CMP 8.01

ING END ONE LAST ROAR REVERSING COURSE A RACE TO THE TOP JANUARY 2013 / ISSUE 8.1 / $6.95

TAXING TIMES REALTORS 1, BROKERS 0

H T LIST 2013 If 2012 is anything to go by, these ‘Hot’ industry players are set to heat up 2013

WHY MORTGAGE ARCHITECTS? I’m with Mortgage Architects because they provide a business environment that allows my team to focus on our core objective: writing more mortgages. MA takes care of the day-to-day operations; namely compliance, payroll & CRM so my team can focus on sales, not administration.

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CONTENTS / ISSUE 8.1 MARKET MATTERS

FEATURES

8 | Reading between the Lines Thanks RMG for promoting brokers, writes Ron Butler.

But is there something else the industry has to do?

38 | Taxing Times If a very determined MBABC gets its way, B.C. brokers will soon have all the tax advantages of their Realtor counterparts

10 | Market Matters Rate sites aren’t the only thing going for brokers looking to win eyeballs on the web 18 | Broker to Broker Quit racing to the bottom, brokers, writes Greg Williamson, laying out an alternative to buy-downs 22 | Stats You’re either hot or you’re not, and this CMP infograph on real estate markets across Canada sums it up nicely

issue

8.1

42 | Merger Madness?

There is an alternative to joining a broker network, writes Lloyd Manning, it involves teaming up with another small – sorry, smaller -- guy

MARKETING 48 | Employee mortgage benefits program: In his latest series, Doren Aldana urges suiting up for that in-person showdown

52 | Casing the joint Learning the ins and outs of commercial brokering may mean learning from the success and the failure of others 56 | Training Twist Granted some great brokers are born, but the vast majority are made with the help of new training programs like this, writes Rich Ulvild

H T

COVER STORY

24 | CMP Hot List 2013 These industry players are set to ignite real change in 2013. At least that’s our expectation, but you be the judge

Blake Cassidy

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CONTENTS / ISSUE 8.1 COLUMNS 62 | Guest Face it, brokers, writes Paolo Di Petta. Jim Flaherty may be right and you may be wrong about the mortgage rule changes

NEWS 16 | ING Retrace Brokers have been tracking and commenting on every move ING has made over the last two years, even before news of its last roar in the channel

REGULARS 58 | Favourite Things

16

15 | Product News This month’s product and industry announcements, even before they come out of the proverbial box

Twitter.com/ CMPmagazine

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60 | Broker Profile Argentum’s Christine Xu is one tough customer, which is a good thing when all your clients are the same 64 | CMP Service Directory

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CONTENTS / EDITOR’S LETTER

THE HEAT IS ON Don’t even bother reaching for the thermostat. The heat, I’m afraid, is on for all brokers confronting a slower 2013 and the challenges now bubbling to the surface.

The hope is this packed issue of CMP will help you put out some of those fires or, at the very least, help you steer around them. That kind of fancy footwork is exactly what we expect of those on our first-ever Hot List. CMP’s Hot List 2013, to be precise.

Starting on Pg. 24, we introduce you to those industry players we expect to generate some heat of their own this year. Members of the Hot List 2013 will, if everything goes to plan, help elevate the broker channel by building on their own 2012 successes.

Note that the list is not a ranking, but the result of focus group discussion and a review of who did what last year.

Whatever else you do in 2013, don’t overlook the other features this issue has to offer, from broker reaction to ING’s departure (Pg. 16) to a how-to guide on merging two brokerages into one brawnier player (P. 42). You may need that extra muscle for the year ahead.

But 2013 promises more than brawls with road reps and an originations slump.

Nominations for the industry’s largest celebration of broker excellence – the Canadian Mortgage Awards – continue through Feb. 15 (www. canadianmortgageawards.com). That gives you time to send in your ballots for the brokers, underwriters, BDMs and others who deserve recognition.

Maybe that includes you, so don’t be bashful about mustering your own support. A streamlined nominations process is at your disposal.

COPY & FEATURES

ART & PRODUCTION

CONNECT

Contact the editor: vernon.jones@kmimedia.ca

SALES & MARKETING

NATIONAL SALES MANAGER Trevor Biggs MARKETING AND COMMUNICATIONS Julia Comitale PROJECT COORDINATOR Jessica Duce

CORPORATE PRESIDENT & CEO Tim Duce OFFICE/TRAFFIC MANAGER Marni Parker EVENTS AND CONFERENCE MANAGER Chris Davis

Editorial enquiries vernon.jones@kmimedia.ca Advertising enquiries trevor.biggs@kmimedia.ca Subscriptions tel: 416 644 8740 • fax: 416 203 8940 subscriptions@kmimedia.ca KMI Publishing 312 Adelaide Street West, Suite 800 Toronto, Ontario M5V 1R2 mortgagebrokernews.ca Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as CMP magazine can accept no responsibility for loss.

ING END One last rOar REvERsING couRsE a race tO the tOp TaxING TImEs realtOrs 1, brOkers 0

H T LIST 2013 If 2012 is anything to go by, these ‘Hot’ industry players are set to heat up 2013

Covers and Spine 2.indd 1

4 | MORTGAGEBROKERNEWS.CA

Alicia Chin

GRAPHIC DESIGNER

January 2013 / issue 8.1 / $6.95

Vernon Clement Jones

Vernon Clement Jones Rachel Naud Nestor Arellano Doren Aldana Lloyd Manning Rich Ulvild Greg Williamson Blair Anderson Paolo Di Petta Jemima Codrington

EDITOR SUB-EDITOR STAFF WRITER CONTRIBUTORS

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CONVERSATIONS / LETTERS TO THE EDITOR

LETTERS TO THE EDITOR Re: 2012 Charity Review (CMP 8.1)

Re: 2012 Charity Review (CMP 8.1)

You missed one

Thanks for the memories

The charitable review is a great idea.

It reminds us that we have a responsibility to give back because we get so much from our work in terms of income and lifestyle. We give back in our office by participating in a church lunch program in Calgary. CMP, you missed us this year, but I’ll try again for 2013.

Thanks, CMP. I enjoyed reading the contributions of other brokers that have made their communities a better place. I think the list is important because it reinforces what I know that brokers aren’t just giving back to people who are in a position to use our services.

Mortgage brokers are giving to people in the community who really need the help. So, it’s not about giving to generate leads.

Linda Martel

Doug Steeves

Re: ING Direct’s volume pooling rules (CMP 7.12)

Albert Collu

Pooh-pooh pooling

John Dearin

I am still waiting for the lenders to bonus out strictly on efficiencies.

That is what will save them money.

The heck with pooling. It is a pain in the backside, the legs, the arms and everywhere else.

A pat on the back

Jim Tourloukis

ING’s move is a step in the right direction, but in my opinion, still not enough. They should eliminate volume bonuses altogether and instead pay an efficiency bonus. This way, they are paying for performance (efficiencies) rather than throwing money away because a broker joined a consolidator (volume bonus).

Re: Eddy Cocciollo speaks (CMP 7.11)

MortgageBrokerNews.ca Reader Poll WILL 2013 SEE BROKER MARKET SHARE FALL OR INCREASE?

Fall

38%

Rise

61%

Peace to you, Eddy

Steve Gregory

Eddy is a class act. He is proof that you can be a fierce competitor while maintaining a decent, civil and balanced perspective. He is a great ambassador for your industry.

LETTERS TO THE EDITOR ARE WELCOME! Due to space considerations, priority is given to those 300 words or less. We reserve the right to edit, condense or reject submissions for accuracy, brevity, clarity, good taste and legal reasons. Writers must provide their full name, address and telephone number to verify authenticity. Please reference the article.

6 | MORTGAGEBROKERNEWS.CA

Eddy Coc ciollo

MARKET FIRST UPMATTERS / READ BETWEEN / ALL ONBOARD THE LINES

READING BETWEEN

THE LINES: Brokers rushed to give RMG a pat on the back last November for promoting their wares to consumers in a Globe and Mail ad. The initiative was all about showcasing broker expertise and ultimately the product they access.

Many see the development as just a taste of what could and should be on the menu if monolines band together and mount a long-term campaign focused on educating consumers. Still others say the RMG effort only highlights the need for brokers to step up with a marketing campaign for and by mortgage professionals.

Industry leader Ron Butler has his own ideas, with the Verico broker jotting down his take on the RMG ad, but also what must be done to lift the profile of the unsung mortgage professional.

Some more thoughts:

If mortgage brokers want to have real brand messaging they need to spend real money, which would be millions and take the approach of the insurance brokers.

CAAMP is simply not the vehicle to provide a national advertising campaign for brokers because the money that funds CAAMP’s activities come from lenders, insurers, networks and service and tech providers. It’s not even CAAMPs fault; they just have too diverse a constituency.

The industry would need a major association shift to achieve the same kind of branding the Insurance brokers have achieved and the budget is in the millions.

Rm oM G rtga ges

Naturally all adve rtising is welcome and we sh ould all thank RMG for their efforts, but as someone who advertises fo r a living I can tell you ad vertising needs to be long-t erm and consistent.

There are so ma ny different reasons brokers choose lenders and althou gh it is great of RMG to provide this advertising they may have been better off to save the money and di scount their rates a little furt her.

Think Outside the Bank.

Think Mortgage Broker.

Your family is un

ncial

needs. That’s w RMG Mortgag of fers a variety residential mor products.

hy

es

of

tgage

RMG Mortgag es works with a na tional network of inde pendent, licensed profes sional mortgage brok ers.

So whether it’s your first home, a m ove up for a growin g family or downs izing for empty neste rs,

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es has the mortgag e solution for yo u.

Rob Butrolekerr, VERICO Butler Mortgage Inc Mortgage B

8 | MORTGAGEBROKERNEWS.CA

ique.

So are your fina

Talk to your m broker or visit www.RMGmor

or tgage

tgages.ca sed

to find a licen

mor tgage bro

MARKET MATTERS / ALL ONBOARD

A NEW TRAIN OF THOUGHT

More and more brokers are expected to get onboard the rate site train in 2013, but as industry vet Blair Anderson writes, there is another marketing track to get you to online shoppers

10 | MORTGAGEBROKERNEWS.CA

The social media train left the station a while ago, but there have been many stops along the way and opportunities to climb aboard, and like shunting trains, alternate tracks are still travelled. There has never been a better opportunity, and resource, to educate the public about mortgages and our roles as financial intermediaries. Just how we choose to use social media however, is the question.

I decided to lay down one track for the Canadian residential mortgage industry and launched the social network, www.

MortgageResource.ca. First and foremost, this is not a “rate site,� which takes the parochial view that all consumers care about is rate. Rather, it uses social media to educate the consumer on all aspects of the industry and, with such a multifaceted industry, the education is invaluable.

For example, one of the first questions a

Un

banklike.

In the world of banking, common sense has become surprisingly uncommon. Rules are piled on top of rules, making life harder than it needs to be for everybody. Well, that’s not how we operate.

We strive to do right by our broker partners in a way that simply makes sense, like our new Advantage and Edge programs. We’re Bridgewater Bank, and That’s just how we do things.

Bwballstarportal.ca

MARKET MATTERS / ALL ONBOARD consumer will face is, who should I work with?

With rate sites, the answer, quite understandably, centres on rate. But there are so many key advisers along the way to getting a mortgage and closing on a purchase and if an originator can use social media to be one of those stops, I believe, they can make a vital connection with consumers without getting shifted to the rate track.

MortgageResource.ca is focused on giving professionals many opportunities to differentiate themselves and build their credibility, which can help guide the consumer to finding and choosing a suitable professional beyond picking a name from a hat. For example, every registered professional gets a profile page, which includes his or her location, company name, contact information, a short biography, links to their other social networks, education and training, professional memberships, community involvement, articles and publications, specialties, number of blog contributions, and, of course, for mortgage originators, a link to their online application form.

From the profile page, consumers can read reviews submitted by past clients and industry associates. Links to a professional’s own network of trusted partners and referral sources are also available.

But, perhaps participation in the site’s social

By actively sharing your knowledge with consumers and penning micro blogs for the site, originators effectively position themselves as the experts they are

Links to a professional’s own network of trusted partners and referral sources are also available STATS Consumers say...

A mortgage broker would be good for...

First time home buyers

68% Source: MortgageInsights 2012

12 | MORTGAGEBROKERNEWS.CA

media is the real key to really setting yourself apart. By actively sharing your knowledge with consumers and penning micro blogs for the site, originators effectively position themselves as the experts they are on the myriad questions that crop up in the mortgage process.

Each of those blog counts as one contribution, and reaching thresholds of 30 or 50 such contributions earns the professional a badge of honour, which is displayed next to his or her name in the site’s directory, and on his or her profile page.

Earning badges will also help the professional’s ranking on the site as consumers can sort directory listings by many options, including “rating.” Furthermore, active professionals will achieve additional exposure in the site’s righthand margin with the “Latest Micro Blog” and “Frequent Contributors” widgets, respectively.

Unlike other websites, there is no cost to join, and no cost for the business generated.

Consumers find and work with their chosen professionals directly. Professionals shouldn’t have to spend extra time blogging. In most cases, blog posts from the professional’s external blog will be automatically picked up and reposted to

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MARKET MATTERS / ALL ONBOARD

MortgageResource.ca. Only now they will reach a much bigger audience. If the professional doesn’t have an external blog, they can use their new micro blog and post directly from the MortgageResource.ca website. Many professionals have published videos and their own YouTube Channels, and MortgageResource.ca will provide links to both.

Today, being socially active and plugged in to the right social networks is critical. You gotta give to get. This is still a relationship business and consumers are looking to make a connection with their eyes wide open.

THE DETAILS The Due Diligence All registered professionals have been properly vetted for the consumer’s protection. Where applicable, licences will be verified with the appropriate provincial regulator, and/or self regulatory organization. This is evidenced by our suitcase icon (1). It is up to the consumer to decide which professional will represent him or her best. Using this website can help make the decision process easier.

1

2

The Challenge erson age Brokers Blair Andodcia tes Mortg Anderson Ad

ABOUT THE WRITER: One of a growing number of truly independent brokers, Blair Anderson is owner of Anderson Associates Mortgage Brokers, based in Hamilton, Ont. The 20-year industry vet is also author of the book Your Mortgage Broker, based on real-life stories and experiences collected over his time in the trenches.

14 | MORTGAGEBROKERNEWS.CA

We have challenged everyone to join, and work toward enhancing their credibility and professionalism; to impart the virtues of their service and help educate the consumer to make an informed decision. In turn, they will raise their profile, and increase their chances of doing business. In addition to the due diligence done during registration, we are recognizing all registered professionals for the contributions they make with the following badges of honour: This badge of honour (2) is bestowed on top contributors with at least 30 quality contributions. These are active professionals who share their real estate and finance knowledge and help others by contributing high-quality content. Users’ contributions can be seen in their profiles.

This badge of honour (3) is bestowed on top contributors with at least 50 quality contributions. These are active professionals who share their real estate and finance knowledge and help others by contributing high-quality content. Users’ contributions can be seen in their profiles.

MARKET MATTERS / PRODUCT ROUNDUP

PRODUCT

ROUNDUP AND INDUSTRY ANNOUNCEMENTS A bite-sized guide to the industry’s newest products as they come down the channel Who: MCAP What: An extra 10 bps commission

for deal-related expenses or marketing expenses to grow their business with MCAP. More details are available at www.mcap. com/brokers.

The facts: MCAP is aiming to kickstart

What they say: “For years MCAP has

2013 for its broker partners with an extra 10 basis points. We know, we know! That contradicts everything you think you know about lenders in 2013. But the MCAP offer is being billed as a reward for loyal brokers and a way of saying thanks

been committed to the success of the broker community with unique products and programs,” says MCAP VP of Sales Gino Tieri, “and a part of that strategy includes creating an ‘Optimal Broker Experience.' Offering an additional 10bps to our loyal brokers is our way of saying thank you and reinforcing that message.”

How it works: That extra 10bps in commission is available on all 5-, 7- and 10-year fixed, the 5-year VIP M-Power variable and Quick Close specials that are high-ratio and fully insured. Brokers are also able to earn MPoints over and above this special promotion, which can go toward business development and “creating an Optimal Customer Experience for their clientele.”

MPoints is MCAP’s business development program, which offers brokers the ability to buy down rates, pay

LAUNCHING A NEW PRODUCT?

Want to be considered for inclusion on this page, send the details to the editor: vernon.jones@kmimedia.ca

ANNOUNCEMENTS Le BDO for La Belle Province?

In a slow market, leaving Quebec alone is no longer an option for broker channel players, if, in fact, it ever was.

Radius Financial has announced Alain Rousseau as its new Business Development Officer for the Quebec & Atlantic region.

Rousseau brings over 12 years of industry experience to the job, including his stint as a financial services manager for National Bank, an underwriter and regional business manager for FirstLine Mortgages and, most recently, as an underwriter at Radius.

“Alain’s solid understanding of the mortgage broker industry, combined with his strong communication, training and presentation skills, will be a great asset for our broker partners,” says Suzanna Stefanec, Radius VP of national sales and product.” I truly believe Alain will ultimately make the Atlantic region a great success and further increase the success of our Quebec region!”

MORTGAGEBROKERNEWS.CA | 15

MARKET MATTERS / ANNOUNCEMENTS

A

TRACKING ING DIRECT MortgageBrokerNews.ca and its commenters are retracing ING’s steps over the last two years, ending in this month's final roar

Dec. 10

2011 ING Direct moves to register all new mortgages as collateral charge, following on the heels of TD and other lenders, but drawing broker criticism.

B Aug. 30

2012 Channel lender Scotiabank reaches a definitive agreement to acquire ING Direct Canada, a purchase worth $3.126 billion in cash and expected to see the big bank invest $1.9 billion.

C

Oct. 30

2012 ING Direct moves to introduce a pooling cap meant to increase efficiency, drawing positive reviews from brokers favouring those restrictions to commission cuts or the lender’s departure.

16 | MORTGAGEBROKERNEWS.CA

D

Jan. 16

2013 For some brokers, the announcement reads like a "Dear John" letter as ING Direct decides to quit the broker channel, effective Feb. 16. At the same time it makes a pitch for brokers to send their deals to its new parent company Scotia.

MARKET MATTERS / NEWS

What you had to say

A

C

Larry

I understand that the lending institutions put a lot of THOUGHT into this, however, those THOUGHTS all appear to be in their best interests and not in the clients.

It is a way of taking our clients, pure and simple and keeping them forever without having to compensate us or giving the clients the benefit of an impartial recommendation. -- GordB

I have no problem limiting the number of agents under a pooling system, provided the Lenders also understand that "streaming" or "hub" desks in those larger houses are cut as well.

B

Ron Butler

I think there is zero chance that Scotia will continue to operate ING's broker side for mortgages. The reason banks buy other banks is to reduce costs and combine departments to save money. Running two mortgage brokerage divisions makes no sense, particularily when SMA is the biggest mortgage brokerage lender in Canada.

Don C.

D

Paul Therien ING has been a great partner to the broker industry in Canada, and it is sad to see this transition happen - even though it makes sense on many strategic fronts for both Scotia and the ING Brand. The sales team, and everyone who is a part of ING, have been great and excelled at their roles.

Don C. Does this mean the "Save your money" guy is out of work?

years

x

My Status

I’m saving time.

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MARKET MATTERS / MASTER CLASS

BROKER

TO

ADVICE

BROKER

QUITTING THE RACE

TO THE BOTTOM

Greg Williamson 180 Degrees Solutions

Buying down rates is a sprint to the bottom, writes broker and trainer Greg Williamson, laying out his plan for swimming against that tide

18 | MORTGAGEBROKERNEWS.CA

O

f course I know that maybe one of the hottest topics in our industry today is about buying down rates. I can say this plain and simple, buying down rates as an entrepreneurial mortgage professional operating a one-person business or a small team is a terrible strategy.

I think, in part, the reason people get sucked into buying down rates is because they are focusing on the wrong metrics in their business.

Since the very beginning, mortgage professionals have gauged their success on their mortgage volume or, second to that, their number of transactions. I think that worked when banks’ aggressive pricing and the online rate discounters were not squeezing our margins.

I think what will work infinitely better in the coming years will be to focus on your sales conversion ratio, and most important, the dollars

Andrea Haines

Account Executive, Ottawa Region

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MARKET MATTERS / MASTER CLASS earned per transaction.

This shift to buying down rate can happen so slowly, but it is so incredibly damaging to a business that if I do one thing in this industry this year, it will be to help brokers see this more clearly.

If brokers have a moderate slip in their sales conversion, because clients are shopping them after they present, my experience is that brokers don’t even realize it is happening, or they say to themselves, “Oh, well, I will just go get more leads.”

What happens, though, if, given their current commitment to marketing, the number of leads in 2013 also slips?

Now what happens if in two out of the four deals a broker wins this month, he or she has decided to buy-down rates, or take a “special” rate with less commission from lenders, to compete and win the deal? I encourage all brokers to change their focus in 2013 by considering the consequences of that very real scenario I’ve just laid out.

This scenario, that I think is playing out everyday in our industry results in a whopping 56 per cent

If brokers have a moderate slip in their sales conversion because clients are shopping them after they present, my experience is that brokers don’t even realize it is happening

drop in revenue. Brokers who have been caught in this trap likely have been thinking, “It seems I have been working as hard or harder than I ever have, but yet I am making less money and I have no idea why.”

If this scenario is speaking to you, well now you know why. The next obvious question is “What will you do about it?”

My position is that many trainers and other well-intentioned people offering help to brokers are often still espouse a get-more-leads mantra, which, of course, I think is really important, but not until brokers fix their sales conversion and sales mix problem.

Even if I thought that getting more leads was going to be easy in 2013, which I don’t think it will be, the problem lies in bringing more leads into an already broken system. It simply does not work.

You run the risk of getting caught in the neverending spiral of working twice as hard for the same money. I think this ultimately leads to a lack of personal fulfillment, passion and motivation for your business and the sense that the business owns you,

AFTER

10 Leads

5

Deals at full commission

$12,500

Leads Slip 10%

Conversion slips by 4 deals of $2,500/deal

2 of the four deals I buy down the rate 2 X $2,500 2 X $1,500

1

$8,000

E R O F BE

9

Leads

20 | MORTGAGEBROKERNEWS.CA

Deal

Gross Revenue

Gross Revenue

MARKET MATTERS / MASTER CLASS

Y A D O T

9

4

Leads

$8,000

Deals

Gross Revenue

3 Five-year at $2,500 3 10-year at $3,900

W O R R Oed focus) M T(wO w e ith ren

9

6

Leads

$19,200

Deals

instead of you owning the business.

So, what to do then? If you actually got better at closing the leads you already get, and learn to present solid mortgage strategies that people will pay more for and you use the best secret weapon of all – to confidently add 10-year mortgages to your sales mix – then you will have a shocking and dramatic effect on your business in 2013. OK, I’m speaking directly to you, the broker reading this right now and saying “Yah, whatever; clients only care about rates.”

I hear this a lot in online chats and comments, and the truth is that’s a story lazy mortgage brokers make up to justify why they will not invest in themselves and just get better at selling.

Of course, the easier road is to just buy-down

Gross Revenue

rates and race to the bottom with everyone else. The scary part is what if I win the race to the bottom?

Alternatively, start on the game plan I’m laying out: Go back and check your data for 2012. Take the number of leads you got and divide that into the number of closed deals you had. This is now your baseline. Track this number religiously on a weekly or certainly a monthly basis.

Next, take the amount of money you earned in 2012, and divide it by the number of deals you did.

This is your other important baseline figure.

If you see either of these numbers slide, then correct course immediately. These are leading indicators for the most important measurable that any business should have: what is my revenue going to be?

That’s a story lazy mortgage brokers make up to justify why they will not invest in themselves and just get better at selling

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MORTGAGEBROKERNEWS.CA | 21

STATISTICS / RESIDENTIAL RESALE ACTIVITY

NATIONAL PICTURE

AT-A-GLANCE

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

Northern Lights, B.C. 62.3 Battleford, Sask.

66.7

Northeastern, Alta.

92.3 Portage La Prairie, Man. 27.8

TOP CITIES Sales Activity

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

22 | MORTGAGEBROKERNEWS.CA

Orangeville & District, Ont. 15.0

Northern N.B. 40.0

HalifaxDartmouth, N.S. 37.0

Cover

STATISTICS / RESIDENTIAL RESALE ACTIVITY

The Year ahead

Sales Activity by Province British Columbia: -17.0 per cent

reality out there instead of trying to sell aroundAlberta: it, then people will trust us.”

3.2 per cent But any efforts the industry may undertake as a whole will have no effect if individual brokers don’t do Saskatchewan: their parts, which means giving -10.9 per cent clients the best value-added service, improving efficiencies and funding ratios with lenders, and of course, placing clientsManitoba: with the right lenders 2.7 per cent for their needs.

“Focus on the best interest of the client first and foremost,” said Therien. “We Ontario: are at a crossroads: we either go back13.0 to per being cent the person you go to when the banks say no as it was 25 years ago, or become truly trusted advisers to our customer and move up Quebec: CMP to the next level.”

13.7 per cent

November stats from the Canadian Real Estate Association (CREA) reveal sales in many major markets are down year over year, although brokers in the Northwest Territories have the least to New Brunswick: 5.1 per cent complain about.

Ten out of 12 markets surveyed saw a drop in units sold, with an 11.9 per cent change posted nationally.

According to CREA President Wayne Moen, the findings are the Nova Scotia: 29.4 per cent result of moderation in the market since the new mortgage rules were implemented in July.

“National sales activity has remained fairly steady at lower levels Prince Edward since mortgage rules were changed earlier this year,” he said, “but Island: 10.6 per cent that stability masks some real differences in trends among local housing markets.”

Regional markets did vary significantly, with metro areas Newfoundland of homeowners say they generally seeing the sharpest decline in sales volumes. Year-overand Labrador: 11.1 per cent are inwhich a good to year sales were lowest in British Columbia, sawposition a 17 per cent decrease from November 2011 to weather 2012, but conversely, the downa potential Northwest Territories saw a steep increase of 133.3 per cent Northwest Territories: reported over the same period. turn in the housing market 133.3 per cent Source: Mortgage Insights: Gregory Klump, chief economist with CREA, agrees that the Highlights from CAAMP’s Fall 2011 decline in the number of properties exchanging hands is consumer national and industry surveys largelyResearch due to tighter lending restrictions.

(CAAMP/Martiz Canada) Yukon: 25.0 per cent “National sales activity lacks the momentum it had a year ago,” he said.

71%

Source: CREA

48

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COVER / CMP HOT LIST 2013

H LIST 20 24 | MORTGAGEBROKERNEWS.CA

T 013

COVER / CMP HOT LIST 2013

If 2012 is anything to go by, these ‘Hot’ industry players are set to heat up 2013 — not just for their businesses, but for the broker channel

Following a rip-roaring year, 2012 – saddled with new mortgage rules and lending guidelines -- can best be described as, ahem, challenging. But against all that gloom, the resilience of some channel players shone red hot.

CMP, and a selection panel of industry professionals, doesn’t expect those bright lights to dim this year. In fact, the expectation is they’ll spark real change, hence our very first Hot List, Hot List 2013.

It’s by no means a scientific or even exhaustive list – let’s face it so many brokers, lenders and service providers in this industry are hot. But it is CMP’s attempt to both honour and recognize individuals who have made positive contributions to the industry in 2012 with all the potential to build on it this year.

The list – which is not a ranking -- is in no particular order, but is the result of focus group discussion and CMP’s own editorial database. The Hot List looks at the individual accomplishments of mortgage industry leaders as well as the collective achievements of their firms. The expectation is they’ll again lead by example in 2013. So without further ado, your Hot List 2013.

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COVER / CMP HOT LIST 2013 Who: Dan Putnam What: VP Business Development Where: CMLS Financial

Who: Northwood Mortgage Ltd. What: From Independent to Verico Where: The Verico Network It’s one of the country’s largest and most successful brokers, once entirely independent but now a member of the Verico network. That last move was a deliberate step taken to grow the business and the opportunities for its agents. The industry is watching and waiting for the result.

2012 MILESTONES • Aligned with Verico, acknowledged in the industry for professionalism and innovation.

• Continued to foster agent personal growth through full-time trainer.

• Tougher banking regulations created the need for new sources of funds. A Northwood MIC provided on-the-spot approvals giving agents the advantage of direct funding opportunities.

Putnam’s list of past employers reads like the who’s who of Canada’s broker channel, with the 29-year industry vet working as mortgage agent, broker owner, superbroker head and lender head

2012 MILESTONE • Accepted the responsibility of leading a newly formed residential mortgage lender about to make its debut to the Canadian Mortgage Brokerage industry in early 2013.

2013 GOALS • CMLS Financial Inc. will officially launch its new residential mortgage service in the first quarter of 2013. We are taking a “we’re in this together” approach with the Canadian mortgage brokerage industry • At launch it will offer a full suite of insured fixed- and variable-rate products with the industry’s “best rate holds and prepayment privileges,” says Putnam.

• Unlike many of the mortgage broker lenders in Canada, CMLS Financial Inc. will be servicing all of our mortgages in-house.

• “From my perspective that demonstrates our long-term commitment to the residential mortgage space,” says Putnam. “We will be open for business in Ontario, B.C. and Alberta, however, our intention will be to open in both the Prairies and Atlantic Canada in due course.

2013 VISION FOR THE BROKER CHANNEL • “Mortgage brokers will always be a valuable service for Canadian consumers. With the implementation of OSFI’s B20 lending rules, mortgage brokers are enjoying increased opportunities in the nonconforming and private lending space. On the conforming side of the residential business, increased competition from bank branches and lender sales forces will continue, however, I believe a new competitor will emerge. Online mortgage origination services will challenge the status quo. I believe mortgage brokers are up for the challenge and will adapt to effectively compete with these emerging threats. New online mortgage brokering servicing models are already in development and I’m sure we will see some of them make it to market by the end of 2013.”

26 | MORTGAGEBROKERNEWS.CA

2013 GOALS • Building on the current formula designed to move a mega brokerage forward • Use separate subprime and commercial divisions to increase expertise and probability of a successful close.

• Use life insurance division to continue maximizing agent wealth.

• Go even bolder with marketing budget designed to saturate the market and attract attention. “We walk a fine line in balancing between risk and reward. But simply stated, we spend money to make money.”

News

COVER / CMP HOT LIST 2013

InternatIonaL

Who: u.s.Mike Cameron What: Founder and managing partner U.S. housing worse than thought Where: Axiommarket Mortgage Partners

The number of Americans who bought previously Cameron brokering in 1994 Vancouver, occupied started homes rose in October.

Butinthe National ultimately building the credentials he’d need to found Association of Realtors says it overstated more than Axiom but also mount a Mortgage designed three million sales during and afterRevolution the Great Recession, showing theindustry housingtoward marketexcellence. was weaker than to prod the previously thought.

The private trade group says sales rose four per 2012 MILESTONES cent in October to a seasonally adjusted annual rate of • Elected to CAAMP board of directors.

4.42 million. That’s below the roughly six million homes • a year Selected RECA’s Broker Advisory Committee. that to economists say are consistent with a healthy • housing Assisted in the But development market. it’s aheadof ofAMBA’s 2008’s mentorship revised sales, program. now considered the worst in 13 years.

The trade groupof revised its sales from 2007 to 2010 • Raised awareness the need for enhanced down 14 per cent, from more than 20.6 million to the nearly professionalism in the broker channel by way of 17.7 million.

Among the reasons for the lower fi gures, Mortgage Revolution. the Realtors group says: changes in the way the Census Bureau collects data, population shifts and some sales 2013 GOALS twice. being counted To-do list: The Realtors consulted with government and • private To create unityexperts, in our channel, working with the housing including the Federal Reserve, the Department of Housing and Urban Development, national and regional associations to become a the Mortgage Association, the National unified voiceBankers for the broker channel. of the Home Builders, mortgage giants • Association Standardize process for service delivery in Fannie our Mae and Freddie Mac and CoreLogic, a California-based channel data firm that first raised doubts about the annual • numbers To help earlier create a standardized message to this year. consumers who wethat are the andRealtors group CoreLogicoutlining has estimated what we do overstated sales in 2010 by at least 15 per cent.

The changing numbers could affect • Implement Axiom’s Six Months to how economists view the trade group’s data.

It could also affect companies Stellar training program to allow us that use the fi gures for hiring and expansion plans. to grow volumes with the current Sales are measured when buyers close on homes. associates we have rather than But many deals are collapsing before that point. focusingof onRealtors recruitment from had at least one contract One-third said they other firms scuttled in October, up from 18 per cent in September.

Contracts are being cancelled for several reasons: Banks have declined mortgage applications; home

&

90.6% 52.1% Percentage of homeownership costs, including mortgage payments, utilities and property taxes that take up a typical household’s monthly pre-tax income in Vancouver and Toronto, respectively (RBC Economics Housing Trends and Affordability Report)

inspectors have found problems; appraisals 2013 VISION FOR BROKER CHANNEL

showedwe a home was worth lessway thanofthe bid; a “I believe need to find a better working buyer lost a job before the closing. together for the common good of the channel. I see a More than two years after the recession channel where we challenge our competitors officially ended, many people can’t qualifyto forimprove and stopor poaching from each in our race to the loans meet higher downother payment bottom.

We need Even to support goals of our requirements. thosethe withcommon excellent credit and stable put jobsour areegos holding offand because fear associations, aside look tothey the future. that home prices will keep falling.

Sales are also We need to increase the level of professionalism in hurtand by find a decline rst-time buyers, who thebeing channel ways in to fiattract, train and maintain are critical to reviving the housing market. new talent to the business. The only way we are going to Sales have fallen in four of the five years raise ourthe market share is by:went bust in 2006. since housing boom • Declining Improvingprices the quality and consistency of our service and record-low mortgage rates delivery;been enough to boost sales. haven’t At the same time, home construction has • Increase the barrier to entry to the channel; begun a gradual comeback and should add to the • Increase consumer awareness with a unified economy’s growth in 2011 for the fi rst year since message of what our value proposition is; and the Great Recession began in 2007. Last month, • Attract and train new talent to the channel.” builders broke ground on an annual rate of 685,000 homes, the government said recently.

That was a 9.3 per cent jump from October and the fastest pace since April 2010.

Most economists say home prices will keep falling, by at least five per cent, through 2012.

I believe we need to find a better Many forecasts don’t foresee a rebound in prices way of working together for the until at least 2013.

The highcommon rate of foreclosures made I see good of the has channel. resold homes cheaper than new ones. The a channel where we challenge median price of a new home is roughly 30 per our competitors to cent above the price of one that’s been occupied before – twice the normal markup.

Investors are improve and stop taking advantage of the discounts. poaching from each The housing market is struggling even in our as the broader economy hasother improved in race to recent months. the bottom The economy grew at an annual pace of two per cent in the July-September quarter. Many economists expect slightly better growth in the October-December quarter. CMP

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MORTGAGEBROKERNEWS.CA | 27

COVER / CMP HOT LIST 2013 Who: Tim Brown What: President and CEO Where: Marlborough Stirling Canada This visionary is on a mission to bring greater choice to the broker landscape, with aggressive market expansion plans for the company’s MorWEB platform. In the business since 1996, Brown has been at Marborough since 2000, building that technology but also a personal reputation with its foundations in CIBC.

2012 MILESTONES Revised existing agreements with top broker lenders (Bank of Nova Scotia and First National Financial) to improve broker channel economics for lenders and lower the cost of providing the mortgage origination technology connecting brokers and lenders. This provides a long-term reliable, competitive option for brokers to interact with their lending partners.

2013 GOALS • “We will continue to roll out revised agreements with additional key lending partners and will be expanding the number of lending partners available through the MorWEB solution.

• This will continue to strengthen a healthy competitive environment and improve lender economics in a year expected to see continued pressure on lender costs as origination volumes decline.”

Who: Glen Ward What: Founding President Where: Mortgage Brokers Association of Atlantic Canada

In financial services for 17 years, Ward spearheaded efforts to bring a professional association to Atlantic Canada, with an eye to upping professional standards and regulations. Before the launch of his own brokerage Verico Ethical Mortgages, he served as regional VP for Mortgage Architects in Atlantic Canada.

2012 MILESTONES Founding the Mortgage Broker Association of Atlantic Canada (MBAAC) was a highlight of the year, and with only a year on the clock, it has built on its grass roots membership and earned the respect and support of sister associations across the country. It has also played a pivotal role in helping encourage Nova Scotia to move brokers toward regulation.

2013 GOALS Association to-do list: • To double our membership over this coming year and to continue to grow awareness of the association within Atlantic Canada with increased communication, using an expanding database brokers working the region. We are pleased to see our Social Media feeds continue to grow in popularity, which allows us to provide industry information to brokers.

• With new faces at the helm -- President Janet McKeough of Halifax and Vice-President Kim Reddin of Charlottetown – developing benefits for brokers is also a priority for 2013. Some of should come through partnering with our sister associations in Ontario and Alberta. Included offerings are group insurance benefits, gas card discounts and, potentially, E&O insurance.

2013 VISION FOR THE BROKER CHANNEL “The industry is changing very quickly, as we have seen that in a smaller region like Atlantic Canada. Our industry has matured over the past few years and with margins shrinking for lenders and brokerages, I believe the days of the large super brokers are limited. We seem to be moving towards a more independent approach.

I think as we see the economy expand over the next couple of years, we will see more lenders emerge and be willing to offer special products to fill the gap that the recent federal regulations have left in the market. This will help revitalize our industry, positioning it for continued success into the next business cycle.”

28 | MORTGAGEBROKERNEWS.CA

COVER / CMP HOT LIST 2013

Sally and Jim were so moved by the CHIP Home Income Plan they fell out of their rocking chairs.

MORTGAGEBROKERNEWS.CA | 29

COVER / CMP HOT LIST 2013 Who: Paul Therien What: Director of Business Development Where: Centum

Who: Steve Ranson What: President and CEO

Therien literally grew up in the financial services industry. Now a 21-year veteran, he’s based in Vancouver, but has worked in Alberta and the Yukon, having worked both the broker and lender side of the industry with key players such as Sutton Mortgage Corporation, FirstLine and now Centum.

Where: HomEquity Bank

2012 MILESTONES • “We took a serious look at our business and made the conscious decision to reduce the size of the CENTUM network,” says Therien. “Our renewed focus on professionalism, education and systems has meant that even with our smaller network size, our funded mortgage volume has increased over 2011.

This 33-year veteran of the financial industry, 15 of them with HomEquity, is now 55. It’s “my first year of eligibility for a CHIP Home Income Plan!” he jokes.

2013 GOALS

2012 MILESTONES

• CENTUM, uniquely positioned given its sister company, Century 21 Canada, is focused finding opportunities to better bring together the two businesses to the benefit of both organizations and ultimately the consumer.

• New model: In early 2013, it is launching a financial literacy program designed for adults to help them navigate through our challenging economy

2013 VISION FOR THE BROKER CHANNEL • “This industry was built on brokers selling rate; it was its calling card: “We can beat the bank’s rate” but that is no longer reality. The banks and other direct-toconsumer lenders are no longer content to let a customer slip through their fingers over rate.

• The changes made to mortgage rules are not popular, but they did achieve what the government sought, and that was a measured slow down as opposed to a dramatic collapse. Has it hurt the industry? Yes, it has, but it also affords us an opportunity – we just need to see it.”

• To quote Don Lawby, our president and the president of Century 21 Canada: ‘Sales is a contact sport; we have to get toe to toe, belly to belly, eyeball to eyeball with the consumer if we want their business.”’

• The banks no longer have the personal relationship they once had with the consumer because when we go to the bank, we use the machine, we go online. The banks can do that because we are already their customer; mortgage brokers do not have that luxury, we need to prospect. We have to get out there and get the customer. Advertising is one tool, but the banks have deep pockets and they will outspend us to keep their clients, so we need to get out there and talk to people – face to face.”

30 | MORTGAGEBROKERNEWS.CA

 We even offered our conference, VISION 2012, to CENTUM members at no cost to attend

2012 was a year dedicated to preparing for growth. On a strategic front, HomEquity turned to shareholders in May to solicit support to sell the publicly traded company to Birch Hill Equity Partners, a private equity firm. The purchase was completed in November 2012.

“We decided that being a private company with access to additional capital would be advantageous and support our growth focus,” says Ranson. “We expect this new arrangement will provide significant capacity for growth, which, in turn, will continue to translate into increased activity in the broker channel.”

2013 GOALS “Brokers have always been a catalyst for the introduction of new and innovative solutions to the marketplace,” says Ranson. “This makes them natural promoters of reverse mortgages.”

To-do list: • Grow new mortgage originations through improved positioning, education and awareness • Introduce new products organically or through partnership or acquisition • Invest in technology to improve internal efficiencies, communication and deal processing

2013 VISION FOR THE BROKER CHANNEL “We believe there’s a great opportunity for growing reverse mortgages in the broker space. Data from Australia in 2009 indicates that broker sales accounted for 45 per cent of the total reverse mortgage market.

We are currently approaching 20 per cent here in Canada and we feel that with continued growing awareness and acceptance in the broker channel we can match that.”

COVER / CMP HOT LIST 2013 Who: Bob Ord What: CEO Where: Invis-Mortgage Intelligence.

Who: Samantha Gale What: CEO Where: Mortgage Brokers

Ord is an industry veteran who’s played an integral role in FirstLine, LSS, MCC, Mortgage Intelligence, Mortgage Architects, Radius (formerly myNext) and Filogix. And, since June 2012, he’s back at Invis-MI, leading the charge.

Association of British Columbia This lawyer and former regulator for the Financial Institutions Commission of B.C. hopped the fence to work directly on behalf of the industry in the fall of 2012. Her agenda for this year of change is jam-packed.

2012 MILESTONES

2012 MILESTONES On behalf of MBABC, responded to a consultation paper on proposed changes to the Mortgage Brokers Act. Gale advocated for: the reform of the current prohibition on brokers and lenders charging residential mortgage customers with fees, which would permit industry members to charge and collect fees at the time of obtaining a mortgage commitment for a client, and the option for industry members to create personal mortgage broker corporations.

2013 GOALS • “2013 promises to be an exciting year for the mortgage industry in British Columbia. We will continue our work on reviewing legislative change – more specifically, we shall be performing an analysis on how bank representatives should be regulated, in addition to making some proposals on streamlining the cost of credit disclosure requirements and working on a host of other issues.

• We shall, of course, be pursuing the concept of self-regulation for the mortgage industry in British Columbia. In addition, we shall be keeping a close watch on how the new security commission rules will affect mortgage investment corporations and mortgage syndicators, and we shall be advocating on behalf of the industry to help ensure the survival of small mortgage investment corporations and mortgage syndicators.”

• Launched a unique partnership with Kanetix, an online rate site, that wins Invis-MI and their members greater access to the next generation of mortgage shoppers.

• Signed several high-producing brokers across the country, adding $600M in new volume to the company.

2013 GOALS • Add $1 billion net new volume • Build private-label capabilities • Focus on helping Invis-MI brokers turn their jobs into businesses, and creating value for customers • With the move into a tighter broker market, teach brokers creative financing and unique solutions • Build technology and continue to improve the CRM through segmentation and targeted and persuasive messaging

2013 VISION FOR THE BROKER CHANNEL “The mortgage channel will shrink; Invis-Mortgage Intelligence will gain market share because we are growing.”

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COVER / CMP HOT LIST 2013 Who: Eddy Cocciollo What: President Where: The Mortgage Centre (MCC) This 40-year-old network head has now spent half his life in the trenches of the industry. His 20-year run started as a loans officer at Canada Trust, before wending its way through CMHC, brokering for GE Money and, ultimately, to CIBC/MCC.

2012 MILESTONES • Led MCC to near-record volumes despite a difficult climate, the result of renewed focus on attracting and retaining quality brokers.

2013 GOALS • We will continue to partner with our lenders to offer unique products, including CIBC and President’s Choice Financial exclusive to MCC’s franchisees.

• We plan to expand on our marketing strategy, introducing more digital age initiatives allowing our network to connect in a targeted and more meaningful way with their customers.

• Our belief is that knowledge is power. We are building tools that will allow our agents to better mine data and pinpoint opportunities (outside of our existing, very effective CRM). These tools will also allow our lenders to get a better understanding of the nature of MCC’s business and help them focus on opportunities to obtain more quality business from our network. We are excited about these developments and their potential.

 We are building tools that will allow our agents to better mine data and pinpoint opportunities (outside of our existing, very effective CRM).

Who: Albert Collu What: President and CEO Where: Argentum Mortgage and Finance Corp In less than 15 years, Collu has made his mark on both the lending side, working for Home Trust and First National, and the brokering side at his Argentum Mortgage. As the current president of the Independent Mortgage Brokers Association of Ontario, he’s also reaching out across regional boundaries in partnership with other provincial groups.

2012 MILESTONES Argentum • Growth without advertising and deployment of aggressive phone and email campaigns.

• Launched GIC offering and Commercial Mortgage Strategy IMBA • Formed first-of-its-kind collaboration with provincial counterparts AMBA and MBAAC (Mortgage Brokers Association of Atlantic Canada)

2013 GOALS

2013 VISION FOR THE BROKER CHANNEL “My vision is simple... to be the adviser of choice when it comes to home financing for Canadians. MCC is ultimately a community-driven model. We have 170 client-facing offices across the country, uniquely understanding and serving their local markets. This industry has huge potential and needs to spread the message to the consumer that by dealing with a qualified mortgage professional, you receive unbiased advice with the client’s best interests in mind. I compare mortgage brokers to other professional industries like insurance brokering and that known providers of advice on a multifaceted basis, building trust one client at a time.”

32 | MORTGAGEBROKERNEWS.CA

“At Argentum, 2013 will be focused on continuing to drive value to our brokers to aid them in dealing with key issues in the face of a changing climate within our industry. We will be placing much focus on specialized training and product launches to create points of differentiation and revenue diversity strategies. One of our most important strategies is to develop a very focused marketing campaign aimed at providing leads and clients for our mortgage brokers to deepen our relationship with one another as a means to create a real sense of corporate partnership within our channel.”

2013 VISION FOR THE BROKER CHANNEL • “I would like to see the benchmarks for entrance into our business to increase so that we are ensuring that mortgage brokers are properly

COVER / CMP HOT LIST 2013 prepared to deal with Canadian borrowers while managing arguably the largest liability of their lives, their mortgages. This can only be accomplished in my view by having a standardized educational program across the country as to remove the variances in quality from province to province, to standardize documentation, and to essentially ensure new entrants have a chance of succeeding while being educated enough to guide consumers accordingly in such an important transaction.

• Setting education and standardization aside, I would like to see an industry that does not view growth as a strategy driven by “taking” or “poaching” from other respective mortgage companies. All we do is reshuffle the deck with the same cards while negatively impacting one another and the industry at large. Our industry needs to grow organically and needs to seek out new entrants with entrepreneurial drive to grow the channel for the future and to continue to ensure we have a new batch of professionals developing for years to come.”

I would like to see an industry that does not view growth as a strategy driven by “taking” or “poaching” from other respective mortgage companies

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COVER / CMP HOT LIST 2013 Who: Andy Charles

What: President and CEO

Where: Who: Kathy Gregory What: President and CEO Where: Paradigm Quest

Canada Guaranty

This Paradigm founder honed her management skills in both telecommunications and banking, with the last 20 years of those accomplishments coming in financial services. Last year, the Women’s Executive Network recognized that success, naming Gregory one of Canada’s Top 100 Most Powerful Women.

Paradigm Quest launched both its end-to-end credit platform (RUBI), including end-to-end processing, funding, servicing and collections, and its broker portal. It also introduced four new brands and four new funding sources as well as converting four portfolios onto a new platform and more “customer-friendly” phone system.

With more than 25 years of financial services experience under his belt, Charles is determined to narrow the divide between Canada Guaranty and No. 1 and No. 2 in default insurance. It’s no small feat, but the industry vet has started down that road, attracting more and more lenders willing to send business his way.

2013 GOALS

2012 MILESTONES

• Expanding asset classes, a point-of-sale system and cross-sell capabilities • On the to-do list: Launching a customer web portal • Exploring opportunities to expand its servicing model into other asset classes, bringing Paradigm expertise in servicing portfolios to other products such as “B” lending products, consumer loans, commercial loans, leasing, etc., to partners.

Canada Guaranty continued to expand its customer footprint by adding Scotiabank, RBC and ING Direct in 2012. This growth facilitated stronger competition within the mortgage default insurance market and by extension, to all mortgage originators by providing additional choice.

2013 VISION FOR THE BROKER CHANNEL

2013 GOALS

• “We are not a broker at Paradigm, however, my personal vision is to support continued growth for brokers to see them focus on and yell from the rooftops their core value proposition: “choice” versus a single brand or lender and the value of advice. This is how brokers differentiate themselves and the consumer awareness of the broker value proposition needs to be significantly enhanced. A broker/consumer awareness marketing program is very much in need. Industry collaboration between the brokerage firms is a key component of leveraging their individual strengths to expand consumer awareness.”

In 2013, Canada Guaranty will continue to expand our customer base, which will create a stronger competitive environment for the mortgage industry.

2012 MILESTONES

34 | MORTGAGEBROKERNEWS.CA

2013 VISION FOR THE BROKER CHANNEL “The broker channel has been an integral part of the Canadian mortgage origination landscape for many years and I see no reason why that is not sustainable in 2013 and the years beyond. While the overall market growth has slowed and this trend may continue, the broker channel has effectively established itself as a viable channel for both lenders and borrowers to utilize.”

COVER / CMP HOT LIST 2013 Who: Gary Mauris What: President Where: Dominion Lending Centres In 2005, this entrepreneur joined and later helped to transform the industry. Self-employed for more than 20 years, Mauris brought extensive experience in startup organizations with him, building a consumer-facing brand also focused on winning and retaining brokers

2012 MILESTONES • L aunched the I AM SOMEONE AntiBullying Campaign (www.iamsomeone. ca), alongside Amanda Todd’s mother, Carol Todd.

• Launched a B space deal desk, with the average pay per deal for users at 95 bps.

• Led DLC to three corporate and three individuals awards at the Canadian Mortgage Awards, including National Broker Network of the Year, Best Branding, Best Advertising.

• Ranked 32nd on PROFIT 200 – Canada’s

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• Re-signed Don Cherry for another three years.

• Launched in Quebec.

2013 GOALS • “We anticipate taking our cross-Canada market share to a minimum of 18 per cent this year.

• “In terms of the impact on the channel,” says Mauris, “we feel that Dominion Lending Centres’ strengthening brand and growing market share leads to a stronger Mortgage Broker Channel in general.

Our intention from Day 1 was to lead – never to follow – to be the company that was continuously pushing new initiatives and opportunities forward that would benefit our brokers and the industry at large.”

2013 VISION FOR THE BROKER CHANNEL “Flat out, we are going for 30 per cent-plus market share. We intend to be the undisputed mortgage Super Broker leader. The key to this will be our need to remain incredibly hungry, always act like we’re No. 2, keep our fighting spirit and desire to constantly improve and to quickly dismiss status quo.”

What’s in it for you? > A unique product portfolio including our award winning All-In-One Banking™. > Niche product lending allowing you to meet a variety of your client needs; including mortgage solutions for first time homebuyers, rental properties, new immigrants, non-residents and more 1. > An incentive program built on your feedback, including reward options such as: $2,0002 towards marketing, $15,0003 travel voucher towards a trip of lifetime, rate discounts up to 15 BPS, free appraisals, great cashback offers, and more!

Contact your local BDM or email mortgagebroker@nbc.ca

TM 2 TM 2 60 deals in the fiscal year.

National Bank All-In-One is a trademark National BankofofNational Canada. 1Financing be subject1to the credit approval

by National Bank. $2,000 marketing fee is aby one-time rewardBank. for the first National Bank All-In-One is aoftrademark Bank ofshall Canada.

Financing shall be subject to the credit approval National $2,000 marketing fee 3 3 trip paidreward for everyfor 125the deals in the65 fiscal year or up to a maximum of 2 in tripthe vouchers.

Minimum to fund ratiopaid of 60% fiscal 2013 required be eligible for either incentives payments be $15,000 trip forforevery 125 isdeals orto$40M funded in financial the fiscal year.and The fiscalwill year is$15,000 a one-time first deals $20M funded fiscal year. approve made in February 2014. The fiscal year is from November 1, 2012 to October 31, 2013. is from November 1, 2011 to October 31, 2012.

MORTGAGEBROKERNEWS.CA | 35

COVER / CMP HOT LIST 2013 This fieriest of the “Dragons’ Den” denizens needs little introduction, except to say he’s been in the money business for several years, including starting a software company in his basement, and eventually selling it for $4.2 billion. Since then, “I've founded quite a few companies, and I keep a busy schedule. Today, I am the founder and chairman of O'Leary Mortgages, as well as O'Leary Funds. I'm the founder and chief sommelier of O'Leary Fine Wines, a terrific new wine label that just won five awards. I'm an investor on Dragons' Den and Shark Tank, and co-host The Lang and O'Leary Exchange. And I'm an author.”

Any controversy aside, he’s excited about “getting into the mortgage business … because I'm all about helping people learn to manage their money. We've learned a lot, and we're learning more every day thanks to the tremendous feedback we've been getting from consumers, and especially from the broker community.”

2012 MILESTONES • The launch of O’Leary Mortgages, of course. The company aims to focus on fixed rates, taking that product directly to consumers.

• “I've been talking to brokers every day,” he says, “and there is a lot of excitement and a lot of interest.“

2013 GOALS • “My goal is for O'Leary Mortgages to help people understand just how important their mortgage is when it comes to preserving and building their wealth.

We've got a lot of ideas around how we can play that role, and I think brokers can be a big part of that.”

2013 VISION FOR THE BROKER CHANNEL “I think that 2013 will be the year that people start realizing how important it is to have control over their financial future. More and more people will start talking about their mortgages around the kitchen table.

Mortgage professionals are going to see the impact of that, there's no question about it. It's going to be a great year.”

I think that 2013 will be the year that people start realizing how important it is to have control over their financial future 36 | MORTGAGEBROKERNEWS.CA

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THE GOOD SHIP FEATURE / TAXING TALK

‘Personal mortgage broker corporation’

Samantha Gale

Michael Sjerven

38 | MORTGAGEBROKERNEWS.CA

FEATURE / TAXING TALK

B.C.’s Realtors and mortgage brokers may be in the same boat, but has the absence of personal mortgage broker corporations relegated brokers to steerage?

When British Columbia announced it would review the oldest Mortgage Brokers Act in in the West, high-volume players from one end of the province to the next dreamed the same impossible dream – a B.C. with personal mortgage broker corporations.

Currently, the act doesn’t directly enable individual submortgage brokers to collect broker earnings through a corporation, something that would allow them to better split income for tax purposes or defer the payment of said taxes. It would also put them on equal footing with their Realtor counterparts as well as Ontario and Alberta brokers.

“I’m definitely in support of that change,” Michael Sjerven, owner of Verico Vivid Mortgage in Vancouver, tells CMP. “I know the limitation of not being able to register myself as a business was a consideration for me when I made the move to open a brokerage about a year ago. I don’t know that there is a downside for the industry in making this change.”

Indeed.

Many brokers, especially seasoned, high-volume subbrokers working under someone else’s brokerage, share that thinking. That support now extends to the Mortgage Brokers Association of British Columbia, which in December put its call for personal mortgage broker corporations in writing before sending it off to B.C.’s Ministry of Finance – more specifically, its financial and corporate sector policy branch.

Below are those arguments as laid out by MBABC’s CEO Samantha Gale on behalf of the association, but also the Mortgage Brokers Institute of B.C.

MORTGAGEBROKERNEWS.CA | 39

FEATURE / TAXING TALK

CURRENT LEGISLATION Submortgage broker is defined in section 1 of the Act to mean “any person who, in British Columbia, actively engages in any of the things referred to in the definition of mortgage broker and is employed, either generally or in a particular case, by, or is a director or a partner of, a mortgage broker.�

Submortgage brokers are, therefore, employed by mortgage brokers, essentially meaning that they are employees, who must be natural persons with social insurance numbers and not corporations. However, the second part of the definition of submortgage broker contemplates that a submortgage broker may be a partner of a mortgage broker. Under common law in British Columbia, a partner of a mortgage broker may be a corporation - the Act thereby contemplates the registration of corporations as submortgage brokers. However, nearly all relationships that submortgage brokers will have with their sponsoring mortgage broker will not be that of partner in a formal partnership arrangement, but rather the more traditional relationship of a mortgage broker employing a submortgage broker. In addition, to our knowledge, there has not been a single corporation who is a partner of a mortgage broker, which has been registered as a submortgage broker.

During the last 10 years, franchising and cobrokering have been used as a strategies by some submortgage brokers to incorporate while also maintaining ties to a larger, well-known mortgage brokers. Under this arrangement, the submortgage broker must incorporate a franchisee entity, set up a separate office, enter into a franchise arrangement and a co-brokering relationship with the franchisor entity and then register as a mortgage broker. The challenge for franchisees that operate as co-brokers with their franchisors is that the public may be confused about which mortgage broker entity they are dealing with, as the two mortgage broker entities may share part of the franchisor name and management operations, in addition to operating in close proximity to one another.

Corporate tax deferral is an advantage for professional corporations as they will pay a lower tax rate on active business income 40 | MORTGAGEBROKERNEWS.CA

PROFESSIONAL CORPORATIONS

STATS Consumers say...

A mortgage broker would be good for...

Problematic financial situations

56% Source: MortgageInsights 2012

Most professionals, such as doctors, dentist, lawyers and Realtors are able to incorporate professional corporations. The benefit to industry members is that a professional corporation enables them to take advantage of income-splitting and tax deferral options.

Corporate tax deferral is an advantage for professional corporations as they will pay a lower tax rate on active business income, up to a single limit of $500,000, than their personal taxpaying counterparts. The professional can then defer the payment of corporate dividends to shareholders to maximize personal tax benefits.

Income-splitting is a clear advantage for professional corporations as the professional corporation can pay dividends to shareholders, such as spouses, children or affiliated corporations, who are at a lower tax rate than the professional.

However, the incorporation of a professional corporation is only possible if it is provided for in the professions’ governing legislation. Currently, the Act does not permit the incorporation of personal mortgage broker corporations.

Amendments to the Real Estate Services Act were introduced in 2009, which permit licensed real estate professionals to incorporate personal real estate corporations. Remuneration paid to a real estate professional may be paid directly to his or her personal corporation, and then payment of fees or dividends may be paid from the personal corporation to the professional. The personal real estate corporation may only provide real estate services by the licensed professional and cannot avoid regulatory liability. In addition, under the regulations, voting shares may only be issued to a licensed professional.

FEATURE / TAXING TALK

RECOMMENDATION The definition of a submortgage broker should be amended by eliminating the option of corporations, who are partners of the mortgage broker, to obtain submortgage broker registration. This provision is clearly not relevant in today’s mortgage broker environment. However, the Act should be further amended to enable submortgage brokers to incorporate professional mortgage broker corporations, which are capable of collecting and retaining broker fees and commissions owing to a submortgage broker from their mortgage broker.

This provision would modernize the legislation and put submortgage brokers on the same footing as other professionals, such as Realtors.

Permitting brokers to do this would also provide a simpler and more transparent mechanism for mortgage brokers to utilize corporations for tax-savings strategies than co-broking strategies, which are sometimes utilized, and may create confusion for the public. The net benefit of permitting personal mortgage broker corporations is, therefore, twofold: enhanced consumer protection and the removal of economic barriers for

mortgage brokers.

The MBABC and MBIBC recommend that the Act be amended to permit submortgage brokers to incorporate personal mortgage broker corporations, in substantially the same manner as Part 10 of the Real Estate Services Act Regulations.

STATS Consumers say...

A mortgage broker would be good for...

Expiring mortgage term

52% Source: MortgageInsights 2012

The net benefit of permitting personal mortgage broker corporations is, therefore, twofold: enhanced consumer protection and the removal of economic barriers for mortgage brokers

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MORTGAGEBROKERNEWS.CA | 41

FEATURE / MERGING MORTGAGE MACHINES

42 | MORTGAGEBROKERNEWS.CA

FEATURE / MERGING MORTGAGE MACHINES

BLENDING BROKERAGES

It could make a mess, but as industry veteran Lloyd Manning reports, merging two small brokerages may also make the most of a mediocre market During the 1980s, it appeared that every company of any size was either buying or merging with a competitor. Then the junk bond traders all went to prison, the promoters faded away and the whole merger-acquisition movement seemingly died.

However, like the fabled Phoenix it has been resurrected from the ashes and the process of merging two or more companies into a single firm is once again quite common. However, although there are some franchisor firms on the trail to sign up new brokerages and the occasional amalgamation, the merger movement, which appears to be limited to the consolidation of mid-tiered firms, does not really seem to have caught on in the mortgage brokerage industry.

It is still largely composed of smaller firms, all doing their own thing and all competing for a piece of the market. Unquestionably many of these brokerages would wonder if they have gone as far as they can unless their mode of operation is changed.

In order to offset today’s shallow profit and ultra

competitive business environment many brokerages have joined a quasi franchise system – a network, which offers some of the benefits of franchising at a lower cost. Yet, this route is not for all.

To survive, compete and grow, it is necessary – no mandatory – to have a brokerage that can work within the constraints of lender inconsistencies while incorporating client retention, marketing, changing demographics, the ability to attract and retain top level associates, with the efficiency and the foresight to overcome present and future challenges. All of this is in the face of increasing expenses and added competition. The nature of the business seems to indicate that either you remain very small, boutique, or get much larger. Staying in between is a hard position to maintain, one probably not sustainable over the next several years.

Although these associations, the networks, offer advice, systems improvement and better marketing it comes at a cost to the individual brokers. Nothing is free.

MORTGAGEBROKERNEWS.CA | 43

FEATURE / MERGING MORTGAGE MACHINES

AN ALTERNATIVE The merging of two or more smaller or midsize mortgage brokerages into one that is larger allows for greater market penetration potential and can more successfully attract capable associates. It can also offer a wider range of services and client satisfaction is one of the ways to beat the odds. The larger office can garner and retain clientele where it may not otherwise be able to do so. It can better provide a wider range of services and more diversified expertise to its clients.

One of the principal advantages of mergers is synergy, primarily financial, but also in terms of efficiency. The merged group’s value is often more than the sum of the individual contributors. Two plus two equals five or more. Cost savings and growth potential can be a direct result of size and diversification that the smaller one- or three-person firm cannot attain.

Cost savings and growth potential can be a direct result of size and diversification that the smaller oneor three-person firm cannot attain

44 | MORTGAGEBROKERNEWS.CA

THE DOWNSIDE Sometimes amalgamations are brought about because of a crisis situation, which is the worst of all reasons to merge. Joining up with another brokerage may not eliminate all of the problems and could exacerbate some. The large brokerage, with more offices serving a wider geographical area and with a larger staff of both associates and clerical staff will require additional management control. The principal difficulty is incompatibility with other merger partners and differing expectations of what the merger will accomplish.

If the objectives are fuzzy so will be the results.

Not everyone is a team player. Yet, this is what each must be if the merger is to be successful.

Incompatibility can take different forms such as conflicting objectives, differing talents, competency, work ethic and financial contribution.

Some mortgage brokers are excellent salespersons who can attract a wide cadre of clients, but are poor managers, and vice versa. Still, all must promote the welfare of the group, not that of any individual associate.

There is a loss of autonomy from that of the smaller firm. This implies central governance, physical integration and at times sacrificing personal preferences for the good of the whole.

Without commitment, the merged brokerage will be nothing other than a disjointed collection of individuals whose cost of doing business and other drawbacks could be greater than before.

STATS Consumers say...

A mortgage broker would be good for...

Transferring mortgage to new property

42% Source: MortgageInsights 2012

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FEATURE / MERGING MORTGAGE MACHINES

IN THE BEGINNING The starting point is a roundtable discussion of what is wanted, what is expected, what each brings to the table and what each participant hopes to achieve.

When there is a melding of objectives, all have agreed to the basics and have laid out rudimentary guidelines; the next step is to undertake a detailed pre-merger assessment of each individual brokerage.

The analysis should include: • The market–going concern value of

•

•

•

• •

• • •

each brokerage, the tangible and intangible assets.

The history of each brokerage, annual income, operating expenses and net pre-tax profit. Valuations are always made after tax but for this exercise it should be pre-tax.

Details of the client base of each brokerage (residential A or B, commercial, etc.)

The sales and support staff of each, the amounts and per cent of commissions paid to sales associates, staff salaries, bonuses, etc.

Are the sales associates employees or independent contractors?

Leaseholds and furniture, fixtures and equipment (FF&E) that could be occupied and/ or used by the merged firm. Value and compensation arrangement.

A clear understanding of what each partner will bring into the merger A detailed personal compatibility analysis.

An assurance that all participants will be better off after the merger.

46 | MORTGAGEBROKERNEWS.CA

PUTTING IT ALL TOGETHER Combining two or more mortgage brokerages into a single firm is never an easy task. It takes time and money. You will require a good accountant, a lawyer, a business appraiser qualified to appraise each brokerage and depending upon the number of prospective partners and the hurdles to be overcome, perhaps a facilitator to tie it all together.

Don’t rush into it. Many what-could-be successful mergers fail because the participants are impatient or lack sufficient guidance to resolve the many decisions that must be made. Some may feel that the end product is not worth the bother.

Strive for a tax-free vending in of equities. Get the best advice from a qualified tax accountant.

There is no point going through all of this only to see your gains frittered away to The Canada Revenue Agency.

Many what-could-be successful mergers fail because the participants are impatient or lack sufficient guidance to resolve the many decisions that must be made

News

aPPoIntments

Mergers are not for everyone yet are a viable mode for smaller and midsize firms that areappointments not interested in the franchise association Mortgage Intelligence announced that route Steve Heimbecker, Marg Green,

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Donna Ramsay and Concierge Mortgage Group are joining IT’S A BUSINESS ARRANGEMENT the company.

Mergers are not for everyone yet are a viable mode Ramsay in Green in Mississauga, for smaller and midsize firms Orangeville that are notand interested Heimbecker in Waterloo, are equal owners in in the franchise-association route yet wish to take Concierge Mortgage Group. full advantage of the growing market and Concierge is a new boutique diversification that is available through size and brokerage firm that will focus on efficiency. elite and experienced brokers, It is important at the outsetoffering to agree on the rules exceptional needs-based for buying in, management, daily operation, opting customer service.

The goal is for out and involuntary exit. The legalese an Conciergeand Mortgage Group to have offices throughout agreement as to who does what and how each isOntario.

Concierge operate as a compensated can be negotiated and agreed will upon. network partner with Mortgage However, no legal document can take into Intelligence, developing its own consideration relationships or how well the brokers brand while taking advantage of will work with each other nowMortgage or in theIntelligence’s future. key Compatibility and mutual interests are the most resources like compliance, payroll, important part of making it allexclusive work. mortgage products, marketing.

Mergers can produce greatand benefits for the “Mortgage Intelligence offers participants, change borderline or single product us competitive compensation mortgage brokerages into successful ones. Through and the support that Concierge the efficiency of size, they can provide many needs to be successful,” benefits for the partners and enhance services for said Heimbecker.

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

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

l a e Ownership that makes R sense.

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their clientele. Still, mergers must be properly set up, judiciously managed and frequently monitored.

TMG The Most often they are an act of faith.

You Mortgage get as youGroup is moving three of its regional leaders up the give, quid pro quo.

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

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SUIT UP BUSINESS / MARKETING

There’s no pitching your employee mortgage benefits program by phone, writes Doren Aldana, so suit up for an in-person show time

Step #5 – The In-Person Meeting ast month, I taught you how to followup by phone to actually book face-to-face meetings with HR execs, so you can have a chance to present your Employee Mortgage Benefits Program and get it approved. If you recall, I gave you a tried-and-true, word-for-word script with exactly what to say -- and how to say it -- when calling on these key decisionmakers. Remember, all the magic happens at the face-to-face meeting. That’s where you can give a full overview on the benefits of your program and if you’re successful, get your program approved. Here’s what you need to know to make it happen..

Now you have a chance to meet the decisionmaker face-to-face, belly-to-belly and connect with them on a personal level. In-person meetings give you

48 | MORTGAGEBROKERNEWS.CA

BUSINESS / MARKETING a distinct advantage when it comes to building trust and rapport because they give you more of what I call, “Marketing Intimacy” -- they allow your prospect to look into your eyes (the window to your soul), and see your body language and facial expressions.

Admittedly, this can easily backfire if you have the personality of Pee-wee Herman or Steve Urkel.

However, if you have some semblance of an attractive personality and you truly believe in the value you’re bringing to the table, that confidence and passion will come through in not just what you say, but how you say it. The more positive energy you emit -- in the form of passion, confidence and enthusiasm -- the more success you’ll have! But you can’t fake it.

People’s B.S. detectors can sense a “fake” from a mile away. Just be real. Be authentic. Be you.

Here are a few tips for conducting a successful meeting. Frankly, some of these tips might seem elementary but I don’t want to take anything for granted; “common sense” ain’t so common anymore.

So, let’s review the critical fundamentals...

TIP #1: BE PUNCTUAL You never have a second chance to make a good first impression and nothing can murder that first impression faster than being late. So plan on arriving at least five to 10 minutes early. Not only will punctuality send a message to your prospect that you’re predictable, reliable and trustworthy, it will also make you feel good -- and feeling good is one of the secret keys to success in sales!

TIP #2 : DRESS FOR SUCCESS Again, this goes without saying but if you want to be successful, you’ve got to look -and smell -- the part. Personal grooming can go a long way towards making a positive first impression. So, brush your teeth, shave the five o’clock shadow, and, if need be, clip those gnarly nostril hairs! Then throw on some sharp-looking duds, like a collared shirt and some pressed slacks. In other words, look like a million bucks. This will help to amp up your “aura of success” and will tip the scales of fortune in your favor to have a successful meeting.

TIP 3: USE POWERPOINT Nowadays, if you’re making a business presentation and you want to look legit, you need PowerPoint -- it’s just a given. Not only does it help you stay on track with your message, if it’s done right, it can be a powerful persuasion tool. With that in mind, here a few Dos and Don’ts...  DON’T use too much text on one slide

-- it will bore your prospect to death.  DO use minimal text and lots of

stunning, emotion-evoking images (I use

istockphoto.com for my royalty-free images).  DON’T just read word-for-word from the

screen (any dummy can do that).  DO have your main points memorized

and then just use the slides to trigger

your memory.  DON’T use an ugly, unbranded

PowerPoint template.  DO get a professionally branded

PowerPoint template designed, so it’s in

sync with the rest of your program

marketing collateral (brochure, posters,

postcards, etc.).

So develop a well-crafted PowerPoint presentation that walks your prospect through the elements of your program. Start with a brief summary of what you’ll be covering in your presentation. Then give an overview on yourself and your company, your qualifications, the benefits of your program, a list of companies you’ve already provided this program to (if you have any), testimonials from happy clients and/or from other companies, ways to promote your program to the employee population, and then wrap up with a call to action. Those are the essential elements you’ll need for an effective PowerPoint presentation.

MORTGAGEBROKERNEWS.CA | 49

BUSINESS / MARKETING

TIP #4 – PRESENT YOUR COMMUNICATION MENU This is the secret weapon most mortgage pros have no clue about that can literally make or break the success of your meeting.

This is one of those little hinges that swings open BIG doors to BIG breakthroughs. And all it is is a laundry list of the different ways that you can promote your Employee Mortgage Benefits Program to the company’s employees. Place a checkbox next to each item, so the decision-maker can check off the ones they’d like you to implement:                

Mass Emailing Hard Copy Mail to Employee Homes Payroll Stuffers Table Tents 11” x 17” Posters “Take One” Flyers Ongoing Exposure Link on Intranet Website Info in New Employee Packages Posters / Signs E-Newsletter Hard Copy Newsletter Onsite Education First Time Home Buyers Seminar Escape Debt Prison Seminar On-Site Q&A

As you can see, there is a lot of different ways to skin the cat when it comes to marketing your program. Your objective, at least during this initial meeting, is to get the decision-maker to check off the TOP Three promotion methods that they “might” want you to implement first. This is what I call the “soft close.” You simply ask them, “What are the top three ways you’d choose to share the benefits of this program with your employees?” You’re not asking if they want to implement your program just yet. At this point, you’re assuming they want your program and you’re just asking how they’d like to promote it to their employees.

50 | MORTGAGEBROKERNEWS.CA

Now that you’ve completed the Communication Menu, you’re ready for Step #6: Get a Commitment.

To close the sale and get your program approved, just ask this simple closing question: “Well, when would you like to get started?” It’s as simple as that. Don’t ask if they want to get started, ask when they want to get started. And chances are, if you’ve done your job right, they’ll give you the green light!

In next month’s article, I’ll teach you the final step in my seven-step system for launching your own Employee Mortgage Benefits Program: Marketing your program to the employees. This, of course, is where all the money is because until and unless you get the word out about the benefits of the program, nobody will take advantage of it. Effective marketing is, and always will be, the key to attracting clients. The better your marketing, the more money you’ll make.

Stay tuned…

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

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FEATURE / COMMERCIAL CONFIDENTIAL

COMMERCIAL CREATIVITY Broker appetite for commercial deals may be growing, writes Vernon Clement Jones, but so is the lender creativity needed to get them done

52 | MORTGAGEBROKERNEWS.CA

FEATURE / COMMERCIAL CONFIDENTIAL

Why did the residential broker cross the road? Given a falling number of home sales and tighter mortgage rules, it was to get to the commercial deal on the other side. That at least is the reality facing channel lenders across the country as they welcome a growing number of neophytes to their end of the business.

But taking a strong lead and presenting an even stronger case for funding is not for chickens, say lenders like Dov Meyer, president and CEO of Terra Firma Capital. He and others are pointing to the expertise of the commercial brokers they deal as a model for residential players hoping to make the leap – if only occasionally.

“Brokers really have to be able to articulate and describe the condition of the property and to provide the follow up and legwork needed to connect the client to the lender,” says Meyer, who took the helm of the publicly traded Terra Firm in 2010. “That’s what we find with the brokers we deal with. They bring that expertise and diligence.”

Acquiring that skill set can take years, but lenders are increasingly willing to help flatten out that learning curve. In fact, with new, tighter lending guidelines in place at most big banks, smaller players are starting to show the kind of flexibility in funding and deal structuring that meshes with the needs of a typical broker client.

Meyer is among those willing to bend to win those “less-straightforward deals” as well as educate

brokers in an effort to prime them for the challenge of getting them funded. To that end, he’s offering two case studies for brokers:

CASE NO. 1 A relatively new developer was looking to acquire a property in Hamilton, Ont., in order to build a supermarket. Attempts to win financing from Schedule-A banks and second-tier lenders were challenged by concerns about the condition of the property and unanswered questions.

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MORTGAGEBROKERNEWS.CA 53 Brokerage # |10160

FEATURE / COMMERCIAL CONFIDENTIAL

He was able to take the borrower through the entire process to ensure that all conditions were met. Really, without that kind of added-value the deal would not have been funded Ultimately, Terra agreed to provide the requested $4,600,000 for construction of the 29,000 sq. ft. retail development, with 100 per cent preleasing.

The lender was also able to attract the backing of a Schedule A player.

The successful outcome is the direct result of the broker’s ability to “articulate and describe the conditions of the property,” says Meyer. “He was able to take the borrower through the entire process to ensure that all conditions were met. Really, without that kind of added-value the deal would not have been funded.”

Reciprocally, brokers are pointing to creative thinking on the part of MICs, syndicates and small institutional players as key to helping them protect their share of commercial business even as banks look to grow their own commercial divisions in 2013. The effort is all about making up for any projected drop-off in residential originations.

“It’s true,” says Meyer. “We’re not a cookie-cutter shop and deals are looked at individually,” he tells CMP. “I think we will see more demand for flexibility and more of a need to fill the gap left by the banks.”

Got Plans?

We should get together.

We’ve been underwriting real estate backed Construction, Bridge and Equity Financing for over 35 years.

54 | MORTGAGEBROKERNEWS.CA

CASE NO. 2 Another developer was focused on building a residential low-rise townhouse development in the north-west end of Toronto. That borrower was hunting for $6 million to free himself from a typical Catch-22 situation: While he had already won development financing from a big bank, release of the first tranche of that money was dependent on presales. But with no finished homes to show increasingly sceptical buyers, those presales simply weren’t coming, says Meyer.

Terra Firma would agree to provide the funds – as sort of bridge financing – to jumpstart that construction. More specifically, those funds came as a combination of debt and an equity position for the lender. While the deal is still fluid, the exit strategy for Meyer is simple: The Terra loan will facilitate presales, which in turn will ensure the client wins his first tranche from the primary lender. That money then gets used to satisfy the agreement with Terra Firma.

“We’ll be seeing a lot more of these in the market, especially with condo development, considering the banks are asking for 75 per cent to 85 per cent presales,” says Meyer. “So what’s happening, and what brokers should be mindful of, is that developers want to get started on construction before they get to their presales, in order to make those presales. To make sales, it’s really important to have a project on its way.”

Still, for relatively new brokers to commercial, those kind of complex deals can be daunting. That’s doubly so in cases where deals may need some element of equity financing – a component lenders like Terra seem more and more willing to include.

It makes partnering with the right lender all the more essential, caution industry vets.

They suggest mortgage professionals focus on familiarizing themselves with the specific market

Loans from $1,000,000 to $15,000,000+ Financing for projects in southern Ontario Only

Contact Mickey Baratz Lic.# M08000714 (416) 483-8018 ext 233 or mickey@vectormanagement.com

Brokerage # 10160

FEATURE / COMMERCIAL CONFIDENTIAL interests of individual lenders. If a deal fits within those perimeters and “makes” sense, that funder will be willing to do the kind of creative thinking needed to get the deal done. The rules of conventional lending, nonetheless apply, add experts.

But in the final analysis, brokers will have to know the deals they present both inside and out, says Meyer. There’s no getting around the need for that level of stewardship.

“It’s essential that they understand the deal and how to put it together,” he says. “But brokers also need to take ownership of the deal. They can’t simply play the role of matchmaker.”

Residential brokers going into commercial, or even hoping to do the occasional deal in that arena have to know that going in, says one experienced mortgage professional.

“It’s not a passive role that you’re expected to take on in these transactions,” says Mike Siddiq.

“Your attendance is required, but also your full participation. If you can’t manage that level of commitment, don’t bother.”

CMP Nov 2012.eps 1 10/25/2012 10:24:17 AM

STATS Consumers say...

A mortgage broker would be good for...

Self-employed

36% Source: MortgageInsights 2012

It’s essential that they understand the deal and how to put it together. But brokers also need to take ownership of the deal

Terra Firma Capital Corporation is a full service real estate finance company, providing customized equity and debt solutions to the real estate industry. Terra Firma offers flexibility and creativity to property owners and developers.

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www.tfcc.ca All mortgage administration services and lending is conducted through Terra Firma Realty Corporation, a licensed mortgage administrator (LIC.#11709) and mortgage broker (LIC. #11710).

MORTGAGEBROKERNEWS.CA | 55

FEATURE / TRAINING

A NEW TWIST ON MENTORING Wringing out the most from mentoring requires a whole new approach, writes Rich Ulvild

56 | MORTGAGEBROKERNEWS.CA

FEATURE / TRAINING

The truth is that it doesn’t matter how much training and technology you have in place if people aren’t taking full advantage of your offerings

N

ew brokers are the lifeblood of the Canadian mortgage brokering landscape and it’s not enough to recruit from within. If this mentality doesn’t change, the industry numbers will remain stagnant or fall and our market share will not grow.

But getting new bodies in the door is only half of the equation. It’s ensuring the success of these new originators that will help our industry thrive in any market. As many as 70 per cent of newcomers to this industry don’t make it through their first year!

And a key component to ensuring success involves holding new brokers accountable.

It’s up to every brokerage, franchise and office to ensure new brokers are properly trained and mentored, and then monitored to be certain they’re on the right path.

Dominion Lending Centres recently rolled out a new national program developed from scratch over the past year to help ensure more new brokers make it through their first year and beyond.

And new brokers are being held accountable by being paired with a preapproved and fully trained in-franchise mentor who monitors their progress and offers feedback.

This mentorship program is a key component that helps new originators know what to do right from their first day in the industry.

The new agent receives a manual that covers everything from their initial set-up as an agent, budgeting, a heavy emphasis on lead generation, building referral sources and creating their database – to form habits that will lead to a better chance of success.

The truth is that it doesn’t matter how much training and technology you have in place if people aren’t taking full advantage of your offerings. We have more than 500 hours of backend training on

our 4,000+ page Intranet. One of the reasons for creating the Learning Academy was to ensure new brokers are engaged and actively using our tools and systems to drive their success.

New agents also receive workbooks that set out exactly what they should be doing every day of their first week, as well as throughout the first four weeks in their new career to help them succeed by creating ongoing habits that enhance their potential for success. After each assignment has been completed, both the mentor and new agent must sign off.

Our mentoring, training and accountability program term is up to 12 months or a minimum of 12 completed deals from lead generation to post-sale follow-up.

Not only are new brokers currently going through the program, it’s also open to existing agents with less than two years of brokering experience who feel they aren’t living up to their full potential and need a refresher.

ABOUT THE WRITER: Rich Ulvild is director of lender and franchise relations for Dominion Lending Centres.

MORTGAGEBROKERNEWS.CA | 57

PROFILE / FAVOURITE THINGS

Favourite things‌

Cecilia Ramos

Broker/Owner, Verico - Ultimate Mortgage and Finance Solutions, Toronto, Ont. Film: Seafood,

NEW

Mortgage Term:

particularly lobster

year - fixed Vacation: Paris

NEW Mortgage Product:

Scotiabank and National Bank

Step Mortgage and All-in-One products

Drink: Tea

Hobby: Travelling Sport: Tennis and golf Downtime Activity: Taking mini-trips with my daughter

58 | MORTGAGEBROKERNEWS.CA

Book: Conversations with God by Neale Donald Walsch Music: Country, Alan Jackson

PROFILE / FAVOURITE THINGS

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

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MORTGAGEBROKERNEWS.CA | 59  

PROFILE / BROKER

TOUGH CUSTOMERS

WATCH OUT 60 | MORTGAGEBROKERNEWS.CA

PROFILE / BROKER

Christine Xu doesn’t have one tough customer, she has hundreds When Christine Xu was turned down for a mortgage by her own bank, she turned to the Yellow Pages and found a mortgage broker.

“This was my first experience with the mortgage industry,” recalls the Argentum broker, who was then working as an investment adviser and realized there was no Chinese mortgage broker/agent advertised in the community. “I basically had to find a way to translate the word ‘mortgage agent’ into Chinese since there wasn’t such a phrase before.”

The effort was very much worthwhile.

Born in Shanghai and having studied as an English major, Xu immigrated to Canada in 1989 along with thousands of other Chinese students.

She went to U of T and got her degree in economics and East Asian Studies.

“I am always very curious to learn new things and to explore a new frontier,” says the broker who originated $98.3 million in mortgages in 2011. That was only after serving as a bank clerk, a constituency assistant to a member of parliament and an executive director for a large non-profit, among other things.

STATS Consumers say...

A mortgage broker would be good for...

Healthy financial position

36% Source: MortgageInsights 2012

The move to brokering came after discovering the dearth of mortgage professionals with a Chinese background in Markham, Ont.

The move to brokering also came after discovering the dearth of mortgage professionals with a Chinese background in Markham, Ont. That afforded her an opportunity too good to pass up. She would first move her office to Markham and later her home, up from downtown Toronto.

“I was thinking many Asian families would have the same difficulties as us,” she tells CMP, “and they would need a broker that can understand their needs, their culture and especially one who speaks their language.”

Xu focuses her marketing effect in the Chinese community. Each week, for the past 11 years, her mortgage ads cover almost all Chinese newspapers.

She also does TV, radio and Internet marketing.

The money she spends on marketing each month?

Not cheap!

It has paid out, however.

As much as 80 per cent of Xu’s clients are Chinese, she said. Currently, the average price of the Unionville homes she arranges mortgages on is between $700,000 and $800,000. That helps to bring funded volume up, she says. “I am very lucky to have a native country, which is now the richest country in the world.”

Xu was among the top-tier brokers in the CMP Top 75 Brokers list for 2011, and attributes her success to hard work, client service, her expertise and her willingness to negotiate.

“Chinese customers, especially those ones who come from the Mainland, are the toughest negotiators,” she says. “In China, you negotiate the price of everything. Some of my clients will walk away because of a 0.01 per cent rate difference (so) I always give my clients what they deserve.”

She’s not bashful about how exactly she decides who and when to give the lowest rates to either.

“Best clients will get the best rates,” she says.

Some 50 per cent of her clients come from client referrals and grateful real estate agents she’s helped close a deal at the eleventh hour.

MORTGAGEBROKERNEWS.CA | 61

GUEST / COLUMN

BARKING UP THE WRONG TREE Are brokers just plain wrong in criticizing the 2012 mortgage rule changes? Paolo Di Petta argues they are

62 | MORTGAGEBROKERNEWS.CA

GUEST / COLUMN

Even the Bank of Canada concedes that rates are too low, at unsustainable levels, and that they have artificially inflated the economy and the housing market because of the easy access to money

I

don’t make a habit of agreeing with politicians, but this is the exception – the real estate market HAS been far too overheated in recent years. It’s just not sustainable any longer. That may mean that some people brand me as a pessimist. But, quite the contrary, I’m optimistic that the market will return to more realistic and reasonable levels.

CAAMP, and the industry as whole, really needs to re-evaluate its mission in Ottawa in regards to getting the government to change course on its tighter mortgage rules. I don’t think it’ll be doing the broker industry justice if it pushes for a turnaround of the current lending policies.

I don’t buy the arguments. For instance, homebuyers were shut out of the market due to skyrocketing home values brought about by low interest rates and previously lax mortgage rules. So, it’s not the rule changes that locked people out of the market; it’s that the prices are so out of control that a 20 per cent down payment seems so high.

Rather than calling for policies that will provide only short-term growth for the mortgage industry, CAAMP and brokers should be more proactive in educating consumers on how to avoid accumulating “irresponsible” debts. In essence, we had to rip off the Band-Aid. It was something that had to be done, whether or not it hurts.

Even the Bank of Canada concedes that rates are too low, at unsustainable levels, and that they have artificially inflated the economy and the housing market because of the easy access to money. As I said many times already: cheap, easy access to credit

is a big stimulus that many people will take advantage of. That’s why our debt-toincome ratio is at 164 per cent -- the highest ever, I might add.

Clearly there’s a problem, and the mortgage rule change was the best option to slow debt growth without pushing people out of their homes. If you have a better solution, I’d like to hear it. I admit that a lax mortgage environment wasn’t the only reason for all of our issues, but it certainly was a big one.

Rates started falling in the late 90s and, if you check the Toronto Real Estate Board stats, you’ll see that sales, which were already on an upswing, accelerated. Not to mention, if easy access to cheap borrowed money wasn’t a major driver, then the rule changes wouldn’t have had this effect.

Supply and demand IS important, but the fact is if people don’t have the money, or access to credit, they simply can’t afford it. Housing prices were getting out of control, and the fourth round of mortgage rule changes are helping to bring them more in line.

ABOUT THE WRITER: Paolo Di Petta, a mortgage agent in the Greater Toronto Area and Southern Ontario, specializes in private lending. Having completed the Ontario Real Estate Association pre-registration courses, he is now working towards a real estate salesperson license.

MORTGAGEBROKERNEWS.CA | 63

SERVICE / DIRECTORY

Banks

Commercial Lenders

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

B2B Bank b2bbank.com/mortgages Ph: 1 800 263 8349 Inside Back Cover

Bridgewater Bank www.bridgewaterbank.ca Ph: 1 888 837 2326 Page 11

Terra Firma www.tfcc.ca Ph: 416 866 3135 Page 55

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

TM

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

Mortgage Architects www.mortgagearchitects.ca • Ph: 1 877 802 9100 Page Inside Front Cover

Vector Financial Services www.vectorfinancialservices.com Ph: 1 866 483 8018 Page 53-54

RMAI Financial Group www.rmaifinancial.com Ph: 1 866 955 7624 Page 47

Canada Guaranty Mortgage Insurance Company www.canadaguaranty.ca Ph: 1 866 414 9109 Page 19

VERICO www.verico.ca Ph: 1 866 983 7426 Outsert

Insurance

National Bank www.nbc.ca Ph: 1 888 483 5628 Page 35 Non-Bank Lenders

Technology & Software

Capital Direct www.capitaldirect.ca Ph: 780 868-0550 Page 21

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

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

Best Points Travel info@bestpointstravel.com Ph: 1 800 551 8786 Ph: 416 251 9944 Page 23

Home Trust www.hometrust.ca Ph: 1 877 903 2133 Page 13 Broker Networks

Peoples Trust www.peoplestrust.com Ph: 1 800 663 0324 Page 41

Pillar Financial Services www.pillarfinancial.ca Ph: 613 282 1242 Page 31

Tribecca Finance Corporation www.tribecca.ca Ph: 416 225 6900 Page 33

64 | MORTGAGEBROKERNEWS.CA

Marlborough Stirling Canada www.morweb.ca Ph: 1 877 626 2022 Page 17 Real Estate

Argentum Mortgage and Finance Corp www.argentummortgages.ca Ph: 1 888 402 7436 Page 9

Centum Financial Group Inc. www.centum.ca Ph: 1 604 257 3940 Page 5

Dominion Lending Centres www.DominionLending.ca Ph: 1 888 806 8080 Page 7

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

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