CMP 14.04

2019

MORTGAGEBROKERNEWS.CA ISSUE 14.04 | $12.95

PRESENTED BY

TOP

MORTGAGE

WORKPLACES Mortgage professionals name the industry’s best places to work

BEYOND THE TRADITIONAL HELOC Give clients a new way to access equity, improve cash flow and more

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HOUSING AND THE FEDERAL BUDGET

Will the government’s attempt to make housing more affordable truly help buyers?

MAKE TECH WORK FOR YOU

How to grow your business by embracing the latest technology

23/04/2019 3:07:26 AM

Overwhelmed by real-estate investing?

(As registered account administrators, we invest in simplicity).

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ISSUE 14.04

CONTENTS

TOP

2019

PRESENTED BY

MORTGAGE

WORKPLACES SPECIAL REPORT

Which companies are leading the industry with regard to diversity, compensation, benefits, training and more? CMP polled mortgage professionals to find out

22

How plans become square feet.

License # 10172

Romspen Investment Corporation is a non-bank mortgage lender specializing in commercial real estate across Canada and the United States. With over $2.7 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

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ISSUE 14.04

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

CONTENTS

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

UPFRONT 04 Editorial

Are the federal budget’s attempts to address affordability just a vote grab?

06 Statistics

32

44 30

Brokers assess whether FSRA can succeed where FSCO failed

BROKER INSIGHT

10 News analysis

Fernando Zilli reveals why he left the big bank comfort zone for the freedom of mortgage brokering

The stress test’s ripple effect in the alternative market

14 Commercial update

Merix Financial’s Interest-Only Flex mortgage offers an alternative to the traditional HELOC

FEATURES

Home Trust VP Ed Karthaus is preaching the gospel of technology to brokers

18

34

THE FUTURE IS IN YOUR HANDS Why growing your business starts with being in tune with the latest technology

36

Retail could continue to be a blight on an otherwise stellar commercial market

16 Opinion

It’s time for brokers to up the ante in setting themselves apart from the banks

PEOPLE 39 Career path

Tracey Robinson brings a financial advisor’s perspective to the mortgage industry

40 Other life

In the ring with mortgage agent and amateur boxer Deren Hasip Special section

PRIVATE LENDING GUIDE 2019

FEATURES

AVOID MENTAL EXHAUSTION

Three ways to make sure your day-today tasks aren’t burning you out

2

Will the federal budget’s measures designed to help first-time buyers actually hurt them?

12 Alternative lending update

CHANGING THE GAME FOR CANADIAN HOMEOWNERS

INDUSTRY ICON

08 Head to head

PEOPLE

FEATURES

PEOPLE

Buyers aren’t fans of the stress test – but they’re not ready to scrap it yet

MORTGAGEBROKERNEWS.CA CHECK IT OUT ONLINE

www.mortgagebrokernews.ca

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Know what’s tougher than starting a dog shampoo business?

Convincing your bank that it’s A GOOD IDEA. This is Dan’s dog, Rufus. Dan walked away from a career in corporate IT to create the best dog shampoo for skunk-spray. He and Rufus smelled sweet success. But when it came time to get a mortgage, other banks wanted nothing to do with Dan. “Too risky”, they said. Luckily, Dan’s mortgage broker worked with Haventree Bank to find Dan a flexible mortgage. The result? Dan and his family are relieved. And so are thousands of dog owners across Canada.

Helping you help your clients Visit HaventreeBank.com

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23/04/2019 3:20:39 AM

UPFRONT

EDITORIAL

A budget awash with short-term solutions

P

erhaps it’s a bit pessimistic, but it’s CMP’s view that the federal budget’s housing measures will do precious little to remedy Canadians’ struggles with housing affordability. In fact, with an election looming and the persistent SNC-Lavalin scandal engulfing the Liberal government, the budget appears to be little more than a vote grab.

The two demographic cohorts targeted by the budget are millennials and baby boomers, both of which will play outsized roles in determining the next federal government of Canada – although for the first time in decades, millennials will outnumber boomers at the voting booth. Millennials have been squeezed out of the housing market in cities large and small. Vancouver and Toronto remain both the country’s most expensive cities to live in and the most proscriptive for first-time homebuyers.

Regions often overlooked are buckling under the weight of collapsing industries and fallout from one-sizefits-all regulation Regions often overlooked, too, are buckling under the weight of collapsing industries and fallout from one-size-fits-all regulation. Prince Albert, Saskatchewan, is the perfect example of this confluence of calamities: Because the oil and gas, mining, and forestry industries are in decline and countless jobs have been lost, people can no longer afford homes. One local Realtor told CMP that the B-20 changes introduced in January 2018 represented the final nail in the coffin.

A few of the budget’s incentives devised to bolster affordability have the stench of venality. A CMHC equity stake of up to 10% of a new home, provided household income doesn’t exceed $120,000, looks generous, but why not just lower the stress test’s qualification rate for millennials? Another incentive would allow prospective borrowers to withdraw up to $35,000 from RRSPs to fund their purchases, but you’ll likely find a victory for common sense before you do a 30-year-old with those savings.

Whether or not the Liberals’ new housing policies work the way they were sold to the public is moot. The party’s only real concern right now seems to be surviving the October election.

The team at Canadian Mortgage Professional

www.mortgagebrokernews.ca ISSUE 14.04 EDITORIAL Writers Neil Sharma Joe Rosengarten Libby MacDonald Ephraim Vecina Heather Turner Copy Editor Clare Alexander

CONTRIBUTORS Trevor Daly Carson Tate

ART & PRODUCTION Designer Joenel Salvador Production Manager Alicia Chin Advertising Coordinator Ella Dayandante

SALES & MARKETING Associate Publisher Trevor Biggs Vice President, Sales John Mackenzie 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

EDITORIAL INQUIRIES

neil.sharma@keymedia.com

SUBSCRIPTION INQUIRIES

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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, Seoul

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

MORTGAGE PROFESSIONAL AMERICA chris.anderson@keymedia.com T +1 720 316 7378

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

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Designed for those who think differently!

thecentumnetwork.ca

thecentumnetwork@centum.ca | thecentumnetwork.ca ®/™ 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.

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23/04/2019 3:08:46 AM

UPFRONT

STATISTICS

Handling the stress

AFFORDABILITY HAS TAKEN A HIT

Even though borrowers believe the stress test is hurting affordability, they aren’t sure it should go away HALF OF all Canadians who are aware of the B-20 mortgage stress test agree that it has reduced housing affordability – although this feeling is much more pronounced in Ontario than elsewhere in the country. Ontarians and British Columbians are also more likely to have a high level of awareness of the stress test, which is unsurprising given that they’re home to the nation’s two hottest markets. However,

57%

50%

of Canadians are aware of the mortgage stress test

of those aware of the stress test feel it has reduced affordability

only 42% of BC residents were convinced that the stress test had an impact on housing affordability, compared to 57% of Ontarians.

When asked what measures would give borrowers some relief, 28% of respondents recommended increasing the amount of the first-time home buyers’ tax credit. Only 15% thought the government should reduce the mortgage stress test rate.

82%

of Canadians believe housing affordability is a major issue

Canada-wide, only 57% of people are aware of the mortgage stress test – but of those who are, half believe it has hurt their ability to afford a home. Ontarians were far more likely to feel the stress test has hurt affordability those living in the Prairies, Quebec or Atlantic Canada.

PERCENTAGE WHO THINK THE STRESS TEST HAS HURT AFFORDABILITY

50%

CANADA

55%

agree housing affordability can’t be fixed solely by government policies Source: Spring 2019 Housing Outlook Survey, Zoocasa

AWARENESS VARIES

CAN THE GOVERNMENT HELP?

Ontario leads the field in awareness of the mortgage stress test, while in Quebec and the eastern provinces, awareness is well below the national level of 57%.

Only 21% of Canadians feel confident that the government will be able to improve affordability in the next five years. Those who are currently renting were slightly more optimistic about the government’s ability to help than current homeowners were.

PERCENTAGE WHO FEEL CONFIDENT THE GOVERNMENT CAN IMPROVE AFFORDABILITY

PERCENTAGE WHO ARE AWARE OF THE STRESS TEST 70% 60% 50% 40% 30% 20% 10% 0%

26%

Renters

58%

52%

62%

44%

British Columbia

Prairies

Ontario

Quebec and Atlantic Canada

Source: Spring 2019 Housing Outlook Survey, Zoocasa

6

21%

All Canadians

19%

Homeowners 0%

10%

20%

30% Source: Spring 2019 Housing Outlook Survey, Zoocasa

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42%

BRITISH COLUMBIA

40%

45% 57%

QUEBEC AND ATLANTIC CANADA

ONTARIO

PRAIRIES

Source: Spring 2019 Housing Outlook Survey, Zoocasa

HOW TO BOOST HOUSING AFFORDABILITY Increasing the First-Time Home Buyers’ tax credit was the number-one suggestion from respondents when asked what the government could do to alleviate the lack of affordability. Less popular measures included bumping the maximum amortization period back up to 30 years and expanding the Home Buyers’ Plan to allow borrowers to withdraw more money from their RRSP for a home purchase.

SHOULD THE STRESS TEST BE SCALED BACK? Only 15% of respondents thought the government should reduce the rate of the stress test to address housing affordability.

20%

28%

Increase the First-Time Home Buyers’ tax credit

10%

Increase the maximum mortgage amortization period to 30 years

15%

8%

Expand the Home Buyers’ Plan

10%

0%

Source: Spring 2019 Housing Outlook Survey, Zoocasa

15%

17%

15%

All Canadians

Renters

Homeowners

Source: Spring 2019 Housing Outlook Survey, Zoocasa

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UPFRONT

HEAD TO HEAD

Will FSRA adequately replace FSCO?

As one regulatory agency steps in to replace another in Ontario, can brokers expect any material changes?

Karen Matthey Co-owner and mortgage agent The Mortgage Professionals

Anthony Contento President and CEO Sherwood Mortgage Group

Shawn Allen Principal owner Matrix Mortgage Global

“I hope, perhaps naïvely, that FSRA is a regulator with more teeth than FSCO. FSRA’s proposal for the mortgage broker sector states that expenses to regulate the sector will significantly outweigh licensing fees received. It appears they intend to increase licensing fees to offset this deficit in subsequent years.

I would like to see greater penalties and fines levied on those found to be in breach of the regulations rather than increased licensing fees across the board. I’d also like to see greater enforcement of suspensions and bans for those guilty of serious infractions.”

“It’s too early to say whether the FSRA will adequately replace the FSCO; however, the new body can certainly learn from its mistakes.

As a self-funded regulator, FSRA has the autonomy to move swiftly.

Public consultation and advice gathered from agents and brokers are crucial to any significant changes. An open line of communication with brokers will help reinforce FSRA’s role as a regulator and send a message to the public of its interest in improving the status quo.”

“Good governance is the standard by which FSRA’s value will be judged. The framework of its organizational structure must differ from that of old regimes, or we will be left with similar outcomes.

As in a court of law, this industry must be held accountable for its actions by its peers. FSRA seeks to provide this accountability, coupled with the binding authority providing for swift action should a violation of the code of conduct be proven.

Change is the only constant; time will tell if this is the change that is required.”

OUT WITH THE OLD …

After finding itself embroiled in several controversies – including involvement in the Fortress Real Developments scandal and the recent revelation that it failed to complete several investigations into risky mortgage brokerages – the Financial Services Commission of Ontario is set to be fully replaced by the Financial Services Regulatory Authority of Ontario by June. According to the new organization’s website, FSRA “aims to be a forward-looking, flexible, self-funded regulator capable of responding to the dynamic pace of change in marketplace, industry and public expectations.” Specifically, this mandate includes protecting Ontarians who use mortgage brokers – FSRA’s 2019-2020 budget proposal outlined several priorities for the mortgage industry, including better regulating syndicated mortgage investments, improving broker licensing efficiency and effectiveness, and adopting an industry-wide code of conduct.

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HOME

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It’s about life scores.

Life happens. When a change in marriage or a relationship occurs, it can affect your clients’ credit and confidence in their future. Let’s partner to look beyond their credit score. Together, we can ask the right questions to understand the whole story so they can focus on the scores that matter most in life. Visit hometrust.ca/lifehappens. Home Happens Here.

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12/6/18 10:11 AM 23/04/2019 3:09:40 AM

UPFRONT

NEWS ANALYSIS

Housing measures fall flat The federal budget included several measures to help first-time buyers enter the housing market – but industry insiders believe they will hamper, rather than assist, entry-level buyers

LAST MONTH’S federal budget included measures to make housing more affordable for entry-level buyers, but upon closer inspection, the measures appear to be a missed opportunity at best and an exacerbation of affordability woes at worst.

“It’s all about increasing demand for housing without doing much to increase supply,” says DLC chief economist Dr. Sherry Cooper, “and you don’t need to be an economist to know that if you increase demand without increasing supply, you’ll end up with higher house prices, which is the opposite of the intention.”

Rather than create incentives that would

zoning and the [Ontario] Greenbelt to open up more land,” she says. “They could even subsidize housing construction or eliminate some of the red tape and other delays in construction. There are other things that could have been done to incentivize the construction of new housing.”

Instead, the budget introduced the First-Time Home Buyer Incentive, which would see CMHC provide first-time buyers up to 10% on the purchase of a new build and 5% on a resale – essentially taking a stake in the equity. The program is slated to launch in September, at which point more details will be made available, but in the interim, crucial questions remain –

“The government could have done things to increase supply, like changing rules around zoning and the [Ontario] Greenbelt to open up land” Sherry Cooper, Dominion Lending Centres considerably boost housing supply, Cooper says, the federal budget instead encourages more buyers to compete for inadequate housing inventory. “The government could have done things to increase supply, like changing the rules around

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namely, whether CMHC’s equity stake will be recouped from appreciation at the point of sale or if the initial amount put in would be repaid.

“It remains unclear whether the government would take an equity position in the home or

whether this would act as an interest-free loan,” says James Laird, president of CanWise Financial and co-founder of Ratehub.ca. “This is an important distinction because if the government is taking an equity stake in a home, the amount that the homeowner would have to pay would grow as the value of the home increases.”

“It appears they’re calling it a shared equity mortgage,” Cooper says, “which means you pay off the loan when you sell the house. It may well be that you pay off 10% or 5% of the sale price as opposed to that of the purchase price, so we don’t know the details yet, but one needs to consider whether you’re also sharing appreciation – the equity you have in your home – when you sell it. Or, for that matter, even a loss.”

Moreover, the incentive will reduce prospective borrowers’ qualifying power. Under current qualifying criteria, including the stress test, buyers can qualify for homes that are 4.5 to 4.7 times their household income. But if they use the FirstTime Home Buyer Incentive, that qualification

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THE FEDERAL BUDGET’S HOUSING INCENTIVES

First-Time Home Buyer Incentive • $120,000 maximum household income • 10% CMHC equity on new construction; 5% equity on resales • Total mortgage plus incentive cannot exceed four times annual income

RRSP Home Buyers’ Plan • Increases RRSP withdrawal limit from $25,000 to $35,000 • Must be repaid within 15 years; at least a 1/15th contribution must be made each year

amount declines by around 15%.

“The total a first-time homebuyer gets, between their mortgage and the incentive they receive from the government, can’t exceed four times their household income,” Laird says. “This qualifying criteria is actually stricter than the

Ratehub.ca, a household with an income of $100,000 that puts down a 5% down payment can qualify for a $479,888 home. This leaves a mortgage amount of $474,129 after the down payment and CMHC insurance premium, which is 4.74 times their annual income. If the same

“Most of the first-time buyers we see struggle to get 5% down … It’s not as straightforward as just increasing the RRSP limit” Karen Matthey, The Mortgage Professionals regular qualifying criteria that exists today. I was surprised the policy itself was launched like this since that section of the budget is called ‘affordability,’ and it actually reduces affordability.”

According to calculations provided by

household elected to participate in the FirstTime Home Buyer Incentive, their maximum purchase price drops to $404,858, because it’s the maximum they can afford while keeping the total below four times their income.

Rental Construction Financing • An additional $10 billion in low-interest financing for developers to build purpose-built low-income rentals It’s telling that the BC Liberals launched a similar program, which ended up being scrapped by the NDP after only 3,000 buyers used it.

Another of the budget’s housing measures is the RRSP Home Buyers’ Plan, which increases the RRSP withdrawal amount from $25,000 to $35,000; however, finding a millennial with enough money saved to participate in the incentive program might be a tall order.

“A first-time buyer in our market with $25,000 to withdraw is rare; a first-time buyer with $35,000 saved is even rarer,” says Kingstonbased broker Karen Matthey, co-owner of The Mortgage Professionals. “Most of the first-time buyers we see struggle to get 5% down, between paying off debts, student loans and other payments. It’s not as straightforward as just increasing the RRSP limit and expecting it will somehow help.”

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UPFRONT

ALTERNATIVE LENDING UPDATE NEWS BRIEFS Alternative lender looks toward further US expansion

According to Toronto-based alternative lender Romspen Investment Corp., the Canadian mortgage market has become too volatile, making further expansion south of the border even more attractive.

Managing partner Mark Hilson told Bloomberg that the 2008 financial crisis has made the larger and more liquid US market an exemplar of tight, effective regulation – in contrast to the Canadian market, which he described as having “too much money chasing too few deals.”

At present, Romspen is in talks with institutional investors to raise as much as $5 billion to begin offering its bridge financing products in the US.

Gen x borrowers are relying heavily on alternative lenders

While much of the growth in alternative lending lies with borrowers who have been pushed out of A lending, data from Realosophy and Teranet suggests that one cohort of buyers in particular is turning to alternative lenders. The two organizations found that gen x borrowers receive 43% of all private mortgage funds in Canada. “A portion of this increase may be driven by owners who prefer to do major renovations to their existing home versus upsizing to another house,” Realosophy and Teranet’s analysis said.

“But another possible explanation is that private debt is being used to help finance existing real estate investments.”

Variable rates moving lower in both A and B channels

Variable rates are trending lower both at the largest banks and at alternative lenders, CIBC economist Benjamin Tal reported in late March. These rates, which are strongly influenced by any movements announced by the Bank of

Canada, are now generally lower than 3%, as many investors believe the central bank could cut its overnight rate at some point this year. “Are we still going to be headed for interest rate increases in the next couple of years? Yes,” Janine White of Ratesupermarket.ca told CBC. “[But] for the rest of 2019, the prediction is that the variable rate is going to be stable and maybe has a chance of coming down.”

Non-bank lenders could soon offer debt-backed securities

Current trends in the Canadian bond market could lead non-bank mortgage lenders to begin issuing risky consumerbacked debt products, according to Tim O’Neil, managing director and head of Canadian structured finance at credit ratings agency DBRS. Yves Paquette, portfolio manager at AllianceBernstein Holding, agreed, telling Bloomberg that “credit delinquencies are showing low numbers, so it’s good timing to issue.” The recently increased volume of consumer-backed bonds has accompanied slow consumer spending and weak inflation numbers. In addition, 10-year government bond yields are trading considerably below the Bank of Canada’s overnight rate.

Lender merger to serve small businesses across Canada

US-based alternative small business lending platform OnDeck has purchased Canada-based small business lender Evolocity Financial Group. The combined entity will operate under the name OnDeck Canada. “The closing of this transaction signals a new era of online lending innovation on behalf of Canada’s small businesses,” said OnDeck CEO Noah Breslow. “As one of Canada’s leading online lenders to the crucial small business sector, we are well positioned to provide financing options that will benefit Canadian small business owners.”

B-20’s effect on alternative lending A new report confirms that the stress test has bolstered non-bank lenders’ market share

Non-bank lenders came to the fore in Canada’s mortgage market in 2018 as a considerable proportion of borrowers were forced to turn to lenders not covered by the stress test regulations mandated by the B-20 updates introduced in January 2018. A CIBC report released in mid-April cited the stress test as a major factor in the growth of the alternative mortgage sector.

In Ontario alone, private lenders accounted for around 12% of new mortgages last year.

Their share of the market increased from 10% in 2017 and 8% in 2016, according to CIBC. However, CIBC World Markets deputy chief economist Benjamin Tal warned that while the alternative market is playing a crucial role in sustaining Canada’s housing activity, federal regulators should begin taking the segment’s rapid growth more seriously.

“If you have a market that’s 7% or 8% of the [mortgage] sector, I think it’s time to start looking at how we can regulate it,” he said. “If it gets to 15%, you want to be able to see what’s happening in 15% of the market.”

The CIBC report also highlighted the tighter mortgage qualification rules as the main driver behind the $25 billion decline in national residential mortgage volume in 2018.

The bank’s report said B-20 was likely responsible for between 50% to 60% (or around $13 billion to $15 billion) of the overall

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shrinkage in 2018’s volume. Interest rate hikes and declining affordability were also factors in the decline, CIBC’s report noted.

Aside from lower mortgage volume, the stress test has also been attributed as a major influence on lower sales activity; transactions plummeted by 11% across Canada last year.

The drop in activity was most apparent in Vancouver, which suffered a 32% decrease in home sales in 2018.

Worse, this weakness is showing no signs of abating any time soon. Data from the Canadian

“[B-20] should be a bit more flexible, and more dynamic, to reflect market conditions” Real Estate Association showed that national home sales fell by 4.6% year-over-year in March, leading to the lowest number of sales for the month since 2013.

According to Tal, this trend points toward a clear conclusion: While the stress test was necessary to cool the country’s hottest markets, the federal government should start contemplating possible amendments. Tal argued that the regulations have become “a bit too severe at this point in the game.”

“I’m not saying to kill B-20 by any stretch of the imagination,” he told The Globe and Mail. “I’m just saying it should be a bit more flexible, and more dynamic, to reflect market conditions.”

Q&A

Nick Kyprianou President and CEO RIVERROCK MORTGAGE INVESTMENT CORPORATION

Years in the industry 30+ Fast fact Kyprianou served as president and director at Home Trust, and then CEO at Equity Financial Trust, prior to founding RiverRock in 2014

Giving clients a leg up on B-20 How does RiverRock help customers amid current market conditions?

At RiverRock, we accept self-declared letters with no supporting documents, and that helps a lot of people. We don’t have a minimum Beacon score, and we don’t have servicing requirements.

For all intents and purposes, we’re an asset-based lender, so if we like the property and we think it’s marketable, we do our best to make the deal work.

Where does RiverRock hold an advantage over the competition?

As an overall package, what we offer is probably less expensive than a lot of other private lenders out there. We allow our clients to use their own lawyers, so that saves them around $2,000 to $3,000 per transaction, and those are big savings. We’re transparent with our costs: We just charge a lender’s fee and our rate, and that’s it. There are no hidden costs that will take the client by surprise.

Another advantage we have is that we possess an administrator’s licence. We don’t have a mortgage broker licence, so this gives the brokers dealing with us an assurance that we’re never going to steal their clients.

In the current environment, what are the major hardships borrowers encounter?

The main problem right now is servicing. That has hurt a lot of people. They got pre-approved by banks, and then they went out and bought houses, and then all of a sudden the rules changed on them. They might have bought pre-constructions with preapprovals in their pockets, but then by the time the homes were completed, they went back to the banks that gave the preapprovals, only to find that they no longer qualify. We’ve seen this exact sequence surprise a lot of borrowers.

Fortunately, the alternative space has always been vibrant.

Around one in five people don’t qualify at banks because they’re self-employed and they can’t prove all their income, or they have some credit challenges. At RiverRock, we see that our opportunity lies in filling the space where the institutional alternative lenders were pushed out.

What market challenges and opportunities do you see for the rest of 2019?

This year will be relatively flat, with rates to remain steady, but I think the market will pick up in 2020. Last year’s new regulations, interest rate hikes and the resulting slower market activity led to much nervousness. People don’t like uncertainty, and when there’s a lot of uncertainty around, people sit on the bench. I think that next year, people will begin feeling confident that rates are stable and that they will finally get the hang of B-20.

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UPFRONT

COMMERCIAL UPDATE

Caution needed in the retail space The retail sector could be a dark spot on an otherwise thriving commercial market in 2019

Avison Young noted that retail deficiencies will likely be compensated for by the commercial market’s overall strength.

“Supported by relatively sound leasing fundamentals in almost every market, debt reduction and asset and geographic diversification will continue in 2019, while asset values are expected to remain elevated and cap rates low for prime assets,” Argeropoulos said.

In its 2019 outlook, meanwhile, Morguard Corporation expressed confidence that the retail sector would remain robust, despite the

“Properties with development or repositioning potential are expected to generate strong interest”

Although Canada’s commercial property sector recorded its 10th straight year of stellar performance in 2018, commercial real estate firm Avison Young has warned investors to avoid retail real estate this year due to the segment’s current unpredictability.

In its 2019 commercial real estate forecast, Avison Young noted that vacancy in the asset class remains in flux, largely because of notable failures among some large-scale retail chains.

The space also saw several closures of under-

NEWS BRIEFS

performing properties due to the disruptive influence of e-commerce.

“The focus on creating memorable consumer experiences will endure across the Canadian retail landscape in 2019,” said Avison Young’s Bill Argeropoulos. “Significant investment in technology to track millennial behaviour is being made by retailers developing and enhancing their physical locations and online market shares while seeking the correct balance in the symbiotic relationship between bricks and clicks.”

Vancouver’s industrial lease rates soar

Amid record-level demand, Metro Vancouver’s industrial lease rates are now among the highest in Canada, according to commercial real estate services firm Lee & Associates. As of the end of 2018, annual lease rates for the asset class in the city of Vancouver stood at $17.70 per square foot, thanks to an industrial vacancy rate of 1.4% – the lowest in any Canadian market. Sales activity in Metro Vancouver’s industrial sector also reached a new record in the fourth quarter of 2018, coming in at $385 million.

risks presented by erratic leasing performance.

A large contributor to this predicted strength will stem from the increased purchasing power inherent in a steadily recovering economy.

“Sustained economic expansion over the next few years bodes well for the Canadian commercial real estate sector as a service provider to the economy,” Morguard said. “Canadian commercial property sales activity will remain robust over the near term against a backdrop of positive overall sector performance. While retail sales growth continues to moderate, properties with development or repositioning potential are expected to generate strong interest among the investment community looking ahead to 2019.”

Toronto facing office supply shortage

CBRE has warned that Toronto’s office space is facing a “chronic shortage,” despite the prodigious amount of new space under construction. As of the end of last year, the city has 7.3 million square feet pending, nearly a 1.3 millionsquare-foot increase from the third quarter of 2018 and far outstripping Vancouver’s 2.86 million square feet. But Toronto’s office market continues to magnetize a wide range of industries, particularly tech. This trend significantly pulled down the vacancy rate of the asset class to 2.7%.

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Q&A

Steve Fabian Senior vice-president, commercial and capital markets CANADIAN MORTGAGES INC.

Years in the industry 15+ Fast fact Fabian got his start in the industry with a chartered bank before moving on to a major non-bank lender in posts ranging from branch office management to credit management and national business development

Keeping pace with commercial strength Can you provide an overview of the situation in Canada’s office market so far this year?

The office market is strong overall. Toronto and Vancouver lead the way, but there is some renewed optimism in Calgary and Edmonton. Employment numbers for the country as a whole are strong, and as such, the national office vacancy rate is down around 11% in both core and suburban markets. Continued demand spurs construction growth, especially in Vancouver and Greater Toronto.

How about the light industrial segment?

Industrial real estate continues to be a hot market.

Manufacturing has rebounded with continued growth in the logistics and warehousing space. Demand is still overpowering supply, and as such, availability rates nationally are at new record lows, creeping near or below 3%. This represents a drop of more than 1% in the past year, continuing a three-year trend of lowering availability. New construction is just as furious with over 20 million square feet of new space being built, with Toronto and Vancouver again leading the way. This follows on the heels of a record year for absorption in 2018, with more than 30 million square feet absorbed.

Landlords continue to benefit, as net asking rents have reached a record high of $8 per square foot, an increase of more than 12% from last year.

In this environment, what are commercial brokers and would-be investors grappling with?

Investors are faced with continued downward pressure

St. John’s commercial market in the doldrums

Downtown St. John’s is seeing as much as a quarter of its high-end office space empty, according to a February analysis by Turner Drake and Partners.

According to Turner Drake’s Alex Baird Allen, the problem took root a few years ago when new office space was constructed at a time when the city was seeing sustained demand, which subsequently declined during the oil price crash. Major players have since elected to own their spaces, while profit imperatives are also causing large businesses to move out of the downtown area.

on cap rates, wherein higher purchase price values make it a challenge to make acquisitions work. Quite often, market values are outpacing NOI growth; as such, many projects don’t meet DSCR tests. Traditional institutional lenders often increase capital requirements, with resulting lower-LTV loans. The ironic flip side is that despite record-high values per square foot, finding acquisitions is difficult, leaving capital not fully deployed.

For brokers, the market dynamics present both challenge and opportunity. Lender appetites for accepting stretch values means LOIs come back with proceeds less than requested. Brokers struggle to find the balance between getting the client the much-sought ‘best rate’ and cutting proceeds. Brokers must juggle lender types on a case-by-case basis to make a deal work.

What can commercial investors expect for the rest of 2019?

Continued down pressure on cap rates, and thus higher values. At the same time, institutional capital will continue to experience pressure from regulatory requirements. Loans will become cut to meet DSCR requirements. Investors will find that their aggregate book value LTV will be lower than forecast, not necessarily planned. Where higher leverage is required, borrowers will find that they increasingly require a secondary lender with higher costs.

Also, expect more capital to flow into CRE markets, as they are increasingly viewed as more certain than the heavily government-interfered-with residential space.

Metro outskirts to see accelerated development

The peripheries of major commercial property markets will likely see intensified development and demand over the next few years, mostly driven by tech firms’ sustained hunger for usable office space, according to a recent forecast

by Marcus & Millichap. “Elevated pricing expectations and fewer high-quality listings in downtown areas motivate investors to broaden search parameters to suburban locations near major metros,” the report said.

“Higher yields beyond the urban core will be a large driver of sales activity in 2019.”

New towers to revive Saskatoon market

Saskatoon’s in-progress River Landing properties – two new office towers slated to offer a total of 450,000 square feet, more than 60% of which has already been leased – are the first true Class A office spaces in the city’s downtown area since the 1980s. The buildings are expected to further boost the city’s recovering commercial market, which currently benefits from a relatively healthy commercial/industrial vacancy rate of 7.7%, with rents at $9.25 per square foot.

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UPFRONT

OPINION

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

The time is now In order to prove their value over banks, mortgage brokers must take the initiative to educate themselves – now, writes Trevor Daly OUR INDUSTRY leaders must begin to act and to take control of what it means to be a mortgage broker. Likewise, it is incumbent on each mortgage broker to invest the time required to fully comprehend what each lender will offer their individual clients.

This can be a very daunting task; however, it is necessary, as we must give consumers a reason to work with a broker over their usual bankers.

A broker must be fully aware of their client’s situation and future plans. This can be accomplished by proper client interviewing and completing client assessments. This process aids in the clients’ overall mortgage knowledge and educates them on how to pay down their mortgage faster while still having the financial freedom to enjoy their lives.

While most mortgage brokers can hold their heads high in this regard, a small percentage of brokers deal in private mortgages without having sufficient experience.

Brokers lacking this in-depth understanding of the products they sell run the risk of placing their clients in unsuitable products.

I started in the mortgage industry working for a bank as a mortgage specialist, and as such, was educated on one product only. When I came over to the broker channel 12 years ago, I found myself overwhelmed by the number of products and solutions I now could offer to clients.

In order to meet the needs of my clients, I spent countless hours educating myself by meeting with lenders and reading background material. Most importantly, I asked

16

questions when I wasn’t sure or felt I had gaps in my knowledge.

As a result of the recent changes to mortgage lending rules, the broker channel has begun to see more private lending deals. This is often a problem, as many brokers who lack training and education with institutional lenders will likely lack the ability to properly process a privately funded mortgage, which

For example, I have heard of instances where mortgage investors were led to believe that their investment was a first mortgage, while the small print of their investment contract included the proviso that their mortgage position could be deferred to a lesser position, thus increasing the risk involved with their investment.

Whether dealing with a mortgage investor or a borrower, it is most prudent to always strive for the highest level of transparency and understanding by the investor or borrower. A broker will typically accomplish this with borrower and investor disclosure documentation, and brokers need to ensure that these documents are understood by the borrower or investor.

What lies at the heart of the lack of transparency among many brokers is broker compensation. Typically, mortgage brokers have to charge their own fees for arranging a mortgage with private investors. The fee can vary for each individual transaction, thus creating the opportunity for unscrupulous brokers to take advantage of their clients.

“Brokers lacking an in-depth understanding of the products they sell run the risk of placing their clients in unsuitable products” has many nuances to do with the qualification of a file in such matters as terms, fees and what the closing process will look like.

When a broker and their client decide to obtain a private mortgage, the plan should be set out from the beginning and steps planned or a roadmap drawn up for the client so that they fully understand the transaction. If a broker is not educated on private financing, how should the broker expect to educate his or her client?

Syndicated mortgages are one hot-button issue that has sprung up within the private mortgage space. Syndicated mortgages – products with more than one investor lending on a mortgage – have been beset by a lack of transparency with investors as a consequence of the lack of education surrounding this process.

As a result, I am calling on our industry to cap brokers’ fees on private lending files at a maximum of 1.5%, with a recommendation that investors follow suit.

I am also calling on our industry to invoke minimum monthly hours of training. Why? Because the time is now for our industry leaders to act and take control of what it means to be a mortgage broker. And for individual agents and brokers, the time is now to focus on training and your own value proposition so that you can be the best mortgage broker you can possibly be.

Trevor Daly is the founder of DLC Home Capital Solutions. He has been working in the mortgage space in the GTA and Niagara Region for the last 20 years.

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PRIVATE LENDING GUIDE 2019 MORTGAGEBROKERNEWS.CA

PRIVATE

LENDING Discover 75 private lending solutions for clients strapped by the stress test

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PRIVATE LENDING GUIDE

PRIVATE LENDER DIRECTORY COMPANY

WEBSITE

PHONE NUMBER

COMPANY

WEBSITE

PHONE NUMBER

7 Park Avenue Financial

7parkavenuefinancial.com

416-319-5769

Lanyard Financial

lanyardgroup.com

604-688-5388

Aaron Acceptance

aaronacceptance.ca

866-434-9992

Magenta Capital Corporation

magentainvestment.ca

888-267-1744

Accepted Financial Corporation

acceptedmic.com

604-727-6111

Mandate National Mortgage Corporation

mandatemortgage.com

604-731-2899

Alta West Capital

awcapital.ca

888-554-9075

MCF Mortgages

mcfmortgages.com

416-272-0494

AP Capital

apcapital.ca

778-328-7401

Mercury Mortgages

amurfinancialgroup.ca

800-587-2161

kotharigroup.com/ mercury_mortgages

905-273-4234

Amur Financial Group Armada Mortgage Corporation

armadamortgage.com

888-467-6449

Mid-Island Mortgage & Savings

midislandbroker.com

250-752-6944

aroi Mortgage Investment Corporation

mic.aroi.ca

902-679-0225

MorCan Financial

morcan.ca

877-732-2801

Atlantic Signature Mortgage & Loan

atlanticsignature.com

902-406-1250

Mortgagepedia

mortgagepedia.ca

416-937-2612

Atrium Mortgage Investment Corporation

atriummic.com

416-607-4209

Mortgagequote.ca

mortgagequote.ca

866-948-7283

Bancorp Financial

bancorpfinancial.com

604-608-2717

New Haven Mortgage

newhavenmortgage.com

416-636-0000

oppono.com

905-886-5352

Bayfield Mortgage Professionals

bayfieldonline.com

604-533-4478

Oppono Lending Company

Blueshore Pacifica Alternative Mortgage Centre

blueshorepacifica.com

604-899-3780

Pacifica Mortgage Investment Corporation

pacificamortgage.ca

604-899-3799

Calvert Home Mortgage Investment Corporation

chmic.ca

403-278-0249

Paramount Equity Financial Corporation

paramountequity.ca

905-201-2282

Canada Lend

canadalend.com

905-881-0242

Peace Hill Trust

peacehills.com

506-455-3430

Canadian Mortgages Inc.

canadianlending.ca

888-465-8584

PHL Capital Corp

phlgroup.ca

604-575-7408

Capital Direct

capitaldirect.ca

800-814-2578

Pillar Financial Services

robinsongroup.com

613-279-2116

Capital West Mortgage

capitalwest.ca

604-899-3799

Pioneer West

pioneerwest.com

604-987-1420

Caplink

caplink.ca

888-429-0114

Poga Capital

pogacapital.com

800-919-4410

Classic Mortgage

classicmortgage.ca

888-869-4912

Premiere Mortgage

mortgagescanada.net/brokers

800-663-4150

Cooper Pacific Mortgage Investment Corporation

cooperpacific.ca

250-475-2669

Private Lender Inc.

myprivatelender.com

403-253-2022

Cove Mortgage

covemortgage.com

604-929-8156

RESCO Mortgage Investment Corporation

rescomic.ca

905-886-8786

CYR Funding

cyrfunding.com

905-731-1111

Reciprocal Opportunities Inc.

roigroup.ca

519-755-6252

Effort Trust

efforttrust.ca

416-924-4680

RiverRock Mortgage Investment Corporation

riverrockmic.com

647-405-2900

Falcon Ridge MGMT Ltd.

falconridgemgmt.ca

365-527-2470

Romspen Investment Corporation

romspen.com

416-966-1100

FamilyLending.ca Capital

familylending.ca

866-941-6678

Secure Capital Mortgage Investment Corporation

securecapitalmic.com

905-709-8633

Firm Capital Corporation

firmcapital.com

416-635-0221

Tekamar Mortgages

tekamar.ca

800-658-2345

First Circle Financial

firstcircle.ca

604-986-3200

Tembo Financial

tembofinancial.com

844-238-6717

First Source Mortgage Corporation

firstsourcemortgage.ca

416-221-2238

Terra Firm Capital

tfcc.ca

416-792-4700

Fisgard Asset Management Corporation

fisgard.com

866-382-9255

The 6ix Capital Group Corporation

the6ixcapitalgroup.com

416-596-6699

Foremost Financial

foremost-financial.com

416-488-5300

The Financing Hub

thefinancinghub.com

Ginkgo MIC

ginkgomic.com

416-901-5133

Trez Capital

trezcapital.com

416-350-1224

Graysbrook Capital

graysbrookcapital.ca

902-229-7479

Tribecca Finance Corporation

tribecca.ca

416-225-6900

Greenpath Capital Partners

greenpathcapital.ca

647-726-1384

Unimor Capital Corperation

mortgageapprovalhelp.ca

519-255-9505

Home Fund Corp.

homefund.com

416-696-9866

Vault Mortgage Corporation

vaultmortgage.ca

416-746-3766

IC Savings

icsavings.ca

416-784-0200

Verico The Mortgage Leaders

petermenicucci.com

877-777-7308

JV Capital

jvcapital.ca

416-572-7337

VWR Capital Corp.

vwrcapital.com

866-907-5407

Kokanee Mortgage

kokaneemortgage.com

844-565-2633

Westboro MIC

westboromic.com

613-729-5764

KV Capital

kvcapital.ca

780-433-1222

This list is not a complete directory of Canada’s private lenders and MICs. If you would like to be added to the next list, please contact Trevor Biggs at trevor.biggs@keymedia.com

Featured lender

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PRIVATE LENDING GUIDE

Cross-Canada index Check out the private lending options in your province Newfoundland Manitoba

Canadian Mortgages Inc.

Canadian Mortgages Inc. Alberta Canadian Mortgages Inc. Premiere Mortgage

Premiere Mortgage

Ontario Canadian Mortgages Inc.

Romspen Investment Corporation

Falcon Ridge MGMT Ltd.

VWR Capital Corp.

Romspen Investment Corporation

Romspen Investment Corporation

First Source Mortgage Corporation

Reciprocal Opportunities Inc. Romspen Investment Corporation VWR Capital Corp.

VWR Capital Corp.

New Brunswick Canadian Mortgages Inc. Romspen Investment Corporation

Prince Edward Island Canadian Mortgages Inc. Romspen Investment Corporation

British Columbia Canadian Mortgages Inc. Premiere Mortgage Romspen Investment Corporation

Nova Scotia Canadian Mortgages Inc.

Saskatchewan Romspen Investment Corporation VWR Capital Corp.

Romspen Investment Corporation

Quebec Romspen Investment Corporation

VWR Capital Corp.

Direct funding from $500,000 to $10,000,000 Across Ontario COMMERCIAL • CONSTRUCTION • DEVELOPMENT Direct Direct funding funding from from $500,000 $500,000 toto $10,000,000 $10,000,000 Across Across Ontario Ontario COMMERCIAL COMMERCIAL • CONSTRUCTION • CONSTRUCTION • DEVELOPMENT • DEVELOPMENT

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For all deal Inquiries contact:

ForFor all all deal deal Inquiries Inquiries contact: contact:

Darren Neziol 519-755-6252

Darren Darren Neziol Neziol 519-755-6252 519-755-6252

dneziol@roigroup.ca

dneziol@roigroup.ca dneziol@roigroup.ca

roigroup.ca

roigroup.ca roigroup.ca 23/04/2019 3:12:25 AM

ca ca 17-24_Private Lending Guide-SUBBED.indd 3

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PRIVATE LENDING GUIDE

CANADIAN MORTGAGES INC. canadianlending.ca

only), construction financing (urban Ontario only)

1-888-465-8584 Lending markets: Ontario-wide, British Columbia (urban markets), Alberta (Tier 1 and Tier 2 cities), Manitoba (Winnipeg and Brandon) and the Maritimes (major metros only) Niche/focus: Low-rate first and second mortgages for good LTVs, fast closings, ethical lending, jumbo firsts and seconds available in the GTA Products: First and second mortgages, bridge loans, third mortgages (behind banks only), draw financing, and commercial mortgages

Purpose: Debt consolidation, purchase financing, renovation lending, bridge financing, credit repair, working capital, construction and more Maximum LTV: 80% in urban Ontario, BC and Alberta; 75% elsewhere. Higher LTVs considered in all locations on a case-by-case basis Minimum Beacon: None Terms: 12 months is our standard.

Shorter and longer terms available upon special request

Preferred loan amount: Residential Minimum loan amount of $50,000; smaller loans available on a case-by-case basis Maximum loan amount of $3 million in GTA; $1 million outside of GTA* *Larger loans available on a case-by-case basis

Commercial Minimum loan amount of $1 million; smaller loans available on a case-by-case basis Maximum loan amount of $50 million in urban markets across Canada* *Larger loans available on a case-by-case basis

Rate type: Fixed Customer type: Salaried, self-employed, corporations, good or bad credit Property type: Single-family up to four units in all markets, income-producing commercial (urban Ontario only), development/zoned land (urban Ontario

Maximum amortization: Interest-only/35 years Fees: Loans priced according to risk; minimum $1,500

FALCON RIDGE MGMT LTD. falconridgemgmt.ca Pino Decina 365-527-2470

Lending markets: GTA and urban/ suburban centres across Southern Ontario Niche/focus: Residential alternative lending programs, including stated income for self-employed individuals

Products: Residential first mortgages, construction and small commercial Customer type: Alternative borrowers (BFS, new immigrants, stated income, etc.)

Terms: One or two years Rate type: Fully open and fixed terms available Maximum amortization: Interest-only

Property type: Residential

Fees: 1%

Purpose: Purchase or refinance

Preferred loan amount: $150,000 to $2 million

Maximum LTV: 80% Minimum Beacon: 600 (or less on a case-by-case basis)

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FIRST SOURCE MORTGAGE CORPORATION firstsourcemortgage.ca 416-221-2238 Lending markets: Ontario – London to Ottawa; prefer population centres of 25,000+ Niche/focus: Non-bank commercial, multi-residential, development land, retail, industrial, gas stations, hospitality Products: First mortgages

Customer type: Experienced builders, developers, real estate investors, business owners Property type: Development land, industrial, commercial (including stores and apartments, plazas, flagged gas stations, flagged hotels)

Minimum Beacon: None Terms: One to two years; lender fee; closed six months then open on one-month bonus Rate type: Fixed Maximum amortization: Interest-only

Purpose: Acquisitions, construction projects, renovations of existing properties, refinances, equity take-out or bridge financing against future development or future sales

Fees: Varies; competitive Preferred loan amount: $1 million to $10 million

Maximum LTV: 75%

Hard to fit client?

We can help.

 1-866-757-8858  lending@premhome.ca  mortgagescanada.net/brokers

 1st & 2nd mortgages  NO credit or beacon score requirements  NO income verification needed in most cases

Submit a deal

 Residential in urban areas: Up to 75% LTV  Residential in smaller towns: Up to 65% LTV

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23/04/2019 3:12:39 AM

PRIVATE LENDING GUIDE

PREMIERE MORTGAGE

Lending markets: BC, Alberta, Manitoba

Property type: Residential properties – detached, semi-detached, condos, townhomes, duplexes, mobile homes on own land, rentals, owner-occupied properties

Niche/focus: Private equity lending

Purpose: Purchase or refinance

Products: First and second mortgages in both urban and rural areas

Maximum LTV: Up to 75% in urban centres; 65% in small towns or rural areas

mortgagescanada.net/brokers 1-800-663-4150

Customer type: Those declined by traditional lenders/banks, CRA issues, previous bankruptcy, BFS clients who can’t prove income the traditional way

Terms: One- to three-year terms available Rate type: Fixed Maximum amortization: Interest-only, up to 30 year amortization Fees: Deal-dependent Preferred loan amount: Up to $500,000

Minimum Beacon: None

Creative Non-Bank Mortgage Solutions For Commercial Real Estate

When Your Commercial Deal Needs The Right Lender…

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Who can provide you with the guidance, skill, knowledge, speed and creativity to over deliver on client needs and demands. We are that Lender. Call us on your next commercial mortgage transaction between $500,000 and $10 million and we’ll prove it!

Land • Land Servicing • Construction • Office • Industrial • Retail • Plaza • Special Purpose • Gas Station • Hotel • Bridge Loans • First Mortgages • Acquisition • Refinance

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Call: 416-221-2238 • David Mandel x22 • Skip Walters x25 • Leonard Zaidener x30 • Paul Labelle x27 Principal Broker First Source Mortgage Corporation (License # 10434) Principal Administrator First Source Financial Management Inc. (License # 12594)

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Email lender notes, application, and credit bureaus to:

deals@vwrcapital.com DIMITRI KOSTUROS

Email lender notes, application, and credit bureaus to:

PAULA HUTTON

Chief Operating Officer deals@vwrcapital.com dimitri@vwrcapital.com

BDM - Prairies paula@vwrcapital.com

Chief Operating Officer dimitri@vwrcapital.com

BDM - Prairies paula@vwrcapital.com

D IMITRI K OSTUROS

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P AULA H UTTON

23/04/2019 3:12:49 AM

PRIVATE LENDING GUIDE

RECIPROCAL OPPORTUNITIES INC. dneziol@roigroup.ca

Customer type: Real estate investors, builders, developers, business owners

Terms: Up to three years

519-755-6252 Lending markets: Across Ontario

Minimum Beacon: N/A

Property type: Development land, construction, industrial, multi-residential, commercial

Niche/focus: Non-institutional commercial

Purpose: Acquisition, refinance

Products: First mortgages

Maximum LTV: 70%

Rate type: Interest-only or amortizations Fees: 2% lender fee plus legal costs Preferred loan amount: $500,000 to $10,000,000

ROMSPEN INVESTMENT CORPORATION romspen.com 416-966-1100

Property type: Commercial, industrial, development, hospitality, special-purpose properties

Lending markets: Canada and the US

Purpose: Purchase, refinance

Niche/focus: Commercial mortgages

Maximum LTV: 75%

Products: Term, bridge, construction mortgages

Minimum Beacon: None

Rate type: 7.75% and higher Maximum amortization: Interest-only and flexible amortizations Fees: From 2% of loan amount, plus lender’s legal fees and disbursements Preferred loan amount: $5 million to $100 million

Terms: Up to five years Customer type: Commercial borrowers

VWR CAPITAL CORP. vwrcapital.com

companies, operating companies, non-residents and more

Terms: One year – open mortgages available

Property type: Single-family, townhouses, condos, row homes, serviced land, raw land, multi-family

Rate type: Fixed

866-907-5407 Lending markets: BC, Alberta, Saskatchewan, Manitoba, Ontario Niche/focus: Residential

Purpose: Financing for borrowers who might not qualify at traditional institutions

Products: First, second and third mortgages

Maximum LTV: 75%

Customer type: Individuals, holding

Minimum Beacon: None

Maximum amortization: Up to 35 years; interest-only mortgages available Fees: Starting at $750 for first mortgages; $500 for second and third mortgages Preferred loan amount: $25,000 to $2.2 million

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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 $2.7 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

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4/15/2019 4:53:56 PM 23/04/2019 3:13:24 AM

PEOPLE

THE TECH GURU Home Trust’s Ed Karthaus knew technology would define his future, and now he’s educating brokers about how it will define theirs

PEOPLE, PROCESSES and technology are shaping the mortgage industry in ways that would have been considered impossible a decade ago, and one of the people leading the charge is Ed Karthaus. As executive vice-president of sales and marketing at Home Trust, Karthaus brings tech experience that few in the mortgage industry can rival.

A natural on the ice rink, Karthaus attended university in the US on a hockey scholarship; after receiving a business degree, he knew that a career in the technology sector awaited. Over the next 20 years, he carved out a niche for himself as someone who not only understood the tech industry, but also had a natural ability in sales and marketing.

“My career has always been purpose-built,” Karthaus says. “I’ve had a chance to work with some of the best technology companies, including Xerox, Oracle and NCR Teradata, among others.” He has also served as a consultant, which allowed him to hone his craft with clients across a range of tech, financial services and venture-stage companies.

Bringing tech to mortgages While Karthaus’ career disciplines stretched throughout the tech world, he primarily focused on financial services. His experience eventually led him to Filogix, where he served as executive

18

vice-president of sales and marketing services, responsible for selling and implementing new technology standards for originating and underwriting mortgages.

“My time was all about using technology to solve business problems and create new business opportunities,” Karthaus says. “The mortgage industry was perfect because I was part of a great company creating a new technical standard

and brokers operated,” he says, “and I got a chance to see and work with many lenders from coast to coast, ranging from Schedule I banks to private lenders and everything in between, so having that hands-on field experience was invaluable in my career development.”

Over time, his role at Filogix expanded to include customer and professional services. The company continued to grow and subsequently

“The technology itself won’t be the competitive advantage; the application of technology will be. You could have a CRM, but if you don’t use it effectively, it’s no competitive advantage. The way brokers apply technology will differentiate them from other brokers” in the industry on both the originating and underwriting sides. My understanding from an end-user perspective, as well as an information technology perspective, served me well.”

In his role, Karthaus dealt with more than 100 different lenders and thousands of mortgage brokers across Canada, and he learned quickly.

“I had to understand how mortgage lenders

was sold to D+H. When Yousry Bissada, with whom Karthaus worked at Filogix, joined Home Trust in August 2017 as president and CEO, he tapped Karthaus to serve as EVP of sales and marketing for the lender. Earlier this year, he was given the added responsibility of overseeing Home Trust’s Visa business.

While Karthaus is focused on changing the

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PROFILE Name: Ed Karthaus Title: Executive vice-president, sales and marketing Company: Home Trust Based in: Toronto Years in the industry: 15 Career highlight: “Being part of the leadership team at Filogix, growing it, then selling it.”

Career lowlight: “I haven’t really had one. I’ve had an incredibly great career that’s been well planned out and well thought out.”

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PEOPLE

INDUSTRY ICON

digital landscape of mortgages, Home Trust itself plays a pivotal role in the Canadian mortgage industry, particularly for borrowers who are self-employed, new to the country or have bruised credit.

“We have great people, people passionate about our great industry, and I’m thankful to be part of a great organization with a tremendous future,” Karthaus says.

Moving with the times Many in the mortgage industry might also recognize Karthaus as the prolific speaker on the transformation taking place in the borrower market as millennials’ preferences impact the way mortgage brokers conduct business.

“The mortgage marketplace is undergoing a change whereby baby boomers are being

symposium to further elucidate how the broker channel can latch onto the coattails of the digital revolution within the industry.

“We’re going to see a lot of innovation in the mortgage industry through the use of digital technology,” he says, “and that’s everything from expanded use of chatbots to transaction monitoring and real-time adjudication.”

Canada’s mortgage industry hasn’t adopted technology at the same rate that technology has evolved, but Karthaus doesn’t despair because he knows that younger millennials are just starting to contemplate homeownership.

The change will gather more momentum as generation z follows suit.

“The technology itself won’t be the competitive advantage; the application of technology will be,” he says. “You could have a CRM, but if

“There will always be a role for mortgage brokers in the industry because the one thing technology cannot do is apply real-life experience and that level of expertise to a mortgage borrower’s situation” replaced by millennials as the majority of mortgage borrowers in the country,” Karthaus says.

“The way in which you communicate with a baby boomer is different than how you communicate with a millennial. For example, boomer borrowers grew up with more face-to-face and direct contact, whereas millennials are more digitally inclined, so you’re using a lot more technology than you ever have – that means social media, web, email, text, video and obviously much more. Mortgage brokers need to adapt to that changing demographic and the evolving technology.”

Karthaus tours Canada, giving brokers tips on how to leverage technology to better communicate with customers and prospects. He recently spoke at the Mortgage Professionals Canada

20

ED KARTHAUS’ CAREER HIGHLIGHTS

2002 Joins Filogix

2005 Serves as director of the Independent Mortgage Brokers Association of Ontario (now CMBA Ontario)

2009 Is inducted into CMBA Hall of Fame

2017 Moves to Home Trust to become executive vice-president of sales and marketing

you don’t use it effectively, it’s no competitive advantage. The way brokers apply technology will differentiate them from other brokers.”

Going forward, Karthaus has nothing but optimism for the broker channel. He doesn’t believe for a minute that mortgage brokers will become obsolete.

“There will always be a role for mortgage brokers in the industry because the one thing technology cannot do is apply real-life experience and that level of expertise to a mortgage borrower’s situation,” he says. “The young couple who comes to a mortgage broker and wants a mortgage hasn’t thought about a lot of the curveballs life will throw them that a broker can prepare them for. Brokers help set them up for success.”

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SPECIAL REPORT

TOP MORTGAGE WORKPLACES

TOP

2019

PRESENTED BY

MORTGAGE

WORKPLACES

CMP’s inaugural Top Mortgage Workplaces report uncovers the best places to work, as rated by thousands of mortgage professionals from across the nation. Did your company make the cut?

A TOP WORKPLACE can encompass many things – great benefits, great resources, great management – but to uncover the roots of what truly makes an organization a wonderful place to work, you have to look at the foundation: its people.

Mortgage companies both large and small, and from all areas of the industry, were invited to participate in CMP’s first-ever Top Mortgage Workplaces survey. Employers were encouraged to nominate their organization to partake in the employee survey process, where employees shared what they love – and hate – about their respective workplaces. From the dozens of companies that participated in the employee survey process, only 23 earned the coveted title of Top Mortgage Workplace.

On the following pages, CMP looks at what the aggregated survey results reveal about what mortgage companies are offering employees and how they are performing with regard to diversity, culture, compensation and employee development before getting down to the detail of which companies made the list of Top Mortgage Workplaces.

22

METHODOLOGY CMP invited organizations to nominate themselves as a Top Mortgage Workplace by filling out an employer form detailing their various offerings and practices. Next, employees from nominated companies were asked to fill out an anonymous survey evaluating their workplace on a number of metrics, including benefits, compensation,

WHAT MAKES A TOP MORTGAGE WORKPLACE? Some of the standout qualities shared by the 23 organizations that made the cut as a Top Mortgage Workplace include: • Flexible work schedules

culture, employee development and more.

In order to be considered, each organization had to reach a minimum number of employee responses based on overall size. Organizations that achieved an 80% or greater average satisfaction rating from employees were named a Top Mortgage Workplace.

THE NOMINATED WORKPLACES BY SECTOR

Technology provider

2%

Network

Other

5%

3%

• Career progression paths • In-house charity initiatives • Multicultural and gender diversity • Professional development training, workshops and mentorship • Competitive bonus plans • Cutting-edge technology

Brokerage

42%

Lender

47%

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2019

PRESENTED BY

COMPENSATION, BENEFITS AND INCENTIVES The majority of the companies nominated as a Top Mortgage Workplace offer standard health and life benefits, such as medical and dental coverage and life insurance, although very few companies offer retirement plans. Competitive bonuses and healthcare benefits were among employees’ top reasons for naming their employer a Top Mortgage Workplace.

Outside of the standard benefits, a few companies also offer

Does your organization offer a bonus or incentive program?

NO

6%

What benefits are offered to employees?

YES

94%

wellness benefits, such as gym membership reimbursement and occasional in-house physiotherapy and massage therapy sessions.

One organization takes its care for employees’ health to the next level, offering a monthly meditation series, free healthy snacks, free access to a local gym and yoga studio, and wellness education that includes financial seminars about saving, budgeting, buying a home, and more.

In terms of compensation, 85% of employees said they were satisfied with their compensation, while 86% reported being satisfied with their company’s bonus structure. There’s a wide variety of bonus structures on offer throughout the mortgage industry, including an organization that offers a bonus after an employee completes a ‘tier’ of training. Another described its bonus structure as ranging from “a minimum target of 5% annual salary to a maximum of 25% annual salary, depending on the employee’s level and position within the company.” Other popular benefits offered by Top Mortgage Workplaces include unlimited time off, sabbaticals and critical illness insurance.

Does your organization offer sabbaticals?

Medical coverage 74% Dental coverage 68%

0%

35%

65%

Yes (paid)

Yes (unpaid)

No

Long-term disability

Does your organization offer any wellness programs or incentives?

53% 47% Yes

No

Does your organization offer loyalty leave?

59%

Yes

Life insurance

1 to 25 employees

56% Disability benefits

91%

26 to 100 employees 101 to 500 employees 501+ employees 8%

92%

44%

56%

33%

67%

53%

WHAT EMPLOYEES HAD TO SAY

Does your organization offer a retirement plan?

1 to 25 employees 26 to 100 employees 101 to 500 employees 501+ employees

9%

No

9% 18% 56% 100%

91% 82% 44% 0%

“Strong employee benefits that provide all the necessary healthcare-related items one would require” “We have fair compensation, which increases depending on volume. It’s not just about the compensation; the resources and tools are also a huge benefit” “The company has a very transparent compensation structure” “Best benefits I have had – 100% paid by employer”

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SPECIAL REPORT

TOP MORTGAGE WORKPLACES

EMPLOYEE DEVELOPMENT

Some organizations have created their own in-house training and education programs. One Top Mortgage Workplace outlined how its nine-tier training program has elevated the quality of its brokers: “Associates have nine tiers of in-depth mortgage industry learning that they work through to become a senior broker. Once they reach the level of senior broker, they then have the opportunity to mentor a team of their own. Each tier focuses on a specific aspect of the mortgage industry and breaks down the whole process of completing a deal with a client from beginning to end. The success that we have seen ... has demonstrated that not only are we training, coaching and motivating those new to the industry, but demonstrating the right behaviours that will take them and our company to the next level.”

Other companies without in-house training offer reimbursements to employees for educational expenses. “We offer $2,500 per employee per year for external courses, webinars, seminars or conferences,” said one Top Mortgage Workplace, while another reimburses 100% of the cost of any education or training courses taken by an employee.

Job shadowing, mentor pairings, and live and virtual training sessions are just a few of the key employee development strategies employed

by Top Mortgage Workplaces. Many companies emphasize the importance of training from day one: One company has implemented a mortgage broker course to train all new hires, while several others noted that new hires are paired with mentors almost immediately.

Another organization uses LinkedIn Learning as an e-learning tool, as well as offering a leadership development program and a personal leadership program. Another company “regularly offer[s] courses using external consultants. These include leadership courses, Excel/ Word training, time management and more.”

Does your organization offer training at onboarding?

97%

YES NO 3%

Does your organization offer work path/career path plans or programs?

YES NO 35%

65%

WHAT EMPLOYEES HAD TO SAY “They are extremely selfless when it comes to providing training” “We have incredible leadership dedicated to our success”

Does your organization offer any continuing education programs or continuing education reimbursement?

76% YES

How often does your organization update technology?

More than once a year Other

40%

24% NO

20%

Yearly

Every few years

9% 31%

Does your organization offer marketing support?

Yes

No

77% 23%

How often does your organization conduct performance reviews?

My organization does not perform reviews

Once a year

43%

14%

“My supervisor is great! I am able to have open conversations with her regarding my career development” “They are always looking for better tools, technology and programs to assist with efficiency and time management”

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Quarterly

23%

Twice a year

20%

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2019

PRESENTED BY

DIVERSITY Many employees surveyed said they were satisfied by their companies’ efforts to develop diversity. Much of the focus centres on recruiting the next generation – in addition to upping their presence on online job platforms and social media, many mortgage companies have aimed their efforts at universities. “Over the past year, we have increased our presence at university fairs with the hiring of emerging talent, as well as participation in co-operative programs through local universities,” one organization said. “At any given time, 1% to 2% of our employees are co-op students. This increases over the summer months to approximately 5%.”

To build more diverse workforces, several Top Mortgage Workplaces have reached out to women and minority groups through ad targeting or by coordinating with local women- or minority-focused organizations. One lender developed a committee dedicated to diversity and inclusion initiatives, such as creating an equal opportunity plan that ensures, among other things, that women are promoted into leadership roles. “Almost 50% of our employee population are of a visible minority group,” the organization reports. “We celebrate Pride Week every year for our LGBTQ community, and our employment equity plan is in place to increase our persons with disabilities employee base over the next three years.” Other companies explained that while they don’t have formal diversity programs in place, they hire and promote based on merit only, allowing people from all backgrounds to shine.

Does your organization offer programs aimed at recruiting and/or retaining younger workers?

What is the average gender balance?

47%

Yes

53%

MALE

No

1 to 25 employees 55%

FEMALE

45%

26 to 100 employees Does your organization offer any programs aimed at recruiting and/ or retaining women, individuals from minority groups, persons with disabilities and/or LGBTQ individuals?

1 to 25 employees

55% YES 45% NO

26 to 100 employees

11% YES 89% NO

101 to 500 employees

57% YES 43% NO

501+ employees

100% YES 0% NO

40% 60%

101 to 500 employees 57% 43%

500+ employees 100% 0%

WHAT EMPLOYEES HAD TO SAY “Being part of the LGBTQ+ community, I feel represented and valued”

“This company cannot be more diverse! I love the fact that they celebrate different cultures’ holidays”

“Different races, ages and ethnicities are welcomed”

“We have such an amazing range of backgrounds, cultures and skills”

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SPECIAL REPORT

TOP MORTGAGE WORKPLACES

CULTURE Feeling like part of a family is what employees value most from their workplace culture, although other factors such as flexible work options, work-life balance and employee recognition programs were common qualities of this year’s Top Mortgage Workplaces.

Celebrating the success of employees was a key component of the culture at multiple workplaces. One organization reported that it has “celebratory lunches for all staff when teams meet major milestones or when employees hit an anniversary date. All employees are encouraged to nominate their coworkers for ‘shout-outs’ in a weekly survey. These smaller achievements and nominations are immortalized for the week by having their

Does your organization offer employee recognition programs or awards?

89%

11%

YES

NO

cartoon likeness drawn by one of the many talented artists in the company.”

Another organization has an Employee Innovation Award, which is given out quarterly to the employee who suggests a process or procedure to improve the company. Other programs, such as retreats, group outings and team-building events, all contribute to a more robust culture at the Top Mortgage Workplaces.

Many organizations also support local communities and charitable organizations through internal initiatives or by offering volunteering opportunities to employees. “We try to give back to the community as much as possible, such as volunteering for the Make-a-Wish Foundation and donating non-perishable food items to the food bank every year,” one company reported. Others give employees the freedom to give back to charities that are meaningful to them by allowing for paid time off from work for volunteering.

How often does your organization conduct organization-wide employee meetings?

Weekly Biannually

Monthly Annually

Quarterly Other

29%

Does your organization partake in any teambuilding and/or leisure activities?

Does your organization offer family-friendly benefits or programs?

YES

3%

55% 45% YES

No

WHAT EMPLOYEES HAD TO SAY “All senior leaders are available anytime, executives are as well, and they also put out a weekly ‘ask the executive’ to ask anonymous questions” “Whether it’s work trips, just going out for lunch or walking the Seawall, we are all about supporting each other and growing together” “Every employee is involved in setting annual goals and performance targets to ensure they are realistic and committed to by all employees. Regular checkpoints help me keep sight of the prize and discuss any blockages in achieving those goals”

26

20% 17%

YES

77%

NO

23%

11%

3%

97% NO

20%

Does your organization allow employees to take additional time off for community service activities or volunteering?

Does your organization offer flexible work options?

88% 12% YES NO

Is your organization actively involved in any ‘green’ or sustainable business programs/ practices?

68% YES

32% No

Does your organization actively support any community and/or charitable organizations?

91% YES

9% No

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2019

PRESENTED BY

2019

PRESENTED BY

TOP MORTGAGE WORKPLACES 2019

The following companies achieved an average satisfaction rating of 80% or greater from their employees

1 TO 25 EMPLOYEES OUTLINE FINANCIAL Headquarters: Toronto, ON Year founded: 2017

Score:

96.0%

Score:

91.9%

89.0%

Headquarters: Thornhill, ON Year founded: 2010

Score:

85.7%

Score:

Headquarters: Surrey, BC Year founded: 2014

Score:

85.6%

Score:

85.4%

MORTGAGE OUTLET

91.3%

Headquarters: Toronto, ON Year founded: 2015

SYNDICATE LENDING

MORTGAGE DISTRICT Headquarters: Mississauga, ON Year founded: 2017

Score:

BLUE PEARL MORTGAGE GROUP

CENTUM FINANCIAL GROUP Headquarters: Vancouver, BC Year founded: 2002

Headquarters: Sharbot Lake, ON Year founded: 1987

CANADIAN MORTGAGES INC.

MILLENNIAL’S CHOICE Headquarters: Concord, ON Year founded: 2017

PILLAR FINANCIAL SERVICES

Score:

90.1%

Headquarters: Vancouver, BC Year founded: 2015

Score:

81.5%

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2019

SPECIAL REPORT

TOP MORTGAGE WORKPLACES PRESENTED BY

26 TO 100 EMPLOYEES ELITE LENDING CORP. Headquarters: Vancouver, BC Year founded: 2016

Score:

96.7%

DLC CLEAR TRUST MORTGAGES Headquarters: Vancouver, BC Year founded: 2011

CENTURION ASSET MANAGEMENT Headquarters: Toronto, ON Year founded: 2009

Score:

TRUE NORTH MORTGAGE Headquarters: Calgary, AB Year founded: 2006

92.5%

Score:

MERIX FINANCIAL Headquarters: Toronto, ON Year founded: 2005

Score:

91.1%

LENDESK Headquarters: Vancouver, BC Year founded: 2014

90.9%

ROCK CAPITAL INVESTMENTS Headquarters: Orangeville, ON Year founded: 1996

Score:

88.3%

JENCOR MORTGAGE Headquarters: Calgary, AB Year founded: 1987

Score:

84.3%

88.5%

DLC CANADIAN MORTGAGE EXPERTS Headquarters: Cloverdale, BC Year founded: 2011

Score:

85.5%

CWB OPTIMUM MORTGAGE Headquarters: Edmonton, AB Year founded: 2004

Score:

91.0%

Score:

Score:

84.8%

Score:

84.0%

HAVENTREE BANK Headquarters: Toronto, ON Year founded: 2001

500+ EMPLOYEES MCAP

101 TO 500 EMPLOYEES

28

Score:

Score:

88.2%

EQUITABLE BANK

CAPITAL LENDING CENTRE Headquarters: Toronto, ON Year founded: 2017

Headquarters: Toronto, ON Year founded: 1981

92.9%

Headquarters: Toronto, ON Year founded: 1971

Score:

81.5%

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CMP

MAGAZINE The only independent magazine dedicated to mortgage industry news, opinion and analysis

WEBSITE Breaking news, in-depth profiles, features, online forum and Mortgage Broker TV

ENEWSLETTER Daily news service delivered straight to your inbox every morning

Find out more and subscribe at mortgagebrokernews.ca CMP subs ad2 2018.indd 1 30-37_Top Mortgage Workplaces 2019-SUBBED.indd 29

14/03/2018 PM 23/04/2019 10:55:41 3:15:01 AM

SPECIAL PROMOTIONAL FEATURE

INTEREST-ONLY MORTGAGES

Changing the game for Canadian homeowners MERIX Financial’s Interest-Only Flex Mortgage goes beyond the standard HELOC to offer homeowners a new way to access the equity in their homes

WHETHER YOU’RE an established mortgage broker with a reliable client base or a new-to-the-game professional in the process of building your reputation, 2019 is projected to be a challenging year. Home purchases are forecast to reach lows not seen for almost a decade. That subdued activity, combined with higher interest rates, means those Canadians who have been fortunate enough to purchase a home will see less appreciation, higher monthly mortgage payments and, if they are investors, dwindling cash flow.

When a market constricts, there is always a flight to quality. The brokers who continue to offer their clients creative, personalized solutions that improve their personal finances will be the ones who see their business blossom. The Interest-Only Flex Mortgage, a unique new offering from MERIX Financial, is one such solution.

Staying within your limits Homeowners have come to rely on HELOCs as a means of providing fiscal breathing room, but with few competing options avail-

30

able, they are often at a loss when their financial needs outgrow what a HELOC can do for them. IO Flex combines the familiar benefits of a HELOC with an innovative array of options the industry hasn’t seen before.

As with a HELOC, clients who enrol in

HELOCs are prized for their flexibility, as homeowners can continually draw on funds as they’re required. Distributing funds in the form of a one-time payout, IO Flex does not offer the same ongoing access to capital.

But it’s no less adaptable to the needs of your

Homeowners can choose multiple strategies for payment and then combine them in a multitude of ways to find the one that works best for them IO Flex can make interest-only payments at 65% LTV, but the similarities end there – right where the advantages begin. The IO Flex rate – currently prime plus 0.25 – is priced lower than any rate offered on a line of credit. It also has a very competitive fixed interest-only term, providing clients a new level of reliability. If that’s not enticing enough, the IO Flex also offers homeowners an opportunity to add a second component for a total LTV of up to 80%.

client. In the case of IO Flex, the flexibility is determined – side-by-side with your clients – before payout takes place.

A solution for all Canadians IO Flex helps homeowners make the most of their finances by allowing them to structure their payments in a way that best suits their needs. ARM, fixed rate, interest-only, amortizing – homeowners can choose multiple strategies for payment and then combine

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them in a multitude of ways to find the one that works best for them.

IO Flex is not a niche product for a small segment of the population. It was created to address the needs of all Canadian homeowners, including:

HELOC clients. As people change, so do their mortgage needs. IO Flex offers refinance clients the best rate in the market, allowing them to save money and increase cash flow.

Professionals. High earners living in major markets can take advantage of IO Flex’s industry-leading $2 million loan amount while also leveraging their equity to make other life-changing investments.

It’s an excellent option for new professionals carrying student loan debt.

BFS clients. IO Flex helps self-employed clients generate better monthly cash flow, pay off high-interest debt and create an emergency fund – all valuable tools for accelerating growth.

Retirement planners. More cash today

Giving clients what they want

means more freedom tomorrow. IO Flex helps clients nearing retirement free up hardearned money for use in other investments.

Anyone can walk into a bank and ask for a five-year fixed-rate mortgage. But clients go to mortgage brokers expecting more. They want someone who can provide them with innovative options that can radically improve their bottom lines – and their lives.

As a fully tailored solution, IO Flex can create benefits for your clients that no other product on the market can. It gives clients low rates and increased cash flow – that’s what it was designed to do – but what IO Flex truly provides is something far rarer and more valuable: peace of mind.

Sit down with a client and walk them through the handy IO Flex Calculator. Plug in the numbers, and the options virtually start generating themselves. In a few short minutes, you will find a combination of payment options that can result in smaller monthly obligations and greater financial freedom.

You’ll have a client for life. But what’s more, you’ll get a front-row seat as a new future comes to life before their eyes.

Experienced buyers. Consumers who have been through the home buying and refinancing processes before will appreciate the diversity of options and outcomes.

Renovators. IO Flex allows buyers priced out of upsizing their properties by helping them realize their dreams in their existing homes. IO Flex’s low, interest-only fixed rate helps make valuable renovation projects more attainable.

First-time buyers. The industry’s best ARM rate and 30-year amortization can make the dream of homeownership a reality for IO Flex enrollees.

Families. The security and stability of an interest-only fixed-rate product has tremendous value in an environment where interest rates and the cost of living are on the rise.

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23/04/2019 3:16:13 AM

PEOPLE

BROKER INSIGHT

Breaking free from the bank Fernando Zilli tells CMP how he transformed from bank teller to leading mortgage broker

CMP: How and why did you get into the mortgage industry?

Fernando Zilli: I started out working as a bank teller at a local credit union. After doing that for a little while, I realized that I liked what I saw across the way in the lending market, and I actually covered a couple of lenders when they were off sick. Shortly thereafter, I became a lending specialist, and once I was comfortable underwriting files, I accepted a position with one of the Big Six banks on their mobile sales team. After a couple of years learning the ropes there, I transitioned into the broker world.

CMP: How did you find the transition from the big bank to an independent brokerage?

FZ: You don’t have the same type of support being an independent. You have a great team behind you, but you don’t have the day-to-day management there to motivate you, so you need self-motivation. You are on your own in a lot of ways – you don’t have the brand that the Big Six banks do. It was an experience, for sure, but having those experiences – working at the credit union and the bank – let me know how those industries work, how everything works in the background.

CMP: Why did you leave the big bank environment?

FZ: It was mainly having the ability to offer

32

additional options to my clients. Being a bank employee, even if you’re commissionbased, you are pretty much restricted to offering one product. Being a mortgage broker, not only can you offer different products from different banks and credit unions, but there are also B lenders and private lenders. There are ways to be creative to get deals done. The compensation is also much more attractive than at a bank.

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

FZ: It has kept me on my toes, for sure. I have experienced gradual change from day one of becoming a broker – multiple levels of stress testing and policy changes at regular intervals. Constant adaptation has been required to find new ways to do business and new ways to sell. I have really enjoyed it, but you have to be able to adapt on a daily basis; otherwise, it might not necessarily be for you.

CMP: You’ve enjoyed success in the industry at a young age. What do you put that down to?

FZ: Being present at all times. Early on, I developed relationships with a relatively large real estate firm, and I made a point of being present at all times. I wasn’t a cold-call guy, so I made sure I went to the office every day, and I literally sat there from 8:30 to 6, and if clients came in with their Realtors, I was right there to answer any questions.

I have an 18-month rule: I believe it takes 18 months to really get some momentum.

Once you hit 24 months and onwards, you should be starting to close some of those deals that you started in your first six months.

CMP: Last year was a struggle for many in the mortgage industry. How was it for you?

FZ: It was different from 2017, which was an exceptional year, but it was still very good

ZILLI’S ADVICE TO OTHER BROKERS “You have to be present – have your phone on at all times. Don’t just sit at your desk, looking at your screen. Try and get into the trenches. Try and get into real estate offices, attend open houses and get your face in front of as many real estate brokers, agents and clients as possible. Do home-buying seminars – anything you can do to promote yourself and get in the face of someone directly. With social media platforms becoming more popular, that can be another avenue to do that. Getting your face out there is number one.”

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FAST FACTS: FERNANDO ZILLI

COMPANY DLC Tribeca Mortgages

POSITION Owner/managing broker

LOCATION Victoria, BC

“You don’t have the same type of support being an independent. You have a great team behind you, but you don’t have the day-to-day management there to motivate you, so you need self-motivation” for us. More than anything, I looked at last year as a time of adjustment and restructuring. I looked at new ways to grow new types of business. With the stress test, I had been focusing on doing some B lending and private lending in the past, and that really came in handy in 2018 when we were able to assist clients in ways that the banks and

more inexperienced brokers couldn’t.

I looked at it as a year of retraction for the industry, but a time for me to grow market share. Even if volumes decrease a little bit, your market share can still increase, which means that when the time comes for things to roll back the other way, you will have even greater success.

YEARS IN THE INDUSTRY 16

PREVIOUS EXPERIENCE Bank teller at a credit union and mobile mortgage specialist at a Big Six bank

ACCOLADES Named to CMP ’s Young Gun list in 2017

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SPECIAL PROMOTIONAL FEATURE

TECHNOLOGY

The future is in your hands The leaders of Dominion Lending Centres explain how brokers can leverage the network’s latest technology investments to grow their business 34

NOT EVEN a generation ago, when you wanted to grow your business, the tools at your disposal were pretty limited. Transactions between client and business were basic and rudimentary by today’s standards.

Think about it: You needed an office, there might be one computer, and communication was strictly done face-to-face or by a landline telephone. There certainly wasn’t the internet to look anything up with ease. And the Rolodex wasn’t a euphemism, but rather an actual object that sat on someone’s desk.

The mortgage industry was no different.

Businesses were built off of word-of-mouth and door-to-door contact with clients. While

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Research Center study, 92% of millennials and 85% of gen x-ers own smartphones.

That’s compared to 67% of baby boomers and 30% of people aged 72 and up, known as the silent generation. The conclusion is obvious for anyone who’s spent any time around someone under the age of 50: Young people have a huge appetite for tech.

Dominion Lending Centres was born in the middle of this technological advancement. The first iPhone dropped just a year after the company was founded. While the early years of DLC were spent building the network and its reputation as Canada’s leader in the mortgage industry, the company has learned to adapt.

Serge Vinokour, DLC’s vice-president of technology, sees this as an obvious and necessary shift for the mortgage industry.

near them. The app is easy to use and provides valuable calculators for users.

But a recent addition to My Mortgage Toolbox is a glimpse into the future of mortgage brokering. Users can now get pre-qualified for a mortgage in less than 60 seconds. The pre-qualifcation tool is both incredibly accurate and simple to use.

“We may be a mortgage company first, but you can’t be successful if you’re not embracing the technology that’s around you,” says DLC president Eddy Cocciollo. “We know Canadians are turning to apps like My Mortgage Toolbox because it makes the process so much easier and quicker. It’s incumbent on a company like DLC to develop the best tools in the industry.

The brokers who represent DLC would only expect the leading mortgage company to be on the forefront of technology.”

Consumers want instant answers to their questions, fast transactions, and reliable and accurate information. These needs are all being addressed by today’s tools and technology

a mortgage broker’s best asset is still the ability to connect personally with their clients, the technology at their disposal is far beyond what the pioneers of the industry could have imagined 30 years ago.

Today, of course, every broker has a website. Every broker has a Facebook or LinkedIn account. And piles of paperwork have been reduced to an email inbox. But those basics aren’t going to be enough to compete in the business world of tomorrow as more and more people – especially younger consumers – become accustomed to technology that fits in their hands.

Consider this: According to a recent Pew

He believes consumers expect every part of an interaction to be quick and efficient. They want instant answers to their questions, fast transactions, and reliable and accurate information. These needs are all being addressed by today’s tools and technology. He also points out that technology breeds new opportunity – features like paperless transactions, e-signatures and real-time deals wouldn’t be possible without recent technological advances.

DLC is now poised to be a leader when it comes to technology in the industry. That effort took a big step in 2018 with My Mortgage Toolbox. The first-of-its-kind mobile app for a national broker network, the app literally puts the power in the hands of consumers.

The technology built into the tool allows users to connect directly with a mortgage broker

Moving forward, DLC has big plans.

Future tech tools will be integrated across various platforms and geared toward generating leads and making brokers’ day-to-day tasks easier. These tools will help brokers manage their commissions, stay on top of compliance with regulatory agencies and improve lender interactions.

So, do these advancements in technology mean an end to the traditional role of the mortgage broker? Hardly, Vinokour says. He sees the future role of the mortgage broker being similar to that of a doctor.

“The role of the broker as an expert will increase with new technology,” he says. “Their deep knowledge and approach to the industry will be the value they offer their clients and consumers.”

www.mortgagebrokernews.ca

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FEATURES

TIME MANAGEMENT

How to avoid mental exhaustion When your mental bandwidth is depleted, it leaves little room for big ideas to flourish.

Carson Tate offers three ideas for replenishing your mental reserves

IN A highly competitive global economy, innovation, creativity and your business’s ability to differentiate itself through its ideas and products are essential for continued growth and profitability. As a worker today, information overload, 24/7 connectivity, constant interruptions from wherever you’re working, and email and text communication can lead to overwhelming anxiety.

All of this anxiety hijacks your time and mental resources, resulting in scarcity. And when you experience scarcity of any kind – time or mental – you become absorbed by it.

Your mind orients automatically toward an unfilled need.

The problem with mental scarcity is that it creates its own trap. It further perpetuates scarcity and reduces all components of our

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mental bandwidth – we are less insightful and less forward-thinking; we have less mind to give to dreaming about that next breakthrough idea, all of which are essential components of innovation.

If you want to support and nurture innovation in your work, it’s time to start thinking about how to reduce mental scarcity and increase your mental bandwidth. Here are three simple yet powerful ways to start.

Develop routines for regular tasks Develop a routine for common tasks so that your brain can automatically repeat them with minimal input by you.

Once the routine is established, it’s interpreted by your brain as a pattern. These

patterns, through frequent use, become hardwired into your brain. And the more you use a pattern, the less attention you’ll need to pay to doing this task, thus freeing up mental bandwidth for ideation. Consider developing routines for phone calls, opening documents, filing and saving documents, sorting and processing mail, and making travel arrangements.

Automate email processing A lot of the work you do is virtual – over email, text or perhaps a project management app. Email processing consumes significant amounts of time and mental capacity. Reduce the time and mental drain by automating frequent email responses, by automating email follow-up, by automating the prioritization of incoming messages and by automatically filing reference materials.

Automate frequent email responses. Use a free text expander software app like FastFox for PC or Text Expander for Mac, or a more robust program like Wittyparrot. These will work in any program, including your email platform, and allow you to insert commonly used text with just a keyboard shortcut or by dragging and dropping text. No longer will you waste your mental energy thinking about what to say, nor precious time typing out a response; you can reply automatically within seconds.

Automate your email followup. Automate your follow-up by setting up and using the ‘waiting for’ rule. Here’s how it works: When you send an email where you need a response from the recipient, cc yourself on the email. That email will then be automatically saved in a folder you have designated for all of your follow-ups. As new messages are automatically added to this

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folder, the numeral indicating how many messages are in the folder will become bold.

No longer will you spend time searching through sent messages or trying to remember if you’ve followed up on your open requests.

Automate the prioritization of incoming messages. The most important mental processes, such as prioritizing, often take the most effort and are energy-intensive.

Let your email program automatically prioritize incoming messages. Colour-code your incoming message by sender priority. For example, you might color-code your manager in red, your top clients in green and turn the messages where you are cc-ed to light grey. So when you open your inbox, you can quickly scan them for the most urgent messages, such as those from your manager or key clients.

Automate the filing of reference

Mental scarcity reduces all components of our mental bandwidth – we are less insightful and less forward-thinking; we have less mind to give to dreaming about that next breakthrough idea materials. Automatically file all of your reference materials, trade publications and industry news by writing a rule. For example, you might write a rule to file all of your trade publications in a folder named Trade Publication Reading. Now, when you open your inbox, it will only contain email messages that require action by you, and you won’t waste precious time or mental energy sorting through messages you can read at a later date.

Cultivate joy Great insights occur more frequently the more relaxed and happy you are. Take time during the workday to do something totally unrelated to work that brings you joy, makes you laugh or just makes you smile. Spend some time on YouTube watching funny videos, call a friend, take a walk or read for pure pleasure. It doesn’t matter what it is as long as it brings you delight.

Don’t let mental scarcity rob you of your next big, bold, breakthrough idea. Support and nurture your creativity and impact by increasing your mental bandwidth, developing routines for regular tasks, automating email processing and cultivating joy.

What’s possible if you shifted your thinking to “What impact can I make today?” instead of “How much can I get done today?”

Remember, you’re in the driver’s seat of your time, energy, attention, mental capacity – and impact.

Carson Tate serves as a consultant and coach to executives at Fortune 500 companies, including AbbVie, Deloitte, EY, FedEx and Wells Fargo. The author of Work Simply: Embracing the Power of Your Personal Productivity Style, her views have been included several publications, including Fast Company, Forbes, the Harvard Business Review blog, The New York Times and more. For more information, visit workingsimply.com.

www.mortgagebrokernews.ca

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PEOPLE

CAREER PATH

MASTER OF ADAPTATION After shuffling between industries, across countries and amongst very different client styles, Tracey Robinson is nothing if not versatile

When she left school at age 16, UK native Robinson joined National Westminster Bank. The move didn’t exactly excite her, although it did allow her to become a homeowner by the age of 19.

“I didn’t have a clue what I wanted to do, and banking was meant to be a good job. My first week was spent folding bank statements.

I remember thinking, ‘What the hell have I done?’”

1985

ENTERS THE BANKING WORLD

1991

LEARNS TO ADAPT As a financial planner, Robinson consistently ranked in the top three in her region. When asked her secret, she realized it was simply being herself.

“I would walk out of the client’s house and think, ‘What did I say to get them to yes?’ and realized it was being me. I learned early to adapt how to talk to a client so as to speak their language” 2007

TAKES CHARGE Appointed to the position of business and risk manager, Robinson was given responsibility for more than two dozen financial planners and mortgage specialists scattered between Leeds, Sheffield and Newcastle.

“This gave me complete autonomy. I was now responsible for anything business or risk-associated with that team of planners. They became my clients.”

1990

FINDS FINANCIAL PLANNING Bored by a lack of activity at her customer service desk, Robinson went to the bank’s financial planner to ask for something to do. He presented her with a cold-call list, and she found her métier.

“That was the start of the rest of my life. He took me on as an assistant and I realized I wanted to do the job myself, so started taking my qualifications.”

1998

TAKES A STEP BACK After the birth of her son, Robinson changed gears in the name of work-life balance, joining NatWest’s sister company, Coutts & Co., as a financial planner’s assistant. The move allowed her to remain in finance without having to work 12-hour days and came with the prestige of being associated with what is colloquially known as ‘the Queen’s Bank.’

“We’d joke that we didn’t get out of bed for less than a million.”

2012

COMES TO CANADA

2015

OPENS HER OWN OFFICE The same year she did $15 million in business, Robinson opened her own office.

By 2018, she had more than doubled her volume to $35 million.

“My business has taken off. I drank a lot of coffee and I got my face out there. I networked whenever I could; I ‘coffee-d’ Realtors, lawyers, businesspeople – and people would remember this crazy British chick.

I made sure to have a profile around town, to get my face known.”

Robinson’s hockey-playing teenage son blazed the trail for her relocation to Canada, spending a few summers at hockey school in Penticton before deciding in 2010 to join the Okanagan Hockey Academy. Over the course of multiple visits, Robinson and her husband fell in love with Canada and decided to make the move.

“I met with a mortgage broker-owner to discuss the industry here and how I could work in it and came out through-the-roof excited. That broker-owner sponsored my visa.”

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PEOPLE

OTHER LIFE

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Hours of training Hasip puts in per week for the Fight to End Cancer bout

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

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Minutes in each of the three rounds Hasip will fight in the event

$15,000 Amount Hasip has committed to raise for the charity

Hasip’s last hour of each training day is a conditioning class made up of multiple rou nds of skipping rope, push-ups a nd burpees, as well as 100 ja bs a nd crosses

FIGHTING THE GOOD FIGHT Mortgage agent and boxer-in-training Deren Hasip is coming out swinging at cancer AS A NEW boxer, Deren Hasip has frequently been challenged by his training for his upcoming bout for the charity Fight to End Cancer. “It’s physically gruelling,” he says. “The first time I trained, my coach told me, ‘Just survive the next 60 minutes.’”

But the cause is enough to motivate the

Toronto-based mortgage agent, who has seen cancer affect his father, his cousin and his daughter – who, while hospital-bound, befriended another sick little girl. The two families became so close that Hasip eventually became the child’s godfather … and then a pallbearer at her funeral when she passed away at the age of 9. Informed by that

experience, Hasip is directing the funds he’s raising for the charity to cancers that strike adolescents and young adults.

As for his day-to-day training, Hasip has found it satisfying, despite its demanding nature. “I like to challenge myself,” he says.

“I’m a glutton for punishment, and this makes me push myself.”

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