CMP 7.9

profiled Gary Mauris’s give and take

September 2012 / issue 7.9 / $6.95

Rate sites ‘We’re not the enemy’ Money maker Syndicate mortgages

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Celebrating brokers who’ve done it and coaching those on their way! page 32

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contents / issue 7.9 market matters 8| First Up First National is cutting 5 bps off its finder’s fees, but brokers don’t have to like it.

10 | Rate Site Rage Canada’s leading executives at rate comparison sites explain why they’re friends and not foes for brokers 16 | Master Class If selling a monoline is difficult, it doesn’t have to be, according to seasoned broker John Panagakos, offering up a handy-dandy cheat sheet

FEATURES

MARKETING 54 | Employee mortgage benefits program: In his latest series, Doren Aldana explains how to hunt down the clients. Get your notepad

24 | Mauris on The industry’s most controversial broker head talks about lenders, brokers and, ahem, competitors 37 | No.1 Commercial Broker Some kids want to be cops or fire fighters. David Beckingham wanted to be a mortgage broker

38

42 | Debt Watchdog (Part2) Brokers have been called a lot of things over the years, but increasingly it may be debt watchdogs as they work to get clients back into the black 46 | Syndicate Suggestion (Part 1) As brokers search for alternative revenue streams, they’re hitting on the benefits of client investment referrals.

Here’s what they need to know

NEWS 20 | Product Round-Up This month’s product announcements, even before they come out of the box 23 | This Time Last Year We catch up with one broker – perhaps the last -- who never, ever buys-down rate.

issue

7.9

Cover Story

20

32 | 2012 CMP Top 10 Commercial Brokers CMP presents its first-ever ranking of commercial brokers by funded volume, and it may surprise you

Product Roundup

Blake Cassidy

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contents / issue 7.9 profiles

regulars

58 | Industry CAAMP is busy attaching all the bells and whistles for the upcoming Mortgage Forum this November. CMP has your full briefing on that cacophonous hardware

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

columnS

64 | CMP Service Directory

61 | Favourite Things

62 | Guest So you’ve been handed a commercial opportunity. But first you’ve got to decide if it’s worth the paper it’s written on, say Tom Lamb and Jake Posliff

56

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Geoffrey Woodford Geoffrey Woodford Atlantic Canada

British Columbia • Grant.Bennett@hlcmortgages.com • Grant.Bennett@hlcmortgages.com • 1-866-978-9919 • 1-866-978-9919

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contents / Editor’s letter

How very commercial Oil & water have nothing on residential and commercial brokers. Those two industry factions have refused to mix for years. Well, that’s if you don’t include referrals and the occasional Christmas party.

But what a difference a slow market makes.

Residential brokers are increasingly looking to bridge the gap between their world and the commercial. While the opportunities are there, the challenges are even more plentiful, and don’t even talk about the paperwork.

Still that newfound interest helps put the accomplishments of CMP’s Top 10 Commercial Brokers in perspective. This year’s first-ever ranking by funded volume (pg. 32) celebrates the success of brokers who slug it out for months at a time on one deal, all in hopes of a big payoff that may never come.

But as CMP’s Nestor Arellano points out, more and more residential brokers are intent on giving it a go (pg. 40). If you’re among them, you’ll want to read the advice of some of the country’s leading commercial players before making that leap (pg. 38).

Also, don’t overlook our bold-as-brass interview with one of the industry’s most controversial leaders, Gary Mauris. On page 24, he shares his take on commission cutbacks, consolidation of broker networks and, ahem, broker defections. He also takes on volume pooling and concerns about Don Cherry.

And in the build-up to next month’s Brokers on Lenders survey, another seasoned broker takes on the thorny question of how best to sell monolines to clients who’ve never heard of Merix, Street Capital or First National (Pg. 8).

And since I’ve already mentioned First Nat, I might as well tell you about our broker critique of its move to cut finder’s fees. Warning: It ain’t pretty.

So read on, and then drop us a note after you’re done. Look for some of those comments in October’s “Letters to the Editor.” By the way, this month’s comments aren’t anything to sneeze at either (Pg. 6).

COPY & FEATURES Editor Vernon Clement Jones SUB-EDITOR Rachel Naud staff writer Nestor Arellano contributors Josh Balner

Doren Aldana

John Panagakos

Jake Posliff

Tom Lamb

Josh Will

ART & PRODUCTION

Alicia Chin

gRAPHIC dESIGNER

SALES & MARKETING

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

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

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

PROFILED GARY MAURIS’S GIVE AND TAKE

SEPTEMBER 2012 / ISSUE 7.9 / $6.95

RATE SITES ‘WE’RE NOT THE ENEMY’ MONEY MAKER SYNDICATE MORTGAGES

Vernon Clement Jones connect

Contact the editor: vernon.jones@kmimedia.ca

4 | mortgagebrokernews.ca

TOP COMMERCIAL BROKERS

Celebrating brokers who’ve done it and coaching those on their way!

PAGE 32

conversations / Letters to the Editor

Letters to the Editor Re: Bob Ord, a trail of innovation (CMP7.8) but I wonder where is the next generation of innovators who will take his place. We need direction if we’re going to take on the banks over the next 10 years.

Can’t we all get along?

Enigma no more

Martin Briggs

I loved the interview with Bob Ord because I’ve heard so much about him from brokers I’ve worked with, but have never actually spoken to him. I think that he is still making contributions to the broker channel,

Mandeep Mukkar

He’s an interesting guy, although I think that he is looking at the industry like everybody else is, from the perspective of his own situation and not the entire industry. Brokers have to do more communicating between superbrokers and competitors. I wonder how often Ord and Gary and Colin Dreyer talk.

I hate to think that their competition is keeping them from working together to take on the banks.

MortgageBrokerNews.ca Reader Poll Will the sale of ING to a Big Six bank hurt brokers?

Yes

58%

No

41%

Re: CMP Top 75 (CMP7.8) Correction: CMP erred in tallying up the number of Dominion Lending Centres brokers on the Top 75 list.

With a total of 26 broker and agents on this year’s Top 75. DLC claimed the largest number of agents and brokers on the list. This represents the fourth time the broker network has accomplished the feat.

No. 1 Controversy

Sid Hannah

Not to take anything away from Dan Eisner and his funded volume of $412 million, but I don’t buy his arguments about him being the sole originator of that volume. He is saying that because his ads bring in business to True North locations and the lenders all come to him as the point man that he is the originator, but I think that does not take into consideration the role of agents, who are licensed, and working for him. They have to be licensed and that means that they are originators of the mortgages they handle. You can dress it up all you like, Dan, but they’re more than order takers. Congratulations, though.

Letters to the editor are welcome!

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

6 | mortgagebrokernews.ca

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First Up / Read between the lines

Reading Between

the lines: The news First National would slash finder’s fees by 5 bps fell on brokers with a thud. That the lender would also end the popular Wizard Spending Account Program was more of an explosion.

Still, the news has stirred a broker debate on volume pooling and exactly where compensation is headed.

In this issue’s Reading between the lines, two

veteran brokers – Greg Williamson, founder of 180 Degrees Solution, and Jim Tourloukis, owner of Advent Mortgages Services – jot down their reaction to First National’s announcement. Be warned: In addition to their thoughts, they’ve also pencilled in some sarcasm.

There have been changes in the marketplace that have resulted in an increase

1

in the cost of originating and funding mortgages. Accordingly, we are making

Greg Williamson

1

May we help you save on your increased cost? Will you finally consider REAL efficiencybased compensation?

2

I know you told us not to pool and we still did it. OK, our bad.

However, we both know you could have stopped this by enforcing only the submission agent to speak and to force the use of Merlin. So we both own part of this problem. Let’s both own the solution, shall we?

3

Smaller broker houses still need to pool ·· Create a fulfillment centre ·· Agents pay a fee or portion of commission to submit through the centre ·· They don’t have to mess around with paperwork. They can chase more biz. ·· You make additional split, they get access to more lenders ·· Lenders get the efficiencies they need

4

Try this on for size:

5

the following compensation adjustments effective August 17, 2012: •

Finders fees for all terms will be reduced by 5 bps.

•

Wizard Spending Account (WSA) will be discontinued.

2

All outstanding committed deals in the pipeline prior to August 17, 2012 will continue to receive the same finders fees and WSA benefits in place prior to this

3

change. Brokers have until December 31, 2013 to request redemptions from their WSA.

4 5

rloukis Jim Tou 8 | mortgagebrokernews.ca

The volume bonus was introduced to reward brokerages for sending in volume which in effect created efficiencies and cost savings for the lender (for example, the lender only had to provide reporting and pay one entity). Today, this is no longer the case. Our industry has created consolidators whose sole purpose is to exploit the lender’s volume bonus.

What the lenders should do is get rid of volume bonuses and pooling and instead pay an efficiency bonus. Doing so will collapse the consolidators in a heartbeat. I left my consolidator years ago because being independent paid me more efficiency bonuses. Others will do the same if pooling goes away.

1) All VB paid upon efficiency a. 90% + funding ratio = 110% of comp. b. 75% to 90% funding = 85% of available comp. c. Under 75% funding = 70% of available comp.

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Market Matters //rate ratesites sites

Seeing

Red

Or Revenue?

10 | mortgagebrokernews.ca

Rate site execs enter the ring of broker rage for a rebuttal CMP may be throwing a red rag in front of a raging bull – a bull furious about broker buy-downs and rate shoppers. But as Torstar, one of the country’s largest media company joins the growing number of online rate sites, angry brokers are increasingly forced to decide whether to join them or continue the fight against those comparison sites. The answer is simple, say opponents: Continue to focus on building your value-add to clients and resist the urge to slash rates – and finder’s fees! In their own words, founders of the country’s three leading rate sites attempt to counter the argument and calm the bull.

CMP leaves the decision making to the brokers.

Lisa Nikiforuk Bell

Account Executive BC – Lower Mainland & Vancouver Island

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Market Matters /rate sites Consumers using online sources: Source: CMHC 2012 Mortgage Consumer Survey

65% 2011

2012 We’re not the enemy!

Vik Palan Ratesheet.ca

I am surprised there are still some brokers with contempt for rate comparison websites. We work for the broker industry and help them attract business from the banks. So if anything, banks should be the one to dislike rate comparison websites, not brokers.

We understand that a right mortgage is more important than a low interest rate... so why are we selling low rates to the consumer? It’s because that’s what a consumer understands and, in most cases, is looking for. Consumers don’t always know about all the mortgage options available to them and hence don’t end up searching for advice. Rate comparison websites like ours act as a platform for brokers to get in touch with such consumers (rate shoppers) – an opportunity that could have been easily lost to a bank!

In today’s world of search engines, the costs of online advertising have increased drastically. Even after spending hundreds and thousands of advertising dollars, brokers with limited knowledge of online marketing lose money. The online mortgage space is currently dominated by rate comparison websites. Ours is already ranking on the

12 | mortgagebrokernews.ca

71% first page of major search engines for most competitive keywords and is a perfect platform that brokers are taking advantage of to get maximum exposure in the market.

Currently, banks have a majority of the mortgage market share – at least three times that of the broker market – the difference is dramatic and if the broker market wants to get anywhere close to or even reduce the gap marginally, brokers should be willing to explore every avenue and every resource available. Be it selling rate, selling services, advertising on search engines or advertising on rate comparison websites.

We understand that a right mortgage is more important than a low interest rate... so why are we selling low rates to the consumer?

STATS

22% (2011) 31% (2012) – consumers solely relying on online mortgage info Source:

CMHC 2012 Mortgage Consumer Survey

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Market Matters /rate sites

Fighting bank fire with fire?

Alyssa Richard RateHub.ca

Rate is just the beginning Kelvin Mangaroo RateSupermarket.ca We have worked very closely with mortgage brokers since we launched over four years ago. In that time, we’ve promoted and advocated the services of mortgage brokers and believe that we share the common goal of educating and connecting the Canadian consumer with the best offers and products for their needs.

The mortgage brokers we work with include us as another channel in their marketing plans, along with other online components (Pay per click, SEO and email marketing) and offline (TV, radio, direct mail, real estate agent referrals and print). We’re simply a part of their marketing mix, providing them with new customers. As we grow, we’ll continue to refer new business to them.

We understand that, to date, there has been a focus on rates, but we believe that this is simply the starting point. As Canadian consumer behaviour evolves, this sector will adapt and rates will become less and less of a focus. A high-quality product, a better customer experience and excellent service levels will be what Canadians will gravitate to and what we will aim to provide.

We view ourselves as a mortgage broker advocate, providing additional direct access to Canadian consumers who have become savvy in using the web to find the best deal for many types of products. Increasingly, we’re seeing consumers search for their financial products in the same manner. Above all else, it will be this consumer demand that will drive the future direction of the mortgage industry.

14 | mortgagebrokernews.ca

STATS

86% “Interest Rates”

73% “Mortgage Options” – primary search terms

Source: CMHC 2012 Mortgage Consumer Survey

We think of RateHub as an online advertising channel for mortgage brokers that actually works. Our brokers choose to work with us each month because there are no contractual obligations or fees based on placements, impressions or brand awareness. Our brokers are charged only when a qualified mortgage shopper is sent to them. RateHub leads are warm because the mortgage consumer specifically chooses the brokerage to arrange a call-back and sends their name, phone number and e-mail address. RateHub’s lead generation system makes it possible for our brokers to track their close ratios and determine their return on investment.

Historically, the online mortgage market has been dominated by the Big Five banks as they had a monopoly on marketing dollars and scale to acquire substantial traffic. We look at rate aggregation websites such as RateHub as a way to funnel some of this traffic to the many talented and competitive mortgage brokers across Canada. We feel we bring market share back to the mortgage broker.

Building a significant online presence takes dedicated resources and a strong understanding of online marketing techniques. Some Canadian brokers have invested capital, time and resources to build these competencies in-house while our clients have decided to focus on their core value proposition, selling mortgages, and have outsourced online lead generation to us.

When we look at the U.S. and European markets, we see multiple publicly traded companies in the financial services lead-generation space with significant business generated from mortgages. The mortgage lead gen space is young in Canada and its only direction is up.

Market Matters /Master class

Broker

-to-

Broker

advice

Selling monolines is easier said than done when big-name branches are aggressive on rate. But, there are key ways to turn consumer bias on its ear, writes broker John Panagakos

16 | mortgagebrokernews.ca

Market Matters / master Class

Toronto Broker John Panagakos is with DLC Centre Home Financial

I

n 2000, I had just left my 10-year job as a top performer at one of Canada’s largest banks for a starting position in one of the country’s leading mortgage broker networks.

In an instant I switched from selling just one product from a single bank to offering 50 different products from 50 different lenders.

The big head-turner was I had to re-educate my customers in order to take advantage of my existing client list. They had never heard of lenders like MCAP, ING, FirstLine, Street Capital or Merix, let alone Dominion Lending Centres, the super broker that I was now working with.

This, of course, is the perennial challenge of every mortgage professional looking to provide clients with alternative non-bank funding sources.

The only lenders people recognize are the Big Five.

Not a few would prefer a high-interest loan from a well-known bank even if an alternative lender clearly offered a better deal.

Educating my clients about products offered by monolines was a big undertaking that turned out to be a learning experience for myself as well. Here are some of those lessons learned on how to sell

1

2

Don’t badmouth banks. Rather

If anything, badmouth bricks & mortar. Clients

Stress the singular sensation.

also have to be told that because monolines rely on the broker channel to sell their products, they do not require expensive bricksand-mortar branches and are able to pass on these savings to the consumer through better pricing and more flexible mortgage terms. I always disclose to my clients that I am compensated by the monolines.

Another point to remember is that unlike banks that sell different kinds of financial products, monolines focus on mortgages and are therefore able to concentrate on developing variants of this product to suit the needs of different borrowers.

In essence, monolines offer products that local branches do not have such as rental, non-income qualifying and self-employed programs. That last point leads to another key point…

than knock the banks, I learned to highlight the advantages attached to the products of monolines. Since recognition, reputation and security are paramount in borrowers’ minds, I focused on helping my clients understand that monolines are Canadian lenders backed by investors who happen to be the banks themselves. I was able to impress upon them that these lenders are guaranteed by insurers such as CMHC, Genworth and Canada Guaranty.

3

mortgagebrokernews.ca | 17

Market Matters /Master class

Not a few would prefer a high-interest loan from a wellknown bank even if an alternative lender clearly offered a better deal STATS

56% – consumers most influenced by mortgage lender Source:

CMHC 2012 Mortgage Consumer Survey

18 | mortgagebrokernews.ca

monolines to clients.

Monolines also provide written approvals that clearly state all the conditions of the loan so that consumers know upfront what they are signing before they get to the lawyers. For example, borrowers know that they can pay 20/20 any time in the year and not just once a year. They know what the IRD is and that it is calculated based on contract rate compared to lender’s best rate for the term remaining.

Once my clients started seeing the benefits of using monolines and began referring to these lenders by their names, it was as if it had become second nature and my referral sources began to grow.

Today, I have clients who are business owners, investors and even VPs and SVPs of banks that are all word-of-mouth referrals. They happily take a mortgage from the likes of Street Capital, MCAP, Canadiana and others without a second thought.

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appointments

Focus on flexibility.

It’s a big

relief for many borrowers to know that monolines can be a lot more flexible compared to banks when it comes to who they lend to (freelance workers, borrowers with less than perfect credit ratings, etc.) and what types of properties they handle (homes, farms, cottages etc.).

Concentration The 120-day rate hold on Mortgage Intelligence announced that look-back centralization: Steve Heimbecker, Marg Green,

policy of Another Donna Ramsay and Concierge Mortgage Group are joining monolines is factor to the company. another great stress isGreen thein Mississauga, Ramsay in benefit to centralized Orangeville and Heimbecker in Waterloo, are equalconsumers. owners in approvals Concierge Mortgage Group. process of is a newWhen Concierge boutiqueyou can tell client brokerage firm that will a focus on monolines, elite and experienced brokers, which enables they will get offering exceptional needs-based best rate themcustomer to turn service. the The goal is for Mortgage Group to within ahave dealsConcierge around offices throughout Ontario. within two to will 120-day Concierge operate as a period, it Mortgage four network hours.partner with Intelligence, developing its own gives them brand while taking advantage of comfort.

Mortgage Intelligence’s key Whenpayroll, they resources like compliance, exclusive mortgagesee products, it in their and marketing. welcome “Mortgage Intelligence offers us competitive compensation package after and the support that Concierge closing a deal, needs to be successful,” said Heimbecker. it reassures clients that we are TMG The Mortgage Group is moving looking three of its regional leaders upout the corporate ladder, billing the move as for their best in keeping with its philosophy of interest. promoting from within.

Effective

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

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

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News

News / Product RoundUP InternatIonaL

& PRODUCT u.s.

90.6% 52.1%

inspectors have found problems; appraisals showed a home was worth less than the bid; a buyer lost a job before the closing.

U.S. housing market worse than thought More than two years after the recession The number of Americans who bought previously officially ended, many people can’t qualify for occupied homes rose in October. But the National loans or meet higher down payment Association of Realtors says it overstated more than requirements. Even those with excellent credit three million sales during and after the Great Recession, and stable jobs are holding off because they fear showing the housing market was weaker than Percentage of that home prices will keep falling. Sales are also previously thought. homeownership being hurt by a decline in first-time buyers, who The private trade group says sales rose four per costs, including are critical to reviving the housing market. cent in October to a seasonally adjusted annual rate of mortgage payments, Sales have fallen in four of the five years 4.42 million. That’s below the roughly six million homes utilities and property since the housing boom went bust in 2006. a year that economists say are consistent with a healthy taxes that take up a Declining prices and record-low Amortgage rates housing market. But it’s ahead of 2008’s revised sales, LAUNCHING typical household’s NEW haven’t been enough to PRODUCT? boost sales. now considered the worst in 13 years. monthly pre-tax At the same time, home construction has The trade group revised its sales from 2007 to 2010 Want it to be considered for income in Vancouver begun a gradual comeback and should add to the down 14 per cent, from more than 20.6 million to nearly inclusion on this page, send the and Toronto, economy’s growthto in 2011 the first year since 17.7 million. Among the reasons for the lower figures, details the for editor: respectively (RBC the Greatvernon.jones@kmimedia.ca Recession began in 2007. Last month, the Realtors group says: changes in the way the Census Economics Housing builders broke ground on an annual rate of Bureau collects data, population shifts and some sales Trends and 685,000 homes, the government said recently. being counted twice.

Affordability Report) in Ontario and Atlantic documentation to prove That was a 9.3 per cent jump needed from October and The Realtors consulted with government and approved brokers provinces. self-employed income (Street still the fastest pace since April 2010. private housing experts, including the Federal Reserve, Most economists say home prices will keep the Department of Housing and Urban Development,Brokers offering the program are makes income reasonability falling, by at assessments least five per and cent,may through 2012. the Mortgage Bankers Association, the National supported by Street Capital’s senior request don’t foresee a rebound in prices Association of Home Builders, mortgage giants Fannie underwriters, a credit manager and a Many forecasts alternative income validation, such as until at least 2013.

Mae and Freddie Mac and CoreLogic, a California-based national sales team to help them find bank statements and/or business The high rate of foreclosures has made data firm that first raised doubts about the annual lending solutions that fit the needs of resold homesfinancials) cheaper than new ones. The numbers earlier this year. clients eligible for Street Options. bankruptcy (with median• priceAofdischarged a new home is roughly 30 perno CoreLogic has estimated that the Realtors group Here’s a rundown of some important waiting period to apply) The facts:sales in 2010 by at least 15 per cent. cent above the price of one that’s been occupied overstated before –• twice the normal markup.mortgage Investorsbehind are The changing numbers could how economists details: A need for a second Street Capital recently made itsaffect Street taking advantage the discounts. view the Program trade group’s data. Itto could also affect • Beacon scores as low as 540 a firstofmortgage (Street will allow Options available borrowers in companies The housing market is struggling that use the figures for hiring and expansion plans. • Loan-to-value up to 80 per cent another lender’s secondeven mortgage Saskatchewan. as the broader economy has improved in Sales are measured when buyers close on homes.

• Higher-than-normal debt-service behind its first mortgage, with a total The Street Options Program is a lending recent months.

But many deals are collapsing before that point. ratios LTV up to at 90an toannual 95 per pace cent,of two tool aimedofatRealtors the uninsured segment of the The economy grew One-third said they had at least one contract • Self-employed income of less than two depending on the application) mortgage market. per cent in the July-September quarter. Many scuttled in October, up from 18 per cent in September.

The program previously economists expect slightly better growth in the Contracts arewas being cancelledonly for several reasons: years October-December quarter. CMP Banks have mortgage available to declined borrowers throughapplications; a group of home• No NOAs or other traditional

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28 mortgagebrokernews.ca 20 | mortgagebrokernews.ca

News / Appointments

A new point man for Radius It’s official!

Radius Financial has announced that industry veteran Shane Lapointe has been appointed as the company’s new Shane LaPointe regional VP for Alberta.

“Shane is well known as a broker advocate and for his value-added approach to broker relations,” says Suzanna

Stefanec, VP of national sales and products at Radius. “We are confident that Shane will make a significant contribution to Radius’s growth and success in the Alberta & Prairie market.”

With more than 35 years of experience in the financial services and retail banking industry, Lapointe comes to Radius direct from FirstLine Mortgages where he first started in 2002 as regional business manager and rose to become the company’s VP of sales for Western Canada until his departure in August.

As FirstLine’s VP of sales, Lapointe

managed more than 24 regional business managers nationally and assisted leading the company to the No. 1 position in broker sales and a record-setting funding of more than $16 billion annually.

Prior to working at FirstLine, Lapointe held various positions in several top companies in the industry.

Fresh out of Okanagan College in 1989, Lapointe became branch manager for National Trust. He was also regional branch manager for Scotiabank for three years before joining FirstLine in 2002.

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mortgagebrokernews.ca | 21

News

Industry News / this time last year

Your trusted news source

It’s Still ‘Never ever

shave even five bps off a client’s interest rate. Estimates are now running close to 95 per cent, as brokers look back at the explosive rate wars of this past spring. first-time buyers, or mortgages that Many start under a professionals turned to have expanded their unsecured lending products. mortgage specific price (remember restrictions in 1992 when What our government fails to realize is that buy-downs to keep clients from taking that the first-time buyer program was implemented? unsecured lending has a larger impact on cash 2.99 per cent Should we look at something similar?)

When “Redat BMO. Just as many shook flow than mortgage lending. Particularly when their fists at their own lenders who, they Ed” Clark at TD was screaming for more home ownership has already been proven to be charged, had forced them to do it. government controls on mortgage lending, what more affordable than renting in most areas he was really saying was that lenders can’t police (Vancouver is currently a rare exception). What Today, many brokers simply have no themselves. If bank A will do the dealchoice why can’t they (government) do see is the most powerful but to sacrifice some of their bank us.

B? You’ll If Johnny off the bridge, would you lobbyYEAR group LATER in the country saying “it’s mortgage commission to secure a deal, says ONE business from neverjumps win against jump off a bridge? What kind of people do we have lending that is the issue.”

Christine Xu, the banks by buying down.”

CMP is happy to report that a certain – Paul Therien running our banking system? The real culprit in a broker with Argentum Mortgage As competition theisbanks heatregulated up Mortgage Alliance broker is keeping true this wholewith mess the least and thatand is Finance Corp “I quickly found out that with this and with the market cooling down, it is to what he told us in 2011.

They just don’t get it, do they? Economics 101, says credit card debt. Put some sense back in the market, my commission is not important,” put the boots to the credit card lenders, expected that more brokers across “Yes, buy-down rates,” says difficult cool offIastill hotdon’t market by making it more to system, understanding that it will impact economy borrow, heat up a cooling economy by loosening the Unionville, Ont., broker. “I needed country will be tempted to buy-down rates thesays Ad Lakhanpal.

“And my reasons for doing significantly, especially retail goods. Gradually upremain lending.

We are cooling off in many markets, to trade on volume. in order to ink a deal. Heck, a growing so the same. tightenhave. the mortgage underwriting “standards” that were never as Toronto “Homebuyers in my area will switch number already “Whatever rateasI hot go down to, the and Vancouver. that have been perverted over the last 10 years.

Canadian institutional (read bank) mortgage brokers Last year, seasoned mortgage borrower can always go to a bank and ask lending has been on a 10-year roll, like drunks on a Will there be pain? No doubt about it. But aneven over 0.3 per cent. I quickly found that out with this market, my professionals estimated that to 90 per an agonizing for an even lowerby one.

I guaranty you that CMHC. pain80now, beats pain bender, abetted their “drinking buddy” I uncomfortable commission is not important.” cent of brokers were prepared to give up a ifagree the bank learns a broker’s involved, later. that a 30-year amortization is too long a portion they’ll a ratebut justmaybe so theyitcan take be theallowed time ingive general, should for of their commission in order to – GTA Broker

buy down rate’ A hard year has broken many a veteran, but Ad Lakhanpal isn’t one: He still never, ever buys down rate

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mortgagebrokernews.ca mortgagebrokernews.ca | 23

Feature / Gary Mauris

Mauris on t h g i fl

s n o i t c e Def

r e d Len

compet ition

y c n e i s c n i f o i s ef s i m m co poo ling

e g a g t r Don moargins m C

her ry RISK big ban ks

Feature / Gary Mauris

Gary Mauris has never held back, and he isn’t starting now as he talks lenders, broker compensation, volume pooling, network solidarity and, ahem, broker defections

have to realize we need to communicate around industry issues and get on the same page to discuss ideas around core issues like this. Here is the fact: if they feel they can divide and conquer and the industry will sit down and take it they will keep trying, and keep moving the goal posts. All companies (regardless of industry) with shareholders will continually try and increase margins, lower costs and typically do it in areas where they will have the least pushback.

CMP: Do you agree, as some suggest, that all of the big banks in the broker channel intend to get out within the next five years? Second, what does that say about broker commission levels and the channel’s competitiveness?

If Don Cherry is increasingly the face Dominion Lending Centres shows consumers, Gary Mauris remains the one facing brokers. The network head doesn’t appear to mind the role, sitting down with CMP for a no-holds-barred discussion on the challenges facing brokers within the DLC family as well as those outside.

His comments are set against a volatile backdrop, as broker anxiety about lender compensation mounts, the real estate market cools and volume pooling gets put under the magnifying glass.

Mauris: I do not believe all of the banks will exit the broker space. I think we as a channel are more susceptible today with the Euro Zone instability and challenges in world markets. Recently one of the senior executives at one of the banks participating in our channel told me that regardless of their success in the broker channel, they are not getting any kudos for a job well done in the housing markets in Canada as they can deploy capital in other markets with more consistent stable returns, and lower perceived risk. As the world economies improve so will the appetite for participation in mortgage originations in Canada. Lenders looking for mortgage originations will come and go as their business models adapt to changing markets and corporate strategy. We as owners and agents have to take appropriate steps to insulate our organizations against the constant change our space will continue to experience. Remember we have already gone through two slowdowns/recessions, GST, HST, a worldwide credit crisis, and three rounds of mortgage rule changes. So does our space scare or concern me... NO.

CMP: Recently, volume pooling has also been scrutinized and criticized by some lenders as an impediment to efficiency. Do you support volume pooling and why or why not?

Mauris: Pooling for accessibility to lenders where there is a clear lead broker who understands the deal and accepts the potential liability will continue to be present in our business. I think pooling for access to higher compensation (bonus compensation) will come under the microscope.

CMP: Broker commission is also under the microscope with one lender’s decision to cut them by 5 bps. Will broker commissions come under greater pressure and why?

Mauris: The discussion around broker commissions is not new. I have been hearing conversations about this for the last six or seven years. I don’t think we need to just roll over and accept that commission compression will become a way of life. We need to focus on knowing our lenders’ products, stop moving deals to someone with a quick-close special or higher commission, focus on efficiencies and embrace and support new participants in our channel. We as competitors have to embrace each other’s competitive spirit, but we also

STATS

270

million

The real estate market cools and volume pooling gets put under the magnifying glass

– viewer impressions for 2012 Source: DLC mortgagebrokernews.ca | 25

Feature / Gary Mauris CMP: Broker network consolidation is on the minds of

leasing, insurance, and wealth management opportunities. Small players can’t manage the costs to compete, create and innovate.

many. Is this really the direction the industry is headed in? We’re guessing you’ll say ‘Yes.’ So, the next question is ‘Why?’

CMP:

OK, that segues nicely into the whole discussion about very high commission splits for agents. Are they unsustainable or will they ultimately prevent brokerages from training and adding real value?

Mauris: I think broker network consolidation is definitely happening. It’s a low-margin industry and it’s very difficult for the smaller players to compete.

Business is like a tree: it has two cycles of life; it grows or it dies. If you aren’t investing and innovating today more than ever before, it’s going to be a tough road ahead. Agents want compensation to be competitive no question, but what they really want is help doing an extra two or three deals a month. That happens through training platforms, brand awareness and consumer confidence, Autopilot stay in touch programs, easy-touse CRM platforms, access to exclusive lender products and programs, and cross-selling opportunities like

Mauris: The broker split debate is an interesting one.

Here are my thoughts: we are in an unbelievable business with no ceiling on our income potential. The best agents in the market have spent years learning through trial and error, hard work, personal development, sales training and just plain getting back up after getting knocked down over and over. They earn a great living but they deserve every bit of it. A new broker comes in and because so many companies don’t have any organized step-by-step training platforms, all they have to negotiate with or offer is a higher split and this is providing chaos in our industry. New agents find a home where there is more than just lip service about training, and be prepared to accept a much lower split while you have the opportunity to learn what your mentor, sales leader or owner has worked so hard to learn. Nothing drives me more insane than when a newly licensed agent who has never done a deal wants to negotiate a top commission split. My advice is if they aren’t prepared to invest in themselves, and if they

It’s a low-margin industry and it’s very difficult for the smaller players to compete. Business is like a tree: it has two cycles of life; it grows or it dies OverOver 600 Million 600 Million LentLent sincesince 19971997

80% 80%

5.75% 5.75%

6.75% 6.75%

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Not Your Average Forum.

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Amanda Lang Biz Stone Randi Zuckerberg Lewis Black Joe Theismann Kevin O’Leary Eric Ryan Suzie McNeil Scott Stratten Mitch Joel Erica Sigurdson Rob Daniel Dawn Chubai Ron Tite

➜ www.mortgageconference.ca

Feature / Gary Mauris don’t appreciate that your time and skill is exceptionally valuable and comes at a cost, then why would you ever invest in them?

CMP: Recently some high-level brokers packed up and moved to a different broker network. Umm, I believe one of the destinations was yours. Will we see more migration and why?

Mauris: High-level brokers are busy and are not moving unless there is a very compelling reason to do so. Most high-level brokers can earn a great living year after year but are realizing that they have no protection or insulation in their income should something unforeseen happen like a personal or family illness. A lot of them have joined our company because they realize they can actually attract quality agents to their team with our model and want to create some additional income rather than having to do every single deal themselves.

They want stability and if they make a move they want this move to be their final career move. There has recently been so much instability in the ownership and management at many of our competitors and this uncertainty is unsettling and rightfully so. Our industry will model the real estate industry. Re/Max and Royal LePage have a combined market share of more than 80

High-level brokers are busy and are not moving unless there is a very compelling reason to do so

28 | mortgagebrokernews.ca

per cent, even though there are several other small players. Brand does matter, especially in the financial services sector. Both Royal LePage and Re/Max are franchise models, and both invest heavily in their brands.

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

Mauris: The only thing constant in life is change. Our industry is evolving, and clients are attracted to bundling of services, and will require a much deeper relationship to remain committed to us in the future. We need to continue to add new products, make the process and communication easier and more understandable, and proactively bring value-added information to the customer before they even need our services in order to build awareness and relationships.

The alternative lending area will continue to grow and if I am a broker today, I am going to learn this area intimately, or find a great referral partner who specializes in this space to maximize opportunity.

Re: Don Cherry CMP: I remember one DLC broker telling me that not all DLC brokers have fully capitalized on the Don Cherry campaign. Do you agree and how so?

Mauris: The majority of our network has embraced the Don Cherry marketing campaign and is raving about the awareness it has created. It creates conversation, engages the most coveted demographic (the family demographic 24-52 who will use our services) and will make more than 270 million viewer impressions this year alone. There are some brokers who maybe don’t maximize it fully in their messaging and that’s OK, too. We will never tell an agent or owner how to run their business. Our job is to make (their) job easier, not to mandate stringent one-sizefits-all rules or protocols.

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COVER / commercial brokers

CMP Top 10 Commercial

In its first year, CMP’s Top 10 Commercial Brokers list cuts a wide swath through the sector, CMP reports

M

ove over, residential brokers! This month’s issue is all about commercial brokers, more specifically the CMP Top 10.

Despite its challenges, 2011 was a pivotal year for those on this inaugural listing of commercial brokers by funded volume.

Their combined volume weighed in at $910.6 million.

The number of deals: a scant 226. That number speaks to the complexity of the work and the blood, sweat and, very often, tears put into it. What the numbers don’t capture are those deals that got away or the hours brokers spent on files that simply failed to cross the finish line.

“It’s important residential brokers know that part of the story,” one broker on the list tells CMP. “I think our friends on that side of the business look at our volumes and the relatively few deals they represent – compared to theirs – and they think we’re living the life of Riley. It ain’t so.

“But the work is rewarding and I wouldn’t trade it for anything else – a commercial broker has to feel that way.”

AN OVERVIEW

$ 910.6 M

Total funded volume:

Avg. number of deals:

AvG. years in the business:

Avg. funded volume:

226

13

Top 10 Commercial Brokers

32 | mortgagebrokernews.ca

6126

Total number of deals:

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Total number of years in the business:

estate as an alternative investment asset class.

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COVER / commercial brokers Rank

Name:

Company:

City/town:

What was the value of the commercial mortgages you personally funded in 2011?

How many commercial mortgages did you close in 2011?

Support staff who don’t write loans

Support staff who write loans

Years as a commercial broker

1

David William Beckingham

Dominion Lending Centres Commercial Capital Inc.

Vancouver, B.C.

$195,000,000

35

2

4

26

2

Brennan Wood

Mortgage Alliance Commercial Canada

Toronto, Ont.

$150,000,000

25

2

0

3

3

Andrew C. Bennett

Nexus Investment Corporation

Vancouver, B.C.

$102,000,000

23

3

1

30

4

Stephen Bryant

IC Funding

London, Ont.

$98,863,000

4

1

0

2

5

Scott Ede

Mortgage Alliance Commercial Canada

Calgary, Alta.

$88,000,000

30

1

1

4

6

Steve Fabian

Downing Street Financial

Toronto, Ont.

$83,000,000

19

2

1

9

7

Greg Wood

IC Funding

London, Ont.

$77,860,000

4

2

1

21

8

Sandy Harrington

IC Funding

London, Ont.

$55,729,213

11

1

0

20

9

Chad Robinson

Verico Best Interest Mortgages

Ottawa, Ont.

$40,177,682

71

1

0

8

10

Richard Wilkins

Invis - Wilkins and Associates

Penticton, B.C.

$20,000,000

4

0

3

3

4

6

MEN: 10 CMP congratulates all the mortgage professionals who took part in this year’s list. Each, as always, had to be employed as a mortgage professional, able to write loans and their deals must must be their own. Those on the list also provided a breakdown of their deals by lender with contact information, which was verified by the CMP team. All deals were commercial, and while there may have been backoffice support in processing the deals, all deals are those of the brokers.

*The fine print: Funded volume speaks for itself, says veteran commercial broker Jeff Atlin of Abacus mortgages.

Still, it is very difficult, if not impossible, to measure a commercial broker’s success by mortgage volumes alone.

Arranging institutional funding for “A” borrowers and properties generally net brokers half as much as the compensation on a private funding deal of the same amount for the poorer-class property of a “B” client. Brokers who do secondary and mezzanine loans will make far more per dollar lent than those doing “A” lending. Those who specialize in non-institutional (private) lending will usually earn the same as the broker doing the prime deals on half, a third or, even, a quarter of the volume. Another challenge in making apples-to-apples comparisons is that many commercial brokers get their referrals from residential mortgage brokers, who are paid a co-brokerage or referral fee, which is generally a percentage of the fees received. So the same $1,000,000 in volume may produce as little as half the income for the broker who gets the deal on a co-brokerage basis compared to the broker who does the same deal without the referral. mortgagebrokernews.ca | 33

COVER / commercial brokers

Canada’s #4 top five commercial brokers A dreaded market slowdown is keeping a large number of residential brokers up late at night. But how are the country’s leading commercial players sleeping?.

Five of this year’s CMP top 10 commercial brokers discuss their take on the current business environment and share strategies they’ve used to mitigate the impact on their practice and to prepare for the coming year.

#5

Scott Ede Mortgage Alliance Commercial canada | Calgary, Alta.

“Lenders are still there but the challenge was to get them to spend and do what they used to do in the commercial space,” says Scott Ede. “Over the last four years, they (lenders) appear to have lost appetite for the commercial marketplace.

The result or answer for many commercial brokers has been to expand their lender rolls.

“We put a lot of effort into strengthening our contacts and building relationships with lenders,” Ede tells CMP. Overall, he believes the business environment for commercial brokers is improving even as a new regulatory environment challenges his residential counterparts.

“The changes may have made money less available on the residential side, but is has not affected commercial at all,” Ede says. “”I think the commercial market is starting to get back to the level of activity five years ago.”

34 | mortgagebrokernews.ca

Stephen bryant ic funding | london, ont.

Despite all indicators pointing to a cooling market, there will always be a demand for commercial mortgage brokers, says Steve Bryant of IC Funding in London, Ont. “The unique nature of each commercial financing transaction and the constant change of commercial lending sources continue to drive demand for commercial mortgage broker services,” Bryant tells CMP. “We expect further growth by reaching out directly to more borrowers.”

Bryant hasn’t encountered any uniquely “commercial” challenges this year but finding the ideal lender for transactions outside the norm is a concern.

“Identifying lending sources for classes outside of core geographies and core asset classes takes more work,” he notes. “But that is also where we can add the most value for our clients.”

In these situations, lender relationships become vital assets for any commercial brokerage, Bryant says.

“This time, investment includes understanding the evolving needs of the lenders and bringing financial opportunities to those who meet those needs,” he says.

#3

andrew bennett Nexus Investment Corp. | vancouver, B.C.

“The commercial brokerage industry is so complex and covers so many segments that it would be foolhardy to come up with a blanket statement saying the industry is in for some tough times,” Andrew Bennett says. “But brokers operating in geographically smaller areas will likely face some hardships.”

That’s because lenders typically have minimal presence in smaller municipalities and the current economic environment is liable to make them scarcer, Bennett says.

“Lenders will look less favourably at an apartment

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COVER / commercial brokers development project in a community with a population of 10,000 to 30,000 compared to the same-sized development in a larger city,” he says.

For a commercial brokerage that handles transactions throughout the country, getting a handle on disparate regulations and different market environments across provincial boundaries is a constant concern, he adds.

“We’ve made a business decision not to operate in Quebec because of the language barrier and their industry rules that we are not familiar with,” he says.

“But now the market environment differences between provinces are also a critical factor.”

For instance, he says, in arranging a transaction involving a processing site for fossil fuel, a commercial broker might need to investigate the rail service that carries that resource to Vancouver’s shipping hub and onto China and other global markets.

Commercial brokers need to have a “global view of a local transaction,” says Bennett.

#2

brennan wood mortgage alliance commercial canada | toronto, ont.

Overall it’s going to be a tough market for both residential and commercial mortgage professionals, according to Brennan Wood of Mortgage Alliance. However, the Toronto-based agent sees opportunities for brokers in both sectors as banks begin to

limit their involvement.

“We’re starting to see the banks backing off of land financing and they are really pushing developers down on the construction LTV,” says Wood. “As a result, there is a lot more interest for using mortgage brokers in the market to get higher loan-to-cost construction mortgages.”

He expects the entry of more alternative lenders to pick up the slack left by the Big Five.

“There has been a flood of money into real estate investment. The proliferation of funders has allowed us brokers to find the best rate and terms for our clients as they search for investments. At the same time clients are having a hard time keeping up with the number of lenders as new ones come on the market,” Wood explains.

“Rates at banks have been pushed way up compared to rates residential brokers are getting. The difference is almost two per cent on the posted rate,” he says. “So I think going forward there is a lot of growth for residential brokers.”

On the refinance side, he says, commercial brokers are seeing a number of American pension funds looking for “cash-flowing projects” in Canada. “These funds are much more aggressive than the Canadian banks,” Wood says. “This has allowed us to compete and win business with clients who traditionally work with banks.”

Still, deals are getting harder to find and close for commercial brokers, he says, and “those who do not focus exclusively on commercial deals will find it more difficult to get deals to the finish line.”

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Brokerage # 10160

COVER / commercial brokers

No. 1 Commercial Broker

The top broker on the list isn’t here by chance, reports Nestor Arellano Most teens dream of becoming doctors, rock stars or, and office towers. increasingly so, the next Steve Jobs. Rarely does anyone DLC Commercial has offices in Vancouver and aim for a career in commercial mortgages. But then, Toronto, but Beckingham says plans are afoot to reach they’re not David Beckingham. out to other major cities in Canada.

“I was 13 when I decided to become a commercial Beckingham sees his profession as a sales career like mortgage broker,” says Beckingham, the president of DLC no other. “If you could sell anything, it might as well be Commercial Capital Inc. in Vancouver. money because everybody wants it,” he says.

Beckingham says his inspiration stems from a family “But early in my career, I realized that it’s not all about friend who was a commercial mortgage broker and money,” he confides to CMP. “I grew to love the frequent visitor to the family home. “I coveted the sleek relationships I built with colleagues, lenders and clients. new BMW he drove and the rich lifestyle he enjoyed. I Some friendships date back to the very beginning of my told myself, ‘I would be someone like him someday.’” career more than 20 years ago.”

Beckingham would later earn degrees in business Co-workers really attest to Beckingham’s supportive administration and political science from Simon Fraser nature.

University, but in 1989, “David is the perfect eventually found himself mentor and boss,” says Lisa working as a commercial Nairn, a residential broker mortgage broker. who switched to commercial The severe and protracted about a year ago. “You can market slump in the 1990s always approach him with was not an ideal time to enter your questions, he’s always the commercial real estate eager to help and guide - David Beckingham arena, but Beckingham beginners. navigated the period “I think his personality is successfully. Before taking the helm of DLC’s commercial largely responsible for the friendly atmosphere in the operations in B.C. in 2002, Beckingham was also among office.” the top commercial performers for Centum.

Friendliness aside, Beckingham says he often tells new Now 47, the seasoned DLC broker has originated over commercial brokers to “pay attention to details.” $1 billion in mortgage transactions across the country “In commercial, every deal is different,” he says. during his more than 20 years in the industry.

“There are no cookie-cutter transactions. The Beckingham has around eight commercial mortgage commercial broker needs to have a handle on every professionals working under him at DLC Commercial document and aspect of the deal, that’s what our clients Capital in North Vancouver. He is also the president of an expect of us.” investment firm, the Dundarave Mortgage Investment Apart from expertise in structuring deals, a Corp. His forte lies in arranging interim construction and commercial broker needs to be tough, he adds. “You need long-term financing of all types of commercial real estate, to have the tenacity to see a deal through until it’s done. including shopping centres, industrial buildings, That could be a challenge because some deals take multi-family apartment complexes, health-care facilities months or even years to get funded.”

Deals will come and go, but the friendships you build are forever

mortgagebrokernews.ca | 37

COVER / commercial brokers

A commercial

casting call New blood could expand broker share of market While other experts say there’s not much need for new entrants to commercial brokering, a top performer understands the need for new blood to keep deals coursing through the sector.

But before you start sending in your resumes, Sandy Harrington, principal broker at IC Funding has something to say about the arduous road aspiring commercial mortgage brokers must navigate.

“We are always looking to add new agents because our goal is for a sustainable business across Ontario and we want to make sure we have enough candidates to compensate for normal attrition,” says Harrington, recipient of this year’s Canadian Mortgage Awards trophy for best commercial broker. “That said, we are looking for the right fit and do not accept many.”

The difficulty for IC Funding – and, indeed, other commerical firms – lies not only in finding the candidate with the skills to eventually structure complex deals, but also landing one with the right attitude to thrive in an unpredictable environment.

Managing expectations

The fact is many new hopefuls bow out of the field or concentrate on residential because working in commercial just isn’t what they’d imagined, says Harrington, reflecting on his own 20 years in the business.

It may fall to commercial veterans to help manage those expectations. While many brokers on the residential side are able to close deals in a matter of hours or days, says Harrington, it is not uncommon for a commercial transaction to take beyond three months.

“People want to be commercial mortgage brokers because they hear of the fees associated with larger transactions,” he says. “But in reality, reaching a consistent pay cycle rarely takes less than one to two years.”

In fact, reaching the point where a new entrant is allowed to close a multi-million-dollar deal by his or

38 | mortgagebrokernews.ca

herself could take several years, according to Harrington, who in his 20 years with IC Funding has successfully handled many transactions throughout Ontario worth anywhere from $2 million to $50 million a pop.

But those kinds of numbers tend to put stars in the eyes of residential brokers eyeing their own migration to the commercial sphere.

Deals are more complex

The less-complicated nature of residential mortgage transactions enable brokers to deal in relatively high volumes.

“But commercial transactions, although typically worth more, take longer to close,” says Harrington.

“That is why not many residential mortgage brokers move to the commercial side.”

Commercial transactions require more due diligence and therefore a greater amount of documentation and permits. “Commercial transactions are not process-driven, he says. “Every transaction is unique and has its own set of demands on the broker who has to do a lot of underwriting analysis and solving issues that continually crop up to threaten funding.”

Mentoring is a must

The brokerage industry is not well-served by inexperienced agents over-promising solutions on commercial mortgages. “Borrowers deserve good advice and market knowledge,” says Harrington.

For these reasons, leading commercial brokerage networks such as IC Funding are very stringent come time to vet potential candidates.

“We need to be sure the agents we allow to carry out the transactions are qualified and prepared to do so because our relationships with our clients and our lenders are vital,” Harrington tells CMP. “If something goes wrong, it could damage our reputation and that relationship.”

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WHERE MORTGAGE DEALS GET DONE.

COVER / commercial brokers

Moxie and

mentors

A record number of residential brokers are now trying their luck at commercial deals, reports Nestor Arellano. But here’s two who’ve made it airn

Lisa N Veteran commercial brokers may be humouring you when they say it takes months to learn the fundamentals of their trade. What they really mean – what they genuinely believe – is that it takes years.

It’s a daunting level of expertise no matter how you tally it up, but two new entrants to the business are proving commercial newbies require just as much moxie and confidence as they do mentorship.

“Working in residential some four years ago, I had no idea I would ever become a commercial mortgage broker,” Lisa Nairn, an agent with DLC Commercial Capital, tells CMP. “But back then, many of my clients kept dropping commercial deals in my lap.”

Rather than take a pass, Nairn, a self-described go-getter, took on those deals herself. Most residential brokers ultimately refer them on or reject them altogether.

The broker’s experience in some ways challenges the mythology around commercial brokering. Still, she relates to the part about seeking the guidance of experienced commercial players as the best way of protecting the deal but also the client.

“In one early deal (for DLC Harbour View), a client had asked me to handle a small development deal,” she recalls. “I took the assignment, but in reality I had no idea what I was doing. The requirements were very different from those of residential.”

It is the fear of taking on those challenges that will likely frustrate the growing number of residential players expected to explore commercial opportunities as the real estate market cools. Their interest is all about making up for lost revenue and refusing to let any potential deal pass them by – residential or commercial.

Unclear is how many will do what Nairn did. She hunkered down and did her research, poring over the vast library of presentation material out there. She also turned to lenders.

40 | mortgagebrokernews.ca

“They told me to call up Peter Fast at Vancity,” she says.

“They said he knew everything there was to know about commercial.”

Fast turned out to be a very accommodating and excellent mentor as commercial and alternative lenders are increasingly willing to be in order to widen their own pipe with the high-quality deals that so often fall into a residential broker’s lap.

“He gave me the commercial mortgage course 101 in three hours over the phone,” she says.

When she moved to Vancouver a year ago, Nairn Bilal Hussain was looking forward to a residential mortgage position in the DLC office there. But things took a curious turn.

“They wanted to bring in a lot of residential loans,” she says. “I did just that, but again also got to do some commercial stuff.”

It didn’t take long for David Beckingham, president of DLC Commercial Capital Inc. to take notice. He saw potential in Nairn and asked her to train with his staff.

“I’m very lucky David took me under his wing. Without a mentor, commercial would be a tough niche to crack.”

Much like Nairn, Bilal Hussain, a mortgage agent for the Toronto-based Canadian Mortgage Group – Find Me Mortgage, had the courage to dive into commercial despite his limited knowledge.

Hussain had been doing residential deals for Find Me Mortgage for about three years when the company decided to launch a commercial arm early this year.

“I was pretty aggressive,” Hussain says. “When my boss asked us who wanted to switch to commercial, I raised my hand even if I didn’t know much about commercial.”

Unlike Nair, however, Hussain was without a large network of commercial brokers to mentor him.

“What I did was consult with the commercial business managers of the banks we worked with,” Hussain says.

“They were always very helpful. They guided me through every step of the transaction.”

CMHC’s 2012 MORTGAGE CONSUMER SURVEY

Released annually for over 10 years, the Mortgage Consumer Survey is a reliable source of insight into consumer behaviours, attitudes and expectations when acquiring, renewing or refinancing a mortgage. CMHC provides you with support, expertise, and the tools you need to effectively meet the needs of an evolving industry, helping you focus your time on serving your clients and managing your business.

Visit cmhc.ca/2012survey today to get the details of the 2012 survey results.

Everything you need to open new doors

Feature / debt

Broker =

debt settlement

watchdog?

In this second of a three-part series on creditchallenged clients, Josh Balner outlines exactly what brokers need to know about debt settlement 42 | mortgagebrokernews.ca

Feature / debt

I

t’s one segment of consumer advocacy increasingly shrouded in controversy and increasingly on the lips of mortgage brokers. And late last month, the country’s largest provincial ministry of consumer services sat down to discuss its impact.

That “it” is debt settlement.

The function of the meeting was to address mounting concern about the legitimacy of the practice and to come up with possible and very practical legislation to govern an industry still in its infancy. With the ministry understaffed and a plethora of different programs available for consumers in need, it became clear that the government may not have the ability to effectively police the industry. In short there was indeed a will, but little way of making it happen.

Many mortgage brokers know the unvarnished truth about debt settlement is that it’s most beneficial for a select group of candidates. More bluntly, it works like a charm in reducing the outstanding collection balances and lawsuits for clients with equity in their homes or otherwise able to lay their hands on a lump-sum payment.

But clients without those means are often out of luck. In fact, that debt settlement process is detrimental to a vast majority of them without the wherewithal to raise a minimum of 40 per cent of their outstanding debt. It also means that brokers will be challenged to ever arrange another mortgage for those clients be it now, one year or 10 years from now.

Although the most practical solution for homeowners, debt settlement is veiled within the mortgage industry by the presence of unlicensed companies and the prevalence of alternatives like consumer proposal. According to statistics from Trustee Hoyes Michalos and Associates, the percentage of people filing for bankruptcy in Canada dropped by 16 per cent while consumer proposals climbed by 6.4 per cent.

Some may construe this as a favourable trend; however, the vast majority of consumers have very limited understanding of the consumer proposal process. They hastily agree to often unfavourable conditions, with very long-term consequences. So, it pays for a broker to be able to steer them away from the snare traps.

What many individuals remain unaware of is that a consumer proposal has a very similar effect to a formal bankruptcy on their credit, lasting three years beyond the date of the last payment made on the proposal as a public record item. In addition to

They hastily agree to often unfavourable conditions, with very long-term consequences.

So, it pays for a broker to be able to steer them away from the snare traps the adverse effect on the credit bureau, if the consumer has any form of tangible asset or liquid cash, it must be claimed and will adjust the cost of repayment to the creditors.

Consumer proposal, like bankruptcy, credit counseling services and debt settlement, is a niche solution, primarily for those without any assets.

For mortgage professionals electing to service that high-risk end of the industry, sourcing money from private investors and high-risk institutions can be costly to their clients, oftentimes causing them to lose faith in their representative and seek alternative advice. In short, it often costs the broker a future client.

So, it’s particularly important that mortgage professionals know the ins and outs of debt settlement programs and the benefit they present

mortgagebrokernews.ca | 43

Feature / debt for all the parties involved. It has been widely speculated that debt settlement is the solution to an economy plagued by inequality as it allows a debt-riddled consumer sizable relief, while allowing the creditor to recover a large percentage of the loss within 30 days. The end result of a well-coordinated debt settlement is a consumer who begins credit rehabilitation immediately after paying a sizeably reduced amount to creditors.

That makes the client a suitable candidate for credit or placement with a conventional lowinterest mortgage within a year.

But with lending legislation becoming more stringent, fear of rapid inflation and no foreseeable end in sight for high consumer debt, it seems

1)

Does the company hold a licence? In Ontario, any third party that is not a barrister or trustee wishing to engage in creditor negotiations on behalf of another person must be licensed with the Ministry of Consumer Services - Protection Branch.

2)

The next answers to be had in selecting a debt-settlement partner – and ones the consumer invariably poses – is how is compensation earned? Are there any upfront fees? Is the fee based on the total debt listed or solely on a savingsonly contingency base? The migration of American-based debt settlement companies across the border was a decision based largely on avoiding having to make legislative changes that would prohibit companies from charging upfront fees without work having actually been done.

3)

Can you trust the growing number of pooled-funds trust accounts? Pooling funds is considered by many authorities to be the most dangerous way to attempt a debt settlement. Money is held in a joint account while small contributions are made monthly from consumers, but as the pool grows so does the interest on the outstanding debts, and the probability of creditor legal action. As

44 | mortgagebrokernews.ca

demand for debt rescue programs will continue to grow. There are a few quick and easy indicators to determine whether or not a debt settlement is the most viable option for struggling clients.

Consider: Is the client receiving calls from collection agencies or lawyers? Is there quickly accessible cash through available equity in their home, insurance policies, RRSPS or holdings? And does the consumer have any plans to rehabilitate their credit?

Hunting down a reputable debt-settlement company for your client often proves to be the most challenging task facing the mortgage professional, but can once again be reduced to three very important questions:

the client has signed over the responsibility of dealing with the debt to the debt pooler, he or she may not even be aware, until it’s too late, that drastic measures such as garnishment, liens or foreclosures are being considered.

Feature / debt

As the real estate market slows, brokers are increasingly looking to lift heavy debt off the shoulders of clients

About the writer: Josh Balner is the president and one of the founding partners of Compliance First Financial Corp, a consumer advocacy company based in the GTA. Before that he led the largest privately owned collection agency in North America.

As the real estate market slows, brokers are increasingly looking to lift heavy debt off the shoulders of clients in hopes of winning future deals and referrals. But they’ve got to understand the ins and outs of debt settlement in order to do it.

Like any industry, there are true authorities and then there are so-called prophets with a limited understanding of the very fundamentals of this process. As the gap between rich and poor continues to grow and the debt industry continues to segment itself, deciphering who can be trusted to represent the average worker’s interest will no doubt become much more difficult. It will also, without doubt, become a mortgage broker’s job.

mortgagebrokernews.ca | 45

Feature / Syndicate mortgages

46 | mortgagebrokernews.ca

feature / Syndicate mortgages

Eyeing

opportunity Brokers eyeing a slowing market are also eyeing syndicate mortgages and referral opportunities, but they have to know what to look for, writes Josh Will, in this first of a three-part series

A

mortgage agent told me that although he has faithfully referred clients to a particular bank’s product line for over a decade, that institution recently declined to pay him on a refinance for one of his borrowers. Does that seem right? Essentially, it means the financial value of that business is gone. More and more, it’s getting difficult to earn a living in mortgage brokering, alone. In today’s competitive mortgage marketplace, what are you doing to keep ahead of the curve, grow your business and more importantly grow your bank account? Mortgage brokers and financial advisers alike are constantly looking for new ways to add value and keep in touch with their clients. Whether it’s info on mortgage rates or current trends in the real estate market, it is important to be in front of your clients and provide them a service they need. However, giving your clients updates on market trends and interest rates rarely generates any revenue for you. So how can you add value to your existing client base, grow your client base and generate new revenue?

A growing number of brokers are now pointing to syndicate mortgages.

Proud Sponsor of the Real Estate Investment Referrals Fortress Real Capital is an RSP-eligible syndicate mortgage product offered by Centro Mortgage Inc. that allows consumers to invest directly in the proven market of Canadian real estate by becoming a mortgage lender. Your principal amount is fully secured against the subject property (as a mortgage); therefore, investors enjoy steady interest on the principal and, where available, a deferred lender fee at the end of the term.

mortgagebrokernews.ca | 47

Feature / Syndicate mortgages

With wounds of the recent recession still lingering, investors are turning towards hard assets as real estate to further diversify their portfolios and achieve their financial goals I think we can all agree that Canadians are beginning to think outside of the box when it comes to investing in their futures. Traditionally, investors diversified their portfolios using the legacy portfolio model, 40 per cent stocks and 60 per cent bonds. This model has proven to be insufficient in the ever-changing Canadian investment landscape. With wounds of the recent recession still lingering, investors are turning towards hard assets such as real estate to further diversify their portfolios and achieve their financial goals. In Canada,

we have more investment options than ever before. Only 20 years ago, it was difficult or impossible to invest in a REIT, a hedge fund, a managed commodity fund, an international index fund, a derivative, a swap, and on and on. While poorly understood, all are competing for inclusion in yours, or your client’s, portfolio.

Now imagine there was an investment that gave you structure such as fixed terms, direct collateral and consistent cash flow – furthermore, a hard asset that provides security, which is managed by leaders in the

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feature / Syndicate mortgages industry and represents the best asset class in Canada.

And here’s the best part: What if mortgage brokers provided the only way for investors to access this? Well, the syndicate mortgage is such an investment.

A syndicate mortgage provides investors with the opportunity to earn real returns by investing in the communities they live in. So what exactly is a syndicate mortgage? A syndicate mortgage is where several investors combine funds together to create one financial instrument, in this case, a mortgage. Some sophisticated mortgage brokerages are now creating investment structures like this for the everyday investor. When a client invests in a syndicate mortgage they are funding a larger instrument; however, their investment is always registered and secured directly to the land under their individual name, which translates into direct collateral for them against a real asset. That’s quite distinct from a derivative such as a limited partnership (LP) or investment corporation (IC).

LPs and ICs are examples of indirect real estate investing. In a syndicate mortgage, investment moves as one, but each individual investor is registered and secured proportionally by a direct charge on the real

estate subject. Now you may be thinking, is this like a MIC (Mortgage Investment Corporation)? No, the difference here is that under a MIC, a number of different mortgages may be held, while a syndicate mortgage can fund only one project at a time. And MICs are only available to accredited investors, obviously minimizing the number of clients who can access this.

So when a client invests in a syndicate mortgage they choose which development they would like to fund, rather than with a MIC where someone else makes that

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mortgagebrokernews.ca | 49

Feature / Syndicate mortgages decision for them. That decision also has a fee attached to it. The other option for investing in Canadian real estate is to buy a rental property. But what the client may really be buying here is a part-time job.

A syndicate mortgage provides developers with the capital and equity they need to take their project from conception to completion. How? Well a syndicate mortgage works in conjunction with bank financing and developer equity. The syndicate mortgages are typically used to help fund the soft costs of a development -consultants and experts, zoning and architecture, and marketing costs such as sales centre. By providing these funds via a syndicate mortgage to a developer, it allows the developer to do more, quickly. And just like paying off your own mortgage, this works the very same way.

You work out fixed terms, meaning interest payable and amortization. Most of the time, a syndicate mortgage acts like an interest-only loan. Meaning the borrower will agree to pay a steady amount of interest on the investment (monthly, quarterly or annually) and agree to pay off the entire loan amount on a certain day as defined by the terms of the agreement.

Now this all sounds great so far right? Let’s look at some not so pretty scenarios. What happens if the developer defaults on the mortgage payments? This is one of the best features of this style of investment.

Syndicate mortgages are secured against the land, whereby investors are actually registered to the land or building and real estate law dictates that charges against the land are to be paid off before shareholders and debts to the corporation. So basically what this means is in the event something should go wrong, the bank will get paid first, then the syndicate mortgage, then everyone else.

When looking at referring a client to a syndicate mortgage there are a few things that you as the broker will want to look for.

Syndicate mortgages are secured against the land, whereby investors are actually registered to the land or building

50 | mortgagebrokernews.ca

info Josh Will is a

mortgage agent with Centro Mortgage Inc. and a senior manager of marketing and communications with Fortress Real Developments.

1. Who is the builder/developer that is acting as the borrower? (This is who you are ultimately investing in).

2. What is the borrower’s track record?

Have they experienced defaults?

3. Diversity? Do they operate in multiple markets? (ie, city, regions) 4. Do they offer a product mix?

Commercial, residential, low rise, highrise, etc.?

5. Quality of client and adviser support. Do they provide you with the tools you need to sell this to your client?

When telling your clients about investing in a syndicate mortgage you are not only providing them with the opportunity to invest in the best asset class in Canada, you are also growing your bottom line.

Have you heard this question recently?

ncial t/Fina

r,

Adviso

asset gen best e age A h g my t t r f o M e for ne o c o ie p is Dear e Estate secur Real nt a a n w ia I d Cana orld. the w in s classe lio. portfo t n e m invest e! help m Please Signed, lient Your C

The Answer

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Visit the website or email us (connect@fortressrealcapital.com) to learn how you can offer this exciting product to your clients.

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Disclaimer: Fortress Real Capital is a product offered by Centro Mortgage Inc. (FSCO License 10102). Fortress Real Capital transactions are all closed by Centro Mortgage Inc. unless specifically noted otherwise. Ontario residents must speak with a licensed mortgage agent/broker for details. For residents outside Ontario, please consult our website http://www.fortressrealcapital.com/legal-agreement.php for more informatio

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

New Listings

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

British Columbia: -4.0 per cent

New Brunswick: 8.3 per cent

Alberta: -3.3 per cent

Nova Scotia: -4.5 per cent

Saskatchewan: 0.9 per cent

Prince Edward Island: 8.2 per cent

Manitoba: -4.2 per cent

Newfoundland and Labrador: 7.0 per cent

Ontario: 6.9 per cent

Northwest Territories: 0.0 per cent

Quebec: -1.6 per cent

Yukon: -4.3per cent

52 | mortgagebrokernews.ca

Sales activity showed a slight decline of 0.01 per cent from June to July 2012, posting the third monthly slide since January.

Actual (not seasonally adjusted) activity was up 3.3 per cent year-over-year in July 2012, with gains in Calgary and slower sales in Vancouver.

Activity was up from the previous month in Kingston, Chilliwack and Calgary, offset by fewer sales in Toronto, Newfoundland & Labrador and Edmonton.

“Recent changes to mortgage regulations were widely expected to temper sales and prices in Greater Toronto and Greater Vancouver, and the data released today confirms that,” said Wayne Moen, CREA president. “Even so, sales and price trends can be very different from one market to the next, and run counter to national trends.”

While the average price of homes fell by two per cent, prices rose in several provinces led by: Yukon (15.4 per cent); Newfoundland and Labrador (nine per cent); Saskatchewan (6.9 per cent); Quebec (4.8 per cent); Manitoba (3.3 per cent); Nova Scotia (3.2 per cent); Alberta (2.7 per cent); and Ontario (1.4 per cent).

The largest decline in average home prices for the period was in British Columbia (-12.2 per cent), followed by Prince Edward Island (-5.4 per cent) and New Brunswick (-2.3 per cent).

The number of newly listed homes fell 3.3 per cent in July compared to June, with declines in more than half of all local markets, including Montreal, Toronto, Vancouver, the Fraser Valley, Calgary, and Edmonton. The number of newly listed homes fell 3.3 per cent in July compared to June, with declines in more than half of all local markets, including Montreal, Toronto, Vancouver, the Fraser Valley, Calgary, and Edmonton.

The average price in July this year was $353,147 compared to $360,400 for the same month last year.

One and two-storey single-family homes posted the strongest year-over-year growth in July, with two-storey single-family home prices up 5.8 per cent and one-storey single-family prices up 5.6 per cent.

Prices for townhouse and apartment units continue to see more modest gains, rising 2.5 per cent and 2.2 per cent respectively on a year-over-year basis in July 2012.

STATISTICs / RESIDENTIAL RESALE ACTIVITY

JULY 2012

JULY 2011

$353,147

$360,400

Sales Activity

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

British Columbia

-0.8 per cent

Ontario

-0.9 per cent

Kamloops Chilliwack Northern Lights

25.8 per cent 24.6 per cent 23.9 per cent

Tillsonburg District Orangeville District Thunder Bay

54.3 per cent 42.9 per cent 22.9 per cent

Alberta

16.5 per cent Quebec

Lloydminster Medicine Hat Central Alberta Calgary

46.5 per cent 44.2 per cent 30.9 per cent 26.7 per cent

Saskatchewan

14.5 per cent

Lloydminster Battlefords Yukon District

63.3 per cent 63.2 per cent 41.3 per cent

Manitoba

-0.3 per cent

Brandon Portage La Prairie

18.3 per cent 16.7 per cent

6.0 per cent

Trois Rivieres (CMA) Sherbrooke (CMA) Saguenay (CMA)

50.8 per cent 23.2 per cent 5.9 per cent

New Brunswick

5.6 per cent

Northern Fredericton Area

86.8 per cent 10.3 per cent

Nova Scotia

12.3 per cent

Cape Breton Highland Annapolis Valley

45.1 per cent 36.4 per cent 13.7 per cent

JULY 2012 Townhouse

+2.5%

Apartment Units

+2.2% mortgagebrokernews.ca | 53  

Business / marketing

liftoff!

We have

Launching your own employee mortgage benefits program: It’s as simple as 1, 2, 3 … and 4, 5, 6 and 7, writes Doren Aldana In last issue’s article, I outlined 10 terrific benefits you could offer to employees as part of your Employee Mortgage Benefits Program. By providing these unique benefits to employees of small to mid-sized companies, you can position yourself as the one and only in-house mortgage expert. This gives you instant credibility because these companies would be endorsing you to hundreds -even thousands -- of their employees.

Where else can you get this kind of third-party endorsement and expert positioning, month after month, for free? When it comes to low-cost, high-leverage consumer-direct marketing, there is nothing better.

Now that you have a handle on the key benefits your Employee Mortgage Benefits Program can offer, the next step is to identify the right companies to market to, who are most likely to give you the “green light” and approve your program.

Here’s how you do it...

54 | mortgagebrokernews.ca

Business / Marketing

Focus on targeting small to mid-sized local companies with 25 to 700 employees.

This type of company tends to be the “sweet spot”

Step 1 - Create a Hit List

The first step in promoting your Employee Mortgage Benefits Program is to compile a list of companies who are most likely to need, want and approve your program. What size of company should you be targeting?

Should you target large multinational companies or smaller local companies? While large multinational corporations have a much larger employee population, getting them to approve your program is a bit like trying to wrestle an elephant -- try as you may, it’s probably not worth the effort. Why? Because there’s way too much red tape and bureaucracy! Unless you’re a sucker for punishment, you don’t want to have to go through that hassle. It’s far too difficult and time-consuming.

Instead, focus on targeting small to mid-sized local companies with 25 to 700 employees. This type of company tends to be the “sweet spot” for promoting voluntary employee benefits. So keep those parameters in mind as you start to compile a list of companies to market to. Now that you know who your target market is...

Here are four ways to reach your target market: 1. Current and past clients. Think about it for a moment. When you take a mortgage application, what field does every client have to fill it? The name of their employer! You already have the employer’s contact information on your application form, so why not use it and profit from it?

Here’s an easy, graceful way to ask your clients whether there’s an opportunity for you to introduce your benefits program to their company. All you have to do is go back to your past clients and ask them this simple question: “Does your company offer voluntary benefits?” If they say, “Yes,” then the company already has a precedent set for promoting voluntary benefits.

Why not have yours be next? If they say “No,” yours could be their first. Regardless of whether they say “Yes” or “No,” you can ask them this question: “Do you think you might be able to introduce me to the person I should talk to about adding my Employee Mortgage Benefits Program to their existing benefits package?” If your client is a raving fan, chances are, they will be happy to help you get a foot in the door.

2. Join HR associations. This is where human resource professionals come together to further their professional development, network, gain or maintain certification credentials and designations, etc. The best resource to find associations in Canada is the Canadian Council of Human Resources Associations (CCHRA). This is a collaborative effort of human resources associations from across Canada, which represent more than 41,000 professionals, 21,000 of whom hold the Certified Human Resources Professional (CHRP) designation. To locate CHRP association chapters in your area, visit mortgagebrokernews.ca | 55

Business / marketing www.chrp.ca.

Now, perhaps you’re wondering why you should bother joining an HR association. After all, you’re a mortgage professional not an HR professional. True, but here’s the kicker.

The HR professionals who go to these association meetings and events are likely the exact same key decision-makers you should be targeting when promoting your Employee Mortgage Benefit Program.

So, instead of making cold calls where you show up and throw up and give a data dump about what you do and what you’ve got, now all you have to do is mix and mingle and build relationships with people at these events. The former positions you as an “annoying pest,” the latter positions you as a “welcome guest.” Which would you prefer? That’s a no-brainer! Remember, warm contacts are always easier -- and more profitable -- than cold contacts.

With that in mind, make it a priority to get to know people at these association events, collect people’s business cards, ask questions, build rapport, and then you can followup and ask them if they would be open to extending their existing Employee

Mortgage Benefits Program with some additional voluntary benefits that would add HUGE value to their employees at no cost to the company.

As you might expect, membership in these associations is not free. The annual fee is usually around $400 but it can be well worth the investment if you capitalize on it and use those networking events as opportunities to make some profitable connections and referral alliances.

3. Join local networking groups (like the Chamber of Commerce, BNI, etc.) Many of the people attending these networking groups are employees or owners of companies that have employee populations in the sweet spot I gave you earlier (25 to 700 employees). So this is yet another opportunity to form warm connections with key decision-makers or, if nothing else, form relationships with centres of influence who can introduce you to those key decision-makers. In either case, this is a great way to get your program approved, without the trouble and struggle of cold calling.

Earn

12%interest to 18% • OPTION 1: Receive 12% interest, RRSP-eligible, 3 year term • OPTION 2: Receive 18% interest, non-RRSP, 1 year term RATES are FIXED INTEREST .... not “projected returns” or “share of potential profit” PASSIVE INCOME No tenants to worry about, no repairs to pay for, no franchise to buy or manage, no fees deducted.

For further information contact;

Restoration Funding Corporation 289-389-1377 info@restorationfundingcorporation.com 56 | mortgagebrokernews.ca

STATS

7.3% – Canadian unemployment rate Source:

StatsCan, July

Business / Marketing 4. Use a list broker. The list broker I recommend for Canadian mortgage professionals is called Info Canada (www.infocanada.ca). Essentially, what they do is compile all of the company listings found in the phone book, turn it into a digital database and then verify their contact information for accuracy.

Then you can purchase a targeted list based on your specific requirements. All you need to do is just call them up and say, “I’m looking for companies in my area that have 25-700 employees and are not multinational corporations. Can you help me with that?” Chances are, you won’t pay more than $300 for a list of 200 to 300 companies. They will provide you with all their contact information in an Excel spreadsheet, including their phone number, mailing address, etc.

So there you have it. I’ve just given you four easy ways to create a targeted hit list of companies to market to. In next month’s article, I’ll teach you how to identify the key decision-maker within the company, how to get hold of them, what to say when you reach them and how to overcome the inevitable objections they’ll throw at you. As intimidating as that might sound, it can be surprisingly easy and fun, once you know how. Stay tuned…

MORTGAGE SOLUTIONS THAT ARE AS SMART FOR YOUR CLIENT AS THEY ARE FOR YOU

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

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 National Bank All-In-One is a trademark of National Bank of Canada. 1 Financing shall be subject to the credit approval by National Bank. 2 $2,000 marketing fee is a one-time reward for the first 65 deals or $20M funded in the fiscal year. 3 $15,000 trip paid for every 125 deals or $40M funded in the fiscal year. The fiscal year is from November 1, 2011 to October 31, 2012.

mortgagebrokernews.ca | 57

Profile / industry

Brokers, start your countdowns MORTGAGE FORUM 2012 is racing into Vancouver this November. It won’t be alone

I

n just two months, for the second time, Vancouver will play host to the most important gathering of mortgage professionals in the country – Mortgage Forum 2012.

Kicking off the conference on Sunday, Nov. 25, the Expo will showcase the latest developments within the industry and will also feature the second annual Career Day designed for students who are interested in learning more about a career in the mortgage industry. Their presence is just one of the things expected to infuse this year’s Expo with more energy and excitement than previous years.

58 | mortgagebrokernews.ca

SUNDAY On Sunday evening, the 9th annual Canadian Mortgage Hall of Fame Awards Night takes place honouring this year’s inductees whose efforts and achievements have contributed to the success of the mortgage industry. It is always a special evening and this year will feature entertainment by home-grown talent Suzie McNeil. The Hall of Fame Awards night is a separate ticketed event and has sold out in previous years so avoid disappointment and reserve your seat today.

profile / industry

TUESDAY

MONDAY

Building on the success of last year’s partnership with The Art of Productions, Mortgage Forum 2012 welcomes The Art of Marketing on Tuesday. This jam-packed day will feature world-renowned marketing leaders Biz Stone, Scott Stratten, Mitch Joel, Eric Ryan and Randi Zuckerberg who will share a blend of cutting-edge thinking and real world experience on today's most critical marketing issues.

Tuesday's program will also give delegates a clear understanding of how marketing has changed, what role it now plays and its impact on your business. It provides mortgage professionals with the tools they need to succeed.

Boris Bozic, AMP, CAAMP Chair and Chair of Mortgage Forum 2012, is extremely enthusiastic about this year’s exceptional program.

“It’s a tall order to make last year’s event even better, but we’re up for the challenge,” says Bozic.

The success of last year’s Mortgage Forum resonated strongly throughout the event world resulting in two Best Conference Awards - by Canadian Event Industry Magazine and by the International Special Events Society Awards in the U.S.

On Monday, CAAMP is welcoming back Amanda Lang, senior business correspondent for CBC News, who will host and moderate the day’s business sessions with renowned venture capitalist Kevin O’Leary and Maritz Research analyst Rob Daniel.

Those panel discussions will be focused on the industry.

Monday’s luncheon will feature legendary Super Bowl-winning NFL quarterback, former CFLer, broadcaster and entrepreneur Joe Theismann, who will provide delegates with an inspiring and motivational midday break. Even more star power will be on hand Monday night as comedian Lewis Black takes the stage at the second annual COMEDYFEST, with opening act Erica Sigurdson.

Monday also features the launch of CAAMP’s Leadership Council designed to identify future leaders in the industry and assist them with mentoring and coaching opportunities.

The council will inspire the next generation to be educated and motivated to succeed, to provide insight into some of the issues they may deal with in the future.

Even more star power will be on hand Monday night as comedian Lewis Black takes the stage at the second annual COMEDYFEST

calender

Nov 25-27 Amanda Lang

– Mortgage Forum 2012

mortgagebrokernews.ca | 59

Cover

The Year ahead/ industry Profile

“Mortgage Forum 2012 is guaranteed to be an amazing conference for anyone in the mortgage industry,” says Feisal Panjwani, AMP, a BC director for CAAMP and chair of the 2012 Host Committee.

“Whether you are a mortgage broker, work for a realityorout there instead trying veteran or lender credit union, are aofseasoned to sell around it, then people will industry - you thinking about entering the mortgage trust us.” have to be there!”

But any efforts the industry may Vancouver also looking undertake asbrokers a wholeare will have no forward to welcoming their peers from across the country. effect if individual brokers don’t do "This year’s CAAMP Conference their parts, which means giving promises to be clients the best value-added service,topics one of the very best.

Timely mortgage improvingwith efficiencies andmarketing funding strategies and combined progressive ratios speakers with lenders, of course, strong all setand in one of the most beautiful placing clients with the right lenders cities in the world, is certain to deliver,” says Jared for their needs.

Dreyer, president MBABC. “Onofbehalf “Focus on theofbest interest the of the board of the Mortgage Brokers Association of B.C., client first and foremost,” said we are thrilled to welcome CAAMP to Vancouver Therien. “We are at a crossroads: we either go backyou to being the person you and encourage to attend.” goThe to when the banks say no as represents it was conference backdrop also an ideal 25 years ago, or become truly time to take advantage of all thattrusted Vancouver and B.C. advisers to our customer and move up have to offer. For those coming from outside of B.C., to the next level.” CMP Panjwani encourages delegates to bring their spouse

48 morTgagebrokernews.ca 60 | mortgagebrokernews.ca

or significant other and spend an extra few days visiting the Vancouver area. “Take in the incredible views on the drive up to Whistler, spend a day on the slopes and ride the Peak to Peak gondola or take the ferry over to Victoria and visit the beautiful harbour.”

Mortgage Forum 2012 takes place at the Vancouver Convention Centre from November 25 to 27. Early bird registration ends October 19. For complete conference details, visit www.mortgageconference.ca

Source: Mortgage Insights: Highlights from CAAMP’s Fall 2011 consumer and industry surveys (CAAMP/Martiz Research Canada)

71%

of homeowners say they are in a good position to weather a potential downturn in the housing market

profile / favourite things

Favourite things…

Lucie Halle Agent, Dominion Lending Centres The Mortgage Source, Ottawa, Ont.

Music: Jennifer Lopez Book: Nora Roberts romance novels

NEW Mortgage Term:

NEW Mortgage Product:

Multi-option

Drink: Red wine

mortgage years

Food: Thai

ii n: Hawa Vacatio mortgagebrokernews.ca | 61

GUEST / column

The word

By Tom Lamb and Jake Posliff

W

hether you choose to take on the challenge yourself or co-broker a commercial deal, the financial rewards can be significant. But first and foremost, you’ve got to be able to identify a viable deal once you see it. That’s something of an art. Actually it’s more of a skill.

In essence, a commercial mortgage broker needs to be conversant with, or have a solid understanding of, various aspects of the commercial/industrial/ investment market. When you spot that opportunity you have to get a sense of how to “size up” the company seeking financing. It is essential to have an understanding of financial statements, possess basic risk analysis skills, be able to assess cash flow and determine repayment capacity.

In this respect, the commercial broker will want to know how to interpret a balance sheet, understand the significance of items on the profit and loss statement and be familiar with the calculation and application of ratios commonly employed.

Through this process, one will be able to make the initial determination as to whether or not “this is a probable deal.”

In conjunction, a commercial broker must have knowledge of the various credit products available for each market

62 | mortgagebrokernews.ca

segment. They vary from term, bridging, condo inventory and construction loans to commercial mortgages. Don’t forget about CMHC-insured loans and government programs. As a broker, you’ll need to be able to identify which product will best serve the client, if any at all.

On the residential side, the process has evolved to become largely standardized, however, that’s not so with commercial.

The degree of success a commercial broker may achieve, in part, depends on choosing the right lender. Some lenders, for example, will be less attracted to construction opportunities, but are happy to provide the take-out financing while the reverse will hold for others.

Perhaps one of the most common areas where commercial brokers fall short is in the preparing and presentation of the proposal to the lender. Commercial proposals put forward by many brokers are commonly viewed as “name, rank and serial number” type. These proposals do little more than outline the amount of funds required, general purpose, terms/ rates sought and a brief description of the property involved, such as location and value. Really, a proposal needs to include a detailed analysis of the company, its financial position, capability to meet its debt obligations and address strength/

weaknesses, including that of management. It should also provide relative comment on the appraisal undertaken and speak to the efficacy of the same.

The closer the proposal format is to that which the lender uses, the more straightforward the deliberation and the faster and cleaner the response.

Inasmuch as there is little in the way of commercial brokering instruction, Posliff and Lamb have developed a one-day seminar (preapproved by CAAMP for 5 CE credits) to prepare residential brokers to comfortably tackle commercial deals. The program will be rolled out in B.C. in the fall, beginning on Vancouver Island. To learn more, email jakeposliff@invis.ca or tomlamb@invis.ca

About the writers: With Invis West Coast Mortgages in Courtenay B.C., Posliff is now in his 54th year in the financial services industry, having served as underwriter, supervisor and manager of commercial/corporate banking with CIBC and TD. His partner Lamb has nearly 40 years’ experience in banking and recently retired as an AVP and regional head of mid-market commercial lending with HSBC.

service / directory Banks

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

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

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

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

The Downing Street Group www.downingstreet.com Ph: 416 248 6206 ext 260 Page 35

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

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

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

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

National Bank www.nbc.ca Ph: 1 888 483 5628 Page 57

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

Vector Financial Services www.vectorfinancialservices.com Ph: 1 866 483 8018 Page 36 Insurance

Non-Bank Lenders

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

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

Fortress Real Calpital www.fortressrealcapital.com Ph: 905 787 9266 Page 49, 51

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

Canadian Mortgage and Housing Corporation www.cmhc.ca Ph: 1 888 463 6454 Page 41

Stinson School www.stinsonschool.com Ph: 289 389 1377 Page 56

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

Titan Equity Group www.titansinv.com Ph: 905 760 2277 Page 48

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

Broker Networks

ING Direct www.ingdirectbrokerteam.ca Ph: 1 800 574 5629 Page 53

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

Best Points Travel info@bestpointstravel.com Ph: 1 800 551 8786 Ph: 416 251 9944 Page 60

Optimum Mortgage A Division of Canadian Western Trust www.OptimumMortgage.ca Ph: 866 441 3775 Page 21

Dominion Lending Centres www.DominionLending.ca Ph: 1 888 806 8080 Page 22,30,31,63

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

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

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

64 | mortgagebrokernews.ca

INVIS Mortgage Intelligence www.invis.ca • Ph: 1 866 854 6847 Pages 15

TM

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

Canadian Association of Acredited Mortgage Professionals www.caamp.org Ph: 1 888 442 4625 Page 27

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