CMP 15.05

OTTAWA STEPS IN

Do new relief measures for commercial properties go far enough?

A TEAM OF EXPERTS

MORTGAGEBROKERNEWS.CA ISSUE 15.05 | $12.95

A leading brokerage on why expertise is paramount in today’s mortgage industry

TO BUY OR NOT TO BUY?

How the COVID-19 pandemic has altered Canadians’ home-buying plans

MUST-KNOW MORTGAGE SOLUTIONS As COVID-19 rewrites the rules of financing, CMP explores the best options for brokers and their clients

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ISSUE 15.05

CONTENTS

18

MUST-KNOW MORTGAGE SOLUTIONS

SPECIAL REPORT

From refinancing and reverse mortgages to a push for enhanced technology, CMP explores the financing challenges and opportunities brought about by COVID-19

Unlike the banks, our rubber stamp says‘yes’.

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ISSUE 15.05

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

CONTENTS

08

twitter.com/CMPmagazine facebook.com/MortgageProfessionalCA

12

UPFRONT 04 Editorial

Ready to get back to business as usual?

Not so fast

06 Statistics

What the recent nosedive in consumer sentiment means for mortgage brokers

10 Alternative lending update

The alternative lending segment is seeing a rise in business from landlords with few other options

17 Opinion

As banks further tighten their lending criteria, private lending can provide a lifeline for brokers UPFRONT

UPFRONT

NEWS ANALYSIS

Will the government’s plan to help commercial property owners and tenants provide the necessary relief?

PEOPLE

INDUSTRY ICON

TECHNOLOGY UPDATE

COVID-19 has forced Canadians to adapt their home-buying plans – or put them on hold

PEOPLE 40 Other life

Painting the town with broker and mixed-media artist Nicholas Mavrikos

30

Dalia Barsoum has risen to the top of the industry by solving complex financing puzzles for real estate investors

14

PEOPLE

BROKER INSIGHT The leaders of Outline Financial explain why building a team of experts has been critical to thriving in the current mortgage landscape

2

MORTGAGEBROKERNEWS.CA CHECK IT OUT ONLINE

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UPFRONT

EDITORIAL

Let’s not get ahead of ourselves

I

t’s been two months since COVID-19 arrived in Canada and immediately started wreaking havoc on the country’s economy. Two months inside a one-story news cycle. Two months of unemployment, death and distress.

In such periods of extended darkness, even the tiniest glimmer of hope can be misinterpreted as a beacon that people are only too happy to follow. As countries in Europe and a few states in the US begin opening up certain sectors of their economies, it’s important to realize that we’re not out of the woods yet.

The most important thing mortgage professionals can do to ensure the economy gets back on track is to follow the direction of the world’s leading medical experts and continue practicing strict social distancing to mitigate the spread, and possible resurgence, of COVID-19. That means ensuring that your offices and meeting places allow people to stay at least six feet apart at all times.

It means turning down or rescheduling meetings where social distancing will

Getting back to normal will require a little more patience, a little more discipline and a little more trust that what we’re doing is working not be enforced. It means sacrificing a little bit of convenience for the sake of your community’s health. Is there any better way of showing concern for your clients than by taking steps to ensure their physical well-being?

And let’s face it: There is currently no viable alternative to social distancing.

Despite what some would love to believe, COVID-19 will not be cured by some magical combination of sunlight, anger and 50cc of Lysol. Until a vaccine is produced, the potential for another flare-up is very, very real.

Can your business afford another three-month pause? Can the federal government afford to backstop another shutdown of the economy? Even if the answer to both questions is yes, who wants to find out?

We’re all professionals, but we’re also all human. The desire to get back to normal is something we’re all feeling right now. But getting back to normal will require a little more patience, a little more discipline and a little more trust that what we’re doing is working. We’ll be out of this soon if we all commit to doing the smart thing: keeping our distance.

The team at Canadian Mortgage Professional

www.mortgagebrokernews.ca ISSUE 15.05 EDITORIAL Managing Editor Clayton Jarvis

SALES & MARKETING Vice-President, Sales John Mackenzie

Writers Ellen Burkhardt Ephraim Vecina Kasi Johnston

National Account Manager Corey Bahadur

Copy Editor Clare Alexander

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CONTRIBUTORS Lev Keselman

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

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Project Coordinator Jessica Duce

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

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UPFRONT

STATISTICS

Reading the room

CONSUMER CONFIDENCE AT AN ALL-TIME LOW

Amid the prospect of a return to normal, Canadians remain worried about what ‘normal’ will look like WHILE IT’S still too soon to get an objective, real-time statistical read on what COVID-19 is doing to the housing market, there’s plenty of consumer sentiment being measured – and most of it is quite negative. Despite the fact that certain countries are relaxing stayat-home orders, recent polling of Canadian consumers and businesses reveals high levels of anxiety about the future.

The Conference Board of Canada’s

66%

of Canadians say a job loss or reduced income would cause severe financial hardship

53%

of Canadians say a health or mental health crisis would severely impact their finances

Between March and April, the Conference Board of Canada’s consumer confidence index plummeted by 41 points, the largest monthly drop ever recorded. Burdened by serious worry over the future of their finances and local job markets, the majority of Canadians say they expect to put off major purchases for the foreseeable future.

consumer confidence index saw its largest ever monthly decline in April, and 77% of Canadians believe now isn’t the time to make a major purchase like a house. In addition, nearly a tenth of mortgage holders are concerned about defaulting. Whether this is merely runaway pessimism fuelled by a steady diet of bad news or an accurate reflection of how many people have had their livelihoods upended by COVID-19 remains to be seen.

45%

of Canadians plan to use savings, stocks or RRSPs to help with the financial burden of COVID-19

42%

of Canadians say they would take out a line of credit to help with their finances

Source: 2020 Survival Guide Study, Angus Reid and Credit Canada

WHAT GETS MISSED?

MAKING THE MORTGAGE PAYMENT

When it comes to deciding what bills and other obligations to skip because of a lack of income, most Canadians ranked mortgage payments quite low.

While most Canadians are confident about their ability to make mortgage payments during these tough times, around 9% Canadians said they would need extra help to make payments or had already made the difficult decision to sell.

WHAT BILLS/PAYMENTS WILL YOU MOST LIKELY MISS PAYING BECAUSE OF INCOME DISRUPTION? 40%

33%

30%

CANADIANS’ ABILITY TO MAKE MORTGAGE PAYMENTS OVER THE NEXT THREE MONTHS I will be able to make the payments on my mortgage fully, without a problem I won’t be able to pay the mortgage and will begin to default without greater help

25%

8%

10%

Credit card bill

Utility bill

7%

Mortgage/ Insurance rent

52%

4% Car payments

8%

0%

1%

60% Source: Dart & maru/BLUE Voice Canada Poll, April 2020

Source: 2020 Survival Guide Study, Angus Reid and Credit Canada

6

Regardless of any bank or government help, I will have to sell my house because I won’t be able to cover any loans

39%

20%

0%

It will be tough, but I will be able to pay the mortgage

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DO YOU EXPECT YOUR FINANCES TO BE BETTER OR WORSE IN SIX MONTHS?

DO YOU EXPECT MORE OR FEWER JOBS IN YOUR AREA IN THE NEXT SIX MONTHS?

IS NOW A GOOD OR BAD TIME TO MAKE A MAJOR PURCHASE?

80%

80%

80%

70%

70%

70%

60%

60%

60%

50%

50%

50%

40%

40%

40%

30%

30%

30%

20%

20%

20%

10%

10%

10%

0%

13%

36%

Better

Worse

0%

12%

53%

More

Fewer

0%

10%

77%

Good

Bad Source: Conference Board of Canada

BUSINESS CONFIDENCE SINKING

SMALL BUSINESS TUMULT

Businesses are equally pessimistic in their economic outlook. The Conference Board of Canada’s business confidence index also registered an all-time low in April, sliding more than 42 points. In its monthly report, the board noted that “very few business leaders are expecting the economy, or their firms’ fortunes, to improve in the next six months.”

The Canadian Federation of Independent Business has warned that “tens of thousands” of small businesses could close as a result of COVID-19; only about half of small businesses were confident they could survive the restrictions imposed in April.

WILL YOUR FIRM’S ECONOMIC CONDITIONS IMPROVE OR DETERIORATE IN THE NEXT SIX MONTHS?

HOW CONFIDENT ARE YOU THAT YOUR BUSINESS WILL SURVIVE IF COVID-19 RESTRICTIONS CONTINUE UNTIL 50% THE END OF MAY?

70% 60% 50% 40% 30% 20% 10% 0%

18%

68%

Improve

Deteriorate

WHAT’S YOUR BUSINESS’S CURRENT OPERATING CAPACITY? 70% 60% 50% 40% 30% 20% 10% 0%

44%

My business will not survive

21%

28%

51%

Close to or above capacity

Below capacity

Substantially below capacity Source: Conference Board of Canada

6%

I am not sure if my business will survive My business will definitely survive Source: COVID-19: State of Small Business, April 15, Canadian Federation of Independent Business

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UPFRONT

NEWS ANALYSIS

Here comes the cavalry In late April, the federal government announced a much-needed relief plan for commercial landlords and tenants. But how will the measures affect the commercial mortgage market?

WHEN COVID-19 first plowed into the Canadian economy in March, forcing millions into unemployment, providing relief to the country’s homeowners and renters was the federal government’s first priority. The potential economic fallout of tens of thousands of missed mortgage and rent payments was effectively nipped in the bud when Canadian banks and lenders agreed to allow homeowners to defer their mortgage payments and to help renters to avoid eviction.

The same level of assistance was much slower in coming to the commercial market, but on April 24, the federal government, in conjunction with the provinces, announced a new

cial property’s owner and tenant would each be expected to pay 25% of a property’s ‘beforeprofit’ costs. The federal and appropriate provincial government will cover the remaining costs in the form of a forgivable loan to the property owner, which will essentially reduce small business owners’ rental costs by 75% for April, May and June.

To be eligible for the program, a nonessential small business tenant must pay less than $50,000 in gross monthly rent and be experiencing at least a 70% decrease in pre-COVID-19 revenue. Not-for-profit organizations and charities are eligible for the plan, as are owners of commercial properties with

“[The initiative is] specifically tailored to assist small businesses, which are the salt of the earth – or of the economy” Pavel Malysheuski, Lockyer + Hein program that will bring relief to commercial tenants. The Canada Emergency Commercial Rent Assistance Program (CECRA) will provide more than $900 million to Canadian business owners struggling to meet their monthly rent obligations.

Under the terms of the program, a commer-

8

a residential component, but only as it relates to their commercial tenants. Properties owned by individuals who currently hold public office will be excluded.

Rent relief for commercial tenants was long overdue, and the program was lauded by many with ties to the commercial space.

“That’s a great initiative. It’s specifically tailored to assist small businesses, which are the salt of the earth – or of the economy,” says Pavel Malysheuski, a corporate and commercial lawyer at Lockyer + Hein, who believes the high rent and revenue reduction thresholds are sufficiently inclusive. “That will help many businesses.”

Others, like Laura Jones, executive vicepresident of the Canadian Federation of Independent Business (CFIB), were less enthusiastic. In a statement released shortly after CECRA was announced, Jones said the CFIB is concerned that the program may be too complex to administer and too dependent on the needs of landlords rather than those of commercial tenants. The CFIB has projected that “tens of thousands” of businesses will close permanently because of the economic damage inflicted by COVID-19.

“In particular, as landlords do not have to participate and will be expected to accept some losses under the program, they may choose

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THE HIGH COST OF OFFICE SPACE The cost per square foot of Class A office space in Canada remains high, making initiatives like CECRA critical for the health of small businesses threatened

by COVID-19.

NET ASKING RENT PER SQUARE FOOT $25

$20

$15

$10

to ignore it, even if their tenants badly need it,” Jones said. “Another concern is that the all-or-nothing threshold of a 70% revenue reduction will leave many hard-hit businesses without the relief they need.”

Kirill Perelyguine, who deals in commercial property for Royal LePage Real Estate Services,

“but I guess it’s better than nothing.”

The rent relief currently being offered to residential tenants has generally taken the form of rent deferrals or temporary reductions that will be paid back in full over time. Rent forgiveness, however, is not a widespread phenomenon. With CECRA, rent forgiveness

“Lenders will not underwrite on the forgiven funds … so your loan amount is going to be cut down quite a bit” Daniela Peeva, Mortgage Alliance Commercial also finds CECRA to be flawed in a number of ways. Even though the tenant is the one potentially facing default, he wonders why it’s the property owner who carries so much of the burden in taking on the associated loan and forfeiting a significant chunk of rent. “There are several glitches in the program,” he says,

is baked in, meaning property owners, who have to kick in 25% of the rent costs, will be facing a significant decrease in cash flow.

Daniela Peeva, vice-president of Mortgage Alliance Commercial in Ontario, says that lack of cash flow could cause headaches for people looking to buy commercial properties or owners

$5

$0

2016

2017

2018

2019

2020 (projected) Source: Statista

who had plans to refinance.

“Lenders will not underwrite on the forgiven funds,” she explains. “They’re going to deduct [them] from the income, so if you’re deducting 25% of the income, your loan amount is going to be cut down quite a bit.”

While legitimate questions have been raised about CECRA’s shortcomings, particularly around giving owners the option of participating without first determining the needs of their tenants, it will provide breathing room to thousands of Canadians who would otherwise have had to stand by and watch as their businesses are slowly asphyxiated.

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UPFRONT

ALTERNATIVE LENDING UPDATE NEWS BRIEFS Community Trust becomes the latest addition to Velocity platform

Community Trust has become the newest lender added to Newton Connectivity Systems’ Velocity mortgage submission platform; the alternative lender’s connection to Velocity went live on May 1. In addition, Community Trust’s rates, product details and other lending information are all available on Newton’s Discovery portal.

“As Velocity’s footprint has expanded rapidly within the mortgage broker community, now is the time to launch this new direct connection,” said Lisa Abbatangelo, vice-president of mortgage operations at Community Trust.

Bridging Finance temporarily suspends redemptions

With COVID-19 wreaking havoc on the alternative lending sector, Bridging Finance has suspended all redemptions placed between February 1 and April 13 “to maintain investor value and limit pandemic effects.” In a letter to investors in April, Bridging said that if it were to “press existing borrowers out of the portfolio in order to satisfy unusual redemptions in the funds, the effect would be to cut off funding to these businesses during an unprecedented economic emergency.”

Banks could tighten home equity lines of credit

Amid the economic fallout of COVID-19, many households have relied on home equity lines of credit to augment their flagging purchasing power. But one market observer has warned that Canadian banks are likely to restrict HELOCs. “HELOCs, in some ways, have the potential to magnify risk on banks’

balance sheets, because in times of stress, people want to draw on them,” Ben Rabidoux, president of North Cove Advisors, told Reuters. “If [federal aid] runs out before we see a return to prior employment levels, we would see people draw down on HELOCs. Maybe that’s what forces the banks to rethink that exposure.”

Home Capital’s weaker Q1 net income stirs uncertainty

Home Capital Group’s profits had already suffered a noticeable drop even before the coronavirus outbreak hit. The lender’s net income for the first quarter was $27.7 million, down $9.5 million from Q4 2019. Originations hit $1.62 billion during the first quarter, compared to $1.22 billion over the same period last year. And while total revenue grew by 22.5% annually to reach $127.2 million, provisions for credit losses swelled by 397.9% year-over-year to end up at $30.2 million. The lender also revealed that as of April 30, it has deferred payments on 9,903 loans with a total value of $3.93 billion.

HomeEquity Bank launches COVID-19 initiatives

Reverse mortgage specialist HomeEquity Bank is proactively checking in on clients amid the ravages of the COVID-19 pandemic through its Operation Warm Hug initiative, which aims to help ease clients’ feelings of isolation. The lender has also launched a media campaign to highlight “some of the countless ways Canadians have embraced this new way of life at home as we all do our part to get through this extremely difficult time,” said president and CEO Steven Ranson.

In addition, HomeEquity has donated $50,000 each to the Canadian Red Cross and YMCA of Greater Toronto.

Distressed landlords flock to alt lending As banks begin clamping down on riskier loans, landlords are increasingly looking to alternative lenders for options The alternative lending sector is seeing a growing contingent of landlords seeking help after being turned away by banks during the COVID-19 outbreak, according to analysts.

Because the economic situation is unlikely to normalize over the next few quarters, Roelof van Dijk, director of market analytics at commercial real estate research firm CoStar Group, recently told Reuters that the market should also brace for an increase in the volume of distressed sales of properties.

“If you’re a landlord and looking to refinance, you can’t get that. So you’re probably going to have to sell,” van Dijk said. “But they’re also limiting new owners who might want to buy that space.”

Owners who can’t sell have been turning to alternative lenders; Equitable Group’s vice-president for commercial lending, Darren Lorimer, told Reuters that the lender has seen steady loan volumes since COVID-19 hit, which he attributed to fewer new originations by the big banks. Lorimer added that this trend will likely lead to “better quality opportunities” for Canada’s alternative lenders.

However, van Dijk cautioned that the alternative space’s higher rates will add more pressure to small- and medium-scale ventures.

And he warned that government-backed relief programs could make it difficult for owners

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to get financing for commercial properties in the future.

“To be eligible for the [rent relief ] program, you have to prove that your tenant has had a dramatic loss of business and is really suffering,” van Dijk said. “[But] then to go to the banks and say, ‘Don’t worry; the tenant is going to continue doing business when we get out of this’ is a hard sell.”

“If you’re a landlord and looking to refinance, you can’t get that” This new status quo isn’t likely to shift any time soon. Dream Office REIT CEO Michael Cooper recently told Bloomberg that commercial landlords might need to hold on for at least three years before the financial system adapts to the impact of the pandemic and yields more agreeable market conditions.

“People talk about what percent of rent they got in April. That was only two weeks of the economic shutdown,” Cooper said. “Really, 2022 is going to be a timeframe where you can look at what the value of a building is and deal with it with confidence. Hopefully it will work out over time, but it won’t be working out smoothly.”

Q&A

Dave Butler

Bracing for rough waters

Principal broker BUTLER MORTGAGE

Years in the industry 17 Fast fact Butler hails from a family of financial professionals – his father and brother are also brokers, and his mother has been active in the financial services sector since the early ’90s

How has your business been doing recently?

We have been tremendously busy. It’s certainly not the same type of ‘busy’ compared to pre-COVID-19, as we have become much more informational to our clients rather than transactional. The vast majority of our clients are not looking to get a mortgage at the moment, but are instead looking for information, which we are happy to provide them.

Thankfully, we have not had to lay any staff off. I will plunge into our past profits if I have to in order to continue to have our team working and able to service our clients during this trying time.

What impact has COVID-19 had on your business, and on the alternative mortgage side in particular?

Certainly, purchase transactions are way down, but refinance transactions are up, so it’s almost a wash so far. But keep in mind that the biggest impact for mortgage brokers will likely not be felt until probably July/August/September, when their May/June work is wrapping up. I suspect our deals originated in May/June will be way down from the same time last year.

The alternative mortgage segment is interesting. Liquidity has certainly tightened up, so you combine that with the growing number of people who will need alternative financing due to the impact of COVID-19, and you can see some potential issues on the horizon.

How are your alternative mortgage clients faring?

Not good. Small business owners are getting hammered out there, and it’s not like there’s a lineup of lenders looking to give money to the owner of a spa or gym that has had their business shut down completely for the last two months.

What does your business bring to the table that distinguishes it from the competition?

My team’s brand at Butler Mortgage is premium service. Our clients are mainly real estate investors who are looking for a mortgage broker who can provide them with a high level of service and planning. Then there is the other brand of Butler Mortgage, run by my father and brother, that focuses on the wholesale market, if you will – clients who are completely driven by the interest rate. So all in all, I feel our company has its claws dug in deep to the dominant future demographics.

In these troubled times, what should industry players be looking out for?

Be prepared for anything at this point. There is no perfect blueprint on how to get through this crisis. Ensure your fundamentals are strong, be prepared for things to not go your way and brace for impact. We are in the middle of a storm, yes, but if you don’t get swept away, there will be sunny days and blue skies ahead.

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UPFRONT

TECHNOLOGY UPDATE

Canadians alter their home-buying habits The COVID-19 crisis has pushed some buyers toward online channels, but many are simply holding off

transforming the spring months, which was normally the time when the housing market was starting to pick up speed, into a period of anxious downtime,” Point2 Homes said in a mid-March analysis, in which it revealed that searches through its portal had declined by 32%. “Much of the activity associated with home-buying and home-selling is simply on hold, as people and institutions alike are trying to see where the pandemic is headed.”

“Much of the activity associated with homebuying and home-selling is simply on hold”

One in five Canadians say they don’t plan to look for new homes until after the COVID-19 pandemic has passed, according to a poll conducted in late March by online real estate portal Point2 Homes. Still, 44% of Canadians said they remain confident in the housing market despite the global coronavirus outbreak. Twenty-four per cent said they’re hoping to take advantage of cheaper prices as a result of the economic slowdown, and 48%

NEWS BRIEFS

said they plan to evaluate homes through online images and virtual tours.

But despite the embrace of online alternatives, interest in buying has significantly waned across Canada over the past few months. Only around 31% of the respondents to Point2 Homes’ survey said they plan to buy within the next six months, while 26% said they plan to do so within the next year.

“The outbreak has shattered seasonality,

RBC’s market share bolstered by online investments

RBC is pulling ahead of its competitors in the mortgage lending sphere, thanks in part to its continued rollout of online solutions like a mobile banking suite, AI-powered property search platform OJO Home and online moving concierge MoveSnap. These innovations helped push RBC’s mortgage market share to 27.4% in the first quarter of 2020. “We are bringing a broader spectrum of advice and solutions to our clients, and when we do that, we expect to continue to increase market share,” said RBC CFO Rod Bolger.

Observers have warned that the societal effects of the outbreak are likely to change some aspects of the home-buying and -selling process permanently.

“There certainly could be long-lasting impacts in terms of shifts in preferences for location and even features of homes,” Jim Clayton, director of the Brookfield Centre in Real Estate and Infrastructure at York University’s Schulich School of Business, said in an interview with Point2 Homes. “Some people may be more hesitant about being part of a crowd and hence avoid mass/public transit.

The work- and learn-from-home revolution that many have been calling for over the past decade could become much more of a reality and may change how and where people want to live.”

Remote work could decimate the commercial sector

The work-from-home revolution prompted by the COVID-19 pandemic has shifted expectations for the Canadian commercial mortgage space.

Office vacancy rates have soared, and the prevalence of online meetings and virtual transactions is putting the future strength of the commercial sector into question.

“We expect there to be pressure on rental rates going down as vacancy, both head lease and sublease, is expected to increase,” said Todd Throndson of Avison Young Real Estate Alberta.

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Q&A

Bridging the gap during social distancing

Vu Le Senior mortgage manager CLEAR TRUST MORTGAGES

Years in the industry 23 Fast fact Le is fluent in both English and Vietnamese

How has business been for you over the past few months?

Despite the recent challenges, we have been doing business consistently and diligently as usual. It is certainly a challenge not being able to interact with our clients the usual way we do, but everyone is coping very well with using technology to communicate and work on clients’ inquiries and applications.

Technology has helped us to stay in close connection with our clients and networks. There have been constant changes with lenders’ guidelines and requirements, and it’s important to keep all of our clients and networks notified in order to prepare them for their mortgage financing. It also allows us to get important messages across to everyone in an efficient manner.

What are the most significant client challenges you’ve been able to solve by using technology?

The most significant challenges revolve around the impossibility of meeting clients face-to-face and also discussing important details and steps in mortgage financing. With these tools that we can take advantage of, we can show them details such as estimating their mortgage payments, pre-qualification and going through the lender approval’s terms and conditions without needing to meet in a physical location.

How do you address instances where clients are less knowledgeable in using these tools?

In cases like that, I would ask them for a family member who is good with using the technology and try to go through them, and they would explain it to the client. In cases when that doesn’t work, then I would put everything in an envelope and ask them to come to my office, and I would slide them the envelope of what I need them to do, and they would do it and put it back into my mail slot when it’s done and notify me through a call or a text message.

How has your use of these tools helped your business so far during the pandemic?

These tools have been helping us tremendously to work efficiently and along with clients’ schedules.

We often run into situations where we can’t set up a face-to-face meeting with our clients due to their family and employment commitments. However, online tools have really helped our clients to communicate with us and picture their mortgage solutions as if we are meeting directly.

Brokers lean on video for training, marketing

As the COVID-19 pandemic rages on, brokerages are leveraging video to improve their training capabilities, launch new initiatives and enhance their social media presence. Videoconferences allow new hires to virtually shadow their co-workers, while the option to record calls provides brokers with valuable content that can be shared on their social media channels. “It’s giving me a huge platform to gain content and actually utilize that content so I’m not just talking to five, 10 or 50 people,” said DLC broker Fernando Zilli.

What advice do you have for brokers who are still trying to maximize their use of technology?

Although we all love to meet our clients in person, we simply do not know how long it will take before the pandemic situation will be over. It’s crucial to take advantage of online platforms to ensure your clients are kept informed of what is happening and how you can provide them with the same level of service through online platforms and technology tools.

Properly rolls out Calgary home price prediction tool

Proptech firm Properly has launched a free online tool for Calgary homebuyers that provides on-demand predictions of a home’s selling price. The ProperPrice tool uses machine learning to estimate a home’s selling price based on hundreds of factors, including historical sold data, property details, and proximity to services such as schools and hospitals.

“Access to this kind of information used to be restricted to industry professionals, but we’re pulling back the curtain on true selling prices,” said Properly CEO Anshul Ruparell.

Genworth MI embraces all-remote model

Like many industry firms, mortgage insurer Genworth MI Canada has fully shifted to an all-remote operational model. That, combined with its positive first-quarter results, position the insurer to survive the pandemic, according to president and CEO Stuart Levings. “We take comfort in the strength of our business model and capital position, along with our disciplined risk management and proven loss mitigation strategies, as we manage through this period of economic stress,” Levings said.

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PEOPLE

INDUSTRY ICON

PLANTING THE SEED By focusing on helping real estate investors nail down the right deals at the right time, Streetwise Mortgages’ Dalia Barsoum has earned a reputation as one of the savviest minds in the business

WHEN DALIA BARSOUM moved to Canada from Kuwait in 1996, she brought with her dual degrees in computer science and accounting, along with a talent for solving complex puzzles, which she was eager to put to use in the burgeoning information economy. At the time, the internet was still in its initial stages, and banks were hiring some of the best and brightest to shepherd their infrastructure into the new digital age.

Hired into the IT department at BMO, Barsoum took to her duties with gusto, but as her responsibilities gradually increased from those of a programmer to those of a database administrator, she realized something was missing from her day-to-day.

“As complex and fun as IT was, it was starting to be boring because I felt like I was isolated from social interaction,” she says. “You get to work with software and deal with machines, but for me, that was not fun.”

Things began falling into place shortly after Barsoum’s next promotion. In her new role as a business analyst, she still had a foot in the IT world, but the other was planted firmly in a new one – wealth management – that scratched all the itches IT could not. She realized that a further move into wealth management would allow her to continue solving problems, but

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in a more interactive, dynamic environment where every client required a unique solution.

“It’s much more interesting than writing code,” she laughs.

Barsoum dove headfirst into wealth planning, completing an MBA in finance at Dalhousie University while carving out a niche

From crash to cash flow For a woman who never met a challenge she didn’t like, real estate investment was a perfect fit. Rather than simply chasing down rent cheques and building a respectable portfolio, Barsoum looked at real estate through the lens of wealth management and saw the space’s

“I love the complexity that comes with investment property financing, because there’s much more than just getting an approval.

It’s more about planning. It’s more about structuring. It’s more about thinking ahead to how you’re going to grow your portfolio” for herself in the space. But even the sharpest minds in wealth management were blindsided by the 2008-09 financial crisis. It was a wake-up call that would change Barsoum’s life forever.

“I lost money,” she says of the 2008 meltdown. “I felt I didn’t have much control over my portfolio at that time, so I made a move into real estate.”

big-picture potential: deals feeding deals feeding deals, each one dependent on the success of the one that came before it.

Barsoum took her long-term, goal-oriented approach to the masses in 2011 when she founded Streetwise Mortgages, a boutique brokerage dedicated to servicing investors in Ontario.

“It’s a lot of the methodology I learned in

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PROFILE Name: Dalia Barsoum Title: President Company: Streetwise Mortgages Based in: Woodbridge, Ontario Years in the industry: 9 Fast fact: Barsoum is also the author of the book Canadian Real Estate Investor Financing: 7 Secrets to Getting All the Money You Want

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PEOPLE

INDUSTRY ICON

wealth management,” she says. “It’s beyond just having a mortgage conversation and saying, ‘Here’s your rate.’ That’s not our practice.”

Barsoum is pained whenever she encounters an investor whose lender has put them into a mortgage that could be described as ‘all now, no later’ – one that gets the current deal done but derails any attempt the investor might make to grow their portfolio in the future. Barsoum believes foresight is a critical component of any investment strategy and that it can only come

help them build their wealth. A smooth, profitable deal today, structured in such a way that it paves the way for another purchase, means more business down the line.

“And if they’re happy, of course they’re going to refer people,” Barsoum says, adding that well-executed joint venture deals often regularly result in business from a client’s JV partners. “It’s a seed. You plant it, then you see the tree, then you see the fruit. It’s beyond just the one transaction.”

“All of our advisors have to have gone through the trenches, and they have to have done their own deals. You need to have touched everything investment-related before you can go off and advise clients on investment properties” from firsthand experience.

“All of our advisors have to have gone through the trenches and learned the lender guidelines for investment property financing, and they have to have done their own deals,” she says. “You need to have touched everything investment-related before you can go off and advise clients on investment properties.”

And when she says “everything,” she means it. Barsoum encourages her brokers to familiarize themselves with every aspect of the investment journey, from acquisition to exit strategy, learning the ins and outs of every moving part along the way.

“You have to talk to someone from a place of deep knowledge,” she says. “You can’t just go to a client and say, ‘OK, let’s go figure out how we’re going to structure this deal.’”

The benefits of fitting investors into successful deals that will allow them to continue growing are considerable. Real estate investors are known for being loyal to the mortgage brokers who

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The bigger picture When Barsoum talks about her experience working with investors, she radiates enthusiasm: for her clients, for her colleagues and especially for the unending challenges of keeping capital flowing. More than 20 years removed from her days as an IT geek enthralled by the possibilities of the internet, it’s obvious that Barsoum is still very much the same person she has always been: a puzzle-solver in search of the most challenging jigsaw she can find.

Not everyone has the right mentality to enjoy financing real estate deals – all those pieces to assemble, each one made up of even tinier pieces – but the more a deal requires of Barsoum, the more she leans in.

“I love the complexity that comes with investment property financing, because there’s much more than just getting an approval,” she says.

“It’s more about planning. It’s more about structuring. It’s more about thinking ahead to how you’re going to grow your portfolio.”

DALIA BARSOUM’S INDUSTRY ACCOLADES

Winner of Outstanding Customer Service by an Individual Office at the 2018 and 2019 Canadian Mortgage Awards

Named to CMP’s Top 75 Brokers list every year since 2017

Named a Woman of Influence by CMP in 2017, 2018 and 2019

Named to the inaugural Mortgage Global 100 list in 2019

Named Mortgage Broker of the Year

by Canadian Real Estate Wealth in 2015 and 2017

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UPFRONT

OPINION

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

The case for private lending For brokers willing to establish strong relationships on both sides of the equation, private lending can provide a reliable, rewarding stream of business – even in uncertain times, writes Lev Keselman AS COVID-19 maintains its dominance over our news cycle, economy and collective psyche, private mortgages may not be top of mind for most brokers. In my opinion, our currently inactive housing market and the tightening lending guidelines borrowers are being asked to meet make now an ideal time for brokers who have so far avoided the private mortgage space to start familiarizing themselves with it.

Canada’s tightening lending framework means a lot of the deals we were once able to place with banks are no longer considered bank deals, and a lot of the deals we used to place with alternative lenders no longer fit with these lenders. Well-rounded brokers must be versed with bank and alternative guidelines, but they also need to be able to understand how to place challenging deals with private lenders if these deals do not fit with institutional lending partners.

When representing the borrower, the broker must, above all else, ensure that the solution put on the table is part of a viable longterm plan. The borrower must be able to afford the proposed financing, and there needs to be an exit strategy in place, which would turn the borrower back to institutional borrowing.

When representing the lender, security has to be priority one. One thing my team is doing during the COVID-19 crisis is lowering our LTVs to minimize lender exposure and discourage lenders from chasing the returns associated with higher LTVs. If the market does go sideways, there has to be a strategy in place that somewhat ensures the capital will be recouped. A foreclosure sale post-COVID-19 is

a huge unknown at this point in time.

Most of the direct private lenders we work with are looking for a secure way to expand their investment portfolios and bring in consistent interest income. Although we have a wide array of lenders, these generally tend to be high-net-worth individuals in search of diversification from more traditional investments.

These lenders tend to want to be very hands-off with servicing the loans post-funding, so we

they are able to become private lenders.

When we look to start relationships with new lenders, we always follow the same education process. We make sure they fully understand private lending as a concept, including all of the risks involved. Once a transaction is underway, we let them know every pertinent detail about every deal they get involved with.

The lender must be the one making the final decision on whether to fund a deal or not.

To enable them to make the soundest decision possible, it’s up to the broker to bring them loans that are both built around strong security and appropriate for the lender’s risk level. I cannot stress how picky a broker needs to be when matching a direct private lender with a transaction. The property must be highly marketable to ensure a seamless sales transaction in the event of a foreclosure. Creating exit strategies that fit both your lender’s timeline and your borrower’s needs is one of the more rewarding pieces of the lending puzzle.

My advice for brokers who want to get established in this space is to thoroughly study the real estate market where you intend to lend and only work on deals within that market.

“There has to be a strategy in place that somewhat ensures the capital will be recouped.

A foreclosure sale post-COVID-19 is a huge unknown at this point in time” as brokers are the first point of contact for the lender if any issues arise. These lenders leave it up to us to deal with routine items like renewals and NSFs. In the rare event that particular mortgages go into default and later foreclosure, we often act as the liaison between the lawyer hired to represent the lenders and the lenders themselves.

Finding those lenders, if you aren’t active in the private space, may take some work.

We primarily work with lenders referred to us by financial planners looking to give their clients another choice of investment. Directly approaching our database of high-net-worth clients with an opportunity to fund loans can be a successful strategy, too. Most individuals out there do not have the slightest idea that

Learn how to read appraisals cover to cover.

Get to know a law firm specialized in representing private lenders; they will be essential to your success. When you find a suitable potential lender, make sure that they fully understand the deals you present to them by thoroughly articulating the associated risk.

I never anticipated private mortgages becoming a particular specialty of mine. But that pivot changed everything for me – it opened me up to a market overflowing with capital, ideas and savvy clients.

Lev Keselman is the senior mortgage consultant at Peak Mortgage Company. He recently came in at number nine on CMP’s Top 75 Brokers list.

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MORTGAGE SOLUTIONS

MUST-KNOW MORTGAGE SOLUTIONS:

REVERSE MORTGAGES Paul von Martels, vice-president at Equitable Bank, talks to CMP about the key features of reverse mortgages, their rise in popularity and why they’re more important than ever right now REVERSE MORTGAGES have long been painted as the ugly duckling of tools for homeowners looking to capitalize on their equity.

This is largely because they’re misunderstood, seen as nothing more than an option to pay down debt or a trap leading to losing ownership of a home.

In reality, reverse mortgages are an effective retirement tool for homeowners aged 55 and older – a rapidly growing demographic in Canada. By 2068, the proportion of Canadians aged 65 and older will have grown to almost 30%, up from 17% in 2018.

Not only is the population aging, but more and more people are looking to stay in their homes instead of moving into long-term care.

“Never before has that decision been more finite and clear than right now,” says Equitable Bank vice-president Paul von Martels. “People prefer the flexibility and safety and comfort of aging in their homes.”

Additionally, decisions surrounding home equity have changed overnight. The recent fall in the stock market, for example, will likely

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have a serious impact on the future retirement incomes of many people – especially pensioners relying on defined contributions. “We’ve been in this exceptional market where people have allowed their portfolios to grow or had been drawing on them,” von Martels says. “But now they’re saying, ‘Wow, if I were to start drawing on that portfolio today, that might be a very expensive decision relative to accessing home equity at a 4% to 5% annual rate through reverse mortgages.’ That’s an important dynamic.”

While home equity lines of credit (HELOCs) are often touted as the best option for accessing home equity, von Martels says that’s not always the case. “HELOCs are really intended for people with substantial income to cover the monthly payments,” he explains. “They aren’t a guaranteed source of liquidity – they can be called at any time, the value can rise and, should the value of your property take an unfortunate correction downwards, the bank could say you owe [the difference]. Especially right now, people may not have that risk tolerance.”

Given all of this, more and more homeowners

are considering a reverse mortgage. Rates are in the high 3% to mid-4% range, and reverse mortgages include several borrower safeguards.

The bank is unable to call the loan as long as the borrower maintains their obligations, and if the home’s value drops to the point where the value of the loan exceeds the value of the property and the client sells, the borrower only owes the bank the market value of the home.

Three considerations for brokers When it comes to reverse mortgages, there are a few key things brokers should keep front of mind, von Martels says. The first is equity conservation. “Whenever anyone takes a loan, they often think there is only one component to comparing the merits of a loan: interest rates,” he says. “While the interest rate is obviously important, there are other factors that need to be considered, such as the renewal/reset terms and how renewal pricing differs from origination pricing.”

The second thing brokers should consider is the loan’s pre-payment features and charges.

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The Equitable Bank team on a recent Zoom call

“The narrative of reverse mortgages is changing … The product is better, the rates are lower, and more than ever, it serves a critical financial planning need” Paul von Martels, Equitable Bank “No one’s financial path is linear,” von Martels says. “Logically speaking, for people with loans, when they go through a period of influx, they want to repay debt. So having a loan product that allows you to do that or gives you flexibility on the pre-payment is very important.”

Finally, brokers should keep in mind the associated fees, including those for the lender, appraisal, independent legal advice, etc.

However, von Martels says, “when you compare a reverse mortgage versus a private mortgage, the fee structure is considerably lower.”

Ultimately, he says, it’s all about equity preservation. “This is so important – understanding all of the components that make up

a loan and understanding what is the best option for the client, and challenging the client and the broker to resist the allure of comparing only on interest rates.”

Overcoming misconceptions The idea of challenging the accepted thinking on reverse mortgages is key to Equitable Bank’s approach, von Martels says. “Equitable is Canada’s challenger bank. We’re challenging the way Canadians use their financial services products – the way they access and interact with them. Beyond just the fact that reverse mortgages in many ways are a challenger product, we’re also trying to challenge the way that product

has been perceived and viewed in the market.”

That includes a stance against using a reverse mortgage as a short-term, investment-oriented product. “We view the reverse mortgage as a long-term financing solution that helps with aging in place and retirement planning,” von Martels says. “Our service model is anchored on helping brokers serve an underserved market with a reverse mortgage. We entered this space because we understood that, ultimately, brokers and clients needed another option. Not to say that the earlier options weren’t good, but brokers needed a different lender that would innovate and play in a different space [from] a philosophical difference.”

Whether a borrower is taking out a reverse mortgage to consolidate debt, maintain their lifestyle or purchase a new property, it’s all part of the same conversation, von Martels says.

“The narrative of reverse mortgages is changing, and it should give brokers more confidence to engage in conversations with clients about them.

The product is better, the rates are lower, and more than ever, it serves a critical financial planning need.”

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MORTGAGE SOLUTIONS

MUST-KNOW MORTGAGE SOLUTIONS: ROUNDTABLE

CMP checked in with four industry experts to find out the various options available to homeowners to allow them to not just endure the current economic downturn, but make the most of it

WHEN FINANCIAL hardship hits, homeowners need to know all the options available to them regarding their mortgage, whether that’s refinancing or taking out a reverse mortgage. An economic downturn like the current one presents an opportunity for brokers, lenders, bankers, tech providers and homeowners alike to re-evaluate, think outside the box and find a silver lining.

With that in mind, CMP brought together some of the best and brightest minds in the Canadian mortgage industry to discuss the current challenges facing homeowners, illuminate the need-to-know facts about different mortgage options and explain how brokers can capitalize on such opportunities in these financially uncertain times.

THE PARTICIPANTS Rakhee Dhingra CEO and broker Mortgage Savvy

Paul von Martels Vicepresident Equitable Bank

Dalia Barsoum President and principal broker Streetwise Mortgages

Shannon Dolphin President and CEO Dolphin Enterprises

After several years of working her way up the ladder at major banks, Rakhee Dhingra founded Mortgage Savvy in 2015 with a mission to challenge the transactional nature of the mortgage industry and focus on building meaningful connections instead. She has created a financial concierge service dedicated to delivering the highest calibre of expertise and, from day one, has invested in developing strategic partnerships with the industry’s leading Realtors. As a result, the Mortgage Savvy vision quickly morphed into a full-blown movement. In 2019, Mortgage Savvy was nominated as Brokerage of the Year (Fewer Than 25 Employees) at the Canadian Mortgage Awards, and Dhingra was named a CMP Woman of Influence.

As vice-president at Equitable Bank, Paul von Martels’ mandate spans everything from national credit and distribution for reverse mortgages to credit for prime mortgages and the credit operations for Equitable’s life insurance policy lending.

Since joining Equitable in 2014 to manage the corporate development and strategy group, von Martels has helped grow the prime business to around $7 billion in assets under management. In 2018, he and his team launched Canada’s second reverse mortgage offering, made available exclusively through the mortgage broker community.

He is also involved in Equitable Bank’s venture capital investing activities and has served on the board of digital credit advice platform Borrowell.

Dalia Barsoum is an awardwinning broker and finance advisor with more than 20 years of experience in the banking sector, spanning lending, wealth management and real estate. In 2011, she launched Streetwise Mortgages, a boutique brokerage that specializes in servicing real estate investors and self-employed clients across Ontario. Over the years, Barsoum and her team have won multiple industry awards, including the award for Best Customer Service from an Individual Office at the Canadian Mortgage Awards for two consecutive years, as well as being named to CMP’s Hot List, Top 75 Brokers and Mortgage Global 100. Barsoum is also the author of Canadian Real Estate Investor Financing: 7 Secrets to Getting All the Money You Want.

Dolphin Enterprises was established in 1976 by Dan Dolphin and has been developing financial accounting systems for more than 30 years. Since 2004, software development has taken place under the direction of president and CEO Shannon Dolphin. As the leader of the company, Dolphin has built a strong team with diverse talents to expand and develop Dolphin Enterprises into the leading software solutions company for clients running syndicated mortgages and mortgage investment corporations. Dolphin Enterprises built MIC Manager in 2002 and has enhanced and developed it, based on requests from the industry and clients, into a robust software system for MICs and Canadian private lenders.

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MORTGAGE SOLUTIONS UNLOCKING EQUITY CMP: Tools to tap into a home’s equity, such as refinancing or getting a reverse mortgage, might seem intimidating to some people. What are the main things homeowners need to consider when looking into these options?

Dalia Barsoum: Refinancing and reverse mortgages are tools that provide clients with liquidity and consolidate expensive debts to create additional capacity and cash flow in their monthly budgets. Regarding refinancing, it’s important for homeowners to do it without adding a drain on their monthly budgets.

First, lines of credit are excellent tools, as they give clients access to equity without an immediate principal and interest payment, and clients can pay a minimal interest-only payment on the amount of money used – i.e. pay as you go. Second, where possible, if the client is taking out funds as a mortgage,

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consolidating expensive debts puts these funds to good use.

The expected temporary softening in property valuations is also a risk that clients considering a refinance are facing, and therefore it’s recommended that clients who are concerned about liquidity and/or cash flow deficit look into their refinancing options

lenges COVID-19 is introducing to the process, namely the ability to conduct research and get competing offers, and being able to close on the mortgage without exposing yourself to the dangers of the virus.

Brokers, lenders, lawyers, mortgage closing services – we understand, and we’ve adapted our processes. Now more than ever, clients

“For some clients, products that used to not make sense may now be very practical options, simply because rates have come off significantly” Paul von Martels, Equitable Bank early and appraise their properties at the earliest opportunity.

Paul von Martels: First, it shouldn’t feel intimidating. Mortgage brokers are experts in helping their clients through the process – they’re in good hands. I appreciate the chal-

can complete their diligence and work with their advisors to ensure they’re getting the best care.

The three things homeowners who would qualify for either [refinancing or a reverse mortgage] would need to consider are the

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SPECIAL REPORT

MORTGAGE SOLUTIONS following. First, know your objective: What’s your financial situation, and what are your goals? Second, cash flow: Is a new or larger mortgage payment the right decision? What impact will this have on your financial health?

Lastly, equity preservation: What solutions offer the lowest total cost of borrowing? It’s not only about the lowest interest rate; brokers and clients need to critique other factors like pre-payment allowances, prepayment charges, and lender and broker fees, to name a few.

Rakhee Dhingra: The COVID-19 pandemic has left many homeowners taking stock of their financial stability, which is a positive side effect of our current circumstances. Many people’s nest eggs or retirement savings are in their home, which is a scary feeling. Refinancing and reverse mortgages are great ways to tap into some of that equity, given these uncertain times.

It all comes down to the numbers and understanding what the overall benefit would be for their financial and lifestyle goals. We look at evaluating the benefits of restructuring debt. That often will start by looking at our client’s monthly obligations, whether it be car loans or outstanding credit card debt, to determine how we can consolidate that to help them reduce their monthly obligations and make them a little bit more comfortable moving forward.

NAVIGATING THE COVID-19 LANDSCAPE CMP: With the rapidly changing circumstances in the industry right now, many brokers are having a hard time getting up-to-date information from lenders in time to make deals for their clients. What challenges does this present? What are the potential solutions?

RD: We need to look at our lenders as our partners. The whole pre-approval process is much more in-depth these days, which means brokers must work even harder to provide lenders with as much documentation and information as possible upfront. When we’re

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submitting a request for a mortgage approval, we’re building a true business case.

This is where the distinction between a really good broker and someone who is transactional shines through. You need to build trust with your clients to get a full sense of their financial and employment stability in order to present the lender with the information they need to support that deal.

PVM: Brokers shouldn’t have a hard time getting this information, but I recognize the pace of change over the past few months has been extraordinary. Furthermore, lenders have nuanced processes and practices, which, when combined, leads to an unmanageable amount of change information.

The primary challenges, as I see them, are customer experience and process inefficiency: the accuracy of information provided to the client and the ease of the transaction. I will argue, however, that the value of a mortgage broker has never been greater – there’s a

lot of opportunity to provide tailored service right now – but no doubt the challenges presented by this unique situation with COVID-19 make it difficult to execute in a way that’s consistent with expectations.

Frankly, the best solution to managing through this difficult time is by doubling down on your strongest relationships. Work with the lenders and partners that you know will give you timely and transparent information; have phone calls with your underwriter; join their webinars and read their emails.

DB: Many lenders are hedging their risks in different ways and definitely at a fast pace. Despite the challenge of obtaining timely updates from some lenders, overall many business development managers have been fantastic and forthcoming with updates to lending guidelines to the broker channel as information becomes available. I find that picking up the phone daily and speaking with your go-to underwriters and/or BDMs

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for updates is a great way to keep your finger on the pulse and keep your clients and partners informed.

Given the delays, managing expectations with clients right now is also key when it comes to helping them understand how lenders are evaluating deals, as well as with approval turnaround times.

Shannon Dolphin: While we don’t work directly with brokers, Dolphin Enterprises, along with our private lender clients, has gone through various cycles in the private lending industry since 2004, particularly in 2008 with the global financial crisis.

During and following 2008, we worked with many private lenders by implementing more software tools to manage arrears, debt and maintain changing financial transactions.

Over the last 16 years, we have enhanced and expanded MIC Manager as a direct

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“It’s important to balance what we’re hearing in the media with reality. Each client’s situation is going to be different, and what may be a good solution for one family may not necessarily apply to others” Rakhee Dhingra, Mortgage Savvy request from the industry to create a robust software only realized with this direct implementation.

COVID-19, with its sudden and drastic impact on our lives and the global economy, is currently only a few months old with little feedback from clients for related reports or related functions. As private lenders have an

array of borrowers, they could see more defaults; some are seeing more opportunities for second and interest-reserve loans. Only time will really tell the impact of this global and national pandemic.

CMP: What opportunities should homeowners know about in the

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current financial climate? What pitfalls or concerns should they be aware of?

PVM: Rates have declined and continue to decline, and there are options to capitalize on this via a refinance or a switch. For some clients, products that used to not make sense may now be very practical options, simply because rates have come off significantly.

Maybe not an opportunity so much as an option is mortgage deferral. Should your clients be in an employment jam, lenders are helping through a payment deferral. Clearly, there’s a cost to this; however, it may provide the necessary breathing room.

Another option for homeowners is a switch or transfer, in which brokers help their client switch their mortgage to a lender offering lower rates, either mid-term or at

renewal. The best option for clients over 55 years old, who are considering a sale of their property, a move into a long-term care facility or alternatives to drawing down on their investment portfolio, is a reverse mortgage.

Lastly, there’s accessing the referral network. This COVID-19 situation has impacted every corner of society and business.

Referral partners – lawyers, Realtors, wealth planners – are likely helping clients with unexpected challenges that mortgage brokers may be uniquely positioned to help with.

Potential pitfalls include making shortterm decisions that limit your future with clients, partners, lenders, etc. We’ll come out the other end of this, and you don’t want to face the uphill battle of repairing damaged relationships when we do. I think that for those of us operating in the broker

channel, the biggest opportunity here is highlighting the value-add we bring in these complicated times.

RD: It’s important to balance what we’re hearing in the media with reality. Each client’s situation is going to be different, and what may be a good solution for one family may not necessarily apply to others.

Consulting with a mortgage broker you trust will ensure that whatever steps you’re taking will have long-term benefits for your financial future.

It’s also important to look at affordability and not just mortgage qualifications. Many clients are coming to us, saying that they’re seeing lower advertised rates and want to switch – but the conversation is much more involved than that. What are the penalties of exiting the existing mortgage? Are the interest

Email lender notes, application, and credit bureaus to:

deals@vwrcapital.com D IMITRI K OSTUROS

Chief Operating Officer dimitri@vwrcapital.com

P AULA H UTTON

BDM - Prairies paula@vwrcapital.com

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SPECIAL REPORT

MORTGAGE SOLUTIONS savings going to make that decision worthwhile? It’s not just about comparing rates.

DB: With the help of mortgage advisors, homeowners need to understand that the real estate environment we operated in pre-COVID-19 and how financial decisions were made then are different in the postCOVID-19 environment. Clients need to be proactive and plan ahead for such times and not wait until they’re in desperate need of money to apply for a refinance or equity take-out.

During times of fear and uncertainty like this, some clients are jumping at mortgage deferrals as a first line of support. While that tool has provided temporary relief for many, it does come with a cost and potential implications to clients’ credit and future ability to borrow. Clients should speak with their mortgage advisor first about any other available options and assess the suitability of mortgage deferrals, given their needs and available options, before pursuing them.

Property valuation is another area of concern for clients. While values are not expected to collapse due to the balanced tension between demand and supply, the values will soften in some markets. Clients are encouraged to appraise their properties early in the process of refinancing to confirm value and also to lock in the best value for 120 days.

A note for those who are looking to get into the market and hold onto their properties for the long run: The softening prices, combined with low interest rates, are fertile grounds for property acquisition.

managers can execute all financial transactions electronically from all Canadian financial institutions. We previously launched Finhub and recently expanded the remote reporting for brokers and borrowers. Since MIC Manager is the only private lending system with an integrated accounting system, the opportunities will be to expand the MIC accounting administration tool with integration with other products.

The private lending industry has seen much growth in the past few years. When Dolphin launched MIC Manager in 2002, most people didn’t even know the definition of a MIC. With previous changes in the banking industry, the private alternative space expanded in need and opportunity, and it will continue to grow in strength and numbers. Since privates meet the changes of

the times quickly, the new opportunities and lending products will also meet the changes of the times.

RD: If you’re a successful broker, you’re usually moving very quickly, and you’re moving from transaction to transaction. The biggest opportunity is really to slow down, focus on your existing database and reconnect with your clients. The piece I’m really enjoying are the check-in calls, which are not transaction-focused. I’m grateful for the opportunity to check in with existing clients to see how they’re doing or to educate them about what is happening. Take this as a time to re-establish those relationships and strengthen them to lay the groundwork for future transactions.

For lenders, I think this situation has made it necessary to look at longevity of income and

CAPITALIZING ON OPPORTUNITIES CMP: What are some of the biggest opportunities for brokers and lenders as the COVID-19 situation continues to develop?

SD: As the business world has been mandated to work from home, there continues to be more need for electronic transactions.

Dolphin recently launched a full EFT feature from our accounts payable module so MIC

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really reassess clients’ ability to carry a mortgage. Even with the stress test, with the amount of momentum we were seeing in the market earlier this year, it felt like people were trying to keep up with the volume. I think everyone has been forced to slow down and mindfully evaluate client applications.

DB: There’s so much information out there right now that’s coming at everyone not just at a fast pace, but also wrapped up in so much fear and concern. As sounding boards, mortgage advisors can help clients make decisions from a place of perspective and explore the right financing tools to use, given the client’s immediate needs and future dreams.

More important than ever, brokers need to stay in touch with their clients by picking up the phone, checking on how clients are doing, extending a helping hand where needed and helping open clients’ eyes to the options available to them at this time to enhance liquidity, cash flow and plan for the future. This is an opportunity for mortgage advisors to strengthen relationships with clients and lenders alike; we all need to support each other as an echo system to come up with solutions, stay strong and emerge from the crisis.

CMP: What role can you play in developing solutions or communicating opportunities to

your current or potential clients?

PVM: Share feedback with your trusted lenders – not nitpicking, but bigger-picture strategy for making products more appealing, more saleable. Communicate with your clients, past and present. Help your clients embrace technology and new tools such as credit information like Borrowell or helping people learn how to use Zoom.

online – is key, especially now, when clients are looking for guidance, comfort and trusted advice. While frequent communication is key, compassion and being respectful of clients’ time – due to their increased workload in some cases and dealing with a lot more at home – can also go a long way.

RD: I’ve been leveraging social media as an educational platform to help keep my clients,

“Mortgage brokers play a pivotal role at these times in helping clients make financial decisions from a place of perspective and with facts. We can help clients understand the evolving environment and their available options” Dalia Barsoum, Streetwise Mortgages DB: Mortgage brokers play a pivotal role at these times in helping clients make financial decisions from a place of perspective and with facts. We can help clients understand the evolving environment and their available options, given the changing landscape and the changes in their personal circumstances.

Relevant and frequent communication through all channels – phone, email and

brokers and Realtors up to date with the everevolving nature of our business. Having the opportunity to educate our clients, especially in times of uncertainty, is the backbone of our business. By keeping our clients apprised of changes in the industry and how they affect their financial longevity, we’re making our lenders’ jobs easier and creating secure, longterm relationships all around.

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PEOPLE

BROKER INSIGHT

Slow and steady wins the race Jason Lang, Joanna Lang and Jason Friesen tell CMP how measured growth and a strong foundation based on expertise and collaboration have set Outline Financial up for success

GROWTH WITH purpose has always been the main goal at Outline Financial. When Jason and Joanna Lang of the Lang Team joined forces with Jason Friesen of Friesen Mortgage to create Outline Financial in 2018, the two organizations fit together like pieces of a puzzle. The three partners understood that their diverse strengths and experiences would create the perfect platform to scale their business, attract high-level technical experts, and provide a level of consistency and value that would vault them ahead of their competition.

“Our vision was to stay a small business but grow in an organic way that would allow us to truly invest in our team,” Joanna Lang says.

“We don’t want hundreds of agents. We are selective in attracting the right kind of people with the right kind of ethics who are going to serve our clients with expertise.”

Some brokerages opt to hire support staff with little experience, exchanging lower wages for additional manpower, but Outline Financial’s partners stress the importance of investing in each team member with training, healthy earnings and a solid support system for individual growth. As the regulatory environment becomes increasingly challenging, building a team of experienced professionals with a similar work ethic and a strong moral compass is of the utmost importance.

“Finding the right people takes time,” Jason Lang says. “That was a big lesson for us.

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There’s always urgency to get help, but rushing into hiring someone can result in duplicating efforts and wasted energy. Once you do find the right person, everything falls into place.”

That’s why Outline Financial puts so much emphasis on the recruitment process. An initial interview reveals whether the candidate is a good cultural fit and what experience they bring. It’s followed by a technical test, which not only helps assess underwriting skills, but also gives insight into the candidate’s thought process and how they react in different situations.

That ties into Outline Financial’s heavy emphasis on underwriting. Each member of the team starts off as an underwriter first to gain a high level of understanding on lender options, deepening their ability to give the best advice to clients. Once hired, everyone goes through the same level of training, which includes shadowing senior agents.

Friesen says this brings everyone together,

strengthening the team bond. “There’s no hierarchy in our teams,” he says. “No job is more important than the other, and that model really allows you to set your ego at the door. In today’s environment, when all of your teammates have a strong background in underwriting, there is a level of respect across the board.”

The mortgage industry is known for being a tough and sometimes lonely road, so Outline Financial seeks to counter that by creating an environment that fosters collaboration, rewards teamwork and encourages reaching out for help. Jason Friesen and Joanna Lang run day-to-day operations at separate Toronto branches, while Jason Lang, who previously served in leadership positions at some of the country’s largest insurance companies, is responsible for business development and company growth. However, all three managing partners play a role in mentoring the team across all branches. Having one

JASON LANG ON TAKING A CLIENT-FOCUSED APPROACH “We make a point to communicate with our customers in plain, straightforward language they can understand. We prepare content and reports that outline various regulatory changes and real estate statistics, and we host a massive annual VIP event for Realtors, clients and lenders to give them up-to-date information on the local real estate market and trends. We also have a custom mobile app – an indispensable digital tool to help clients and their advisors better understand the mortgage process.”

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“There’s no hierarchy in our teams. No job is more important than the other, and that model really allows you to set your ego at the door” From left: Jason Lang, Joanna Lang and Jason Friesen

leader who isn’t a broker, but instead is dedicated to constantly improving the business, is a huge competitive edge, according to Friesen.

“When mortgage brokers get busy, other parts of the business fall to the wayside,” he says. “With Jason focused solely on adding value to our partners, ensuring we run smoothly as a team and researching things like CRM platforms, that’s worth its weight in gold.”

Jason Lang also manages the brokerage’s database so the team always has a good measure of where their business is coming from, as well as insights – including valuable information on local market conditions and trends – that can be used to help their referral sources score more business.

Having that data, rather than just going off intuition, has been a huge eye-opener and has helped foster symbiotic relationships with real estate partners. “One agent might, for

example, send you 30 leads, resulting in three closed loans, but another agent who sends you 15 converts to 12,” Joanna Lang explains. “You might feel busier with one, but once you have the data, you’re able to make better decisions with your time and money.”

Jason Lang adds that his partners bring to the brokerage a commitment, passion and wealth of knowledge that is second to none – and he acknowledges that without each person bringing their best to the table, it just wouldn’t work.

“Our borrowers aren’t our only clients,” he says. “Everyone on our team plays an important role in our business. Aside from our borrowers and referral partners, we also have to make sure our underwriters are equipped to build trusting relationships with our lenders and that the loans we produce are always consistent. That’s our reputation that we work hard to maintain every day.”

FAST FACTS: OUTLINE FINANCIAL Managing partners: Jason Lang, Joanna Lang and Jason Friesen Network: Verico Areas served: Ontario, Alberta and BC, with core business in the GTA and Ottawa Offices: Two in Toronto and one in Ottawa Awards: Finalist for Outstanding Customer Service by an Individual Office, Mortgage Industry Employer of Choice and Broker of the Year (Joanna Lang and Jason Friesen) at the 2019 Canadian Mortgage Awards; finalist for Brokerage of the Year (Fewer Than 25 Employees) at the 2020 CMAs

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PEOPLE

OTHER LIFE

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

This painting is one of 30 works of mixed-media art Mav rikos has completed

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Age at which Mavrikos first got involved in art

6.5' x 6.5'

Size of Mavrikos’ largest work to date

6

Number of pieces he's currently working on

SHAPE AND COLOUR Broker Nicholas Mavrikos has turned a penchant for drawing into a side gig as a mixed-media artist WHEN VICTORIA-BASED broker Nicholas Mavrikos headed to university on a soccer scholarship half a dozen years ago, he had no idea that the drawing class he enrolled in would wind up being more than an easy credit. But he soon found that art had the power to take him away from the day’s million thoughts and pressures.

“It puts things into perspective,” Mavrikos

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says of having a creative pursuit. “Everyone thinks their job is so important, but when you have a little break and you can come back to it, it calms and refocuses you.”

Almost entirely self-taught, Mavrikos uses a vivid mix of spray paint, oil sticks, acrylic and pigment ink to bring his ideas to life. His work could be described as abstract, but he says each piece is tied

together by a discernible theme. “It just has to be an idea that kind of comes,” he says. “I might hear a lyric and think, ‘OK, perfect. I can do that.’ I just roll with it.”

For Mavrikos, art isn’t about the potential for recognition. It’s about the magical act of getting lost in something, only to find yourself. “I don’t think enough people do it,” he says. “It’s very beneficial.”

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CMA20

Brought to you by

OCTOBER 30, 2020 • TORONTO

CONGRATULATIONS TO THE 2020 FINALISTS The selection of individuals and organizations across 20 categories are a true representation of excellence in the mortgage industry for their outstanding achievements, innovation and leadership over the past year .

CELEBRATE YOUR SUCCESS Join hundreds of your industry peers as we celebrate your successes and reveal the big winners at the award show in October.

For more information, visit:

canadianmortgageawards.com

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Everybody has a story

A mortgage application is just a snapshot Let’s partner and ask the right questions to truly understand your client’s story. Together, we can develop the right financial solution. To see the whole picture, visit hometrust.ca/realstories

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CANADIAN MORTGAGE PROFESSIONAL

MUST-KNOW MORTGAGE SOLUTIONS | RELIEF FOR THE COMMERCIAL SECTOR | OUTLINE FINANCIAL

ISSUE 15.05

20/05/2020 3:10:10 AM

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