CMP 12.03

BR OK SPE ER CIA SE L IN NT THI IM S ISS EN UE T PO LL MORTGAGEBROKERNEWS.CA ISSUE 12.03 | $12.95

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INDEPENDENT BROKERAGES Seven of Canada’s leading independent brokers reveal what they love (and hate) about going it alone

THE LENDER’S PERSPECTIVE Street Capital’s Alfonso Casciato on how brokers can win on every deal

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FOREIGN BUYER TAX IN TORONTO? Amid still-rising prices, will the city soon follow Vancouver’s lead?

MORTGAGE FRAUD ON THE RISE The correlation between overheated markets and falsified applications

23/03/2017 10:12:33 AM

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ISSUE 12.03

CONTENTS

TOP INDEPENDENT BROKERAGES COVER STORY

What does it take to make it as an independent in today’s rapidly evolving mortgage industry? CMP talked to seven leading independent brokers to find out

22

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HOW PLANS BECOME SQUARE FEET.

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ISSUE 12.03

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CONTENTS

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

UPFRONT 04 Editorial

The industry continues its fight against new regulations

06 Statistics

10

Can first-time buyers still afford a home under new mortgage rules?

08 Head to head

UPFRONT

NEWS ANALYSIS

44 34

Momentum is building toward a foreign buyer tax in Toronto – but how does the industry feel about it?

CMP’s annual survey of the broker channel reveals a growing unease with mounting regulations and the role of the big banks

INDUSTRY ICON Street Capital’s Alfonso Casciato gives the lender’s perspective on how brokers can best position themselves for success

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47 Career path

COMMERCIAL UPDATE

Broker Daniel Patching’s two-wheeled sartorial splendour

James Loewen’s entrepreneurial spirit has led him to great heights in the mortgage industry

CMY

K

48 Other life

As Canada explores marijuana legalization, cannabis is poised to become the next big thing in commercial real estate

PEOPLE

32

BROKER INSIGHT

Shaun Zipursky of DLC City Wide Mortgages reflects on the ins and outs of spending his entire career as a mortgage broker

2

Another downside to Canada’s overheated housing markets

How the government has missed the mark on housing affordability

UPFRONT

PEOPLE

12 Alternative lending update 16 Opinion

FEATURES

BROKER SENTIMENT 2017

Is the broker channel being unfairly called out for fraud?

MORTGAGEBROKERNEWS.CA CHECK IT OUT ONLINE

www.mortgagebrokernews.ca

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UPFRONT

EDITORIAL

Not going down without a fight

L

ast month, we covered the industry’s involvement in meetings with MPs in Ottawa to discuss last year’s mortgage rule changes and the implications they have had on regular, middle-class Canadians. Attendees represented a who’s who of the mortgage industry, including association heads and leading brokers.

It would have been easy for the industry to rest on its laurels after those meetings, to claim it had done all it could to influence the government, but that was hardly the case. Mortgage Professionals Canada further organized a number of more informal discussions between some of its members and MPs. More than 100 discussions took place, according to one attendee, and it seems the message is finally getting through.

More than 100 discussions took place between industry members and MPs, and it seems the message is finally getting through The government’s changes, which were meant to target escalating prices in major cities, have had a negative impact in markets across the country.

Potential buyers in small-town Canada can no longer afford homes or are required to qualify at higher, unrealistic rates. And prices in major cities, especially in Toronto, have done nothing but bloat.

But amid the doom and gloom, there could be sunny skies ahead – at least if this small industry, which is obviously punching above its weight, has its say.

Stay tuned …

The team at Canadian Mortgage Professional

www.mortgagebrokernews.ca ISSUE 12.03 EDITORIAL Editor Justin da Rosa Writers Joe Rosengarten Libby Macdonald Ephraim Vecina Kimberly Banks Copy Editor Clare Alexander

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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

23/03/2017 8:46:26 AM

INNOVATION

INNOVATION UNRIVALLED SUPPORT

UNRIVALLED SUPPORT UNRIVALLED SUPPORT

centum.ca

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UPFRONT

STATISTICS

First-timers shut out?

FINDING THE DOWN PAYMENT Down payments are most often composed of personal savings, as was overwhelmingly the case pre1990. However, the intervening years have seen a rise in the proportion of first-time buyers relying on loans and gifts from family.

First-time buyers are a staple of the mortgage market, but do the new rules cut them off?

THE RECENT imposition of tightened mortgage rules, which make borrowing more difficult for buyers with less than 20% to put down, would seem to land most heavily on the shoulders of new buyers. Because they haven’t yet invested in property, these buyers are making their maiden purchases without the benefit of equity that existing buyers bring to the table.

Who comes to the rescue? In many cases,

Before 1990

it’s the bank of Mom and Dad: Almost one in five new buyers relies on either a loan or a gift from family to make up their initial deposit – a form of funding that has grown in popularity over the years. An HSBC survey reports that 37% of millennial homeowners have turned to family for help in buying property; 21% even moved back in with their parents in order to sock away more money for a down payment.

1990–1999 2000–2004 2005–2009 2010–2013

102

Number of weeks it would take the average wage earner to save a 20% down payment

53

Number of weeks it would have taken to save that 20% down payment in 1995

43%

Percentage of millennial nonhomeowners who need more time to save for a down payment

82%

2014–2016

Percentage of millennial nonhomeowners who intend to buy in the next five years

Sources: Mortgage Professionals Canada, December 2016; HSBC, February 2017

MORE MONEY DOWN

HITTING THAT MAGIC 20%

Homebuyers dipping their toes in the market for the first time are putting down more money than ever.

While new mortgage regulations will squeeze those putting down less than 20%, the proportion of first-time buyers doing so has been lower over the last couple of years than in any other time in recent history.

AMOUNT OF INITIAL DOWN PAYMENT 25%

FIRST-TIME BUYERS

20%

22%

20%

20%

21%

23%

FIRST-TIME BUYERS PUTTING DOWN LESS THAN 20% 60%

54%

53%

20%

50%

48%

50%

15%

42%

10%

39% 40%

5% 0% Before 1990

1990–1999 2000–2004 2005–2009 2010–2013 2014–2016 Source: Mortgage Professionals Canada, December 2016

6

30%

Before 1990

1990–1999

2000–2004

2005–2009

2010–2013

2014–2016

Source: Mortgage Professionals Canada survey, Fall 2016

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SOURCE OF DOWN PAYMENT

Personal savings

Gift from family

Loan from financial institution

Loan from family

54%

5%

44%

10%

46%

7%

44%

10%

45%

7%

5% 5%

11% Likely to rent out part of their home No plan to rent out part of their home

6%

6%

2%

12%

1% 19%

3%

14% 0%

23% 3%

9%

1%

27%

RENTING TO OWN The option of renting out part of their newly purchased home – whether it’s a room in the house or a basement suite – is more likely to be taken by first-time buyers than those who have already owned.

1%

27%

15%

Other

1% 2% 3%

28%

3%

45%

RRSP withdrawal

28%

6%

13%

Definitely plan to rent out part of their home

Loan from employer

1%

11% 0%

3% 10%

2%

WHAT NEW RULES?

3%

Most consumers surveyed by Mortgage Professionals Canada last fall were unconcerned about what impact the latest regulations would have on their plans.

The new rules will have no impact on me because I will save for a 20% down payment

REPEAT BUYERS 91%

FIRST-TIME BUYERS

Disagree Neutral

84%

Agree Source: Mortgage Professionals Canada, December 2016

19% 43% 38%

Source: Mortgage Professionals Canada survey, Fall 2016

www.mortgagebrokernews.ca

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UPFRONT

HEAD TO HEAD

Have brokers been unfairly blamed for fraud?

Media attention seems to focus on mortgage fraud in the broker channel while ignoring instances in larger institutions

Eitan Pinsky

Robert Mogensen

Ron Butler

Mortgage expert DLC Origin and Pinsky Mortgages

Mortgage consultant The Mortgage Advantage Financial Services

Mortgage broker Butler Mortgage

“I don’t think the media has a choice – they are presented with information, and that information is then written about. If the media had a credible source within the banks, we would hear stories about them as well.

What happens now is that when a mortgage broker is disciplined, it becomes public. In BC, our regulator releases statements about fraud as soon as it happens. When a bank employee is disciplined for fraud or anything else, no one hears about it – it’s swept under the rug by the bank or ignored. At least, that was my experience when I worked at a bank.”

“Fraud stories in the broker channel are easy pickings for the media – a broker provides a face and a name to focus on versus the somewhat anonymous image of a big bank.

These institutions often skirt compliance issues that brokers cannot via the latitude given to managementlevel employees. Every broker has stories of deals they have personally turned down, only to hear that a big bank bent the rules to get the deal done. The pressure at bank branches to sell more products these days will only exacerbate the problem. This is the story the media should be following.”

“Mortgage fraud is far less than 5% of all mortgages. The incidence of true fraud is about identical in all channels.

Today, broker mortgages receive extreme diligence at all lenders – job letters are all phoned, pay stubs not from Ceridian/ ADP require bank statements to back up income, and tax documents are often requested. The down payment is drilled down to $2,500 deposits and transfers.

If underwriting got any tougher, it would simply be impossible.

The reality is, mortgage fraud hardly exists – the incredible growth of MICs and private financing proves that alternate financing is what is really happening.”

JUST HOW WIDESPREAD IS MORTGAGE FRAUD? One broker recently posited a figure that roughly one in five homebuyers had engaged in what could be construed as fraud, by way of “strategically try[ing] to withhold information or inflate their income through various means.” The broker later sought to explain his comments and perhaps tamp down the furor that had by then erupted.

In fact, such fraud does seem to have accelerated in recent years – alongside purchasing prices – in the nation’s hottest markets. Eight per cent of Canadians surveyed

by Equifax confessed they had fudged facts on a credit or loan application, and the consumer credit reporting agency also discovered a 52% spike in suspicious mortgages in Canada between the years of 2013 and 2016.

8 www.mortgagebrokernews.ca

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UPFRONT

NEWS ANALYSIS

A tax for Toronto?

Broker opinion was split following Vancouver’s implementation of a foreign buyer tax last year.

Now that Toronto’s real estate prices are raging out of control, many are considering a similar policy in Canada’s current hottest market A LOT HAS changed since last summer’s bombshell announcement that Vancouver would start taxing foreign homebuyers an additional 15%. Vancouver’s real estate prices have taken a dive while Toronto’s have skyrocketed. And while there is no concrete proof that foreign money that would have been spent in Vancouver is making its way farther east, anecdotal evidence certainly supports that hypothesis.

The news of Vancouver’s tax hit the mortgage broker industry like a sledgehammer last summer, but brokers couldn’t seem to come to a consensus on whether it was a good or bad thing. A CMP poll at the time found

… the ability of people to enter the marketplace. [There are] bidding wars everywhere you go, it appears, and I’m sensitive to that.”

For its part, however, the housing industry in Ontario is against the tax.

“Home affordability needs to be addressed before millennials are completely priced out of the market,” says Ontario Real Estate Association CEO Tim Hudak. “That is why Ontario Realtors have called for the creation of an Affordable Homeownership Task Force.

We need real estate experts to come together to hammer out a plan for making homeownership more attainable for first-time buyers and young families.

“Before we pin a tax on foreigners, we need to address the elephant in the room, and that’s the lack of housing supply” Tim Hudak, Ontario Real Estate Association that 54% of brokers supported the tax, compared to 33% who did not. An additional 13% were undecided.

Now, it seems, the debate could soon be reignited in Toronto.

“A year ago I was thinking, ‘Let market forces prevail,’” Finance Minister Charles Sousa recently said when asked about the potential tax. “But now I’m concerned about

10

“The main culprit behind rapidly rising house prices is the GTA’s unbalanced market – housing supply cannot meet demand – not foreign buyers,” Hudak continues. “A foreign buyer tax would only penalize the international MBA student who will one day start her own business in our province, or the surgeon aspiring to work at Sick Kids. Before we pin a tax on foreigners, we need to address

the elephant in the room, and that’s the lack of housing supply.”

That opinion was echoed by the Toronto Real Estate Board.

“When the idea of introducing a foreign buyer tax in Ontario surfaced last year, TREB cautioned it would be a knee-jerk reaction before knowing whether a problem existed,” says TREB president Larry Cerqua. “There was little in the way of reliable data on the issue. To better understand the foreign buyer issue, TREB commissioned an Ipsos survey on foreign buying activity in the GTA, the results of which show that concerns about the effect of foreign buyers on the GTA market are widely overblown.”

That survey found that only 4.9% of transactions in the GTA are attributed to foreign buyers, and that 80% of those buyers are purchasing a primary residence.

“The fact that most foreign buyers are looking to purchase a home for their family, for personal use or to provide a tight rental

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A TALE OF TWO MARKETS A look at how the average home price has changed in Canada’s two largest markets since last summer puts the impact of Vancouver’s 15% foreign buyer tax into stark relief.

June 2016 average home price Toronto $709,825 Vancouver $1,007,687

January 2017 average home price Toronto $770,745 Vancouver $878,242

market with much-needed supply is something to be encouraged, as these actions are essential to Ontario’s economic success,” Cerqua says. “We can’t forget that immigration is the key driver of population growth in the

on the government’s latest regulations. “The bigger concern has to do with tightened lending rules, which make it more expensive for buyers to acquire homes,” says Sergio Custodio, co-leader of the national real estate

“Imposing a tax on foreign buyers will could create adverse effects on the national, provincial and GTA economies” Larry Cerqua, Toronto Real Estate Board GTA, and therefore a key driver of economic growth as well. Imposing a tax on foreign buyers will not have the desired effect of cooling the housing market and could create adverse effects on the national, provincial and GTA economies. It will do little to correct the real issue impacting housing affordability, which is the lack of available housing supply.”

Others in the industry have laid the blame

law practice at Fasken Martineau.

However, there’s no denying that the tax in Vancouver appears to be effectively addressing the city’s affordability crisis. The average home was selling for more than $1 million in June of last year, the month prior to the announcement of the tax. By January 2017, however, Vancouver’s prices had cooled to an average of $878,242.

Toronto’s real estate prices, meanwhile, experienced the opposite. The average GTA home cost $709,825 last July; in January 2017, it was $770,445. It’s worth noting that GTA figures also include totals from Brampton, Durham, Mississauga, Orangeville, and York Region – all of which, save York Region – bring Toronto’s average price down.

While many industry players oppose a foreign tax in Toronto, the prospect has gained some proponents.

“The more Toronto houses soar in value, the more vulnerable all these parties are to an ugly correction,” personal finance columnist Rob Carrick wrote in a recent column for the Globe and Mail. “A foreign buyer tax has helped to settle a frantic Vancouver market, and there’s no reason to think it wouldn’t help slow Toronto as well. We want to pump the brakes on housing through a series of measures, if required. Bringing the market to a screaming halt would be just as bad as letting it soar and then crash.”

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UPFRONT

ALTERNATIVE LENDING UPDATE NEWS BRIEFS OSFI issues stern warning against bundled loans The Office of the Superintendent of Financial Institutions has announced that it will be cracking down on socalled ‘bundled’ loans, which package a primary mortgage with a second offering from an unregulated group. In the wake of stricter rules, this type of pairing has gained popularity as a way for some lenders to sidestep bylaws that place a cap on the amount that mortgage providers can lend. “Anytime a regulated entity is or appears to be designing a product or an approach that is, by its design, circumventing the rules, we would take issue with that,” said OSFI assistant superintendent Carolyn Rogers.

Traditional credit scores dying in America?

American lending industry newcomers have begun ditching traditional credit evaluation systems in response to millennial desires. “We just don’t think the score itself is a real driver to credit performance,” said Mike Cagney, CEO of upstart lender SoFi, which has begun implementing a unique proprietary underwriting assessment in place of FICO scores. However, observers are saying it’s premature to conclude that conventional evaluations are dying out. “Whether [the shift] proves to be effective over the long-term remains to be seen,” said Lend Academy’s Ryan Lichtenwald. “[Millennials] don’t have a lot of credit history, and it’s interesting to see these companies do more with data.”

Major non-bank lender completes public offering A major non-bank provider of resi­ dential and commercial mortgages

has announced the successful closure of its public offering of common shares. Atrium Mortgage Investment Corporation said in a statement that the public offering accumulated gross proceeds of more than $30 million.

“Atrium will use the net proceeds of the offering to repay existing indebtedness under its revolving operating credit facility, which will then be available to be drawn, as required, for general corporate purposes, particularly funding future mortgage loan opportunities,” the company said.

CMHC raises mortgage insurance premiums

As of March 17, CMHC has increased the premiums on its insured loans. The organization reports that the change will cost the average CMHC-insured homebuyer an additional $5 on their monthly mortgage payment (based on a mortgage of $245,000 and a down payment of between 5% and 9.99%, a 25-year amortization and a five-year term at 2.94%). Meanwhile, homeowners with mortgages worth $350,000 and $450,000 will experience monthly payment increases of around $7 and $8, respectively.

Home Trust stands behind broker suspensions

Despite the filing of a class-action suit, Home Trust says it is standing by its 2015 decision to suspend 45 brokers for allegedly falsifying documents to reflect higher borrower income. The suit claims that Home Capital Company “failed to make required disclosures regarding the termination of its relationships with certain mortgage brokers and brokerages.” However, Home Trust’s Laura Lepore told MortgageBrokerNews. ca that “the company stands by its decision to suspend its relationship with [the brokers].”

Mortgage fraud an increasing threat Industry experts believe continuing high prices are driving more consumers to commit mortgage fraud Recent data from Equifax highlights the growing problem of mortgage fraud in Canada – a study by the credit reporting agency found that the number of potentially dishonest mortgage applications has grown by 52% since 2013. And it seems the country’s white-hot real estate market is to blame: Many of the problematic applications came from Ontario and British Columbia, where soaring prices continue to squeeze the average consumer.

Identity theft and money laundering comprised most of the cases, but buyers also submitted falsified or tampered tax returns, bank statements and employment documents in order to qualify for larger mortgages.

“It could be investing in the market as a way to cleanse money,” said Tara Zecevic, vice-president of customer insight at Equifax.

“It could be, ‘I really want that home and I’m getting into a bidding war, and even though I make $60,000, I’m going to say that I make $90,000.’”

In a related online survey, Equifax discovered that 8% of Canadians had falsified information on their credit applications. Thirteen per cent believed it was okay to tell ‘little white lies’ on their mortgage applications, while 16% considered mortgage fraud a ‘victimless crime.’

“What ends up happening is consumers think, ‘I’m not really doing anybody any harm,’” Zecevic said, adding that Canada’s long-running affordability crisis is largely

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responsible for the trend. “I definitely think there is this fear of a continuous rise in the cost of homes, that homeownership is starting to become out of reach.”

Amid the spectacular growth rates of home prices and sales volume in Toronto, the CEO of the city’s real estate board warned that authorities need to rethink their approach to the affordability crisis.

Toronto Real Estate Board head John DiMichele noted that the federal and provincial governments’ focus on allaying demand should give way to policy solutions aimed at

“What ends up happening is consumers think, ‘I’m not really doing anybody any harm’” improving supply, especially since there will be no shortage of people wanting homes in a city with vibrant economic prospects.

In particular, a foreign buyer tax similar to the one implemented by the BC government in mid-2016 would lead to reduced supply, “because the number of investors looking to purchase and rent out a property could decline.” Such conditions might provoke “stronger price growth in neighbouring communities/regions without a tax,” DiMichele said.

Q&A

Shawn Allen

New rules and bruised credit

Principal broker MATRIX MORTGAGE GLOBAL

Years in the industry 9 Fast fact Allen has also been the owner and principal broker of Second Mortgage Hub Canada since 2013

Who are the kinds of consumers who approach you for help?

Mostly, people who are working – people who last year qualified at their banks, and then were suddenly unable to because of the stricter mortgage regulations. They get competitive rates from us – rates they are simply unable to get from those institutions. These people find refuge in Matrix because we have less strict lending and underwriting guidelines.

What were the leading reasons for people not qualifying, based on your transactions?

Qualifying rates are now higher, and the federal government has changed the parameters, effectively contracting access to credit.

The Matrix advantage is that we approve applicants based on their equity and not on their incomes or credit, although we also look at the latter factors to provide better pricing.

Right now, there are more homeowners than homebuyers, and Matrix taps into the equity spawned from the current low-supply, high-demand environment in real estate.

How do these owners manage their debts once they have secured loans from you?

Matrix actually has a program that guides and mentors these owners on the path to avoiding debt accumulation. But even then, some people still fall through the cracks because they haven’t changed their lifestyles. Being in debt is a habit, and it’s one that you have to break.

On average, how long does it take for clients in this program to reform their habits?

Generally, it’s anywhere between a year and two. Sometimes, what happens is that they might have a consumer proposal, which will stay on record for an extra period of time. For example, let’s suppose you have a consumer proposal, and you have three years left to pay. If you do nothing, you will have to pay out the proposal over the next three years, and when the three years are done, you will have to rehabilitate your credit, which will take two more years.

So now you’ve lost five years.

But when you come to us, we’ll pay out the proposal today, and you can rehabilitate your credit from today over the next two years.

In effect, we save each of our clients three years.

In your view, is it even possible for consumers to remain debt-free?

That’s a tricky question, because money itself is debt. The more money you have, the more debt you have, because every dollar that comes into existence does so with debt already attached to it. Every dollar that comes into existence comes to a loan, or it comes to the Canadian central bank, which prints money with interest attached to it. Every dollar that you have is paid back with interest when you buy anything – that’s how money is created.

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UPFRONT

COMMERCIAL UPDATE

Cannabis: the next powerhouse sector?

Amid the prospect of legalization, commercial players are taking a closer look at the cannabis industry

“Aurora’s new facility will benefit from high-quality services on site at EIA, including bonded warehousing, ground transportation access and air cargo connections across the country,” said EIA vice president of commercial development Myron Keehn.

Aurora officials touted the project as the turning over of a new leaf for the Alberta economy, which has been battered in recent

“At the beginning we shied away from it, but more and more, it’s becoming mainstream”

As popular and political momentum gathers in favour of marijuana legalization, observers and industry professionals alike are looking to cannabis as the next big potential winner in the Canadian real estate sphere. Pure Industrial Real Estate Trust [PIRET], which holds approximately 21 million square feet of space across over 170 locations nationwide, has announced it will be adding the medical marijuana industry to its list of tenants.

“At the beginning we shied away from it, but more and more, it’s becoming main-

NEWS BRIEFS

stream,” said PIRET CEO Kevan Gorrie. “We would treat them as any other tenant that would require a lot of due diligence.”

Others have already taken steps toward capitalizing on the nascent sector’s potential. Aurora Cannabis is currently building a large-scale growing facility at a leased 30-acre parcel at Edmonton International Airport.

Projected to be approximately the size of nine football fields upon completion, the Aurora Sky production plant will grow a projected 110 tons of marijuana per year at full capacity.

Vancouver industrial demand outpacing supply

CBRE has predicted that industrial real estate in Vancouver will soon suffer accelerated price growth, as the city has less than 10 years of supply left. As a result, clients who might have normally considered Vancouver are now opting for Surrey and Delta. “It’s definitely been the trend in the last three years that demand has outpaced supply almost two-to-one,” said CBRE’s Chris MacCauley. “It will take some long-term planning throughout Metro Vancouver to find out what are the right places for industrial land of various uses.”

years by oil price devaluations and the Fort McMurray blaze. Approximately 20% the industrial real estate space in Leduc, where the airport is located, went into disuse as a result of the oil price crash.

“This is a pivotal initiative for Leduc County, for Alberta, the Canadian cannabis sector and the global cannabis industry,” Aurora CEO Terry Booth said. “[Aurora Sky] will become an important contributor to the local economy, both through investments and job creation.”

At present, around 130,000 Canadians have a prescription for medical marijuana. A CIBC World Markets study earlier this year noted that the potential $10 billion industry that would spawn from legalization represents a gold mine for the Canadian industrial and commercial real estate sectors.

Commercial demand intensifies in central Hamilton

Numbers from the Realtors Association of Hamilton-Burlington reveal that sales volume in the city’s commercial sector reached unprecedented heights last year, posting a 17.2% year-over-year increase at the end of 2016. Hamilton’s overall sales volume also saw robust activity in 2016, with a total of 16,556 completed transactions across all property types. “Obviously demand is high for getting the supply side up,” association president Lou Piriano said.

“Anything that goes up on the market, if it’s reasonably priced, you see it sell.”

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Q&A

Peter Reed

Changing market encourages refocus on commercial

Mortgage associate SHERWOOD MORTGAGE GROUP

Years in the industry 4 Fast Fact Prior to entering the commercial mortgage industry, Reed worked for a major bank and credit union in the commercial finance sector for more than 15 years

What has changed in Saskatchewan between the time you became a mortgage broker and the present?

When I first started, we were on the tail end of a real estate boom, so my focus back then was mostly on construction financing. Since then, our economy has shifted, and we now deal more with long-term financing.

What are the particular challenges in Saskatchewan’s commercial market?

Lately, it’s been higher vacancies. The rate went from less than 1% to 5%, mainly because of the market shift.

What do you believe caused this shift?

The commodity market experienced severe shocks, with oil prices dropping sharply over a short period of time. And the value of potash – a significant driver in our provincial economy – has plummeted dramatically over the past few years. Saskatchewan is more of a resourcebased economy, driven not so much by investment. The decline in commodity values has dramatically changed the way we do business in the province.

What would you say makes Saskatchewan a good commercial real estate destination?

Our province has not experienced the extreme highs and lows that usually happen in larger centres. Our pricing remains very affordable across the board, from residential to commercial. On a per-square-foot basis, our properties are still cheaper than those in the majority of cities across Canada.

Development cycle shortages affect prices

According to a report by Newmark Knight Frank Devencore, around 95% of the structures delivered in this development cycle in Vancouver are almost fully leased. This led average gross rents in the city to balloon to $41.17 per square foot by the end of 2016, a trend that shows no signs of abating. “The strength of the underlying BC economy, particularly relative to the rest of Canada, makes BC a very attractive destination for commercial investment,” said Brendon Ogmundson, economist for the BC Real Estate Association.

So where do you think the smart money should go?

It’s a complicated issue, as our market has changed so much in such a short time. As recently as two years ago, I would have a quick answer to this question, but now it takes more analysis than ever before to choose a deal. There are plenty of good buys out there, but they’re not just going to fall into your lap. What I think enterprising individuals should always keep in mind is that Saskatchewan currently has high vacancy.

What’s your advice to those who are looking to get into the commercial market in Saskatchewan?

Be more diligent, and hire a mortgage broker to help you through the process. Saskatchewan is not a bad place to invest in at all. However, what I would suggest not putting money into right now is entry-level housing. This is because I find that more people are moving out of older properties or subsidized housing areas and into newer townhomes or condos with nearly identical pricing.

A safe bet in Saskatchewan today is agriculture. The value of our farmland has been increasing by 2% to 3% annually, at minimum. More importantly, agricultural real estate is not likely to see drastic swings over short periods of time, like we’ve seen in rental properties in the largest Canadian cities.

Our market has definitely changed, but amidst that, there are plenty of opportunities for investors and brokers to do good business.

TD Economics strongly warns against rate hike

TD Economics has cautioned that an increase in interest rates “could be the number-one risk” to Canadian commercial real estate in the near future.

Citing developments such as the recent uptick in Canadian 10-year bond yields and US Treasuries, TD warned that rising interest rates would cause the housing market to lose steam. “A housing slowdown will ultimately spill over to demand for office and retail space through reduced employment and household spending,” the firm said.

Vancouver office vacancy lowest in two years

A February report from Avison Young revealed that office vacancy in Metro Vancouver dropped to 9.7% by the end of 2016, the lowest level seen in two years.

To compare, 2015 vacancies were at 10%.

“Positive annual absorption of 849,868 square feet in 2016 was the second-most annual absorption recorded since 2007 and followed 1.3 million-plus square feet of absorption registered in 2015,” the report said. “Virtually all new supply delivered since 2015 has been occupied or will be primarily occupied by the first half of 2017.”

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23/03/2017 9:17:57 AM

UPFRONT

OPINION

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

More rules won’t help The latest regulatory moves are not the way to address housing affordability problems, writes Samantha Gale MORE NEEDS to be done to help ensure accessibility to the housing market by keeping costs in check. It goes without saying that people have to live somewhere; if they are not able to purchase housing, they must rent. In doing so, they are no longer paying down a mortgage on their appreciating asset, but instead that of their landlord’s. However, most federal government policies, such as the latest crop of federal mortgage rules, which are intended to promote economic stability by curbing debt, only have a singular, narrow focus on the economy.

Specific government policies and programs intended to address housing needs tend to concentrate on providing social housing; few government initiatives support most Canadians who wish to access market housing. Some provinces are now responding by implementing programs to assist first-time buyers entering the housing market. For example, BC just introduced a program to fund second mortgages for first-time homebuyers who qualify for CMHC-insured mortgages.

Governments need to find ways to encourage the removal of red tape and excessive costs and delays in the housing development process. A multitude of costs incurred in the development process for new construction range from excessive permit fees, carrying cost charges spanning the years required to complete a development, school and road fees, and land dedication costs for public parks and buildings. In its 2016 budget, the federal government provided an unprecedented level of funding to municipalities for infrastructure improvements, housing and transit. It should be tying municipal

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funding grants to whether a municipality has a comprehensive red-tape-reduction strategy in place to efficiently deliver services to the public.

Although mortgage rates are at historical lows, high-ratio insurance premiums continue to skyrocket without justification and strain affordability by adding to the cost of housing.

On February 1, the insurance premium on a $500,000 home with a 5% nontraditional down payment would have been $18,287, for a

CMHC premiums and ensure that the delivery of high-ratio insurance is revenue-neutral.

Of course, regulatory change also has an impact on affordability. Concerns raised over new mortgage rules, which now require all borrowers of insured mortgages to be stress tested, have become a reality. For instance, various branches of the federal government, including the military and RCMP, often require employees to relocate. Mortgage brokers have witnessed firsthand the impact of the new stress test qualifying rate on homeowners who needed to sell their home to relocate, but have been unable to purchase a home at their new post.

Under new qualifying rules, some cannot now qualify for a mortgage large enough to purchase a home in the vicinity of their relocation. This inability to buy means they have no choice but to become a tenant. Paying high rents at a time of record low vacancy rates means they will be challenged to save the down payment for a future home purchase.

The federal government needs to review the wisdom of its mortgage rule changes and focus

“Housing will become more affordable when consumers can better afford mortgage costs due to having less unsecured credit” total mortgage of $493,287; on March 17, that premium rose to $21,375, for a total mortgage of $496,375.

In this example, a first-time homebuyer using an alternative down payment program will experience a premium hike from 3.85% to 4.5%, which means paying an extra $3,087.

Premiums for traditional sources of down payments increased from 3.6% to 4% on March 17. The increased half a percentage point for traditional versus nontraditional would be an additional $2,375 in the above example, or a 9.5% premium for consumers using a fully nontraditional down payment, or a 19.5% premium on the BC Housing Program (maximum 50% of down payment).

From this perspective, the insurance premiums are extraordinarily high and appear usurious. The federal government should be promising Canadians that it will not profit from

instead on curbing other debt, such as credit card debt. Housing will become more affordable when consumers can better afford mortgage costs due to having less unsecured credit.

Many members of the mortgage industry recently attended the Standing Committee on Finance, which is studying challenges surrounding access to residential homeownership. Mortgage brokers are uniquely qualified to comment on this subject, as they have direct contact with the home-buying public. Let’s hope the committee listens and can influence federal government policy to help keep housing costs in check.

Samantha Gale is the CEO of the CMBA-BC, and serves as executive director of its umbrella organization, CMBA. Gale practiced law prior to a 15-year stint at FICOM.

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23/03/2017 9:19:40 AM

PEOPLE

INDUSTRY ICON

TAKING IT TO THE STREET Alfonso Casciato, senior-vice president of sales at Street Capital, has been with the lender since the beginning – and he’s still there as it embarks on its continued evolution

WHEN ALFONSO CASCIATO joined the mortgage broker industry in the early 2000s, he was drawn by the relationship aspect of the business. In 2003, he left a management job at CIBC to become VP of credit for FirstLine Mortgages.

From there, he seized the opportunity to help launch Street Capital as its VP of credit, a role he held until 2015, when he was promoted to senior vice-president of sales for the lender.

“Launching Street Capital was intense; it was 24/7,” Casciato recalls. “By having ownership, it was a perspective I had never had before. You weren’t just responsible for the role you had – you were responsible daily for the success of all aspects of the company.”

Launching a lender meant a level of commitment Casciato hadn’t experienced before. And it also brought with it its own challenges, especially considering the timing of the launch, just before the global financial crisis.

“We were lucky our strategy was always to be a full-suite lender,” Casciato says. “The idea was to launch on the B side and roll out our prime business within the first year of starting Street Capital. With the economic downturn, we were able to quickly turn our focus from the B business over to the prime side of busi-

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ness. We successfully launched that in February of ’08 and haven’t looked back.”

Challenging times Given the constant changes in the mortgage industry, particularly over the last few months, many brokers have been grappling with the best way to adapt. In Casciato’s view, learning

seamless approval on the lender side and a more positive experience for the customer.

“The story has to make sense,” he adds.

“There has to be a level of reasonability. So, for example, if a 25-year-old is putting $120,000 down on a home, a story has to be made to explain where that deposit came from. In the past, it would have just been a section filled

“If brokers spend time on providing details and a strong story on each and every transaction, it will allow for a more seamless approval on the lender side and a more positive experience for the customer” what lenders are looking for in the new framework can set a broker apart.

“I think the successful broker will adapt to the changes that are going on right now by putting more focus and attention on the application and the submission of the application to the lender,” he says. “If they spend time on providing details and a strong story on each and every transaction, it will allow for a more

out in the application that $120,000 is the total deposit, and there was no story around how a 25-year-old had such a large deposit.”

Casciato also gives the example of a businessfor-self borrower – a sector that has increased year-over-year. Brokers need a story plan for those clients as well.

“How does the income that is being submitted for that self-employed individual

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PROFILE Name: Alfonso Casciato Title: Senior vice-president of sales Company: Street Capital Years in the industry: 17 Career highlight: “Experiencing the success of Street Capital and developing relationships with the brokers from scratch.”

Career lowlight: “Not being able to have a full suite of products when Street Capital launched – only being able to offer the prime business and waiting to launch the B business as long as we had to.”

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23/03/2017 9:21:04 AM

PEOPLE

INDUSTRY ICON

make sense?” Casciato says. “Do they own retail space, how many customers do they have, how long have they been in business – that kind of reasonability.”

Another major challenge for the broker industry, according to Casciato, is ensuring brokers and lenders can better compete with their big-bank peers.

“I think we have to be competitive on rates and better on service,” he says. “Better service looks and feels like more timely contact, more support. When the application comes in from the broker, I would expect the lender to make initial contact, thanking them for the application and asking for clarifying

Mortgages trending Despite the growing popularity of the broker channel, Casciato says brokers still bear the burden of having to educate Canadians about the value they can provide.

“Market presence is always a challenge [brokers] have to focus on,” he says. “It seems as if they’re always competing against the banks, and I think that suggests there isn’t enough broker presence out there.

“The numbers are there,” he continues, “but I don’t think there’s a good enough marketing campaign out there so the end customer is aware of what an independent mortgage broker can offer.”

“Market presence is always a challenge. The numbers are there, but I don’t think there’s a good enough marketing campaign out there so the end customer is aware of what an independent mortgage broker can offer” questions right after the application – a hand-holding experience. Not just an application comes in, a commitment goes out, the documents are sent in, and the deal either funds or for whatever reason stalls, or we lose it to a competitor.”

Street Capital recently became a Schedule 1 bank, which will allow it to provide many of the same financial products already on offer at the country’s larger institutions.

“To be able to continue to offer all of the products available to the customers that the banks currently offer the customers” will continue to be a challenge, Casciato says. “At Street Capital, by successfully launching as a Schedule 1 bank, we’re positioning ourselves to be able to offer a full suite of products to all of our clients.”

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He believes technology will be key in driving more consumers to the broker channel – but that both brokers and lenders have a lot of catching up to do to put themselves on the same playing field as other industries.

“I think being able to submit an application from your phone is technology that is out there,” he says, “but both brokers and lenders have been slow to ramp up to that level of technology – the ease of online application submissions by clients to brokers, and in the same fashion, brokers to lenders.

“There’s really only one mode of submission to lenders these days, and it’s electronically through Marlborough Sterling or D+H,” he adds. “I think we’re archaic when it comes to the options we have to submit an application from a broker to a lender.”

ALFONSO CASCIATO’S CAREER TIMELINE 1985

1989 1990

2000

Earns bachelor of arts in business, managerial economics

2003 Joins FirstLine Mortgages as VP of credit operations

2005

2007 Helps launch Street Capital as VP of credit 2010

2015 2015

Takes on role of senior vice-president of sales at Street Capital

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WHY MORTGAGE ARCHITECTS? MA IS A BRAND THAT IS BUILT AROUND QUALITY. THE LEVEL OF PROFESSIONALISM AND BROKER SUPPORT IS TOP NOTCH. THE LEADERSHIP TEAM IS INTELLIGENT AND ATTUNED TO CHANGES IN THE INDUSTRY AND USING SUCH CHANGES TO CREATE A COMPETITIVE ADVANTAGE.

Harry Singh

To learn more about why this industry executive decided to launch his brokering career with MA, contact Harry at harry.singh@mtgarc.ca.

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23/03/2017 9:21:17 AM

FEATURES

COVER STORY: TOP INDEPENDENT BROKERAGES

TOP INDEPENDENT BROKERAGES Going it alone isn’t always easy, but these seven independent brokers prove that it can be done – efficiently, effectively and on your own terms

IN MOST lines of business, being independent carries a bit of a cachet – it implies that you don’t need to fall in line with the big dogs just to get a scrap to eat. In an industry as competitive as mortgage brokering, this still holds true.

“Being independent allows us to do business without the added costs, rules and supervision of a brokerage network,” says Nitesh Prakash, president of Blue Pearl Mortgage Group. “Being independent also allows us to have the freedom to build our own culture, have the ability to be organic and go with the flow, be in control of our own brand and image, and have the freedom to stay ahead of the curve and develop our own unique technology that best fits our team and clients.”

Being an independent broker obviously has its challenges, but independents usually

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don’t bat an eyelid at the extra responsibility.

Sometimes that means hustling harder in order to keep up with the volume requirements necessary to stay on the books of the lenders, as opposed to relying on the pooled volume of a network. Sometimes it means being more proactive when it comes to staying educated and up-to-date on industry happenings, as independents don’t always have support systems in place if they run into a roadblock.

This is especially a challenge for new brokers, who may get their license easily and want to be independent, but not know all the practicalities of structuring a deal or have the experience to find creative solutions when an issue arises.

Deciding how best to use technology and shouldering the cost of doing so is another area where independents have to forge

their own path and protect their own interests, along with deciding how to adapt to an increasingly digital industry.

“Although most brokerages claim that their brokers/agents own their own data, we have found this to be a little bit tricky to navigate,” says Marcus Tzaferis of MorCan Direct. “In any of our discussions, the brokerages are unwilling to offer their brokers/ agents full access to the data. By running our own brokerage, we never have to worry about being denied access to our data.”

“A lot of brokers are reluctant to embrace technology,” Prakash adds. “With technology comes change and cost – something that scares a lot of brokers.” However, by making these decisions on their own rather than relying on a network, independent brokers have another string to their bow.

“Handling technology issues and changes can be frustrating and time-consuming, but you sure do learn a lot,” says Michael Maguire, a broker at Mortgage Wise Financial.

Of course, there are some conveniences a brokerage provides that independents miss, such as dealing with compliance

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24/03/2017 8:52:48 AM

MORTGAGE OUTLET SHAWN STILLMAN Years as an independent broker: 2 2016 volume: $268 million Number of employees: 8

Why did you decide to be independent?

The big advantage I had is that I wasn’t starting from scratch. When I was an agent and already doing $70 million on my own, I had the relationship with the lenders that I needed. So when I went out on my own, I didn’t need a DLC or someone to open doors with my top lenders because I could pick up the phone and say, ‘Hey, I’m going out on my own; what can we work out?’ Because of that, the [lenders] that we’ve been successful with were very happy to work with me directly and continue that relationship.

Right now, [a network] really can’t offer much because we have our own technology, we have our own name, and we have our own volume. So from a dollars-and-cents point of view, why does it make sense to leave?

and regulatory issues. “Having to handle [your] own compliance can be a bit timeconsuming, but with good agents, it generally is fine,” Maguire says. Other things are much less tangible, like the feeling of being on a team and having a sense of support and camaraderie.

However, many independents value their freedom and flexibility above all else. Time and time again, they turn down offers to join networks because, in spite of the apparent obstacles, they prefer their own brand to that of another.

“We are not building a referral network to make a large national firm rich,” Maguire says.

“We own it and control our own destiny. A lot of clients don’t trust big companies. Here, they can meet the president. Also being able to be truly local – we try to support local business for everything we can, and a lot of our clients feel the same way. We give back to local charities, and it’s great being a small business in our community.”

At the end of the day, independent brokers are in the trenches with everyone else – perhaps shouldering a heavier share of the burden, but also reaping the rewards of doing so.

Would you ever join a broker network?

It really comes down to the control of marketing. Right now, we have two very unique businesses in our brokerage. We do business under two different names, which we’re allowed to by FSCO. So we have the traditional broker model and then a directto-consumer online model. We have two unique brands that target two different consumers, and we really couldn’t do that under a label. I need to have two names so I can control both of them and control those messages to the consumer.

“I look back on my mistakes, and they were all around hiring people” What advice would you give to other brokers who are looking to branch out on their own?

I look back on my mistakes, and they were all around hiring people. When I started off hiring, I was looking for people who had mortgage experience, and the first two were complete duds. I came to a realization after that: If you’re a good mortgage person and you’re competent and you know what you’re doing, you never really want to come and work for somebody else. You want to be your own boss, you want to be your own agent, and you want to be your own person because if you’re out selling, that means that you’re doing an amazing job.

We find good people and teach them the skills of the industry because it’s so easy to get the licence. So it’s about finding people who are excellent at customer service, finding people who are good on the phone and are able to provide a positive experience for the customer.

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FEATURES

COVER STORY: TOP INDEPENDENT BROKERAGES as we see it – lending, securities and everything else – I think we’ve done enough to sort of safeguard ourselves from the changes coming in the future.

We’re not really in a position where we have to depend on what the big brokerages usually bring you, because usually they’re selling either volume bonuses or some sort

ness from a lot of the super-brokerages out there, and to tie ourselves with any one super-brokerage might actually be shooting ourselves in the foot.

What advice would you give to other brokers who are looking to branch out on their own?

OBSIDIAN MORTGAGE CORPORATION

“For those people who are thinking of independence, make sure your team is strong”

RICHARD SAMUELS

of mass discounts. We do pretty well for ourselves. We generate over $100 million in business every year, and for the most part, our guys take vacations when they want to take vacations. It’s about the quality of life – that’s what we’re in it for, right?

Years as an independent broker: 16 2016 volume: $100 million Number of employees: 7

Why did you decide to be independent?

It just never seemed as lucrative to join a network. We liked doing things the way we were doing them, and we like the flexibility of working with our own matrix. I think we’re comfortable in our shell at this point.

Obsidian as a culture has grown; the majority of people who are here have been here as long as we’ve been here. For the most part, we’re all happy. Plus, with everything changing in the world of mortgages

Would you ever join a broker network?

Regulatory decisions are being made on a daily, monthly and yearly basis, so at the end of the day, if regulations change in a way that makes it a deal we can’t turn down, we’ll always look at that. We’re always trying to make the matrix better.

But at this point, it just probably wouldn’t make sense to join. We get a lot of busi-

For those people who are thinking of independence, make sure your team is strong. At the end of the day, compliance is the major issue that you’re going to deal with, so make sure you have people around you who understand that. Compliance and sales aren’t the same, so you have to have a firm understanding of compliance as well as sales in order to survive, obviously.

If you’re thinking of jumping into the big water, who you work with is more important than anything else, so finding a good team – whether it be super-brokerage or independent – that you can trust and that you can work with is paramount for any level of success in this business.

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23/03/2017 9:49:20 AM

FEATURES

COVER STORY: TOP INDEPENDENT BROKERAGES Why did you decide to be independent?

The reason I switched is to have more control in terms of policy and procedures, of income, and also more exposure in what I’m able to do in terms of connecting with other lenders and operating with other lenders and brokers.

yourself. You have to have a proper team for compliance, underwriting, accounting setup, an external auditor – you have to have your foundation and manpower set up in order to brand yourself. Also, meet with lenders to know what the requirements are if you go independent.

“It’s so competitive out there that others are offering 90% or 100% commission. Are you going to be able to match that?”

CANADA MORTGAGE & FINANCIAL GROUP AMEERA AMERULLAH Years as an independent broker: 2 2016 volume: $139 million Number of employees: 3

Would you ever join a broker network?

I don’t think we need to be with a network for branding or anything, but if they have a product – for example, maybe an insurance product – that can add value to what we’re doing, then maybe there could be a collaboration. Other than that, for the brokering side, I don’t think there is any reason for us to join a network.

What advice would you give to other brokers who are looking to branch out on their own?

You can’t just become independent by

CYR FUNDING RENA MALKAH Years as an independent broker: 43 2016 volume: $200 million Number of employees: 15

Why did you decide to be independent?

When I started out on my own, there were no networks! It was 43 years ago – there were no networks, there were no women even doing it, and besides that, there were around 500 mortgage brokers in the whole province of Ontario. A lot of people didn’t even know what a mortgage broker was.

Would you ever join a broker network?

The only reason I don’t join a network is because mainly they’re focusing on the A business. When I started in 1974, the banks were not allowed to lend on mortgages. The Bank Act changed that, allowing them to lend on mortgages, so I decided I didn’t want to

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If you’re looking to grow a team, if your pay structure will be based on the volume, would you be able to grow into a team? It’s so competitive out there that others are offering 90% or 100% commission. Are you going to be able to operate independently and match that in order to grow your brokerage?

If that’s going to be something that’s going to take time to grow, then maybe it’s a good idea to stay under a brokerage platform to just brand yourself, establish that rapport and build a team as a team lead.

compete with the banks. I decided to do alternative lending, commercial, construction and private, so I’m not really like the average broker.

I don’t really fit the mold – their systems wouldn’t even work for me.

What advice would you give to other brokers who are looking to branch out on their own?

I don’t know why they’d want to go independent, unless they’re having some dispute with their network or they don’t want to pay the fees to their network. I’m sure the network provides a lot – group advertising and probably a lot of other economies of scale – so I don’t think anything is better than the other.

I’ve always worked for myself, from 21 years old. I just like to be my own boss and not have to answer to anybody, so it just depends on your personality.

“I don’t really fit the mold – their systems wouldn’t even work for me”

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23/03/2017 9:50:02 AM

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23/03/2017 9:50:08 AM

FEATURES

COVER STORY: TOP INDEPENDENT BROKERAGES ADMORE FINANCIAL SERVICES GEOFF CARNEVALE Years as an independent broker: 10 2016 volume: > $50 million Number of employees: 3

Why did you decide to be independent?

The biggest reason why we’ve stayed independent is it allows us to run our business however we want to run our business. We’re not constrained by any sort of company philosophies or anything of that nature.

We’ve thought about going to a broker network, and for our business, it really just came down to independence.

We read the pros and cons, and based on our business – and everyone’s business is different – we just thought that it was in our best interest to stay independent and not be limited in any decisions we wanted to make.

Would you ever join a broker network?

The majority of our business is private business. There’s a lot of regulation around that, and having to be part of a major broker network might actually prove to be a bit of a hindrance – just

“I wish I would’ve spent more time with others in the industry. I’ve learned that every problem I’ve faced, mortgage-wise, someone else has dealt with” the fact that we can manage our own compliance, and things of that [nature]. I have nothing against bigger brokerages; I think they’re great, but for our specific business model, I don’t think it suits us.

It’s something I think about regularly.

A lot of it might just be in my head: I’ve

28

always been independent, and I want to stay independent. That’s definitely a part of it. There’s no negative reason behind it – it’s just that we’ve done it this way for so long.

What advice would you give to other brokers who are looking to branch out on their own?

Know your business, and know what being a part of a network would bring or not bring to the table. If you’re joining a network, understand why you’re joining a network. If you want to be independent, that’s great – why do you want to be independent?

I also think I would’ve spent more time with others in the industry. I’ve learned that every problem I’ve faced, mortgage-wise, someone else has dealt with. So in retrospect, I wish I would’ve known more people and therefore could’ve had some more discussion around it. I kind of figured out everything on my own.

www.mortgagebrokernews.ca

22-31_Cover story Top Independent-SUBBED6.indd 28

23/03/2017 9:50:42 AM

MORTGAGE EDGE

For clients, they don’t care about the branding. What they care about is the interest rate.

EDWARD BARR Years as an independent broker: 10 2016 volume: 14 million Number of employees: 0

Why did you decide to be independent?

Basically, I find that information everywhere is the same. I don’t get any benefit.

Would you ever join a broker network?

The way I see it, we have the same underwriting guidelines.

We have access to the same lenders, same requirements. So maybe if you’re a part of a broker network, you might have access to the lenders’ presentation – something they want to teach you on a product or something like that – but once we have guidelines, everyone has to follow them.

What advice would you give to other brokers who are looking to branch out on their own?

Today, if you want to survive in this type of business, you really have to have knowledge. Some people think, ‘You know what? I’m just going to learn how to do applications and I’m going to get clients,’ and it doesn’t work. I see people come into the business – they try, and then they leave because you have to be really knowledgeable in order to deal with clients. It requires more experience now.

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www.mortgagebrokernews.ca

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23/03/2017 9:51:08 AM

FEATURES

COVER STORY: TOP INDEPENDENT BROKERAGES MORTGAGE EDGE JOHN BARGIS Years as an independent broker: 18 2016 volume: $1.28 billion Number of employees: 86

Why did you decide to be independent?

As one of the original founders of Invis, I had the opportunity to have exposure to the national network concept for three years, and I decided that the grassroots independence model, if structured

team and our lender partners to the size it is today.

I found that the independent model is far more profitable. Being one who actually takes the time to do the math behind the deal, and relating it to the cost a broker pays to the network for the perceived value received, the math simply doesn’t add up.

One of the reasons the Coalition of Independent Mortgage Brokers of Canada was formed was because I saw how much money brokerages were leaving on the table and how much they were actually

“As an independent, I found I was better able to control my own destiny as a business owner by taking lender relationships to another level” properly, was the better way to go. As an independent, I found I was better able to control my own destiny as a business owner by taking lender relationships to another level. If executed strategically by applying simple principles of running a business, this would allow for better comp programs and specials for our agents, giving us an edge to not only grow our agents’ business, but also to grow the volume of the Mortgage Edge

disadvantaging their agents, so I decided to export Mortgage Edge’s model to other brokers who took the time to do the numbers behind their business.

Would you ever join a broker network?

The reality is that the numbers simply don’t work. The networks are making corporate bonuses on the back end that Mortgage Edge would have to forfeit as a franchise, which would place us and our

agents at a disadvantage. Imagine me having to tell my agents that regardless of their production, I have to pay them a 90/10 or 95/5 rather than the real 100% we receive from lenders, just because we’re with a network. Even if Mortgage Edge was on a flat fee, the back-end corporate bonuses give us a leg up.

What advice would you give to other brokers who are looking to branch out on their own?

Call me – I’d be happy to help.

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23/03/2017 9:51:30 AM

PEOPLE

BROKER INSIGHT

A family affair Shaun Zipursky of DLC City Wide Mortgage Services talks to CMP about coming of age in the mortgage industry and how things have changed since he started in the early ’90s

CMP: What made you want to become a mortgage broker?

Shaun Zipursky: I got licensed as a mort-

CMP: What are your thoughts on the recent regulation changes?

SZ: We still don’t know how impactful

gage broker when I was 21, in 1991, so I celebrated my 25th year in the business last year. When I left school, I wasn’t quite sure what I wanted to do, so I took some time off from school and finding a career and worked in the restaurant business, waiting tables.

Needless to say, that wasn’t going to be my lifelong career.

My father was in the mortgage business a long time ago, and I decided to get licensed and see what would happen. Twenty-six years later, here I am.

this is going to be; we’re still digesting all of the rule changes and how they affect the lenders and how they price their mortgages today. Who thought that a client putting 20% down, even if they still fit within the ‘insurable’ guidelines, was going to be so unattractive to some lenders under the new rules? Those clients are now paying some of the highest rates in our market. In my 26 years, these are the most impactful changes our industry has faced.

The day the announcement came out, I skipped lunch and went out to play nine holes of golf by myself. My phone was blowing up like Vegas a slot machine with calls from other mortgage brokers asking, “What the heck is going on?”

I think the consumer still has a huge advantage going to a mortgage broker because, with all of these changes, it isn’t as simple as it was. Having choice and the ability to go to different lending institutions

CMP: How would you describe your time in the industry?

SZ: It’s been really good. When I first got into the business, I worked under Andy Ambro at Hamilton Mortgages, but I left there after three years and opened up City Wide with my partner at the time. That was in 1995 when I was 25.

I did a lot of A- business at that time, a lot of hard-to-place deals. I did what some of the B mortgage specialists are doing today, but to be honest, I didn’t like that side of the business. I didn’t like charging fees or the stress of dealing with clients in financial hardship.

I started focusing more on A business around 10 years into my career, and that’s where 95% of my business is today. I still tinker with second mortgage stuff, but my main focus is the A business.

32

is very important to the consumer. It’s going to be interesting to see how the different lending institutions react.

CMP: How have your clients been impacted?

SZ: The biggest thing for clients has been the stress test. I would say that the majority of my clients do not qualify for what they want to. For example, I had a client over the weekend who has been preapproved with me for a year and a half purchase a home for $428,000. They had previously been preapproved for close to $600,000. I think their maximum was $475,000, but they ended up buying below that because they implemented their own stress test.

When you qualify someone at 4.64% on a 25-year amortization, it takes 20% to 25% of their purchasing power away, based on the old qualification guidelines, when a client could have qualified at the discounted rate when taking a fixed rate. In my opinion, first-time buyers, those buying a rental property or someone refinancing their own

ZIPURSKY’S TIPS FOR OTHER BROKERS “You have to know this business inside and out, so continue to learn and get to know your lenders and their products. Study the business and stay involved. Watch other people because there is always someone doing slightly more volume than you.

Examine what they are doing, and find your own way of doing something similar. If someone is successful, it’s for a reason. Also, don’t restrict yourself to one type of business or client; I’m 26 years in this business, and even I’m figuring out a 2.0 version of myself in order to improve the way I do business.”

www.mortgagebrokernews.ca

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FAST FACTS: SHAUN ZIPURSKY

Located in West Broadway, Vancouver

Has been a mortgage broker for 26 years

Has funded 2,500 loans, worth more $700 million, throughout his career

Opened City Wide Mortgage Services in 1995

“I think the consumer still has a huge advantage going to a mortgage broker because, with all of these changes, it isn’t as simple as it was”

City Wide regularly features on the Top 10 franchises list in Canada

Was affiliated with Mortgage Centre Canada for close to 10 years home have been affected the most.

CMP: What’s the secret behind your success?

SZ: It’s all I’ve ever done and known. I’m very involved with clients, and I try to meet with as many as I possibly can. There is a lot of competition out there, and I want to

educate and wow my clients. There are a lot of reasons why a consumer might walk into a bank and get a mortgage, so I need to wow them from A to Z. I want them to walk out of our meeting knowing way more about mortgages than when they came in. I also believe in collaborating with other mortgage brokers in the business.

Now under the Dominion Lending Centres umbrella

www.mortgagebrokernews.ca

33

FEATURES

SPECIAL REPORT: BROKER SENTIMENT

BROKER SENTIMENT 2017 On the heels of a whirlwind year for the mortgage industry, CMP took the pulse of brokers to find out exactly how you feel about everything from new government regulations to the role of banks in the broker channel

VOLATILITY IS perhaps the best word to describe the broker industry at the moment. A great deal of brokers are unsure what the future holds, and several even admit to fearing for their future in the channel.

Last year was unquestionably a tough one for brokers, and that’s evident in this year’s Broker Sentiment Poll. Just like in years past, government rule changes continue to stick in the industry’s craw; this year, nearly 67% of brokers said stricter underwriting and poorer service from lenders is their biggest concern in 2017.

34

Brokers also continue to fear lenders will leave the broker channel – a very real concern following the exit of yet another big bank.

It’s not all negative news, though. Brokers commended their networks and associations for going to bat for the industry. Whether it’s speaking out against government intervention or marketing to consumers, it seems support has never been better.

We received a great deal of contributions from brokers this year.

Read on and see how your perspective and concerns align with those of your peers.

www.mortgagebrokernews.ca

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TOP CONCERNS A major concern among brokers is, once again, stricter guidelines and poorer service from lenders, furthering what has become a three-year trend. However, that concern, which has been exacerbated by perhaps the most intrusive round of mortgage rule changes to date, is growing.

In 2015, 55% of brokers cited strict guidelines and poor service as their main concern; that number grew to 62% last year. This year, nearly 67% of brokers listed it as their number-one concern – a new record.

The truly worrying part is that this wasn’t even the chief concern among brokers. That unlucky honour goes to the fear that fewer lenders are operating in the channel. Given National Bank’s recent exit, as well as the significant roadblocks placed in front of monoline lenders over the past year, that’s hardly surprising.

WHAT ARE YOUR BIGGEST CONCERNS OVER THE NEXT 12 MONTHS? Fewer lenders operating through the broker channel

66.94%

Stricter underwriting guidelines and poorer service from lenders

66.85%

Meeting the requirements of new regulations/licensing

34.68%

Economy/new home sales

33.87%

Interest rate volatility

27.42%

Consumer/household debt

27.42% 25.00%

Shrinking market share Industry reputation damaged by rogue brokers

22.58%

Reduced revenue due to lower commissions

21.77%

House prices falling My brokerage failing

17.74% 3.23%

www.mortgagebrokernews.ca

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23/03/2017 9:56:27 AM

FEATURES

SPECIAL REPORT: BROKER SENTIMENT A CHANGING INDUSTRY Last year, brokers imagined that the biggest change in the industry would be increased competition from the big banks and their aggressive mobiles sales teams. This year, however, the biggest change brokers expect is banks outright exiting the channel.

And that is a very real concern, considering the number of those large institutions that work with brokers has been cut to two.

Banks exiting the broker channel is a very real concern, considering that the number of those large institutions that work with brokers has been cut to two Another major change brokers foresee is new commission structures. That’s a worry that seems quite reasonable, especially in light of the increased pressure on monoline lenders to find new ways of funding their mortgages following the government’s recent crackdown.

WHAT DO YOU THINK WILL BE THE BIGGEST CHANGES IN THE INDUSTRY OVER THE NEXT 12 MONTHS?

Remaining big banks leaving the broker channel 49.19%

Big bank mobile sales teams competing with brokers 41.94%

New commission structures 30.65%

A decline in home sales 28.23%

Lenders moving toward efficiency bonuses as opposed to volume bonuses 21.77%

A steep decline in overall broker numbers 20.97%

Brokers as multi-product sellers 19.35%

Brokers charging upfront fees 9.68%

0%

36

10%

20%

30%

40%

50%

www.mortgagebrokernews.ca

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EVOLVING REGULATIONS HOW DO YOU FEEL THE GOVERNMENT IS HANDLING THE ISSUE OF MORTGAGE REGULATIONS? 10 = EXCELLENTLY

We asked brokers to rate the government’s recent handling of mortgage regulations, and the results are much as you’d expect.

The majority (33.9%) gave the government the lowest possible score of 1 out of 10. What’s more, a whopping 83.9% of brokers rated Ottawa’s handling of mortgage rule changes below a 5, effectively giving the government a failing grade.

As for how the rule changes have impacted business, 87.7% of the brokers we surveyed said they have had a negative impact. That’s up from 62% last year and 80% in 2015.

HOW HAVE LAST YEAR’S MORTGAGE RULE CHANGES AFFECTED YOUR BUSINESS?

8 7 6

0.8% 3.2%

5

8%

4

13.7%

3

20.2%

2

16.1%

1

33.9%

0% (10) 0% (9)

4%

Positively (12.3%)

Negatively

1 = POORLY

(87.7%)

www.mortgagebrokernews.ca

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23/03/2017 9:57:39 AM

FEATURES

SPECIAL REPORT: BROKER SENTIMENT STAFFING WOES

BANKS VERSUS NON-BANKS Banks have certainly fallen out of favour among mortgage brokers. The largest chunk of brokers surveyed – 40.3% – said they expect to place a quarter or fewer of their mortgages with big banks, likely due to diminishing options.

More than 60% of brokers, meanwhile, said they would be putting over half of their clients with a non-bank lender.

WHAT PERCENTAGE OF YOUR LOANS WILL YOU PUT THROUGH A BANK?

76–100% 0.8%

0–25%

51–75% 17.7%

It appears many brokers will be implementing a hiring freeze this year – bad news for aspiring industry players. More than three-quarters of respondents said they don’t plan on hiring any new staff over the next 12 months. And while a nearly identical number said they also don’t plan on reducing staff, 6.7% do expect to cut jobs, and an additional 15.4% will reduce staff if market conditions worsen.

WILL YOU BE HIRING NEW STAFF OVER THE NEXT 12 MONTHS?

40.3%

41.1%

26–50%

WHAT PERCENTAGE OF YOUR LOANS WILL YOU PUT THROUGH A NON-BANK?

0–25%

76–100%

4% 29% 35.5%

26–50%

38

22.6%

Yes

77.4%

No

IF NO, WILL YOU BE REDUCING STAFF?

6.7%

Yes

77.9%

No

15.4%

31.5%

51–75%

Only if market conditions worsen

www.mortgagebrokernews.ca

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LOOKING FOR A NEW HOME? IF AN INDEPENDENT, WOULD YOU CONSIDER JOINING A NATIONAL NETWORK OR BROKERAGE IN THE NEXT 12 MONTHS?

YES

IF PART OF A NATIONAL NETWORK OR BROKERAGE, WOULD YOU CONSIDER BECOMING INDEPENDENT DURING THE NEXT 12 MONTHS?

YES

YES

6.98% 8.1%

16.1%

33.1%

NO

NO

NO

ON A SCALE OF 1 TO 10, HOW WOULD YOU RATE YOUR BROKERAGE? 35% 31.5%

30%

25%

25% 20% 15%

3

4

8%

2

3.2%

1 1 = POOR

3.2%

0.8%

0%

0.8%

5%

2.4%

10%

0%

Brokers who currently belong to a brokerage are relatively happy with their current situation: 81.5% of those brokers rated their current brokerage at least an 8 out of 10. Still, that’s down fairly significantly from last year, when 91.9% rated their brokerage as good or excellent.

As for brokers’ willingness to jump ship, 8.1% said they may leave the industry entirely within the next year.

That’s up from 7% last year and 0% in 2015, pointing to a worrying trend.

Of those brokers who are currently independent, 33.1% admitted they would consider joining a major network in the next 12 months – that’s down from the 40% who considered it last year.

Finally, those who currently belong to a network plan on staying put for the most part – 83.9% of those brokers said they have no plans to go independent this year.

83.9%

66.9%

91.9%

25%

DO YOU THINK YOU MIGHT LEAVE THE BROKER INDUSTRY IN THE NEXT 12 MONTHS?

5

6

7

8

9

10

10 = EXCELLENT

www.mortgagebrokernews.ca

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23/03/2017 9:58:19 AM

FEATURES

SPECIAL REPORT: BROKER SENTIMENT CHANNEL PROMOTION If Canadians are unaware of the value mortgage brokers provide, it will be impossible for the channel to grow its market share. Thankfully, it seems brokers have started to feel more positive about the efforts put forth to grow the channel’s influence – at least when it comes to networks and associations.

More than 44% of brokers surveyed said they think industry associations – including Mortgage Professionals Canada and the

Networks remain the best when it comes to promotion: 53% of brokers said networks are either effective or very effective in their promotional efforts Canadian Mortgage Brokers Association – are doing an effective or very effective job promoting the channel. The number of those who view association promotion as ineffective also fell, from 20% in 2016 to almost 13% this year.

Networks remain the best when it comes to promotion, though: 53% of brokers said networks are either effective or very effective in their promotional efforts. Further, a mere 5.7% said they are ineffective.

One segment of the industry that could be doing a better job of promotion, according to brokers, is lenders. Almost 47% of those polled said lenders are ineffective at promoting the industry; that’s up slightly from last year’s mark of 45%.

40

WHO IS MOST EFFECTIVE AT PROMOTING THE BROKER CHANNEL? LENDERS

26.6%

13.7%

Somewhat effective

Effective

8.9%

4%

46.8%

Ineffective

Very effective

Don’t know

ASSOCIATIONS

12.9%

31.5%

12.9%

2.4%

Effective

Very effective

Don’t know

40.3%

Ineffective

Somewhat effective

NETWORKS

5.7%

25.8%

17.7%

15.3%

Very effective

Don’t know

35.5%

Ineffective Somewhat effective

Effective

www.mortgagebrokernews.ca

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FEATURES

SPECIAL REPORT: BROKER SENTIMENT MARKETING STRATEGIES WHICH MARKETING STRATEGIES WILL BE MOST IMPORTANT TO GROWING YOUR BUSINESS IN 2017?

Email newsletters Unimportant 35%

16%

17%

18%

14%

Social networking

When it comes to reaching potential clients, brokers rely on a mix of old-school and new marketing strategies.

For the second year in a row, brokers told us that the Yellow Pages are an effective marketing tool – nearly 37% of those polled said the good old-fashioned phone book is the best way to reach clients. Still, that’s down from last year’s high-water mark of 51%.

So where else are brokers turning? Rate sites have become quite popular: 34% said they are the best form of marketing.

Another popular method is TV and radio ads (32% rated them ‘very important’) and print ads (29%).

Ads on broadcast (TV/radio)

Unimportant

Unimportant

37%

16%

13%

20%

37%

15%

Ads in print

7%

11%

18%

Seminars

27%

21%

12%

Very important

Unimportant

29%

22%

11%

Direct mail

Important 18%

20%

22%

31%

23%

18%

11%

18%

Yellow Pages

20%

Somewhat unimportant

Somewhat important

22%

22%

21%

15%

Rate sites Very important

Very important 37%

3% 5%

8%

46%

30%

Blogging

8%

14%

14%

34%

Other Somewhat important

42

18%

Community events/trade shows

Unimportant

18%

32%

20%

24%

Very important 23%

15%

32%

5%

11%

14%

38%

www.mortgagebrokernews.ca

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WHAT’S DRIVING YOUR BUSINESS? It seemed impossible, but the percentage of brokers who rely predominantly on residential deals is growing. This year, brokers said 99.2% of their business is residential, up from last year’s total of 98%.

Referrals are also growing in importance: Brokers reported that 70% of their business comes from current clients, up from 60% last year. The number of clients interested in HELOCs also appears to be on the rise. Brokers got 45.2% of their business from HELOCs, up from the 33% reported in 2016.

And brokers largely continue to shun rate buy-downs. More than three-quarters of survey participants said that less than 25% of their files are bought down.

WHAT PERCENTAGE OF YOUR BUSINESS WILL COME FROM REPEAT OR REFERRAL CLIENTS?

WHAT PERCENTAGE OF YOUR DEALS WILL BE BOUGHT DOWN? 76.2%

14.8%

0–25%

26–50%

4.9%

4.1%

51–75%

76–100%

WHAT PERCENTAGE OF YOUR BUSINESS WILL COME FROM NEW CLIENTS?

40.3% 34.7%

54%

19.4% 21.8%

20.2% 5.7%

4%

0–25%

26–50%

51–75%

76–100%

0–25%

26–50%

51–75%

76–100%

WHERE WILL YOUR BUSINESS COME FROM? Residential

99.2% Commercial

29%

Referral (database)

70.2%

Reverse mortgages

15.3%

Referral (partners)

HELOCs

66.1%

45.16%

Insurance

Equipment leasing

11.3%

2.4%

www.mortgagebrokernews.ca

34-45_Broker Sentiment-SUBBED.indd 43

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23/03/2017 10:00:35 AM

FEATURES

SPECIAL REPORT: BROKER SENTIMENT OTHER SERVICES

BROKERS TALK BACK

The private side of the business seems to be growing as a result of the latest mortgage rule changes. Almost 64% of brokers said they will take on or build their private mortgage offerings this year, and an additional 38% said they planned to increase their own private lending offerings.

Brokers shared their views on how the industry can increase market share and make Canadians more aware of the services and value they offer.

WHICH SERVICES WILL BE YOU BE TAKING ON OR LOOKING TO BUILD OVER THE NEXT 12 MONTHS?

“Put more into social media to bring the benefits of working with a broker to the forefront – TV doesn’t hit enough of a market share.”

63.7%

Private mortgages 37.9%

Private lending

“The government needs to change the rules to create a more balanced market. Banks and non-bank lenders should all be regulated by the same

36.3%

Mortgage insurance

32.3%

HELOCs Financial planning

28.2%

Real estate

26.6%

Commercial

25%

Construction

MARKET SHARE WORRIES

23.4%

Home, auto or life insurance

16.9%

Equipment leasing

7.3%

Development

7.3%

WORRIED

64.2%

SOCIAL MEDIA When it comes to brokers’ professional social media usage, LinkedIn has fallen in favour: 98% of brokers relied on it last year, but only 84% did this year. Brokers’ allegiance to Facebook, meanwhile, has risen slightly, from 86% to almost 89%.

35.8%

NOT WORRIED LinkedIn

Facebook

88.7% Google+

26.6% 44

Twitter

83.9% Blogging

23.4%

48.4% Pinterest

10.5%

Foursquare

2.4%

Shrinking market share is a growing concern among brokers. More than 64% of respondents admitted to being worried about dwindling market share, compared to 53% in 2016. And things have changed drastically since 2015, when a majority said they weren’t worried about shrinking market share at all.

www.mortgagebrokernews.ca

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governing bodies and be subject to the same rules and regulations.”

“Start influencing lenders to stop the unfair practice of minimum volume requirements.”

“Continue lobbying the government in regard to rule changes and to ensure competitive balance for consumers. Also, offer more education on how to properly educate clients. Brokers now have an even bigger role in brokering, and that is educating borrowers on what is out there.”

“Continue to work as a group to highlight the unintended consequences of the constant government involvement in our industry. Also continue to broadcast the experience and knowledge that a licensed, full-time mortgage professional can bring to the table for consumers.”

banks – they should all have to be licensed and have the same rules to follow as we do.”

“The associations need to start working together. If CMBA doesn’t want to play in the same sandbox as the others, they should roll up and go away.”

“Increase the education requirements of agents/brokers to increase the barrier to entry. This is a competitive business, and it’s shaped by many different individuals.

As a whole, we cannot foster collective growth without smart individuals.”

“Level the playing ground with the big

“Monoline lenders need support to gain back their competitiveness. Create public awareness regarding the brokerage channel.”

www.mortgagebrokernews.ca

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23/03/2017 10:00:56 AM

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PEOPLE

CAREER PATH

MAKING IT HAPPEN

For James Loewen, life is all about looking for the better answer and rising to the next challenge Loewen’s father, a mason in small-town Muskoka, was his greatest early influencer – not only did he bring his son along GETS A HANDS- to client meetings to observe his process, but he also instilled a love of finance by encouraging Loewen to spend his birthday ON FINANCIAL money on mutual funds EDUCATION “Each Sunday we would mark on a chart the movement up or down. It took a lot of work to earn $5, and then I’d see that money earned $117 doing nothing. It made me appreciate the value of appreciation”

1980s

2001

MAKES HIS FIRST FORAY INTO BUSINESS

Even as a university student, Loewen’s entrepreneurial streak shone through. He worked with College Pro Painting during summer vacations for three years, but when Loewen was offered his own franchise, he responded by launching his own, higher-quality product: University Painting “I looked at their model and realized I could undercut them and pay my painters more – and still have more profit”

2004

DISCOVERS MORTGAGES Loewen’s first professional job, as a financial planner with RBC, inadvertently provided his entry into the world of mortgages “The training was amazing; I got to understand the role of the mobile mortgage manager. The woman who hired me said I wouldn’t last more than two years, given my entrepreneurial spirit”

2006

BECOMES A BROKER When Loewen compared the amount that RBC was making on each mortgage he arranged with how much he was being paid, he was prompted to consider a career change “I met with a mobile specialist whose wife was a mortgage broker. He said, ‘Don’t become a mobile; take the harder road and become a broker’”

2012

REACHES CLIENTS IN THEIR POCKETS

2012

WINS INDUSTRY RECOGNITION In 2012, the Loewen Group first snagged a spot on CMP’s Top 75 Brokers list, then followed that distinction with a Canadian Mortgage Award for Mortgage Broker of the Year in 2015 and Mortgage Brokerage of the Year in 2016 “It’s been an honour to have won those awards. We also have 324 Google reviews and a perfect rating”

Always striving to stay ahead of the game, Loewen looked into creating an app to improve the client experience. Finding the costs of building one from scratch to be prohibitive, he co-branded with an existing app for a monthly fee

“You’ve got to keep moving or you’re going to get hit; tech is continually changing”

2016

GIVES BACK Last year, Loewen became regional chair for the charity 100 Brokers Who Care, a group of mortgage professionals who have teamed up to raise funds for various charitable causes. The project is a work in progress, but the group is almost two-thirds of the way to its goal of recruiting 100 brokers from four regions around the country

www.mortgagebrokernews.ca

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PEOPLE

OTHER LIFE

1,500

Estimated hours Patching spent organizing the Tweed Ride

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

5

Flat tires experienced

by Tweed Riders over the three years

20

Number of volunteer staff required to successfully run the ride

RIDING FOR A CAUSE

Charity begins at home, but for Vancouver mortgage broker Daniel Patching, sometimes it continues on the move DANIEL PATCHING credits his parents for instilling in him a desire to extend a helping hand at an early age, via such hands-on experiences as working at a food bank in downtown Vancouver. Even as an adult, the City Wide Mortgage broker always looks for ways to give back. Perhaps the most eye-catching of his forays into philanthropy has been the Vancouver Tweed Ride, a costumed fundraising ride through the city’s streets that became his main charitable focus in 2012.

Inspired by London’s Tweed Run bike ride, the Vancouver Tweed Ride involves cyclists dressed in their sartorial finest riding to various city landmarks over a 14km course with a stop midway for a boxed lunch and entertainment. Their $50 entry fee helps pay for the live music, carnival games, prize giveaways and other merriment; the remainder, of course, is marked for a worthy charity.

“When I first found out about the London ride, I thought it would be an

awesome event to throw and a great fit for Vancouver with our natural beauty,” Patching says, “but with any event, I think about how to raise money for a good cause.”

Thanks to a strong social media profile and considerable world of mouth, the event grew organically: The almost 80 riders who attended the first year rose to 130 the next year, and to just under 200 in the ride’s third and final year. More importantly, the amount of money raised for charity has totalled more than $30,000.

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Making Mortgaging Great Again For the past 30 years, we’ve navigated a changing economic environment, mortgage industry and the needs of homeowners. Together, we continue to help thousands of Canadians build a bright future.

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