportunities to expand. He recently complemented the mortgage brokerage, securities arm and lending company with a mortgage investment corporation, called CMI MIC. “We’re always trying to progress forward in some capacity”

2010 OPENS CANADIAN LENDING INC. As the mortgage company grew, Jaskolka noticed the increasing need for alternative lending sources for clients. He put his entrepreneurial spirit to use once again and opened a lending division, which uses its own capital to fund mortgages for clients who don’t qualify for traditional lenders

2004

SELLS NEVIDIA TO A US COMPANY Running and owning a successful company taught Jaskolka a lot about the business world, but he learned even more when he decided to sell Nevidia to a US firm for an undisclosed amount. He left university a year later “I was very entrepreneurial. School had always been secondary”

2011

OPENS CANADIAN SECURITIES INC. Jaskolka’s business savvy perked up again just a year later, and he opened a mortgage administration arm to manage mortgage investments. That company, Jaskolka proudly explains, is one of only a few FSCOlicenced mortgage administration companies in Ontario “There were two major paths forward – growing the mortgage brokerage and growing the lending division”

2005

STARTS CANADIAN MORTGAGES INC. After leaving school, Jaskolka decided to enter the world of mortgages, starting Canadian Mortgages Inc. with three employees: himself, his father and a friend. Since then, the company has grown to a staff of more than 25 agents and brokers “I knew some people who were involved in the mortgage industry at the time, so I brought my existing skill set into the mortgage industry”

2001

STARTS WEB DEVELOPMENT COMPANY NEVIDIA

While studying at Western University’s prestigious Richard Ivey School of Business, Jaskolka started a web development and software company called Nevidia – but it wasn’t a love of all things tech that prompted him to open his virtual doors “I started it because I wanted to make money”

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PEOPLE

OTHER LIFE

TELL US ABOUT YOUR OTHER LIFE Email mortgagebrokernews@kmimedia.ca

BALANCING ACT Between looking after her family and her thriving mortgage business, Sherisse Hume finds her focus via yoga IT’S IMPORTANT to stay calm and present if you’re going to work in the mortgage industry, and for Sherisse Hume, yoga is the key to doing so. A couple days each week, Hume takes respite from her busy mortgage business for a quick yoga class to keep herself grounded. “I believe that everything I need is right here within me,” Hume explains, “so if I just tap into that, everything I need will be made available.” Indeed, Hume searches within to find the clarity she needs not only in her yoga practice, but also in dealing with difficult clients. “Ultimately, anything you come across in life is like a difficult yoga pose,” she says. “It’s no different with mortgages or dealing with difficult clients. We’re selfemployed, so you can’t lose your cool or your calm or your focus when dealing with people, even if they might frustrate you or push you beyond your limit.” HUME’S FAVOURITE YOGA POSES

dancer (natarajasana)

camel (ustrasana)

triangle (trikonasana)

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