MORTGAGEBROKERNEWS.CA ISSUE 14.09 | $12.95
BROKERS ON LENDERS 2019 Which lenders always come through for their broker partners?
WHAT’S NEXT FOR XMC?
The alt lender reveals its plans to continue driving impressive growth
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THE GTA MARKET’S COMEBACK How millennials sparked a renaissance in detached home sales
NEXT-LEVEL CUSTOMER SERVICE Why your focus should be on appreciation, not satisfaction
10/09/2019 3:55:02 AM
Tired of waiting for answers? (We lend urgency).
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ISSUE 14.09
CONTENTS
BROKERS ON LENDERS 2019
22
SPECIAL REPORT
Brokers tell CMP which lenders are meeting their expectations in regard to compensation, underwriting, interest rates, tech offerings and more
License # 10172
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.
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Blake Cassidy or Pierre Leonard 800 494 0389 | www.romspen.com
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ISSUE 14.09
CONNECT WITH US Got a story or suggestion, or just want to find out some more information?
CONTENTS
38
plus.google.com/+MortgagebrokernewsCa facebook.com/MortgageProfessionalCA
UPFRONT 04 Editorial
A flurry of good news for would-be homebuyers
PEOPLE
44
twitter.com/CMPmagazine
40
BROKER INSIGHT East Coast Mortgage Brokers’ Robert Jennings reveals how he inadvertently became a specialist in alternative mortgages
42
FEATURES
ROOM TO GROW
The Great Recession proved to be the perfect launching pad for Shawn Allen’s Matrix Mortgage Global empire
18
CREATING A CULTURE OF EXCELLENCE
An inside look at the making of DLC’s Team Blue culture
Brokers weigh in on Mortgage Professionals Canada’s effectiveness
10 News analysis
A look at what’s behind the market rebound in the GTA
12 Alternative lending update
Alt lenders’ latest results show what a boon B-20 has been for the segment
14 Broker network update
The networks aren’t the only ones joining forces
FEATURES 48 Stop that 80-hour hustle
Working nonstop isn’t a recipe for success. Here’s how to take a break
52 Five things you must have to lead a team Are you lacking any of these essential leadership qualities?
PEOPLE
FEATURES
44
SEIZING THE GOLDEN OPPORTUNITY
Building true loyalty requires going beyond customer satisfaction
2
08 Head to head
Raising the industry’s standard of entry will provide a lift to all brokers FEATURES
INDUSTRY ICON
What are millennials most worried about when purchasing a home?
16 Opinion
What’s behind XMC Mortgage Corporation’s explosive growth – and what’s next for the lender?
PEOPLE
06 Statistics
54 Career path
Joseph Trimboli always keeps coming back to the mortgage industry
56 Other life
In the fast lane with mortgage exec and Porsche enthusiast Morris Briglio
MORTGAGEBROKERNEWS.CA CHECK IT OUT ONLINE
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Overall
Underwriter Support
BDM Support
Overall Service Levels
Satisfaction With Credit Policy
IT/Tech
Transparency of Commission Structure
HELPING YOU HELP YOUR CLIENTS IS
THE REAL REWARD. Thanks for your unwavering support, we could not have done it without you.
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UPFRONT
EDITORIAL
Confidence returns to the GTA
A
fter a few false starts over the last year, it appears the national housing market has come back to life, and the Greater Toronto Area is leading the way. According to the latest figures from the Toronto Real Estate Board, sales activity in the GTA has been impressive, to say the least: July saw a 24.3% year-over-year increase in the number of homes sold, and the average sale price climbed 3.2%. The GTA’s home price index also rose by 4.4% on an annual basis in July. Above all else, the TREB figures demonstrate that consumer confidence has returned. While still far from its peak, the market is unmistakably buoyant. Buyers are once again competing for semi-detached houses, townhouses and condos. The detached housing market might still be sluggish, but Re/Max and TREB reported double-digit sales volume increases in just over half of GTA neighbourhoods, 75% of which are located south of Highway 401. Given how difficult detached houses have become to purchase because of the mortgage stress test – especially in the York Region, where they sit on the market much longer – it turns out the old adage of “location, location, location” rings as true as ever.
The detached housing market might still be sluggish, but there were double-digit sales volume increases in just over half of GTA neighbourhoods The good news doesn’t end there. The Bank of Canada’s five-year benchmark rate dropped 15 basis points to 5.19% toward the end of July, and there’s no question that will help first-time homebuyers. Data from Ratehub.ca shows that under the previous benchmark rate of 5.34%, borrowers with a $100,000 annual household income and a 20% down payment could qualify for a mortgage of $589,000 at 2.70% with a 25-year amortization. The recent drop in the benchmark rate allows them to afford an additional $8,000. Moreover, by August, the most competitive five-year fixed mortgage rate had reached 2.39%. According to Ratehub.ca, the last time five-year fixed rates were at a similar level was July 2017. Between January and August of this year, fixed rates have declined 0.8%. Considering how palatable fixed-rate terms have become, it’s encouraging to see that, at least for the foreseeable future, the mortgage landscape is becoming a more hospitable place for borrowers. The team at Canadian Mortgage Professional
www.mortgagebrokernews.ca ISSUE 14.09 EDITORIAL
SALES & MARKETING
Managing Editor Joe Rosengarten
Associate Publisher Chris Anderson
Writers Neil Sharma Libby MacDonald Ephraim Vecina
Vice President, Sales John Mackenzie
Copy Editor Clare Alexander
CONTRIBUTORS Paul Meredith Darrell Hardidge Aytekin Tank John Eades
ART & PRODUCTION Designer Joenel Salvador Production Manager Alicia Chin Advertising Coordinator Ella Dayandante
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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
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No matter your why, we will figure out how to get you there!
At CENTUM, we are committed to making sure our Mortgage Brokers have the tools, education and support they need to succeed without all the extra fees! We are family after all! Reach out today whether you are in interested in a Franchise or joining as an agent!
thecentumnetwork@centum.ca | thecentumnetwork.ca ®/™ Trademarks owned by Centum Financial Group Inc. © 2019 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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UPFRONT
STATISTICS
A bundle of nerves
CANADA 3.26 years
When it comes to climbing the property ladder, millennials are riddled with anxiety
US 4.79 years
THE FINANCIAL commitment involved makes buying a home a nerve-racking proposition – and millennials are especially stressed out by the prospect. In a recent poll by HSBC, more than half of millennials worldwide said they’re overwhelmed by buying a property, compared to just a fifth of baby boomers. A third of Canadian millennials said they were most worried about the applications, land
61%
Percentage of Canadian millennials who feel anxious about buying a property
16%
Canadian millennials who say they’ve stayed in a bad relationship due to property
surveys, fees and contracts associated with the mortgage process. That anxiety doesn’t end at closing – 30% of Canadians said they were willing to backburner discretionary spending in favour of funnelling that money toward their home. In addition, 25% of millennials said they check on the value of their home monthly, compared to just 8% of Canadians in other age groups.
2.08
MEXICO 3.76 years
FAMILY MATTERS Canadian millennials said they were willing to put off starting a family by just over three years in order to afford a property, which was on the low side compared to other developed nations – in the US, for example, prospective homeowners are willing to delay having children for almost five years.
4.95
Hours a week Canadian buyers spend viewing, reading about and searching for property
Hours a week American buyers spend viewing, reading about and searching for property Source: Beyond the Bricks, HSBC Bank Canada, July 2019
STRESSED BY THE PROCESS
WHAT’S YOUR (PROPERTY) TYPE?
Many would-be buyers said that the paperwork and fees associated with the mortgage process was their greatest stressor when buying property, but this opinion was most marked amongst millennials.
Shared financial and property goals have become an important piece of single millennials’ dating lives – nearly 40% of Canadian millennials said they place more importance on shared financial thinking than looks, while a third said they’re more likely to prioritize shared property goals.
PERCENTAGE OF BUYERS OVERWHELMED BY THE APPLICATIONS, LAND SURVEYS, FEES AND CONTRACTS ASSOCIATED WITH THE MORTGAGE PROCESS All age groups 25% Millennials 33%
Canadian millennials who say shared financial goals are more important than looks when considering a potential partner
39%
Canadian millennials who say shared property goals are more important than looks when considering a potential partner
33% 0%
Source: Beyond the Bricks, HSBC Bank Canada, July 2019
6
10%
20%
30%
40%
Source: Beyond the Bricks, HSBC Bank Canada, July 2019
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UK 4.5 years
TAIWAN 4.39 years
FRANCE SINGAPORE
4.15 years
3.77 years
UAE 3.82 years
MALAYSIA 3.49 years
AUSTRALIA
HOW LONG ARE MILLENNIALS WILLING TO PUT OFF STARTING A FAMILY TO AFFORD A HOME?
3.97 years Source: Beyond the Bricks, HSBC Bank Canada, July 2019
CUTTING BACK
BANG FOR THE BUCK
In the quest for homeownership, Canadians are often willing to alter their spending habits, typically cutting back on day-to-day expenses, the purchase of major items and social activities.
Financial considerations are most likely to prompt Canadian millennials to move – almost two-thirds of millennials told HSBC that the last time they moved house, it was due to money matters.
WHERE ARE CANADIANS WILLING TO CUT BACK TO AFFORD A HOME?
24.5%
wanted to get more house for the money
30%
23.4%
20%
62.8%
10%
0%
of Canadian millennials said financial considerations drove their last house move
were looking for a lower cost of living
14.9%
30%
29%
28%
6%
Day-to-day spending
Major expenditures (e.g. buying a car)
Social life
Having a child
had other financial reasons
Source: Beyond the Bricks, HSBC Bank Canada, July 2019
Source: Beyond the Bricks, HSBC Bank Canada, July 2019
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UPFRONT
HEAD TO HEAD
Does Mortgage Professionals Canada serve brokers well? The industry association turns 25 this year. How well is it doing in representing its members’ interests?
John Bargis Vice-president Mortgage Edge, a broker member of CIMBC
Ron Butler Mortgage broker Butler Mortgage
Shawn Allen CEO and broker of record Matrix Mortgage Global
“The challenge for any association is the demonstration of strong representation to their entire membership. MPC currently claims 11,000 members, including lender and industry partners. Over 18,000 mortgage brokers and agents are registered nationally, so about 40% have chosen to either belong to another association or none at all. Further, MPC’s policy is that all agents of a brokerage must register if one does, which is very telling after a 25-year run. An organization that’s been around so long should be able to stand on its own merits. The good news is, with meaningful changes, there is hope for a unified front.”
“Everyone in every business complains about their trade association. We all complain about MPC – but hold on, it’s $250 a year! What do you want, folks? National advertising? That’s $2,500 per year. So let’s get real – we won’t all agree, but MPC does its best. Government relations, education, and national and regional meetings, all for $250 a head? Decent value! And for everyone who wants MPC to drop the requirement that 100% of agents in a brokerage be a member, it’s a rational policy. What sense does it make to charge one person and the whole brokerage gets the information?”
“I think MPC is adequately serving its broker members, but it needs to do more to get the message out. They have a wealth of resources, and I feel most in the industry are unaware of their role or significance. MPC was responsible for lobbying to ensure that broker commissions are HST-exempt. My only concern is their ‘all or nothing’ approach to membership; they are losing out on attracting quality members who could strengthen the organization and community. The perception that MPC is lender-focused also needs to change for brokers to see the value from the work they do.”
BANG FOR THE BROKER BUCK? Mortgage Professionals Canada claims to represent the interests of 11,500 individuals and 1,000 companies across Canada’s broker channel – but not all are convinced the organization truly speaks for everyone in the industry. Matrix Mortgage Global owner Shawn Allen says he signed up for MPC membership when he first started in the industry but eventually cancelled because he didn’t find it valuable. “MPC should be working to promote players within the industry, rather than only those who pay for it,” Allen says. “If there’s a successful brokerage in the industry, it should be used as an example by MPC for the rest of the industry – showcase the people within the industry who provide value to their peers. MPC is all in it for the money. They should be lobbying and promoting the industry as a whole, not just a select few.”
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N�W!
STUDENT HOUSING Program
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Helping y Canadians Move Forward
600-200 King Street West, Toronto, ON M5H 3T4 | FSCO 10406 Proudly owned by MCAN Mortgage Corporation | xmcmortgage.com
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UPFRONT
NEWS ANALYSIS
GTA on the rebound Detached home sales are on the rise again in the Greater Toronto Area – and the trend is largely being driven by the buyers punished by B-20
LANGUID SINCE 2017, detached housing in the Greater Toronto Area appears to have rebounded this year. According to a recent Re/Max report, which analyzed data from the Toronto Real Estate Board, the detached sector has shown promising yearly gains. Between January and June, annual detached home sales increased in almost 88% of markets. Prices are trending upward in the city as well. In the area made up of North and South Riverdale, Blake-Jones and GreenwoodCoxwell, valuations shot up 15.2% in the first half of 2019, reaching $1.38 million. In the area from Kensington-Chinatown and westward to Dufferin Grove and Little Portugal,
of 2018, which plunged the market into a nadir not seen in years. But now, it appears, “detached housing is finally back on track, with yearto-date sales almost 17% ahead of last year’s levels, signalling a return to more normal levels of homebuying activity,” says Christopher Alexander, executive vice-president and regional director of Re/Max Ontario-Atlantic Canada. “Market share is also climbing, with detached homes now representing 45.7% of all home sales in the Greater Toronto Area, up from 43.1% one year ago.” The uptick in sales was witnessed throughout the GTA; 51% of neighbourhoods saw doubledigit increases, and three-quarters of those
“Year-to-date sales [are] almost 17% ahead of last year’s levels, signalling a return to more normal levels of ... activity” Christopher Alexander, Re/Max Ontario-Atlantic Canada valuations jumped by 12.8% to $1.95 million. Leaside and Thorncliffe Park, meanwhile, saw values rise by 11.2%, hitting $2.19 million. The GTA’s detached market has been sluggish since the one-two punch of the Ontario Fair Housing Plan, introduced in April 2017, and the B-20 changes rolled out at the start
10
are south of Highway 401, Alexander says, adding that the other 49% are flat or just below last year’s figures. Re/Max’s report noted that “the north end of the GTA appears to be in recovery mode, having been particularly hard-hit in the correction. Savvy first-time buyers looking for the best deals in the GTA
are likely to find them in the York Region, where the dollar seems to stretch further.” “In some neighbourhoods, you can probably get a deal, and in others it’s more difficult,” Alexander adds. “Consumers are in a good position that way; they have options, and as a seller, depending on what neighbourhood you’re in, you’re very much in the driver’s seat.” Another reversal of fortune concerns GTA millennials, many of whom are first-time homebuyers and are driving detached housing sales. According to Fivewalls, an online platform that matches buyers and sellers with Realtors, detached and semi-detached home sales in the GTA rose 23% this summer, compared to the same period in 2018. First-time buyers have arguably been B-20’s greatest casualty, but it turns out many of them have been biding their time and have
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GTA PROPERTY VALUES MAKE A COMEBACK Average price, 2018
Average price, 2019
$1.5 million
$1 million
$500,000
$0
Detached
Semidetached
Townhome
Condo
Source: Fivewalls
pounced on a flat market. Looking at the trajectory of condo, townhome, semi-detached and detached home values between summer
says Freda Lau, Fivewalls’ director of operations. “Anything under $1 million, it’s millennials and gen x-ers driving that market. When we look
“[Millennials’] thinking is that detached home pricing flattened out, so they have gone for those instead of condos” Freda Lau, Fivewalls 2018 and this summer, only detached home values fell (by 1%), lending credence to the theory that millennial buyers were watching pricing intently. “In terms of our customers, their thinking is that detached home pricing flattened out, so they have gone for those instead of condos,”
at housing affordability, how much income do you need for an entry-level detached home with all expenses included, assuming someone has a 20% down payment? You need an income of $160,000 for a home priced $900,000.” Konstantin Polyakov, principal broker at Centum The Pocket Mortgage, notes that
millennials are getting older and are entering a crucial juncture in their income-earning years. “They’re hitting over $50,000, $60,000 per head, and as households, that puts them over $100,000,” he says. “They’re maturing and able to qualify for properties of up to $1 million, but I haven’t seen many millennials able to qualify for more than that.” The dearth of competition in the detached and semi-detached markets has created fertile buying conditions. “Those sitting on the sidelines, unable to qualify in the exorbitant price ranges, finally have a shot because they don’t have to bid against 20 other people and drive the sale price 20% to 30% over asking,” Polyakov says. “This is one of the most educated generations in the market right now, and it’s because of the lack of activity that there’s more millennial activity.”
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UPFRONT
ALTERNATIVE LENDING UPDATE NEWS BRIEFS RiverRock rolls out competitive suite of products for broker channel
Brimming with capital and making a deep push into the broker channel, RiverRock Mortgage Investment Corporation recently launched a competitive new product suite. RiverRock offers a 6.99% rate on first mortgages and 9.99% on second mortgages. In addition, “we allow clients to use their own lawyer, so there’s only one set of lawyer fees,” said president and CEO Nick Kyprianou. “Other MICs require you to use your lawyer and their lawyer.” RiverRock also reimburses brokers for appraisals on closing when they submit a paid invoice.
Mortgage credit sees fastest rate of growth since 2017
Canadian household mortgage credit saw its largest month-over-month increase in two years, expanding by 5.2% between May and June 2019. “Mortgage growth has surely rebounded after a period of deceleration from early 2017 to its mid-2018 trough,” Scotiabank economist Juan Manuel Herrera and research analyst Alena Bystrova wrote in a recent report. Herrera and Bystrova noted that acceleration of borrowing activity in non-bank institutions exceeded that of banks. However, the pair added that non-bank mortgage credit has yet to significantly exceed the long-term average, and non-bank lenders occupy just 21.3% of the mortgage credit market.
Self-employed professionals harmed the most by B-20
Amid calls for relaxing some of the B-20 provisions, Equitable Bank CEO Andrew Moor urged Ottawa to consider the significant impact upon particular sectors. “My concern about B-20 and
the stress test generally is that I think it potentially disadvantages certain groups of people from buying houses in the communities where we’d all like to live, and it makes it easier for people on a salary to buy a house compared to people who are self-employed,” Moor told the Financial Post. “While this was laid out as an OSFI initiative … it’s got broader policy implications for housing at the federal government level.”
Canadian rates shouldn’t be affected by US Fed decision
The Bank of Canada held its overnight rate at 1.75% in September – and there’s nothing compelling the bank to follow the US Federal Reserve’s lead in cutting rates, Deloitte chief economist Craig Alexander noted in a recent interview with Global News. “The two central banks didn’t move in lockstep with rates going up, so they don’t need to move in lockstep with rates coming down,” he said. “I don’t think the economic indicators, at this point, are flashing that a recession is upon us. One could argue that the Fed went farther faster and now it’s going to reverse some of that, so there isn’t the pressure on the Bank of Canada to respond.”
Brokers need to embrace longterm lending strategies
With the recent rise in alternative and private lending, brokers have been forced to take on a mentorship role to guide their clients through several tiers of lending. “It’s no longer onesize-fits all with mortgages ... because s underwriting criteria becomes more complex, clients need advice about long-term strategies,” explained Frances Hinojosa, managing partner at Tribe Financial. “If you know, for example, you’re working through a strategy to move them from a private lender to the B channel and then to an A lender, you have to put them in a better debt situation.”
Tighter rules cause alt lending windfall Since the new B-20 rules were rolled out, the sector’s market share has been on an upswing
A stricter regulatory environment, along with consistently elevated prices in markets like Toronto and Vancouver, has led to considerable dividends for some alternative lenders. In early August, Equitable Bank reported a historic high in its outstanding principal retail loans, which grew by 23% year-over-year during the second quarter of 2019 to end up at $16.9 billion. Outstanding commercial loans also increased by 19% annually, to $7.9 billion. At present, the lender holds a 35% share of Canada’s alternative mortgage market. “We certainly have seen our client portfolio quality improve over the last couple of years,” said Equitable CEO Andrew Moor. “The general risk of a house price correction gets reduced as these rules now get embedded in the system. It’s a structural permanent shift, and we will continue to see higher credit quality than we’ve ever had.” Meanwhile, Home Capital’s second-quarter earnings defied expectations at $31.9 million – a marked uptick from the $29.6 million the lender reported during the same period last year. Home Capital’s mortgage originations also grew by 4% to $1.28 billion, while loans under administration increased by 1.7% to $22.9 billion. Total loans for the second quarter clocked in at $16.84 billion, an increase of 1% quarter-over-quarter and 9% annually. Home Capital CEO Yousry Bissada said the results are “beginning to reflect the impact of
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some initiatives that we at Home Capital have been working very hard at for the past few quarters.” He expressed confidence that if current trends in the Canadian real estate market hold, Home Capital should see stability and healthy earnings for the rest of the year, following up on “substantial progress in our operations in the first half of 2019.”
“We certainly have seen our client portfolio quality improve over the last couple of years” An especially important component of Home Capital’s ongoing rebound is the renewed sign of life and strength in the national housing market. “Sales activity is picking up, with particular strength in the GTA,” Bissada said. “The latest data on economic growth, employment and interest rate expectations is consistent with our outlook for a stable and balanced real estate market for the rest of 2019.” The latest figures from the Toronto Real Estate Board backed up these observations: Housing sales in the region grew by 24.3% on an annual basis in July. This will more than compensate for any weakness in Vancouver, according to Bissada, who said that Home Capital “does not expect the recent decline in prices and sales volume in the Vancouver real estate market to have a material impact on business.”
Q&A
JOHN LEE Founder and president ARISE MORTGAGE CORPORATION
Years in the industry 3 Fast fact Outside of the mortgage industry, Lee is an enthusiastic volunteer at his local church and an avid supporter of Compassion Canada
Addressing the current crisis in Hong Kong How has Arise Mortgage been doing so far this year? We’ve been doing very well, thankfully. The introduction of the stress test has slowed down the market, and it’s been so difficult for people to borrow money. It’s been difficult for them to qualify for the precise amounts that they need, so many of them have gathered towards alternative providers like Arise Mortgage.
In this environment, what are the major issues that your clients are dealing with, and how do you address them? The ability to show income – that’s definitely up there in terms of challenges. When it comes to income qualification, many clients do not match up with the current guidelines among A lenders. We have strong relationships with MICs in the market. On top of that, we also have a good list of our own investors, all of whom are willing to lend and put their names on the titles.
What trends and opportunities do you anticipate for the rest of 2019? With the concerns surrounding Hong Kong, we’ve seen a surge of people inquiring about getting mortgages for expatriates. In August alone, I had five to six interviews with people from Hong Kong inquiring about how to get financing. Typically, the ones that I’ve chatted with were in the 35 to 45 age group, mainly from young families and households. Their rationale is that they are not confident about the future for Hong Kong. They are the ones making sacrifices – not for themselves, but for their children.
How do you see this trend playing out? We’re definitely getting more and more inquiries, although the volume changes from day to day. A major influence is the impact of the protests in Hong Kong, which have gradually escalated over the past few weeks. Many crucial secrets have been revealed to the people of Hong Kong, and a good number have come to the decision that they can never trust the government nor the police officers who maintain the law. Even when the situation gets defused, the revelations will remain as pressing concerns among the citizenry, and this will entice them to look for homes elsewhere. A significant proportion of expats grew up in Canada and found themselves with work in Hong Kong later in life, either after high school or university. Deep inside, however, they still know what it was like to live in Canada, and comparisons between the two are inevitable. Ultimately, a good number of them choose Canada, deeming it the best possible environment for their children.
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UPFRONT
BROKER NETWORK UPDATE
The many faces of consolidation Networks are far from the only example of the widespread consolidation in the broker channel
is to use their commission, so brokers will make less to land the deal,” Turcotte says. “Some firmly believe you articulate value and don’t buy the rate down, and I was very much like that when I was a broker, but the reality is that bills don’t go away and food always has to be on the table. You can’t feed your family on your pride.” Internal data from Dominion Lending Centres, meanwhile, shows that broker commissions have been increasing per deal – but expenses are another story, says DLC president Eddy Cocciollo.
“When margins compress, both sides feel it; it’s not a matter of big or small”
Consolidation isn’t just coming by way of large networks subsuming independent brokerages. In towns and cities, in offices large and small, there’s been a reckoning with leads that have been shrinking since the new B-20 rules were rolled out. Brokerages carry high overhead costs and aren’t always as profitable as they seem. “Mortgage brokerages – offices owned by brokers – are consolidating because the margins are shrinking,” says Centum Group president and CEO Chris Turcotte. “You’re seeing it across
NEWS BRIEFS
the board, even the big guys with 100 agents. Imagine the lease and mortgage payments and infrastructure overhead on those buildings. If they have multiple assistants, multiple underwriters, their Xerox bills – all those little things add up, and when margins compress, both sides feel it; it’s not a matter of big or small.” The squeeze also manifests in broker commissions. “If Royal Bank is offering you a 2.64% interest rate and the broker has a 2.69% interest rate, the only way to get that rate down
MonsterMortgage.ca joins Centum Financial Group
Centum Financial Group has welcomed MonsterMortgage.ca into its fold. The longstanding independent brokerage has served over 100,000 Canadians for more than two decades and has been courted by industry networks for years. “Monster wanted to add technology to its repertoire, and that’s the Centum factor,” said Centum president and COO Chris Turcotte. “We asked [owner] Vince [Gaetano] what his scenario was so that we could customize our technology to how he does things. We consider this a partnership.”
“I think brokers are looking for more revenue and savings on expenses, and they’re looking for ways to do that,” Cocciollo says. “By teaming up, operationally they can consolidate costs and hit more bonuses with more lenders. It makes sense because everyone wins.” Regulation breeds attrition in the broker channel, which in turn spurs consolidation. “People should be more open to conversations with any brand, now more than ever, to understand there’s a better option out there,” Turcotte says. “There are ways to put that margin back in your pocket.” There is a caveat, though. “The only challenge is control,” Cocciollo says, “which some brokers are not willing to relinquish.”
DLC launches training initiative with new hire
After hiring First National’s Doreen Walsh as its VP of network development, DLC is embarking on a new educational initiative. “We’re going out into the world and finding opportunities for new brokers coming into the channel, whether they’re coming out of school or simply entering the field,” Walsh said. “It’s going to be very technology-driven, from how brokers originate mortgages to closing. We’ll be changing how things work and how people are trained so that we can make them the most successful brokers they can be.”
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Q&A
Glen Kelleway
The mortgage broker as educator
Mortgage broker and licensed Realtor KELLEWAY MORTGAGE ARCHITECTS
How has the first half of this year been for your brokerage?
Years in the industry 16
I would say it was moderately busy. It’s been busier before, but we’re on track to match last year’s numbers – not exceeding expectations, but meeting expectations.
Fast fact Outside of his work in the mortgage industry, Kelleway coordinates the adult co-ed soccer program for his local soccer group
We’re digging into our database to ensure that we’re reaching out to as many past clients as possible, letting them know that we’re still here to look after them.
What do you attribute that to?
Based on your recent transactions, what issues are having the greatest impact on your clients? Service ratios have been impacted by not being able to exceed certain limits. Credit scores are going down due to payments, and a lot of it is high-balance. If the payment is high-balance, the credit score will drop, and that’s going to impact their ability to qualify with any of our co-lenders.
How has the tightening of mortgage rules changed your business? The challenge here is that clients will say, “My mother’s brother’s sister’s cousin said that getting a mortgage wasn’t that difficult.” And when asked about when the transaction took place, they will say, “A little while ago”
Brokers need to leverage social media marketing
Despite the popularity of social media, the industry is still largely wary of it as a marketing tool. But broker Daniel Johanis, who is an Instagram and Facebook vlogger, argues that traditional advertising is on the decline. “In this industry, we’re similar to real estate agents in that the question becomes ‘What differentiates you from the next agent?’” he said. “Clients want to work with you because there’s a connection and they feel comfortable. You can leverage social media to create a relationship with someone you’ve never met before.”
– only it turns out that it wasn’t just a matter of weeks or months, but way back in 2012 or even as long ago as 2008. Their estimations are only as good as their last mortgage transactions, and for many of them, their previous dealings were five years ago or more. What I’m finding is that many clients are coming in to take look at properties, and they need to be careful, especially when selling something, as a particular asset might have a huge exit penalty. One client I had was looking at a $30,000 to $40,000 exit penalty.
What advice do you give to these particular clients? People often don’t understand that they need all of the documentation upfront. Part of our job is to educate clients that they need to have every important paper on hand, anytime, every time. Major banks and financial institutions will always ask for these documents. People are arriving thinking that they have everything that they need: the right income, the right funds in hand, the right papers. What clients should be able to do is to start in advance, to start with the end in mind. Our job as brokers is to help clients, to guide them. And right now, brokers should take the time to listen, to build relationships and then to educate clients.
DLC’s Cooper touts benefits of lower stress test rate
In July, the Bank of Canada lowered the five-year benchmark qualifying rate from 5.34% to 5.19%. DLC chief economist Dr. Sherry Cooper said that while the change is minimal, the industry shouldn’t discount its psychological impact. “This 15-basis point drop in the qualifying rate will not turn the housing market around in the hardest-hit regions, but it will be an incremental positive psychological boost for buyers. It should also counter, in some small part, what’s been the slowest lending growth in five years.”
New certification offers territorial exclusivity
A new certification for financial professionals is being touted as a way to give brokers a competitive edge. Robinson Smith plans to launch a certification program built around his late father’s Smith Manoeuvre strategy, which converts non-deductible mortgage interest into the deductible interest of an investment loan. Smith said the certification will be limited to one broker for roughly every 50,000 people, “but because of the network’s exclusivity, each professional will be carefully vetted.”
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10/09/2019 3:26:29 AM
UPFRONT
OPINION
GOT AN OPINION THAT COUNTS? Email mortgagebrokernews@kmimedia.ca
Raising the bar for brokers The current standard for entry into mortgage brokering is too low – and all brokers suffer for it, writes Paul Meredith
AS LICENSED mortgage professionals, our clients rely on us for guidance through the mortgage process. It doesn’t matter if we’ve been licensed for a week or for 10 years – we have the licence, so they view us as experts, regardless of our level of experience. But is this really true in every situation? Given the lack of educational requirements to entering the business, virtually anyone can become a broker. The mortgage licensing courses train us on the basics – the bare minimum. And no one comes out of school an expert. This is why doctors do three years of residency before they are permitted to practice. Experience trumps education, every time. The real learning begins when the broker gets out into the real world and is dealing with real clients in actual situations. Many consumers feel more comfortable dealing directly with banks and won’t consider anything but a bank. This is changing, but slowly. We can accelerate the pace by raising the bar for entry. A healthy tree starts with healthy roots. The stronger the roots, the stronger the tree. Raising the bar for entry into this industry amounts to strengthening its roots. If it’s too easy to become a mortgage agent, the quality of advice coming from our industry suffers. I’ve seen mortgage ‘professionals’ working for banks who have no business giving people advice on mortgages. Don’t get me wrong – there are some truly talented mortgage professionals working for the banks, but they seem to be few and far between. I hate to say it, but the broker
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channel is no different. If it’s too easy to enter this business, this will be reflected in the quality of applicants to which we are handing licences. This will have a direct influence on the quality of advice given to clients, which impacts the quality of our industry. Several things should be done to make entering the industry more challenging. First, licensing courses are too short – I’d
help strengthen students’ comprehension of the material. Some licensing exam questions should result in immediate failure of the course if answered incorrectly, regardless of the actual score obtained. I remember seeing questions about fraud on my exam and thinking that anyone getting this wrong should be determined ineligible for a mortgage licence. If the exam is more difficult, fewer applicants will pass, and fewer will become licensed. This is as it should be. Just because someone can come up with $300 for the course, they shouldn’t be de facto guaranteed a licence. Once licensed, mortgage agents don’t have any additional restrictions against them – they have the ability to operate independently right from the beginning. But just as one cannot get a driver’s licence and immediately have full access to its privileges, the same caution should be bought to bear when issuing mortgage licences. New agents should be under the close supervision of an established mortgage broker for at least the first year before being permitted to go out and
“Just as one cannot get a driver’s licence and immediately have full access to its privileges, the same caution should be bought to bear when issuing mortgage licences” like to see them at least three times longer. Additional areas of focus should include examples of real-world situations and how to handle them. Increasing course length will also increase the cost, which isn’t a bad thing. The more skin someone has in the game, the more seriously they will take it. Among other things, a higher cost will deter those just looking to earn some extra income on the side. Second, the final exam passing grade should be raised to 80%. The exams should also include more essay questions and fewer multiple-choice options that show the student the right answer. Let them come up with the answer themselves. This alone will
advise fully on their own. Over that period, their emails should be monitored by their broker so they can be guided accordingly. As an industry, we are still growing and getting stronger all the time, but there is much room for improvement. We have the power to take our industry to the next level. The question is, what are we prepared to do to make it happen? Paul Meredith is a broker with CityCan Financial and author of the Amazon bestseller Beat the Bank: How to Win the Mortgage Game in Canada. He was a finalist for Mortgage Broker of the Year at the Canadian Mortgage Awards in 2018 and 2019.
www.mortgagebrokernews.ca
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10/09/2019 3:26:57 AM
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10/09/2019 3:27:01 AM
PEOPLE
INDUSTRY ICON
KING OF THE PRIVATE CHANNEL Shawn Allen has built one of Canada’s most successful mortgage brokerages by understanding that marketing is as important as financing
THE GREAT Recession was a time of tumult for the Canadian mortgage industry – but not for Matrix Mortgage Global. Launched by Shawn Allen in 2008, Matrix skirted the recession fallout to become one of Canada’s most venerable mortgage companies. When he created Matrix, Allen recognized that while fewer people were buying homes than they had in preceding years, there was still a large cohort of homeowners who needed servicing. “The recession didn’t affect us because we weren’t necessarily catering to homebuyers,” he says. “There were more homeowners in most markets than homebuyers, so we did a lot of refinancing. At the time, there were slightly fewer than 13 million residents in Ontario, and a large chunk of them were homeowners. How many were buying homes at that time? Not many, but when I saw statistics on how many people owned homes, I focused Matrix on the refinancing side of the business.” Allen also realized from the outset that conflating his background in database administration with hyper-focused marketing would yield his incipient company the client base it sought – although his initial strategy did require a bit of fine-tuning. Matrix Mortgage Global began as a call centre, cold-calling potential clients and building an email database, but
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when anti-spam and do-not-call legislation landed in Canada, the company threw its energy and resources into online marketing. Allen admits this wasn’t always easy – it required buckets of creativity, perseverance and, above all else, methodical planning. “You have to track and measure different aspects of your marketing; you need good governance; you have to record your calls and track where
does with marketing. The sooner they realize they’re in the marketing business, the more effective they’ll be in generating leads and retaining them long-term.”
One-stop shop Allen began his career at Petro Canada, where he used his database background to provide support for gas stations across Canada. He also
“[B-20 has] provided an influx of people into a space we’ve consistently mined since 2008. Now it’s hard for other brokerages to catch up to what we’re doing because we’ve concentrated on it for so long” they’re coming from,” he explains. “If you’re making webpages, track where those leads came from and how they got onto your site; parse your database and purge it of clients who are no longer relevant. “It’s a full-time job,” he adds, “and what people in the mortgage business have to realize is this has less to do with mortgages than it
moonlighted part-time for now-defunct National Mortgage Loans, which was run by a real estate broker. Immediately, Allen recognized that the brokerage’s superlative advertising campaigns were the reason it did so well. In 2004, Allen got his mortgage licence, followed by his broker licence two years later. When he founded Matrix Mortgage Global in
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PROFILE Name: Shawn Allen Title: Founder, president and CEO Company: Matrix Mortgage Global Based in: Toronto Years in the industry: 17 Matrix at a glance: “We dominate the alternative and private mortgage spaces, and our marketing is our claim to fame.�
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10/09/2019 4:38:07 AM
PEOPLE
INDUSTRY ICON
2008, he brought along his 35-person team at National Mortgage Loans, many of whom are still with the company. Allen also founded PropertyXchange Realty to create a de facto one-stop shop for clients, who can first be prequalified by Matrix Mortgage Global. “The original reason I got the real estate licence was when I worked at the real estate brokerage, I was giving Realtors prequalified mortgage leads, and they were often too busy to use them,” Allen explains. “I realized that if they’re too busy to follow up with them, then I should. That’s also the reason I opened a realty brokerage – I already had full control of clients from the mortgage side, but whether they later
By building its business through alternative lending from the beginning, however, Matrix was way ahead of the curve. Allen says that, as much as B-20 has hampered the broker channel, it has been a blessing in disguise for Matrix. “It’s been good for us because a lot of these institutions cannot finance the same people they would have a couple of years ago – good people with great credit and great incomes, but because of the dynamics of how they’re qualified and approved for mortgages, it makes them non-bankable,” he says. “It’s been a game-changer, especially for us, because it’s provided an influx of people into a space we’ve
“The sooner [brokers] realize they’re in the marketing business, the more effective they’ll be in generating leads and retaining them long-term” sold their property or refinanced, I wanted full control of that, too. I always found it was better to lead with the mortgage because I’d be in control of the financing – and if you’re buying, you need some sort of financing.”
Private eye Today, Matrix Mortgage Global is the Canadian mortgage industry’s undisputed leader in the private mortgage space – Allen was named Private Lending Broker of the Year back-toback at the 2018 and 2019 Canadian Mortgage Awards, and the Matrix Mortgage Global empire includes Private Lending Hub, where brokers can submit deals for private funding. Matrix is an unremitting force in the B space as well. In the years before B-20, brokers typically flocked to A lenders in search of the best rates for their clients; since that well has begun to dry up, they have immersed themselves in the worlds of alternative and private lending.
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consistently mined since 2008. Now it’s hard for other brokerages to catch up to what we’re doing because we’ve concentrated on it for so long through advertising – not to mention our product knowledge and the central underwriting team we have and our relationships with BDMs across Canada.” Between 2013 and 2018, Matrix Mortgage Global grew 610% and funded more than $1.1 billion in volume. The brokerage currently boasts more than 100 agents and has – as its name suggests – global aspirations. Allen has begun working with brokerages in Australia and the United States to export the company’s unique brand of marketing. While it’s early days yet, it will hardly be surprising if Allen’s latest vision comes to fruition like all the others. “Our marketing is very solution-based; people call us because they have a problem, and we provide the solutions,” he says. “Information is the new currency.”
SHAWN ALLEN’S INDUSTRY ACCOLADES
2016 Verico’s Veris Award for being number one in units sold and finalist for Alternative Lending Mortgage Broker of the Year at the Canadian Mortgage Awards
2017 Finalist for Mortgage Broker of the Year (25 Employees or More) at the CMAs
2018 Finalist for Alternative Lending Mortgage Broker of the Year and winner of Private Lending Broker of the Year at the CMAs
2019 Winner of Private Lending Broker of the Year at the CMAs
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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 18-21_Industry Icon-SUBBED.indd 21
14/03/2018 10/09/2019 10:55:41 9:25:07 PM
SPECIAL REPORT
BROKERS ON LENDERS
BROKERS ON LENDERS 2019
Which Canadian lenders are excelling, and which ones need to step up their game? CMP polled brokers to find out what they really think about their lender partners
THE 13TH EDITION of CMP’s annual Brokers on Lenders survey unearthed a number of unexpected revelations. While some brokers highlighted the efforts lenders have made to improve in certain areas, others painted a less than positive picture. CMP asked brokers to rate up to six of their lender partners a scale of 1 (very poor) to 5 (very good) in 10 key categories, including turnaround time, interest rates, product range, underwriter support and more.
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Overall, lenders experienced a decline in seven of the 10 categories; the most dramatic drops came in the areas of turnaround time and IT/technology. Lenders did improve modestly in the interest rate and commission structure categories. After last year’s stellar results, in which lenders secured higher scores in all but one category, some evening out of scores is to be expected this year. As housing markets across the country face continued uncertainty and
volatility, it’s clear that brokers feel they need more support from their lender partners. CMP readers have spoken, and in many cases, they’re asking lenders to improve their processes. There were some success stories, though, and certain lenders performed well despite brokers’ tough scoring. What exactly did brokers have to say about lender performance, and which lenders received top marks from brokers this year? Read on to find out.
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HOW WELL DID LENDERS PERFORM ON AVERAGE?
Lenders secured lower scores this year across all categories with the exception of three. Overall average scores in transparency of commission structure and interest rates both rose slightly, while the score remained the same in satisfaction with credit policy. Last year, lenders scored a 4 (‘very good’) or higher in all but one category. This year, brokers were much more split; five categories cleared the ‘very good’ threshold, while five fell back under. After being ousted by BDM support as the area where brokers think lenders are performing best, transparency of commission structure reclaimed the top-performing spot in 2019, while BDM support slipped to second. Unsurprisingly, interest rates saw the biggest jump in terms of broker satisfaction, moving from rock bottom in 2018 to the third spot overall this time around. 2019
2018
2017 4.30 4.27 4.30
Transparency of commission structure
4.17 4.32 4.15 4.00 3.97 3.84 4.00 4.20 4.05 4.00 4.00 3.92 3.97 4.22 4.08 3.91 4.06 3.97 3.85 4.10 3.98 3.77 4.06 3.89 3.71 4.01 3.92
BDM support Interest rates Satisfaction with credit policy Broker support Underwriter support Product range Overall service levels Turnaround time IT/technology 1 Very poor
2 Poor
3 Average
4 Good
5 Very good
THE TOP PERFORMERS
These lenders earned the highest average scores across all 10 categories this year. A LENDERS
ALTERNATIVE LENDERS
Gold RMG Mortgages
Gold Magenta Capital Corporation
Silver Merix Financial
Silver Haventree Bank
Bronze First National Financial
Bronze (tie) CWB Optimum Mortgage, Equitable Bank
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10/09/2019 4:11:41 AM
SPECIAL REPORT
BROKERS ON LENDERS TRANSPARENCY OF COMMISSION STRUCTURE TOP LENDERS
TOP ALTERNATIVE LENDERS
Gold RMG Mortgages
Gold Magenta Capital Corporation
Silver Merix Financial
Silver Haventree Bank
Bronze (tie) MCAP, First National Financial, TD Bank, CMLS Financial
Bronze (tie) CWB Optimum Mortgage, NPX
2019 average score 4.30
2018 average score 4.27
Transparency of commission structure has consistently ranked as lenders’ top-performing category; after being briefly usurped by BDM support last year, it returned to the top of the
BDM SUPPORT TOP LENDERS
TOP ALTERNATIVE LENDERS
Gold Marathon Mortgage Silver Merix Financial Bronze RMG Mortgages
2019 average score 4.17
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Gold Magenta Capital Corporation Silver CWB Optimum Mortgage Bronze Haventree Bank
2018 average score 4.32
pile in 2019. Lenders who put in the effort to create transparent commission structures are clearly at the top of brokers’ lists. RMG Mortgages and Merix Financial took home gold and silver in this category (the latter was singled out by a broker as the best lender in the industry, in part due to its commission structure), while four lenders tied for bronze. Among the alternative lenders, Magenta Capital Corporation and Haventree Bank claimed the top two spots on the leaderboard, while CWB Optimum Mortgage and NPX shared the bronze. Despite brokers’ general satisfaction with their commission structures, there were some calls for improvements in regard to clarity. “I don’t really see any posted compensation structure, and I have to often ask for confirmation of commission,” one broker said. Another echoed those sentiments: “It is very difficult to figure out how much you are getting paid on a file, as commissions are not published.”
After its surprise turn as lenders’ bestperforming category last year, BDM support slipped back down to second place for 2019, and the overall average score dropped slightly. Lenders’ strong performance in this area can be largely credited to the BDMs who go above and beyond. One broker described their BDM as “positive, informative and quick to help” and said he’s “the biggest reason I love working with this lender.” Another broker raved: “I have a killer BDM at several lenders, and that makes all the difference.” But some brokers’ experiences weren’t so positive. “I’m tired of the BDM telling me to read the manual; he is too lazy to answer questions directly,” one broker complained. Another broker put a botched deal down to an “irresponsible BDM and funding team … delay in funding and pushing blame until it was proven an error instead of taking ownership first.”
HOW MANY LENDERS HAVE YOU SUBMITTED DEALS TO IN THE LAST 12 MONTHS?
In today’s competitive market, the majority of brokers still prefer to submit deals to a wide range of lenders.
FIVE OR MORE 80.4% FOUR 10.1% THREE 7.8% TWO 0.6% ONE 1.1%
WHERE DO LENDERS NEED TO IMPROVE? “Accept more soft income that often goes undeclared and universally allow us to deduct spousal support from income rather than add it as a debt” “More common sense and flexibility on minor details” “Simplify what they need to see from borrowers” “Product range! Lenders need to innovate and bring new products into the current market space” “Offer more competitive commissions and streamline their underwriting processes”
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10/09/2019 9:02:55 PM
Thank You As Magenta marks its 25th anniversary, I want to say thank you to all our broker partners who have made our first quarter century of extraordinary growth and success possible. Delivering service excellence was the cornerstone of our company when we began back in 1994, and we proudly continue that tradition today as one of Canada’s largest MICs. The team here at Magenta is honoured to be named Top Alternative Lender of the year by CMP. This award recognizes that putting you, our partners, at the heart of everything we do is the only way to do business. We look forward to working with you and your clients in the years to come.
Gavin Marshall, MBA CEO and Founder
2019 Top Alternative Lender Learn more about how we put brokers first at magentainvestment.ca
Email brokers@magentainvestment.ca
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Turnaround Time
Underwriter Support
Overall Service Levels
Interest Rates
BDM Support
Product Range
Satisfaction with Credit Policy
Broker Support
IT/Tech
Transparency of Commission Structure
Call 1 (613) 230-5014 Toll Free: 1 (888) 267-1744
Visit 580 Terry Fox Drive, Suite 401 www.mortgagebrokernews.ca Ottawa, ON K2L 4B9
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10/09/2019 4:11:47 AM
SPECIAL REPORT
BROKERS ON LENDERS INTEREST RATES TOP LENDERS
TOP ALTERNATIVE LENDERS
TOP LENDERS
TOP ALTERNATIVE LENDERS
Gold Magenta Capital Corporation
Gold Merix Financial
Gold Magenta Capital Corporation
Gold Marathon Mortgage Silver Merix Financial Bronze RMG Mortgages
2019 average score 4.00
Silver Alterna Bank Bronze Community Trust 2018 average score 3.97
As B-20 changes continue to wreak havoc and the mortgage industry grows increasingly competitive, the need for enticing rates for alternative clients is at an all-time high, causing brokers to be even more aware of any rate changes. The good news is that lenders seem to be moving in the right direction: Interest rates was one of only two categories to see its average score increase from 2018 to 2019, and it tied for lenders’ third bestperforming category this year, climbing from the bottom of the rankings in 2018.
This was one of only two categories to see its average score increase from 2018 to 2019 Marathon Mortgage took the top spot among the A lenders, while Merix and RMG rounded out the top three. An honourable mention went to TD Bank, which one broker commended for “dropping rates upon request.” In the alternative lending category, Magenta earned another gold medal, while Alterna Bank nabbed silver and Community Trust took bronze.
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BROKER SUPPORT
Silver RMG Mortgages Bronze (tie) First National Financial, Marathon Mortgage
Silver CWB Optimum Mortgage Bronze Equitable Bank
WHY SEND DEALS TO BANKS?
As in previous years, brokers tend to prefer banks over monolines. What has changed is that nearly 17% of brokers said they’re choosing banks because they’re getting better service, compared to 14% last year. 60% 50% 40%
2019 average score 4.00
2018 average score 4.20
Despite experiencing a slight decline in overall average score, broker support also tied for lenders’ third best-performing category. Merix Financial missed out on a medal in this category in 2018 but claimed the top spot in 2019. RMG managed to move up one spot from last year to take silver, while First National Financial sank to bronze, sharing it with Marathon Mortgage. Among the alternative lenders, Magenta earned its fourth gold, while CWB Optimum Mortgage took silver and Equitable claimed bronze. This category is all about brokers feeling that their lenders have their back, and it featured highly in brokers’ comments about their most positive experiences with lenders. One broker described their lender as “fantastic from a broker-supportive standpoint – truly invaluable,” while another praised their lender for working closely with them “to understand a more challenging file and support me and the client.” Some brokers cited support when asked about the industry’s best-performing lenders. One gave RMG top marks due to its “overall broker support – lots of communication and correspondence, and works with you when issues arise.” Merix and its Lendwise arm also topped brokers’ personal charts because their “support is amazing.”
30% 20% 10% 0%
50.8%
21.8%
16.8%
Product Client Underwriter/ offering preference BDM service
9.5% Rates
1.1% Compensation
WHAT’S THE BEST THING A LENDER HAS DONE FOR YOU? “Just being partners in a challenging industry is appreciated – we’re all in this together, so we shouldn’t be working against each other” “Got me an approval in less than four hours when the other lender took four and a half days and came back with the wrong rate” “Lowered their rates and paid us more to give us the flexibility to stay competitive”
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10/09/2019 4:12:00 AM
LENDER SPOTLIGHT
MAGENTA CAPITAL CORPORATION Magenta is celebrating a momentous year – 2019 marks the company’s 25th anniversary. Headquartered in Ottawa with an administrative office in Perth, Ontario, Magenta is a mortgage investment corporation that offers both mortgages and investment products. On the mortgage side, Magenta lends in urban and small centres in Eastern and Southwestern Ontario, partnering with brokers to provide custom alternative mortgage solutions. “Our goal is to help brokers solve their clients’ short-term credit challenges and facilitate their return to traditional lending channels,” says Magenta founder and CEO Gavin Marshall. “What makes us different is not the product – the mortgage – but the relationships we’ve built with our broker partners. This our greatest asset. Over the last 25 years, we’ve earned their trust by being accountable and transparent and by simply doing what we say we’re going to do.” Magenta hired its 30th staff member in early 2019, and its growth shows no signs of slowing. Marshall says the company’s culture is just as entrepreneurial as it was when he founded it in his basement in 1994. “Our teams are empowered to iterate and make improvements to their roles and the company on a daily basis,” he says. “This flexibility, combined with the confidence, credibility and capacity that can only come from a quarter-century of consistent growth and success, puts us in an ideal position to seize the generational opportunity presented by today’s market.” For Marshall, there’s nothing more gratifying than when a longstanding client tells him that they couldn’t have lived the life they did without Magenta. “This mission is even more important now than it was 25 years ago,” he says. “Our country and our world will undoubtedly face new challenges that we can barely imagine today. So as we celebrate this milestone, the larger and stronger Magenta of today is rededicating itself to its essential mission – to invest in a better tomorrow.”
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10/09/2019 4:12:01 AM
SPECIAL REPORT
BROKERS ON LENDERS SATISFACTION WITH CREDIT POLICY TOP LENDERS
TOP ALTERNATIVE LENDERS
Gold Street Capital Bank of Canada
Gold Magenta Capital Corporation
Silver Scotiabank
Silver Haventree Bank
Bronze RMG Mortgages
2019 average score 4.00
Bronze CWB Optimum Mortgage
2018 average score 4.00
Satisfaction with credit policy is the only category that achieved the exact same score from brokers (4.00) in both 2018 and 2019. Street Capital Bank of Canada made it onto the podium for the first time in this category this year, taking home the gold, while Scotiabank retained its silver medal from last year and RMG slipped from gold to bronze. Among alternative lenders, Magenta continued its gold-medal streak,
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while Haventree Bank and CWB Optimum Mortgage rounded out the top three. Beyond the top performers, the picture was less rosy. When asked about the biggest challenge they’ve faced with lenders in the past 12 months, a number of brokers mentioned rigid and tightening credit policy. One broker urged lenders to “lower the qualifying rate [and] stop relying too heavily on the new credit scores.” Another bemoaned the slow turnaround times brought about by increased documentation requirements: “They need more documents, and the policies are dragging service levels down. A third broker said they’d like to see “a float-down policy in this dropping rate environment.” Brokers continue to be frustrated by a perceived lack of flexibility among certain lenders. “Underwriters have no authority to waive policy,” one particularly exasperated broker said. “Most want refinances with a minimum score of 680 and have turned down 675 just for the number, forcing brokers to use A- lenders who are ripping off the public with rates at least 2% higher and all kinds of fees, including higher penalties for early payouts.”
HOW LONG HAVE YOU BEEN A BROKER?
11 OR MORE YEARS 46.4% FIVE TO 10 YEARS 22.3% ONE TO FIVE YEARS 22.5% LESS THAN A YEAR 5.6%
WHICH LENDERS HAVE SET THEMSELVES APART FROM THE COMPETITION? “Merix/Lendwise has excellent underwriting, reasonable lending policies and trailers that pay again at renewal.” “CMLS and First National have shown they can be flexible on minor issues with solid clients.”
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SPECIAL REPORT
BROKERS ON LENDERS UNDERWRITER SUPPORT TOP ALTERNATIVE LENDERS
TOP LENDERS Gold First National Financial
Gold CWB Optimum Mortgage
Silver (tie) RMG Mortgages, TD Bank, MCAP
Silver (tie) Magenta Capital Corporation, BlueShore Pacifica Alternative Mortgage Centre, Haventree Bank, Home Trust
Bronze (tie) CMLS Financial, Scotiabank
Bronze Equitable Bank 2019 average score 3.97
2018 average score 4.22
Lenders’ overall average score of 3.97 in underwriter support represents a notable decline from the 4.22 they scored in 2018. There were some bright spots, however: Haventree Bank marked three years in the top three for underwriter support among alternative lenders, sharing the silver with three other lenders. CWB Optimum Mortgage took the gold-medal spot from Equitable Bank, which fell to third. Among A lenders, First National earned its second gold in a row. RMG also reprised last year’s performance, sharing the silver, and was highlighted by one broker as having “a phenomenal BDM and underwriter.” Scotiabank tied for bronze and received top marks for an underwriter who “is consistent and gives quick answers and turnaround.” When asked about their biggest challenge with a lender’s service, a number of brokers brought up a lack of communication and continuity from underwriters. One broker was frustrated by failed attempts to “get
THE MOST IMPORTANT BROKER-LENDER ISSUE
WHO IS YOUR STRONGEST REFERRAL PARTNER?
As in previous years, brokers are most concerned about the move to an efficiency ratio affecting their relationships with lenders over the next six to 12 months – although almost as many were worried about having to meet higher volume requirements. Move to an efficiency ratio
39.1%
Higher volume requirements from individual lenders
31.8%
Lender concerns about fraud during originations
17.3%
Commissions
11.7% 0%
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the underwriter to get back to me quickly when I or the client have questions.” Another reported that “after an underwriter handoff mid-file due to vacation, the new underwriter did not reply to questions after adding conditions.” A third broker offered a particularly extreme case study, saying they were “cut off by a lender because of complaints about the incompetence of an underwriter. Instead of firing the underwriter, who they admit is very bad, they fired me.” However, it wasn’t all doom and gloom. Several brokers were quick to praise their underwriters, especially those who went above and beyond. One broker praised their lender’s “move to a dedicated underwriter that works with my style and understands the AAA nature of majority of my clients [and] works to uphold my relationship with these clients.” Another broker was happy to work alongside an underwriter who “stayed late to get approval for a client who came to me with only three days to COF date.”
Past clients are an even more important source of referrals for brokers than they were last year, when 58% of brokers named them as their number-one source.
PAST CLIENTS 66.7% REAL ESTATE AGENTS 22.8% FRIENDS/FAMILY 7.6% FINANCIAL PLANNERS 2.8%
10%
20%
30%
40%
50%
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LENDER SPOTLIGHT
EQUITABLE BANK As Canada’s ‘challenger bank,’ Equitable Bank offers a diverse and growing suite of financial services and solutions. Equitable launched its online banking arm, EQ Bank, in 2016, and today is a major contender in the digital banking space. With more than $31 billion in assets under management, Equitable Bank is now the ninth largest Schedule I bank in Canada. Helping to serve Canadian homeowners, Equitable’s residential lending division offers a robust line of mortgage products, complete with customized options and solutions. Headed by Brian Leland, senior vice-president of residential lending, and Kim Kukulowicz, senior vice-president of residential sales, Equitable’s residential lending offerings have experienced steady growth in recent years, which is attributed to the mortgage brokers to whom Equitable provides high-touch service every day. Beyond providing residential brokers with a variety of innovative solutions, service is what sets Equitable’s team apart. By continuing to offer more digital-based solutions such as e-signatures, a bank verification tool, and easy online access to dedicated sales and credit teams, Equitable Bank’s service is designed to provide brokers with the deep knowledge, tools and resources they need to turn deals into a reality. This personalized touch stands as a testament to how Equitable values its relationships with brokers across the country, and it’s something Equitable will continue to enhance moving forward. Not only is Equitable committed to bettering the broker experience, but it also cares about building better communities. From the arts to charity events to volunteer work, Equitable participates in a number of important initiatives across Canada, including Madison Community Services, Brown Bagging for Calgary’s Kids Society, Montreal Children’s Hospital Foundation, JDRF Ride for Diabetes Research, the ALS Plane Pull and many more.
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SPECIAL REPORT
BROKERS ON LENDERS PRODUCT RANGE TOP LENDERS
TOP ALTERNATIVE LENDERS
Gold Merix Financial
Gold Magenta Capital Corporation
Silver Scotiabank
Silver NPX
Bronze Street Capital Bank of Canada
Bronze Equitable Bank
2019 average score 3.91
2018 average score 4.06
After being on an upward trajectory for the past three years, lenders’ performance in product range sank to an average score of 3.91 out of 5. Among traditional lenders, Scotiabank was ousted from the gold-medal spot by Merix but managed to hold onto silver. Last year’s bronze medalist, Manulife Bank, fell out of the top three and was replaced by Street Capital Bank of Canada. There was even more change among the top three alternative lenders in this category: Only Equitable Bank retained a podium position, slipping from silver to bronze. Magenta Capital Corporation continued its gold-medal sweep with a score of 4.80, followed by NPX with 4.30. A number of brokers named product range as an area where lenders could really
improve. One broker identified their biggest challenge with a lender as “product restraint in terms of lack of flexibility to the reality of unstable employment, BFS, multiple jobs or contract work.” Another echoed the need for lenders to introduce “customized lending products to this challenging environment.” One broker suggested lenders consider “expanded product offerings like HELOC and rental offsets.” However, some lenders are wowing brokers with the wide range of products they offer, including Scotiabank, which one broker praised for having “great rates and product range; a hungry appetite for business.” Another commended MCAP for “really stepping up their product offering, service, rates and compensation.”
OVERALL SERVICE LEVELS TOP LENDERS
TOP ALTERNATIVE LENDERS
Gold First National Financial Silver RMG Mortgages Bronze (tie) TD Bank, MCAP
Gold (tie) CWB Optimum Mortgage, Magenta Capital Corporation Silver (tie) Haventree Bank, Equitable Bank Bronze BlueShore Pacifica Alternative Mortgage Centre
2019 average score 3.85
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2018 average score 4.10
Overall service levels play a fundamental role in relationships between lenders, brokers and clients. If response times or access to product information are inconsistent or lacking, it’s the end client who suffers. As with product range, service levels saw a significant drop after three years of rising scores. Yet despite
team, which has drastically improved service and quality.” There was little change at the top of the leaderboard in this category: First National Financial and RMG Mortgages retained the top two spots again this year, while TD Bank and MCAP shared bronze.
If response times or access to product information are inconsistent or lacking, it’s the end client who suffers the lower scores, brokers didn’t hesitate to heap praise on those lenders doing a good job in this area. Service was mentioned by several brokers when asked about the best experience they’ve had with a lender over the past year. Brokers praised lenders that have “provided exceptional service and turnaround,” “increased their service level” and “given us new underwriters that have been better fits with our
There was also some consistency from 2018 among the alternative lenders. Magenta Capital Corporation remained on top, although this year its gold medal was shared with CWB Optimum Mortgage. Last year’s silver and bronze winners, Equitable Bank and Haventree Bank, tied for the silver this year, while BlueShore Pacifica Alternative Mortgage Centre broke onto the podium with the bronze.
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THANK YOU FOR RATING US #1 OVERALL! IT/Technology
Underwriter Support
Turnaround Time
Transparency of Commission Structure
Overall Service Levels
Interest Rates
Broker Support
BDM Support
Satisfaction with Credit Policy
Visit www.RMGmortgages.ca or contact one of our Business Development managers to learn how RMG Mortgages can help you create homeownership opportunities. RMG Mortgages is a division of MCAP Financial Corporation Ontario Mortgage Brokerage #10600 | Ontario Mortgage Administrator #11790 www.mortgagebrokernews.ca
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SPECIAL REPORT
BROKERS ON LENDERS TURNAROUND TIMES TOP ALTERNATIVE LENDERS
TOP LENDERS Gold First National Financial
Gold Magenta Capital Corporation
Silver CMLS Financial
Silver BlueShore Pacifica Alternative Mortgage Centre
Bronze RMG Mortgages
Bronze Equitable Bank 2019 average score 3.77
2018 average score 4.06
Brokers have long considered turnaround times from lenders to be one of their biggest challenges, and judging by this year’s results, there’s still some work to be done. After being one of the most improved categories in 2018, turnaround times was one of lenders’ worst-performing areas this year, sliding from an average score of 4.06 to 3.77. However, that performance comes with some caveats. The B-20 regulatory changes, for example, have shaken the industry to its core and are adding a new level of complexity to files that’s not helping turnaround times. The rise of contract employment in the gig economy is another trend that some lenders are struggling to keep up with. Nonetheless, brokers continue to be frustrated with certain lenders’ turnaround times. “Scotiabank is swamped with mort-
HOW HAS B-20 IMPACTED YOUR BUSINESS?
WHERE ARE COMMISSIONS HEADED?
Given all the evidence of B-20’s negative effects so far, it’s hardly surprising that nearly three-quarters of brokers said the changes have been bad for business.
Most brokers expect commissions and bonuses to remain stable over the next six to 12 months; of the remaining minority, most expect commissions to decrease rather than increase. 70%
50% 40%
“Turnaround times for submission and doc review”
20% 10%
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“Not putting themselves in my shoes and understanding that I lose referral relationships, etc., through slow, apathetic service and over-conditioning”
“A significant increase in all the various documents required for income verification”
30%
0%
WHAT HAS BEEN YOUR BIGGEST CHALLENGE WITH LENDERS?
“BDMs not knowing the underwriting guidelines enough – it causes severe delays and last-minute declines”
60%
NEGATIVELY 69.8% POSITIVELY 8.4% NO IMPACT 21.8%
gage applications, and turnaround and service times have suffered,” one broker said, while another blamed slow responses on the busy spring market. One broker complained that a lack of communication is exacerbating the slow turnaround times, while another said they’d moved their business to lenders who can produce commitments in a timelier manner. First National was the top performer among A lenders in this category, holding onto the gold medal it earned in 2018. CMLS and RMG rose to the silver and bronze spots after missing out on the podium in this category last year. Of the alternative lenders, Magenta once again found itself in the top spot, followed by BlueShore Pacifica Alternative Mortgage Centre in second place and Equitable Bank in third.
64.2%
19%
14%
2.8%
Stay the same
Decrease
Increase
Move to a flat-fee commission
“Product restraint in terms of lack of flexibility to the reality of unstable employment, BFS, multiple jobs or contract work”
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SPECIAL REPORT
BROKERS ON LENDERS IT/TECHNOLOGY TOP ALTERNATIVE LENDERS
TOP LENDERS Gold RMG Mortgages Silver MCAP
Gold Magenta Capital Corporation Silver Home Trust
Bronze First National Financial
Bronze (tie) CWB Optimum Mortgage, Haventree Bank
2019 average score 3.71
2018 average score 4.01
Technology is shaking up businesses in all sectors, and the mortgage industry is not immune. Brokers are increasingly looking to partner with lenders that have invested in efficient, intuitive tech solutions, as today’s clients expect their mortgage application process to be quick, easy and stress-free. Certain lenders are hearing that message loud and clear. The same lenders made the top three this year as in 2018. Praised for its broker portal, RMG took the gold again, while MCAP rose to silver and First National fell back one spot to take bronze. Among alternative lenders, Magenta took the goldmedal spot from Home Trust, which dropped to silver this year. CWB Optimum Mortgage and Haventree Bank, meanwhile, shared the spoils for bronze. Despite not making the top
three, TD Bank was singled out by one broker for its tech offerings: “TD is always way ahead of the others. They have the technology and the experienced staff.” Despite these standout companies, brokers felt lenders’ tech offerings have room for improvement overall. As in 2018, a process for streamlining shared documents and the ability to easily upload and access documents topped brokers’ wish lists. One tech-savvy broker wanted to see the industry incorporate more automated technology, and several wished for a single portal for all lenders. “Each lender has a different way of receiving documents – some have portals, while others email,” one broker explained. “It would be great if we could use Expert for all documents, no matter what lender.”
Email lender notes, application, and credit bureaus to:
deals@vwrcapital.com D IMITRI K OSTUROS
Chief Operating Officer dimitri@vwrcapital.com
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P AULA H UTTON
BDM - Prairies paula@vwrcapital.com
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LENDER SPOTLIGHT
STREET CAPITAL BANK OF CANADA Street Capital Bank of Canada is one of Canada’s largest broker-channel-sourced residential mortgage lenders by market share. Founded in 2007 as Street Capital Financial Corporation, the company made a quick and significant impact on the Canadian mortgage market. It currently holds more than $27 billion in mortgages under administration and has originated $40 billion since inception. Despite its impressive growth story, Street Capital’s entrepreneurial spirit and desire to improve has never diminished. After receiving regulatory approval in late 2016, the company officially commenced operations as Street Capital Bank of Canada in 2017. In the same year, the bank launched its uninsured alternative mortgage program, Street Solutions™, as well as its first deposit product, a suite of GICs distributed by registered deposit dealers. Innovation fuelled by data and insight remains at the forefront of Street Capital’s strategy as it continues to address the unique needs of its broker partners and clients. In September 2018, the bank launched its Change You Can Believe In campaign, which was designed to create immediate improvement in delivering competitive rates and service, updates to underwriting guidelines, and a streamlined broker experience. As part of the campaign, Street Capital launched a new broker status program called Prestige, designed to enhance the broker experience and reward dedicated and high-performing brokers. Brokers are encouraged to meet a funded volume target or achieve a combination of volume and funding ratio to qualify for Bronze, Silver or Gold status, positioning them to receive a comprehensive set of benefits to support their ongoing success. Recently, Street Capital formalized a broker advisory board composed of its top brokers from across the country, with the objective of keeping its strategy focused on ongoing growth in the broker channel. The board’s feedback enables Street Capital to remain in touch with the market and the needs of its broker partners. “Without our broker partners, we would not be where we are today, and we recognize how significant these partnerships remain to our future success,” says Steve Kissuk, senior vice-president of mortgage credit operations at Street Capital. “Over the past year, we have implemented several changes to our business, specifically to our credit policies and products, and have received positive feedback from the broker community overall. Change was necessary, and this is just the start. We will continue to engage our broker partners and welcome all feedback as we evolve our business now and in the future.”
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SPECIAL PROMOTIONAL FEATURE
ALTERNATIVE LENDING
Room to grow CMP caught up with Derek Serra from XMC Mortgage Corporation to find out how the company has more than doubled its market share this year IN THE first half of 2019, alternative lender XMC Mortgage Corporation grew its market share by more than 200% year-over-year. Driving those impressive numbers is a strategic approach to building partnerships, new leadership, a growing team and a fresh way of thinking about the lending ecosystem.
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Derek Serra has become both the face and force of the XMC brand since being named managing director in 2018. A nominee for Lender BDM of the Year at this year’s Canadian Mortgage Awards, he figures prominently on the company’s social media channels and is increasingly an advocate
for change in the mortgage business. CMP caught up with Serra to find out how XMC has achieved so much so quickly and what’s in the works for 2020.
CMP: With big growth comes big change. What are some of the more significant changes at XMC over the last year? Derek Serra: The drive of a new management team and high expectations really pushed us to take some big swings. Everyone on the team, from the front line to leadership, is committed to core values that include community, connection, collaboration and creativity. A good example of how we’ve embraced
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design thinking is our new student housing program. It started when a partner broker in Kingston voiced frustration with the lack of options for clients hoping to invest in a home for their children at university. There’s a shortage of student housing in key markets. Shelter is the most basic of needs – something a parent always wants to provide – and you have strong clients being denied that opportunity. We workshopped it at a broker lab in Ottawa, made some tweaks and launched in June. The response has been positive. We’re helping Canadian families invest in their future, in more ways than one. It’s how we design our products – and the entire XMC experience, really – by challenging assumptions with empathy and creativity.
CMP: What stands out as a highlight of the last year? DS: People. We’ve built an incredible team, added two experienced BDMs in Ontario and divided our ops team into dedicated insured and uninsured divisions. The XMC broker nation is strong – I’ve made some good friends, and we’re looking at new ways to help our partners expand their referral networks in 2020. We live in an ecosystem that revolves around helping people buy homes for their family, for their future. With that in mind, we designed XCELERATOR, a program that enables partner brokers with more client-centric tools to build their business. We include things like free appraisals, mortgage payments, priority service – all things that add delight to the experience and win clients for life.
CMP: How willing are mortgage brokers to share their experience and client intel with you? DS: Extremely. They are not shy with their feedback, I promise! It’s a partnership, for
sure. We benefit from the generosity and insight of key partner brokers and reciprocate with perks like exclusive Sprint status rates, special client appreciation events and priority account service. We’ve had a series of successful broker labs in Toronto and Ottawa, plus several smaller feedback sessions in key markets. This month, we launched a ‘sandwich series’ to host teams from important accounts at HQ for less formal conversations, and we’ll be throwing two amazing events at the MPC national conference this year.
CMP: What’s next for XMC? DS: That line from the poem “If ” by Rudyard Kipling pops into my head: “If you can keep your head when all about you are losing theirs …” I think we’ve done that. In a year full of uncertainty, we stuck to our plan and principles. We remained rigor-
rent to their suddenly not-so-empty-nester parents; multi-generational homes where everyone contributes – we can help. Our business-for-self program has gone through many iterations in pilot mode, and we’re looking at a new set of enhancements that will offer the many Canadians who choose to be self-employed a new alternative. XMC insured solutions continue to evolve, too, as we prepare to launch our new switch product next month. We identified a need, connected with stakeholders and designed a great solution for clients seeking flexibility at any point in their homeownership journey. The XMC experience is designed to help people. We partner with brokers who get it. Canadians want to buy homes, and life just doesn’t look the way it did 30, 20, even 10 years ago. People work remotely, they buy homes with friends, and they live outside
“You can’t build a business by just offering the lowest interest rate or the highest commission. You can’t buy relationships. You build them” Derek Serra, XMC Mortgage Corporation ously committed to carefully crafted policies and guidelines, nurtured relationships with highly regarded mortgage brokers, and built a culture of communication and transparency. We’ve had a good year. And I don’t take it for granted, not for a minute. Damaged credit is not a lifestyle; it’s often a result of a major life event. We recognize that in the uninsured space, the mortgage solutions currently available to Canadians don’t necessarily reflect reality, and our mission is to fill those gaps. For example, we accept alternative income types that other lenders will not: boomerang kids paying
cities or they live in city cores … the point is, there’s no prototype client; we help real people, every day. You can’t build a business by just offering the lowest interest rate or the highest commission. You can’t buy relationships. You build them. We’re a national lender. We will continue to expand our footprint and build those partnerships across the country. I don’t have a crystal ball, but I think if we continue to design mortgage solutions that serve Canadians and deliver a superior client experience, we will continue to see sustainable growth.
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PEOPLE
BROKER INSIGHT
No other alternative Robert Jennings tells CMP how he unintentionally became a leader in the alternative space and why he never takes his foot off the gas
CMP: How did you first get into the mortgage industry? Robert Jennings: I got into finance at the age of 23, right after I graduated from university. I knew I wanted to go into financial sales, but I didn’t know what area. I thought about investments and did dabble in insurance for a short period. My first job was with Citi Financial; I think a lot of brokers get their feet wet with a finance company. Subprime lending, higher-interest-rate loans and mortgages, insurance and collections – it was the perfect experience. Working in finance straight out of university and doing some collections work – it was really humbling, the people I saw and spoke with. I then stumbled across the mortgage industry and entered the business eight years ago. It was just a great fit. I love real estate and money, and giving mortgage education and advice is so valuable – I think everyone appreciates it. I don’t consider myself a salesman because I just provide advice and options, which is free. I’d never had my own mortgage, so I was learning it all for the first time. There was some very valuable work experience, but also valuable life experience.
CMP: You were a finalist in the Alternative Mortgage Broker of the Year category at this year’s Canadian Mortgage Awards. Did you target the
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alternative space on purpose? RJ: I absolutely did not intend on it. I’ll never forget, though, three of my first four deals were alternative mortgages, so it did really become natural. I came straight from Citi Financial, so all I knew were alternative mortgages; I’d never done an easy one before. There was never an intention to do alternatives; it was just natural. Specializing in alternatives sure makes a lot of the other stuff pretty easy.
CMP: What are some of the challenges you face in the alternative space? RJ: It is very challenging, but the mortgage channel in general is challenging – even doing A mortgages with the best clients. Competition and compliance make things difficult, although there are another couple of layers in alternative mortgages. But it is a very important space, and you’re
usually dealing with someone who needs your help, someone who has probably been turned down before. So it’s a great opportunity to get a really good success story and referral source. If you get a B client, you’ve got a client for life – someone who is probably going to work with you for quite some time. Sometimes the deals are smaller, on shorter terms, but they are still really important for those clients. It’s difficult to quantify just how good a solid base of alternative clients can be.
CMP: You’ve also been named a CMP Young Gun. What is it about your approach that has led to recognition from the industry? RJ: I don’t take it for granted because you’re only as good as your last deal. I am still young in the industry, and I don’t take my foot off the pedal. You’re measured annually, and you have to keep going and do better this year
JENNINGS ON DOING BUSINESS IN NEWFOUNDLAND “We are four and a half years into an oil recession, and we are very oil-dependent here. The economy has been very sluggish. We have a major inventory issue, and prices have been decreasing pretty steadily over the past four years. It hasn’t been kind to us, but our business has been growing every year. When times are tough or people are struggling to sell, people need mortgage brokers more than ever. There are tons of opportunities in decreasing markets, just like in increasing markets.”
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FAST FACTS: ROBERT JENNINGS
BROKERAGE East Coast Mortgage Brokers
POSITION Owner/mortgage broker
LOCATION St. John’s, Newfoundland
YEARS IN THE INDUSTRY 8
“You’re usually dealing with someone who needs your help, someone who has probably been turned down before … If you get a B client, you’ve got a client for life” than last. So you have to get up every single day and put a full day’s work in. Every single person you speak with is an opportunity, and you can’t become complacent because there is a lot of competition. Different brokerages are very competitive, the banks are our biggest competition, and there is a threat from online – it’s harder than it’s ever been. You have to be the first one in the office in
the morning and the last one there at night. If a call comes in late at night, you’ve got to take it because if you don’t, they will call someone else. You have to be responsive and be informative because buying a house or remortgaging is very important. We might take these situations for granted, but for clients, it is the most important financial decision of their entire lives.
COMMUNITY SERVICE Volunteers for and contributes to a number of charitable organizations, including the Ronald McDonald House and Make-A-Wish Foundation
INDUSTRY ACCOLADES Was his brokerage’s top producer from 2012 to 2017, was named a CMP Young Gun in 2018 and was a finalist for Alternative Mortgage Broker of the Year at the 2019 CMAs
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SPECIAL PROMOTIONAL FEATURE
CULTURE
Creating a culture of excellence Dominion Lending Centres explains how it has built its winning, inclusive Team Blue culture
CULTURE CAN be defined in many ways. In simple terms, it is the customs, arts and social institutions of a particular population or social group. Today, we attach the label of ‘culture’ to things as basic as the music people listen to or the way they dress. The idea of ‘culture’ is everywhere you look, including the corporate world. Companies have come to realize the importance of fostering a culture within their workforce to ensure that employees feel engaged and attached to something bigger than them. Consider the culture at coffee giant Starbucks, which touts its inclusive workplace and use of ethically sourced beans. Walk into any Starbucks, and you can’t miss the culture being conveyed, right down to writing your name on a cup. So where does a company’s culture come from? It could be manufactured in a boardroom, based on the whim of a marketing scheme, but consumers, the general public and even employees can see right through these efforts if they’re not genuine. A true and lasting culture comes organically from leaders who exude traits and a vision, with top-to-bottom buy-in from employees and industry partners.
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While Dominion Lending Centres is a mortgage company by description, it’s so much more. Culture is at the forefront of everything DLC has done since it was founded by Gary Mauris and Chris Kayat. These two entrepreneurs wouldn’t have it any other way. They’ve always believed in the dream of homeownership for every Canadian, and they built a company that strives to make this goal a reality for anyone who wants to achieve it. DLC’s ethos has always been about taking the hassle out of the mortgage process and simplifying the consumer’s life so they can focus on other things. This has allowed DLC to work with the best lenders, create new products like a mortgage app and grow a national network that puts a knowledgeable mortgage professional on the customer’s doorstep when needed. DLC’s internal culture also developed quickly. A love of sports has permeated across the company, even playing a major role in marketing by using beloved hockey figure Don Cherry as a pitchman. Employees at head office and brokers across the network are affectionately known as members of Team Blue. That’s because the success of DLC is
based on the teamwork from every corner of the organization. Labels are one thing; action is another. DLC’s founders have never forgotten their humble beginnings and have always given back at every possible turn. For years, DLC has been involved in two national charities: Bullying Ends Here and Bikes For Kids. Bullying Ends Here is a one-hour presentation for youth or adults that’s aimed at eliminating all forms of bullying, including cyber bullying. The organization is requested around the world and has saved countless lives. Bikes for Kids was created by DLC to bring underprivileged children the joy of their first bike. Since 2014, the charity has donated more than 6,500 bikes to kids across the country. And when it’s time to deliver these bikes during the holiday season, volunteers from DLC step up and let the Team Blue spirit really shine. DLC’s culture extends right through to brokers in the network. “We work for you; you don’t work for us” isn’t just a catchphrase used at DLC. It’s what drives every member of the corporate team, from the marketing department to support and training. DLC has built a suite of products and services to help agents
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succeed every day. The industry’s best trainers are at the ready to help every new DLC broker with everything from product launches and marketing to skills training and lender product education. DLC has a renowned reputation for hosting the industry’s leading events and conferences, which offer huge opportunities to engage in the network’s culture. From DLCUniversity to the Leadership Summit and National Sales Conference, DLC puts broker education and culture at the forefront of each event. Take THRIVE, a biannual destination event that brings industry partners and hundreds of people in the DLC network together for three days of fun. Kate Brady, DLC’s director of marketing and events, explains that events like THRIVE are meant
A true and lasting culture comes organically from leaders who exude traits and a vision, with top-to-bottom buy-in from employees and industry partners to be a unique experience that can only be shared with a large group. “When I think about planning any #TeamBlue gathering, the most important piece outside of the educational component is our culture – our support for our network, getting to know each broker personally and celebrating all of their success,” she says. “We are a big family, and we love the opportunity
to spend time with all of our people and have some fun, too.” These conferences and events are the ultimate expression of the Team Blue culture at DLC. Building a sustainable culture that fosters excellence, teamwork and success can only come from within, and DLC brings these elements together like no other company in the industry.
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FEATURES
CUSTOMER SERVICE
Seizing the golden opportunity Focusing on customer appreciation instead of merely delivering customer satisfaction will have a massive impact on your brokerage’s bottom line, writes Darrell Hardidge
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MANY A successful businessperson will have heard the adage that it’s at least six times more expensive to gain a new customer than to get an existing one to return. What’s so interesting about this well-known fact is that very few businesses can demonstrate how they measure customer loyalty and protect their future revenue. Part of the issue is that most are using the wrong theory and don’t even know it. We’ve all seen advertisements by companies boasting that “our satisfaction ratings are the highest” or “you’ll be completely satisfied with our service” and offering a “100% satisfaction guarantee.” Whenever I read these statements, my first thought is, “As opposed to what, 80%?” Delivering on customer satisfaction is basically about giving people what they paid
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FEATURES
CUSTOMER SERVICE
for, but customers also expect efficiency, minimal fuss and a good price. There is an attitude of complacency around service, which is a real problem. Think about how often you are wowed by your customer experiences. If you consider all of your personal transactions, you’ll discover that only about 15% go way beyond your expectations and provide an excellent experience, and this is where the golden opportunity of optimizing loyalty is hidden.
tion, you will see a massive impact on your bottom line.
Four steps to revenue In a competitive market, there are four specific categories that define and create revenue. It’s critical to master and manage these four areas if you want to build powerful ambassadors for your business and maximize margins. If you’re only delivering the basics of customer satisfaction, your primary focus will be on price.
3. Number of transactions Successful businesses have a high focus on creating repeat customers, as they know this is more profitable, especially because ambassadors for your company value experience over price and reward you with the maximum wallet share. Think about who you are loyal to and why you choose them first. If you don’t have customers’ loyalty, then you will have to compete on price to get them back.
4. Average sale value
Customer appreciation is a powerful and profitable currency. It’s rarely understood and grossly underleveraged in business The power of customer appreciation Think of the people in your life whom you care about, the ones you love and appreciate. You have a strong heart connection to them. For businesses, it can be the same: If you think about the businesses you are truly loyal to, you will find that it’s not because you got what you paid for, but because you got a whole lot more. It usually depends on the relationship you have with them and how they make you feel when you connect. Customer appreciation is a powerful and profitable currency. It’s rarely understood and grossly underleveraged in business. It’s without a doubt one of the biggest weapons a business can have against its competitors. The challenge is how to define customer appreciation in the culture of your business. It’s impossible to have extremely high customer loyalty with an average team culture. Most companies don’t place a high enough importance on the relationship between team culture and customer experience. In fact, it’s rarely measured or implemented in team training. With customer appreciation as your objective instead of mere customer satisfac-
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However, if you deliver very high levels of customer appreciation, then experience is the currency, and it’s about value.
Appreciative customers can spend considerably more in your business than just satisfied customers – often double the money. If your business has a high focus on delivering appreciation for service excellence, you will be rewarded with higher sales values. This area is often overlooked, as the speed to transact can override the opportunity gained from delivering service excellence.
The verdict 1. Lead generation Your marketing strategies are designed to bring potential customers into contact with your business and to attract the best prospects. In the last three to five years, there has been an explosion in business marketing methods, and it’s expensive if you don’t measure and manage these wisely. The most effective lead generation strategy has always been and still is powerful referrals from loyal customers, as they know what they want, and they want to deal with you.
2. Conversion rate The fastest way to grow revenue is to increase conversion rates with prospective and existing customers. If you usually sell to two out of every 10 potential customers and you can increase your conversion rate to three out of every 10, that’s a 50% increase. Powerful referrals deliver the most effective and profitable conversion rates.
Customer satisfaction is the goal in a price-driven economy – a very fragile and unforgiving marketplace to operate in. Many businesses are stuck in the price trap and don’t even realize it. Customer appreciation is the result of a value-driven economy – a secure and predictable space in which customers genuinely want you to succeed, as they want you to be there for them in the future. True customer appreciation creates an unshakable emotional connection to your business that ensures you have the most powerful advocates who will go out of their way to support you. Darrell Hardidge is a customer experience strategy expert and CEO of customer research company Saguity, which works with businesses to develop customer appreciation. He’s also the author of The Client Revolution and The 10 Commandments of Client Appreciation. To find out more, visit saguity.com.
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FEATURES
WORK-LIFE BALANCE
Stop that 80-hour hustle Starting your own business isn’t easy – but it also doesn’t have to involve endless hours of work. Aytekin Tank explains how and why to cut back
“ENTREPRENEURS ARE willing to work 80 hours a week to avoid working 40 hours a week.” Maybe you’ve already seen this quote from serial entrepreneur and Shark Tank star Lori Greiner. If not, I bet you’ve heard a version of it. Entrepreneurs are infamous for busybragging. Sometimes it even feels like a competition: Who can work the longest? Who can sacrifice the most? Who will sleep at the office and go a full week without natural light? Yes, starting a business is hard work, and Greiner’s dedication has clearly paid off (she’s created over 700 products and holds 120 patents). But the willingness she describes is really about freedom. Whether they’re chasing a big idea or solving a real problem, most founders also want to call the shots, to make their own money, set their own hours and create something they care about. So why are we all trying to outwork each other? I don’t believe in the 24/7 hustle and grind. It’s not productive. And it’s starting to kill us. I also know firsthand that starting a business is not easy. I’ve been on a 12-year entrepreneurial journey, slowly building JotForm
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into a global company with four million users and 110 employees. So where is the balance? How can you fulfill your vision without sacrificing yourself? Instead of logging more hours, the answer is to make the most of the hours you work.
management. Controlling your work is a matter of focus, not creating a crazy-strict schedule. When you focus your attention, you maximize your time, which increases your motivation. It’s a productive cycle that feels really, really good.
Instead of logging more hours, the answer is to make the most of the hours you work. If you’re smart about time management, you might be amazed by how much you can achieve in a sane, focused week If you’re smart about time management, you might be amazed by how much you can achieve in a sane, focused week. Here are five strategies that help me to avoid overworking – even when there’s always more to do.
1. Minimize your active projects Time management is attention
At any given time, I have no more than three core goals or active projects. That’s it. I say no to everything else. I delegate or save any outside tasks for later. You can also try a more sophisticated approach. In a Fast Company article, Google for Work director Thomas Davies described the problem with most time management strategies: “Managing time starts from the
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2. Mono-task, don’t multi-task Establishing core priorities will narrow your focus. You also need to perform just one task at a time. That’s because, as Phyllis Korkki wrote in The New York Times, multi-tasking is a biological impossibility: “Your brain may delude itself into thinking that it has more capacity than it really does, but it’s really working extra hard to handle multiple thoughts at once when you are switching back and forth between tasks. Your ability to get things done depends on how well you can focus on one task at a time, whether it’s for five minutes or an hour.” To create a mono-tasking environment, Korkki suggests that you remove all temptations – even if that means installing anti-distraction programs like Freedom or FocusMe. Also, use just one screen. Work in set chunks of time, and if you lose focus, get up and walk around. You can also try the popular Pomodoro technique, which breaks the day into highly focused 25-minute intervals, followed by a five-minute break. After four intervals, you take a 15-minute break – ideally away from all screens and mobile devices. premise that your workload is going to be what it’s going to be, and the best you can do is keep it ‘manageable.’ But what if you could design your workday instead?” Davies decided to create a new strategy. He divided his work responsibilities into four quadrants: people development, business operations, transactional tasks and representative tasks. Then he slotted every task into one of the four quadrants.
Once he had a high-level view of what actually occupied his time, he could decide what mattered most – and what made him feel most energized. Now he tries to maximize his work in those high-value quadrants. If this method speaks to you, give it a try. As Davies explains, you’ll soon realize that not all tasks are created equal. Armed with that knowledge, you can be mindful of where to dedicate your attention.
3. Cut back on meetings Meetings have become a contentious topic in entrepreneurial circles. Tesla founder Elon Musk told his staff to “walk out of a meeting or drop off a call as soon as it’s obvious you aren’t adding value.” And Basecamp’s Jason Fried says “it’s hard to come up with a bigger waste of money, time or attention than status meetings.” Some meetings are critical, but many are
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FEATURES
WORK-LIFE BALANCE
not. Unless the meeting can remove a roadblock or it’s essential for team cohesion, find another way. Send an email and follow up later. Say no and protect your time. You’ll be helping colleagues and co-workers to regain their focus, too. I’m honoured to receive a lot of requests for coffee and casual get-to-know-you meetings. I mentor some young entrepreneurs, but I politely decline everything from speaking invitations to networking events. I wish I had time to accommodate everyone, but I just don’t. I have to draw a firm boundary – and you should as well.
will rebel, too. You’ll be less analytical, way less creative, and your emotions will eventually overrule all logical thoughts. I spent a summer in Izmir, Turkey, where JotForm has a small office. It’s a beautiful city by the sparkling Aegean Sea. So I worked
took three months off to travel across Europe. It’s a matter of planning and sticking to your priorities. For example, if you’re working in your business, it doesn’t function without you. When you work on your business, you can
Imagine your brain is a whiteboard. Every time you make a decision, you’re wiping off more scribbles. Soon, it’s clear and ready for creative thought
4. Make quick decisions Hoarding decisions creates stress. When your mind is buzzing with many different choices – from what to eat for lunch to which job candidate to hire – it’s almost impossible to have a productive workday. Now imagine your brain is a whiteboard. Every time you make a decision, you’re wiping off more scribbles. Soon, it’s clear and ready for creative thought. When it comes to decision-making, speed is the goal here. There are very few decisions that can’t be made quickly. I know that goes against conventional wisdom, but give it a try. If you’ve already gathered enough information, combine that data with your personal instincts and make a choice – now. Don’t have enough data? Then forget the decision and gather what you need. Once you have the right information, make your choice and move on. Repeat as needed.
5. Make the most of your work time – then step away Vacations and downtime are essential for success. There’s just no way around it. You can hustle with the best of them, but at some point, your body is going to say no. The mind
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four-day weeks and explored the nearby beach towns with my family. I realize this is a great privilege – and I know you might have a few more questions. Don’t you feel pressure to show your face in the office? Do you worry that your team will lose morale and slack off if you’re not there? Honestly, I’m just not concerned about it. I guess some employees might slip into ‘relaxation’ mode if I’m not in the office, but I also know that our teams love their work. They’re knee-deep in meaningful projects, and I have great respect for what they contribute to JotForm. I encourage our employees to take time off, too. If you don’t take vacations, you’ll burn out and eventually produce less. As CEO, my job is to ensure our teams are motivated and they don’t hit roadblocks. Our employees won’t function well if they don’t take care of themselves. How on earth can I ease up when I’m just launching or growing my business? I promise it’s not impossible. Even during the early days of my company, my wife and I
develop systems and processes that let you step away. You build a company that doesn’t break if you’re not answering every email or performing every single task. Even as a solopreneur, you can plan to hit pause – if it matters to you. I know the details can be tricky, and this is a far easier proposition with an online business. But ultimately, life isn’t all about work. I don’t know about you, but I don’t to want to work, work, work and then retire for a couple years before I die. I want to enjoy my life and my freedom. Be strategic. Ask for help. Develop systems and safety nets that allow you to step away, even for a short time. You and your business will be so much better for it. Soon, you won’t even dream about using the word ‘hustle.’ Aytekin Tank is the founder and CEO of JotForm, an online form creation software with four million users worldwide and more than 100 employees. A developer by trade but writer by heart, Tank shares stories about how he exponentially grew his company without any outside funding. For more information, visit jotform.com.
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FEATURES
LEADERSHIP
Five things you must have to lead a team People often fail when they ascend to leadership roles because they haven’t cultivated the qualities necessary to lead a team. John Eades highlights five attributes that are critical for new leaders
IF YOU KNOW about your industry, perform your job well and show ‘potential,’ there’s a good chance your organization will consider promoting you to a management role. Unfortunately, as a manager, you’ll only use a small percentage of the skills that got you the promotion in the first place, and according to the latest statistics, you have a greater chance of failing than being successful. Sadly, I’m qualified to write on this topic because soon after I was promoted into a role leading other people, I quickly figured out that I had no clue what I was doing. I did everything wrong, and unfortunately, my people bore the brunt of the pain associated with my lack of leadership skills. At the end of the day, leadership is a journey and not a destination. To improve your odds of success on your leadership journey, there are skills and behaviours you need before and while you lead a team.
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1. Have servant mindset I’ve written about this many times, but the best definition of leadership comes from John Quincy Adams: “If your actions inspire others to dream more, learn more, do more and become more, you are a leader.” Leadership is about serving and empowering other people. No longer do you come to work for yourself or for your own self-interest. You now come to work to serve other people and help them become the best version of themselves in order to achieve more as a team. Serving others doesn’t mean being a pushover or not holding others accountable. It’s actually the opposite. In truth, you can’t effectively lead in today’s environment without it.
2. Know the qualities you want to see in people One of the biggest mistakes I’ve made
in my leadership career was not knowing what I was looking for in people. We now teach something called the Leadership Compound Theory, which shows the four characteristics we look for in people – confidence, drive, selflessness, and character – and what we expect each team member to bring to work every single day. You might be looking for different things based on your role or position, but the important thing is that you define them, communicate them and live them yourself.
3. Find an excellent mentor Leading a team is hard work. I tell my team all the time, “If it were easy, everyone would do it.” Because of the difficulty, having someone in your corner is extremely important. Sir Richard Branson said, “If you ask any successful businessperson, they always will have had a great mentor at some point
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Leadership is about serving and empowering other people. No longer do you come to work for yourself or for your own self-interest along the road.” The same goes for leadership – if you ask any successful leader, they always will have had a great mentor to ask questions and learn from.
4. Discover a love of learning The best leaders are learners. PJ Fleck, the current head football coach at the University of Minnesota, became the youngest head coach in college football in 2012. By that time, he had built out a book of lessons he learned during the seven years he spent as an assistant coach. The lessons were things he did or didn’t do when he became a head
coach. That book continues to evolve and grow, years later. The minute you think you have it all figured out or you forget to be curious is the minute your skills start to diminish.
5. Understand the importance of culture When I first started leading a team, I thought it was all about strategy and execution. I had no idea how important the culture was to the results of the team. On my Follow My Lead podcast, Step Up Leadership founder Jason Barger told me, “Culture is everything.” Culture is really all about the beliefs and behaviours that
produce the results of any team or organization. The word ‘culture’ actually comes from the Latin word cultus, which means ‘to grow.’ In today’s modern business environment, that really means ‘to grow people.’ Put an emphasis on and define the culture you want to create for your new team. Before you accept your first leadership position and the responsibility that comes with managing other people, consider these five skills and behaviours. If you’re already leading a team, it’s never too late to start. John Eades is the CEO of LearnLoft, a fullservice organizational health company whose mission is to turn managers into leaders and create healthier places to work. He is a speaker, host of the Follow My Lead podcast, and author of F.M.L.: Standing Out & Being a Leader and the upcoming book The Welder Leader. For more, visit learnloft.com
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PEOPLE
CAREER PATH
MIND OVER MATTER He’s had a varied path, but Joseph Trimboli’s main life lesson has been that “you can’t outperform your self-image” Killing time while waiting for his sister, Trimboli wandered into a shop – and walked out with a job. “I had dropped off my sister to do an exam and happened to walk into Giorgio. The manager talked to me – I felt like I shouldn’t even be in the store – and then asked me if I wanted a job. I was very mature and respectful; he saw something in a young man that he wanted to take under his wing.”
1996
SNAGS HIS FIRST SALES JOB
1999
GETS INTRODUCED TO THE MORTGAGE INDUSTRY While working in the garage, Trimboli was asked by one of his customers – a Realtor – if he had ever considered becoming a mortgage broker. “He had me meet the VP, who hired me on the spot. It was all about sales – I was a young man, but mature and knowledgeable, and they provided training. I was drawn by the fact that it’s an integral part of the home-buying process and helps people get the home they want.”
2005
STEPS INTO THE FAMILY BUSINESS Sidelined from mortgages by the need to step in at his father-in-law’s small business, Trimboli became the VP of operations for a furniture manufacturer – and had an important realization. “People took comfort in me being there – one major Canadian retailer would only do business if I was there. Everything I am today is the result of all those experiences. I realized we are 100% responsible for our results.”
2015
CHANGES HIS MINDSET When he shifted from focusing on what he could give rather than what he could get – attending coaching programs, reading personal development books and embracing an open-minded approach – Trimboli saw his business grow.
“Taking responsibility allowed me to get different results with the same resources. It helped me get things in alignment. I got busier; it allowed me to get to the next level”
1997
QUALIFIES AS A MECHANIC Raised by a garage owner, Trimboli became a licensed mechanic right after graduating from high school with an eye to taking over the family business, but his heart was never in it. “I had worked since I was 10: paper routes, pumping gas, construction – I wasn’t on the streets playing ball hockey. I worked at the garage during the week and at the boutique on the weekend. I enjoyed working with people.”
2000
JOINS MORTGAGE INTELLIGENCE Being restricted to selling a single product at CIBC weighed on Trimboli, prompting his move to Mortgage Intelligence. “It was very limiting; there weren’t a lot of options. That made things convenient for [the lender], not the client. I had to go out and get my own clients, and I had the challenge of a 20-year-old face – I had to rely on my persistence, my relationship with Realtors and my referral sources. It was tough starting out.”
2009
GETS BACK TO MORTGAGES A thwarted business opportunity ended up being a blessing in disguise, as it pushed Trimboli back to the mortgage world. “I wanted to open a restaurant; the morning I was to sign the lease, the landlord called and said, ‘Don’t bother; we’re going with a national tenant.’ I thought it was the worst thing ever. I decided I would get back into mortgages and that I was going to do it full force. That’s what started me towards my success.”
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PEOPLE
CAREER PATH
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PEOPLE
OTHER LIFE
1989
Year of Briglio’s red Porsche 930 Turbo Cabriolet, one of only 400 made worldwide
270km
Maximum speed Briglio has reached in his black 2007 Porsche 997 Twin Turbo
TELL US ABOUT YOUR OTHER LIFE Email mortgagebrokernews@kmimedia.ca
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Years Briglio has been participating in the Father’s Day Show and Shine
The idea for the personalized plate on Briglio’s red Porsche ca me from his oldest son, who told his dad, “When someone takes a look at that car, the first thing they think is ‘Ooh, yah!’”
LIFE IS A HIGHWAY As a teen, he drove muscle cars; these days, mortgage executive Morris Briglio’s rides help him do good in the world A LIFELONG driving enthusiast, Morris Briglio, the Vancouver-based president of The Mortgage Advantage Financial Services, can often be found behind the wheel of one of his beloved Porsches. In addition to the driving, a large part of the joy Briglio derives from owning such eye-catching cars comes from the charity
work they allow him to carry out. Briglio’s local chapter of the Porsche Club of America holds a bi-weekly drive on the Sea to Sky Highway; every driver must make a donation the Shriners, which is then matched by the restaurant where the ride culminates. But the highlight of the year for
Briglio is the club’s Father’s Day Show and Shine. “The people who come in to see the cars have the option of making a donation and choosing vehicle,” Briglio says. “They jump in the passenger seat, and [we] drive up to Cypress Mountain. I typically take the [red Porsche] and get chosen every year.”
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