CMP 5.11 by Key Media

www.mortgagebrokernews.ca

november 2010, 5.11

Growing through technology

SPECIAL FOCUS Working with INVESTOR CLIENTS

FEATURE TRAILER FEES HAVE THEY FINALLY FOUND ACCePTANCE?

PROFILED GARY MAURIS FROM DOMINION LENDING CENTRES PUBLICATIONS MAIL AGREEMENT #41261516

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NOVEMBER 2010, 5.11

56 The East Coast in Fort McMurray The broker industry has officially existed in Alberta for 25 years. Heather Li looks at how this energy-rich province has treated its mortgage associates in recent years

Growing through technology

5. 11 issue

cover story

SPECIAL FOCUS WORKING WITH INVESTOR CLIENTS

30 Superbrokers – Breaking through the technology barrier CMP recently polled the major national broker

FEATURE networks across Canada PROFILED to uncover what they offer GARY TRAILER FEES their brokers – what we found wasMAURIS an accelerated FROM DOMINION HAVE THEY FINALLY cut top on crop marks growth in new technology LENDING CENTRES FOUND ACCEPTANCE? PUBLICATIONS MAIL AGREEMENT #41261516

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contents 8

Letters & comments from mortgagebrokernews.ca: Some of the best stats and comments from CMP’s website

72 Broker Profile: The president of Dominion Lending Centres Inc. has a limitless energy that he injects into every part of his life. Heather Li explores what fuels Gary Mauris’s drive

NEWS 10 News: More mortgage fraud, privacy issues, housing slowdown, Canada’s inflation rate, mortgage TV and more 42 News Analysis: Do you have a RED X? There has been much talk of late as to what our industry can do to try and stem mortgage fraud. One solution that some lenders and insurers turn to is Terranet’s REDX system 50 Trailer fee model earns respect: While there are still only two Canadian lenders offering the trailer fee option to brokers, the trend appears to be gaining ground. 64 Six referral mortgage marketing mistakes: Doren Aldana explores some of the reasons why new brokers fail in the first two years of their career

PROFILES 70 Provider: Bridgewater Bank puts power into brokers’ hands

mortgagebrokernews.ca

Provider: TMG The Mortgage Group continues to build strong relationships with customers, lenders and mortgage brokers across Canada

44 Niche series -Investing in Investment Properties Over the next few months, CMP magazine will explore a variety of niche markets and how mortgage professionals can work within this these areas to increase their business

76 Insight: After years in personal banking, Nicole Samson realized working in mortgages gave her more satisfaction than investment advising ever did 78 Guest Column: Peter Kinch challenges you to think about the last time you seriously sat down and analyzed your VAP

regulars 26 International News 28 This time last year 79 CMP Service Directory Follow us on Twitter Twitter.com/CMPmagazine

Editor’s Letter

Trailer fees, Canadian mortgage awards and superbrokers The last downturn in the economy was an eye-opening experience for the mortgage broker industry. If you were just getting into it, it was tough to make any headway. And if you didn’t know how to build a business you were in trouble. For the brokers with the ‘eat what you kill mentality’, if they didn’t have a good database of renewals, then it was tough. So it might be the reason that the trailer fee model has become more popular among brokers. Last year, the brokers that were randomly selected were hot and cold on the topic of trailers, however this year the brokers we spoke to were in favour. They see it as a long-term strategy for brokers who are committed to the industry. I believe that anyone who wants to survive the ups and downs of this industry and who wants to grow and prosper has to seriously consider trailer fee options. With the banks aggressively pursuing your clients; creating a mobile mortgage force; and overhauling their mortgage products like the TD collateralcharge mortgage, it’s important to protect your business. Also, the buzz in the industry is that a few banks are considering this option as well. This issue also takes a look at the major broker networks to see what they have to offer. This year we include valuable information from even more brokers. What you’ll find, beyond the usual commission splits and broker model, is the continuing development of online technology to deliver everything from webinars to live streaming. Once again, the Canadian Mortgage Awards nominations are now open and all the information you need to prop up the people in the industry you think deserve recognition is on page 69, as well as on mortgagebrokernews.ca. We always depend on you, our readers, to make it a success not only for making the nominations but also for picking the winners. On a final note, this is my last issue of CMP magazine. I’ve enjoyed meeting and speaking with many of you and I’ve enjoyed sharing the news of the industry through these pages. I like this industry. When it works, it’s great and everyone prospers; but when there are challenges, there is enough creativity and forwardthinking brokers among you to overcome anything the banks or the economy will throw at you. Please welcome our new editor John Tenpenny. The industry is going through a transition, as all new industries do, and there is still more market share to go after; still more compensation issues to work through; and still more competition from banks to deal with. I’m confident you will weather all these challenges as you continue to grow and prosper. I wish you all the best of luck! Gina Monaco Editor Gina.monaco@kmimedia.ca

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5. 11 issue

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Quotables

“the majority of our consumers don’t really like banks. They often feel like they’re being taken advantage of most of the time. I’ve found over the years that they usually like the one-on-one, small office atmosphere.” - Peter Carstensen, managing partner and associate of MortgageBrokersAlberta.com on brokering challenges in Alberta. Page 56

“with the traditional upfront model a broker is only as good as his or her next deal; what we’re trying to do is help our brokers build a book of business. We are serious about creating value for the broker community by offering them a recurring revenue stream.”

“if someone is considering getting into the investment market, they should talk to a broker even if they’re not actively looking right now. If it’s just a thought in the back of their minds where they’re thinking about it in the next couple of months or next few years, they should speak to a mortgage professional. They can go through the requirements, look at their finances now and develop a plan to get into that market in the future.” - Meaghan Hutchings, mortgage agent with Invis, The Mortgage Coach in Toronto on working with real estate investors. Page 44

- Boris Bozic, president of MERIX Financial on the trailer fee model. Page 50

November 2010 Publications Mail Agreement #41261516 Postmaster: Return undeliverable addresses to KMI Publishing, 100 Adelaide Street West, Suite 300, Toronto, Ontario M5H 1S3

EDITOR

Gina Monaco

Incoming EDITOR

John Tenpenny

Staff Writer

Heather Li

Staff Writer

Shane Buckingham

NATIONAL SALES MANAGER Account Manager

PRESIDENT CEO

Vivid Design Solution Tim Duce Mike Shipley

Andrew Davies Marni Parker

SUB-EDITOR

Rachel Naud

mortgagebrokernews.ca

DESIGNER

Jacqui Alexander

Trevor Biggs

OFFICE MANAGER

DESIGN MANAGER

Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as CMP magazine can accept no responsibility for loss

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Editorial enquiries john.tenpenny@kmimedia.ca Printed by Solisco imprimeurs-printers www.solisco.com

KMI Publishing 100 Adelaide Street West, Suite 300 Toronto, Ontario M5H1S3 mortgagebrokernews.ca

Readers Write Web comments

Mississauga man charged with mortgage fraud This is only the tip of the iceberg on what has actually happened in the past or still the ongoing efforts of fraudsters. RCMP, undoubtedly, got involved because it was most likely requested by CMHC. I have, on several occasions, gone to major banks where there was fraud on deals that had either funded or not funded. Their response was astonishing. They did nothing and did not want to hear about it. - Kevin Power Every business, government, charity, amateur sport associations etc., etc., they can all be hit by fraud. Sadly, it is just human nature. Some people are motivated by greed and will do whatever it takes to get ahead. To point a finger at one group whether it be lawyers, lenders or brokers is naive. There are bad apples in every group. The problem is when they are actually caught the punishment isn’t enough to make others think twice about doing it themselves. - Tom MacDonald

borrowers go through that pre-qualifying calculation and cannot buy/refinance if they do not meet TDS benchmarks. If the minister really wanted to help the consumer, he might be better served by addressing weak job market issues, better annual increases, etc... - Dan P. TD bank overhauls mortgage program Being in the mortgage industry for nearly 30 years, few things surprise me other than how the big banks continue to create new ways to take advantage of their customers - and get away with it. - James in Whitby.

TD is doing this to ensure they ‘own’ their customers and to prevent second mortgages against the property. Once they ‘own’ the customer they can get away with almost anything with terms and rates. Isn’t it time the government cracked down on the big banks who dictate to any and all? The first thing they should attack are penalties. Someone please explain to me why they are allowed daylight Flaherty says no mortgage rule changes, yet Jim, some people you just can’t help. I’ve always said robbery when it comes to penalties? you can’t fix stupid! That said, I think your efforts - Marjorie would be better served trying to reform the loose credit card policies. Credit cards are way too easy to Unless they have a special program that fits best obtain and bankruptcy is way too easy to claim. for your client, why would you want to deal with the - AB Mortgage Broker banks? There are plenty of non-bank lenders to work with. It is plain as day that they want to hold The finance minister and his economist entourage onto the client any way they can and, of course, cut out the broker who would be able to offer some need to take a reality pill. The mortgage industry, and credit industry as a whole, already has checks/ choices on renewal. Once they have the client, they don’t have to offer them the lowest rate anymore. balances in place to control financial capacity, it’s called a debt-service ratio. Most credit/mortgage - Vic CMP

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News Industry

Buyers’ market emerging in Calgary One in five Alberta repeat homebuyers are looking for houses they don’t plan to live in, according to a recent report. Compared to other Canadians, Albertans are twice as likely to be shopping for a vacation home (13 per cent versus five per cent nationally) and another six per cent want to buy a rental property, said the TD Canada Trust Repeat Homebuyers Report, which surveyed Canadians who have purchased or intend to buy a home that is not their primary home.

Calgary real estate investors allegedly defrauded A Calgary-based investment club has allegedly duped a group of investors out of at least $5 million in a real estate Ponzi scheme, says the Alberta Securities Commission (ASC). The commission alleges that Robert John Harris, operator of Harris Agencies, has breached a number of securities regulations by running an elaborate real estate scheme, which involved more than 200 investors from 2000 to 2010. “ASC staff allege the money raised by Harris Agencies through the investment club was used to make payments to existing club investors in the manner of a Ponzi scheme, instead of [being] used to purchase real estate or second mortgages,” the commission said in a news release posted on its website Oct. 6. Other allegations of securities breaches are: • trading in securities in Alberta without being registered to do so; • illegally distributing securities in Alberta; • making misleading and untrue statements to Alberta investors; • perpetrating a fraud on Alberta investors; and • acting contrary to the public interest. No criminal charges have been laid, but a commission hearing for Harris has been set for Nov. 10 in Calgary. CMP

mortgagebrokernews.ca

“In Alberta, we’ve seen a buyers’ market develop and many repeat buyers have been able to take advantage of opportunities because of the equity they’ve built in their current home,” said Jesse Bilodeau, a Calgary-based TD Canada Trust mobile mortgage specialist, to the Calgary Herald. “Many Alberta homeowners have paid off their mortgage, giving them the freedom to take advantage of opportunities in the market.” Albertans are the most likely in the country to own their current home without a mortgage (41 per cent versus 32 per cent). CMP

41.2%

how much of pre-tax income it costs to own a detached bungalow in the April to June period of 2010

Carney remains positive about Canadian housing market Canada’s privacy watchdog said the federal government is showing a “disturbing” lack of regard for the privacy of Canadians with its use of wireless devices, such as the BlackBerry, and the disposal of documents and computers. While Bank of Canada Governor Mark Carney says he’s concerned that a sudden drop in home prices could add to the already excessive debt levels of many Canadians, he doesn’t see the chances of that happening as very likely, reports the Globe and Mail. The housing slowdown is unfolding much like the Bank expected, given the changes in mortgage rules and the record-low interest rates, Carney told the House of Commons finance committee Oct. 26. He did, however, warn the lawmakers that there is a possibility of a further slowdown in the Canadian housing market and such turn of events would undoubtedly lead to smaller economic growth than the Bank’s latest forecasts. “One of the important downside risks to our projection is the possibility that there is a more abrupt correction in the housing market than we’re anticipating,” Mr. Carney told MPs in Ottawa. “We’re not forecasting an abrupt correction, but it is a possibility, given two factors: the speed with which house prices rose and, secondly, the absolute weight of debt in the economy that is tied to housing.” CMP

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News Industry

Housing slowdown suggests prudent debt management: CIBC The housing slowdown suggests consumers are being more “prudent” with credit after accumulating a record amount of household debt earlier this year, said CIBC’s CEO. Gerry McCaughey is confident that Canadians can maintain meeting their payments and suggested that the mortgage lending slowdown is positive at an investor conference sponsored by his bank in Montreal. “The consumer is probably taking a pause and acting in a prudent fashion, and that’s what’s driving this slowdown in the housing market,” said McCaughey. “I think that is a good thing because interest rates will rise back to normal levels. It would be a good idea to have the level of total debt at a more manageable state.” Earlier in September, Statistics Canada reported household debt hit $1,481 trillion during the second quarter of 2010, up from $1.385 trillion during the same period last year. CMP

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Two-thirds of repeat homebuyers buy again and again More than two-thirds of repeat homebuyers believe their next house purchase won’t be their last, according to a new survey by TD Canada Trust. Out of 1,000 participants, more than 23 per cent said they plan to move again within six years. One in five repeat buyers has owned more than five homes. The survey participants either purchased a home that was not their first within the past two years, or intend to purchase a home that is not their first within the next two years. Roughly half of Canadians will look for a smaller house, while the rest want to upsize. Most intend to find a fully detached home for their next purchase. As a result, 51 per cent will need to take out a mortgage to finance their next purchase, said the survey. CMP

Consumer confidence on decline heading into holidays Consumer confidence and ability to spend are still on the decline, according to a number of economic reports released in September. Economic optimism declined between the first and second quarters of 2010 among 11,000 Canadians, surveyed by the Empathica Consumer Insights Panel. So many people are cutting back or holding on spending even with the upcoming holiday season. “These continue to be difficult times,” said Gary Edwards, executive vice-president of client services at Empathica, to the Ottawa Citizen. “There’s more of a feeling of dread among older people in the workplace that we may be in this for a long time.” Meanwhile, six in 10 Canadians are living paycheque to paycheque, according to a report released recently by the Canadian Payroll Association. And 81 per cent of respondents said if they won $1 million in the lottery, they would pay down debt. Much of this has to do with the rush of homebuying earlier this year. “Most of the increase in household credit has been in mortgage debt, helping to bring about a strong revival in housing market activity after a brief dip at the beginning of the crisis,” said a report on Canada’s economy by the Organization for Economic Co-operation and Development. But “high household indebtedness also implies a growing vulnerability to any future adverse shocks.” CMP

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Canada’s inflation drops; mortgage interest cost index down Canada’s annual inflation dropped to 1.7 per cent in August from 1.8 per cent in July. The Consumer Price Index rose by 0.1 per cent in August on a seasonally adjusted monthly basis. The mortgage interest cost index was down by 3.8 per cent in August following a 4.2 per cent fall in July. Meanwhile, electricity prices rose by 7.7 per cent in August and gasoline prices saw a 1.9 per cent increase in August on a yearly basis. The food index was up 0.3 per cent in August on a monthly basis. The personal care index rose 0.7 per cent while the transportation index dropped by 0.3 per cent. CMP

Vancouver’s percentage of homeowners, including condo units, which is the highest home ownership rate in the country

31%

New national reality mortgage show premiered A new reality show called Burn My Mortgage debuted Tues. Oct. 5 on the W Network. The program puts overspending families through a series of physical challenges designed to show a mortgage isn’t a life sentence. The first episode features Christine and Roman Sharanewych trying to keep up with their affluent Toronto neighbours. They spend $17,000 a year on sports for the kids, $12,000 a year on dining out, ordering in and entertaining friends, and another $17,000 on vacations, housekeeping, landscaping and dry cleaning. “We get caught up with this keeping up with the Joneses, but what you realize, certainly what they’re realizing in the U.S., is that the Joneses are broke,” said co-host Chad Bisch, who motivates the families as they compete for $5,000 prizes. By the end of the show, the family sees if they cut spending on luxuries in half, they can pay off their mortgage 14 years sooner and save $55,000 in interest. CMP

mortgagebrokernews.ca

Vancouver housing starts strong for August The Vancouver Census Metropolitan Area (CMA) had 1,488 housing starts in August 2010, bringing the total number of Vancouver CMA starts to 9,493 for the year, reported by Canada Mortgage and Housing Corporation (CMHC). “Many centres across the Vancouver CMA have seen a rise in single detached housing starts in response to strong consumer demand for groundoriented housing,” said Robyn Adamache, senior market analyst for CMHC. “Not only are developers building in areas of raw land supply, but also there has been an increase in infill developments in areas such as Vancouver City, Burnaby and Richmond.” Multiple family units still dominate new home construction activity, and make up more than two-thirds of all housing starts in the Vancouver CMA, Adamache further noted. CMP

Positive outlook for Victoria housing market Despite the recent cooling off in buying activity, Victoria’s housing market remains strong, according to a report by Re/Max. Victoria’s market returned to more normal levels of activity in recent months after an “exceptionally strong start to the year,” said the Fall Market Trends Report. “This report demonstrates we have had a good, strong year regardless of what we’re seeing right now,” said Wayne Schrader of Re/Max Camosun to the Times Colonist. “We are now moving toward a more balanced market.” The report, which covered the first eight months of the year, showed sales in Victoria at 4,856 units, down from 5,521 between January and August 2009. The average selling price was eight per cent ahead of last year at $495,993, an increase of nearly $40,000. CMP

$100 billion of experience behind every mortgage In 2010 Invis and Mortgage Intelligence reached the milestone of $100 billion in mortgages funded… a new record in the Canadian mortgage brokerage industry. Our experience and expertise is why Canadians trust us. When borrowers turn to one of our mortgage brokers, they’re in good hands. When you become part of Invis or Mortgage Intelligence, you join a national team of mortgage professionals who are proud to deliver outstanding advice and attention to each of their clients. There’s 100 billion reasons to join us.

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News Industry

Mortgage Brokers Ottawa partners with The Mortgage Centre Canada

Gary Siegle inducted into the Mortgage Hall of Fame Gary Siegle of Invis and Mortgage Intelligence is being inducted into the Mortgage Hall of Fame of the Canadian Association of Accredited Mortgage Professionals. Siegle is regional manager at Invis and MI for Calgary, southern Alberta and Saskatchewan. He is a 37-year veteran of the financial services industry, and has been with Invis since 2002. CMP

DLC 46th on Profit’s Hot 50 List Dominion Lending Centres Inc. ranked 46th on Profit magazine’s Hot 50 List of Canadian Emerging Growth Companies, published in its October 2010 issue. This is the second year DLC has made Profit’s Hot 50, which ranks the top 50 young businesses in Canada by two-year revenue growth. From 2007 to 2009, Dominion Lending Centres grew by 98 per cent. From 2006 to 2008, when Dominion Lending Centres was ranked 23rd on last year’s list, the company grew 485 per cent. To date, DLC has more than 1,800 mortgage and leasing professionals across the country. “We are so proud to have been recognized in consecutive years on such a prestigious list as the Profit Hot 50,” said Gary Mauris, DLC president. “This ranking shows that we’re moving in the right direction, but we must always continue to better ourselves to prove to consumers that we’re the No. 1 choice to take care of all their mortgage and leasing needs.” Since its inception in January 2006, DLC’s main goal has been to become the challenger brand against Canadian banks as the mortgage financing provider of choice. The brokerage firm spends more than $1 million each year on TV advertising and other marketing initiatives. CMP

mortgagebrokernews.ca

38% percentage of new mortgages originated by mortgage brokers in 2009

Mortgage Brokers Ottawa has partnered with The Mortgage Centre Canada, an independent broker network belonging to the CIBC group of companies. The new venture will give Mortgage Brokers Ottawa access to a wider product lineup from CIBC, including some of its branch products and PC Financial options. “The partnership gives us the ability to offer a greater range of products under both channels of distribution—Mortgage Brokers Ottawa and The Mortgage Centre Ottawa,” said Mike Hapke, managing partner of Mortgage Brokers Ottawa. “In terms of the backend systems, it’s all one company but this really just allows us to have two brands, both which are recognizable in the Ottawa market and capitalize on that branding.” Mortgage Brokers Ottawa will continue to offer products of competing brands. The mortgage agents typically deal locally but the company is launching a national campaign across Canada to promote different local websites and generate leads for the MCC network. “We’re not interested in managing more people. We’ve already got a large enough team,” said Hapke. “What we’re interested in doing is having partners in Vancouver, Toronto, Calgary, Halifax, etc. that when we generate leads in business for them, we actually send the lead over to them. Once that lead turns into a real deal, we would share in the commissions at that point.” Essentially Hapke sees the brand link as a strategy to compete with the banks’ retail branch networks, and views other independent brokers as partners rather than competitors. “If we recognize that our biggest competitor is the bank then given that all brokers have access to the same products, our real competitive disadvantage is the banks because the banks offer different products,” adds Hapke. “By partnering with MCC, I’m now gaining access to those bank products that in the past could beat me. Now they can’t because I’ve also got access to them.” MCC first approached Mortgage Brokers Ottawa with the proposition in February 2010 and it was finalized this past September. CMP

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Industry

In the community

Right On Sept. 21 and 22, Mortgage Architects held its second annual Western Canada Lead Planner Wine Tour and Social in the South Okanagan. Twenty-three lead planners attended, along with Bob Ord, president and CEO of Mortgage Architects; Meini Ickert, vicepresident national sales; and newly appointed western region vicepresident Joanne Vickery.

mortgagebrokernews.caâ&#x20AC;&#x201A;â&#x20AC;&#x201A;

News

mortgages in the press

Industry

Mortgage broker headcount at peak? There are approximately 18,000 to 20,000 people who hold a mortgage agent and/or broker licence in Canada, according to the Canadian Association of Accredited Mortgage Professionals. Ontario has the most with 10,000, while B.C. and Alberta have a combined total of 6,000. In Quebec, 1,000 people are licensed. Canadianmortgagetrends.com says the going assumption of how many are actually active is 10,000 to 12,000. Although Canada’s broker count has increased over the past three years, it’s been relatively stable in the last 12 months, said Jim Murphy, CAAMP CEO. There is speculation the industry will shrink because of increasing competition, falling home prices, rising rates, falling commissions and bigger bank sales forces. In the past few months, two brokerage CEOs have also said they believe broker numbers have peaked for the near future. CMP

BMO drops five-year fixed “low frills” rate BMO dropped its five-year fixed “low frills” rate yet again from 3.79 per cent to 3.59 per cent. The bank says this deal “saves homeowners over $60,000 in interest costs compared to leading competitors’ five-year special fixed rate at 3.89 per cent and 35-year amortization.” CanadianMortgageTrends.com notes the following to keep the rate in perspective: • Most people break their five-year terms early, and you can’t break BMO’s mortgage to go somewhere else. Plus, pre-payments are limited to 10 per cent a year. • Various competitors can match or beat 3.59 per cent on a five-year term. • A five-year term at 3.59 per cent may not be the lowest cost option. A mortgage broker can present clients with other alternatives. CMP

mortgagebrokernews.ca

Angels in the Night This year on Dec. 7, Invis and Mortgage Intelligence brokers and their business partners will deliver new clothing and supplies to homeless shelters across Canada as part of the Angels in the Night program. Fifteen centres will participate: Halifax, Montreal, Toronto, Ottawa, Winnipeg, Calgary, Edmonton, Red Deer, Vancouver, Victoria, Nanaimo, Kelowna, Vernon, Kamloops and Cranbrook. Fundraising for Angels in the Night 2010 is well underway with event cities holding local fundraising activities throughout the year. For more information: angelsinnight.org CMP

TD mortgage business expands in U.S. TD Bank plans to hire 75 people in South Carolina to expand its U.S. mortgage business after recently completing the purchase of South Financial Group Inc. The bank said its U.S. residential mortgage business has doubled in the past two years and will continue to increase into 2011. TD recently completed its acquisition of the Greenville, South Carolina-based company, adding about 175 branches in the Carolinas and Florida. After this $191.6-million purchase, TD now has about 1,300 locations in the U.S., more than it has in Canada. CMP

Real Matters ranked second fastest growing tech company in Canada Real Matters was ranked No. 2 on Deloitte’s 2010 Technology Fast 50 list that ranks Canada’s 50 fastest growing technology companies. The Markham, Ont.-based company designed a system to help property owners obtain cheap home appraisals, and its revenue grew by 40,532 per cent. “They’re really exploiting a specific niche,” said John Ruffolo, Deloitte national leader of technology, media and telecommunication, to The Globe and Mail. “And this way, when they focus in on the niche, they need less capital because Canadian businesses have far less capital.” ClickFree, a device plugged into your computer to back up files, was No. 1 with revenue growth of 64,240 per cent. CMP

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News

Appointments

Mortgage Architects hires new regional VP of Western Canada Mortgage Architects appointed industry veteran Joanne Vickery to regional vice-president of Western Canada. Vickery has over 30 years of financial industry experience, the majority spent at a major Canadian bank. She became a licensed mortgage broker in 1999 and was part owner of a successful boutique brokerage firm. Most recently, she was director of training and development at a western-based national brokerage firm. Vickery is currently the president of the Mortgage Brokers Association of British Columbia (MBABC). She has been on the MBABC board for the past seven years and previously served on the education committee. As regional VP of Western Canada at Mortgage Architects, Vickery will provide core support to the MA network of lead and associate planners in Western Canada, and will assist with recruiting qualified planners to the brokerage firm. CMP

appointments HomEquity Bank, provider of CHIP Home Income Plan, recently appointed Bob Dubask as the new business development manager for mortgage brokers and Realtors in southern Alberta. The business development managers for HomEquity’s financial partners in Calgary are Maria Schneider in Calgary North, and Lorne Broski in Calgary South.

Women differ from men in homebuying stress Joanne Vickery

$640 million Q3 net profits for CIBC

Women more than men want an easy-tounderstand mortgage structure and low monthly payments, found a study by Genworth Financial Canada. Genworth also found that women are more anxious about their financial future, find shopping for a home more stressful than men, but like men find the notion of home ownership comforting. A recent Bank of Montreal study made similar findings, noting that women are more likely to report feeling overwhelmed by the home-buying process. This trend—and the fact that more women are buying their own homes— has led to a rise in services catering to women. Banks are focusing on female buyers in their marketing materials, while some mortgage brokers are starting female-exclusive businesses, such as Marcy Berg. Berg runs the Cobourg, Ont.-based Mortgages for Women. Berg’s clients include separated and divorced women as well as the never-married, single crowd. The latter group is on the rise. A 2007 Royal LePage survey found that 30 per cent of women who have never been married already own their own home. And of those who didn’t, 31 per cent said they planned to purchase a home within three years. CMP

DLC Alliance adds two Ontario teams to the franchise Two teams from Mortgage Intelligence joined Dominion Lending Centres Alliance, effective Tue., Oct. 12. Sean Binkley’s team from Kingston, Ont. includes 10 agents while Peter House’s group from Belleville has five agents. The DLC Alliance franchise now has 85 agents working from 17 different markets within Ontario, including the Greater Toronto Area, Whitby, Oshawa, Cobourg, Peterborough, Belleville, Kingston and Ottawa. CMP

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L-R: Glenn May-Anderson, manager of DLC Alliance; Peter House; Sean Binkley; and Mark Rashotte, broker/owner of DLC Alliance

News

Canadian Real Estate magazine announces first ever investor forum in 2011 Mark your calendars. Canadian Real Estate (CRE) magazine will be hosting the first Canadian Real Estate Investor Forum in Toronto, Ontario on March 25th and 26th, 2011. The two day event offers an array of conferences and exhibitors and will present property investors with an opportunity for learning and networking. “At this event, we want to offer the same degree of knowledge and sophistication present in our magazine,” says Tim Duce, President of KMI Publishing and Events. “We are using our experience and expertise to create a high-end event at which we can promote excellent content and the best Canadian speakers in the industry. Our goal is to create an environment for networking between our readers and sponsors and one where people can walk away with valuable information. We’ve asked the industry what they wanted and now we are giving it to them.” The first day of the event, tailored to more seasoned investors, will consist of all day conferences and an exclusive keynote lunch. A few of the anticipated topics cover international investing, how to safely buy a property and effective investing strategies. The second day will include free seminars but will mostly allow people to familiarize themselves with new products and network with other people in the industry. The growing speaker list currently includes the likes of Don Campbell, Paul Hecht, Julie Broad, Mark Weisleder, Peter Kinch, Philip McKernan and Russell Westcott. Even in its very early stages, the event has seen an overwhelming response in support and anticipation. Sponsors already on board include Pro Funds and Dube & Associates. To meet popular demand, early bird tickets to the event are now available. CMP

Industry

AMBA takes on Realtors in Diaper Challenge AMBA’s Edmonton and area members have challenged their Realtor counterparts to a friendly fundraising competition. Edmonton Realtors have committed to raise the equivalent of $23,000 worth in diapers, as part of a campaign in support of the Terra-Centre for pregnant and parenting teens in Edmonton, Alta. AMBA members have pledged to raise more than the Realtors between Oct. 6 and 24, 2010. Called Baby Heroes, the campaign’s goal is to collect 5,000 boxes of diapers from sizes newborn to toddlers, and help raise community awareness of the challenges teenage parents face daily. The Terra-Centre for pregnant and parenting teens is a not-for-profit organization that has been serving youth in Edmonton for 39 years. Each year, approximately 600 young families access their support services, which focus on high school completion and strengthening the capacity of teen parents to be successful parents. CMP

Household debt to outpace income: TD When interest rates rise, 10 per cent of Canadian households could be in financial trouble, according to a TD Economics study. TD chief economist Craig Alexander said household debt, which includes mortgages, has become excessive as Canadians get more accustomed to easy borrowing. “One in 10 is a high ratio,” Alexander told CBC News. “It looks to us that Canadians’ personal finances have gotten stretched.” Alexander also expects those debt levels to increase more rapidly than income growth. The TD study said that even if the Bank of Canada’s overnight rate only rises to 3.5 per cent by 2013, family debt might still rise five per cent annually. That should be a concern, the report said, given its prediction that incomes will likely grow only by four per cent a year. CMP

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Mortgage Investment Trust For Lending Inquiries Please Contact:

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www.FirmCapital.com

Ottawa, Ontario

$11,650,000 FIRST MORTGAGE Term loan on 158,176 sq. ft. retail plaza Kitchener, Ontario

$4,500,000 FIRST MORTGAGE Land loan on condo development site Toronto, Ontario

Residential & Commercial Construction Land & Development Financing Inventory Housing Loans Infill Construction Financing Bridge & Equity Financing Investment Properties Multi-Residential Alternative House Lenders 1st & 2nd Mortgages Loan Sizes $200,000-$20 Million

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International

u.s.

U.S. foreclosures up 25 per cent over year Lenders repossessed more U.S. homes in August than in any month since the U.S. mortgage crisis began. Banks reclaimed 95,364 properties last month, up three per cent from July and a 25 per cent rise from August 2009, said foreclosure listing firm RealtyTrac Inc. August marks the ninth month in a row where pace of homes lost to foreclosure has increased annually. The previous high was this past May. More than 2.3 million homes have been reclaimed by lenders since the recession began in December 2007, according to Realty Trac. The firm predicts more than 1 million American households will lose their homes to foreclosure this year. The top 10 states with the highest foreclosure rate were Florida, Arizona, California, Idaho, Utah, Georgia, Michigan, Illinois and Hawaii. CMP U.S. mortgage applications drop the most in four months U.S. mortgage loan applications decreased 10.5 per cent for the week ending October 15 from the previous week, which is its biggest drop in the past four months.

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National average home price reached a record

$325,400

U.S. 30-year mortgage rate fell to lowest level on record Rates on 30-year mortgages in the U.S. have matched the lowest level in decades, while rates on 15-year loans dropped to their lowest point in nearly 20 years. The 30-year rate fell to 4.32 per cent, the lowest on records dating back to 1971, according to mortgage buyer Freddie Mac. The rate was 4.37 per cent the previous week. Meanwhile, the average rate on 15-year fixed loans fell to 3.75 per cent, the lowest on records dating back to 1991. CMP

The Refinance Index fell by 11.2 per cent from the week before, and the seasonally adjusted Purchase Index declined 6.7 per cent from one week earlier, according to the Mortgage Bankers Association. “People just don’t really have the confidence or bility to buy a new home,” Paul Dales, a U.S. economist at Capital Economics Ltd. in Toronto, said before the report. “A lot of homeowners are constrained by accumulated debts or the fact that they’re in negative equity.” The average rate on a 30-year fixed mortgage increased to 4.34 percent from a record-low 4.21 percent the prior week, today’s report showed. At that rate, monthly payments for each $100,000 of a loan would be about US$497, or US$44 less than a year ago when the rate was 5.07 percent. CMP

u.k. U.K. house prices significantly fall U.K. house prices fell in September by the most since at least 1983, contributing to evidence that the housing market faces a renewed slump. The average cost of a home fell 3.6 per cent from August to 162,096 pounds (US$258,000). That’s the biggest drop since the mortgage lending division of Lloyds Banking Group plc began its housing gauge in 1983. Property values were 0.7 per cent lower than the same month a year earlier. “I think housing is already in a double-dip,” said Alan Clarke, an economist at BNP Paribas in London, to Bloomberg News. “We’re probably looking at house prices being down five per cent year-on-year by the middle of 2011. It’s going to be very hard for the U.K. recovery to continue on an upward sloping trajectory.” The International Monetary Fund said that U.K. house values remain “high” and may fall further as policy measures may not be sufficient to support the property market. CMP

News subhead

www.mortgagebrokernews.ca

ISSUE 4.11

superbrokers

Canadian Mortgage Award nominations open. See page 59 for details

ANALYSIS WHERE ARE CANADA’S GREEN MORTGAGES?

TRAILER FEES WHEN TO SHOW THE MONEY, NOW OR LATER?

PROFILED JULIE STAMP: DOWN BUT NOT OUT IN MOTOR CITY

2009

this time last year Current market strength maintainable, Royal LePage says Last year Royal LePage surveyed more than 1,100 agents and brokers from across Canada, and found that 61 per cent agreed that the real estate market strength was sustainable at the time. The No. 1 driving force in the market was the low interest rates, with 66 per cent of Royal LePage agents and brokers who completed the survey agreeing. The second highest factor was the belief that the economy is strengthening, with nine per cent of agents and brokers choosing this option. One year later; According to Royal LePage’s recent House Price Survey and Market Survey, Canada’s residential real estate market will slow in the second half of 2010. While market fundamentals remain strong across most major centres in Canada, sales activity was overly ‘front-loaded’ in the first half of the year and is expected to cool off for the third and fourth quarters. Prices are also expected to steady in the second half of the year. “We have seen an unusual pattern of activity in the housing market over the past 12 months, with the market experiencing a surge of activity and price increases that peaked in the fall of 2009 rather than spring. Early 2010 has followed a more typical seasonal pattern with prices and activity peaking in the second quarter,” said Phil Soper, president and chief executive, Royal LePage Real Estate Services. “An expected increase in the supply of homes on the market will now bring stabilization in prices and in some cities we will see both prices and unit sales decline towards the end of the year. This should not be interpreted as a severe correction but rather a natural reaction to the market having peaked quite early this year.” CMP Bridgewater Bank ups broker support with new coaching program It’s been a year since Bridgewater Bank kicked off its

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new coaching program last fall. In October 2009, 40 brokers from across Canada were selected to participate in the Business Plan 2010 strategic coaching sessions along with the bank’s Business Development Managers and underwriting staff. The brokers were divided into groups based on experience levels and business goals and met online on a bi-weekly basis for 10 weeks. Calgary broker Greg Williamson, who recently launched his own coaching business called 180 Degrees, led the sessions. The purpose of the coaching initiative, says Todd Poberznick, assistant vice-president with Bridgewater Bank is “to strengthen relationships with brokers” and to increase the levels of underwriting support and service. One year later; The coaching sessions went very well according to facilitator Greg Williamson. “The 90-day coaching sessions were well-received and after the initial period, if participants wanted to continue they had to join as a member and about 50 per cent of them did.” After a year, over 90 per cent of those who joined are still members. The in-person and webinar delivered sessions helped build momentum in the underwriting team and renewed the bank’s focus on customer service. Working with Greg and his team, the bank restructured its underwriting team to better focus on broker needs. “We absolutely have a better relationship with our brokers as a result” says Colleen Lindsay, manager Underwriting Broker Services, Bridgewater Bank. “As part of Bridgewater’s ongoing commitment to provide value to the broker community,” adds Poberznick, “we’re always interested in unique ideas and will continue to pursue new methods to enhance our relationships and assist brokers grow their business”. CMP

Think reverse mortgages are expensive? Think again! With CHIP Home Income Plan’s new low rates, homeowners 60+ can now access up to 40% of their home equity at rates comparable to other home equity lending products. But unlike these other products, with the CHIP solution: • no payments are required, until homeowners choose to move or sell • no income, credit or medical qualifications are needed • funds can be received as a lump sum or over time, giving your clients the flexibility they need

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CHIP Home Income Plan is provided by HomEquity Bank, a Schedule I Canadian Bank. HomEquity Bank is a wholly-owned subsidiary of HOMEQ Corporation, a TSX-listed company. TM Trademark of HomEquity Bank.

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Growing through technology

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Broker Network

CMP recently polled national broker networks across Canada to uncover what they offer their brokers – everything from compensation to training to ancillary services. Here are the results

t’s been quite a year for all the broker networks polled in CMP’s annual survey, and if all the accounts are accurate, it’s a year that should end on a high note. Brokers enjoyed steady business with the help from low rates and steady housing sales. That said, economic analysts are predicting a balanced market going into 2011, which should still bode well for the industry. About the survey This year CMP decided to let the brokerages speak for themselves, so in the following pages what you will find is a chart devoted to each participating brokerage that was generated based on their responses. The actual survey was in the form of an e-mail questionnaire and followup phone call, asking various questions about how the brokerage does its business. Along with the information charts, CMP has also included various answers to these questions. Since the survey’s inception, the number of participating brokerages has varied, citing several different reasons why. While several national brokerages opted to tell all and completely answer every question, some others selected to only answer specific questions for privacy reasons, while others still decided not to participate altogether or simply did not answer repeated e-mails and phone calls. With the missing entries this survey is obviously not what you would call a complete coverage of the brokerage market in Canada, but it does include information from leading broker networks across the country and serves as a great reference tool for anyone interested in seeing what is out there. Of course, if you have any further questions about the information in the following pages, don’t hesitate to contact the respective brokerage.

Axiom Mortgage Partners Number of agents: 600+

Established: 2007

Compensation

• 100% volume bonus; each owner determines agent splits • All trailer fees paid to licensees regardless of whether they switch firms

Brokering Model

• National network of independently owned and operated brokerages –not a franchise • $995 flat fee for entire brokerage regardless of the number of agents • 70 locations across Canada

Ancillary Services

• White label

Lead Generation

• Automated marketing programs designed to encourage loyalty and generate referral business • All traffic driven back to individual agents

Compliance

• Individual licensee is responsible for compliance • Provides best practice policies and procedures

Payroll

• Each licensee is paid directly from the lender and is responsible for their own payroll

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Michael Cameron

Axiom Mortgage Partners was built on the idea that strong individuals build a strong industry. “It’s these individuals who have insisted on remaining independent by running their own businesses,” says Mike Cameron, one of the partners at Axiom. “Axiom was designed to support and assist the type of entrepreneurism that you find in these industry innovators and forward thinkers.”

adds. “Our web technology allows agents to build custom marketing campaigns or one-off marketing pieces as needed. Targeted marketing lists are available for specific campaigns.” Axiom’s primary objective is to assist the independent broker/owner in reaching their target consumer so they can collectively grow the broker market share.

Training Axiom has partnered with several industry leading training providers and agents have direct access to a number of online training modules. “We have also partnered with training providers to make live training programs available for individual licensee offices in addition to weekly training conference calls covering a variety of topics.” Axiom also works closely with several creative marketing firms to produce strategic marketing plans. “All of our marketing is produced by experienced mortgage professionals who understand today’s mortgage consumer,” Cameron

What’s ahead for 2011 Axiom believes that proper CRM and database marketing will make the most difference in any business. “Today, brokerages on average turn over or lose 88 per cent or more of their business on an annual basis,” Cameron says. “With the cost of acquisition being 10 times greater than that of retention this statistic seems insane,” Perhaps Axiom’s greatest strength is helping brokerages build loyalty with their existing book of business while encouraging new business and referrals at the same time. A great CRM will do all of this and more.

Centum Financial Group Number of agents: 2,000+

Established: 2002

Compensation

• Royalty plan starts at five per cent • Commission and volume bonus splits vary between broker and agent • Trailer fees can follow brokers/agents, depends on lender program

Brokering Model

• The storefront model is the only • Over 240 franchises across Canada and over 2,000 agents

Ancillary Services

• White label – Exclusive Centum Primo Mortgage products • Home and automobile insurance • Creditor life insurance • Exclusive Centum Protection Insurance

Lead Generation

• Online leads generated through partnership with real estate website (traffic: 800,000 visits per month) • Targeted branding through customer referrals. Ninety per cent of online consumers complete mortgage within 90 days. • No upfront marketing dollars from our brokers and agents

Compliance

• No response

Payroll

• Franchisees are paid daily • Turnaround time for receiving payment from lender to paying broker/agent: two hours

“There is little value of a brand to a network unless the brand is generating sales leads,” says Bill Jamieson of Centum Financial Group. “We’ve partnered with the leading real estate website in Canada, a site which gets over 800,000 visitors per month. We pass the free mortgage leads from this site down to our network. Also, our brand advertising helps builds equity in your business. It is efficient and aggressive, and specifically targets consumers who are in the market to get a mortgage today. Centum is the only broker network in the mortgage industry offering advance commissions.

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“The Centum Commission Advance Program is fully integrated into The Centum Equity Builder, our exclusive CRM.” Jamieson says. “There is no double entry for the broker or agent and the commission advance forms are pre-populated from the transaction information within Filogix.” Training Centum uses an outside training company as well as delivering its own internal programs. The two sales mentoring programs: Advanced Sales Mentoring – Agents learn proven traditional sales techniques on how to build

e r o m I am t s u j than . e t a r a

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Broker Network

a database of consumer contacts and how to market to those contacts for lead generation. This step-by-step coaching program can potentially increase sales by up to $20 million in two years. Social Media Sales Mentoring: This internal program focuses on proven techniques on how to build a database of consumer contacts and how to market to those contacts using online social media. The step-by-step companion guides and training will help agents grow their business through word of mouth, existing clients and referral sources. Bill Jamieson

What’s ahead for 2011 Relationships management and lead generation will be issues for brokers and agents as the competition for mortgage business increases, suggests Jamieson. Centum has developed a full suite of tools for

brokers and agents to capture and retain their market share. As well Centum has created business magament systems that make it easy for agents to build value, Some of the systems include: • Centum AutoPilot CRM • Equity Builder Lead Generation CRM with Sales Mentoring • Centum Primo Mortgage Products • Centum Protection Insurance • Centum Targeted Brand Advertising • Nexsys Underwriting Administration Service • Centum Customer Product Advisor • Centum Equity Builder Back Office Management • Commission Advance Program • Group Medical and Dental Health Benefits • Daily Electronic Commission Payments

Dominion Lending Centres

Gary Mauris

Dominion Lending Centres (DLC) has developed a strong brand across Canada with its emphasis on television, print and radio advertising. The company’s goal, according to Gary Mauris, president and CEO, is to be the mortgage brokering brand in Canada --competing head on with the banks for consumer business. “Our national advertising fund powers this strong brand,” Mauris says. “We collect monthly funds from all agents and distribute this pool back into the region from which it was collected in the form of various advertising. Television is our primary advertising focus and for the past number of years, our television campaign included a schedule that accumulated a minimum of over 140,000,000 impressions (over 2.6 million impressions per week). We are seen on such programs as NHL hockey games in a variety of cities, local news channels, and home improvement shows on HGTV.”

DLC recently concluded an endorsement deal with sports celebrity Don Cherry who will be featured on television commercials. “We will also be offering our agents advertising templates featuring Don Cherry to take advantage of this deal on a local level.” Training DLC provides a variety of ongoing free training for all mortgage professionals. This includes: • Power Calls -- hosted by a variety of industry partners, including lenders and other suppliers, to keep network abreast of any changes to products or industry rules • CRM training webinars • Leasing training webinars • Intranet training webinars • Underwriting training webinars

THE BEST APPRAISERS IN CANADA ARE CERTIFIED AND REGULATED BY

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DAR & DAC

THE CANADIAN NATIONAL ASSOCIATION of REAL ESTATE APPRAISERS CALL 888-399-3366 or FIND AN APPRAISER at WWW.CNAREA.CA

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• Communications training webinars • Monthly calls with Gary Mauris on the first Tuesday of each • Motivational Coaching and Sales Calls from a variety of suppliers. “For the past few years, we have been holding a quarterly Dominion University for all franchise owners and support staff in a variety of locations across the country,” Mauris says. “This is an intense 2.5-day session where attendees get to interact with head office staff and industry partners including lenders.” Our newest training and networking initiative created to further nurture the excellent culture

within DLC is the inaugural Dominion Lending Centres National Sales Conference, which will take place in May 2011 in Las Vegas. Moving forward, this conference will be held every other year, and feature a trade fair, break-out sessions, and both business and pleasure events. What’s ahead for 2011 “We will continue to add new advertising templates, training courses and communication tools to our intranet site, as well as offering new training webinars to help our agents each month. It is our goal to always be ahead of the pack and ensure our agents have everything they need to succeed in this industry.”

Number of agents: 1,800+

Established: 2006

Compensation

• Franchise owners receive a 95/5 split • How brokers and agents are paid is determined by individual franchisees • Trailer fees can be earned through white-label offerings • If someone leaves the company, the trailer fees follow contractually

Brokering Model

• Franchise opportunities available –cost = $20,000 • For an existing team with volume exceeding $40 million, this fee can be absorbed by head office • Over 200 franchises across Canada • Identifies and secures storefront locations for agents

Ancillary Services

• White label • Equipment leasing, with internal credit department • Creditor life insurance through Mortgage Protection Plan package (life and disability insurance) for clients

Lead Generation

• Generate leads through national campaign and main website • Rotationally distributed to agents • Leads also generated by agent websites

Compliance

• Every mortgage professional has access to ongoing education and up-to-date compliance information from regulators and industry associations • Information communicated via network-wide or province-wide • Communications (depending on the issue), the DLC Intranet, DLC Weekly Bulletins and the monthly Dominion Opinion internal newsletter

Payroll qrtr banner October 2010_V2.pdf • Turnaround time for CMP 5 5 CapitalDirect 1 10/25/2010 11:24:48 AM receiving payment from lender to paying broker/agent: 48 hours

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Invis and Mortgage Intelligence (MI) Number of agents: 1,400+

Established: 2000

Compensation

• Prefers not to disclose

Brokering Model

• Invis operates in all jurisdictions outside Quebec; MI operates in all jurisdictions • MI has an affiliate program that offers broker teams attractive commission splits and access to volume bonuses, payroll services, and compliance services for their entire team • Invis and MI Regional Managers help brokers establish their own offices, guiding them through the set-up process. The company shares a bundle of strategies to help brokers establish successful storefront operations. For example, tips for the pre-launch stage, marketing to the neighbourhood and post-launch strategies.

Ancillary Services

• Invis and MI offers a line of private label mortgages with competitive rates, a dedicated underwriting team, competitive commissions, both upfront and trailer. • Mortgage Insurance enables brokers to offer their clients competitively priced Mortgage Life Protection, Mortgage Critical Illness Protection, and Mortgage Disability Protection. Competitive commissions and trailer fees

Lead Generation

• Invis Call Centre provides brokers with qualified leads. • Invis and MI also have affinity programs with major financial planning companies

Compliance

• Zero-tolerance policy for fraud – past, present and future – and will partner only with brokers with solid reputations

Payroll

• Weekly direct deposit

Invis and MI distinguish themselves from competitors by offering a high level of support through regional managers, who are a useful “go to” resource for brokers. They offer brokers comprehensive deal support and advice on tough deals, which is a benefit also to its lender partners. Whether they are transitioning from another institution or are new to the industry, new brokers at Invis and MI are given formal orientation and introduced to the regional managers, to the right people at its lender partners, which further enhances our lender relationships. “Our regional managers play a vital role in coaching and mentoring our brokers,” says Stan Falkowski, senior VP and national sales leader for Invis and MI. “We offer guidance on business planning, building relationships with referral sources, and reaching out to clients and potential clients. Training Training for Invis and MI brokers is offered internally. Guest speakers are also brought in on a regular basis.

“ the company also arranges to have certain new recruits join the broker teams of more seasoned brokers if it is deemed that they are not yet ready to be a sole agent ”

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“We are in the process of launching an all-new training program delivered by our Regional Managers, which spans a variety of topics including business development, marketing and advertising, client and database management, privacy and compliance, technology, underwriting, product knowledge and placement,” Falkowski adds. Orientation training is done on a regular basis for new hires to Invis and MI. The company also arranges to have certain new recruits join the broker teams of more seasoned brokers if it is deemed that they are not yet ready to be a sole agent. By doing this they are given solid hands-on guidance and mentoring when starting out. What’s ahead for 2011 This year marks the 10th anniversary of both the Invis and Mortgage Intelligence brands. Together, Invis and Mortgage Intelligence form the largest independent mortgage brokerage firm in the country. “At Invis and MI we will continue to provide our brokers with wide-ranging support in the areas of IT, marketing, compliance and deal support, all to help our brokers serve their clients better,” Falkowski adds. “We consider our firms to be “full service” operations, so if someone wants to have an efficient payroll system, or someone to help with the design and development of marketing materials, or if they want a suite of marketing technology tools, and someone to look after regulatory compliance, then we are the place to be. Our brokers spend more time doing business while make sure the systems are in place to support them.”

Stan Falkowski

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Broker Network

MortgageBrokers.com Number of agents: 440+

Established: 2005

Compensation

• Variety of splits based on volume, experience and type of relationships whether a managing partner, business partner or franchise • Volume bonus paid to managing partners, business partners and franchises based on commission-split agreement • Pays trailer fees

Brokering Model

• Franchise model • Franchise fee: $12,500 • Storefront model encouraged and will consider financial assistance • National network of 400 mortgage professionals • First three franchises launched in 2010

Ancillary Services

• White label – myNext Mortgage • Life and disability insurance • Offers a Central Services Operation with access to lenders for hard-to-place residential as well as commercial mortgage placements

Lead Generation

• Primarily sourced through its website. The site refers new mortgages but also includes a mortgage registry where clients with existing mortgages can register their renewal details. All renewal registry mortgages are referred to its network based on geography

Compliance

• Electronic storage of all deal documentation • Centralized team of admin experts review each deal for accuracy and completion prior to file being authorized for payroll

Payroll

• Fully automated • Paid weekly for finder’s fee payment and biweekly for volume bonus • Money in by Wednesday, out by Friday.

Everyone has an ownership stake in MortgageBrokers.Com right from the start. Its business model also offers a franchise option for top performers. “We believe that with our existing training systems, extensive business management tools and our leadership team, MortgageBrokers. Com provides all the necessary elements to allow

members of our network to take their business to any level they desire,” says Dan Putnam, president of MortgageBrokers.com. MortgageBrokers.Com also offers our Customer Service Operation (CSO) which offers co-brokerage assistance for all members of its network on private financing, commercial loans

Creative, Knowledgeable & Experienced Fisgard is a private lender dedicated to providing brokers and their clients with the answers they need. With Fisgard’s creative, knowledgeable and experienced underwriters, your deal that doesn’t fit the “bank box”, can get done here. We are here for you and we’re here for your clients.

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Think of Fisgard Capital as your partner in private lending for Western Canada. Let us show you how effectively we will combine our expertise, flexibility and the best private pricing to help you close those difficult deals.

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Speak to an underwriter today. Call 866.382.9255 or visit www.fisgardmortgage.com Fisgard Capital Corporation | 3378 Douglas Street, Victoria BC V8Z 3L3 | www.fisgardmortgage.com CMP 1/3

CMP_Third_page.indd 1

12/21/2009 8:54:45 AM

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Dan Putnam

and/or complex deals that may be beyond the scope of expertise for a mortgage specialist. “Our CSO department has unrivaled expertise in all areas of mortgage financing,” Putnam says. “We leverage our technology to control costs and maximize efficiencies at all levels of the organization. Our CRM, compliance, payroll and administrative platforms allow our mortgage partners to concentrate on being in front of clients, prospects and referral sources and building their book for the long term rather than at the office struggling with administrative paperwork and management.” Training “Training is vital to our network’s success so we offer both online training and regular internal training.We provide regular orientation training days for new agents and franchises and webinars

for specific elements of our value proposition such as our CRM program,” Putnam explains. What’s ahead for 2011 MortgageBrokers.com will continue to lead the industry in CRM technology development and management and will use this technology to enhance its overall value proposition. Based on extensive consultation with its network and after a full review of off-the-shelf CRM programs, the company developed its own. Called Eximius, it uses smart-profiling of clients and referral sources to automatically generate meaningful and timely touches to an agent’s database. Internal logic engines determine when and what type of touches are automatically generated. The cost of Eximius is $199 dollars per year, per agent regardless of the size of the database. This fee includes Customer CRM, Prospect CRM and Referral Source CRM.

Real Mortgage Associates (RMA)

Ron De Silva

Real Mortgage Associates uses a pay-per-use model that is unique to the industry. “We felt the traditional brokering model wasn’t doing what it should be doing for brokers,” explains Ron Da Silva, CEO of Real Mortgage Associates.”We knew there were certain components that were needed such as compliance and payroll processing, which we’ve included in our pay per use program.” Many of RMA’s brokers are one-person operations or work in small offices and might only do two to three deals a month. RMA allows its brokers to pool their deals to get maximum value from lenders. “We also have an intranet, which is full of tools to help our brokers in their business,” Da Silva says. The goal is to allow small broker firms to maintain their identity yet have all the tools of a larger network.

Training RMA offers an apprenticeship program for new agents. Senior agents manage their own business and must have broker designations. New agents must join a senior account. “You have to be a broker to train an agent.” In this scenario, the commission split is decided between the broker and the junior agent. “We pay the senior broker full compensation.” What’s ahead for 2011 This past year RMA has increased its media exposure through advertising in local print and television to drive consumers to their website, which is designed to create awareness of the broker industry. For 2011, RMA plans to maintain its current course. “We’re attracting agents; we plan to increase our volume; and we are looking at introducing some ancillary programs.”

Number of agents: 550+

Established: 2007

Compensation

• Senior consultants receive 100% of all finders’ fees and volume bonuses • RMA provides payroll and compliance services to consultants. As such, it charges a standard monthly fee of $750 to process and pay up to 200 funded deals per year • A pay-per-deal program is also available • Trailer fees follow the senior consultant contractually

Brokering Model

• Operating in every province but P.E.I. • Licence strategy • Flat fee and pay-per-deal fee programs

Ancillary Services

• Central underwriting unit

Lead Generation

• No

Compliance

• Zero-tolerance policy for consultants that abuse lender relationships

Payroll

• Weekly payment via electronic fund transfer • Broker firms paid twice weekly

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Cover

Broker Network

The Mortgage Group TMG The Mortgage Group is creating a culture whereby agents and brokers can grow and thrive. Through extensive training programs and state-of-the art technology, TMG agents and brokers have the tools and support to position themselves as knowledgeable and effective partners for their clients. Indeed, TMG looks for people who want to be successful and who are sincere about helping customers navigate the mortgage process. “The ideal candidate for us is one who believes in the mortgage broker model and who cares about customer needs,” says Mark Kerzner, president of TMG The Mortgage Group. “The person wants to be involved and operates within a moral and ethical framework.”

TMG University offers additional training over nine modules covering all aspects of the mortgage process. TMG’s marketing programs is incorporated into its CRM system, providing easy access for brokers. This includes e-mail marketing campaigns, customizable brochures and ads and a Build-a-Feature Sheet that can used for attracting referral partners. TMG brokers also have access to a marketing and design team if something more creative is required.

What’s ahead for 2011 “We believe we will continue to grow in 2011,” Kerzner adds. “Our corporate culture is very inclusive and complementary and we focus on our business and the Training business of our brokers and agents.” TMG agents and TMG training includes a state-of-the art production brokers get strong support from regional management studio with HD Green Screen in its Vancouver office for who actively manage their territories and will work broadcasting weekly training sessions with TMG partner with brokers to help meet their needs. “We have and Debbie Thomas. Other broadcasts include interviews will continue to have a hands-on, open-door with industry partners that are eligible for AMP credits. philosophy,” Kerzner adds. Number of agents: 800+

Established: 1990

Compensation

• Competitive compensation • Trailer fee • Trailer fees follow the broker

Brokering Model

• Offers different models: traditional broker, corporate agents, team leaders • Storefronts OK – whatever works best for the broker

Ancillary Services

• White Label through Paradigm Quest • Pre-paid Visa • Creditor Life Insurance • TMG Leasing • Centralized payroll • Benefits program

Lead Generation

• Custom websites available • Clyde management system • Customized videos • Newsletter

Compliance

• Required digital document storage and payroll compliance

Payroll

• Automated payroll system • Paid weekly

Mark Kerzner

Verico Over the past year Verico has been proactively positioning itself in the market to be the best broker network across the country, not necessarily the biggest. Throughout the year, the communications department at Verico has been working to increase its profile in the industry through its public relations efforts. On the technology front, Verico has introduced its Mobile Office -- the first of its kind in the industry. With this tool, which is fully integrated

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with Filogix, mortgage professionals can complete an application form for their client anywhere. “We set a goal for 2010 that encompassed 15 initiatives – 13 of those have been completed,” says Colin Dreyer, president of Verico. Some of those initiatives included creating a new website to better communicate with his network; new consumer videos to promote the industry; Verico Coaching for agents and brokers, and more.

Colin Dreyer

cover

Broker Network

Training Training is an integral part of Verico’s package and is a critical factor to help businesses grow explains Dreyer. The company offers both in-house and outside training programs as well as individual coaching sessions with a success coach and there are four to eight webinars a month on all topics.

What’s ahead for 2011 “There have been so many changes in the marketplace due to economic factors -- lenders continue to modify their programs and the real estate market is balancing itself out,” Dreyer says. “Changes bring interesting opportunities especially for welltrained, experienced brokers. I’m excited about the opportunities coming in the New Year. We have the ability to position ourselves well for these changes and to capitalize on them.”

Number of agents: 1900

Established: 2005

Compensation

• 100% commissions; 100% volume bonus; each licensee determines agent splits

Brokering Model

• 235 locations in every province • Fee charged to licensee • Encourages storefront model

Ancillary Services

• Private label Verico Mortgage • Trailer fees on private label • Verico Insurance for mortgage life protection, critical illness • In-house preferred suppliers

Lead Generation

• Corporate referral programs • Generate leads through referral partners, which comprise of large national companies

Compliance

• Individual licensee is responsible for setting standard • Part of licensee agreement

Payroll

• Lenders pay directly to licensees • Individual licensee is responsible for their office

CMP

“I PARTNER WITH TMG THE MORTGAGE GROUP BECAUSE...

100

...TMG is a great company that provides its brokers/agents all

the necessary tools, support, and industry leading training. I am proud to be part of the TMG network."

Matt Daniels, Ottawa Mortgage Advisors, Kanata, ON ...TMG allows me to maximize my income, including the ability

to take full advantage of volume bonuses with the deal centre.

The company is large enough to provide excellent support, training, lender relations and promotional/advertising tools.”

Michael Fortin, Vancouver, BC

100

The Mortgage Group Canada Inc.

find a Mortgage Professional in your area

www.mortgagegrp.com

Celebrating our 20th Year

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News Analysis

Do you have a RED X? There has been much talk of late as to what our industry can do to try and stem mortgage fraud. One solution that some lenders and insurers turn to is Terranet’s REDX system. David Armstrong of River City Financial Services Ltd in Edmonton, Alberta examines this service

f you are not familiar with REDX, you should be. REDX is a service that provides its subscribers with information that may have been reported by other subscribers or regulatory bodies on companies and individuals a subscriber is doing business with, or intends to do business with. Plainly put, it is a library of incidents of misconduct, or suspected misconduct reported by lenders, default mortgage insurers and regulatory bodies. What it is REDX is modelled after a similar system in the United States known as MARI. These systems allow subscribers to monitor certain negative activities by its customers or referral sources, which has been reported by other subscribers. It’s also used by subscribers to screen potential new customers or referral sources. For example, a mortgage broker has applied to sign up with a certain financial institution that subscribes to REDX. That lender would run a REDX report to determine if any other subscribers had any issues with this particular mortgage broker in relation to misconduct, inaccuracy of mortgage applications or suspected fraud. As part of its due diligence, that lender could choose not to enter into a referral relationship with that broker based on information obtained from sources such as REDX. Who uses it According to REDX it has about 30 subscribers including financial institutions, insurers and members from the funds industry. They have a stringent application process, and companies wanting to participate are vetted and have to qualify. REDX primarily considers companies with actual compliance or loss prevention departments, or at the very least a compliance officer. In other words, they want to be sure that submissions made to REDX come from reliable sources. All of this can sound a little bit scary if you don’t fully understand the process. Here is a comment received by CMP from a broker with regard to the REDX system: “Brokerages and lenders have been using REDX to blacklist agents from working for a brokerage and/or being able to use a lender they are trying to sign up with.” Others expressed concern about fraudulent activity that may have occurred but the broker was unaware of, such as a fraudulent letter of employment. Brokers can be the unwitting victim of fraud as well.

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Both of these concerns are valid on the surface, but when you drill down on the REDX process, you will see that these concerns are mitigated. First of all, not everyone can report to REDX. In order to report to REDX, a company has to have met the subscriber’s guidelines and passed through the thorough application process. All applications are reviewed by legal council, and they have to agree to follow REDX standards and procedures. Also, approved subscribers report to REDX through a stringent publishing process. First of all, the report has to come from the compliance department and has to meet certain tolerance guidelines. REDX has a quality control process for every single report submitted from its subscribers. In other words, an angry underwriter cannot “blacklist” an agent. Reports to REDX can be either public or private. A private report will report the incident, but not disclose the company reporting it. This seems a little cloak and dagger, but it’s to encourage companies to freely report incidents without fear of reprisal. This type of report often comes from “non-funding” lenders. In other words lenders that have received fraudulent applications, recognized they were fraudulent, and have declined them. Often, the lender has taken steps to confirm or prove the applications were fraudulent prior to submitting a report. What you can do So, want to find out if you have a REDX? Well you can. You can pull a report on yourself at anytime by going through its website www.redx.ca. There is a form you complete and fax in to them, and they will send your report, free of charge. So what do you do if you disagree with something that is on your REDX? Well, REDX will facilitate a challenge for you. Because some of the submissions are private, or “blind” you may not always know who you are disputing with. The lender can either choose to ignore your challenge, amend their report, or remove it altogether. An interesting thing to note about the REDX system is that under the Personal Information Protection Act (PIPA) it has a privacy exemption. Not only does REDX work with the subscribers mentioned above, but also works closely with various regulatory bodies across Canada. Because of the stringent process surrounding the system, and this close relationship with government

News

Analysis

regulatory bodies, it has been deemed an investigative body and therefore has a privacy exemption. REDX receives reports on Realtors, mortgage brokers, appraisers and lawyers and is considering expanding to other crossover industries such as the insurance industry. Moving forward On the surface, some of this might seem a bit scary to mortgage brokers. Someone could falsely accuse us, or we could be the victim of fraud ourselves. But we need some system in place where frauds are tracked and reported. The regulatory bodies simply cannot keep up with the investigations, and the burden of proof requirement is too great for them and for the crown attorneys. The REDX system allows members to report suspected frauds and misconducts without going through such a long process, while still maintaining stringent reporting guidelines. A couple of REDX reports does not a career ruin. In speaking with several subscribers to the system it is evident that what they are looking for when they pull reports is a pattern, not “one-off”

incidents. Most subscribers recognize that everyone can be the victim of fraud, even mortgage brokers. So when a subscriber pulls a report on someone and there is an incident, this is only one part of the process for them. REDX members must all agree to follow a strict process, and one of the things they must agree to is to not to use REDX as the sole reason for making a decision. The long and the short of it is, that if you do your job as a mortgage broker properly, you have nothing to worry about. Anyone of us can be the unwitting victim of fraud at anytime. If we have a pattern of it, however, then the question becomes–are we participating in the fraud, or are we simply not doing our own due diligence and not performing our role as we should be? We need to chase fraudsters out of our industry, and if you fear REDX, then maybe there is a reason, and you need to look at your own practices, rather than trying to find fault with one of the few tools lenders and insurers have to manage it. The only flaw with REDX is that not all broker-orientated lenders use it, and those that do, do not use it consistently enough. CMP

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NICHE SERIES RENTAL PROPERTIES

investing in

investment

properties

Rental properties generate extra income for consumers. As a broker, specializing in the real estate investor market could be your preferred way to make money. CMP continues its special focus on niche markets

mortgagebrokernews.caâ&#x20AC;&#x201A; â&#x20AC;&#x201A;

NICHE SERIES

RENTAL PROPERTIES

Joe Walsh

Mortgage Specialist The Mortgage Centre Toronto, Ontario

Joe Walsh

CMP: How has the rental property mortgage rule changes in April affected borrowers and brokers? Most lenders now only take 50 per cent of the rental income instead of 80 per cent, so often that property does not carry itself anymore. A borrower needs to show some income from a job to qualify for that rental property and will have to feed the rental property on a monthly basis even though in actuality, they might not. This also means that a number of rental mortgage deals we usually sent to A lenders, we’ve had to go use B lenders because B lenders still use 80 per cent of rental income or they will take more on stated income – they are flexible. Because we’ve had to take them to other lenders, the rates may be higher. So instead of somebody getting today’s five-year rate at 3.79 per cent, we have to take them to a B lender where their rates may be 4.75 per cent. It’s a double problem: The client now has to pay more money, and the percentage of rental income isn’t as good anymore. CMP: What does this mean for a broker who wants to specialize in rental property deals? There’s two ways to look at it because now it becomes much more difficult. You can still specialize in this niche but you’re going to have to find other strengths in the deal that you didn’t before. Borrowers who go to different brokers who don’t do a lot of rental properties will get discouraged and they won’t get the help they need. But if you specialize in this tougher market, you’ll be able to tell them the challenges in the market right away. You’re not wasting a week by going to all these lenders and getting turned down. You tell them right away, “Here’s our challenge.” CMP: Tell us about how rental properties are still a viable market. As long as interest rates are low, rental properties are still a good economical equation. For the investor, they will say, “Instead of buying for $300,000, I may have

to look outside the city. I may have to buy for $200,000 because then I can put 20 per cent down.” You’re getting money so cheap and you’re going to own maybe fewer properties, putting bigger down payments but on the flip side, you’re going to be able to weather the storm. Lenders are saying, “We have to be less speculative, less risky. We as a lender and CMHC (Canada Mortgage and Housing Corporation) as an insurer need to be on more solid ground.” So subsequently, we’re going to help the borrowers be on more solid ground.

CMP: What kind of clientele buys rental properties? It’s all over the map. You have a lot of professional people who make a lot of money. They may have very secure jobs, making $150,000 a year, and don’t feel comfortable investing in the stock market but they feel comfortable in real estate. Real estate does two things. One, it can build up your assets and net worth, and hopefully they appreciate. At the same time, the rents help pay down your mortgage. Also, a person making a lot of money could have some possible writeoffs. Accountants will tell people if you’re making $150,000 out of a salaried job, and you just go in every day, you don’t have any writeoffs except retirement savings programs. So by putting your money into rental properties, you’re able to write off a lot of the expenses, maybe some of the repairs. Accountants can sometimes manipulate management fees, maintenance fees; do different things, and it becomes worthwhile. CMP: As a broker, how do you market yourself to start acquiring this clientele? It’s where you’re going to market. There’s a lot of real estate clubs and investment clubs over the years that have grown bigger. You

“ if you specialize in this tougher market, you’ll be able to tell them the challenges in the market right away ” mortgagebrokernews.ca

NICHE SERIES RENTAL PROPERTIES

join these clubs and network as much as you can. Then when you’re marketing on your website, you market in that vein so when people are searching for “rental property mortgages” your name comes up.

Meaghan Hutchings Mortgage Agent Invis, The Mortgage Coach Toronto, Ontario

CMP: What is the difference between working on a primary residence versus a rental property? The client themselves usually. On a primary residence, you get a lot more first-time homebuyers or buyers with a little less knowledge base. Usually when they are at the point of investing in rental properties, they have more experience so the clientele is more knowledgeable, which helps as long as they’ve been properly educated. But usually you can have a good conversation with them if they’re knowledgeable and know what they’re talking about. CMP: Since the mortgage rules changed in April, how has the business been affected for brokering on rental properties?

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NICHE SERIES

RENTAL PROPERTIES

We’ve noticed certainly in the past few months a decline in clients purchasing purely 100 per cent rental properties. Over last fall and winter, we had significantly more clients who were looking at investment properties whereas this summer, the number of clients has declined.

CMP: When it comes to packaging a deal for a primary residence versus a rental property, how does it differ? We certainly want to make sure if a client has more than one investment property that we have all those details upfront. We want to have the lease agreements and the mortgage statements if there are other mortgages on those properties. So we need a lot more information and documentation upfront compared to someone buying a condo to live in.

“ if someone is considering getting into the investment market, they should talk to a broker even if they’re not actively looking right now ”

CMP: What should brokers do if they want to specialize in rental properties? Do their homework. Know their products. Be very well educated in the topic so they can properly educate their clients. There are definitely ins and outs, and different tax benefits so the more they know, the more they can help their clients. Knowledge is power. That’s what it always comes down to. CMP: What marketing strategies can a broker use to develop this clientele? There are certainly different advertising or direct mail pieces that a broker could use: Partnering with a Realtor who specializes in investment properties; holding a seminar on the subject that helps educate potential clients, and hopefully the people who attend those seminars become your clients. Certainly look to past clients as well who’ve entered the investment market in the past. You want to make sure you’re staying in touch with them because if somebody is entering into that market, they’re looking at it long term and how it’s going to contribute to their retirement down the road. So you want to make sure you’re staying in contact with them for any future rental properties that become part of your clients’ portfolios as well.

Meaghan Hutchings

Actively supporting the mortgage industry for over 20 years • Charter Member of CAAMP • 2009 CAAMP Partner In Excellence

Building relationships from a strong foundation

1-800-788-6311 • www.concentrafinancial.ca

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NICHE SERIES RENTAL PROPERTIES

CMP: What is your clientele like for rental properties? We have a pretty good mix. A lot of our clients originally started with their primary residence, and some have now moved into the investment market. We have a mature clientele. I say around 30 per cent have investment properties. CMP: What advice would you give to a consumer about rental properties? If someone is considering getting into the investment market, they should talk to a broker even if they’re not actively looking right now. If it’s just a thought in the back of their minds where they’re thinking about it in the next couple of months or next few years, they should speak to a mortgage professional. They can go through the requirements, look at their finances now and develop a plan to get into that market in the future. They may think they’re ready to do it in the next couple of months. When they actually look at the requirements, existing finances, what they will need to get into the market and have a bit of a safety net, they may not be as close as they think they are. Or maybe they’re closer than they think they are. But definitely, the first step is to speak to somebody and have them go through their finances ahead of time.

Robin Jensen

Mortgage Associate, Team Lead Canada First Mortgage Calgary, Alberta

CMP: What is the difference between working on a primary residence versus a rental property? There’s a lot more qualification involved when you’re dealing with an investor of rental properties. We really try to focus on setting up our clients as more of a complete portfolio as opposed to looking at just that one particular property, which you would do with residential. When you’re doing rental properties, the focus is usually keeping the payments really, really low, depending on what the investment

“ knowledge is power. That’s what it always comes down to ”

mortgagebrokernews.ca

goals are and keeping things liquid so if the client is looking to get rid of the property, you don’t want anything that’s closed. It really depends on the investor’s goals: Are they looking to use this property as a cash flow property? Or a revenue property for equity gain?

CMP: Since the mortgage rules changed in April, how has the business been affected for brokering on rental properties? I don’t find that the changes to the rules have made a significant impact. I find just simply the market out there is slow and people are really sitting on the fence. With the changes between the prior and current rules, they’re not that much different. The most significant change now is that investors need a 20 per cent down payment, but we didn’t do a lot of mortgages before where people had less than a 20 per cent down payment. People would go all the way through the process of wanting to buy a revenue property but the insurance premium on buying something with less than 20 per cent down was very, very high. So when you look at that cost versus how much money the property is going to generate you, a lot of the times people would say, “Whoa, whoa, no. I’m going to wait till I have the 20 per cent down payment,” which is really when they are more in a position to purchase a rental property. They have more equity and their payments are going to be lower. Their financial stability is usually reflected in the amount that they have as a down payment. CMP: What should brokers do if they want to specialize in rental properties? They first have to make the distinction that this is going to be their sole business and if so, they’re going to need some information and the experience for both the commercial side of lending as well as residential. There’s only a certain capacity of rental properties that an investor can have before you start moving it over to a commercial portfolio, which is a very different ballpark. I’ll usually refer my deal off when they start to go commercial because it’s just not my area of expertise. It’s a very different lending game so you really need to expand your horizons on all types of lenders -- the way you would with any type of mortgage specialization. Know your products and know what’s available.

Robin Jensen

NICHE SERIES

RENTAL PROPERTIES

CMP: What difference do you find working with the clientele who buys rental properties? Sometimes it’s easier to work with people who are not as informed because it doesn’t become too complicated. You can complicate the daylights out of a deal, left, right and centre and sometimes the more information the person has, the quicker they are to formulate an idea of what they want versus what is realistically available. I like working with a client who’s just starting to get into their rental properties so we can really do a more holistic approach to their portfolio. But on the other side, people who are very seasoned and experienced with having rental properties and buying them, they already know what to expect, they already know what they’re looking for so they can be quite easy to work for because they know you’re going to need a lot of documentation. They also understand it’s not necessarily about finding the best rate -- it’s about finding the best mortgage for their portfolio. CMP: What other advice do you have for a broker who is trying to acquire that niche clientele? At that time in your life when you’re ready to make an investment, just as you would an RRSP, to have someone in your face, telling you, “Yes, you need to do this. You need to do this. You need to do this,” isn’t as beneficial. The clients very much know when they are ready to start looking at options and will come to you when they need to. CMP

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Feature Trailer Fees

Trailer fee model

earns respect from broker community While there are still only two Canadian lenders offering the trailer fee option to brokers, the trend appears to be gaining ground. CMP gets feedback on this compensation model and looks at the possibility of more lenders jumping on board. What we found was of the four randomly selected brokers we spoke to; all were in favour of trailer fees

he tide seems to be turning for the trailer fee compensation model, which could be due partially to the recent downturn in the economy. The upfront model is great during good times but in slower times, brokers who arenâ&#x20AC;&#x2122;t prepared may be forced to leave the industry or only work as part-timers until the market improves. Opting for a trailer fee has its advantages, especially for those brokers who are in the industry for the long term and who want to grow their business and survive the ups and down of the economy.

Boris Bozic

President, MERIX Financial The compensation model/MERIX Two lenders have dominated the market -MERIX Financial and Macquarie Financial -and both have been gaining momentum over the past five years with their trailer fee compensation model. Both lenders have focused on developing strategic partnerships with brokers with the intention of helping them grow a book of business over the long

mortgagebrokernews.caâ&#x20AC;&#x201A; â&#x20AC;&#x201A;

Feature Trailer Fees

term that will sustain both parties during lean times. For all those involved it’s a win/ win situation. At MERIX Financial, Boris Bozic and his team have, over the past year, harmonized its compensation model to offer only the trailer fee model in two different options. Using a five-year term as an example, the first option offers 75 bps on closing, then 8 bps on each anniversary date for the next four years. Twenty bps is then paid on renewal and every year thereafter for as long as the mortgage is in active status with MERIX. The second option offers 90 bps upfront and 20 bps on renewal for the mortgage and then 10 bps on each anniversary date thereafter during the renewal term. “With the traditional upfront model a broker is only as good as his or her next deal; what we’re trying to do is help our brokers build a book of business,” explains Bozic, president of MERIX Financial. “We are serious about creating value for the broker community by offering them a recurring revenue stream.” This model does give the broker more money in the long term and it also creates loyalty between the lender and broker. MERIX, unlike the banks, does not compete for clients. “We only work with the broker channel,” Bozic says. “Once we’ve developed a strategic partnership, there is no reason for us to compete for the customer.” For example, if an existing customer goes directly to MERIX, the company will do the work for the customer but will still pay the original broker trailer fees. In the vast majority of cases the trailer fees increase because the mortgage amount is increasing. “We are the only lender that we are aware of who does this.” In addition to harmonizing its compensation model, MERIX has eased up on its minimum volume requirements, looking more at efficiency ratios. “We’re giving our brokers soft targets based on their volumes from the previous 12 months,” he says. “And we’re looking at an efficiency ratio between 70 and 75 per cent. The mortgage originator can control that part of the transaction by picking the right product for the client so there should be no excuse for not having a good funding ratio.” According to Bozic customer retention is critical. “As long as the mortgage is on the books we all win.” He would also like to see

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every lender go the trailer fee route because it’s a strategic partnership in its truest form. “There are definite economic benefits for brokers,” he says. “However, banks don’t want to share revenues and once you bring them a customer, they believe they’ve bought them and will compete, not only for mortgage business, but with other products as well.”

Grant MacKenzie

CEO, Macquarie Financial Ltd. The compensation model/Macquarie

Top: Boris Bozic Bottom: Grant MacKenzie

“ trailer fees create more enterprise value for mortgage brokerage companies than simply a list of names, since the future trailer revenue can accrue to the business, rather than the individual ”

At Macquarie Financial the emphasis is on the trailer fee model with a variation on the upfront model. Its primary five-year rate model offers 75 bps on closing, then eight bps each year thereafter and 50 bps on renewal and eight bps each year thereafter. The upfront model offers 100 bps on closing and 50 bps on renewal with eight bps each year thereafter. One of the greatest benefits for brokers, according to Macquarie’s CEO Grant MacKenzie, is the ability to manage their income, especially during an economic downturn. “Brokers still have money coming in so in one sense it acts as employment insurance or as a company benefit.” And in an industry where brokers can make a sizeable income, using a trailer fee model can help them plan for their financial future. “Top performing brokers evolve with us and can manage their compensation,” MacKenzie says. “If, for example, a broker earns too much money, they can redirect it. Our trails can be deferred to subsequent years, so now there’s the ability for financial planning.” What’s more, trailer fees create more enterprise value for mortgage brokerage companies than simply a list of names, since the future trailer revenue can accrue to the business, rather than the individual. This now means that mortgage brokers can eventually sell their practice as a business with ongoing value, instead of just closing up shop and retiring, which is the way it’s been until now. When Macquarie introduced the trailer model to the market, the company wanted to offer brokers an efficient system that would allow both parties to act as partners in each other’s business and to share customers, unlike the banks who will aggressively go after a broker’s client. “The trailer fee model has evolved and is here to stay.”

Choices.

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Feature Trailer Fees

book of business and create real value. It also creates a steady income stream for brokers and for a broker/owner it helps creates company loyalty. When people are desperate for money they can end up doing things they would not normally do, so having a stream of income wards off any potential fraud as well. With a trailer fee, you’ve created a partnership with a lender rather than a competition with banks with aggressive retention teams. To counter that we have developed our own CRM system to stay in touch with our clients and to build a relationship with them so when it’s time to refinance or renew, then we’re the ones they turn to. The trailer fee model is something we urge our agents to consider since it looks as if a few traditional lenders may start offering trailers, which would change the mortgage business and create a different platform. There will probably be different expectations for us with regard to minimum volumes and funding ratios. And part-timers will have to pool their submissions and we will probably see fewer of them.

Brokers weigh-in

Bill Rainbow

Mortgage Alliance Team Meridian Mortgage Solutions Invemere, B.C. The trailer fee model in the mortgage brokerage industry is long overdue. In order to be seen as long-term financial advisers mortgage brokers need to be paid as such. Under the trailer model, lenders should give brokers a greater ability to take on a servicing role throughout the course of the relationship as opposed to being put in a situation where we have to place a new mortgage with that client in order to get paid. This allows brokers to build a “book of business,” which will give our businesses true value. This model has served the financial planning industry quite well over the years since all parties involved then have a long-term vested interest in the relationship. It also means the lenders are starting to see brokers as long-term partners, not just lead generation vehicles. If you look at the three-way relationship between client, broker and lender from an efficiency standpoint, the trailer model would mean fewer turnovers for the lenders using that program. The second term of any mortgage is more profitable then the first and with this model I feel lenders will see more second and third-term mortgages then they do under the current setup. By changing a client’s perception to one of a unified entity between broker and lender as opposed to one that is potentially antagonistic, for example, when a client is put in the middle of a battle between the broker and the lender’s retention team, our overall image will be far more professional. This would lead to a better client experience and more repeat business for the broker and the lender. I think trailers are something we will see more of as lenders consider the option. I realize that not all brokers feel the same way about this issue. From what I have seen since I started attending broker advisory board meetings for Macquarie is that this model does attract long-term, client relationship oriented, high volume brokers, which is a benefit to any lender.

Bill Nugent

Neighbourhood Dominion Lending Centre Ontario We looked at trailer fees a few years ago and found that it is the best way for brokers to build their

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Mark Goode

Mark Goode Team, Mortgage Architects Orillia Top: Bill Rainbow Bottom: Mark Goode

What has been lacking in the industry, according to Mark Goode of Mortgage Architects based in Orillia, is a way to sustain cash flow and find stability. “With the trailer fee model, brokers can actually budget and start to plan their financial affairs. But it also builds a long-term relationship with a lender so it’s a good situation for both parties.” As a broker, Goode’s role is to help his clients get the best mortgage deal. However, Goode also believes he is equally responsible to the lender. It’s less expensive for a lender to keep an existing client then it is to process a new client. “Trailers compensate us for keeping our clients with an existing lender. The mindset is that the client is “ours” rather than “mine/yours.” The ultimate goal is to make money explains Goode so there is a dog-eat-dog mentality among brokers. “We have to look at the long-term viability of our business. Instead of battling with the banks for our own clients we should stop sending them business,” he says. “Then they’ll figure it out. When the banks start losing market share, they’ll notice, and then we can collectively work together.” CMP

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Feature Alberta

The

well-oiled provınce

The broker industry has officially existed in Alberta for 25 years. Heather Li looks at how this energy-rich province has treated its mortgage associates in recent years

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Feature Alberta

lberta is known as the land of oil and gas. When oil prices significantly increased in the early 2000s, the oil sands became an economic boon and created tremendous growth within the province, attracting numerous businesses and inter-provincial immigration. This inevitably had a positive domino effect on real estate and the mortgage broker industry. Though there are fewer brokers in Alberta compared to British Columbia and Ontario, the Alberta Mortgage Brokers Association (AMBA) was founded in 1975. This means the province has a long-standing relationship with brokers, which likely helped increase market share and strengthen consumer trust in the profession over the years. CMP continues its regional focus after spotlighting the Atlantic provinces in the September issue, and visiting B.C. in October. This month, we examine Alberta to see how its mortgage market differs from other parts of the country. Battling the banks Competition with the banks is a ubiquitous problem for the industry nationwide. But Alberta brokers, particularly in the major urban centres, have noticed a recent surge in the banks’ will to dominate mortgage financing. “The banks have become really, really competitive and they didn’t used to be,” says Jackie Woodward, owner and broker of MortgageGirl.ca based in Edmonton. “They’ve seemed to have stepped up their game here, whether they’re offering really, really aggressive rates or their mortgage specialists seem to be out there more. So the brokers’ value of being on-call and working Saturday nights isn’t so unique anymore because a lot of the bankers are doing it as well.” Peter Carstensen, managing partner and associate of MortgageBrokersAlberta.com, echoes Woodward’s observation on increased bank competition. “I’ve noticed with a lot of my previous clients, the banks have really made it hard for me to renew their mortgages or take them to a different institution for better products or rates,” says Carstensen, based in Calgary. “I’m dealt with payout penalties and other issues that the bank will waive for the client and offer a competitive rate with no penalty just to keep them at the branch.” Carstensen feels consumers are currently keeping it simple by signing with the banks’ competitive offers because the banks are still short on customer service. “The bank is not spending time educating the consumer or following up and

The East Coast in Fort McMurray Fort McMurray is its own special mortgage market. Many transient families and persons come to work for the oil and gas sector from Newfoundland and the Maritime provinces. As a mortgage associate, you have to build a special relationship with this niche clientele. “It’s tougher to get to know certain people in the area because they are moving around so much,” says Sheldon Moylan, broker with Dominion Lending Centres Mortgage Excellence, specializing in the Fort McMurray and Edmonton markets. “You have to be friends with them and get to know them before they deal with you.” As detailed in the Atlantic Canada spotlight from the September issue, east coasters tend to be more loyal to traditional bank institutions. But because the Fort Mac workers still see the Atlantic provinces as their home, they don’t have a penchant to deal with unfamiliar bank branches. So a broker can create that personal, one-on-one relationship to catch that business. “Once you get in with certain little groups of people, then you’re introduced to many more,” says Moylan, who initially spent three years in Fort McMurray when he worked with a credit union as a mortgage specialist. “There was a lot of eating out in restaurants, but once you had a hold of them, got deeper into the crowds, you became more known

making sure everything is great,” adds Carstensen. “The consumer contacts us but when it comes to closing, we have lost deals where we just couldn’t compete.” But Carstensen isn’t too worried. He thinks it is a temporary slump where the banks are merely trying to make up some money for overhead costs. “In the past, being that banks are a bricks-andmortar-style operation, they’ve got all the overhead, staff, training and all the rest of the costs associated with running a business,” he says. “They try to make profit versus volume and targets. So I think they’re dropping their bottom line right now to create volume, work on economies of scale versus overall volume.” Though Alberta brokers have had a tougher market share battle with the banks this past year, it isn’t because of lack of consumer trust. “The majority of our consumers don’t really like banks,” says Carstensen. “They often feel like they’re being taken advantage of most of the time. I’ve found over the years that they usually like the one-onone, small office atmosphere.” It’s partly this personal, high level of customer service brokers provide that has kept the profession well-received by the province’s consumers. Consumer perception Another nationwide industry issue is whether consumers see mortgage brokers as a legitimate channel to obtain home financing. As discussed in

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Feature Alberta

September’s issue about the mortgage market in Atlantic Canada, the eastern provinces lag behind in trusting and using mortgage brokers. Meanwhile on the West Coast, B.C. is the furthest ahead in the country with an established mortgage broker network. The consumers’ perception of brokers in Alberta predictably falls closer to its next-door neighbour than the Atlantic provinces. “When I built my business over the past 10 years, our phone would just ring and we would get business in,” says Woodward. “Then we came into the financial crisis and that business dropped off in Alberta. There weren’t new purchases. People weren’t moving. People couldn’t afford to move.” Carstensen confirms when the oil boom was occurring brokers didn’t need to convince consumers to use their services. Alberta clients already saw the value in choosing a mortgage broker.

“We have found in the past, we have a larger penetration in the market than maybe the rest of Canada does, according to statistics we’ve seen from the Canada Mortgage and Housing Corporation,” says Carstensen. “Particularly in the major urban centres: Edmonton, Red Deer, Calgary, and for Calgary, it may be because of the overall education level. We have a lot of professionals here, being the oil and gas Mecca of Canada.” Alberta is a huge geographical region so there are obviously rural differences too. Small towns in Canada, just by nature, are more inclined to depend on their bank. But the hard times may have shifted small-town consumer views, according to Dean Koeller, AMBA’s president of the board of directors. “For Alberta, especially with how our economy has been in the last year-and-ahalf, rural communities have really needed the services of a mortgage broker more than ever,”

Dean Koeller

License #11127

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Feature Alberta

says Koeller. “There are fewer financial institutions that have the willingness to lend on rural products so it requires someone with good experience and knowledge to help them find alternatives to options that aren’t available to them anymore.” The Alberta broker brand as viewed by the consumers is further strengthened by the professional regulation. Though not as stringent as B.C.’s, Alberta’s broker education and licensing helps protect the consumer and maintains the integrity of the profession.

attending part time. After completion of the course, you must write the provincial qualifying exam within one year of the course start date. Though the licensing requirement filters out the less serious professionals, the education could be more robust. “It could easily be a year’s worth of course work, teaching people how to prospect and market, and package deals up in different scenarios,” says Carstensen. “You learn some legislative dos and don’ts through the program but the true education is built working on the deals and pounding the pavement.” These kinds of concerns were heard by AMBA. Licensing and education: always room to improve It hasn’t lengthened the time it takes to complete In Alberta, you have to successfully complete the the course but the new curriculum is going to be Mortgage Associate Program (MAP) to become a more thorough and practical. “We’re developing broker. To register in the program, you must and going to be rolling out a brand new Mortgage submit official proof to AMBA that you earned a Associate Program that will be a first-class high school diploma in Canada or its equivalent. training environment for new members to the Once your application has been approved, you can industry to learn how to be successful,” says take the program either online or in-class. The Koeller. “It teaches everything from how to take an Mortgage Associate Program is offered in-class in application to the full process, and the whole Calgary at Mount Royal University and in gamut of what it takes to be a mortgage associate.” Edmonton at Grant MacEwan University. The In any case, when it comes down to how program costs $1,275 and can be finished in three successful an Alberta broker is, for now it is an weeks attending full time or over two months when individual sport. “I find that in Alberta, a lot of the education, training and mentoring has to come from individual brokerages,” says Woodward. “When someone is new in the industry, there seem to be a central training place. There’s AMBA initiatives to raise doesn’t a huge drop-off in brokers between how many people take the new associate course and how consumer education many are actually in the business. The problem with new people is they don’t know what they The Alberta Mortgage Brokers Association has don’t know.” identified a few different methods to educate Since Alberta’s economic conditions are still consumers about mortgage brokers and raising recovering, it’s not the best time for new brokers to awareness. The following are a few of the projects start their own businesses. Carstensen says when they have worked on and are developing: he and his wife moved to Calgary from B.C., it was • A webinar series directed to the public to educate the perfect time because lending guidelines were on what is a mortgage, how to use a mortgage more relaxed and the market was starting to pick broker, and other mortgage topics that show the up just before the oil boom occurred. But Alberta value of choosing a mortgage associate. will rise again. “For the long term, Alberta has a huge amount • The Get To Know Your Neighbourhood program of growth potential and opportunity,” says is a grassroots plan where industry members host Koeller. “We’re seeing overcapacity of commercial a local pancake breakfast or barbecue, so people real estate and condos in both Calgary and in the community can interact with mortgage Edmonton. This access capacity is going to attract associates and have a personal, casual more head offices to our province and encourage conversation to become more familiar with the more productivity.” profession. In all, the broker industry in Alberta is strong. • Mortgage Education Month was launched by the The need for new associates has tapered off, but it’s Mortgage Brokers Association of British Columbia simply a reflection of the bigger economic market. in B.C. in October 2009, as an annual event for In the meantime, mortgage brokers can continue to brokers across the province to host open mine their client database, develop their product mortgage seminars for the public. AMBA is knowledge and expertise, and patiently wait for looking to duplicate this initiative within Alberta. people to make the pilgrimage back to Canada’s oil and gas Mecca. CMP

mortgagebrokernews.ca

Top: Jackie Woodward Bottom: Peter Carstensen

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Business Marketing

It has been reported that over 80 per cent of mortgage professionals fail within their first two years. Thatâ&#x20AC;&#x2122;s a staggering statistic. Doren Aldana explores some of the reasons why this happens and how new brokers can help themselves succeed in this first of a six-part series

six referral mortgage marketing mistakes that make you work harder, not smarter

mortgagebrokernews.caâ&#x20AC;&#x201A; â&#x20AC;&#x201A;

Business

Marketing

y hunch is that most of these mortgage professionals throw in the towel, not because they dislike the business, but because they can’t afford to eat. I know of several cases where new brokers exit the business because their families are in dire financial trouble. Of the remaining 20 per cent who manage to survive in the business past the first two years, the average broker only makes $45,000 per year -- only the top half or 10 per cent make over $85,000 per year. As you can see, the odds are clearly stacked against you. So, what is it about the top 10 per cent of income earners that allows them to enjoy financial prosperity, while the other 90 per cent struggle? Is the difference found in their education, intelligence, skills, timing, work habits, contacts or luck? Perhaps. What I can tell you with absolute certainty is this: After coaching hundreds of mortgage professionals since 2005, I’ve observed that the single most important success factor separating the top dogs from all the rest is effective marketing.

“ the single most important success factor separating the top dogs from all the rest is effective marketing ”

Unfortunately, most professionals are entering the business completely clueless about how to market themselves in today’s hypercompetitive marketplace. But there’s good news: If you avoid the following six deadly marketing mistakes, you’re guaranteed to tip the scales in your favour. Mistake #1: Neglecting your database One of the most costly mistakes I see mortgage professionals make is their tendency to myopically focus on acquiring new clients and in doing so, they neglect the only true asset they will ever have in their business: their database of clients and referral partners. Think about it. What other market likes you, knows you, and trusts you more than your own happy clients and referral partners? Nobody! They’re your raving fans. Yet how many of them get pushed to the side and neglected due to your “busy schedule?” When was the last time they received a meaningful communication from you by e-mail, phone or direct mail?

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Real support from real people For many broker companies it’s all about the broker… that is, until they hire the broker. Then it becomes all about the next broker. It’s difficult to say that you offer full service support when your HR, Marketing and IT departments are the same person. At Invis and Mortgage Intelligence we are all about the broker... all of the time. Whether you have been with us 10 months or 10 years you’ll receive the info, tools and programs that enable you to stand out and succeed. We’re all about real support from real people, including reliable payroll, an innovative new CRM program, customized marketing, prompt IT help, a proven national brand, and resourceful regional managers. We also have a unique broker-centred culture that celebrates excellence and gives back to our communities – our brokers have raised over $1.5 million for the Angels in the Night homeless shelter project, $1 million for the Chair in Thoracic Surgery at McMaster University, and funds for other local charities. Call us today and discover what makes our brokers so successful. It’s your career, your business, and we’re here to support you.

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Business

Marketing

Every month that goes by that you ignore your database could be costing you thousands of dollars! For example, the National Association of Realtors did a study and came up with some interesting statistics on the correlation between number of mailings and marketing results. Here’s what they found: • Sending fewer than eight mailings a year yields minimal results. • Eight to 12 mailings a year generated a 200 per cent increase in results. • Now here’s the kicker. Going from 12 to 18 mailings per year increased results by an additional 200 per cent. What does this mean? Simply put, if you’re not consistently staying in touch with your database, month after month, you’re losing out on thousands of dollars. Studies show that it costs five to 10 times more to acquire a new customer through advertising than it does to market to your existing clients. Why pay that much more when you don’t have to?

“ the fact is people hate being ignored and if you’re not continuously staying in touch they’re likely to get poached by your competition ”

The fact is people hate being ignored and if you’re not continuously staying in touch they’re likely to get poached by your competition. If you want to build a predictable, profitable and salable mortgage business, you can’t afford not to develop a consistent follow up marketing system. So, if all this is true, why aren’t you investing more time, energy and money to mine the gold from your client database? Perhaps no one has taught you the importance of it and shown you how to do it. If you study it, as I have for the past five years, you’ll find that top producers are more likely to be using a mix of both e-mail and direct mail in their followup marketing campaigns. Why would they bother spending their money on direct mail when e-mail is cheaper? Simply put, it pays better. With that said… Three keys to a top-flight followup marketing system 1. Monthly direct mail newsletter. If you want it to be read, send it by direct mail. If you don’t care if it’s read or responded to, send it by

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22/10/2010 2:36:25 PM

Business Marketing

8 tips to protect your newsletter from becoming “Dullsville” Tip #1: Use exciting and compelling headlines – i.e. “9 Secrets to Make Your Home Renovation Pay For Itself!” Tip #2: Make it look like you did it yourself. It shouldn’t look mass produced. Tip #3: Write in a personal tone as if you were writing to a friend – not too formal or stuffy. Tip #4: When applicable, end the article with a specific call to action – i.e. “call today!” Tip #6: Make it entertaining - i.e. quizzes, trivia, recipes, Sudoku, interesting news, etc. Tip #7: Include photos, cartoons and white space to please the eye of your reader. Tip #8: Use blue handwriting font on the envelope and mail with a live stamp (not indicia).

e-mail. It’s as simple as that. Your newsletter should be going out to three different segments of your database: prospects, clients and referral partners. The key to followup success is consistency. Commit to sending your monthly newsletter out to these three groups every month like clockwork until they buy, or tell you to stop. Content is king when it comes to the success of your newsletter. If your newsletter is even remotely irrelevant, boring or dry, it will quickly meet its fate in the recycle bins of the world. A true direct response newsletter is not, nor will it ever be, professional. There should be no articles about technical items, written in technical jargon. If you do talk about something technical, translate it into layman terms, and when relevant, add stories, humour or sentiment. 2. Weekly e-mail tips. If you’d like to supercharge your followup marketing results, send your contact list a weekly e-mail tip in addition to the monthly mailing. I’ve put together a heavy lifting complete DONE-FOR-YOU 52-Week E-mail Campaign. You can grab it free of charge at: www.Done4UEmail.com.

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3. Phone calls. Once per year, mail out a postcard inviting your clients to call you for an annual mortgage review. For best results, follow up with a phone call. Your objective is simple: Find out if their mortgage is still up-to-date and whether or not it makes sense to refinance, do a debt consolidation, or finance a renovation, etc. This is also a perfect time to ask for referrals. If implemented correctly, your followup marketing system can become your most profitable marketing weapon – feeding you a steady stream of repeat and referral business. Consider it like the glue that keeps your clients and referral partners bonded to you for life. About the Author: Doren Aldana is considered by many to be Canada’s leading mortgage marketing coach. Since 2005, he has been dedicated to helping mortgage professionals attract more clients with less effort, regardless of market conditions. Aldana is also the author of a new three-disc DVD/CD set titled, “7 Secrets to Attract More Referrals on Autopilot.” To pick up your free copy, visit: www.freereferralsecrets.com. CMP

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profile PROVIDER

Bridgewater Bank

puts power into brokers’ hands The downturn in the mortgage industry has provided an opportunity for both lenders and brokers alike. The opportunity is a renewed focus on relationshipbuilding. Bridgewater Bank has introduced a new program to improve its relationship with brokers

hroughout the industry, lenders are using the market slowdown to take a step back and see how they’re doing business with their brokers and brokers in turn are asking, “How can I change the way I structure deals to improve my ratios”? Both parties are looking to improve their relationship with the other and that’s created a perfect storm in the industry with respect to mortgage lending service levels. Bridgewater Bank is one such lender that is capitalizing on this trend by introducing a new program in support of improving broker relations. Launched earlier this year, the Power Compensation Program rewards brokers for quality deals and consistent volumes. In return, Bridgewater Bank offers brokers direct compensation and the opportunity to buy down client rates. Bridgewater’s Power Compensation Program has three main benefits: 1. The Power Pay® Rate allows brokers to earn up to 168 bps in compensation or to reduce the rate by up to 15 bps. 2. The Power Bonus® offers brokers the opportunity to earn up to an extra five bps on total funded deals for each term by meeting a 30 per cent, 35 per cent or 42 per cent funding ratio. 3. The Service Priority ensures Power Brokers get VIP treatment on all their deals. While certainly not the first lender out of the gate to address broker relationship status, Bridgewater was cautious to avoid jumping on the loyalty program bandwagon. “We wanted to ensure we got it right, rather than just going along with the trend” explains Todd Poberznick,

mortgagebrokernews.ca

assistant vice-president production with Bridgewater. To do this, the program needed to be accessible to the average broker, not just exclusive to those with high volumes. Brokers can qualify with as little as $1 million in funded volume every six months, making it one of the most achievable programs in the industry right now. The bank decided on a program that allowed brokers flexibility with rate and compensation. “The unique thing about our program is that we give brokers the power to decide how to use their incentive on a per deal basis.” says Poberznick. “They’re in the driver’s seat.” Response to the bank’s program has been favourable: “The Power Compensation Program provides me with the flexibility to offer appropriate rates in the marketplace I am working in. I like the rate and compensation flexibility,” shares Leonard McAuliffe, AMP, Axiom Mortgage Partners, That Mortgage Guy, Winnipeg, Manitoba. In addition to flexibility, McAuliffe appreciates the competitive finder’s fees, allowing up to 38 extra basis points on Gold, Silver and Bronze deals. “I have a number of deals in my area that just don’t fit with other lenders but do fit under Bridgewater’s Silver or Bronze programs.” While other lenders dangle the carrot of points, prizes or trips, Bridgewater offers a direct, hasslefree monetary incentive. “We listened to our brokers and learned the direct compensation model was preferred,” Poberznick adds. Bridgewater conducted a survey of over 100 brokers asking why they chose one lender over another. Survey results were clear; brokers want a relationship with their lender, reliable service, rate discretion and rewards in a dollar format. “They do not want rewards points or trips because they just don’t offer the same value.” Attention to customer service is not forgotten with the program. Bridgewater Bank’s commitment to brokers remains strongly focused on its tried-and-true method of common sense underwriting. “Our underwriting guidelines apply to a broader range of clientele than the major banks,” explains Poberznick, “We listen to your clients’ story and can get your deals done the first time.” The common sense approach includes consideration of non-traditional income (selfemployed, seasonal, part time), supplementary income (living allowance, child tax benefits) and financing in rural areas that many lenders won’t touch. CMP

Todd Poberznick

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PROVIDER

TMG The Mortgage Group continues to build strong relationships with customers, lenders and mortgage brokers across Canada

ith a network of more than 900 mortgage brokers and agents nationwide, TMG has assisted more than 200,000 Canadians find a mortgage to best suit their financial needs. TMG operates on the premise that a mortgage broker provides the best value for consumers and has the knowledge and expertise to assist anyone seeking mortgage financing advice. TMG’s programs, systems, training and technology are always tested against the principle: Does it support a broker in their business and does it support a customer? In its early years, the company, operated as Kirk Capital Corp. and opened its first franchise in British Columbia under London, Ontario-based “The Equity Centre” led by industry pioneers Grant and Debbie Thomas. Four years later, CIBC purchased the master franchisor and changed the name to The Mortgage Centre. In 1997 Kirk Capital Corp. parted ways with The Mortgage Centre franchise network and changed its name to The Mortgage Group, becoming an independent privately owned Mortgage Brokerage Firm. TMG promotes a sense of family says Lori Emde, managing director, TMG Prairies. “TMG treats their brokers with respect. We educate and encourage them to reach their highest level of achievement and, more importantly, we share their successes and celebrate with their family.” Today, TMG continues to develop unique training programs, customized payroll systems, and personalized marketing materials. “We

develop programs and systems based on feedback from our brokers to ensure it benefits them at the end of the day.” says Grant Thomas, CEO, TMG Canada. One groundbreaking development is the delivery of broadcast training programs through its secure website. TMG has built its own recording studio and remodeled its training facility with full HD, Green Screen, broadcasting capabilities. Aside from training programs, which also includes sessions with industry speakers, brokers have the option to produce personal videos to assist their own marketing. These videos can go on their websites or as part of their e-mail signature. TMG has also developed a communications management system that includes a media centre, collateral information control, automatic monthly newsletter distribution, contact management, and an automatic inbound inquiries capture and response system. An extensive library of marketing materials allows TMG brokers to customize flyers, brochures, advertisements and other forms of traditional collateral material. With its own branded mortgage, facilitated through Paradigm Quest, TMG Mortgages offers a full suite of mortgage products that keep both the customer and broker top of mind. “Rates are competitive, service is outstanding and the broker is continually referenced in all communication throughout the life of the loan” says Mark Kerzner, president, TMG Canada. “We are committed to promoting unique mortgage and related products to our brokers for their customers.” TMG has attracted mortgage leaders from across the industry and across the country. Its regional sales leaders are experienced and well-respected individuals who work directly with brokers in their regions to help them exceed their mortgage business goals. Debbie Thomas, partner, sums it up this way. “TMG has seen quite a lot of change in the industry over the past 20 years. We never forget where we came from. We never take our mortgage brokers or staff for granted and we will be here for the long term because we are as committed to this business now as we were 20 years ago.” CMP

TMG Canada is an innovative and progressive mortgage brokerage company combining the entrepreneurial spirit with strength and stability. The brokerage recently celebrated its 20th anniversary

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Profile Brokers

the

real The president of Dominion Lending Centres Inc. has a limitless energy that he injects into every part of his life. Heather Li explores what fuels Gary Mauris’s drive

deal

ive years ago, Jay Seabrook and Kevin Cochran were actively recruited by Gary Mauris to join Mauris’s new mortgage brokerage Dominion Lending Centres Inc. The company only had about 50 brokers at inception, and Seabrook and Cochran were comfortably earning six-figure salaries as speakers for Richard Robbins International, a sales training company. But Mauris’s enthusiasm was difficult to ignore. “When I first met him—and I think some people probably take Gary the wrong way because I definitely did—I said, ‘this guy isn’t real. There’s no way he is always like that,” says Seabrook. “Kev was really into him right away. I was more skeptical because I said, ‘who could possibly have this much energy all the time?’ But my first week at the company, I saw he was the real deal. He’s a very, very, very unique individual.” Now Seabrook is the vice-president of operations at DLC based in Vancouver, while Cochran is the regional director based in Toronto. Meanwhile the brokerage recently placed No. 46 on Profit magazine’s Hot 50 list of Canadian Emerging Growth Companies for 2010. This is the second year the firm made Profit’s Hot 50, which ranks the top 50 young businesses in Canada by two-year revenue growth. From 2007 to 2009, Dominion Lending Centres Inc. grew by 98 per cent. “Gary had a very big vision,” adds Seabrook, “and we bought into his vision.” Mauris’s vision was to be No. 1 by outperforming and securing more mortgages than any other national brokerage. He often speaks about achieving No. 1, and to be ahead of the nearest competitor by the widest margin possible. But underneath the No. 1 goal-driven personality lays a

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desire to give more than he receives. “I love changing the way people feel about getting a mortgage,” says Mauris. “I love seeing our owners and agents become successful and thrive themselves. I love the underdog story. I love watching someone who was average become exceptional.” This may be because Mauris has his own underdog story. Mauris was born and raised in Port Coquitlam, B.C., where the DLC head office now stands. He worked his first job in Grade 5 as a busboy, and always kept two or three jobs through to graduating from high school. “I grew up in a very… I don’t want to insult my mother, but a poor family,” says Mauris. “I couldn’t play hockey because my parents couldn’t afford hockey gear. We went on one holiday every two or three years, and it was a driving holiday where we went camping. We just didn’t have any money.” Mauris recognized early on what he did have was the ability to deliver more than what was expected. He never attended university but his entrepreneurial spirit and motivation led him to build and sell two successful businesses in his adulthood: Slim Line Designs, a company that manufactured oak wall-mounted cigarette machines; and an ATM business where machines were sold to “every bar, nightclub, cabaret and casino across Canada.” What led him to the mortgage broker industry, afterwards at 37 years old, was the enormous potential he saw in it. “Whatever happens in the U.S., always happens in Canada a few years later, whether it’s fashion, music, whatever the trend may be,” says Mauris, now 42. “In U.S., at its peak, 75 to 80 per cent of all people used a broker to get their mortgage. So knowing that only 30 per cent of

Profile Brokers

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Profile Brokers

Canadians used a broker to get their mortgage, I thought there was a tremendous upside. I’m five years in now and I’m more encouraged about our business than ever before.” Mauris wants consumers to instinctively see DLC as the opposing brand to the banks, which will likely always dominate the market share for mortgage financing. “In every industry in the world, there is a lead brand and a challenger brand,” says Mauris. “In coffee, the lead brand is Tim Hortons, challenger brand is Starbucks. In communications, the lead brand is Rogers, challenger brand is Bell. In realty, lead brand is Re/Max and challenger brand is Royal LePage. In the mortgage industry, banks have lead brand. We’re always striving toward DLC as the challenger brand.” To heighten DLC’s challenger brand status, the brokerage has signed Don Cherry as its TV spokesperson for the next three years. “I’m proud that we are at a point where we can actually afford that,” says Mauris. “We think of it as a pioneering move where every single mortgage company, agent and lender is going to benefit from that. We have a celebrity spokesperson who is one of the top 10 greatest Canadians of all time talking about mortgages. It’s game-changing.” Becoming the indisputable challenger brand is inevitably a boon to DLC brokers. “I’m not in the mortgage business. I’m in the mortgage agent business,” says Mauris. “My job is to build the very best tools to help make an agent’s job easier, and help them generate more business. Our agents will never ever work for us. We work for them. Our boss is our agents.” Mauris is keen on listening to his bosses whenever they have an idea to share or a problem they need help solving. In November 2009, Mauris was in Victoria, B.C. speaking at one of the DLC agent universities. At lunch, a broker named Jason Zailo approached him. Zailo said he learned more in the two hours listening to Mauris speak that morning than he had in three years of business. Zailo had never funded more than $10 million a year, which roughly equates to a $80,000 annual income. He asked if he could call Mauris later on to ask for more guidance. Mauris agreed. “True to his word, he called me next week,” says Mauris. “On November 15 of last year, I said, ‘Jason, if you follow my lead, I’ll mentor you over the next 90 days. So every week, I had a half-hour call with him and I gave him goals for that week. From November 15 to December 30, 2009, he funded $8 million and cashed $80,000 in commission. Between June of that year and November 15, he had only funded about $250,000. Now he is one of our top 20 brokers in the country.” During this time, all the broker owners in Victoria were asking Mauris in astonishment: “What are you doing with Jason? How did that happen? This guy’s on fire. What are you doing?

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“ in every industry in the world, there is a lead brand and a challenger brand. In coffee, the lead brand is Tim Hortons, challenger brand is Starbucks. In realty, lead brand is Re/Max and challenger brand is Royal LePage. In the mortgage industry, banks have a lead brand. We’re always striving toward DLC as the challenging brand. ” Can you help us?” So in January 2010, Mauris launched a pilot seven-week mentorship series called the President’s Program for the top agents within five of the biggest Ontario offices. “All five offices had record quarters,” says Mauris. “I have 50 agents whose business has doubled since they started the program.” Mauris’s ease with people and instinct to help others succeed was evident to Seabrook early on. “He is a consummate leader, and the best person I’ve ever seen in terms of building relationships with people,” says Seabrook. “The way he is with people is remarkable. He continuously builds people up and gives them credit. He is incredibly warm and very humble. He’s always learning. You’ll go with him to see a speaker and the next couple of days; he’s using all of it even though he’s at the high end of his game in business. He’s still a sponge and always learning from people.” Aside from loving to see speakers in his spare time, Mauris is a voracious reader and reads at least one book a week. “Besides my family and my business as a whole, what is most valuable to me is my book collection,” says Mauris. “I read business books. I want to feed my brain all the time. I sound like a nerd but I love it. I don’t give books away. I’ll buy anybody any book they want any time but I keep mine. Pages are torn over, they’re highlighted, and words are circled. It’s where I get a lot of my drive and ideas from.” Two books he recommends are Never Eat Alone by Keith Ferrazzi, and Swim with the Sharks Without Being Eaten Alive by Harvey Mackay, one of his favourite writers. Mauris’s appetite for learning and generating ideas is boundless but he does know how to turn it off. “I travel a lot but I fly home every Friday afternoon,” he says, to his wife, Kelly, 14-year-old daughter, Marisa, and 21-year-old son, Cole. “When I get home in the evening, I don’t work from home. I don’t take calls, I don’t check my BlackBerry. I attend as many functions and events for my kids as I possibly can. And we still take regular holidays.” In everything Mauris does, he undoubtedly loves to give it his all and likely doesn’t know how to do otherwise. His energy may be hard to fathom at first but he quickly proves to be genuine in his efforts and passion. It’s easy to see Mauris tries to achieve No. 1 not just in business but in all parts of his life. CMP

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Profile Insight

After years in personal banking, Nicole Samson realized working in mortgages gave her more satisfaction than investment advising ever did. Heather Li talks to her about the transition

banking to brokering Why did you become a mortgage broker? I worked in personal banking for many, many years and had an investment adviser role with a mutual fund company. Then I became a mortgage specialist with a local bank in Alberta. After a couple of years of doing that, I quickly realized I wasn’t able to help all of our clients who had different needs because obviously the application doesn’t fit many times, working with one lender. After significant consideration, I took the mortgage broker course in 2006. Once I made the decision, I never looked back. I knew it was the absolutely best fit for me because I wanted to grow my relationships with my clients and help them out with whatever bank suited their needs.

record and my regional manager were the very first ones to say, “Nicole, don’t try to memorize them. They change daily and weekly.” But I didn’t listen and I was trying too feverishly to memorize who does everything on what, as opposed to just looking at the tools that we have online and all of your reference libraries that are right there.

What is your advice to someone new who wants to become a broker? For a brand new broker, coming from a non-related industry and not even from a self-employment background, I strongly recommend they join a team. I mentored a lot of individuals because new brokers, without any financial background, don’t have the knowledge or confidence to ask deeper With so much experience in the banking world, why questions with the client. They are just filling in did you become particularly attracted to mortgages? the blanks. They’re not comfortable enough taking You handhold clients through the ups and downs of a step back and saying, “It sounds to me like this the market when you work as an investment isn’t something you’re going to be staying in for five adviser in personal banking. You’re watching your years,” and knowing that an open mortgage may clients’ investments grow -- and decline. Like be their best option. And they’re not able to ask anything in life, things go up and down, but more open-ended questions to help clients watching clients’ investments go down is not a very understand that there is a totally different product pleasant experience. that would better suit their needs rather than the So when I started doing more mortgages in one they just came in and asked for. banking, I saw that there was almost immediate Why did you choose TMG, The Mortgage Group? gratification when you’re able to see the joy I knew I was coming to TMG prior to me and excitement after approving the loan for a completing the broker course because I was first-time homebuyer. looking for an established brokerage. My weakness How has your experience in the banking world as a new broker would be learning the new contribute to your new career as a broker? computer system, learning about different lenders, I quickly realized I could offer information and and what deal fits what at which banks. I wanted advice and add value to the transaction with the to make sure there were people available to help client because of my years in banking. Generally, me, as well as tools and technology to assist with for most people, a mortgage is the largest debt of that transition. their lifetime. I feel it should be handled by You stress the relationship with the client. What somebody with many years of experience in the is one strategy you use to maintain and grow financial world; somebody with experience and confidence who can give the client information and that relationship? I do an annual review with my client, whether it’s tools to take home to make an informed decision. face-to-face or through a letter. It’s like a financial What was your biggest challenge entering review or checkup just to make sure that their the industry? mortgage interest rate is working for them the best It was the overwhelming number of lenders, and way it can be. I think that’s often overlooked, variety of products and programs that were offered. whether it’s the sophisticated client or clients who Coming from one bank and one institution, it was are just starting out with a mortgage or large overwhelming at first. At the time, my broker of amounts of debt. CMP

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Profile

Favourite Things

Food Filet mignon and my wife’s perogies

Tyler Hildebrand + Mortgage Broker + Mortgage Architects + Saskatoon, Saskatchwan

Favourite Things Movie The football movie, The Program

vacation spot Las Vegas

Music/band The Tragically Hip

Celebrity #99 – Wayne Gretzky

Hobby Slo-Pitch

Drink Scotch Book Fiction: John Grisham’s A Time to Kill; Non-fiction: Spin Selling by Neil Rackham

Sport Hockey Place to be On my couch

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Guest Column

Every decent sales program will tell you that you need to have a ‘value-added proposition’ or VAP to differentiate yourself from your competition. Peter Kinch challenges you to think about the last time you seriously sat down and analyzed your VAP

What is your value-added proposition?

time upfront to establish enough value in working with me that he wouldn’t even bother going to his regular bank. Here’s an example of the opposite story: A few weeks ago a client called who wanted to buy a rental property, which happens to be my specialty. She had three existing properties and wanted to buy another one. She had already spoken to another broker and she too was rate shopping. However, after spending half an hour asking her about her long-term goals and discovering the real reason why she wanted to buy investment real estate, I was able to structure a long-term plan that assured her success. When she asked me about the rate, I said ‘Do you only want the best rate or are you serious about accomplishing your goal?’ She apologized his hit home with me the other day when I for the question and it never came up again. I will took a call from a client and agreed to meet not only do this mortgage for her, but many more with him on a Saturday morning. I have to admit to come. that this was probably the first time in over five The difference between these two stories is years that I actually met with a client on the simple -- the VAP with the second client was so weekend so I was a little out of practice. The client strong and so obvious that she could not afford to was also a homeowner who had seen my sign and go elsewhere. If you do not have a strong and wanted information on the best rates and options compelling reason for a client to want to work available. Now, I have spent the bulk of the past 10 with you, why shouldn’t they just shop for the years working with investor clients who had either best rate? If you are not clear as to what that seen me speak or read something I wrote or were reason is then don’t expect your client to figure referred by someone they respected. As such, I was it out. a little taken aback when this client really didn’t Why is this important? In the ever-changing know me and was as equally happy to follow up broker world in which we live, we find ourselves our appointment with one at his own bank. increasingly coming up against branches that will This may come across as arrogance on my part, quickly undercut our best rate. If you haven’t run but I had become so accustomed to dealing with across this yet, you soon will. In fact, I see a day clients within my area of specialization that I was when the broker will no longer be able to offer the completely caught off guard by a rate shopper and best rate. Rookies will eat into their commissions wasn’t prepared. I took a lazy, basic approach and and drop their rates to match; professionals will did not offer the client enough of a ‘value-added look to add value. If the cheapest price was the proposition’ to prevent him from getting a second only determinant to shopping for an item, we’d all quote from his own bank. be driving the same car. So here’s what happened: I gave up a Saturday Your mission, if you choose to accept your role morning, took all the information from him, spent as a mortgage professional, is to determine what an hour explaining the various options and your value-added proposition is and don’t simply teaching him all about what we could do. Then say good service. You have to do more than pay lip more time processing the application to get an service to the phrase -- you have to own it and live approval -- well you know the drill -- only to have it. Once your client sees you as more than just a him come back a week later asking if I could match commodity or an order-taker, your life as a broker the rate he got from his bank. I eventually dipped will become more productive and fun again. So into my points account to buy-down the rate to take the time to figure out your VAP -- your salvage the deal. Why? Because I didn’t take the future may well depend on it. CMP

Peter Kinch

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service directory

Banks

Bridgewater Bank www.bridgewaterbank.ca Ph: 1 888 837 2326 Pages 16 & 17

ICICI Bank Canada www.icicibank.com Ph: 1 800 ICICI CA or (1 888 424 2422) Page 7

Fisgard Capital Corporation www.fisgardmortgage.com Ph: 1 866 382 9255 Page 37

Resmor Trust Company www.resmor.com Ph: 866 809 5800 Page 55

Harbour Mortgage Corp. www.harbourmortgage.ca Ph: 416 361 3315 ext. 221 Page 49

HomEquity Bank www.homequitybank.ca Ph: 1 866 522 2447 Page 29

Home Loans Canada www.hlcmortgages.ca Ph: 1 866 452 1821 Inside Front Cover

National Bank www.nbc.ca Ph: 1 888 483 5628 Page 51

Home Trust www.hometrust.ca Ph: 1 877 903 2133 Page 27

Non-Bank Lenders

Street Capital www.streetcapital.ca Ph: 877 416 7873 Page 5

The Money Source www.mymoneysource.ca Ph: 416 699 2274 Page 59

Vector Financial Services www.vectorfinancialservices.com Ph: 1 866 483 8018 Page 45 Insurance

Capital Direct www.capitaldirect.ca Ph: 780 868-0550 Page 35

Concentra Financial www.concentrafinancial.ca Ph: 1 800 788 6311 Page 47

Canada Guaranty Mortgage Insurance Company www.canadaguaranty.ca Ph: 1 866 414 9109 Gatefold

ING Direct www.ingdirectbrokerteam.ca Ph: 1-800-574-5629 Page 33

Macquarie Financial www.macquariefinancial.com Ph: 1 877 462 3788 Page 53

Genworth Financial Canada www.genworth.ca Ph: 1 800 511 8888 Outside Back Cover

Broker Networks

Equitable Trust Company www.equitabletrust.com Ph: 1 866 407 0004 Pages 8 & 23

Firm Capital www.FirmCapital.com Ph: 416 635 0221 Page 25

Merix Financial www.merixfinancial.com Ph: 1 877 637 4911 Page 61

Peoples Trust www.peoplestrust.com Ph: 1 800 663 0324 Page 43

Centum Financial Group Inc. www.centum.ca Ph: 1 604 257 3940 Page 11

Dominion Lending Centres www.DominionLending.ca Ph: 1 888 806 8080 Pages 20 & 21

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service directory

The Mortgage Group www.mortgagegrp.com Ph: 877 899 1024 Page 41

INVIS www.invis.ca Ph: 1 866 854 6847 Page 66

Filogix Limited Partnership www.filogix.com Ph: 1 866 345 6449 Page 2

Real Estate

Verico The Mortgage Practice Inc careers@vtmp.ca Ph: 905 458 4222 Page 12

Mortgage Architects www.mortgagearchitects.ca • Ph: 1 877 802 9100 Page 39

Canadian National Association of Real Estate Appraisers www.cnarea.ca Ph: 1 888 399 3366 Page 34

Real Estate Institute of Canada www.reic.ca Ph: 1 800 542 7342 Page 65

VERICO www.verico.ca Ph: 1 866 983 7426 Page 13

MortgageBrokers.com www.mortgagebrokers.com Ph: 647 680 9384 Page 58 Commercial Lenders

Services

ROMSPEN investment corporation www.romspen.com Ph: 1 800 494 0389 Page 1

Mortgage Intelligence www.mortgageintelligence.ca Ph: 1 877 667 5483 Page 15

Best Points Travel www.bestpointstravel.com Ph: 1 800 551 8786 Page 19

Technology/Software

The Mortgage Centre Canada www.mortgagecentre.com Ph: 1 800 423 0107 Page 3

CreditCRM

Credit CRM www.creditcrm.ca/cmp Ph: 1 877 256 8162 Page 67

Vanguard Law Group www.vanguardlg.com Ph: 1 866 420 4714 Page 9

Got news? Y Your

news n ews is our news!

Do you hav have a e news to share? r Hav Have ave you you heldd a recent event v or made d a new w appointment? pp If so,, CMP W WANTS ANTS to hear ffr from om you. Send us your newsworthy submissions and photos, and you may find your story printed in a future issue of CMP. Send your news to: john.tenpenny@kmimedia.ca

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An exclusive business opportunity for top performing mortgAge professionAls in the greater toronto Area

CiBC mortgages & lending will be hosting an exclusive career networking event on nov. 25, 2010 for experienced mortgage professionals interested in joining the CIBC Mortgage Advisor team in the Greater Toronto Area.

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