MORTGAGEBROKERNEWS.CA ISSUE 13.06 | $12.95
ALTERNATIVE LENDING Industry insiders reveal what brokers can do to solidify their presence in this increasingly important space
Mike Forshee Home Trust Company
A GENERATION SHUT OUT OF THE MARKET? Why the B-20 stress test is hitting millennial buyers particularly hard
Lisa Abbatangelo Community Trust
Joe Flor Equitable Bank
A LESSON IN PERSEVERANCE Veteran lender Nick Kyprianou on what he learned from the ’90s real estate crash
John Bargis Mortgage Edge
FIXED RATES CONTINUE TO CLIMB Do the banks’ recent moves spell the death of the fixed-rate mortgage?
14/06/2018 1:45:46 AM
Lending Expert Proudly serving the mortgage market for over 30 years
Business for Self New to Canada Rental Properties Small Commercial Home Renovations
Equity Takeout Damaged Credit Debt Consolidation First-time Homebuyers Non-traditional Income
To learn more, talk to your Business Development Manager or visit hometrust.ca
01-03 IFC_Contents-SUBBED.indd 1
14/06/2018 1:46:12 AM
ALTERNATIVE LENDING SPECIAL REPORT
As the B-20 stress test pushes more and more clients out of the prime market, connections to alternative lenders will be key for brokers. Four players in the space offer advice on how to cultivate these relationships
UNLOCKING VALUE OFTEN REQUIRES SPECIAL KEYS. Romspen Investment Corporation is a non-bank mortgage lender specializing in commercial real estate across Canada and the United States. With over $2.2 billion under administration, we offer customized mortgage solutions for term, bridge and construction financing from $5M to $100M. Blake Cassidy or Pierre Leonard | 800 494 0389 | www.romspen.com
01-03 IFC_Contents-SUBBED.indd 1
APRIL 4, 2018_ 1:25PM
License # 10172
LIVE: 7.5” x 2.875”
8.25” x 3.625” www.mortgagebrokernews.ca 1 x 4.125” TRIM: BLEED: 8.75”
AD NUMBER: ROM CMP 18 02
AD / JOB TITLE: SPECIAL KEYS
PUBLICATION / RUN DATE: CMP / APR-MAY-JUN 2018 ISSUES
CREATIVE TEAM: BENSIMON/PARKER
B E N S I M O N PA R T N E R S 4 4 6 S PA D I N A R O A D , S U I T E 2 0 7, T O R O N T O , O N TA R I O , M 5 P 3 M 2 , C A N A D A
T E L . 4 1 6 5 9 7 9 7 0 0 FA X . 4 1 6 5 9 7 9 7 0 7
14/06/2018 1:46:18 AM
CONNECT WITH US Got a story or suggestion, or just want to find out some more information?
twitter.com/CMPmagazine plus.google.com/+MortgagebrokernewsCa facebook.com/MortgageProfessionalCA
UPFRONT 04 Editorial
A new network giant emerges
A BRIDGE TO NEW BUSINESS
Trez Capital’s Greg Vorwaller highlights the opportunities available to brokers in bridge lending
Partnerships with Realtors have myriad benefits for brokers in the commercial sector – so why aren’t more brokers pursuing them? PEOPLE
RiverRock MIC founder Nick Kyprianou discusses how living through Ontario’s early ’90s real estate crash laid a solid foundation for his lending career
08 Head to head
Brokers weigh in on FSCO’s Fortress boondoggle
10 News analysis
The banks’ recent interest-rate moves have made the question of fixed versus variable a no-brainer
12 Technology update
New developments suggest the industry is starting to embrace artificial intelligence
14 Broker update
REACHING OUT TO COMMERCIAL REALTORS
The new stress test has taken a serious bite out of millennials’ purchasing power
BROKER INSIGHT David Hetti reveals how he’s set himself apart from the pack – and offers advice on how other brokers can do the same
Brokers worry that new regulations are having an unintended effect on housing mobility
You can’t put a price on integrity – particularly in today’s challenging lending environment
PEOPLE 38 Career path
For Reza Ghazi, specialization has paved the way to success
40 Other life
Cool off with Vancouver broker and snowmobiler Steve Nipius
A CULTURE OF INNOVATION
Three ways to make sure innovation is more than just a buzzword
MORTGAGEBROKERNEWS.CA CHECK IT OUT ONLINE
01-03 IFC_Contents-SUBBED.indd 2
14/06/2018 1:46:25 AM
01-03 IFC_Contents-SUBBED.indd 3
14/06/2018 1:46:24 AM
How high can M3 climb?
fter its acquisition of Verico last year, Montreal-based M3 Mortgage Group isn’t resting on its laurels. As a matter of fact, the largest network in the country is about to get a whole lot bigger. In a long chat with CMP, M3’s chairman and CEO, Luc Bernard, and its executive vice-president of strategy and innovation, Dino Di Pancrazio, revealed a growth plan that, while lofty, seems well within the realm of possibility. The network intends to nearly double its annual loan volume from $44 billion to $80 billion in just three years, half of which will come from acquisitions. According to both Bernard and Di Pancrazio, while B-20 hasn’t been ideal for most players in the industry, the silver lining for M3 is that it’s rendered independents increasingly reliant upon the support and resources that only a massive organization can provide. It may take up two years for M3 to finish the consolidation phase of its plan, but it will be swiftly followed by organic growth, which Bernard says is essential for brokers.
All of this growth wouldn’t be possible without M3’s acquisition of Verico, which has proven to be the linchpin of its expansion strategy The behemoth network also recently launched a highly successful tool in Quebec that prequalifies users in fewer than five minutes, and it appears to be a taste of what’s to come. M3 has invested a great deal in technology for both brokers and customers, with the goal of propelling the network to heights never before seen in the Canadian mortgage industry. Additionally, M3 expects to add white-label credit cards and both creditor and home insurance to its suite of offerings. All of this growth, however, wouldn’t be possible without M3’s acquisition of Verico, which has proven to be the linchpin of its expansion strategy. Four years ago, M3 funded close to $9 billion annually; just prior to purchasing Verico, it funded $25 billion. After the September 2017 acquisition, volume climbed to $44 billion, and that trajectory gives Bernard and Di Pancrazio confidence that the network will be able to realize its goals. With housing markets mostly lukewarm from coast to coast, being a mega network has allowed M3 to absorb the impact of slower sales cycles. However, as Bernard pointed out, while the GTA’s market is unusually cool, Quebec’s is enjoying a commanding ascent – one that mirrors M3’s own.
www.mortgagebrokernews.ca ISSUE 13.06 EDITORIAL Writers Neil Sharma Joe Rosengarten Libby MacDonald Ephraim Vecina Heather Turner Hannah Go Copy Editor Clare Alexander
CONTRIBUTORS Mike Bricknell Paul McGill Amantha Imber
ART & PRODUCTION Designers Loiza Caguiat Marla Morelos Joenel Salvador Production Manager Alicia Chin Advertising Coordinator Ella Dayandante
SALES & MARKETING Associate Publisher Trevor Biggs Vice President, Sales John Mackenzie National Account Manager Trevor Lambert Marketing and Communications Melissa Christopoulos Project Coordinator Jessica Duce
CORPORATE President & CEO Tim Duce Office/Traffic Manager Marni Parker Events and Conference Manager Chris Davis Chief Information Officer Colin Chan Human Resources Manager Julia Bookallil Global CEO Mike Shipley Global COO George Walmsley
tel: 416 644 8740 • fax: 416 203 8940 firstname.lastname@example.org
ADVERTISING INQUIRIES email@example.com
KMI Media 312 Adelaide Street West, Suite 800 Toronto, Ontario M5V 1R2 tel: +1 416 644 8740 www.keymedia.com Offices in Toronto, Sydney, Denver, Auckland, London, Manila, Singapore, Bengaluru
Canadian Mortgage Professional is part of an international family of B2B publications and websites for the real estate and mortgage industries MORTGAGE PROFESSIONAL AUSTRALIA
The team at Canadian Mortgage Professional
firstname.lastname@example.org T +61 2 8437 4787
MORTGAGE PROFESSIONAL AMERICA email@example.com T +1 720 316 7378
04-05_Editor's Letter-SUBBED.indd 4
Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as the magazine can accept no responsibility for loss
14/06/2018 4:02:41 AM
WHAT DOES A CENTUM FRANCHISE LOOK LIKE? • Robust CRM system
• A variety of auxiliary products
• CENTUM’s 25 policies gets
• Strong relations with Head Office
you a trip1
• Engaging marketing
• Real time deal analytics
• Ergonomic consumer facing websites
• Online & 24/7 CENTUM University
• A network of driven entrepreneurs
• CENTUM Store
• A place to grow
The only thing it is missing, is you! Let’s connect! Opportunity@centum.ca | centumcanada.ca/franchises ¹This is not the only criteria to qualify for the trip. For full details please reach out to firstname.lastname@example.org ®/™ Trademarks owned by Centum Financial Group Inc. © 2018 Centum Financial Group Inc. The intent of this communication is for informational purposes only, and is not intended to be a solicitation to anyone under contract with another mortgage brokerage operation.
04-05_Editor's Letter-SUBBED.indd 5
14/06/2018 1:46:54 AM
B-20 bites back
WHAT CAN MILLENNIALS AFFORD? Royal LePage found that homes priced between $325,000 and $425,000 are most attainable for millennials. But what buyers can get in that price range varies considerably across the country. In Vancouver, for example, it’s only enough for a 788-squarefoot apartment, while Halifax buyers can net a three-bedroom, three-bath home at the same price point.
The recently introduced stress test has caused millennials’ purchasing power – and their aspirations – to plummet SINCE OSFI introduced its new stress test in January, would-be homebuyers have been forced to square up to a new world, one in which their aspirations are constrained by the necessity to qualify for a mortgage at a rate higher than the one they’re signing up for. Through no fault of their own, prospective homeowners can now afford less than they could a year ago.
In its most recent market survey, Royal LePage found that a peak millennial (those born between 1987 and 1993) living in Vancouver can expect to purchase 12% less living space, on average, compared to a year ago. Meanwhile, millennials in Toronto are being forced further from downtown as prices in the core increase to a level that’s beyond the typical budget for this cohort.
TYPE OF PROPERTY AVAILABLE BETWEEN $325,000 AND $425,000
Median salary of millennials born between 1987 and 1993
Consumers aged 18–34 who say higher interest rates are having a negative impact on spending
Decrease in the average millennial homebuyer’s purchasing power
Current aggregate home value in Canada
Source: From a Studio Apartment to a Large Detached Home: What the Average Peak Millennial Can Afford Across Canada, Royal LePage, April 2018; Bloomberg News, May 2018
REDUCED BUYING POWER
SLOW TO SAVE
Since the stress test was implemented, millennials have seen their purchasing power reduced by more than $40,000.
Coming up with a down payment could be a challenge for many millennials, who typically don’t have much money set aside in the bank. According to a recent CIBC poll, one in five millennials has less than $5,000 in savings, while a similar proportion has no savings at all.
MAXIMUM PURCHASE PRICE BASED ON MEDIAN ANNUAL SALARY
AMOUNT OF SAVINGS FOR CANADIANS AGED 18–37
Qualifying interest rate
Qualifying interest rate
27% Before stress test
After stress test
Source: From a Studio Apartment to a Large Detached Home: What the Average Peak Millennial Can Afford Across Canada, Royal LePage, April 2018
$100,000+ Don’t know No savings Source: Millennials & Homeownership Poll, CIBC, April 2018
14/06/2018 1:47:13 AM
1,736 Source: From a Studio Apartment to a Large Detached Home: What the Average Peak Millennial Can Afford Across Canada, Royal LePage, April 2018
WHAT DOWN PAYMENT? Even among millennials who have plans to buy a home in the next five years, saving for a down payment remains a pipe dream. Nearly half of the millennials surveyed by CIBC said they have yet to start socking away money for a down payment. DOWN PAYMENT SAVINGS AMONG PROSPECTIVE HOMEOWNERS AGED 18–37
I haven’t started to save yet
I’ve saved about a quarter
I’ve saved about half I’ve saved about three-quarters
AVERAGE MORTGAGE AMOUNT SHRINKS Thanks to the stress test, the median millennial income now allows for a mortgage of just over $160,000 – a drop of more than $30,000 compared to a year before. MAXIMUM MORTGAGE BASED ON MEDIAN ANNUAL SALARY Mortgage amount
20% down payment
I’ve already saved the full amount Before stress test Source: Millennials & Homeownership Poll, CIBC, April 2018
After stress test
Source: From a Studio Apartment to a Large Detached Home: What the Average Peak Millennial Can Afford Across Canada, Royal LePage, April 2018
14/06/2018 1:47:16 AM
HEAD TO HEAD
Does the Fortress scandal prove that FSCO is useless?
The regulator’s delayed reaction in the Fortress Real Developments case has provoked widespread outcry in the industry
Chief operations officer Matrix Mortgage Global “Fortress Capital has lost more than $400 million in syndicated mortgage investments over the last seven years while FSCO turned a blind eye. The CRA, RCMP, Ontario Finance Ministry, IMF, affected investors and brokers launched 17 investigations against Fortress Capital. In each instance, Anatol Monid, FSCO’s licensing and conduct chief, made the unilateral decision to call off the investigation. Monid’s job is to protect consumers, but he ignored well documented claims. FSCO cannot be effective as a regulatory body if its leadership refuses to act.”
Drew Charles Donaldson
Mortgage broker and managing partner SafeBridge Financial Group “I cannot and will not say that FSCO is useless based on this one isolated incident. They have likely learned a lot from this unfortunate situation, and I have heard they are taking different steps to ensure people are protected moving forward. For those criticizing FSCO, I recommend you provide them with some valuable feedback and ideas instead of the constant complaining. Our firm has always had a great relationship with FSCO, and as the industry innovates and evolves, so too will our regulators.”
Mortgage broker Real Mortgage Associates “It’s abundantly clear that FSCO lacks the skills, knowledge and training to regulate the syndicated mortgage market. The changes to syndicated mortgage transactions that take effect on July 1 are a step in the right direction, but is it too little, too late? Brokers promoting syndicated mortgages will be required to comply with expanded requirements, but there still needs to be regular and consistent monitoring to ensure the new requirements are being met. FSCO has clearly shown that they are not the vehicle capable of doing that.”
FSCO FUMBLES FORTRESS FLAP It was just this February that the Financial Services Commission of Ontario punished four mortgage brokers and four brokerages involved with the Fortress Real Developments syndicated mortgage scandal, revoking licences and levying a total of $1.1 million in penalties. Yet a report published by Reuters late last year revealed that FSCO’s knowledge of Fortress’ activities dates as far back as 2011. Between then and 2015, the report said, “a troubling pattern” emerged, in which investigators from the Ontario watchdog disregarded numerous recommendations from compliance officers to constrain Fortress’ marketing and sales efforts. The regulator defended its position to Reuters, telling the news agency that “FSCO requires a high standard of proof and evidence to take enforcement action.”
14/06/2018 1:47:33 AM
CONTACT YOUR RBM TODAY
14/06/2018 1:47:36 AM
Variable trumps fixed As the spread between fixed and variable rates grows, the days when choosing a fixed-rate mortgage without lingering doubt appear to be in the rearview mirror
WHILE FIXED-RATE mortgages might help many a borrower sleep at night, it appears that peace of mind is all they are proffering right now. Moreover, on the heels of A lenders increasing their five-year fixed mortgage rates almost across the board, it also appears something else is amiss. According to one mortgage broker CMP spoke to, the real reason chartered banks have increased fixed rates is because they’re trying to shackle borrowers. “Banks are losing some of their customers at the renewal stage to mortgage specialty companies, and this makes it harder to switch lenders at renewal,” says Elan Weintraub, a mortgage broker and director of Mortgage Outlet. “The other thing it does is increase the profitability of banks because most people don’t pay posted rates, and if you break your fixed-rate mortgage
discounts on their variable-rate mortgages. All the better for brokers like Weintraub, who is partial to variable-rate mortgages, believing they are actually less risky than the alternative. “It’s kind of a paradox,” he says. “People think fixed-rate mortgages are less risky, but the reality is a significant number of people break their mortgage early, and the penalty for a variable rate is substantially lower than it is for a fixed-rate mortgage. When you factor in that risk and the discounts, statistics show it’s safer to take a variable rate.” Weintraub isn’t alone in that belief. Clinton Wilkins, a Halifax-based broker with Centum Home Lenders, says the recent discounts merely elucidate the reasons why variable rates have always been preferable to fixed, especially on insured mortgages. Throughout Wilkins’ 12-year career as a broker, he has
“When you factor in that [penalty] risk and the discounts, statistics show it’s safer to take a variable rate” Elan Weintraub, Mortgage Outlet during the term, the penalty is based on the discount you receive, so they’re essentially increasing that discount, which increases the penalty.” Not long after the chartered banks announced fixed-rate hikes, they rolled out
unequivocally promoted the advantages of variable-rate mortgages. “You can get a variable-rate product at prime minus 1.05%, so you get a variable-rate mortgage at 2.4%,” Wilkins said following BMO’s announcement of its variable-rate
discount. “Why would you go with a fixed-rate product in the mid-threes? The spread is getting bigger between fixed and variable, and it’s going to drive more consumers to the variable-rate mortgage product.” According to an analysis by Ratehub.ca, fixed-rate mortgages have steadily risen and recently hit a four-year high. The spread between fixed and variable rates reached 104 basis points in early May, marking the first time since December 2011 that the gap was more than a full percentage point. “It means that the increased risk of a variable rate should be seriously considered because the consumer can save so much money, at least in the early stages of the mortgage,” says Ratehub.ca co-founder James Laird, “and if the prime rate stays low in the
10-11_News Analysis-SUBBED.indd 10
14/06/2018 1:49:02 AM
THE BIG SIX: FIXED VERSUS VARIABLE BMO 5.19% 3.6%
TD BANK 5.59% 3.6%
CIBC 5.19% 3.45%
RBC 3.74% 3.45%
NATIONAL BANK 5.34% 3.45%
SCOTIABANK 5.34% 3.65%
Current rates as of June 8, 2018 Five-year fixed later part, the savings will continue for the whole duration of the mortgage. The Bank of Canada would have to increase prime four
Provided that Canadian economic news remains positive, as it largely has, at least one additional rate increase is almost certain. But
“The Bank of Canada would have to increase prime four times for today’s variable rates to be equal to fixed rates” James Laird, Ratehub.ca times for today’s variable rates to be equal to today’s fixed rates. With most experts predicting a maximum of two additional prime rate increases for the remainder of 2018, it is likely that variable rates will be the better choice for Canadians this year.”
the fact that the real estate sector has been in the doldrums since the beginning of the year – largely due to the B-20 mortgage stress test and rising interest rates – could potentially complicate the Bank of Canada’s decision. However, Chris Allard, an Ottawa-based
broker with DLC Smart Debt, points out that although the housing market continues to stagnate, it’s far from the sole determinant when the Bank of Canada mulls an interest rate hike. “At the end of the day, when they raise the prime rate, it’s about more than what’s happening in the real estate market,” Allard says. “Most of it has to do with how the global markets are doing and how it’s going to impact foreign companies buying Canadian products.” “The Bank of Canada is going to weigh all these factors in 2018,” Laird adds. “Where I personally stand is that the economic news in Canada is strong enough to warrant one more prime increase, possibly two, but I wouldn’t expect more than that this year.”
10-11_News Analysis-SUBBED.indd 11
14/06/2018 1:49:05 AM
TECHNOLOGY UPDATE NEWS BRIEFS Financial platform and fintech firm join forces
Collaborative financial platform Onist and fintech firm Quovo have announced a partnership meant to help Onist’s Canadian clients get better access to reliable financial data. The alliance will allow Canadians to view disparate financial data in an integrated dashboard that provides a comprehensive overview of their cash flow and net worth. “We are thrilled to partner with Quovo and feel strongly that we can help bring Canadians the same financial insight Americans have had for years,” said Onist CEO Brad Kotansky.
Mogo’s mortgage apps reach critical milestone
Mogo Finance Technology announced in late April that its suite of mortgagerelated apps has hit the 600,000-user mark. CEO Dave Feller attributed the sustained growth to the increasing interest in homeownership among Canada’s young professionals and families. “As recent RBC survey results showcased, millennials are the biggest group of potential homebuyers over next few years,” Feller said. “They not only want a good rate, but also demand a digital experience and, like other consumers, prefer the convenience of one app to manage their financial life, including their mortgage.”
Online platform closes $50 million worth of transactions
As of May, real estate platform Casalova has closed more than $50 million in sale and rental transactions nationwide. Co-founder and CEO Ray Jaff attributes the platform’s popularity to its ability to facilitate on-demand communication between would-be buyers and agents in
less than half a minute, far outstripping the industry average of half a day. “The real estate market in Canada is a $14 billion annual industry, yet it takes 15 hours on average for an agent to respond to client inquiries,” Jaff said. “We live in an on-demand world ... and people expect a response the moment they’re looking for it.”
Goldman Sachs-funded fintech enters Canada
San Francisco-based fintech startup Plaid – which received $44 million in funding from Goldman Sachs Investment Partners – has announced the first phase of its international expansion into Canada. Plaid connects consumers’ bank accounts to apps like Venmo (for free payments), Robinhood (no-commission stock trading), robo-advisors Betterment and Wealthfront, and Coinbase (a Bitcoin and cryptocurrency exchange). The company’s technology is compatible with both US and Canadian currencies, a feature intended to both support current clients and attract new Canadian fintech companies. Toronto-based loyalty rewards app Drop is among Plaid’s first Canadian clients.
DLC brokerage creates awardwinning mobile app
At the 12th annual Canadian Mortgage Awards in May, the Collin Bruce Mortgage Team took home the award for Best Use of Mobile Technology for its proprietary mortgage app. According to Bruce, the app’s popularity among consumers is a sign of a wider trend in the mortgage industry. “People want the convenience,” he said. “Especially with this app, when people are out shopping, they have ability the ability to get accurate payment [information], and our rates are updated on there all the time, too, so it just gives our buyers convenience while they’re out shopping.”
AI makes great strides What was once feared as the technology that would replace brokers has become a vital tool
In late April, Canadian real estate giant Royal LePage announced it had signed a comprehensive deal for an innovative sales solution created by artificial intelligence innovator Lead Assign. Royal LePage plans to adopt Lead Assign’s state-of-the-art AI-based lead distribution technology to help more than 18,000 real estate professionals vastly improve accuracy and speed when sifting through leads. “Research shows that nearly half of all sales go to the vendor that responds first, and that replying to an inquiry within five minutes can increase sales conversion rates by as much as 400%,” said Joe Steeves, Lead Assign’s director of global operations, “yet most organizations lack the ability to quickly qualify and respond to inbound leads without substantial manual effort. Lead Assign uses AI to automate that process, ensuring the most suitable agent receives and responds to a lead in minutes, which can often be the make-or-break factor in closing a deal.” In the event that the first agent is unavailable, the AI-powered platform will redirect the lead, thus reducing the risk of losing the opportunity due to a delayed response. The Royal LePage partnership is the latest sign of the Canadian mortgage and real estate industry’s acceptance of AI. It’s a significant shift from previous fears that the technology would replace humans in the vital people-topeople interactions that the industry requires. Earlier this year, TD Bank Group announced the acquisition of Layer 6, a pioneering AI company based in Toronto.
12-13_Update Tech-SUBBED.indd 12
14/06/2018 1:49:24 AM
“Layer 6 adds new capabilities to TD’s growing base of innovation talent and know-how,” said Michael Rhodes, group head of innovation, technology and shared services for TD Bank Group. “Artificial intelligence has the potential to power a new generation of data-driven applications, from personalized
“Artificial intelligence has the potential to power a new generation of datadriven applications” and real-time advice to predictive analytics, that will shape the future of banking for millions of individuals.” RBC has also embraced AI, becoming one of the few North American banks to have incorporated AI into capital markets research. According to Marc Harris, RBC Capital Markets’ head of US research, incorporating AI has become “a critical must-do for any research department. Giving great sell-side analysts access to great data-science resources is going to be mission-critical to their success – not 10 years from now, but over the course of the next three to five years.”
Christa Mitchell VP of sales, support and user experience MORTGAGEBOSS
Years in the industry 13 Fast fact In March, MortgageBOSS announced that First National was the latest financial institution to join the platform
What’s new at MortgageBOSS? How have things been at MortgageBOSS recently? It’s been an exciting few months at MortgageBOSS, to say the least. From integrating one of the most powerful lead-generation tools in the industry to releasing our newest version of the platform, we’ve achieved a whole lot in a short time. For MortgageBOSS 5.0, we’ve created a brand-new UX/UI, enhanced workflows and processes for brokers, developed a completely responsive version of our intuitive dashboard, and successfully launched the new version to over 3,600 brokers. We are now working on rolling out the French version to our network users in Quebec.
Has your technology affected the way brokers run their businesses? Absolutely. Users can now focus on getting business, knowing that the system will take care of the rest. It saves them valuable time through automation of lead generation, the mortgage application process, customer follow-up, and the sale of ancillary products and services like insurance and credit cards. Simply put, it helps users do more, faster and easier.
What are the most significant advantages that users of MortgageBOSS enjoy? Most notably, the integration of all systems, mechanisms and tools they need to run their business into a single platform. Some of these advantages include integration of lenders, credit bureaus, automatic property valuations, insurance, credit cards, loans, leasing and many more; a Safe Docs customer upload portal; mobile apps; prequalification and lead generation; real-time metrics and KPIs; and daily payroll and compliance.
What were the most notable challenges during the formative years of MortgageBOSS? Our biggest challenge was to prioritize projects with so many great initiatives in the pipeline. Another challenge comes with all firsts, which require the adoption and training of new concepts. That said, we’ve been blessed with an amazing user base that’s open to change.
What advice would you give to those who are reluctant to use or are struggling to maximize their use of the platform? MortgageBOSS has been designed for users with different levels and comfort zones. My advice would be to learn the system one section at a time and take advantage of the automation to start. Today, it’s important to know how to do deals and get paid; tomorrow, you may want to start tracking expenses; next week, perhaps you can set up your first email campaign, and so on. Each section you learn, you will find much easier than the one before as you get to know your way around the system. We have a dedicated MortgageBOSS support team that is here to help 12 hours a day, one-on-one training, online and in-class training, and plenty of tutorials to make sure users are comfortable working on the system.
12-13_Update Tech-SUBBED.indd 13
14/06/2018 1:49:29 AM
Brokers say B-20 limits housing mobility Tightened regulations have cooled down markets, but brokers worry they’ve already gone too far
paid down an $800,000 mortgage and still can’t move without downsizing substantially, Axsen says the government “has set up rules in which you can’t even qualify for the mortgage you have. Not only can’t you move, you can’t go to a different lender because they have to qualify you, so you’re stuck with your existing lender. You can’t compete to get yourself a lower interest rate on your house, and you can’t sell your house for a different one ... Somehow,
“It makes me nervous that bureaucrats are making these decisions and not bankers”
A brokerage owner has issued a warning that the bureaucrats who determine mortgage lending rules are currently doing more harm than good. “There’s this overall restriction throughout the entire economy about who can get a mortgage, how many people can get a mortgage and how big the mortgage they can get is,” says Croft Axsen, owner of DLC Jencor Mortgage
Corporation. “I don’t think they understand what they’re doing. It makes me nervous that bureaucrats are making these decisions and not bankers.” Axsen is particularly concerned about the fact that the new stress test – which consumers must pass if they want to refinance with a new lender – has put existing mortgage holders on shaky ground. Relaying the tale of a client who
Quebec brokers lobby for more regulation
In contrast to brokers elsewhere in Canada, Quebec’s mortgage brokers are hoping for added regulation – at least in regard to banks’ referral fees. Quebec is the only province that permits banks to pay Realtors referral fees, but Bill 141, which is currently being tabled in the National Assembly, could change that. “Right now my personal experience is I don’t deal with a lot of Realtors,” said Montreal-based broker Jason Zuckerman. “It’s something that would benefit us if banks weren’t allowed to pay Realtors the 0.5% [referral fee].”
some bureaucrat sitting in front of a computer running a statistics program is telling the bankers how to qualify you to get a mortgage.” Axsen predicts that a cooler housing market will result in a stagnant economy, in part because the government’s bid rectify the outsized performance of the Toronto and Vancouver markets has hit smaller cities especially hard. Shane Bruce of Verico Acme Mortgage Professionals adds that those with modest incomes are suffering the most due to B-20. “I’m surprised homeowners aren’t complaining because a large portion of Canadians’ net worth is in their real estate equity,” he says. “We’re saying we’re all underfunded – too much debt and not enough pension – so why would the government prevent their properties from appreciation?”
Government fixes refinancing oversight
Brokers are celebrating the government’s change to a significant regulatory oversight that precluded low-risk borrowers from insurable mortgage rates simply because they refinanced after a certain date. Thanks to the lobbying efforts of a small group of brokers, lenders and insurers, the government fixed the flub, clarifying that “any refinance after November 2016 can be switched or transferred to a new lender and qualify for insurable mortgage rates,” said Champion Mortgage broker Doug Adlam, who called the move “a huge win for Canadians.”
14-15_Update Broker-SUBBED.indd 14
14/06/2018 1:49:45 AM
John Bargis Executive vice-president MORTGAGE EDGE/ CIMBC
Years in the industry 25+ Fast fact Bargis has a degree in economics and business from York University
Not your average broker network What sets the Coalition of Independent Mortgage Brokers of Canada apart from other broker networks? CIMBC is very different from the network models, even though the networks would disagree from a defensive standpoint. CIMBC is relevant, disruptive and focuses on strengthening brokerages by giving them the tools to grow their brand, both qualitatively and quantitatively, with industry partners. We’re all about building wealth for our broker members, not the networks.
members based on specially designed parameters that work for all industry partners, with further opportunities to participate in a revenue share program. Broker members consult regularly and openly exchange ideas on how each member can enhance their business and practices to grow their individual brokerages. One of the biggest differences between CIMBC and the networks is that our direction in the marketplace is determined by brokers who actually broker deals, and who have a strong understanding of the need for diversity in product availability during these challenging times.
How are things at CIMBC right now? How is CIMBC addressing the challenges brought on by the current regulatory regime?
With the increasing challenges the industry has had to face, brokers have wisely taken the time to reflect on and explore the opportunities available to them by being part of a genuine independent concept that actually works better for the feet on the street versus the network model. We have added six new member broker firms in the last 90 days alone, and we’re interviewing more as the calls keep coming in from those whose contracts are coming due.
We’ve dealt with some of the challenges by working closely with our lender partners, and have created new ways of filling the void for clients who can’t easily obtain financing under the new B-20 guidelines. The key for us has been the level of experience and collective consultation of brokers representing their clients’ best interests.
What advantages do CIMBC members have over brokers who are working with the more traditional networks?
What advice would you provide to mortgage professionals who are considering going solo, independent of any network?
Traditional networks are more expensive models for what they have to offer, and many who take the time to understand the math [will realize] the significant advantages, as well as the marked advantages, in the long-term value proposition of CIMBC membership. CIMBC is an inclusive, co-operative force that works together to strengthen the revenue stream for each of its
Latest rate hike could signal hard times ahead
Following hikes across the Big Six, the Bank of Canada increased its benchmark rate from 5.14% to 5.34%, and according to Mortgages of Canada CEO Samantha Brookes, buyers and sellers are in for a bumpy ride. “I do think the housing market will continue to correct and adjust the prices,” Brookes said. “Homebuyers’ buying power has been decreased even more … Until the rate gets to where the government and banks feel [it] needs to be – I truly believe it will be in the 5% or 5.5% range – rates will continue increasing.”
Don’t listen to the noise, and be a leader. Be mindful that noise, whether it comes from a lender or broker, may have an agenda attached to it. Do your homework well, explore all options, and develop a sound long-term strategy that works for your business and not the networks’. Only then can you be in a position to make the right choice for your brokerage.
Banks’ caginess toward Airbnb explained
Canadian banks’ hesitation to lend for Airbnb properties – unless the approval can be quantified – has a compelling reason, according to Mortgage Architects broker Joe Sammut. “[This] is because individual rooms could be rented out, and then they’d essentially be running a rooming house, and banks have frowned upon that for many, many years,” he explained, adding that “things get difficult from a security standpoint because there’s nothing long-term and concrete ... that shows a revenue stream.”
Broker launches social media marketing tool
Jason Henneberry, the broker behind DocAssist and LenderSpotlight, has launched STREAM5 Social along with co-creator Darryll Esch. The marketing platform is designed to help brokers leverage social media while keeping prospective clients in what Henneberry calls “a broker’s virtual store ... [It] publishes the same articles you read on the Globe and Mail and Financial Post, but the site is branded to you as an individual broker. The only thing a client can see, do or interact with is you and your brand.”
14-15_Update Broker-SUBBED.indd 15
14/06/2018 1:49:46 AM
It’s just not worth it Buyers grappling with a challenging market are increasingly tempted by fraud, writes Mike Bricknell, and it’s up to brokers to hold the line of integrity IN MY EARLY 20s, I purchased a condo in downtown Toronto and found myself working two jobs to be able to afford the home. Ultimately, I made the tough decision to sell the condo to break even. That was 20 years ago, when mortgage rules were different. Changes have been made, with good reason, to protect buyers from the stresses I went through. But those changes have also led to more incidents of fraud as people attempt to get on the housing ladder in an increasingly difficult market. With the combination of recent B-20 and B-21 mortgage regulation changes and spiking house prices across Canada, borrowers – especially first-time homebuyers – are feeling the pinch. Interest rates are increasing, forcing the big chartered banks to hike their posted rates. How can anyone purchase a home these days? Dozens of websites list the documents lenders require from borrowers in order to provide mortgage financing. With this information readily available, there are people who are either coached or take it upon themselves to falsify documents in order to achieve homeownership, whether it’s by altering a stated income amount, changing the name on the documents or getting someone to write a false employment letter. In the last two months, I have personally noticed an increase in potential borrowers looking for a mortgage when they only claim $30,000 in total household income. At this income level, families still qualify for the maximum child tax rebate and other govern-
ment benefits, and pay lower income tax. But when they’re looking to purchase a home in a certain neighbourhood, house prices can be as high as $750,000 and more. With an annual income of just $30,000, a purchase of this size would need a down payment of $670,000 or more. But these borrowers are asking for a mortgage with
a home you can’t afford? If you can’t afford to purchase a home right now, then perhaps it’s best to keep renting or living with family members. Continue to save for a larger down payment and closing costs, fix any existing credit issues, or purchase outside of your preferred neighbourhood. This is the smart decision, but increasingly, borrowers who cannot and should not be able to afford a home are somehow still making the purchase, leaving them at risk financially. To the mortgage professional: Who is allowing this to happen? It is common knowledge that there are mortgage ‘professionals’ out there who will work with documents that have been altered, perhaps found on certain websites, to help a borrower achieve homeownership. Brokers who are found guilty of this can lose their licences to practice and are penalized for their unscrupulous behaviour, yet borrowers are still managing to buy homes far outside what their legitimate financial documents should allow them to qualify for.
“The mortgage professionals who are allowing this to happen to pad their own pockets should think twice. It will eventually catch up to you, and all you’ve worked so hard to achieve will be stripped from you in the blink of an eye” a down payment of between 5% and 20%, which is not reasonable in today’s market. When I tell them what they can actually afford at the given qualifying rates and recommend some steps they can take for future home affordability, the clients typically go into hiding. When I reach out a couple of weeks later to follow up with them on their progress, and they report that they ended up purchasing the home with a different broker who could “get it done” with the same information they provided to me, I feel shocked. After washing the salt out of the wounds brought on by the injustice for losing out on a deal I worked hard to close, I am left with two important questions. To the borrower: Why are you purchasing
Having been house poor in my early 20s, I don’t recommend it to anyone. The mental and physical stress you endure isn’t worth it just because you’re tired of renting or you want to keep up with your friends. The mortgage professionals who are allowing this to happen to pad their own pockets should think twice. It will eventually catch up to you, and all you’ve worked so hard to achieve will be stripped from you in the blink of an eye.
Mike Bricknell has been a broker for four years and in the mortgage industry for almost a decade, during which time he has worked with both banks and credit unions.
14/06/2018 1:50:02 AM
14/06/2018 1:50:04 AM
TRIAL BY FIRE Nick Kyprianou worked his way through Home Trust’s ranks, and the challenges he encountered along the way prepared him for his latest venture as president and CEO of RiverRock Mortgage Investment Corporation
WHILE SUCCESS is usually measured by a series of auspicious events, Nick Kyprianou has a different take. He believes that without tribulation – and, more importantly, the fortitude to persevere – success can never truly be realized. Kyprianou is currently the president and CEO of RiverRock Mortgage Investment Corporation, but before launching his MIC four years ago, he spent 18 years at Home Trust, eventually becoming president of the alternative lender. Kyprianou joined the organization in 1992, when it was doing $5 million in monthly originations; he helped grow that number to $100 million every week. Kyprianou’s early tenure at home trust was marked by a monumental crash in Ontario’s real estate market. In the second quarter of 1990, Canada entered a recession, and the real estate market’s hardship was particularly acute. Interest rates nearly doubled from 8% to 15%, and unemployment hit levels not seen since the Great Depression. “Unemployment in Ontario was over 12%,” Kyprianou recalls. “Manufacturers were closing up in Ontario and moving to the southern states and Mexico because of high provincial taxes, the Quebec referendum was going on in the middle of it, and the NDP government in Ontario created utter chaos during that time. You had all these things that happened at the same time within a five-year period. We always used to joke that we didn’t know if it was a
light at the end of the tunnel or a train coming towards us.” The experience had a powerful impact on Kyprianou. “I think working [at Home Trust] in the early ’90s during the real estate meltdown taught me how to handle crisis,” he says. “You don’t learn tons when the market does well because it corrects mistakes, but when the market does poorly, it magnifies mistakes. What
a bad market makes you realize that you’ve learned something.” Kyprianou isn’t being hyperbolic in describing the crash as a “meltdown.” Between 1989 and 1995, residential property values dropped 25%, and commercial values fell by as much as 50%. However, of nearly 20 similar companies, Home Trust emerged as one of the few still standing by the mid-90s.
“You don’t learn tons when the market does well because it corrects mistakes, but when the market does poorly, it magnifies mistakes. What you learn in a bad market is so valuable that I wouldn’t give it up for anything” you learn in a bad market is so valuable that I wouldn’t give it up for anything.”
School of hard knocks One of the things Kyprianou mastered during the real estate nadir was crisis management. “You learn how to manage collections and negotiate,” he says. “You have a much better understanding of risk, real estate and exit strategies. The bad market gives you all of your foundation of knowledge. A good market just makes you think you’re smart, but surviving
“You learn to be extremely disciplined in your underwriting model,” Kyprianou says. “That’s what you learn first and foremost, because bad things happen to good people. Bad times always come, and if you build your book with that in mind, you’ll learn to survive.” That period in Canadian history was both daunting and acrimonious, as evinced by the near-secession of the country’s second most populous province, but greener pastures lay ahead – until, after about a decade of stability, the Great Recession hit the world like a ton of
18-21_Industry Icon-SUBBED.indd 18
14/06/2018 1:50:18 AM
PROFILE Name: Nick Kyprianou Company: RiverRock Mortgage Investment Corporation Title: President and CEO Based in: Toronto Years in the industry: 30+ Career highlight: “My 18 years at Home Trust from February ’92 to December ’09. When I started with the company, it was $200 million in mortgages, 20 employees, and I was a manager of underwriting. When I left 18 years later, it was over $15 billion in mortgages and over 550 employees, and I was the president.”
18-21_Industry Icon-SUBBED.indd 19
14/06/2018 1:50:22 AM
bricks. While Canada’s banking system mitigated the recession’s impact on the country, it wasn’t without its trials. However, by that point, Kyprianou was a grizzled veteran. “During the liquidity crisis in 2007, that’s when at Home Trust, due to the fact that we were well positioned and had a tremendous amount of capital, we were able to turn that into an opportunity,” he says. “We were basically going around buying portfolios from companies that just used a securitization model and didn’t use a balance sheet. We saw the
and he taught me a lot during that period of time,” Kyprianou says. “To be successful in a business, you have to have good mentors. You’ll learn by your mistakes, but to have a mentor explain your mistakes to you, and give you some oversight and some thought to what’s happening and how to manage it, is critical.” During a brief stint at Equity Financial Trust, Kyprianou noticed headwinds turning the industry’s way. In 2012, when the first B-20 guidelines hit, he saw the writing on the wall. “By then, regulators were becoming proscrip-
“To be successful in a business, you have to have good mentors. You’ll learn by your mistakes, but to have a mentor explain your mistakes to you, and give you some oversight and some thought to what’s happening and how to manage it, is critical” market for what it was. A lot of people just thought it was going to be a short-term meltdown, and at Home Trust, we moved quickly on arrears and we moved aggressively. Other people were thinking things would get better very soon, but it didn’t happen. Our aggressiveness and discipline managing arrears, and sticking to new business we put on the books, kept us alive.”
From the ground up Kyprianou’s work ethic is indomitable, and he constantly looks for organizational efficiencies. That doggedness helped him ascend through Home Trust’s ranks from an underwriting manager to the become the company’s president, for which he credits former CEO Gerald Soloway. “I was younger at the time, but I was lucky that Jerry Soloway was a strong mentor to me,
tive,” he says. “It’s difficult to grow a business with one arm tied behind your back, but I saw the MIC space as an opportunity to service mortgage brokers.” In 2014, he left Equity to start RiverRock Mortgage Investment Corporation, plunging headfirst into the exhilarating experience of starting a business from scratch. “In the very early stages, you’re basically like any business: You don’t have a lot of people, so you’re chef, cook, bottle washer and waiter. Like any business, you start from zero and do everything,” Kyprianou says. “I think it’s exciting because you truly understand all aspects of the business, and you build it the way you want it to be. “Now, I’m doing very well,” he adds. “Business is growing very well, and I’m very lucky that I have access to a lot of capital, which is key if you’re going to be a MIC.”
NICK KYPRIANOU’S CAREER HIGHLIGHTS 1990
1992 Starts working at Home Trust
2000 Helps open Home Trust offices in Calgary and Halifax
2001 Helps open a Home Trust office in Vancouver
2007 Helps open a Home Trust office in Montreal
Becomes president of Home Trust
2010 Becomes CEO of Equity Financial Trust
2014 Starts RiverRock Mortgage Investment Corporation
18-21_Industry Icon-SUBBED.indd 20
14/06/2018 1:50:27 AM
Letâ€™s make lemonade. (We can even make a pie. When life throws a curveball, itâ€™s good to have options). View lending differently. (416) 909-6989
Community Trust Company does not provide investment advice and does not endorse or promote any investment products. Investors are encouraged to seek independent financial and legal advice before making any investment decisions.
18-21_Industry Icon-SUBBED.indd 21
14/06/2018 2:01:01 AM
ALTERNATIVE LENDING COMING SOON: ALTERNATIVE LENDING PANEL DISCUSSION Join CMP and MortgageBrokerNews. ca for an upcoming free webinar to learn from industry thought leaders about how you can capitalize on the alternative market, including business-for-self, new to Canada, debt consolidation and more. Stay tuned for more details!
There’s more to alternative lending than you might think. Hear what four experts have to say about a market that’s rife with opportunity WHAT WAS once thought of as ‘the mortgage of last resort’ has proved to be a growth engine for brokers across Canada as alternative lending options gain momentum in an increasingly regulated environment. Not every borrower is a fit for mainstream lenders, but thanks to alternative lenders, their dreams of homeownership can become reality. Amid the recently implemented stress test, alt lenders are stepping up their financing game, creating greater opportunities for both homebuyers and brokers. On the following pages, you’ll hear from three alternative lenders about what makes the future so bright for alternative mortgages, along with a broker who shares his experience of working in this rewarding space.
22-27_ALT Lending-SUBBED.indd 22
14/06/2018 1:50:46 AM
LISA ABBATANGELO Vice-President, Mortgage Operations Community Trust
CMP: Given the current environment, how important is it for brokers to embrace alternative lending? Lisa Abbatangelo: I think now more than ever, brokers are needed to help borrowers navigate through all these changing rules, market fluctuations and rate increases. It’s just a constant barrage of changes that leave the borrowers feeling beaten up and deflated. So I can’t emphasize enough how important the broker’s role is here. And this is not unfamiliar territory. In the credit crisis in 2008–09, a lot of prime lenders had to exit the market, which saw borrowers turning to alternative lenders. In 2016, the same thing happened – lots of regulatory changes created another decline in the prime market, which saw people move into the alternative space again. In 2018, another shift from prime to alternative is starting to happen, just like we had anticipated. It’s important for brokers to embrace the alternative lending space, as time and time again, the shift continues to happen. There are more and more borrowers, and more and more demand in the alternative space is being created, whether it’s by market conditions or a regulatory change. The alternative lending space has been here for a long time, and it will be here for a long time going forward, so it’s important that they consider it. CMP: How important is the partnership between brokers and lenders? LA: I love the term ‘partnership,’ and that’s something we’re absolutely building here. True partnership means standing next to each other, and it’s a long-term vision and strategy towards growing mutual businesses. That’s the position brokers and lenders need to take – we’re in it together; we’re collaborative. We need
to get to know what the broker’s vision is, what their strategies are and their target market. This way we can help them out and share with them what we have to offer to help them with their business. It’s built on
alternative lending space, we’re very optimistic about it. We’ve been in this situation with all these regulatory, industry and housing market changes; we’ve been in this place before. We’re starting to see the effects of the most recent changes that have been made, and we’re confident that it’s going work itself out, even though it’s taking longer than expected. Every time a change is made, brokers are impacted, but as we can see, they’ve
“The alternative lending space has been here for a long time, and it will be here for a long time going forward, so it’s important that [brokers] consider it” trust, integrity and collaboration, and it’s about how to work together, what we can do together in order to lift each other up to represent the industry in the best way that we know how, which helps everyone. CMP: How can brokers ensure they’re providing the best options to borrowers? LA: Brokers need to explore all of their options when it comes to serving their clients – it could be a prime lender, an alternative lender or a private lender. I think what’s important is that they identify different lenders to work with so they can meet the needs of their target audience. They can do that by networking, attending industry events and through publications like CMP, which are all a great way for them to explore their options. They need to get to know their lenders really well, reach out to them. It’s most important to establish a personal contact with the lenders, to truly know each other, build up the partnership and make the connection. Partnership through constant contact and collaboration is key.
bounced back, and they’re resilient. Brokers are the ones who can help borrowers navigate the changes so they can still realize their dreams. We’re trying to get the message out to everyone in the industry that we’re very positively, optimistically looking at the future and getting through this little challenge that’s been presented to us, just like we have before.
CMP: What does the future of alternative lending look like? LA: In terms of growth outlook for the
22-27_ALT Lending-SUBBED.indd 23
14/06/2018 1:50:50 AM
ALTERNATIVE LENDING MIKE FORSHEE Senior Vice-President, Residential Underwriting Home Trust Company
CMP: What sort of impact is the new mortgage stress test having on Canadian homebuyers? Mike Forshee: The interesting thing is that the stress test gets a lot of airplay, because it had the potential to affect the majority of [brokers’] clientele, or the majority of the consumers applying for a conventional mortgage. However, one thing that gets overlooked in the alternative space is the rigour placed around analyzing the sustainability of income. You have this rigour that the underwriters have to perform on the stated income or the self-declared income client, but I don’t know if the industry as a whole has adjusted to that part of the B-20 framework, because the in-depth knowledge that the broker has of the client doesn’t seem to have changed. If we have to put more rigour to approve files, we need to know more about the client and how they operate their business at the first stage of the file, and not just solely rely on documents such as bank statements that the broker sends in. We need to be able to analyze the bank
statements and apply it to the story or to how the client operates the business. CMP: With these new restrictions now impacting regulated lenders, should brokers be turning to private lenders and MICs to place their more challenging clients? MF: Private lenders play an important part in our industry; they’re an important funding source for a certain segment of client. What I do believe is happening right now, though, is there are certain clients who are ending up in the private lending space who could probably qualify with Home Trust or other regulated lenders. Getting a thorough
understanding of what your client does so that it can be properly relayed to the lender is crucial. We have a lot of solutions for self-employed individuals, individuals with bruised credit and individuals with slightly elevated debt-servicing ratios. Sometimes there’s the assumption that just because we are federally regulated institutions, if the bank didn’t fund the loan, we won’t do it either. I think it’s just a lack of education on what the federally regulated alternative lenders truly do and what we can offer. CMP: We often hear about the partnership between alternative lenders and the mortgage broker community, but too often it seems that the relationship is more adversarial than a true partnership. Why do you think this seems to be the case, and how can the industry change this perception?
“Without brokers, we don’t have a business. Partnership is key in this business, and being able to work closely with our brokers and have them refer high-quality deals – that’s mutually beneficial”
22-27_ALT Lending-SUBBED.indd 24
14/06/2018 1:50:51 AM
MF: First and foremost, without brokers, we don’t have a business. Partnership is key in this business, and being able to work closely with our brokers and have them refer highquality deals – that’s mutually beneficial and ensures success for lender, broker and customer alike. Our industry has undergone significant changes in recent memory, and the underwriter’s job has changed as well. It’s become more detail-oriented and thorough, which can sometimes be perceived as being adversarial since lenders are asking more questions during the application and adjudication process. I think it just comes down to mutual respect and understanding of each party’s role in closing a transaction. There are times when lenders need to communicate more effectively with brokers, and in return, lenders may require more in-depth analysis
of a client’s financial picture before the deal comes in. There are many components that result in a completed loan, and successful partnership is key to each deal and to the industry as a whole. CMP: What advice would you give to brokers to better improve the alternative lending process? MF: Don’t be afraid to tell the story. We know why alt lenders exist – if someone has bruised credit, tell us the cause and the cure. Don’t be afraid to tell us the cause. We can see that they have a weaker credit score, but what we really want is to understand what caused it and how the clients are looking to move forward. We need a thorough understanding of the client we’re dealing with, so we need that story to be told to us to adjudicate the files efficiently.
Email lender notes, application, and credit bureaus to:
email@example.com D IMITRI K OSTUROS
Chief Operating Officer firstname.lastname@example.org
P AULA H UTTON
BDM - Prairies email@example.com
22-27_ALT Lending-SUBBED.indd 25
14/06/2018 1:50:56 AM
ALTERNATIVE LENDING JOE FLOR Director of National Sales Equitable Bank
CMP: How has the new stress test impacted brokers? Joe Flor: We have seen a slowdown in purchase activity, especially in the GTA and within the first few months of the year. At that point, broker partners were still learning how to piece deals together and how to make them work. Some of the deals that once qualified in the alternative space no longer do, so brokers are finding other ways to make those deals work. At the beginning, we were seeing a lot of those deals not being processed, but in the past two months, brokers are starting to adapt. It shows that brokers are starting to understand the nuances of the new stress test. CMP: What are the benefits for a broker who is able to build a meaningful and mutually beneficial partnership with alternative lenders? JF: It’s a question of understanding that lender and their parameters and guidelines, because when brokers are working with clients and have multiple lenders they can send business to, they want to send business to the lender that best fits the client’s needs. If they aren’t familiar with that lender or their risk tolerances, that can be a challenge because brokers might not understand why one lender would consider one thing and why another wouldn’t. It’s important to understand that lenders are no different than brokers – we are all trying to do the right thing for the borrower. Brokers also have to keep in mind that we are being scrutinized as well. We want to work with brokers and make sure we are following the rules, too. We have more partnerships than
we ever have, and we strategize with brokers on how to grow our businesses together. I think the challenge is that brokers sometimes feel like the rules are just ours, and ours alone, and that we are trying to not make certain deals fit. We
lending that we are just trying to find ways to make the deal fit in whatever way we can, but trying to fit a prime deal in the alt world and vice-versa doesn’t make sense. There are brokers who will continue to try to challenge the business and tarnish relationships over that because lenders don’t want to have that type of business out there. It can be a challenge for brokers to decipher what’s an alt deal versus prime versus private, but understanding
“It’s important to understand that lenders are no different than brokers – we are all trying to do the right thing for the borrower” are in the business of putting mortgages out there and helping Canadians with homeownership. At the end of the day, not wanting to do business is contrary to what our objectives are. CMP: What is your advice to brokers who may be hesitant about entering the alternative lending space? JF: My advice to brokers is to embrace it. Alternative lending isn’t what it used to be. When I got into the business, the alternative lending risk appetitive was very low. It was really almost like private lending at that time. Brokers have always had this conception that alternative lending was for borrowers that were weaker, had bad credit, were new to Canada or incomechallenged, but that has changed. Alt lending is exactly what it states – it’s another source of providing a solution to borrowers that allows them to purchase the home they want. We are institutional lenders and we are federally regulated, so we abide by the same guidelines and regulations as the Big Five. We are not subject to anything different, so we have to look at everything the same way. There’s this notion of alt
what’s what and being informed can make a big difference when it comes to servicing clients. For us as alternative lenders, it is really about providing solutions to Canadians so that they can have their dream home, pay off their debt or put themselves in a better financial position.
22-27_ALT Lending-SUBBED.indd 26
14/06/2018 1:50:57 AM
THE BROKER PERSPECTIVE
Mortgage Edge executive vice-president John Bargis shares his take as a broker on alternative lending and the partnership between brokers and lenders CMP: What sort of impact is the latest mortgage stress test having on borrowers? John Bargis: The introduction of the new B-20 stress test has had a significant impact on qualifications for a sizeable number of borrowers who no longer qualify under conventional terms, which is reflective in the reported volume numbers from the large majority of our lender partners and the banks, regardless of the space they’re in, prime or alternative. So, although it’s too early to tell, the government may have had an impact on slowing the debt-to-income ratio and the acceleration of the real estate market as we knew it a year ago, but it’s still too early to make a determination. From our perspective, though we are seeing a slowdown in volume, there is definitely an uptick in demand for the more costly private and alternative funds from consumers as a result of the federal regulatory intervention, which is very concerning. CMP: What’s your perspective on the broker-alternative lender partnership? JB: I believe the success or failure of any relationship comes down to the time and effort one is prepared to invest to make the best of what each party has to offer. In this particular case, brokers who view much-needed alternative lenders as adversaries, frankly speaking, need to develop a better understanding of what these lenders go through to keep the broker revenue stream flowing. A more relevant concern to me is the way that our lender partners industrywide are generally painted with the brush in the media as being ‘shadow
lenders,’ which is nothing short of a negative connotation in the eyes of the average consumer, who probably has an image in their mind of being in a dark lane with a high risk of getting robbed. This doesn’t bode well for our industry, whose key goal is to build trusting long-term relationships with clients. This needs to change to something a little more appropriate. CMP: How can lenders improve this relationship?
good way to describe the definite misconception. Industry-wide education at all levels should be on the table, including communication that effectively reaches the consumer about what the alternative channel means and what purpose alternative lenders and brokers serve to the consumer. If executed properly, I am certain that the adversarial and negative misconception of alternative lenders would be far less visible in the eyes of borrowers.
“Brokers who view much-needed alternative lenders as adversaries, frankly speaking, need to develop a better understanding of what these lenders go through to keep the broker revenue stream flowing” JB: This endeavour would take a concerted effort on the part of both mortgage brokers and our alternative lender partners. The alternative space has become significantly more important with the series of recent regulatory changes over the last year and a half, and mortgage brokers should take the initiative to better educate their clients on the details of the changes, why they were implemented and how they affect the consumer. Better training for their agents from the broker of record, which is ultimately their responsibility, would be a great start in improving the relationship with any lender partner, alternative or otherwise. CMP: What are some of the common misconceptions about being an alternative broker? JB: A ‘source of last resort’ would be a
22-27_ALT Lending-SUBBED.indd 27
14/06/2018 1:50:59 AM
SPECIAL PROMOTIONAL FEATURE
A bridge to new business Trez Capital’s Greg Vorwaller talks to CMP about the opportunities on offer in the bridge lending space
DESPITE RISING concern around household debt, the fundamentals that underpin Canada’s economy continue to look strong. After stumbling in January, the domestic economy has bounced back, and recent data suggests Canada will see growth of above 2% in the coming months. The country remains an attractive investment location, and although there is uncertainty in some areas of the residential real estate market, on the commercial side, investors still view Canada as a safe bet. As a result, the bridge lending space continues to see impressive expansion. “We are seeing a strong demand for bridge financing, particularly in the middle market, the $10 million to $30 million range,” says Greg Vorwaller, president of Trez Capital. “We are seeing a good pipeline of Canadian activity, and our originations are up considerably over 2017. That gives an indication of the strength of the marketplace and the demand for private lender bridge financing.” There’s a bullishness pervading Canadian business leaders, and it’s making them more confident than their global peers in several areas. A recent KPMG survey revealed that 94% of Canadian CEOs are confident in domestic growth (versus 74% globally), 96% are planning to be a disruptor rather than be disrupted (versus 54% globally), and 66%
believe that AI will create more jobs than it eliminates (versus 62% globally). In addition, 94% of business leaders believe the Canadian economy will grow over the next three years, and 96% believe their business will grow with it. That positive outlook is reflected in the eagerness of developers to push forward with commercial development projects. In particular, the Vancouver and Toronto markets are seeing strong demand on the residential for-sale and for-rent side, which can be attributed to the continued robust migration into those cities, Vorwaller explains. “To a lesser extent, we are also seeing growth in Ottawa and Montreal, where the underlying economy has shown great strength, and we believe there might be some opportunities that unfold there in the near term,” he says. “We also continue to monitor economic activity levels within the Alberta marketplace. We have not increased our position there, per se, but we continue to monitor the market relative to future opportunities because we know the Calgary and Edmonton markets very well.” With the assistance of bridge lending products, Vorwaller has seen commercial investors and developers take advantage of opportunities in many areas of the Canadian market,
including for-sale and for-rent residential, office redevelopment, industrial development and repositioning, and the neighbourhood retail sector. “As a result of the various measures brought in to cool the housing market in Ontario and BC,” he says, “we see more downside risk at the upper end of the for-sale market than in the middle price point, where there is a high degree of affordability with continued robust demand.” The bridge lending market remains competitive, and new entrants continue to enter the space in search of opportunities, particularly at the lower end of the market. Despite the influx of new players, the void left by institutional lenders reluctant to service the commercial space is effectively creating demand for private bridge lenders of all sizes. “The commercial property market-
28-29_Trez Capital-SUBBED.indd 28
14/06/2018 1:51:20 AM
“The commercial property marketplace had a record year in 2017, and from what I can see, the activity levels in the first quarter of this year are indicating continued, unabated strength” Greg Vorwaller, Trez Capital place had a record year in 2017, and from what I can see, the activity levels in the first quarter of this year are indicating continued, unabated strength,” Vorwaller says. “We are seeing continued inflows of capital from both domestic investors and offshore investors, which is definitely significant.” Vorwaller highlights a $675 million bid
that was recently made by a Chinese group for the Hudson’s Bay property on George’s Street in Vancouver. There are also properties on the market in Edmonton and Toronto that are attracting both domestic and offshore institutional capital. “That indicates that there is continued interest in the Canadian marketplace,” Vorwaller says, “not only from
domestic investors but, more importantly, from international investors.” The market’s strength suggests that savvy brokers have a good opportunity to capitalize on the current level of investment in Canada’s commercial development space. Brokers looking to take advantage of the continued positive momentum should take note of the emerging and active developers who are the key players. Vorwaller encourages brokers to be highly engaged in the marketplace. “Brokers who recognize the opportunity but haven’t worked in this space before need to display the acumen, presence and financial analytical skills to really be effective in terms of understanding the numbers and what they mean to their clients,” he says. “Rather than go it alone, brokers should identify organizations and/or people with whom they can affiliate to really make a difference.”
28-29_Trez Capital-SUBBED.indd 29
14/06/2018 1:51:24 AM
SPECIAL PROMOTIONAL FEATURE
Reaching out to commercial Realtors By aligning themselves with Realtors who focus on commercial deals, brokers in this space can tap into a wealth of opportunity, writes Paul McGill of The Financing Hub
WHEN PUTTING together the next article for this series, I decided to speak to a small group of commercial real estate agents. I wanted to find out how they interact with mortgage brokers and how they think the relationship could be improved. It made sense to me because commercial Realtors and brokers should be a perfect combination.
and Dave Dulmage from Heritage Realty. While these Realtors are all local to me, I could go anywhere in this country and have very similar conversations in the local commercial market. What surprised me most was that the one thing these four Realtors had in common was that none had a strong connection to
Mortgage brokers don’t tend to cultivate a niche the way their Realtor counterparts do. As a result, when making a pitch to a Realtor, brokers can come across as less knowledgeable and therefore be perceived as less professional Both sides are completely aligned, as both want to see deals closed so they can get paid. The group I spoke with included Vince Macri of Icon1 Realty, Stephanie Peralta from Sotheby’s International Realty Canada, Jared Rogers from Re/Max West Realty
individual mortgage brokers. None of the Realtors regularly worked with a broker to help close deals. Of the four, only Peralta had really used mortgage brokers at all. The reason is certainly not because of the business each Realtor does. One focuses
almost exclusively on land deals. Another does infill transactions. The third is almost exclusive to the commercial retail business, and the last one does a great deal of business with a core group of investors along the Burlington, Hamilton and Niagara corridor. All of them, in fact, generate business any commercial mortgage broker would be happy to take on. So why haven’t they teamed up with a mortgage broker? To paraphrase, the comments I heard ranged from “Few, if any, of the mortgage brokers I meet are very professional. Both my clients and I know more about my client’s business than any of the mortgage brokers I meet” to “My clients have their own sources of funding”
30-33_Financing Hub-SUBBED.indd 30
14/06/2018 1:54:18 AM
to “I don’t usually refer my clients to mortgage brokers because finance is not part of my business, and I don’t want a failed funding attempt to spoil my relationship with my clients.”
Cultivate specialized knowledge To Realtors, being professional means knowing your client’s business, not just your own. Strong commercial Realtors tend to find niches and learn everything they can about that market, their clients and the key factors that impact that market. Take, for example, the Realtor I spoke to who focuses on retail. He can tell you a great deal about retail in the geographic area he
deals in: the average retail dollars generated per square foot, the retail trends in his area. He can research a retail operation and make buy or sell recommendations to his clients, or advise if a prospect’s retail business will make them a good rental tenant. Mortgage brokers don’t tend to cultivate a niche the way their Realtor counterparts do. As a result, when making a pitch to a Realtor, brokers can come across as less knowledgeable and therefore be perceived as less professional. This can be the case even when the broker is really quite knowledgeable about a wide variety of financing structures. All of the commercial Realtors I spoke to pride themselves not only on their extensive
knowledge of their own business, but also on their knowledge of their clients’ businesses. It’s only natural they would expect the same from any mortgage broker who approached them to team up. In past articles in this series, I’ve talked about the value of niche marketing. This is just another example of why every commercial mortgage broker should consider niche marketing for at least part of their business.
Showcase your financing expertise The second message that came out of my conversations with Realtors was that they all believed their clients could access adequate sources of financing without the help of a
30-33_Financing Hub-SUBBED.indd 31
14/06/2018 1:54:21 AM
SPECIAL PROMOTIONAL FEATURE
As part of the client team, the Realtor is not the financing expert. As the mortgage broker, it’s your job to explain financing alternatives and show how they add flexibility or other benefits to the deal mortgage broker. I expected that response, and rather than try to convince them otherwise, I simply talked about the lending parameters of some of the specialty lenders and the lending programs we have on The Financing Hub. In virtually every case, the Realtor I was speaking to came up with an example where those specialty programs would have helped them close a deal.
All of them wanted to know how their clients could gain access to The Financing Hub. But isn’t the best way to access it through you as their financing advisor? The point here is that as part of the client team, the Realtor is not the financing expert. As the mortgage broker, it’s your job to explain financing alternatives and show how they add flexibility or other benefits to the deal. In commercial brokering, as I’ve said before, low rates are good, but not as important as conditions that make the deal easier to close.
Clear out your old ideas When you look to team up with Realtors for new sources of business, it’s important to realize this is a very different sale than you might have made in the residential space. Residential sales and funding are volume businesses, and they rely on common factors that don’t require extensive transaction background knowledge. As a residential broker, you rarely – if ever – needed to know operational details of your clients’ businesses, particularly if that borrower was a salaried employee. That’s not the case for successful commer-
cial business. When you’re approaching a commercial Realtor, it helps to know their business and something about their client’s business. You should prepare a business proposition that shows them how you can bring knowledge and value to their particular markets. If you’re approaching a Realtor who specializes in a particular segment of the market – and you should assume that’s every successful commercial Realtor you meet – do some homework. Know some of the current market trends and look up some recent transactions in that niche. Be ready to explain financing options that work in that sector and tell them about the lenders you can bring to the table who are willing to provide those options. Realtors are just like you – they make money when the deal closes. Make sure they understand exactly how you can help make that happen.
Paul McGill is president of The Financing Hub, which is dedicated to delivering effective digital solutions for commercial real estate financing.
( l t
30-33_Financing Hub-SUBBED.indd 32
14/06/2018 1:54:25 AM
More Options. More Lenders. More Solutions.
The Financing Hub Brings Online Technology to the Commercial Mortgage Application Process Discover More:
www.TheFinancingHub.com In exclusive partnership with MERIX Financial
30-33_Financing Hub-SUBBED.indd 33
14/06/2018 2:00:43 AM
Point of difference David Hetti of Mortgage Intelligence talks to CMP about the power of marketing and why it’s more important than ever for brokers to differentiate themselves
CMP: What made you first get into the mortgage broker industry? David Hetti: I was in the financial services business as a senior manager at Assante Capital Management. After the collapse after 9/11, Assante went through a restructuring, and I was let go. With the experience I had in sales, managing people and negotiating, I decided to start something by myself, and that’s how my career in mortgage brokering evolved. I joined Invis in December 2002; today, Invis and Mortgage Intelligence are one.
CMP: How would you describe your time in the industry? DH: It has been fantastic; we have grown tremendously. It is a journey, but when I stepped into this industry, I knew it was my life calling. That’s how I see my mortgage business.
CMP: You’ve operated during a tumultuous period for the mortgage brokering industry. What have been some of the biggest challenges you’ve faced? DH: Initially, the biggest challenge was learning the ropes and gaining the experience. I have 20 agents working for me, and I always tell them that there’s nothing in this business than can replace experience. The biggest challenge at the beginning was getting that
experience, prospecting and gaining clients. Then once you have the clients, you have to learn how to close transactions. It was an amazing experience gaining that expertise and product knowledge. Prospecting came easy for me; getting on the phone and doing cold-calling was not a difficult task. But as we have progressed, the market has become more and more competitive; there have been rate wars and undercutting. One of the things I have done is to differentiate myself. I don’t compete in the price market. Everybody was competing for price, but I didn’t want to. I try to enhance the customer experience and to deliver a product that truly fits with each client. Another challenge today is the magnitude of fraud in the marketplace. We are noticing that clients we have said no to are being serviced by others in the marketplace.
There is less fraud now that the rules have changed, but it does still happen.
CMP: What markets do you focus on, and how has business been so far this year? DH: We are based out of Oshawa, and our business comes from the surrounding areas – anywhere from Pickering, Haliburton and Port Perry to north of there. Business has been fantastic this year. We have seen an increase in the Tier II type of business – people with challenged credit or those who are self-employed, who can’t get approved by the traditional lenders. They have been the majority of our business, and we’ve seen an increase in business going to private lenders. We haven’t seen a decline in our business since the mortgage regulations have tightened.
HETTI’S TIPS FOR OTHER BROKERS “A broker should either find a niche line of business to focus on or find a way to differentiate themselves. I would tell a broker to ask themselves: Why should a client deal with me? What is the value proposition I bring to the table? What am I good at? If we can strategically answer those questions, I think we can all find success. Getting into the business is very easy, but strategically speaking, clients have options. In order to sustain a competitive advantage, we have to find ways to differentiate ourselves, because if we are all competing in the same line of business, someone will lose out. We don’t have the deep pockets of the banks, so we have to differentiate ourselves.”
34-35_Broker Insight-SUBBED.indd 34
14/06/2018 1:54:52 AM
FAST FACTS: DAVID HETTI
Serves as director of operations at MiMortgage, which is part of Mortgage Intelligence
Based in Oshawa; also serves surrounding markets, including Pickering, Haliburton, Markham, Cobourg and the Kawartha Lakes
Became a broker in 2002 after working at Assante Capital Management
“If we are all competing in the same line of business, someone will lose out. We don’t have the deep pockets of the banks, so we have to differentiate ourselves” CMP: What’s your secret to growing your business? DH: We don’t do the things most people do. I have a very holistic approach to my business. In the good old days, we didn’t have social media or Google or Facebook ads; it was all about connecting with our clients and enhancing that relationship. I keep doing that. We have a process that helps us keep our relationships close to us. We also look for opportunities to enhance and
prosper with credit cards and life insurance and so on. We marry our growth with technology. We try to automate as many processes as we possibly can, and we have been able to grow through social media marketing. We have an elaborate marketing system, and we do weekly blogging. There’s not a single day that goes by, whether I’m working or not, that marketing or prospecting does not happen.
Specializes in residential mortgages and alternative lending
Holds a life insurance licence
Finalist at the 2017 Canadian Mortgage Awards for Mortgage Broker of the Year (Fewer Than 25 Employees)
34-35_Broker Insight-SUBBED.indd 35
14/06/2018 1:54:56 AM
FEATURE / BROKER EDUCATION FEATURES
Creating a culture where innovation thrives What does it take to embed a culture of innovation in an organization? Amanda Imber examines three key drivers
DOES YOUR organization have a culture in which innovation thrives? Are people challenging the status quo and being encouraged by leaders to take risks in pursuit of innovation? Or is the opposite true – managers don’t take time to listen to new ideas, and suggestions to make improvements are met with the comment, “But we tried that last year and it didn’t work”? Building a culture of innovation is hard work. Many leaders who have been given this directive immediately think about the Googles and Apples of the world. Images of beanbags and table-tennis tables fill their minds, as do ‘blue sky’ workshops in far-off country retreats. However, what we know from research is that all of this is completely ineffective in creating a culture of innovation. As is often the case, the voice of popular culture and fad-ridden management books wins out over the voice of scientific research. Jargonfilled, densely written journal papers are harder to access than the pop-psych books filling the shelves. The scientific research into how to create a culture where innovation thrives is both plentiful and precise. For example, Samuel Hunter from the University of Oklahoma, along with his colleagues Katrina Bedell and Michael Mumford, ran a large-scale meta-analysis to understand which variables had the biggest impact on innovation culture. They reviewed
42 journal papers, which, in total, had drawn data from 14,490 participants. The research revealed 14 key drivers into innovation culture and ranked the drivers from most impactful through to least impactful. Let’s delve further into three of the top-ranking variables. 1 Find the right level of challenge
Hunter’s meta-analysis found that employees feeling a strong sense of challenge in their work is one of the strongest drivers of a culture of innovation. They defined ‘chal-
Silvia da Costa and several colleagues from the University of the Basque Country examined the difference in creativity for those in challenging versus non-challenging roles. The researchers found that if people are in a role that challenges them, 67% will demonstrate above-average creativity and innovation in their performance. In contrast, only 33% of people in ‘easy’ jobs show above-average innovation. At GE, Jeff Immelt famously introduced imagination breakthroughs [IBs], defined as an innovation that will contribute $100 million worth of incremental growth, to
It is not uncommon for senior leaders to play it safe when confronted with the choice of whether to support innovation lenge’ as the “perception that jobs and/or tasks are challenging, complex and interesting – yet at the same time, not overly taxing or unduly overwhelming.” It is important that you don’t simply think about how to give people the biggest possible challenge. Instead, you should ensure that the level of challenge you set is one that is achievable. On the flip side, setting tasks that people are able to complete with their eyes closed will not breed a culture where innovation thrives. In a 2014 review of several meta-analyses,
his senior leadership team. Each member of the team was responsible for generating three IBs every year. The challenge is big, but the resources made available to leaders make it a challenge they can meet. Matching the level of challenge to an individual’s skill level is key to finding the optimal level. As a manager, take time to thoughtfully consider how you allocate tasks and projects to people. Ensure that you are matching these elements so that people feel a significant sense of challenge.
36-37_BIZSTRAT Innovation-SUBBED.indd 36
14/06/2018 1:55:17 AM
2 Encourage risk-taking
The notion of failure being unacceptable is one that I have found resonates with many organizations. Failure is generally thought of as a dirty word, something that gets swept under the carpet when it does rear its ugly head. But being able to acknowledge and learn from failure is a huge part of building a culture where risk-taking is tolerated and innovation can thrive. Leaders play an important role in signalling that risk-taking is encouraged and that failure is tolerated. The Tata Group is an example of a company that has embraced risk-taking. Like many organizations serious about innovation, they have an annual innovation awards program, known as InnoVista. While that is not particularly ground-breaking, what is innovative is the awards categories. InnoVista pays tribute to the group’s most outstanding and promising innovations, but there is also a category called Dare to Try, which was launched back in 2009. This category is reserved for ideas that were attempted but that, according to the Tata Group, “have fallen
short of achieving optimum results.” As a leader, think about initiatives and actions you can put in place to illustrate that your company doesn’t just pay lip service to risk-taking, but actually does it. You might even want to consider having a company award for innovations that were not successes, but where the learnings were really rich. Finally, consider reframing risk-taking in a positive way, such as talking about how risks provide people with the opportunity to learn. 3 Offer support from the top
Ensuring that senior leaders in your organization understand and communicate the importance of innovation is critical. In fact, Hunter’s meta-analysis showed that people feeling that the top level of management truly supported innovation efforts was one of the strongest predictors of an innovation culture. Unfortunately, it is not uncommon for senior leaders to play it safe when confronted with the choice of whether to support innovation. I recently worked with the Australian
leadership team of a global technology company. While innovation was a strategic priority for the company globally, the Australian CEO was frightened of innovation because it meant taking a risk. And this fear permeated the business, which meant that employees were too nervous to do anything differently because that was the message they were getting from the top. If you are a senior leader, make sure that you see your role as actually innovating, as opposed to just delegating it to other people. Research has shown this is a key differentiator between leaders in innovative versus non-innovative companies. Further, as a leader, think about behaviours you can engage in that symbolize your commitment to and support of innovation.
Dr. Amantha Imber is the founder of Inventium, a leading innovation consultancy. Her latest book, The Innovation Formula, tackles the topic of how organizations can create a culture where innovation thrives.
FEBRUARY 2015 | 37 www.mortgagebrokernews.ca
36-37_BIZSTRAT Innovation-SUBBED.indd 37
14/06/2018 1:55:54 AM
FINDING HIS NICHE He’s come a long way, but Reza Ghazi has finally found where he fits best
The teenage son of first-generation Iranian immigrants, Ghazi arrived in Canada speaking little English. He dealt with the isolation bought about by the language barrier by immersing himself in computer code. After high school, in the midst of the dot-com boom, Ghazi began a college computer engineering program but dropped out after a semester to start a business “I was such extrovert – I didn’t want to sit in a cubicle all day”
IMMIGRATES TO CANADA
LEARNS WHAT NOT TO DO
DISCOVERS MORTGAGES A family friend who was working as a mortgage broker provided Ghazi’s introduction to the industry at a propitious time, when he was looking to go back to school but unsure of his ultimate direction “I didn’t know where I wanted to fit in. My sister said, ‘You like numbers; you like to work with people – why don’t you look into it?’ I took a course and liked it, and I started doing mortgages on the side while studying”
With a partner, Ghazi opened a company intended to serve as the middleman for the sale of computer accessories from Chinese sources. However, his first experience as an entrepreneur was marked by a number of problems, including the rise of competitor sites, capital restrictions and – most pointedly – a lack of business experience “About a year in, we decided to call it quits. I learned a lot from that experience: I learned about the management of resources and time, and I learned what not to do”
SHARES HIS KNOWLEDGE Ghazi’s experiences as a broker came together when he joined Mortgage Edge, a brokerage where he had the opportunity to build his own team and mentor up-and-coming brokers ‘I was helping to get agents started in the business, holding their hands through the deals – it was a good gateway to management, a good stepping stone. I would recommend that to anyone who wants to open their own shop”
BECOMES A PARTNER A move to Morbridge Financial, which specialized in residential, commercial, industrial and construction mortgages, gave Ghazi the chance to add to his management skill set when he was named partner and vice-president “Becoming a partner exposed me to some of the challenges that owners face, be it agent recruitment or renovating the office. It was an eye-opener for sure. It was a great experience – a nice gateway for me to get in. It helped me put together the model we have today”
WINS RECOGNITION Three years in, Ghazi’s new company had a banner business year that coincided with its first YOUNG accolade of many, when Ghazi was recognized GUNS as one of CMP ’s Young Guns 2016 “It was our first real industry recognition. I went through a lot of ups and downs in the first three years; the award was vindication of my efforts. It was the start of a very good year”
FOUNDS GREENFLOW Ghazi discovered his niche when he started GreenFlow Financial, specializing in just a few segments – including business owners and entrepreneurs – and revamping the brokerage model into one that doesn’t rely on agents
“In this industry, people tend to want to do everything – I don’t want to be a jack of all trades. I always say, ‘If you needed heart surgery, would you go to an MD?’”
38-39_Career Path-SUBBED.indd 38
14/06/2018 1:56:22 AM
CIMBC IS THE BEST
CIMBC IS UNITED BY A COMMON VISION OF BUILDING TRUSTED RELATIONSHIPS WITH ITS BROKER MEMBERS AND LENDER PARTNERS BY DELIVERING AN UNPARALLELED BUSINESS EXPERIENCE.
BRINGING INDEPENDENT BROKERS
TO MAKE MEANINGFUL CHANGE
COALITION OF INDEPENDENT MORTGAGE BROKERS OF CANADA Coalition of Independent Mortgage Brokers of Canada
T: 1-416-994-4496 | INFO@CIMBC.CA | LIC: 12822 | WWW.CIMBC.CA
38-39_Career Path-SUBBED.indd 39
T: 1-416-994-4496 | INFO@CIMBC.CA | LIC: 12822 | WWW.CIMBC.CA
14/06/2018 1:56:19 AM
TELL US ABOUT YOUR OTHER LIFE Email firstname.lastname@example.org
In a typical day, Nipius and his friends will cover around 60km in the backcountry
Weight, in pounds, of Nipius’ snowmobile
KEEPING HIS COOL For Steve Nipius, there’s nothing quite like taking a snowmobile out on a pristine backcountry trail
WHEN ONE of his cousins first took Steve Nipius out for a ride on a snowmobile more than five years ago, the Vancouverarea mortgage broker instantly knew he had found his métier. “I enjoyed it so much they said I should buy one,” he recalls, “so the next day I did.” The sport is both physically demanding – steering involves physically moving the sled from side to side with your body – and time-consuming. Each trip requires a minimum of 8 hours, and a typical day
Highest elevation, in feet, at which Nipius has snowmobiled
Days out on the snow Nipius typically manages per season
begins at 4:30 a.m. “It’s the most intense sport,” Nipius says. “People who have never snowmobiled are shocked at how physically exhausting it is.” But in his opinion, it’s these challenges that make the pastime so much fun. “Rough terrain is the fun terrain,” Nipius says. “I enjoy the challenge of doing something other riders can’t. The combination of adrenaline and pristine wilderness is everything – you don’t get that any other way.”
40-IBC_Other Life-SUBBED.indd 40
14/06/2018 1:56:43 AM
Hear from brokers who made the move to DLC With the move to DLC, I must say, I have been more than impressed! Every week I am finding a new tool to help my brokers and I close more deals. The support team for marketing has been able to turn around new logos for my website in less than ONE day! The sales team has been able to send us leads on agents that are interested in joining our franchise. Consumers are more familiar with the DLC brand than any other brokerage. Insureline is a great tool to build additional revenue streams and provide more value to our clients. And yet, I can’t help but think the best is yet to come with Dominion leading the charge as the largest firm (and in my opinion, the best) in Canada. Kyle Green DLC Homeline Mortgages, formerly Mortgage Alliance It was the opportunity to have better tools. No doubt the national advertising can’t be ignored. As for advertising, DLC took a bigger picture than what Verico was doing. They’ve been extremely active in helping us build this business, and we have. We keep getting a little bigger every quarter. That’s one of the biggest pluses as far as I’m concerned, It was definitely an advantage for us to make the change.
Len Lane DLC Brokers for Life, formerly Verico
40-IBC_Other Life-SUBBED.indd 41
14/06/2018 1:56:57 AM
INTRODUCING THE FINANCIAL ILLUSTRATION CALCULATOR.
This innovative tool allows you to craft your clients a unique financial strategy that suits them, and shows them how much equity they can expect to retain (and in many cases, earn) over the course of their plan.
FEATURES YOUR CLIENTS WILL LOVE: Customizable Plans Tailored to Them.
Interactive and Detailed Review.
Downloadable and Printable PDF.
Adjust the calculations so you can craft a financial plan that fits your client’s needs and lifestyle.
Go over your client’s plan with them, year by year, and demonstrate how much the value of their home increases in comparison to the loan.
Send and print your clients a copy of their Financial Illustration. They can review it at their leisure and ask any questions they may have.
Try the new Financial Illustration Calculator today!
14/06/2018 1:44:35 AM