CMP 10.12

BONUS! Alternative Lending Guide

D

MORTGAGEBROKERNEWS.CA ISSUE 10.12 | $12.95

LIFES

TYLE M

ER MATT Y E N O

S

ND ATE A TTERS T S E RE AL GAGE MA T MOR

RAP EMOG

HICS

WOR

K LIF

E

ATION C U D E

2015

BROKER LIFESTYLE SEVEN DEADLY SINS Avoid these common marketing faux-pas

00_OFC Spine2_SUBBEDda.indd 2

NEGOTIATING 101 Why negotiation isn’t about winning at all costs

INDUSTRY ICON Lester Shore talks straight about getting a grip on 2016

2/12/2015 11:17:51 AM

get rewarded for your efforts Our compensation model offers you more choice & increased compensation.

The new and improved compensation model allows you to decide if you want to earn more commissions today or tomorrow by choosing either our upfront or renewal commission on each deal.

Learn more about how we reward you for your loyalty by visiting: http://www.radiusfinancial.ca/affinity

contact us today!

1.877.369.6398

sales@radiusfinancial.ca

www.radiusfinancial.ca/contact Š Copyright 2015 Radius Financial Inc. All Rights Reserved.

IFC-03_Contents_SUBBEDda 2.indd 1

2/12/2015 10:40:22 AM

ISSUE 10.12

CONTENTS

22

BROKER LIFESTYLE COVER STORY

Our third-annual survey looks at where you stand against your peers in work, life, finances and more

OppOrtunity is Often simply a matter Of seeing it first.

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

DATE:

IFC-03_Contents_SUBBEDda 2.indd 1

August 25, 2015_1:45 Pm

License # 10172

LIVE: 7.5” x 2.875”

www.mortgagebrokernews.ca 1 x 4.125” 8.25” x 3.625” TRIM: BLEED: 8.75”

AD NUMBER: Rom CmP 15 07

COLOUR: CmyK

AD / JOB TITLE: oPPoRtunity

CLIENT:

PUBLICATION / RUN DATE: CmP / sePt., oCt., nov. & deC. 2015 issues

CREATIVE TEAM: Bensimon/PARKeR

RomPsen

B E N S I M O N PA R T N E R S 4 4 6 S PA D I N A R O A D , S U I T E 2 0 7, T O R O N T O , O N TA R I O , M 5 P 3 M 2 , C A N A D A

T E L . 4 1 6 5 9 7 9 7 0 0 FA X . 4 1 6 5 9 7 9 7 0 7

2/12/2015 10:40:31 AM

ISSUE 10.12

CONNECT WITH US Got a story or suggestion, or just want to find out some more information?

CONTENTS

10

twitter.com/CMPmagazine plus.google.com/+MortgagebrokernewsCa facebook.com/MortgageBrokerNewsCA

UPFRONT 04 Editorial

FEATURES

40

7 DEADLY SINS OF MARKETING

If you’re committing any of these, you’re not alone – and you’re not doing your business justice, either

A new association name doesn’t necessarily spell more success

06 Statistics

There are several good reasons for brokers to look closer at condo deals

08 Head to head

Should brokers be able to charge cancellation fees?

12 Commercial update

A leading lender releases its in-depth commercial mortgage update

14 Private lending update

This leading player believes there’ll be more private lenders in 2016

16 Opinion

It’s time to make more noise about minimum-volume requirements

UPFRONT

NEWS ANALYSIS

Brokers argue a FICOM disclosure overhaul in British Columbia could hurt, not help, clients’ interests across the country PEOPLE

INDUSTRY ICON

He has seen it all – industry veteran and Optimum Vice President Lester Shore shares his straight, no-holds-barred perspective about what brokers need to get a grip on in 2016

18

42

BUSINESS STRATEGY

HOW TO HIRE THE RIGHT PERSON

Taking time to prepare meaningful HR interview questions helps ensure you hire the right person every time.

PEOPLE 38 Broker profile

Big-hearted Geoff Lee is dedicated to helping everyone around him – whether he’s arranging mortgage financing, or fundraising for the orphanage he founded

46 Career path

Carmen Campagnaro built successful businesses in three different sectors

48 Other life

Jarrett Slaney makes his business stronger by being a fitness trainer, too

44

BUSINESS STRATEGY

CHANGE OR DIE

Why leaders must embrace change

MORTGAGEBROKERNEWS.CA CHECK IT OUT ONLINE

MCAN 2

www.mortgagebrokernews.ca

IFC-03_Contents_SUBBEDda 2.indd 2

2/12/2015 11:13:34 AM

XCEED is a wholly owned subsidiary of MCAN Mortgage Corporation

Traditional and Alternative Lending Great Compensation Flexible Solutions

Gleb Ioussoufovitch Director, Sales and Marketing

@XCEEDMortgage

XCEED Mortgage Corporation

Hassan Shaikh Managing Director, Single Family Mortgages

marketing@xceedmortgage.com

MCAN Mortgage Corporation | XCEED Mortgage Corporation, 200 King Street West, Suite 600 | Toronto, ON | M5H 3T4 | FSCO 10406

www.XCEEDMortgage.com IFC-03_Contents_SUBBEDda 2.indd 3

2/12/2015 10:40:46 AM

UPFRONT

EDITORIAL

www.mortgagebrokernews.ca ISSUE 10.12 EDITORIAL

What’s in a name?

A

sk marketing professionals from Victoria to Gander this question and the answer will come back fast and pithy: “Everything!” To flesh it out, of course, they’ll talk about the must-have power of any organization’s name to connect with its target audience and almost immediately register its value-add.

As an acronym, CAAMP, most will agree, has largely failed to meet that simple but pivotal goal. In November, the industry’s national association announced it would move to correct that. The association is ditching its inherently confusing moniker in favour of the much more to-the-point Mortgage Professionals Canada. No acronym, in fact, required.

“Our brand was tired,” conceded Cindy Freiman, director of marketing and communications for Mortgage Professionals Canada, at this year’s opening ceremony for the organization’s national conference. She’d helped effect quite

“That success will come from helping consumers better understand what mortgage brokers actually do” significant structural changes to improve operations. The old name, however, was the elephant in the room Freiman was left to tackle.

Brokers seem grateful for her initiative, pointing to the challenges they’ve traditionally had in getting clients to wrap their heads around the concept of the organization and its mandate to lift and maintain industry standards of practice.

The rebranding process was put in motion last January and by February, the organization had parachuted in a communications specialist whose past client list includes McDonald’s, IKEA, Pepsi and, ahem, the makers of Viagra.

The consumer-facing roster speaks to the work Mortgage Professionals Canada has cut out for itself in the fight to raise broker market share above the 30% threshold.

That success will come from helping consumers better understand what mortgage brokers actually do. That’s still murky territory for most homebuyers, even as they increasingly turn to the web to better educate themselves on the mortgage transaction.

The organization’s new name is expected to help with that heavy lifting. Still, it’s not along. Other associations, lenders and networks are shouldering their own responsibility to market the industry and what it can do to connect consumers with superior product and servicing beyond rate.

For going on a decade it’s a collective mission brokers – or rather, mortgage professionals – have been calling for.

Vernon Clement Jones, editor

Editorial Director Vernon Clement Jones

SALES & MARKETING Associate Publisher Trevor Biggs

Senior Writer Justin da Rosa

General Manager, Sales John Mackenzie

Writers Olivia D’Orazio Donald Horne

National Account Manager Trevor Lambert

Executive Editor – Special Features Ryan Smith Copy Editor Dean Askin

CONTRIBUTORS Sarah Derry Gabrielle Dolan Jane Anderson

ART & PRODUCTION Design Manager Daniel Williams Designer Loiza Caguiat Joenel Salvador Production Manager Alicia Salvati Traffic Manager Kay Valdez

Marketing and Communications Claudine Ting Project Coordinator Jessica Duce

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

EDITORIAL INQUIRIES

vernon.jones@kmimedia.ca

SUBSCRIPTION INQUIRIES

tel: 416 644 8740 • fax: 416 203 8940 subscriptions@kmimedia.ca

ADVERTISING INQUIRIES trevor.biggs@kmimedia.ca

KMI Media 312 Adelaide Street West, Suite 800 Toronto, Ontario M5V 1R2 tel: +1 416 644 8740 www.keymedia.com Offices in Toronto, Sydney, Denver, Auckland, London, Manila CMCA AUDITED

Canadian Mortgage Professional is part of an international family of B2B publications and websites for the real estate and mortgage industries MORTGAGE PROFESSIONAL AUSTRALIA sam.richardson@keymedia.com.au T +61 2 8437 4787

MORTGAGE PROFESSIONAL AMERICA cathy.masek@keymedia.com T +1 720 316 0151

4 www.mortgagebrokernews.ca

04-05_Editor's Letter_SUBBEDda.indd 4

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 the magazine can accept no responsibility for loss

2/12/2015 9:43:11 AM

04-05_Editor's Letter_SUBBEDda.indd 5

2/12/2015 9:43:26 AM

UPFRONT

STATISTICS

A closer look at condos

CONDO STARTS IN CANADA Overall, condo starts were up almost 42% across Canada in September, compared to the year-ago period. Manitoba, Ontario, New Brunswick and Prince Edward Island posted the biggest gains. Meanwhile, sharp declines in provinces such as Saskatchewan and Newfoundland and Labrador point to markets already saturated with unabsorbed units.

The condo market’s often a microcosm of the rest of Canada’s housing market. Currently, regional differentials are stark

September 2015 NEWS OF overbuilding in many major Canadian cities has observers and analysts questioning the stability of the country’s housing market. Condos, especially, often show the first signs of weakness in a market.

But with condo starts up in most parts of the country, 2016 could be full of good news for brokers, who certainly could benefit from the increased business. Winning that business won’t be easy, however. Typical condo purchasers tend to be first-time buyers

19%

of home purchases between 2013 and mid-2015 were condos

and investors, whose deals are often challenging to finance.

On the flipside, unabsorbed units are also up in certain areas of Canada – mainly those still recovering from low oil prices. Brokers might see a decrease in condo deals as the market stalls altogether. Still, as Canada’s population swells and the idea of condo living becomes more popular, the size – and price – of condos will also rise. Originators sticking it out in this segment could soon win penthouse-sized deals.

22%

of first-time buyers purchase a condo

30%

of new-to-Canada homeowners live in condos

YOY change

Canada

13,802 41.7% British Columbia

1,599 -0.1%

5

average number of rooms in a typical owneroccupied condo Sources: CAAMP, June 2015; CMHC, April 2015

DETACHED HOMES STILL KING Condos are gaining traction in the Canadian housing market, but they still lag behind the immensely popular single-detached home. It represents more than half of all home sales.

THE COST OF A CONDO Less than $100,000 $100,000 – 149,999 $150,000 – 199,999

$200,000 – 249,999

Detached Semi-detached

18.5% Condo

11.3% Townhouse Source: CAAMP, June 2015

6

4%

16%

57.3%

9.7%

4% 3% 2% 1% 4%

$250,000 – 299,999

Today’s condos are 12% as varied as the people who occupy them. They come at just as many price points, too. That means 5% brokers can expect files of different 14% sizes when it comes to serving 8% the condo market.

15%

13%

$1 million or more $800,000 – 999,999 $600,000 – 799,999 $500,000 – 599,999 $450,000 – 499,000

$400,000 – 449,000

$350,000 – 399,999

$300,000 – 349,999 Source: CAAMP, June 2015

www.mortgagebrokernews.ca

06-07_Statistics_SUBBEDda2.indd 6

2/12/2015 10:42:30 AM

Ontario

Quebec

5,206 123.2% Alberta

3,977 53.1%

Newfoundland and Labrador

Manitoba

1,917 -8.7%

508 109.9%

12 -68.4%

Prince Edward Island

38 442.9%

Saskatchewan New Brunswick

139 -74.8%

Nova Scotia

126 137.7%

280 24.4% Source: CMHC, September 2015

BUILT BUT VACANT

RESALE ROLLER COASTER

The more newly constructed but unabsorbed condo units there are, the more challenged the market could be as fewer buyers scoop up these properties. In September, Canada’s oil-producing provinces exemplified this struggle.

Condo sales have continued rising in most parts of the country. However, regions largely impacted by the low Canadian dollar and the price of oil have faced tough times in this segment of the housing market.

3000 2500

September 2014

Vancouver

Saskatoon

Montreal

28.7%

September 2015

2000

-20.1%

0.2%

Victoria

30.2%

Regina

Moncton

1500 1000

Calgary

Winnipeg

Halifax

Edmonton

Toronto

-40.5%

500 Vic to Van ria co uv er Ca lga Edm ry on t Sa on ska too n Re gin Wi a nn ipe g Tor on to Ott aw Mo a ntr ea Mo l nc t Sa on int Joh n Ha lifa x

0

Source: CMHC, October 2015

-15.4%

-11.2% -8.6%

28.8% 13.6%

3.8%

Sources: REBGV, September 2015; VREB, September 2015; CREB, September 2015; EREB, September 2015; SaskatoonREALTORS, September 2015; ARR, September 2015; WinnipegREALTORS, September 2015; TREB, September 2015; GMREB, September 2015; GMREB, September 2015; NSAR, September 2015

www.mortgagebrokernews.ca

06-07_Statistics_SUBBEDda2.indd 7

7

2/12/2015 10:42:37 AM

UPFRONT

HEAD TO HEAD

Should brokers be able to charge cancellation fees?

Despite the controversy, many brokers say they’d consider charging a fee to clients dropping out of a deal at the last minute

Tony Piattelli

Andy MacDonald

Karen Boies

Mortgage specialist Quantus Mortgage Solutions

Mortgage broker Domus Financial Corporation

Mortgage planner Dominion Lending Centres City Wide Mortgage Services

“I don’t charge cancellation fees, so my initial response was, we shouldn’t. But in certain cases – if you’re doing a build or working with someone to repair credit – I do think you should be able to charge a fee.

With those files, there’s nothing to tie clients to us. There’s no thanks for the work we’ve already done. For a standard deal taking 30 or 60 days to go through, however, you don’t need cancellation fees.

There’s a differentiating factor that should be considered, particularly for those situations where there’s greater time investment on the part of the broker.

People shouldn’t be getting access to our time and knowledge without some compensation.”

“Mortgage brokers have every right to be compensated for their services. By specifying an amount for liquidated damages – not a penalty or cancellation fee – in my closing documentation, I can be compensated for my services should the mortgage fail to close. I usually choose a nominal amount for the liquidated damages, demonstrating my goodwill toward the client.

I want the mortgage to close because I’ll be paid more if it closes than whatever I collect from liquidated damages. This simple clause solidifies the relationship with my client, and I almost never have to collect.

When I provide a service, I expect to be compensated for it.”

“In some situations, I wish I could have charged a cancellation fee – for instance, when I’ve done all the work and the client chooses not to commit.

The first time it happened to me, I was helping a first-time buyer for more than six months. I got her approved with the rate, terms and conditions … [that] were best for her long-term plans. She signed off on the commitment but didn’t complete the mortgage with me. She took the commitment to her own bank, and they matched the rate.

Cancellation fees won’t stop this situation, but will prompt a conversation that might have the client thinking about their commitment to us.”

TAKING BACK YOUR TIME Mortgage brokers lose income when clients back out of deals at the 11th hour. Many want to do something about this. The Mortgage Brokers Association of British Columbia (MBABC) is lobbying the provincial government to amend Section 5 of the Business Practices and Consumer Protection Act. It prohibits advance fees, including cancellation charges. The MBABC argues brokers should be compensated for the time they invested in files prior to clients opting out. However, other industry players believe cancellation fees can leave a bad taste in clients’ mouths. They argue there’s more than enough business to go around – even when a deal falls through.

8 www.mortgagebrokernews.ca

08-09_Head to Head_SUBBEDda.indd 8

2/12/2015 9:45:30 AM

MCAP Fusion Mortgage is a mortgage and a line of credit… …a POWERFUL combination with flexible financing options to meet your customers’ financing needs.

Ask your MCAP Business Development Manager for more details.

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

08-09_Head to Head_SUBBEDda.indd 9

2/12/2015 9:45:34 AM

UPFRONT

NEWS ANALYSIS

A forced fee disclosure conundrum Regulators have confirmed a disclosure overhaul in one province, but brokers argue the move could actually hurt clients’ interests, not help

MORTGAGE BROKERS in British Columbia could soon be required to loosen their lips when it comes to how much they’re paid, and some originators fear that might sink ships as stunned clients demand bought-down rates.

In an e-mailed statement to CMP sister site MortgageBrokerNews.ca, the Financial Institutions Commission (FICOM) said the improved disclosure rules would require “that brokers disclose the amount of compensation they received from lenders.” The change, it said, is a result of a shared interest in improved regulatory compliance and higher industry standards.

Mountain View in Coquitlam, BC. “Then adding in the very complicated compensation and remuneration aspect for disclosure – it opens up extra questions that are difficult to answer.”

The concern is less about a potentially awkward conversation about money, Anderson says, and more about the confusion surrounding who pays for what.

“There’s already so much education that goes into the mortgage process; it’s already such a convoluted process for the client,” she says, pointing to the need for extensive documentation and the difficulty some clients have in qualifying for certain products. “[Fee disclosure] just adds a little bit of doubt, and

“This is going to add another layer of confusion and make it that much more difficult for the independent brokers” Donna Telep, Seville Mortgage Front-line brokers, however, aren’t seeing it that way.

“There is already enough confusion around the mortgage broker industry, where clients don’t truly understand what we do,” says Tanya Anderson, a mortgage professional with DLC

10

we’re already handling sensitive information.

It’s hard to factor all that in.”

Brokers are already required to disclose whether they receive a fee or a bonus from lenders, though they aren’t required to divulge the actual amount.

“I feel that the disclosure requirement that they’re wanting to bring in, I don’t think it’s necessary because the client isn’t paying [the fee],” says Donna Telep, a mortgage advisor with Seville Mortgage in Maple Ridge, BC. “It’s no different than if you walked into a furniture store – would you feel that the salesperson should disclose to you exactly how much they’re getting paid on that sale?”

Telep says her clients – most of whom are repeats and referrals – are fully aware that she gets paid by the lender. For clients who might be using a mortgage broker for the first time, though, the forced fee disclosure may inadvertently support any feelings of distrust.

“We’re going to run into clients who misunderstand how we’re paid,” Anderson says.

“They may think that, by us making a fee,

www.mortgagebrokernews.ca

10-11_News Analysis_SUBBEDda3.indd 10

2/12/2015 10:55:39 AM

FICOM’S TAKE ON FEE DISCLOSURE Responding to questions from CMP sister site MortgageBrokerNews.ca, FICOM said the new law has improved conflictof-interest disclosure in British Columbia. It will require brokers to “disclose the amount of compensation they receive from lenders, including base compensation, volume bonuses and other rewards. It will also require disclosure of compensation paid to another broker in co-brokering situations.”

The financial regulator said it’s “actively consulting with CAAMP, MBABC and directly with leaders in the BC mortgage broker community,” but hasn’t said when the changes will be put into place.

“We’re going to run into clients who misunderstand how we’re paid. They may think that, by us making a fee, they’re getting a lesser rate” Tanya Anderson, DLC Mountain View they’re getting a lesser rate. There are already rate shoppers out there, so it might add to that.”

Anderson says disclosing her fee to a client without explaining how she makes that amount could result in a rate-sensitive client pressuring her to buy down the rate.

“There are questions about how [the lender paying the broker fee] impacts them, and without getting into a monotonous explan-

ation, the client won’t really understand how one lender may take five extra hits, but that is no different from the lender who is not,” she says. Anderson points to the many variables brokers consider when placing a client with a particular lender. She says the client could become fixated on the broker’s fee associated with that product, overlooking the broker’s reason for recommending it in the first place.

Telep, meanwhile, says this move could further increase the fierce competition in the mortgage space that’s pressuring many brokers to buy down rates.

“We’re competing with other brokers for the business, plus we’re competing with the independent banks,” she says, adding that the bank agents are exempt from these updated disclosure rules. “This is going to add another layer of confusion and make it that much more difficult for the independent brokers.”

That double standard could lead some clients to question why banks aren’t required to disclose, Anderson points out, potentially setting up a foundation of distrust.

“I think, in this case, it is going to add a bit of extra doubt,” she says. “Clients might think, ‘My banker doesn’t have to do this, so maybe they’re more trustworthy than my broker.’”

FICOM claims the updated requirement will better protect homebuyers in British Columbia by way of increased transparency, but Anderson and Telep don’t see it that way.

“With clients being so savvy nowadays … the need for that extra layer of protection in unnecessary,” Anderson says. “When you add in the layer of what the broker is paid without explaining it, you just add confusion. I don’t think it’s saving the client; I think it’s just adding an extra layer that didn’t need to be there.”

www.mortgagebrokernews.ca

10-11_News Analysis_SUBBEDda3.indd 11

11

2/12/2015 10:55:47 AM

UPFRONT

COMMERCIAL LENDING UPDATE NEWS BRIEFS

Crediting brokers for impressive quarter

“Brokers play a very big role for us; we get all our business from the channel,” Robert Inglis, chief financial officer for First National, told MortgageBrokerNews.ca. “Mortgage brokers do offer a valuable service by helping clients for free; banks are good too but brokers can just get better rates.”

First National Financial Corporation announced upticks in a number of categories for the quarter ending Sept. 30. That includes commercial originations, which saw significant gains for the company, growing 45% yearover-year to $1.3 billion.

MICS offer solutions for commercial deals Lending tools mortgage insurance corporation (MIC) managers have available to them are more than what’s available to a typical private investor.

So says Gay Andrews, executive vice president, COO, Caplink Financial Corporation, Camrock Capital. He said those tools include complex deal structuring; mortgage syndication with other private investors and/or other MICs; more flexible mortgage advance schedules; and the ability to meet the growing needs of repeat commercial borrowers. “The scale and dexterity of the average MIC allows managers to be much more creative in solving lending problems. That creativity can be a real asset to any mortgage broker trying to facilitate their client’s lending needs.”

Cashing in on Liberals’ marijuana promise

Legalization of marijuana in Canada will open up a new segment for brokers – one that will be ignored by the big banks, according to one major player. “As far as I know there are a limited number

of brokers who have knowledge about lending for that industry and the brokers and lenders will be slow to adapt,” said Dale Bilton, one of Canada’s top commercial brokers. That means those brokers who prepare to fund commercial deals – and learn the ins-and-outs of available options – will be better situated to cash in on a potential boom as companies prepare to set up growing operations.

Queen’s receives royal-size donation Stephen Smith, co-founder of First National Financial, has donated $50 million to the Queen’s University School of Business. The donation will fund new chair positions and professorships at the university. It will also finance several student scholarships. First National is the largest non-bank commercial and residential lender in Canada. “The school of business has the energy and strategy to advance its international influence and recognition, which will be good for students, the university and for Canada,” said Smith. He earned an undergraduate degree in electrical engineering from Queen’s in 1972.

Smith also has a master’s degree from the London School of Economics and Political Science.

American crowdfunding platform repays massive loan

iFunding, a US-based commercial real estate crowdfunding platform, has repaid its largest loan to date – $55 million for two Courtyard Marriott hotels. The repaid funds were for a deal that gave investors the opportunity to invest $1-million mezzanine loans. “iFunding takes pride in offering its investors opportunities to participate in large commercial projects,” William Skelley, iFunding founder and CEO, said in a release. The loan was paid back ahead of schedule.

Highlights from the year that was A leading lender releases its in-depth commercial mortgage report CMLS Financial released its in-depth November 2015 commercial mortgage commentary report, and these are the pertinent details. “(The) November 2015 commentary discusses the impact of ongoing bond market volatility on the commercial mortgage market; looks at the continued widening of spreads on commercial mortgages, CMHC (Canada Mortgage and Housing Corporation) insured loans and the corporate credit market more generally; highlights a slowdown in senior unsecured debt issuance from 2014 highs; and more,” CMLS said in a release.

According to the report, global markets were volatile in the third quarter of 2015. As a result, the Bank of Canada may be forced to maintain current policy until manufacturing activity increases.

This has also impacted spreads.

“The increasingly attractive relative value of corporate credits vs commercial mortgages together with typical seasonal decline in lender availability is putting upward pressure on conventional mortgage spreads,” CMLS wrote. “Many lenders that remain active in the market have increased spreads and/or are restricted by floor rates still in play given the low interest rate environment.”

According to CMLS, commercial spreads on “high quality” assets are currently priced between 185 to 205 basis points (bps) for five-year deals. Ten-year deals, meanwhile, are priced between 200 and 220 bps, which represents a 15- to 20-bps increase over the prior quarter.

12 www.mortgagebrokernews.ca

12-13_Commercial Update_SUBBED.indd 12

2/12/2015 11:14:13 AM

“Notwithstanding the incremental inch-up in commercial mortgage spreads year-to-date, borrowers can take comfort in the fact that all-in coupons remain at or near all-time lows,” CMLS writes. “On the other hand, credit spreads now make up 70% of the total mortgage coupon, up from 30% in December 2007, indicating risk now makes up the majority of investor returns.”

Spreads on CMHC loans, meanwhile, are up.

According to CMLS, spreads on new fiveand 10-year, multi-family CMHC insured loans are approximately 100 bps, which is up 20 bps (for five-year) and 10 bps (for 10-year), quarter over quarter.

“... borrowers can take comfort in the fact that all-in coupons remain at or near all-time lows ... On the other hand ... risk now makes up the majority of ... returns” “The increase in spreads is likely due to limited availability as balance sheet lenders and the Canadian Mortgage Bond allocations have either been filled or are close to being filled for the balance of 2015, with generally less availability of 5-year funds vs 10-year funds,” CMLS said.

Q&A

Rajan Kaushal

Development looking good

President TRIBECCA FINANCE

Years in the industry 20 Career highlight “Helping people achieve their goals. We have many lending products that help people achieve those goals – not just financial goals, but also goals like purchasing a home – and that feels rewarding.”

Biggest challenge “Many times there are instances when mortgage brokers and agents are placing private mortgages, and sometimes the lenders aren’t aware of the level of risk they’re taking ... the mortgage broker or agent may not realize the level of risk either. But that’s a challenge – these mortgages are being placed and the level of risk in many cases is not suitable for the lenders.”

How is the commercial space doing right now?

I believe the commercial space is healthy. Commercial real estate also has many different components. There’s office space3, there’s retail space, there’s industrial space. There are many different aspects of commercial real estate, but overall I see the commercial real estate market being healthy. There’s a lot of demand in the hotel sector for quality hotel buildings. There’s strong demand for that.

Do you see any challenges ahead for the commercial space?

I don’t see any immediate short-term challenges in the next few months. I do potentially see some challenges in the long term. Cap rates have compressed very low and interest rates have gotten very, very low. So I don’t think that there’s a lot of room for the cap rates to be compressed any further. Values go up for several reasons, but one of the most prominent is cap rates. I don’t see a lot of room for the cap rate to go too much lower. I also see interest rates at some point rising. And when interest rates do rise, that will put pressure on values as well.

We’ve talked about the challenges in the industry right now.

What about opportunities?

Well, development opportunities have been very attractive in the commercial real estate market in the last few years, and I think they will continue to be. Commercial properties located on parcels of land for redevelopment are definitely an opportunity and will continue to be an opportunity. Those buildings are not only sold on return on investment – they’re sold on redevelopment potential.

So how do commercial real estate brokers take advantage of those opportunities?

It’s always good for mortgage professionals to have access to and understand the lenders in the space. The more lenders they have access to, the more mortgages they can facilitate. It’s very important to understand different lenders’ niches. One lender might not have an appetite for a certain type of commercial property, and another lender might. At the end of the day, the more mortgages they can facilitate and the more they can provide their clients with what they want.

How does geography affect the market?

I believe it’s important to note the demand in your geographic area.

I believe currently in Ontario and many other parts of the country, the environment is good. However, it’s important to know that many parts of the country may be having a hard time. It’s different in terms of geographic areas.

Like the rising vacancy rate in Calgary.

Exactly. When there’s that much vacancy, it becomes more difficult to put valuations on properties. So you’ve just got to be more aware and more careful in that environment. The health of the economy in the geographic area is very important to commercial real estate.

www.mortgagebrokernews.ca

12-13_Commercial Update_SUBBED.indd 13

13

2/12/2015 9:25:12 AM

UPFRONT

PRIVATE LENDING UPDATE

More private options in 2016?

One leading player believes more private lenders will enter the market next year

of our money is private based and the same old story: rates must be attractive and yields must be attractive for investors. At the same time obviously providing competitive pricing.”

As for those interested in entering the market as a private lender? Vyner has some advice.

“I think there will be more private lenders entering the market. Everybody should have

“As long as the market remains competitive, everything will follow suit and it will be another good year in the business”

Private lending has enjoyed a boon since regulators have battened down the hatches on more traditional lending, and that trend is expected to continue.

“In my opinion, what I see here is that there is a heavy demand for private financing.

Private funds will continue to cover a niche of the market,” Daniel Vyner of New Haven Mortgage Corporation tells CMP Magazine.

“It will continue to be steady, and I’ve seen speculation that interest rates will rise and that could add more momentum to private

NEWS BRIEFS

deals, and that could mean more competition for us.”

According to Vyner, an increase in institutional pricing will make private rates seem more appealing to clients, since the gap between the two will be slightly eroded.

And privates are a lot less reliant on government yields and rates when it comes to setting their own prices.

“With private rates, it’s hard to speculate (where they will go) because there is no formal plan to raise rates,” Vyner says. “As a MIC, all

Hunting for private lenders

The growing popularity of second mortgages has created a scramble to find private lenders – and one online solution is attracting broker attention.

“We have 220-plus brokers on board already in the system,” said Paul DeMelo, CEO of Home Ownership Solutions, a division of Fourth Street Financial Corporation based in Mississauga, Ont. DeMelo said this “engagement platform” lets brokers avoid dialing for dollars in the second-mortgage space. From an investment perspective, the algorithms make for a consistent portfolio approach to loan management.

the opportunity to get into the market,” Vyner says. “But they should be experienced, have a game plan, and know the proper regulations.”

He certainly welcomes the competition – as long as they play by the rules and focus on setting up a shop in accordance with current regulations.

“As long as the market remains competitive, everything will follow suit and it will be another good year in the business.

There is always friendly competition and as long as they can add something to the industry, it will be great for everyone,” Vyner says. “Everyone should have the opportunity to open a MIC as long as they focus on the right things, including compliance.”

Thriving in newconstruction block

Brokers complain about the difficulty of working with new-construction mortgages, but a leading player in that space says those who dedicate the time to understand the market will thrive.

“Generally, we don’t have any problem with those deals; the biggest problem is brokers not taking the time to understand them,” said John Meredith, president and CEO of CityCan Financial. Meredith estimates new-construction deals comprise 25% of his business. They account for six to $10 million in funded mortgages. He usually completes four to five of those files a month.

14 www.mortgagebrokernews.ca

14-15_Private Update _SUBBEDda 2.indd 14

2/12/2015 10:45:24 AM

Q&A

Denise Buckley Vice president of mortgage operations MAGENTA

Private lending is all about understanding where you fit How’s the private lending space doing, in your opinion?

Years in the industry 15 Career highlight “Every day is different.

You never get two days the same.”

Biggest challenge “Understanding what everybody does, honestly, that is a challenge. Because part of what we do at Magenta is, if I can’t do it, I try to find someone who can.”

It’s fantastic actually. The space itself just continues to grow as the world continues to shrink. There’s definitely more competition as the banks start to see opportunity there again, but as a private lender it’s almost like you get to pick and choose now. The biggest challenge in the space right now is being able manage the portfolio in such a way that you’re always there to support that portfolio. But it’s strong and thriving.

What’s the biggest challenge in the space right now?

The last thing you ever want to do is be dry, or not have funds. It’s making sure you’re always turning the portfolio to make sure people are moving up into the right kind of opportunities – ensuring clients aren’t displaced, but also making sure you have money for the next deal. It’s kind of exciting that way.

Do you see any challenges or opportunities on the horizon?

I think opportunities would be expanding that product base so you’re getting stronger borrowers so you can be a little more adventurous in that construction and renovation space that seems to be opening itself up.

The biggest challenge is that there are always people coming in and going, so it’s about staying the course and understanding what you do well. As you’re opening up, remember the core of who you are, and educate people that although you’re a private lender, you still have a

Ontario MIC association long overdue

Brokers have CAAMP, and Mortgage Investment Corporations out west have their own associations – which begged the question: why not Ontario? “We should have done this years ago. The one in Alberta has been around for six years; the one in B.C. has been around for some time, and they are all well-organized,” says Chris Couprie, CEO of Secure Capital MIC and one of the founders of ONMICA: the Ontario Mortgage Investment Companies Association. “We’ll get there – we’re just getting started.” The Ontario MICs have gathered informally for years.

responsibility to your investors and your company. We’ve been here 21 years. We want to be here another 21.

You mentioned Magenta’s longevity. How does a company stay vibrant and relevant through economic ups and downs?

For Magenta, it’s understanding where we fit. Regardless of the economy, we’re a property lender first. As the rules tighten for the rest of the world on documentation, we look more attractive because we care about property.

But on the other side, when the rules loosen, we know we’re still driven by property. We’re very specific on our territories. We’ve been in eastern Ontario for our entire life. We’ve been in Southwestern Ontario for the last two years, because it’s another market space that acts very similar to where we are.

It’s also about ensuring you have a network that supports you in all facets of the industry, from the real estate agents to the property managers to the brokers, most specifically. Their information needs to be relied on to make sure you have an understanding of the areas you’re in.

You talked about the importance of finding a niche. Can you elaborate on that?

Private lending becomes unique in that, in the A space it’s all about the rate. In my space, it’s all about knowing my real estate and about being okay with knowing that I’m not going to do every deal. It becomes less about volume and more about creating the right yield on the right portfolio.

MIC advantages: stability, arsenal of lending tools

Mortgage investment corporations (MICs) remain the go-to lender for brokers they can depend on, says one industry insider. “A MIC offers constancy of market area, LTVs, terms, rates. In addition, more than your typical private investor, professional MIC managers are skilled at structuring mortgage financings and ... can ... assist mortgage brokers with putting together comped mortgage financings,” said Gay Andrews, executive vice president, COO, Caplink Financial Corporation, Camrock Capital.

Network launches program for easier private-deal access

Money Market was one of the new services the Mortgage Alliance network focused on at its recent annual Franchise Conference. The service allows brokers to pull credit bureaus and submit mortgage applications directly to a pool of MICs and private lenders right from the system.

Initiatives like this have helped Mortgage Alliance grow 35% this past year. The 2015 franchise conference was held the first week of October in Ochos Rios, Jamaica. The organization’s partners discuss plans, processes, industry trends and initiative launches.

www.mortgagebrokernews.ca

14-15_Private Update _SUBBEDda 2.indd 15

15

2/12/2015 10:45:30 AM

UPFRONT

OPINION

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

Help for the little guys As lenders move to implement minimum volume requirements, Blair Anderson says it’s time for the broker channel, and the associations representing it, to start making noise IT WASN’T long ago the broker channel was predominately represented by small-shop brokerages. In a November 1992 survey commissioned by the Mortgage Brokers Section of the Ontario Ministry of Financial Institutions, an estimated nine in 10 brokerages had five or fewer people. In fact, 48% of brokerages had only one person. This was the lay of the land for many years.

Fast-forward to today: the 1,436 mortgage brokerages registered in Ontario paint a very different picture. Yes, the traditional small-shop brokerage is still around, but the larger national networks have taken centre stage. At least, that’s how it seems when it comes to influencing lender policy. (The Financial Services Commission of Ontario [FSCO], the current regulator for the province, has neither commissioned a new survey similar to the one cited above, nor was FSCO able to share this information when I requested it.)

For the past few years, there has been a trend among some lenders to cut off business ties with the small-shop brokerage by requiring brokerages meet minimum-volume requirements. For example, if the brokerage can’t originate $5 million in new loans annually, the lender will cut off the brokerage.

It doesn’t matter how well the loans perform; or if the brokerage maintains an application-to-funding ratio at or above the lender’s standard. It’s simply a matter of volume.

For a large national brokerage, this isn’t a problem. The number of mortgage agents together will satisfy any lender’s minimum

16

volume requirements. But for the small-shop brokerage, there’s not enough business to go around to satisfy multiple lenders. This draconian measure is wrong on many levels.

And as the proprietor of a small-shop brokerage, I can no longer stay quiet.

Every mortgage broker and agent in

room for everyone to operate in this industry.

You should have the opportunity to work wherever you want, and with the same access to lenders who service the broker channel.

No one would argue against lenders controlling their costs. If your benefit to a lender is net negative because your application-to-funding ratio is consistently below the industry standard, and no amount of training has changed that, you deserve to go. If your business adversely affects the lender’s delinquency ratio, and they have good reason to suspect fraud, you deserve to go. On the other hand, if any business you originate performs well; your application-to-funding ratio is good; and no BDM is spending extra time or money on you, then your benefit to that lender is net positive.

By being forced to comply with minimum volume requirements, mortgage brokers are losing their ability to shop around so they can maintain their active status with lenders. This undermines the integrity of our professional service.

“As licensed mortgage professionals, we have all fulfilled the same requirements in order to do business. That doesn’t change because you prefer to work in a smaller office” Ontario – or any other part of the country – should be as outraged as I am about this unfair practice. It doesn’t matter what size brokerage you work for now or may work for in the future. As licensed mortgage professionals, we’ve all fulfilled the same requirements to do business. That doesn’t change because you prefer to work in a smaller office. Where you decide to do business should have no influence on the number of lenders to which you have access. For years, that was the fair practice.

What changed?

And what about the public? Is the consumer better served by marginalizing smaller brokerages? Definitely not! Ask any small-shop brokerage about their level of service, supervision and training. I’m sure they’d match up against any large office.

But that’s not the point. There should be

So what can be done to reverse this ugly trend and restore the fair practice that has characterized this industry for decades? This is my call to action for every brokers’ association, including CMBA, to right this ship. Collectively, you represent every mortgage originator who works exclusively in the broker channel across Canada. You have the ear of the lending community, and I can’t think of anything more important you can do for your membership.

At the grassroots level, I encourage every originator who works in the broker channel to make some noise. Let’s unite and reinforce the ground we stand on.

Blair Anderson is a mortgage broker at Anderson Associates, a professor at the Real Estate and Mortgage Institute of Canada, and the founder of MortgageResource.ca.

www.mortgagebrokernews.ca

16-17_Opinion_SUBBEDda.indd 16

2/12/2015 1:34:43 PM

PEOPLE

INDUSTRY ICON

THE VIEW FROM THE FRONT LINES Straight talk – industry veteran Lester Shore doesn’t mince words about challenges mortgage brokers need to get a grip on in 2016

LESTER SHORE was there during the financial downturn; he saw the effects it had on economies world-wide; and he experienced the uncertainty it left in its wake.

He has also watched as the industry has grappled with various lending-rule changes.

And those challenges aren’t over yet, according to Shore.

forward,” Shore says. “The byproduct of all that is, more and more customers are going to get pushed from the A space into the alternative space. So that’s one trend that will happen in the upcoming year.”

Getting a grip on fraud Shore is a financial services industry veteran.

He has been in the business for 28 years –

falsified, pay stubs that are falsified; a week doesn’t go by where we don’t see some issue around the broker channels inability to deal with fraudulent documents.”

Shore says brokers and lenders must work together to ensure the reputation of the industry remains in good stead.

“It’s not good for our industry, it’s not good for consumers, it gives our regulators lots of

More high-ratio rules coming “The big trends next year are probably a continuation of the trends that we saw formulating this year, and the department (Department of Finance Canada) continues to voice their concern about quickly appreciating home values,” Shore says. “And the department has a couple of levers they can use to limit the supply of mortgage funds; they can raise interest rates, that will minimize demand, or they can change regulations and rules around what an eligible borrower has to look like. And they clearly have chosen the latter lever to use.”

Shore says one thing to look for in 2016 will be the federal government continuing to amend requirements around acceptable borrowers, all in an effort to limit the number of people who qualify for mortgages.

“And so we’ve seen the government amend high-ratio rules and I believe we’ll continue to see them amend high-ratio rules going

18

“With the introduction of B-20 … the criteria have been increased … borrowers that used to be able to get an A mortgage perhaps can’t anymore. As a result, the alternative space has grown considerably” and has led Optimum Mortgage for 13 of those. He says another challenge next year – especially for lenders – will be ensuring fraud in the channel is minimized.

“The other trend that continues to catch the attention of the press is that our industry must figure out how to deal with misrepresentation of mortgage documents inside the broker channel. When I say mortgage documents, I mean pre-funding documents,” Shore says. “Employment letters that are

legitimate concern that people are able to get into housing when they don’t qualify for housing,” he says. “And our industry has to figure out how to deal with that.”

Risk-sharing on the horizon Much talk has been made about mortgage-default insurers sharing some of the risk of the mortgages they underwrite, and Shore believes that scenario is a likely one in the near future.

www.mortgagebrokernews.ca

18-21_Industry Icon_SUBBEDda3.indd 18

2/12/2015 10:46:35 AM

PROFILE Name: Lester Shore Company: Optimum Mortgage Title: Vice president Career highlight: Taking an idea that our bank had, that was sitting on the corner of somebody’s desk, and turning it into a full-fledged business employing 70 people.

Career lowlight: The most difficult time was at the peak of the financial crisis. The capital markets effectively collapsed. None of us knew what tomorrow was going to bring; securitization of assets had vanished – there was such turmoil in our financial markets that it was a huge worry. The equity markets had crashed; nobody knew if any business was going to be transacted.

18-21_Industry Icon_SUBBEDda3.indd 19

2/12/2015 10:46:44 AM

PEOPLE

INDUSTRY ICON

“My personal view is that we will see a sharing of risk between the lender and the insurer. Today, if a lender advances a high-ratio mortgage that defaults and there is a shortfall, we make a claim to the insurance company and they reimburse us for the claim on the full amount,” he says.

“The sharing of risk model is that the lender pays for part of that claim themselves and the insurer pays for the other part.”

This sort of change would make lenders a little more particular and conservative with their loans, according to Shore, and force

says that the criteria is now this, then it’s the broker’s job to figure out what that criteria is and making sure their clients meet that criteria.

“If their client doesn’t meet that criteria, the broker has alternatives for clients.”

The growth of the alternative segment Shore has operated in the segment for years.

“We got into this space primarily because we like the profit opportunity, and this was 11 years ago when the market was a lot

“My personal view is that we will see a sharing of risk between the lender and the insurer.

Today, if a high-ratio mortgage defaults we make a claim to the insurance company and they reimburse us on the full amount” them to be more critical in their assessments.

It also would result in higher costs being passed on to consumers.

“It may drive the price up for the consumer because as a lender I say from a profitability perspective, I am looking at potentially losing on every mortgage that I insure and statistically, some percentages of mortgages will default, and some percentages will result in a loss, so I have to pass that on (to the borrower),” Shore says. “So it may result in higher pricing to consumer or it may result in lenders amending their appetite so that they have even better quality borrowers than they have today.”

But what would this mean for brokers?

“Brokers will adapt by doing what they do, which is providing their clients with the appropriate council on how to get the best solution all, all issues considered,” Shore says.

So if the lender that the broker has chosen

20

different than it is now,” Shore says. “We saw it as a potentially very profitable channel and we felt comfortable to go to the mortgage broker channel to source these Alt-A mortgages.”

And it certainly has been a profitable channel for brokers and lenders alike, and that trend is set to continue, according to Shore.

“The alternative segment will continue to grow; there’s been a material shift in the last 12 to 24 months,” Shore says. “With the introduction of B-20 and all lenders now having to follow B-20, the criteria have been increased. The borrowers that used to be able to get an A mortgage perhaps can’t anymore.

As a result, the alternative space has grown considerably.

“To what degree? I don’t have a clue. All I know is we’re much busier today than we used to be.”

LESTER SHORE’S CAREER TIMELINE

1979 Joined TD Bank; remained there for 14 years between 1979 and 1995

1985 Entrepreneur at heart; left TD for a two-year hiatus as a self-employed restaurateur

1996 General manager of small cap public company; grew employee base by 400 staff in three years

2001 Joined Canadian Western Bank as manager of Edmonton main branch

2003 started Optimum Mortgage with a staff of two

2008 Appointed vice president, Optimum Mortgage

2013 Celebrated Optimum Mortgage’s 10-year anniversary with more than $1.3 billion in assets

2015 Continues leading Optimum Mortgage: more than 75 staff and $2 billion in assets

www.mortgagebrokernews.ca

18-21_Industry Icon_SUBBEDda3.indd 20

2/12/2015 10:47:23 AM

HAPPY HOLIDAYS! FROM ALL OF US AT DOMINION LENDING CENTRES

THIS UPCOMING NEW YEAR WE’LL BE CELEBRATING 10 YEARS JOIN THE COMPANY THAT IS ALWAYS FIRST TO POWER ITS MEMBERS WITH THE BEST!

1-888-806-8080

JoinUsNow.ca

DominionLendingCentresCanada

18-21_Industry Icon_SUBBEDda3.indd 21

DLCCanadaInc

2/12/2015 10:47:46 AM

FEATURES

COVER STORY: BROKER LIFESTYLE

BROKER LIFESTYLE SURVEY 2015 How do you stack up to your peers? In our third-annual broker lifestyle report, CMP looks at the average broker

ONCE AGAIN, we’re pulling back the curtain to look at the average broker’s lifestyle. We asked about money matters, of course – such as how much the average broker has in savings, home equity and investments. But brokers were also polled on softer subjects such as pet ownership and vacation habits.

We encourage you, readers, to look hard at the facts and figures in the following pages. But be warned – what you find out may encour-

22

age you to work a little harder, if only to catch up with the 18% of brokers who own a vacation home.

And this year – for the first time – we compare some of these numbers to last year’s results to get an idea of how the industry’s doing overall. Are brokers working longer hours? Is the gender balance improving? And are brokers as a whole doing better financially than in 2014? Read on to find out.

www.mortgagebrokernews.ca

22-37_Cover Story Broker Lifestyle2_SUBBEDda3.indd 22

2/12/2015 10:12:16 AM

DEMOGRAPHICS Newfoundland and Labrador

1%

0.26%

Saskatchewan

1.3%

British Columbia

25%

Prince Edward Island

Ontario

Quebec

49%

1%

Alberta

14.4%

Manitoba

2.8%

New Brunswick

Nova Scotia

0.5%

1.3%

PARTICIPANTS REPRESENT 115 DIFFERENT CITIES Toronto . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10% Calgary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6% Ottawa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5% Vancouver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.5% Edmonton . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4% Winnipeg . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2% Victoria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3% Regina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.8% St John’s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.8% Quebec City . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.3% Halifax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.8%

84% of brokers work within the city in which they live

CMP ANALYSIS

38% Female

62% Male

The financialindustry professions are often thought of as an “old boys’ club.” Unfortunately, this year the trend seems to support that. Last year, 42% of brokers who responded to our survey were female.

This year, that number has slipped four percentage points to 38%. Are women leaving the industry?

www.mortgagebrokernews.ca

22-37_Cover Story Broker Lifestyle2_SUBBEDda3.indd 23

23

2/12/2015 10:12:21 AM

FEATURES

COVER STORY: BROKER LIFESTYLE

WORK LIFE EXPERIENCE

7.8 hours

WORKDAY

Average workday

Brokers who work 12 or more hours day

0

7.5% Work 9 to 11 hours a day 10

23.2%

11

Work 8 hours a day

Average years of experience

28.4%

20 Work 6 to 7 hours a day

30

40

40

Number of years the most experienced brokers have been in the industry

24.2% Work 4 to 5 hours a day 13.7% Work 3 hours or less a day 3%

CMP ANALYSIS There’s apparently no rest for mortgage brokers. The percentage of brokers who work weekends jumped this year, up three percentage points from 63% in 2014.

66% work weekends

24

www.mortgagebrokernews.ca

22-37_Cover Story Broker Lifestyle2_SUBBEDda3.indd 24

2/12/2015 10:12:25 AM

EXPERIENCE AND WORKDAY IN 2014

Average workday: 7 hours

The average broker’s workday hasn’t changed that much since 2014. If anything, the average broker has become a little more experienced and works a little longer each day in 2015 than he did last year. Here’s a quick breakdown of last year’s numbers:

9 years Average experience in 2014

12+

7.5% of brokers work 12 or more hours a day

9-11

23.2% work nine to 11 hours a day 28.4% work eight hours a day

40 years

8

The most experienced broker in 2014 had been working for

6-7

24.2% work six to seven hours a day

4-5

13.7% work four to five hours a day

3

3% work three hours or less a day

THE BEST APPRAISERS IN CANADA ARE LICENSED AND REGULATED BY

LOOK FOR THE PROFESSIONAL DESIGNATIONS

DAR & DAC

THE CANADIAN NATIONAL ASSOCIATION of REAL ESTATE APPRAISERS CALL 888-399-3366 or FIND AN APPRAISER at WWW.CNAREA.CA www.mortgagebrokernews.ca

22-37_Cover Story Broker Lifestyle2_SUBBEDda3.indd 25

25

2/12/2015 10:12:33 AM

FEATURES

COVER STORY: BROKER LIFESTYLE

BROKER PROFILE 24%

39%

independent brokers

from banking industry

80%

76%

wouldn’t consider moving to banking industry

work for broker network

CMP ANALYSIS Many question whether brokers would be considered more professional if fewer part-timers plied their trade hawking mortgages. Well, full-timers’ wishes may be coming to fruition. Our survey saw a considerable year-over-year decline in the percentage of part-timers. In 2014, they totalled 12%.

This year that number’s down to 8%.

8%

part-time brokers

92%

full-time brokers

®

26

www.mortgagebrokernews.ca

22-37_Cover Story Broker Lifestyle2_SUBBEDda3.indd 26

2/12/2015 10:12:41 AM

ARE YOUR CLIENTS STRESSED OUT ABOUT THEIR MONTHLY PAYMENTS? EXHAUSTED AND FRUSTRATED WITH THE LACK OF CONTROL ON THEIR DEBT? Your clients have worked tirelessly to get to where they are today. Help them enjoy their retirement by eliminating the stress of making monthly payments and consolidating their debt in one place with the CHIP Reverse Mortgage from HomEquity Bank. Homeowners 55+ can qualify for up to 55% of the equity in their home as tax-free cash and pay for whatever life throws their way. Best of all, there are no regular monthly payments and no medical checks required.

For more information, visit www.homequitybank.ca or call 1-866-536-2447 to find out what amount your client may be eligible for.

22-37_Cover Story Broker Lifestyle2_SUBBEDda3.indd 27

2/12/2015 10:14:20 AM

FEATURES

COVER STORY: BROKER LIFESTYLE

MONEY MATTERS ANNUAL INCOME

ANNUAL SAVINGS

$0–40,000

$0

6%

17% $41,000–60,000

$1–10,000

36%

11% $61,000–80,000

$11,000–20,000

10%

10% $81,000–100,000

$21,000–40,000

11%

14%

$101,000–160,000

$41,000–75,000

17% $161,000–300,000

15% 24%

$300,001 or more

$76,000–150,000

9% $150,001 or more

10%

10% $3 million

INVESTMENT PORTFOLIO

highest income

$173,182 average income

$501,000 or more $201,000–500,000 $101,000–200,000 $41,000–100,000 $11,000–40,000 $1,001–10,000 $0–1,000

28

4% 10%

11%

18% 19%

19%

19%

www.mortgagebrokernews.ca

22-37_Cover Story Broker Lifestyle2_SUBBEDda3.indd 28

2/12/2015 10:14:28 AM

Appointment Announcement

2015 $71,313

average amount in savings

$415,084

Appointment Appointment Announcement Announcement

2014 ANATOL MONID $39,000 The Financial Services Commission of

averageOntario amount (FSCO) is pleased to announce Anatol Monid as the new Executive in savings Director for the provincial regulator’s Licensing and Market Conduct Division, effective August 3, 2015.

In October 2014, Mr. Monid was $273,000 named the Interim Executive Director

ANATOL ANATOL MONID MONID The The Financial Financial Services Services Commission Commission of of Ontario Ontario (FSCO) (FSCO) is pleased is pleased to announce to announce Anatol Anatol Monid Monid as the as the new new Executive Executive Director Director for the for provincial the provincial regulator’s regulator’s Licensing Licensing and Market and Market Conduct Conduct Division, Division, effective effective August August 3, 2015.

3, 2015.

divisional strategic planning and regulatory oversight of five of FSCO’s regulated sectors. Some of his other CMP ANALYSIS duties included leading regulatory engagement with government officials Brokers are saving and investing dramatically moreand on industry associations, and acting theandelegate of the Superintendent average than in 2014. Last year, survey respondentsashad of Financial Services, issuing regulatory average savings of $39,000. This year, that had spiked to decisions on licensing sanctions and more than $71,000 – an increase of almost 83%. And administrative monetary penalties average investments saw a leap of 52%. against market participants.

In October In October 2014,2014, Mr. Mr. Monid Monid was was named named the Interim the Interim Executive Executive Director Director of the of Licensing the Licensing and and Market Market Conduct Conduct Division.

Division.

He He has has responsibility responsibility for for divisional divisional strategic strategic planning planning and and regulatory regulatory oversight oversight of five of fiofveFSCO’s of FSCO’s regulated regulated sectors. sectors.

SomeSome of his of other his other duties duties included included leading leading regulatory regulatory engagement engagement with with government government officials officials and and industry industry associations, associations, and and acting acting as the as delegate the delegate of the of Superintendent the Superintendent of Financial of Financial Services, Services, issuing issuing regulatory regulatory decisions decisions on licensing on licensing sanctions sanctions and and administrative administrative monetary monetary penalties penalties against against market market participants. participants.

Mr. Monid joined FSCO in 2005, where he served as Director of the Market Regulation Branch. In this role, Mr. Monid appeared as a crown witness to present and explain regulatory decisions, he was appointed the Insurance Ombudsman to consumer complaints. Mr. Monid of brokers will be set for retirement by resolve 65 transformed FSCO’s Market Regulation Branch into a leading market conduct regulator by implementing modern supervisory initiatives, reinforced by solid risk-based principles.

Mr. Monid Mr. Monid joined joined FSCOFSCO in 2005, in 2005, where where he served he served as Director as Director of the of the Market Market Regulation Regulation Branch.

Branch.

In this Inrole, this role, Mr. Monid Mr. Monid appeared appeared as a crown as a crown witness witness to present to present and explain and explain regulatory regulatory decisions, decisions, he was he was appointed appointed the Insurance the Insurance Ombudsman Ombudsman to to resolve resolve consumer consumer complaints. complaints.

Mr. Monid Mr. Monid transformed transformed FSCO’s FSCO’s Market Market Regulation Regulation Branch Branch into into a leading a leading market market conduct conduct regulator regulator by implementing by implementing modern modern supervisory supervisory initiatives, initiatives, reinforced reinforced by by solidsolid risk-based risk-based principles. principles.

average amount in investments

54%

22% won’t be

averageofamount the Licensing and Market Conduct in investments Division. He has responsibility for

to joining FSCO, Mr. Monid was a 24%Prior are unsure Senior Supervisor with the Office of

the Superintendent of Financial Institutions.

He also served in a variety of progressive leadership roles in the insurance industry CMP ANALYSIS overseeing claims, underwriting, and marketing departments.

There hasn’t been much of a change from last year inMr. the Monid served in the Canadian percentage of brokers who say they’ll be ready for retirement; Armed Forces, for both the Reserve and thehas Regular Army. He is also a member 54% say they will be, compared to 53% last year. What of Royal Canadian Military Institute, changed significantly is the number of brokers who say thethey Chartered Insurance Professionals’ definitely won’t be. Last year, just 16% said they wouldn’t be and the Institute of Public Society, Administration of Canada. ready for retirement at 65, while 31% were unsure. This year, 22% say they won’t be ready to retire at 65. Meanwhile the percentage of brokers who were unsure fell to 24%.

Financial Services Commission of Ontario

22-37_Cover Story Broker Lifestyle2_SUBBEDda3.indd 29

Prior Prior to joining to joining FSCO,FSCO, Mr. Monid Mr. Monid was was a a Senior Senior Supervisor Supervisor with with the the Office Offiofce of the Superintendent the Superintendent of Financial of Financial Institutions.

Institutions.

He also He served also served in a variety in a variety of progressive of progressive leadership leadership rolesroles in theininsurance the insurance industry industry overseeing overseeing claims, claims, underwriting, underwriting, and and marketing marketing departments. departments.

Mr. Mr. Monid Monid served served in the in the Canadian Canadian Armed Armed Forces, Forces, for both for both the Reserve the Reserve and and the Regular the Regular Army.Army.

He isHe also is also a member a member of Royal of Royal Canadian Canadian Military Military Institute, Institute, the Chartered the Chartered Insurance Insurance Professionals’ Professionals’ Society, Society, and and the the Institute Institute of Public of Public Administration Administration of Canada. of Canada.

Financial Financial Services Services Commission Commission of Ontario of Ontario

2/12/2015 10:14:36 AM

FEATURES

COVER STORY: BROKER LIFESTYLE

REAL ESTATE AND MORTGAGE MATTERS 2.5%

average mortgage rate

PERCENTAGE OF ASSETS IN REAL ESTATE

5 years

average mortgage term

16%

0–20%

13% 11%

21–40% 41–60% 30%

61–85% 86–100%

30%

HOME OWNERSHIP

CMP ANALYSIS

Brokers own their own homes

Brokers have less home equity on average than last year, but more have the majority of their assets in real estate. The percentage of brokers who own their own homes fell slightly from 2014. However, a greater percentage of brokers with mortgages are with a monoline. Here’s a quick look at the 2014 numbers:

91% Have a mortgage

80%

Average home equity . . . . . . . . . . . . . . . . . . . . . . . . . 60%

Currently have their mortgages through banks

56%

Brokers with 61% or more of their assets in real estate . . 41% Percentage of brokers who owned their own homes . . 94% Percentage with mortgages . . . . . . . . . . . . . . . . . . . . 82%

Are with a monoline

44%

Brokers who had mortgages through banks . . . . . . . . . 63% Brokers who had their mortgages through monolines . . . 37%

30

www.mortgagebrokernews.ca

22-37_Cover Story Broker Lifestyle2_SUBBEDda3.indd 30

2/12/2015 10:14:48 AM

CMP ANALYSIS

43% of brokers own rental properties 37%

25%

one property

13%

two

5% five

9%

three

3% six

LENDING TO CLIENTS

four

8%

seven or more

The percentage of brokers who own rental properties is down slightly from last year. In 2014, 45% of brokers who responded to the survey owned at least one rental property.

However, among brokers who own rental properties, the percentage of those who own two or more is up. In 2014, 55% of brokers who owned rental properties, owned two or more. This year, that share is up to 63%.

FSCO Brokerage License #10119 FSCO Administrator License #11209

OUTSIDE THE BOX • Self- or seasonally employed • Newcomers to Ontario • Irregular cash flow • Past credit problems • Discharged bankruptcies • Rural properties • Payout consumer proposals

Let’s find a solution for your clients’ unique circumstances: 1 877 279-2116 ext. 109 | info@pillarfinancial.ca | PillarFinancial.ca 54-04-012 CMP Ad FINAL.indd 1

2015-01-20 10:03 AM

www.mortgagebrokernews.ca

22-37_Cover Story Broker Lifestyle2_SUBBEDda3.indd 31

31

2/12/2015 10:14:57 AM

FEATURES

COVER STORY: BROKER LIFESTYLE

A

EDUCATION

(HIGHEST LEVEL OF EDUCATION ATTAINED)

Some high school: 2% High school diploma: 16%

Some university: 30%

39%

Undergraduate degree

CMP ANALYSIS The average broker is slightly more educated than in 2014. That year, 17% of survey participants reported that their highest level of education was a high school diploma. This year, that number is down to 16%. Meanwhile, the number of brokers whose highest level of education was an undergraduate degree has jumped nine percentage points from last year’s average of 30%. The percentage of brokers who’ve completed a graduate degree crept up a percentage point from last year’s 12%. The number of brokers who participate in ongoing education held steady at 88%.

Graduate degree: 13% 32

88% participate in ongoing education

www.mortgagebrokernews.ca

22-37_Cover Story Broker Lifestyle2_SUBBEDda3.indd 32

2/12/2015 10:15:17 AM

THE SECRET OF GETTING AHEAD IS GETTING STARTED

WE HAVE THE MARKETING TOOLS YOU NEED

PERSONALIZED WEBSITES

UNIQUE PRINT MATERIAL

EXCITING E-MAIL TEMPLATES

PROFESSIONAL BRANDING

Begin your journey to incredible success with MA! visit JOINMA.ca today

© Copyright 2015, Mor tgage Architects Inc., All rights reserved.

22-37_Cover Story Broker Lifestyle2_SUBBEDda3.indd 33

2/12/2015 10:15:28 AM

FEATURES

COVER STORY: BROKER LIFESTYLE

LIFESTYLE 46% conduct business in a suit 54% don’t wear a suit

WHAT DID YOU PAY FOR YOUR BEST SUIT?

25% own a bespoke or tailored suit

13%

$100 or less

46%

$100–500

25%

$500–1,000

16%

$1,000 or more

VEHICLE PROFILE

58%

drive SUV

30%

99.3% drive a car 80.7%

own their car

34

drive sedan

19.24% lease

12%

drive sports car

www.mortgagebrokernews.ca

22-37_Cover Story Broker Lifestyle2_SUBBEDda3.indd 34

2/12/2015 10:16:55 AM

23%

VEHICLE PRICE TAG

20%

18%

16%

14% 9%

less than $20,000

$20,000–25,000

$25,000–30,000

Spent $30,000– 40,000

VACATION

$40,000–50,000

$50,000 or more

18% of brokers own a vacation home Of those who own a vacation home:

47% cottage

40%

US or international condo or house

1

13% Take one week per year

3

21% Take three weeks per year

2

21% Take two weeks per year

4+

45% Take for weeks or more per year

13%

own both

www.mortgagebrokernews.ca

22-37_Cover Story Broker Lifestyle2_SUBBEDda3.indd 35

35

2/12/2015 10:17:03 AM

FEATURES

COVER STORY: BROKER LIFESTYLE

SOCIAL MEDIA USE

77% favour Facebook

60%

12% favour LinkedIn

daily

4% love Twitter

31%

occasionally 3% prefer Instagram

9%

1% choose Google+

never

FAMILY LIFE

CMP ANALYSIS

75% of brokers are married 69%

25% are single

married once

16%

2%

twice

24%

don’t have kids

36

one

lonely broker supports SnapChat

Oops. The percentage of married brokers slipped slightly from 2014. Last year, 78% of our survey respondents were married, as opposed to 75% this year. A greater percentage of brokers this year have never been married.

As well, there was a higher percentage of brokers who’ve been married three or more times. The percentage of brokers with one marriage held steady at 69%.

A slightly higher percentage of brokers don’t have kids this year. In 2014, only 19% of our survey respondents reported they had no children. This year, 24% report they don’t have kids. The number of brokers with three or more kids held steady at 6%.

three or more times

17% one kid

37% two

15% three

6%

four or more

www.mortgagebrokernews.ca

22-37_Cover Story Broker Lifestyle2_SUBBEDda3.indd 36

2/12/2015 10:17:18 AM

46%

21%

own a dog

own a cat

CONTACT US

Toll Free: 1 - 866 - 907 - 5407 Email: info@vwrcapital.com

Your residential private lender since 1993 LENDING IN: British Columbia Alberta Saskatchewan Manitoba Ontario

1st, 2nd, and 3rd mortgages Lender fees from $500 No income qualification No minimum beacon scores Purchase, Refinance, ETO Up to 75% Loan to value

Edmonton

Victoria Regina

Winniepeg Ottawa Toronto

Property types: houses, condos, townhouses, serviced land, raw land and multi-family properties

Email lender notes, application, and credit bureaus to: info@vwrcapital.com WWW.VWRCAPITAL.COM

www.mortgagebrokernews.ca

22-37_Cover Story Broker Lifestyle2_SUBBEDda3.indd 37

37  

2/12/2015 10:17:25 AM

PEOPLE

BROKER PROFILE

A helping hand Whether he’s arranging financing for homeowners or raising funds for his orphanage, Geoff Lee is dedicated to helping those around him

GEOFF LEE’S mortgage career has its roots in retail.

Having found a part-time job with an independent clothing store as a teenager, Lee quickly rose through the ranks to partner. He was in the business more than 24 years. But his time at the store had transformed him into a workaholic.

“I was probably leaving my house at 7:00 in the morning and not returning until 10:30 at night,” Lee says. “In my opinion, I had everything – a great income, a big house, all the possessions that you could want, but I didn’t have balance. I had to reflect back, look at what’s important, and ask, why am I working so hard?”

Naturally, Lee decided it was time for a change. An acquaintance had also gone through a career change to become a successful mortgage broker, planting the seed in Lee’s mind. He began asking his family and friends if they could see him in the mortgage field. Their support tipped him into the business, where he has been for the last five years.

“We’re super successful, which always helps,” Lee says with a laugh when asked what’s kept him in the industry. “We can go with the vanilla-flavour answer – we love to help people – but that’s the real answer.”

But exceptional customer service, Lee says, is the backbone of his business. And he has perfected that side of his business during his decades spent working in the customer-centric retail industry.

“I always tell people, the building blocks of our business are customer service; we understand it, and we follow through with it,” Lee says. “We’re in a generation where that service isn’t focused on anymore … and that’s one reason we’re doing well.”

Lee’s priority for customer service starts with his personal guarantee – he promises to return phone calls and e-mails within 90 minutes, and actually does – and continues with his dedication to client education.

He is also a member of the Better Business Bureau, the Canadian Association of Accredited Mortgage Professionals and the Mortgage Brokers Association of British Columbia.

“We want to be seen as credible, as ethical, as educators, as being involved in the community,” he says. “That takes time, energy and money, but it gives you the foundation of what your successes will be.”

For Lee and his team, those successes include being finalists in the Best Customer Service from an Individual Office category at this year’s Canadian Mortgage Awards.

“We’re in a generation where customer service isn’t focused on anymore … and that’s one reason we’re doing well”

Above and beyond Lee prides himself on being able to help those whose needs go beyond a black-and-white file – the businessfor-self, stated-income and private-lending clients.

A real estate investor himself, he recognizes the importance of a truly specialized and knowledgeable mortgage broker.

38

Giving back Lee’s devotion to helping others hardly ends with the mortgage industry. In 2010, he and his wife opened the non-profit Imani Orphan Care Foundation. A portion of every mortgage Lee’s company finances goes toward the Imani Home of Love, an orphanage in Narok, Kenya.

www.mortgagebrokernews.ca

38-39_Profile_SUBBEDda.indd 38

2/12/2015 9:51:10 AM

BY THE NUMBERS Geoff Lee and his wife, Kim, started the Imani Orphan Care Foundation and the Imani Home of Love in 2010. Since then, the orphanage has welcomed and cared for dozens of children.

55 The number of children who live at the Imani Home of Love

4.2 The number of acres the orphanage occupies in Narok, Kenya

$40 The amount needed to provide for one child for a month

22

The number of children who attend boarding school, supported by the Imani Orphan Care Foundation

To donate to the orphanage or to sponsor a child, visit www.imaniorphancare.com.

“It’s pretty cool when one of my sons goes to school and says, ‘I have 77 brothers and sisters.’ All the boys and girls in our Imani Home of Love are his brothers and sisters,” Lee says. “When you hear stuff like that, it’s pretty powerful.”

Outside the contributions from his mortgage business, Lee is constantly raising funds for the orphanage by hosting garage sales and charity dinners. He also organizes an annual hockey tournament each September that’s presented by Canadian hockey legend Paul Henderson.

“We play eight games of hockey in 10 hours,” Lee says. “Anyone of a certain generation who understands hockey knows who Paul Henderson is.”

Thanks to Lee’s efforts, the Imani Home of Love can look forward to a brighter future; not only does he fundraise the $7,200 required to run the home each month, but he also covers out of pocket what he can’t raise. As well, he’s preparing to hit $50 million in funded mortgages – through good old hard work.

“How can you expect to be successful if you’re not putting the time and energy into growing your business?” he says. “Your mortgage doesn’t feed my family; what feeds my family or builds my business is the relationship we start because you’re going to refer me to friends and family. So many people in this business focus on the deal, not the relationship, and that’s just the opposite way of doing things.”

www.mortgagebrokernews.ca

38-39_Profile_SUBBEDda.indd 39

39

2/12/2015 9:51:15 AM

BUSINESS STRATEGY

MARKETING

7 deadly sins of business marketing Jamie Thomas lists cardinal marketing sins all business owners commit EFFECTIVELY MARKETING your business is key to delivering a stream of qualified leads to your door and ultimately determines the level of your business success.* The latest surveys suggest the average consumer is bombarded with between 3,500 and 5,000 marketing messages per day, every day.** Therefore the challenge to be heard above all others increases daily. In such a crowded space costly marketing mistakes will inevitably occur. So for all you sinners out there, here are the “seven deadly sins” every business owner commits. How many of these sins are you guilty of?

1

Sin #1: Lust – pleasing the masses

(or getting into bed with everyone) As Nick Rellas, the co-founder and CEO of Drizly (the on-demand alcohol delivery app) said at a Soaring Startup Circle session in Boston this past June, “If you try to be everything to everyone, then you’re nothing to no one.” Too many business owners still target the mass market with too general a message. The misguided belief is that a wider reach with a broader message should produce better results – cast your net wide and reap the reward. The trouble is, the rules have changed.

Today the smarter strategy requires

40

targeting a specific market niche that shares similar needs and wants. Select targeted channels where your best customers are more likely to listen. This way, you can create messages speaking directly to your customers and solve their problems. The big-picture goal?

Dominate the market gradually and build up your niches. So, resist the temptation to jump into bed with any old customer. Be selective and start playing hard to get.

2

Sin #2: Gluttony – overdoing it with

your content Content is the new king. Business owners who understand how content marketing can help build their business’s profits are often guilty of overindulging in the type of content they generate. As well, they use too many platforms and post their content too frequently. Resist the temptation to create content for content’s sake while blitzing your client database. It’s both a sin and a crime against your brand. Always abide by the first marketing commandment: make all content relevant, engaging and useful, and you won’t stray from the path.

3

Sin #3: Greed – or, being selfish Are you always focusing on yourself

and never on your customer? Not knowing the audience is a business owner’s classic cardinal sin. Absolve yourself. Put yourself in your customers’ shoes and brainstorm campaigns that target their specific interests and problems. Don’t be greedy and just promote your product or services. Share your unique IP in a way that resonates with your audience.

Entertain and educate first. Then learn about the best ways to reach your audience.

4

Sin #4: Envy – is someone doing “better” than you are?

There’s always someone doing better than you are. The likely reason they’re more

www.mortgagebrokernews.ca

40-41_bizstrat_7 deadly sins of business marketing_SUBBEDda.indd 40

2/12/2015 9:52:53 AM

the sale. Remember, always have a clear call to action for all your marketing campaigns – tell customers what you want them to do next.

Above all, make your call to action stand out.

7

successful is that they’re working smarter than you are. That is, you’re not leveraging your time and bringing in qualified leads. A golden rule of marketing: get your message out to the market. With only 24 hours in any day, duplicating your messages and attracting leads using new technology and practices is smart marketing. Don’t get left behind in Biblical times. Get up to date.

5

Sin #5: Sloth – lazy, lazy, lazy you

Do you always play it safe? Do you adopt a wait-and-see approach? Do you simply follow what every other business does? This only serves to help you blend

into the background. Get up and stand out.

Be creative; make some noise and make a statement. How? Publish a unique video, look for a niche or create a unique online community. Get social or get forgotten.

Calculated risks all come at a price, but they’re usually the ideas that generate the most results and ROI. Get busy, get creative, get moving.

6

Sin #6: Wrath –are you angry over a

lack of leads? Are your customers angry at a lack of clear direction?

Aside from needing anger-manage­ment classes, maybe you’re simply not asking for

Sin #7: Pride – or as I call it, “me, me,

me’” content Pride – the most common “sin” or symptom of self-obsession. The guilty are easily identified by marketing copy harping on “company XYZ has been around for 30 years” or “we’re the market leader” in blah, blah, blah. You’ve already lost me as a prospective customer. It has no place in your marketing collateral anymore. The problem is we’re all masters at marketing to ourselves, and pride has a lot to answer for. Use the words “you” and “your” much more than you say “I”, “me” and “our company”. Stress the benefits of what your business offers – focus on how you solve problems rather than telling customers how good you are. Here’s a wake-up call: people aren’t that interested in you, but they are interested in what your business can do for them. Always stress the benefits; don’t sell on features. Customers primarily buy solutions.

But mostly they buy benefits. And invariably they “buy” how you improve their lives; how you give them more time; and how you solve their problems.

If your marketing makes no reference to any of these pain points, you’re committing the biggest sin of all. Worst of all, they’re deadly for your business. Learn the lessons from these seven deadly sins; change your ways; see the results; and see your business thrive. * Whatever success means to you – in this case we’re simply mean financial success ** A recent study by Yankelvich Consumer Research, NY

Jamie Thomas is a brand and marketing specialist at Synkd. He is also co-author of Self-Made – Real Australian Business Stories (Busybird Publishing). For more information, visit synkd.com.au or contact info@synkd.com.au

www.mortgagebrokernews.ca

40-41_bizstrat_7 deadly sins of business marketing_SUBBEDda.indd 41

41

2/12/2015 9:52:34 AM

BUSINESS STRATEGY

HIRING

What to ask when interviewing for your small business Sarah Derry helps you increase the chances of selecting the right candidate every time with her tips for small businesses

THERE IS a big difference between hiring staff for a small business and recruiting within a larger organization. Not only will you be hiring less staff, but it’s also likely you’ll be seeking an employee with a wider range of skills as well as greater flexibility, accountability and commitment.

When beginning the recruitment phase, it’s important to look for people who will not just suit your needs with regards to skill and expertise, but who also fit into the overall culture of your small business.

Most small-business owners wear many hats and don’t have a dedicated human resources department. They’re also often extremely time-poor. As a result, they don’t have much time to spend on the preparation and planning stages of interviews.

42

However, I’d like to stress the importance of ensuring you make the time to prepare some good questions. Doing so will ensure you recruit the right person for the job. You may just save yourself a whole heap of time later on if you discover you haven’t hired the right person for your business.

What to ask Questions such as “What animal would you be?” or “What is your favourite food?” are not OK. Not only do they tell you very little about the substance of the candidate, but it’s also likely they may be considered discriminatory or inappropriate.

Even if you are a solopreneur, it’s always good business practice to be 100% professional in an interview. Word of

mouth spreads fast, and you never know who your interviewee will share their experiences with. Be sure to keep in mind that every time you interview someone, you’re creating an impression of your business for the outside world.

Interview dos and don’ts To hire the right person for your business, take a few minutes to consider the following before your next interview:

1

Don’t do all the talking

It’s fine to tell the candidate a little bit about your business and the role,

www.mortgagebrokernews.ca

42-43_bizstrat_Questions to ask when hiring_SUBBEDda.indd 42

2/12/2015 9:53:47 AM

candidate is a good fit, but it will also give you a strong indication of future behaviour.

5

Drop the hypothetical questions.

The truth is, when you ask a hypothetical question, you get a hypothetical answer

but then get straight into asking some questions. A good place to start is by asking the open question, “Tell me about yourself.” The answers you receive to this question can tell you a great deal about the person in the first few minutes.

2

Think up a fact-finding question

This will allow you to confirm any information included candidates’ resumes. It will also help them warm up and relax, making them feel more comfortable in responding to more difficult questions you’ll ask later on in the interview.

3

Drop the hypothetical questions

4

Ask a few behavioural questions

Avoid questions such as, “If you were in the situation … what would you do?”

The truth is, when you ask a hypothetical question, you get a hypothetical answer.

These days people are skilled enough to tell you want you want to hear, rather than the truth of what they really did or would do.

Behaviour-based questions (such as “Tell me about a time when…”) will focus on what a person has done in the past and the success he or she enjoyed as a result.

Not only will this help you work out if the

Ask questions specific to small businesses

Make sure you ask questions about things such as initiative, flexibility, problem-solving, ability to work on your own, ability to work under pressure and multitasking.

6

Talk less

7

Make sure you have a closing question

It’s better to ask short follow-up questions such as “What happened next?” or “What was the end result?” Let them tell you the whole story in their own words.

A question such as, “If this was your business, why would you hire you?” provides a great opportunity for the candidate to showcase their own unique skills and talent that they may not have had the opportunity to raise during the interview process.

Running a successful small business is often about trust, so make sure you employ someone you have belief in and you feel you can depend on. If you fill your business with staff who are self-motivated, then you can be sure your business is on the right track.

To conclude, the culture and success of your small business will be determined by your people. So, next time you’re looking at taking on new staff, make sure you do yourself a favour by taking sufficient time to plan your interview questions, giving consideration to the type of business you run. This will assist you in finding the right person every time.

Sarah Derry is the director of People Reaching Potential. Prior to founding People Reaching Potential, she was the regional director of human resources for a large multinational company.

www.mortgagebrokernews.ca

42-43_bizstrat_Questions to ask when hiring_SUBBEDda.indd 43

43

2/12/2015 9:53:52 AM

BUSINESS STRATEGY

MARKETING

Change or die Michael McQueen reveals how to anticipate, prepare for and embrace change when it’s needed IN THE early 1930s, with the world in the grip of economic depression, a Danish widowed father of four had a vision. Despite the grim fiscal outlook, Ole Kirk Christiansen purchased a small toy shop in the town of Billund and launched a modest business with the name Leg Godt (Danish for “play well”).

Christiansen was a pioneer from the outset – his was the first toy business embracing a new technology called plastic. Within a few short years, Lego – as the company was now affectionately known – became the toy of choice for children worldwide.

In the years following, Lego evolved and grew. From simple plastic blocks to the release of playsets and the invention of the little yellow man, the company innovated its way to the position of undisputed leader in children’s play.

Until the late 1980s, that is.

As new generations of children began opting for video games rather than plastic playsets, Lego faced a dilemma. The company began an 11-year loss stretch – losing $500 million in just two years at its worst point. By the late 1990s, the casual observer may have been justified in predicting Lego had run its course and was a dead brand walking.

And yet, the story was far from finished.

Recognizing the need to embrace the digital age, Lego’s strategy was informed by the old adage, “If you can’t beat ’em, join ’em.” Lego entered a series of licensing arrangements with well-known movie franchises such as Star Wars, Batman and Indiana Jones to create its own

44

co-branded video games. Buoyed by the success of this new direction, Lego expanded its digital offering with the 2010 release of a massively multiplayer online game called Lego Universe.

More recently, the company developed smartphone apps that let users build Lego shapes while sitting on the bus.

There’s little doubt Lego today is more powerful, profitable and relevant than ever – the recent release of its block-buster movie is testament to this. In contrast, Lego’s one-time rival Meccano has faded into obscurity.

What can we learn from Lego?

So, what can other brands and businesses learn from this story of adaptation and reinvention?

I’d suggest winning the battle to stay relevant over time means organizations and leaders must consistently be willing to do the following:

1

Recalibrate

While an appetite for change is critical to staying ahead of the curve, it’s important to discern which fundamentals in an organization should never change. Just as it’s necessary to determine which walls are load-bearing when renovating a house, leaders must identify nonnegotiable values, principles and purpose.

Tamper with these “load-bearing” fundamentals, and everything may come crashing down.

Before embarking on any change agenda, it’s vital to recalibrate an organization with its core DNA and allow this to be a guidepost for strategy and a touchstone for decision-

making. In the case of Lego, the company’s leadership never lost sight of Lego’s core purpose of inspiring play, creativity and imagination amidst their digital reinvention.

2

Refresh

Any gardener knows, regular pruning is necessary for maintaining the health and vitality of a garden. In the same way, organizations require regular pruning of initiatives, traditions and even people who are inhibiting growth.

Pruning can be painful and even disruptive in the short-term. But it’s critically important.

Consider how Sony CEO Kazuo Hirai has recently embarked on a series of necessary

www.mortgagebrokernews.ca

44-45_bizstrat Change or die_SUBBEDda.indd 44

2/12/2015 9:54:49 AM

pruning initiatives. In the face of a US$6.4 billion loss for 2012 and a dramatic downgrade of Sony’s credit rating, Hirai recognized he’d need to act quickly to turn around the ailing tech giant’s fortunes.

His first step was ending Sony’s decade-long marriage with Swedish mobile phone company Ericsson. Next, Hirai spun off any Sony-owned, non-core companies. This

leaders and organizations to continually re-engineer their internal systems and processes.

Too often, being ‘in a groove’ can easily turn into a rut, and simply repeating the habits that have worked in the past can set you on a collision course with inefficiency and irrelevance.

5

Reposition

As times and needs evolve, so must the positioning of businesses and brands.

This could mean developing new products and services, tapping into new markets, or completely overhauling a brand’s messaging.

Just as it’s necessary to determine which walls are load-bearing when renovating a house, leaders must identify non-negotiable values, principles and purpose dramatically streamlined manufacturing processes and cut Sony’s global workforce by roughly 10,000 employees.

3

Reframe

We were all raised to believe the lie that great minds think alike. Nothing could be further from the truth. The greatest and most creative minds have always thought very differently from their peers and the prevailing wisdom of their eras. Being able to view the world from a different frame of reference is, in fact, the key to innovation and invention.

Leaders must pay particularly close attention to the views and perspectives of those who have fresh eyes in an organization – often owing to their lack of experience. Such fresh eyes have no trouble thinking outside the box because they have no idea what the “box” even looks like yet.

4

Re-engineer Keeping pace with change will require

To see a brilliant example of a repositioned brand, look no further than 160-year-old glass manufacturer Corning.

In 1908, half of Corning’s revenue came from making glass bulbs. Over time, the Corning brand extended beyond these roots and became known for its high-quality, cookand kitchenware. Today, however, many of Corning’s most lucrative products are ones that didn’t exist 10 years ago. The company now specializes in cathode-ray tubes; fibre optics for HD TVs; and laser technology enabling mobile phones to be fitted with micro projectors.

Corning’s a great example of a company rich in tradition and history that has stayed relevant by not being afraid to embrace new products and services as times have changed.

Setting a brand or organization up for enduring relevance involves a principle every experienced surfer understands well. Good surfera know the importance of keeping their eyes firmly on the horizon to catch the perfect wave. While a wave is still forming a long way off, surfers know this is the time to move – to

SHAKY TIMES: 10 ENDANGERED BRANDS Every year, 24/7 Wall St, which provides critical online analysis and commentary for US equity investors, identifies 10 US brands that it predicts will disappear within a year’s time.

Among the selection criteria are declining sales and losses, disclosures by the parent of the brand that it might go out of business, rising costs that are unlikely to be recouped through higher prices, and companies that have lost the great majority of their customers. Last year’s list included:

paddle out and get in position. Move too late or not at all, and you’ll simply get washed up as the wave crashes over you.

In much the same way, winning the battle for relevance is about anticipating, preparing for and embracing change – no matter how uncomfortable or confronting it may be.

As Charles Darwin once observed, “It is not the strongest that survive, nor the most intelligent.” “Rather,” he said, “it is those who are most responsive to change.”

Michael McQueen is a leading business commentator and four-time bestselling author.

His most recent book “Winning the Battle for Relevance” explores the importance of reinventing an organisation or brand before you are forced to. Visit www.MichaelMcQueen.net

www.mortgagebrokernews.ca

44-45_bizstrat Change or die_SUBBEDda.indd 45

45

2/12/2015 9:54:58 AM

PEOPLE

CAREER PATH

BUILDING IT BETTER

From video store owner to clothing designer to mortgage magnate, Carmen Campagnaro knows how to keep a business booming 2016

PLANS TO OPEN A MORTGAGE INVESTMENT TRUST

2011

OPENS VALOUR CAPITAL With a booming mortgage business, Campagnaro began diversifying. She opened a due-diligence firm to ensure clients make good investment choices.

“We noticed right away there was a demand for an analytical team to perform the due diligence so that if we approve a deal, it will be successful”

Campagnaro isn’t slowing down. Looking ahead to next year, she’s readying Pro Funds to launch a mortgage investment trust.

“It makes sense to have a fund where you can commit and lend, rather than pooling money with individual investors one at a time”

2010

LAUNCHES PRO-FEP PROGRAM Campagnaro launched Pro-FEP, which lets clients borrow up to 95% loan-to-value at just 5% interest.

“With this program, we can get investors [and] people who are self-employed up to this LTV, secured on real estate, at only 5% interest”

1998

STARTS PRO FUNDS MORTGAGES

Her first client had challenging financing needs. She got the deal done, and that client – a successful investment speaker – repaid the favour.

“My business went from one deal to an inundation of people calling me about their financing. It was a blessing that landed on my lap”

1989

PURCHASES HER FIRST INVESTMENT PROPERTY Campagnaro and her father purchased a singlefamily home and rented it out for a year before selling it for a $160,000 profit.

“I’ve always had a passion for real estate. I pushed my father – he didn’t want to do it.”

1986

OPENS MY VIDEO STORE

1991

BECOMES A MOTHER Campagnaro started sewing baby clothes and went back to school, studying fashion design.

That led to the creation of Bumpy Roads in 1993.

“We were Canada-made, which was really great, but it was hard to compete and the profit margins were really low”

After graduating from high school in London, Ont., Carmen Campagnaro moved to Burlington, where she opened My Video Store. The company was wildly successful.

“I didn’t want to work for anybody else, so I decided to open something. [Video rental] was the up-and-coming thing”

46 www.mortgagebrokernews.ca

46-47_Career Path_SUBBEDda3.indd 46

2/12/2015 10:50:26 AM

Mortgage solutions that reward clients and brokers every step of the way.

National Bank’s Red Carpet Program is still one of the best in the industry.

Talk to your local BDM for more details on the recent changes to our efďŹ ciency bonus program, or email mortgagebroker@nbc.ca today.

46-47_Career Path_SUBBEDda3.indd 47

2/12/2015 10:50:29 AM

PEOPLE

OTHER LIFE

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

TRAINING DAY Jarrett Slaney showed his strength by blending fitness training with mortgage financing JARRETT SLANEY joined the mortgage industry in 2007 while studying at Brock University. He learned the business from his father, who owns Slaney Mortgages. But the younger Slaney decided to travel the world after graduation. Those travels took him to Australia. There a friend had opened a gym, and was teaching a new fitness training called F45 Training.

Today Slaney is a successful broker and co-owner of the first Canadian F45 Training franchise.

“My business partner and I researched [F45 Training] for about three months,” Slaney says. “We crunched the numbers and got really excited about it.”

F45 Training consists entirely of group fitness classes that change daily, each led by two certified personal trainers. Every exercise is demonstrated on large TVs in the studio space.

The gym has actually been a bolster for Slaney Mortgages. “It’s a good networking tool,” he says.

“That wasn’t the intention, but that’s how it’s worked.”

1

The number of F45 Training locations in Canada

129

The number of F45 Training locations in Australia, where the system began

3

The number of classes offered at the F45 Training studio in Toronto

A tra *A

48 www.mortgagebrokernews.ca

48-OBC_Other Life_SUBBEDda.indd 48

2/12/2015 9:57:12 AM

Unsecured credit card of $1,000 – even while in bankruptcy or consumer proposal.

You deserve the credit.

Help your clients rebuild their credit now.

The Affirm MasterCard® is an ideal way for your clients to begin to rebuild their credit.

Even if the bankruptcy or consumer proposal process is not yet completed, we can offer a credit card with a $1,000 limit. It’s a true credit card – no security deposit is required. After discharge or consumer proposal acceptance, the credit limit can be increased to $2,000 – and even further as a repayment history builds and credit scores improve.

At Affirm, we understand that people’s financial plans may not always work out the way they had imagined. But we also believe people deserve the credit for facing up to their financial difficulties. We’ve already helped over 45,000 Canadians get their finances back on track.

We can do the same for your clients.

Features

ü m ü m ü m ü m ü m ü m

Annual Interest rate of 29.99% Minimum monthly payment is the greater of $30 or 4% of outstanding balance Monthly fee of $7 Reporting monthly to credit bureaus*

Qualifications

No security deposit or upfront fees required

ü m ü m

Use it anywhere MasterCard® cards are accepted

ü m

Minimum employment of 6 months May require proof of discharge from Bankruptcy or Consumer Proposal Maximum Debt Service Ratio of 60%

TERM LOANS, TOO – Post Bankruptcy discharge or Consumer Proposal completion, your clients may also qualify for an Affirm Term Loan, offering up to $4,000 of additional credit. Call us for more details.

For more information contact Peter Young 1-844-266-4401 | peter.young@affirmfinancial.ca www.AffirmFinancial.ca Affirm MasterCard®. This card is issued by Peoples Trust Company pursuant to license by MasterCard® International Incorporated. MasterCard® and MasterCard® Brand Mark are registered trademarks of MasterCard® International Incorporated. *Affirm Financial Services reports credit card payments to TransUnion Canada and Equifax, and term loan payments to TransUnion Canada.

48-OBC_Other Life_SUBBEDda.indd 49

2/12/2015 9:58:07 AM

SOME CLIENTS NEED A DIFFERENT WAY IN

We have more mortgage solutions so more of your clients can get into a home.

•

Expanded, alternative, insured and conventional mortgages

•

Wide range of qualifying criteria for varying credit scores

•

Local support, national coverage

BANKING THAT WORKS FOR BROKERS® b2bbank.com/mortgages | 1.800.263.8349 All mortgages are funded by, registered in the name of, and administered and serviced by B2B Bank. Mortgages are subject to credit approval by B2B Bank. Some conditions apply. B2B BANK and BANKING THAT WORKS FOR BROKERS are registered trademarks of B2B Bank.

48-OBC_Other Life_SUBBEDda.indd 50

2/12/2015 9:57:58 AM