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MARKET MATTERS 6 | Letters to the Editor 8 | Reading between the lines Industry players wonder if and when OSFI will intervene. 10 | News analysis For brokers spotlighted in the media, honesty is key. Plus, the softer side of Dominion Lending Centres’ TV ads 16 | Broker advice Do you have a client who is interested in purchasing a house that once doubled as a marijuana grow-op? Read this 14 | Infographic
30 FEATURES 30 | Brokers on Lenders Part 2 For brokers, it’s adapt or die in today’s lending landscape, writes Justin da Rosa, revealing more key stats from the 2013 CMP Brokers on Lenders 36 | Reliable referrals They’re the bedrock of a successful broker business, writes Doren Aldana, and just likely the most reliable referrals around 39 | Commercial brokering For brokers doing even the occasional smallproperty deal, a working knowledge of property types is key
42 | The next generation of technology solutions The 21st-century broker needs an arsenal of high-tech solutions to keep up with client demands
22 COVER STORY
CMP’s Lenders Reply September saw brokers rank and rate and, occasionally, rant about their lenders as part of the seventh CMP Brokers on Lenders survey. This month, lenders reply...
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NEWS 12 | Product News A bite-sized guide to the industry’s newest products and appointments as they come down the channel
REGULARS 58 | Favourite Things 64 | CMP Service Directory
MARKETING 48 | CMA celebration The 2014 CMAs are set to break new ground, with a wider nominations process and celebration of community spirit 50 | Executing the plan It’s all well and good spending hours, days or months on putting a business plan into place, but if you fail when it comes to putting it into action then you’re back
53 | TD’s market forecast One big bank’s take on what brokers can expect in 2014 54 | Manulife’s master plan What does the insurance giant’s 2012 purchase of Benesure really mean? 56| Guest Column Is the ‘best rate’ a bought-down rate? Ron Butler answers
A y w
60 | Broker Profile A former professional lacrosse player – and current broker – lands a job as coach for a national team
W s a L y
62| Guest Column Dustan Woodhouse answers the question: Whose client is it anyway?
Twitter.com/ CMPmagazine Like Us on Facebook Canadian Mortgage Professional
Br • •
Qu • •
38 Qu reg Alb
2 | OCTOBER 2013
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CONTENTS / EDITOR’S LETTER
LENDERS ON LENDERS? COPY & FEATURES EDITOR Vernon Clement Jones STAFF WRITER Justin da Rosa CONTRIBUTORS Donald Horne, Dustan Woodhouse, Doren Aldana, Scott Dawson, Rob Butler COPY EDITOR Rachel Naud
ART & PRODUCTION GRAPHIC DESIGNER Alicia Chin
SALES & MARKETING ASSOCIATE PUBLISHER Trevor Biggs GENERAL MANAGER - SALES John Mackenzie MARKETING AND COMMUNICATIONS Claudine Ting PROJECT COORDINATOR Jessica Duce
CORPORATE PRESIDENT & CEO Tim Duce OFFICE/TRAFFIC MANAGER Marni Parker EVENTS AND CONFERENCE MANAGER Chris Davis
Editorial enquiries firstname.lastname@example.org Advertising enquiries email@example.com Subscriptions tel: 416 644 8740 • fax: 416 203 8940 firstname.lastname@example.org KMI Publishing 312 Adelaide Street West, Suite 800 Toronto, Ontario M5V 1R2 mortgagebrokernews.ca 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.
“Brokers on Lenders” and now lenders on, well, lenders. As CMP has done seven years in a row, this month we follow the annual brokers’ survey with lender reaction to that research. First, it’s worth thanking those money men and women who took time to reply. Not all of those in the survey did. But the bravest among them answered, accepting both the praise and the criticism. Read for yourself on page 22. But we’re not entirely finished with the Brokers on Lenders report itself. A second installment of the survey outlines the changes brokers have made to their business mix and what if any changes they’ve made to their individual lists of preferred lenders (p. 30). While industry vet Ron Butler isn’t speaking directly to those preferences, in this issue he’s offering his take on broker buydowns, a growing trend, but are they really necessary to satisfy clients (p. 56). So read on, and then drop us a line after you’re done. We’d also like you to make note of our early start to the nominations process for the Canadian Mortgage Awards. That process is so much more than a popularity contest and is designed to ensure brokers from across the country are placed in contention. See page 48 for more details. Cheers, Vernon Clement Jones
Contact the editor:
4 | OCTOBER 2013
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CONVERSATIONS / LETTERS TO THE EDITOR
TO THE EDITOR RE: ARE YOU INCLINED TO USE A BROKER-OWNED BANK? (CMP 8.9)
Mo rt ga ge br iss ue 8.9 | $6 ok er ne ws .ca .95
Broke on len rs 2013 ders
Is this what you would call putting a positive spin on a story? If a quarter of respondents are answering “yes,” then 3/4 said “no” and that, I am sure, would be the result if the broker bank was formed. Like all lenders it would have to earn the business, and it would also have to compete with other lenders to get funds. Therefore we could expect no special deals.
Where do I sign up?
drea m com Broker e -ownetrue d Bank ?
WALID HAMMAMI OFC_IFC
Once we start talking about a bank acquired by brokers and its benefits, we will see things differently. Banks do steal our clients and, yes, banks do compete against us with their mobile sales force. Why not have a bank owned by brokers that can put pressure on the Big Six. I am all for it. Now tell me, how can I help in this?
LETTERS TO THE EDITOR ARE WELCOME! Due to space considerations, priority is given to those 300 words or less. We reserve the right to edit, condense or reject submissions for accuracy, brevity, clarity, good taste and legal reasons. Writers must provide their full name, address and telephone number to verify authenticity. Please reference the article and send your letter to email@example.com
Hund red are s s of indus endin ry p g nt ew rofess old pa artnemessageionals to rs
Brok erage CalCul atingBalance sh your wortheet
Brok er Br Person an alizin ding Profes sionalg ism
13 2:17 :06
RE: BROKERS ON LENDERS (CMP 8.9)
Lend me your ear KEVIN BRAITHWAITE
It’s interesting that this year’s list is significantly different from the last one in terms of broker satisfaction with the monolines. But the results clearly align with the decisions that some of the lenders have made this year in terms of compensation and their programs. If you moved down the rankings, don’t make the mistake of ignoring that. Your business depends on listening to us.
No bellyaching MELANIE
It would be a mistake for lenders to dismiss the criticism brokers have shared as just sour grapes. Yes, some respondents are angry with some particular lenders, but that counts. It is valid and it is important to hear those voices.
67+33 Yes 32%
Do the best brokers come from the banks?
6 | OCTOBER 2013
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Un conventional In the world of banking, common sense has become surprisingly uncommon. Rules are piled on top of rules, making life harder than it needs to be for everybody. Well, thatâ€™s not how we operate. We strive to do right by our broker partners in a way that simply makes sense, like treating you like friends and family. Weâ€™re Bridgewater Bank, and thatâ€™s just how we do things. bwballstarportal.ca
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MARKET MATTERS/ READING BETWEEN THE LINES
In September, Julie Dickson of the Office of the Superintendent of Financial Institutions (OSFI) reiterated the organization’s intention to closely watch the real estate market and judge whether further tweaks to underwriting guidelines were necessary. Speculation is now rampant as industry players wonder if and when OSFI will make that move on mortgages. But don’t get too worked up, says Verico network head Colin Dreyer, who’s reading between the lines. 1. As a result of a recent uptick in
Colin Dreyer, president &CEO, Verico Financial Group Inc.
house sales, the question on a lot of peoples’ minds is, Will OSFI look at underwriting guidelines and make any more regulatory changes. And I suggest not. Certainly it’s under a watchful eye; I think that real estate is a passion for Canadians and, as a result, we’ve seen an uptick in house sales. But that’s really a result of interest rates increasing a little bit.
2. I think, statistically, they’ll look at the balance of the market and the changes that they’ve made already that have had an impact for year-to-date; and the fact that housing starts are down in every major area across Canada, aside from Toronto.
3. RealNet put out a survey: Residential bulk land purchases
are down significantly: 50 per cent in the Toronto area, 50 per cent in Vancouver, 30 per cent in Calgary.
4. When they take a look at the trend for development in new housing starts, I think that will put a healthy balance into the marketplace.
5. So it’s under a watchful eye, but I don’t anticipate any changes happening in the near future.
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BROKERING BREAKTHROUGH When Jim Tourloukis(R) reached the summit of the CMP Top 75 Brokers this year, few industry players were surprised. The Unionville, Ont., professional is a perennial member of the list’s Top Five, with its ranking of brokers by funded volume. His, by the way, was more than $218 million from a whopping 592 deals all closed in 2012 and by Tourloukis personally. That funded volume may be more than the GDP of some countries, but the No. 1 broker is taking the accomplishment in stride. He also took this year’s plague, accepting the award from Colin Dreyer, CEO of Verico Financial, sponsor of both the 2013 Top 75 and the 2013 Small Market Top 20. (Tourloukis rejoined that network this month.)
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MARKET MATTERS / NEWS ANALYSIS
BROKERS MEET YOUR TV AUDIENCE
FOR BROKERS SPOTLIGHTED IN THE MEDIA, HONESTY IS KEY WHEN REPRESENTING THE INDUSTRY Industry leaders are increasingly finding their way into the mainstream news, charged with explaining, in layman’s terms, the trends and forecasts of the day. Two brokers, who are often featured in Toronto, suggest that with media exposure comes an obligation to bolster personal and industry credibility with straight talk focused on objective advice and not hype. “The market can’t always be hot; it can’t always be positive: there are dips and we have to deal with issues at hand and be truthful about it,” Vince Gaetano, owner of MonsterMortgage.ca tells MortgageBrokerNews.ca. “Not everybody deserves to be a homeowner and the reality is, as hard as leads are to come by, sometimes our industry tries to stretch things and tries to fit round pegs into square holes.” Gaetano, and colleagues at his brokerage, are often featured on CP24’s Hot Property, hosted by Ann Rohmer. The show invites potential buyers to call in and have their real estate questions answered by industry leaders. And one thing Gaetano endeavours to do is to be completely honest with the audience. “I’m trying to be as unbiased as possible, it’s not acting any different than I act every day,” he tells CMP. “It’s not a short-term thing. You have to be in the spotlight, educate, be blunt and you can’t always sugar-coat. If you start to do that, you lose your credibility.” Diane Alvernaz is another MonsterMortgage.ca broker often featured on the show and does what she can to appeal to the mass audience, while still providing useful information. “The show attracts viewers from all walks of life...rich, poor, young, old, married, single, so I actively use layman’s terms,” Alvernaz says. “I try hard to position rules, regulations and product information in the most general terms possible so it’s useful to all viewers, while still answering a caller’s question.” And like Gaetano, Alvernaz values honesty. As for how many leads have come from the duo’s appearances on the show, it’s hard to pin down the exact number. “The show generates a lot of inquiries for Monstermortgage.ca; some of them result in commission, some of them don’t...and that’s OK,” Alvernaz said. “At the end of the day, I feel personal success when I have educated the consumer and the show reinforces my credibility. A lot of people are surprised when I make a house call.”
28.2 hours - Canadians watch an average of ... of television a week
THE SOFTER SIDE OF DOMINION LENDING CENTRES’ TV ADS
- Collectively, Canadians watch ... hours of television per week
48.9% - of the programs viewed are Canadian
With the latest hockey season in swing and dreams of a Toronto Maple Leafs victory still alive, Canadians are tuning in to Hockey Night in Canada and seeing Dominion Lending Centres’s traditional Don Cherry ads. But the company is also taking a new, softer approach in an effort to appeal to a larger audience. “This (new) ad is meant to appeal to the ‘family demographic’ (which is still our target demographic of males and females ages 25-54), but intends to reach the female influence in the home purchase rather than the sports enthusiast that might be familiar with our Don Cherry commercials,” Veronica Love-Alexander, DLC’s VP of network development, tells CMP. The campaign – featuring children talking about their homes – is a concerted effort by the company to diversify outside of the traditional messaging often found in mortgage lending ads. “We wanted to do something that got away from the regular ‘best service,’ ‘free,’ ‘lowest rate’... and go towards a more emotional message,” says Derek Loose, of DLC Mortgage Excellence, and the man who came up with the idea for the ad. His brainchild was inspired by personal development guru Darren Hardy’s White Knight Strategy, which poses the question: “What would make your marketing message so inspiring that Oprah would invite you on her network to talk about it (and show your commercial)?” And DLC believes featuring children talking about homes is the perfect inspiration for soon-to-be homebuyers. “No matter who you are, your home is the most important and memorable purchase you will make in your life,” offers Loose. “Why I think it’s so great is because the kids truly show us why our homes make us smile.” For those worried that the company will be pulling the old Don Cherry ads in favour of this softer approach, fear not: DLC plans to run both ad campaigns.
10 | OCTOBER 2013
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MARKET MATTERS / PRODUCT ROUNDUP
inspectors have found problems; appraisals showed a home was worth less than the bid; a buyer lost a job before the closing. U.S. housing market worse than thought More than two years after the recession The number of Americans who bought previously officially ended, many people can’t qualify for occupied homes rose in October. But the National loans or meet higher down payment Association of Realtors says it overstated more than requirements. Even those with excellent credit three million sales during and after the Great Recession, and stable jobs are holding off because they fear showing the housing market was weaker than Percentage of that home prices will keep falling. Sales are also previously thought. homeownership being hurt by a decline in first-time buyers, who The private trade group says sales rose four per costs, including are critical to reviving the housing market. cent in October to a seasonally adjusted annual rate of mortgage payments, Sales have fallen in four of the five years 4.42 million. That’s below the roughly six million homes utilities and property since the housing boom went bust in 2006. a year that economists say are consistent with a healthy taxes that take up a Declining prices and record-low mortgage rates housing market. But it’s ahead of 2008’s revised sales, typical household’s haven’t been enough to boost sales. now considered the worst in 13 years. monthly pre-tax At the same time, home construction has The trade group revised its sales from 2007 to 2010 income in Vancouver begun a gradual comeback and should add to the down 14 per cent, from more than 20.6 million to nearly and Toronto, economy’s growth in 2011 for the first year since 17.7 million. Among the reasons for the lower figures, respectively (RBC the Great Recession began in 2007. Last month, the Realtors group says: changes in the way the Census Economics Housing builders broke ground on an annual rate of Bureau collects data, population shifts and some sales Trends and 685,000 homes, the government said recently. being counted twice. Affordability Report) That was a 9.3 per cent jump from October and The Realtors consulted with government and the fastest pace since April 2010. private housing experts, including theof Federal Reserve, National Bank announced a number changes to its economists say home prices will keep the Department of Housing and Urban Development, Mortgage Broker Services in September. Among • All Red Carpet brokers willMost be eligible for all falling, by at least five per cent, through 2012. the Mortgage Bankers Association, the National four levels, while non-status brokers will be adjustments to its sales commission and Red Carpet Many forecasts don’t foresee a rebound in prices Association of Home Builders, mortgage giants Fannie Program, National Bank has moved to switch up key eligible for Level Oneuntil andatTwo Efficiency least 2013. Mae and Freddie Mac and CoreLogic, a California-based elements of itsfirst volume efficiency bonus. Bonuses only. The high rate of foreclosures has made data firm that raisedbonus doubtsand about the annual Here’s what youthis need to know. According to the Nationalresold Bankhomes press cheaper release,than new ones. The numbers earlier year. price of ato new • CoreLogic Efficiency bethe doubled in all tiers, “efficiency and volume bonusmedian will continue behome is roughly 30 per has bonuses estimatedwill that Realtors group cent above the price of one that’s been occupied overstated sales in 2010 by at least 15 per cent. while the volume bonus will be reduced to paid on a monthly basis and all other requirements before twice the normal markup. Investors are The10 changing bps. numbers could affect how economists of the EB program will continue to be– the same. taking advantage of the discounts. view the trade group’s data. It could also affect companies • That volume bonus change applies to all “These changes take effect November 1, 2013, but The housing market is struggling even that use the figures for hiring and expansion plans. brokers no matter how much volume is will only impact volumes funding as of November 1. as the broader economy has improved in Sales are measured when buyers close on homes. Brokers can expect to see the commission structure funded recent months. But many deals are collapsing before that point. • Volume bonus commission thecontract same when receiving the VB & EB payments in December The economy grew at an annual pace of two One-third of Realtors said they had atwill leastbe one all independent andinthose part of for all funding in November.” per cent in the July-September quarter. Many scuttledfor in October, up from brokers 18 per cent September. economists expect slightly better growth in the Contracts are being cancelled for several reasons: a brokerage network. October-December quarter. CMP Banks have declined mortgage applications; home
PRODUCT NEWS AND INDUSTRY ANNOUNCEMENTS A bite-sized guide to the industry’s newest products and appointments as they come down the channel
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28 mortgagebrokernews.ca 12 | OCTOBER 2013 7.1_News.indd 28 08-21_Market Matters.indd 12
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er n h t o o An mini Do st
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STATISTICS / RESIDENTIAL RESALE ACTIVITY
(year-over-year percentage change) Source: CREA
6.9 per cent
Greater Vancouver, B.C.
53.1 per cent
28.8 per cent
16.7 per cent
47.2 per cent
Orangeville & District, Ont.
48.7 per cent
37.0 per cent
This month’s roundup looks at the most recent data on residential new and resale listings
August stats from the Canadian Real Estate Association (CREA) reveal sales in many major markets are up year-over-year, with brokers in the Yukon, British Columbia and Alberta having most to celebrate. Still, seven out of 12 markets surveyed saw a drop in units sold, with an 11.1 per cent change posted nationally. According to CREA Chief Economist Gregory Klump, the increase is the result of a normalization in the market following new mortgage rules implemented in July 2012. “Sales activity dropped sharply around this time
last year in the wake of tightened mortgage rules and has improved since then, so a sizeable year-over-year increase this August was expected,” he said. “Buyers who put off purchase decisions or who were otherwise sidelined by tighter mortgage rules and lending guidelines implemented last year were anticipated to return to the housing market. That said, the upward trend and levels for activity in recent months has been steeper than expected, but that may not last.” Year-over-year sales were lowest in the Northwest Territories, which saw a 55.6 per cent decrease from August 2012 to 2013. Conversely, the Yukon saw a
14 | OCTOBER 2013
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SALES ACTIVITY BY PROVINCE British Columbia:
Prince Edward Island: -24.6 per cent
Newfoundland and Labrador:
28.6 per cent
drastic increase of 52.4 per cent reported over the same period, while British Columbia and Alberta also posted significant increases of 28.6 and 17.8 per cent, respectively. Klump posits that the national surge in properties exchanging hands is largely due to fence-sitters hopping into the market in the wake of increased interest rates. “Recent increases to fixed mortgage rates caused sales to be pulled forward as buyers with preapproved financing at lower rates jumped into the market sooner than they might have otherwise,” Klump said. “That pool of homebuyers has largely evaporated so demand may soften over the fourth quarter. The outsized year-over-year gains may persist, however, due to relatively weak sales toward the end of last year.”
0.5 per cent
1.5 per cent
17.8 per cent
-0.8 per cent
0.9 per cent
-5.1 per cent
Ontario: 10.6 per cent
-55.6 per cent
-1.1 per cent
52.4 per cent
PREPARE YOUR CLIENTS FOR
UPS, DOWNS, TWISTS AND TURNS!
DID YOU KNOW?
79% OF CANADIANS have no individual disability insurance!**
• 44% of Mortgage Protection Plan® claims are made in the first two years of a mortgage!1 • Nearly half of mortgage foreclosures are due to medical problems!2 Make sure your clients are covered!
36% OF CANADIANS
say no one has approached them about insurance.**
58% OF CANADIANS
find it difficult to decide on the type of insurance to buy.**
Mortgage Protection Plan® is offered by Credit Security Insurance Agency Inc. (“CSIA”). ®Registered trademark of Benesure Canada Inc.; used under license. 1 According to 10 years of MPP claims data. 2 Get Sick, Get Out: The Medical Causes of Home Mortgage Foreclosures, Health Matrix: Journal of Law-Medicine, 2008** SOURCE: Manulife Financial survey of 1,000 Canadian homeowners between the ages of 30 and 50 with household income of $50,000 to $150,000 per annum. Conducted on-line by Research House, March 2001.
OCTOBER 2013 | 15
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MARKET MATTERS / BROKER-TO-BROKER ADVICE
PURCHASING A FORMER
W Do you have a client who is interested in purchasing a house that once doubled as a marijuana grow-op? There are some things you – and your client – need to know before that mortgage app gets sent off, writes broker Scott Dawson
Whenever I get a call from a Realtor or client asking me about obtaining mortgage financing for a former grow-op, the first thought that comes to my head is, “Why would anyone want to buy a former grow-op?” If you’ve got a client who insists on purchasing a former grow-op property, here are some things you should know to provide the proper advice.
HOW WILL YOU KNOW THE PROPERTY WAS A FORMER GROW-OP?
In British Columbia, the property disclosure and/or MLS listing will indicate the property has been a former grow-op. Not all provinces in Canada require a property disclosure. Your client should use a Realtor who can research the property and help find out if it was a former grow-op.
WHERE CAN YOU GET A MORTGAGE FOR A FORMER GROW-OP?
The truth is not very many places. This is part of the reason I always encourage clients to avoid buying a
16 | OCTOBER 2013
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SOLUTIONS. ADVICE. MOVE.
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MARKET MATTERS / BROKER-TO-BROKER ADVICE
While your client might be getting a “deal” on the purchase price of a former grow-op, they may find it ends up costing them more in the long run since you are pigeon-holed into one lender. former grow-op. Over the past few years, the majority of lenders in Canada no longer finance former grow-ops. There’s a good chance that if you walk into your local bank branch they’ll turn you away. There are only a handful of lenders left that will even consider lending on a former grow-op and for the most part are made up of local credit unions. Since there are less mortgage financing options for a former grow-op, your clients should be prepared to potentially pay higher rates at origination and renewal. Make sure you thoroughly review the terms & conditions of the mortgage and make sure they fit with your client’s current and long-term goals for the property. While your client might be getting a “deal” on the purchase price of a former grow-op, they may find it ends up costing them more in the long run since you are pigeon-holed into one lender. When will a lender lend on a former grow-op? Lenders will only provide financing to a former grow-op if it has been fully re-mediated. In British Columbia whenever a property disclosure and/or MLS listing indicates that a home has been declared a grow-op, lenders will require a satisfactory Phase 1 Environmental Assessment and a re-issued occupancy permit by the applicable municipality. If your clients are thinking of purchasing a former grow-op, advise them that the listing Realtor should have both on hand. Without both a satisfactory Phase 1 Environmental Assessment and occupancy permit
Broker: Demolish marijuana grow-op houses Brokers across the country are calling for complete disclosure when it comes to former marijuana grow-ops and one industry leader believes any house known to have formerly housed a grow-op should be
demolished. “I think it should be disclosed at the very least but they should be torn down,” Mark Goode of Dominion Lending Centres Mortgage Man told MortgageBrokerNews.ca. And in the province of Ontario, townships have been doing just that. “Some municipalities are tearing the buildings down because they’re worried about the recourse,” Goode said. “If someone in the building gets sick or gets cancer, they’re worried about that.” Problems arise, however, when it is a rental house being used as a grow-up. Often, the owners aren’t made aware that their tenants are illegally growing marijuana and it is the owners who bear the brunt of any recourse. “In the future, going forward, Realtors and lawyers are suggesting to those buying rental properties that they make sure the renters put utilities in their name so they aren’t liable for any recourse for hydro if it’s been stolen for a growop,” Goode said. “If the utilities are in the homeowner’s name they will be responsible for paying the funds for any stolen hydro.”
For his part, Goode pulled out of a personal deal as soon as he found out the house had formerly been used to grow marijuana. He cited concerns about unknowns pertaining to long-term ramifications. “I personally looked at a former grow-op house, myself and I turned it down,” Goode said. “I found out about it after; I wouldn’t be able to live with myself if my son got sick when I tried to save a little money on a house.”
in place, you will not get a mortgage.
HOW DOES BUYING A FORMER GROW-OP AFFECT VALUE? Since a former grow-op is stigmatized, you will find less buyers interested in the property in the first place. Something else to consider is it will be more difficult to find a buyer for your property since many people want to port their mortgage when they are purchasing a new home. There’s a good chance that these potential buyers can’t port their mortgage to a grow-op since their lender won’t finance them.
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approvals, Terri Butcher, Underwriter Angela Calla, Mortgage Broker, DLC Kristina Morrison, Account Manager
they make it
easy for me
and my team!”
“I find First National really great to work with – they’re always on my side.” At First National we’ve spent the last 25 years focused on delivering fast and outstanding service to you and your customers. And we’ll continue that commitment towards the next 25. Behind the scenes
35852 FN25ad Angela CMP Ev1.indd 1 08-21_Market Matters.indd 19
Thank you mortgage brokers for 25 years of shared success. Ontario Mortgage Brokerage License No. 10514
2013-08-30 4:04 PM 07/10/2013 2:09:54 PM
MARKET MATTERS / BROKER-TO-BROKER ADVICE
Hopefully they will give it a second thought after you share this information with them, but if they still want to buy a former grow-op, make sure they get pre-approved at a lender that finances former grow-ops Scott Dawson
SHOULD CLIENTS HAVE OTHER CONCERNS WHEN BUYING A FORMER GROW-OP? Absolutely! Since the property was once used for criminal activity, your clients need to aware that their property may still be viewed as such by other criminals and they may be more susceptible to home invasions and break & enters. Another thing to keep in mind is that any property used for the production of drugs falls under the same classification as gas stations, coal mines and machine shops. “The production of illicit drugs (grow-op, meth lab, etc) is considered a ‘Schedule 2 Activity’ under the BC Contaminated Sites Regulation (‘BC-CSR’),” according to Patrick Johnstone, an Environmental Geoscientist in British Columbia. “This means that any property where these activities took place are subject to a bunch of screening measures that would normally only be applied on commercial or industrial properties where activities ‘likely to cause contamination’ took place.” Things get even dicier if the future owners ever want to rezone or redevelop the property. “Where there has been Schedule 2 Activity, the City is required to get a Site Profile from you outlining the site history, and send that to the Ministry of Environment prior to issuing a permit,” Johnstone
said. “The Site Profile must be filled out by someone knowledgeable of the site history, and if the presence of an illicit drug operation was disclosed to you on the Property Disclosure form, you must relay this information forward (or risk defrauding the government -- a bad idea).” At the very least, this will result in a two-week inconvenience and the cost of the site profile, which, according to Johnstone, will cost anywhere from $1,500 - $3,000 while the owners await a response from the ministry. However, if the report states that there is a high probability of contamination, the homeowner will incur the cost of a $15,000 investigation and hope no cleanup is required. It’s easy to see how quickly the property that was attained at a good discount can become a financial burden.
DOES YOUR CLIENT STILL WANT TO BUY A FORMER GROW-OP? Hopefully they will give it a second thought after you share this information with them, but if they still want to buy a former grow-op, make sure they get pre-approved at a lender that finances former growops and get in touch with a Realtor that has experience with these types of properties.
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recommend them to
Paul Brown, Underwriter Terry Short, AMP, Partner The Mortgage Centre Jody Comeau, Account Manager
and to other
“First National has helped me build my business. My team thoroughly enjoys working with them.” We’ve spent the last 25 years putting our local market expertise to work helping brokers build their business. And we’ll continue that commitment towards the next 25. Behind the scenes
35852 FN25ad Terry CMP Ev5.indd 1 08-21_Market Matters.indd 21
Thank you mortgage brokers for 25 years of shared success. Ontario Mortgage Brokerage License No. 10514
2013-08-30 4:38PM PM 07/10/2013 2:10:06
COVER / LENDERS ON BROKERS
LENDERS’ REPLY 2013
It goes without saying that lenders are more than receptive to feedback from mortgage professionals, especially the positive stuff. But, many are just as willing to lend an ear to criticism directed at any and everything, from their product lines to their finder’s fees. This year’s Lenders’ Reply – a response to September’s Brokers on Lenders survey – demonstrates both points, with banks and monolines thanking brokers for their support but also offering their own must-read responses. This year, those messages are varied, but all involve identifying successes and areas to improve. Generally, those points align with the survey’s categories: approval/ loan turnaround times, underwriter support, overall service level, interest rates, BDM support, product range, satisfaction with credit policy, broker support, IT/technology and transparency of commission structure.
Total Medal Standings Finishing in first never gets old. Everyone at MERIX strives to be the absolute best at everything we do. Irrespective of the challenges we face, there is a way to succeed and standout out from the rest. Winning the overall medal count is not only a reflection of our efforts but an indicator of the depth of our working relationship with our supporters. Our originators took time from their busy schedules to say thank you by way of completing the survey. We’re humbled by their support and forever grateful.
It ranges from sales to credit; from compensation to servicing, and everything in between. Winning the gold in this category legitimizes our claim that we are the true broker advocate.
Overall Service Levels (GOLD) Excelling in Overall Service Levels is important to MERIX as it encompasses many facets of the underwriting process. It ranges from servicing credit solutions and supporting documentation, as well as understanding our customers and treating them with respect. We have a commitment to our customer, the mortgage broker and to always become better at what we do, which is why we will never become complacent and will always strive to improve in this category.
Underwriter Support (Gold) Winning the gold medal in this category is due in large part to our strategic partners at Paradigm Quest. A willingness to work with customers regardless of deal structure is what sets one lender apart from another, and we’ve made significant strides in this category over the last few years and will strive to build upon our successes.
Broker Support (GOLD)
From our re-launch online deal management system, to our 30 Days of Innovation, social media and everything in between, we constantly look for innovative ways to stay connected with our customers. Integrating our business with technology and providing tools for our customers has and always will be a priority for us.
To me this is THE category; winning gold in this category means we’ve excelled at many disciplines.
Satisfaction with Credit Policy (SILVER)
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From my perspective, winning the silver in this category means we’ve done a fairly effective job at communicating the changes to our credit policies. As we all know, this has been a very challenging and trying year due to these changes. The real praise in this category goes to our mortgage brokers; they’ve been extremely patient under the most difficult circumstances. We thank our broker customers for understanding that changes to credit policies are beyond our control.
are “hungry.” We launched the brand in June 2012 and for two years in a row RMG’s BDMs have been in the top 2 of this category. They engage in a high touch-point approach with the broker community not only assisting with deals submitted to RMG but also assisting the brokers in growing their overall business by sharing their knowledge on how to structure applications. This means discussing our suite of products and making sure that calls and emails are promptly responded to.
Approval/Loan Turnaround Time (BRONZE)
I believe the industry has moved away from the irresponsible notion that all mortgages should be adjudicated within a set time frame
I believe the industry has moved away from the irresponsible notion that all mortgages should be adjudicated within a set time frame. Today, mortgages are very complex, and the complexity of underwriting guidelines takes precedent over a stop watch. It’s not about speed; it’s about making the right credit decision. Brokers understand that and the right communication is put forth to their customers, the borrower. Being acknowledged in this category means brokers have a realistic expectation of what turnaround times should be.
BDM Support (BRONZE) For the last seven years our BDMs have been acknowledged as one the best in the industry. We look for two basic qualities when hiring our BDMs: hunger and humility. They always want to do more but if a mistake is made they’re the first to raise their hand and take responsibility. Our BDMs are genuine, and they genuinely care about their customers, and always look for innovative ways to help them grow their business. — Boris Bozic, President, Merix
Interest rates RMG re-introduced the concept of a low-rate basic mortgage earlier this year, which proved to be very successful. For a long period of time we were able to offer rates on both fixed and variable low -rate basic products that were significantly lower than our competitors. Our goal is to continue looking for innovative products and features that will allow brokers to serve their clients from both rate and flexibility perspectives.
BDM support/Product support/Broker support RMG has a very experienced BDM team and they
Satisfaction with credit policy I believe we scored well in this category for many different reasons. In the world of B-20, most lenders apply very similar credit policies. So what really differentiates a lender is how we build products and features that comply with all mandatory regulations while at the same time creating value for brokers and consumers. This requires a strong partnership between sales, underwriting, and credit risk, which is not easy to achieve but something everyone at RMG is working hard at.
Transparency with commission structure RMG has probably one of the simplest structures in the market with our rate buy-down approach and this has resonated well with brokers for many years. Challenges:
IT We have invested a significant amount of time and energy this year addressing some of these concerns. We launched our broker portal early in 2013 (Gateway) and we are making enhancements to it as we speak. Brokers will see these improvements very soon and I hope that this will improve our standing in this category.
Approvals/Turnaround time & Overall service levels We went through a huge transformation in March. We introduced a brand new underwriting system OCTOBER 2013 | 23
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COVER / LENDERS ON BROKERS
We introduced a brand new underwriting system and relocated our Western office from Calgary to Vancouver. Overall these significant changes went really well but I must admit that we were not consistent throughout the year when it comes to maintaining our turnaround time. We have made significant improvements to our processes and will be enhancing our training capability in order to address this concern and improve in the standings.
Underwriter support This will be a byproduct of the changes and improvements we are making to our technology capacity and our belief & support of training and development. I am very confident that next year we will move up in this category. — Michel Cubric, VP Mortgage Operations, RMG Mortgages “Thank you to the brokers who participated in the survey. We sincerely appreciate the feedback. The information gathered from this survey will be used by MCAP in our efforts to continuously improve. Our focus in 2014 will be to continually provide the support and value the broker channel is looking for from a monoline lender.” — Gino Tieri,Vice-President of Sales, MCAP Service Corporation Congratulations to all the award winners and to CMP for providing this great feedback. After receiving six medals and second place overall, we are very proud that our efforts have been so highly recognized in our first year of participation in the CMP broker survey. For a small, new lender that engages
This type of industry feedback is not only gratifying but also necessary to ensure continued lender improvements in an ever-changing environment
with limited number of brokers, we must be doing a lot right. We are grateful for the opportunity to be recognized in areas where we excel as well as the opportunity to have areas identified that we can work at improving. Brokers are our sole distribution channel, and providing excellent service is a team effort which is our focus every day. That team effort begins with our CEO James Clayton and continues right through to our underwriters. We strive to provide brokers with the best options and best underwriting practices where we are able to work with each individual broker to find the best solution for both the broker and their client, ensuring continued success and business growth for the broker. We would like to congratulate Merix on the fantastic operation they continue to operate and their ongoing success. Thank you to each broker who took the time to complete the survey. This type of industry feedback is not only gratifying but also necessary to ensure continued lender improvements in an ever-changing environment.
OVERALL To be awarded the second highest marks and medals across the board is a great honour for our new company, especially when we are only dealing with select broker partners across the country. To be ranked with great broker supporters like First National and Merix makes our organization very proud about our future as we continue to grow with our exciting new venture.
TURNAROUND / APPROVAL TIMES Receiving a gold medal in this category is extremely satisfying. This gold confirms that we are doing our business correctly. Giving great service and most importantly the proper approvals is what we strive for every day.
UNDERWRITER SUPPORT With only two underwriter centres to service our brokers in the many time zones across Canada, we are pleased to be ranked in the top 5. Although this is a very competitive category, we are even more determined to shine in our efforts over the next year.
OVERALL SERVICE LEVELS Service is about treating brokers as individuals and not only understanding their needs but also being able to respond to them beyond guidelines and rules.
24 | OCTOBER 2013
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07/10/2013 2:11:07 PM BOR_AD
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07/10/2013 2:11:08 PM AM 13-05-24 11:00
COVER / LENDERS ON BROKERS
It is quite an achievement to receive bronze in such an important category. We very much appreciate the brokers recognizing us for our service and will improve service to this channel as we continue to earn their business. As MonCana moves forward as part of the Canadian First Financial Group, we are excited to be adding more options that will enable us to continue to increase our service levels.
INTEREST RATES We strive to be competitive in the market. In the upcoming year, as we move forward with Canadian First Financial, new products will be developed that will permit us to showcase even more competitive rates.
BDM SUPPORT We believe we have the best BDMs in the industry working hard every day to service their broker networks and this first place standing proves it. We are very proud of our business development team and congratulate them for their recognition from the broker community. We look forward to continuing to earn broker business over 2014.
PRODUCT RANGE A broker’s edge is the varied selection of products they can offer to their clients, ensuring each client is acquiring the right mortgage. In 2014, brokers can expect to see new exciting product lines for their clients.
CREDIT POLICY Being flexible and listening to our broker partners on every deal has always been a priority for MonCana Bank. We want to ensure our policies are fair to our clients and to the Bank to ensure a great book of business.
BROKER SUPPORT We were delighted to launch our Use a Mortgage Broker campaign last year in urban centres across Canada promoting the value of a mortgage broker to over 2million viewers. We will continue to educate Canadians that mortgage brokers provide the best Independent Advice for the Canadian homeowner.
TECHNICAL With the launch of phase 1 of our broker portal now complete. We will be moving into phase 2, which will provide brokers with an easier way to deal with conditions and business management at MonCana Bank. We are excited about our future; as we move forward, we will be providing our broker partners
with even greater technology.
COMMISSION We believe this should be simple with no hidden surprises. We are proud of our Renewal Compensation Program that allows our broker partners to build their business without sacrificing upfront compensation. — Darren E. Thompson Senior Vice President Sales & Marketing, MonCana All of us at CMLS Financial were thrilled to see that we were so highly rated in the 2013 Brokers on Lenders survey. To place among the top five Canadian lenders in such a strong competitive environment made up of esteemed industry leaders is an immense honour, especially given the fact that our Residential Division had only been in operation for just over six months when this survey took place. The credit definitely goes to our residential team for their unwavering commitment to supporting the needs of our brokers with quality solutions and responsive service. We also feel that such strong recognition so soon out of the gate is evidence that we are truly delivering on our Customer Forward philosophy that puts our customers’ needs ahead of our own. We appreciate all the brokers who took the time to provide their feedback and will use it as a valuable benchmark moving forward to enhance areas that can be improved upon. We are committed to the industry and the Broker channel for the long term and look forward to continuing to support your business success. — Dan Putnam Senior Vice President, Business Development, CMLS Financial
We appreciate all the brokers who took the time to provide their feedback and will use it as a valuable benchmark moving forward
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We attribute our success to the strong partnerships we have created with our valued MERIX originators
We are humbled by your support and forever grateful
› Overall Service Levels
› I.T./ Technology
› BDM Support
› Broker Support
› Satisfaction with Credit Policy
› Turnaround Times
› Underwriter Support
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COVER / LENDERS ON BROKERS
National Bank is pleased to be recognized as one of the top lenders in Canada for 2013. This year continued to be a year of change for the broker industry with some new entrants in the lender space as well as ongoing lending policy changes as a result of OSFI. While we would like to see our scores higher and be recognized with the industry leaders in the Gold to Bronze rankings, we are very pleased to see that National Bank Mortgage Broker Services has improved our scores in all categories in 2013. This demonstrates that we are making improvements and becoming more broker centric. We are especially proud of being recognized as Gold for the Product Range category. This year marks the third year in a row that we have received recognition within the top 3 for this division. We continuously strive to offer innovative and leading products and solutions
for all of our clients. Our signature product, the National Bank All-In-One continues to be recognized as one of the best credit solutions, that offers our clients significant flexibility for daily transactional banking. It gives our clients the opportunity to fully integrate their financing solutions and personalize it to fit their specific needs. Other innovative product solutions have included our cash back offers and our rental program. This type of feedback, as well as the comments that we collect from our Red Carpet brokers are invaluable to us at National Bank as it helps us to continuously improve and evolve so that we are able to support the needs of our brokers in the coming years. National Bank Mortgage Broker Services is looking forward to 2014 and the opportunities that lie ahead for everyone in the broker industry. The support and loyalty that broker community has shown us over the past number of years is truly appreciated.
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and be a part of next years conference National Western Canada Central Canada Central Canada Eastern Canada
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FEATURE / WHAT’S YOUR BUSINESS
It’s adapt or die in today’s lending landscape, writes Justin da Rosa, revealing more key stats from the 2013 CMP Brokers on Lenders survey
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Y You brokers are a crafty bunch; with ever-tightening rules and increased competition from the big banks, many players are getting creative and looking for business that may not fit the traditional A-lending criteria. And the numbers speak for themselves. According to our seventh annual Brokers on Lenders survey, more brokers are relying on nonprime deals than ever before, with 40 per cent of mortgage professionals polled saying their number of such deals has increased this year. Coupled with the growth in conventional deals versus high-ratio, it’s time we admit – as Bob Dylan famously squawked – “times, they are a-changin.” And it appears brokers are game to adapt to the times. For some, that may entail divvying up a mortgage amount into prime and subprime parts to ensure a client can purchase that rental property; for others operating business in soft markets forces them to expand their pool of lenders. For almost all, however, the sun is setting on the days of relying solely on prime mortgage brokering.
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FEATURE / WHAT’S YOUR BUSINESS
BROKERS’ STRONGEST RENEWAL PARTNER Past client
70.2% 24.3% 3.5% 2.0%
PERCENTAGE OF DEALS DONE WITH LENDERS WHO PAY AT RENEWAL AND NOT JUST UPFRONT:
STATED-INCOME ALTERNATIVE DEALS ACCOUNT FOR WHAT PERCENTAGE OF YOUR BUSINESS?
STATED-INCOME A-LENDER DEALS ACCOUNT FOR WHAT PERCENTAGE OF YOUR BUSINESS?
RENTAL ALTERNATIVE-LENDER DEALS ACCOUNT FOR WHAT PERCENTAGE OF YOUR BUSINESS?
RENTAL A-LENDER DEALS ACCOUNT FOR WHAT PERCENTAGE OF YOUR BUSINESS?
CONVENTIONAL VS. HIGH RATIO On average, 44.8 per cent of deals are conventional • 21% of brokers report that 0-25% of their deals are conventional • 50% of brokers report that 26-50% of their deals are conventional • 24% of brokers report that 55-80% of their deals are conventional • 5% of brokers report that 81-100% of their deals are conventional
Nathan Zurowski – 20% conventional The bulk of my stuff is high-ratio because of the amount of first-time buyers I deal with. Traditional deals are tougher because of tightened regulations and lending policies. You were getting better deals with high-ratio deals this year. Cathy Roddy – 30% conventional I do try to attract rental people buying investment properties, so with that they have to put 20% down. Another part is those with a little bit of credit challenge and a smaller down payment – for them, I do a conventional mortgage backed by a 10 per cent private second mortgage.
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FEATURE / WHAT’S YOUR BUSINESS
Peter House – 80% are non-prime; It’s definitely the market that I’m in; we’re in a soft market area and that definitely drives up our sub-prime lender deals. And I’ve started to target that market more because so many people go after the A-business and the competition is more aggressive. The banks have started to open up their eyes to what the brokers have been doing for years and they’ve become sharper. We just have to become a little bit more flexible.
NON-PRIME DEALS On average, 18.6 per cent of deals are non-prime • 52% of brokers say 0-10% of their deals are non-prime • 27% of brokers say 11-25% of their deals are non-prime
Dan Burke 10% non-prime We don’t have any lenders down here (Essex County, near Windsor, Ont.), that’s why we can’t do them. The couple lenders we did have access to, they have cut back on the loan to value so far. All lenders have all but pulled back out of our area. We’re not doing very much subprime and B-lending anymore. The only lenders we have access to are A-lenders. We have to turn customers away who don’t qualify for A-deals and it’s costing us big time. There is a huge opportunity for a B-lender to come to our market. We had a tough time for a while, but we’re rebounding. We’re always the first to get slammed but we’re the first to rebound.
• 16% of brokers say 26-50% of their deals are non-prime • 5% of brokers say 51-100% of their deals are non-prime
Amit Jain – 10% non-prime It’s all based on the client. If a client is good enough for an A-lender, we will go with them. It’s getting tougher to deal with A-lenders because of CMHC guidelines. Dianne Morozoff -- 5% non-prime My number of non-prime is lower based on the customers who come to me. Most are referrals and repeat business; I don’t do any advertising. I’m semi-retired and just taking care of the relationships cultivated over the years. It’s easier to deal with the lenders because myself and the clients already have relationships with them.
OF PEOPLE SAY THEIR NUMBER OF NON-PRIME DEALS HAS GONE UP SINCE LAST YEAR
The broker’s resource for
Real Equity Lending for Homeowners
Greg Kakuno 604.329.6067 34 | OCTOBER 2013
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Paula Hutton 403.278.6200
Sue Foster 905.299.6971
Hugh Doggett 905.299.6951
Trevor Bowie 902.894.7700
07/10/2013 2:13:13 PM
CG_Ontario_CMP_Andy 13-09-23 10:51 AM Page 1
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Director, National Accounts
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Director, National Accounts
President & CEO
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BUSINESS STRATEGY / SECRET#8
RELIABLE Theyâ€™re the bedrock of a successful broker business, writes Doren Aldana, and just likely the most reliable referrals around
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There are “Real Advantages” to joining RMA
“A s s o o n a s t h e l e n d e r s s e n d t h e c o m m i s s i o n s t o h e a d o f f i c e i t ’s direct-deposited into my account. H i g h est co m m i ss i o n s a n d p ro m p t payroll. I love RMA!”
Donna Stewart RMA Mortgage Broker Guelph, ON
SECRET #8: THEY USE REFERRAL SYSTEMS TO ATTRACT A STEADY STREAM OF REFERRALS. If you’ve been in the business for any period of time, you know that referrals are the lifeblood of your business. Pre-sold referrals are undeniably the best quality, most profitable, easiest-to-convert leads you’ll ever attract in your business! Why? Because they… • Are less rate conscious • More trusting and approachable • More loyal • Easier to set appointments with • Require less time and energy • Are less costly to acquire (in many cases, they’re free!) and... • Are a great source of what? More referrals! It’s no wonder that most mortgage professionals rely almost entirely on referrals for new business. But the difference between the superstars and the mediocre majority is that they setup referral systems that provide a predictable and consistent flow of quality referrals into their business. There’s a BIG difference between word of mouth and referral systems. Average mortgage pros get their referrals through word-of-mouth (WOM), top producers get their referrals through referral systems. WOM occurs when one of your clients just so happens to be talking to someone who just so happens to mention they’re looking to buy a new home and your client just so happens to recommend you as their trusted mortgage adviser. We love it when that happens, don’t we? But the problem with relying on WOM is that we have no control over it. It’s unpredictable. It occurs by happenstance and serendipity.
Learn more about the advantages of joining our team at
www.rmabroker.ca/join OCTOBER 2013 | 37 1.877.677.7778 36-38_Secret.indd 37
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BUSINESS STRATEGY / SECRET#8
FOUR CARDS: The Initial Inquiry Card Immediately after submitting the mortgage application, send out a handwritten greeting card to your client, thanking them for entrusting their mortgage needs with you. For added WOW FACTOR, enclose a $5 gift card from Starbucks or Tim Hortons. This will go a long way towards improving your closing ratios and boosting your referrals and repeat business! The After Closing Card After the deal closes, send out another Thank You card expressing your appreciation for their business. But don’t stop there. Exceed their expectations with a gift, such as a box of brownies or pecan brittle. Remember, little things really do make a BIG difference! The Referral Thank You (Unclosed) Every time you receive a referral, regardless of whether it has closed yet or not, send out a postcard to the person who referred you and thank them for the referral. Yes, you could do this by email but it doesn’t have near the same effect. Something tangible always has more impact than something digital. Trust me, it works. The Referral Thank You (Closed) After a referred mortgage closes, go back to the referrer and do something special for them to reinforce their positive behaviour. I recommend rewarding referrers with a $100 certificate towards an excellent restaurant. Then invite them to have a “fun night out” with a guest couple because “breaking bread with friends is always more fun.” Guess who they are going to be talking about at least once during that memorable evening? You, my friend. And that means your chances of getting more repeat and referral business go up dramatically!
If you are a superstar mortgage professional, you refuse to leave your marketing -- and your income -- to happenstance. You need a marketing system that produces predictable, consistent results. And that is what referral systems give you. One of the most powerful referral systems you’ll see superstar mortgage pros utilizing, is what I call the WOW Factor Formula. It includes four cards: As you can see, a referral system is a systematic process, which you can use time and time again to generate referrals at will. In my Mortgage Superstar Coaching Program, you’ll have access to my entire WOW Factor Formula System, including the complete four-card campaign with all the graphic design and content done for you. Plus, you’ll also get access to an amazing online card-sending system that does all the printing, collating, envelope stuffing, stamp licking and mailing for you! Not only that, you’ll also have access to my Download Library with dozens of turnkey, ready-made referral systems that are battle-tested to generate referrals. In next month’s 9th secret, you’ll learn how superstar mortgage professionals have their names everywhere. In books, newspapers, magazines -everywhere you look, you see their name. Stay tuned
Doren Aldana is considered by many to be Canada’s leading Mortgage Marketing Coach and has won the “Best Industry Service Provider” award two years in a row at the 2012 and 2013 Canadian Mortgage Awards. Since 2005, he has been dedicated to helping mortgage professionals attract more clients with less effort, regardless of market conditions. For a free copy of Doren’s new CD titled, “21 Secrets of Superstar Mortgage Brokers,” visit: www.SuperstarMortgage Broker.com
After a referred mortgage closes, go back to the referrer and do something special for them to reinforce their positive behaviour. I recommend rewarding referrers with a $100 certificate towards an excellent restaurant
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FEATURE / COMMERCIAL CONSTRUCTION
CHEAT SHEET Commercial brokering is about more than lending proposals. For brokers doing even the occasional smallproperty deal, a working knowledge of property types is key, writes commercial agent Tarun Gupta CLIENT QUESTION: I have a very small hotel that used to be popular but the area has become less desirable to tourists. The only steady clientele now are mainly visitors to a nearby hospital, though not enough to sustain the business. I’m thinking of upgrading the premises into a more boutique-style hotel, but am not confident that the capital outlay would mean an increase in tourism. What do you suggest? A: Rather than upgrade your premises in the hopes of attracting more business in an ebbing market, rethink the current use of your commercial real estate. Consider your neighbours and what the area can sustain. Few specialized markets come with guarantees of industry growth. Of necessity, health care stands out as our single-most in-demand service with the highest growth rates. Assisted living facilities and other medical support centres offer various possibilities. Alive and well, the medical centre niche market will deliver excellent returns in the years
ahead. Mid-range commercial real estate investors can benefit just like the big guys do when renovating for, and so investing in, the multi-billion dollar health care commercial realty market.
RX: NEW OR RELOCATING PRACTICE DX: MEDICAL CENTRE When entering private practice, newly trained physicians today consider the expense of buying a commercial address — not to mention the subsequent property management commitment — more than they care to manage while launching a medical career. Add to that the harsh reality, in most cases, of enormous student loans effectively debilitating any thoughts of owning a place in the foreseeable future upon which to hang a newly minted shingle. In tandem, within the medical community, there also exists a traditional relocation reticence among practiced physicians for a variety of reasons, the most
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FEATURE / COMMERCIAL CONSTRUCTION
Tarun Gupta is leading real estate sales agent with Royal LePage Real Estate Services Ltd and an expert on small-scale commercial properties ($3 million to $10 million) in the GTA.
notable of which is to avoid any disruptions of essential medical services. Most physicians will opt to practice for years in cramped spaces rather than move ahead with addressing the spatial demand of an expanding patient base. When a move is made, therefore, it is to a substantially larger, more customized, facility with a location that suits their patients even more than it may suit the lease-holding physician. Typically, doctors then imagine themselves to be practicing from the new location for the remainder of their professional career. Naturally, such a protracted upgrade must meet criteria in the present and well beyond to justify relocating any medical practice.
COMMERCIAL PROPERTY REPURPOSING: MEDICAL RENOS AND REHABS Corporate acquisition of buildings designed or modified especially to accommodate health care professionals have become as commonplace as the medical plazas themselves. With our aging population of baby boomers expected to increase health care needs by a third or more over the coming decades, this type of property investment also offers a steadily expanding niche market to the smaller commercial real estate investor. While financing structures and specialized renovations to create medical plazas of any size requires considerable financial investment — averaging 25 per cent more than standard commercial renovation — even smaller health care centres with six medical suites or more will tend to net profits in the million-dollar range when substantially leased, outperforming retail real estate by a healthy margin. There is ample opportunity for mid-range commercial investors to buy, renovate and sell newly established medical buildings, reaping excellent returns within a relatively short time frame. The type of building best suited to medical use rehabilitation, like all real estate, puts location first
on the list of important attributes. Close proximity to major medical services, such as a hospital or dialysis clinic, and/or to large assisted-living facilities are among the best locations for medical centres dedicated to private practice. Transportation and parking are also important to an aging population facing mobility challenges. Older retail buildings, plazas, and any commercial real estate falling into obsolescence are all likely candidates for a medical “facelift.”
DEVELOPING HEALTH CARE CENTRES AND MEDICAL PLAZAS Finding a location worthy of rehabbing into a medical facility is not the main challenge in this type of investment. Choosing appointments wisely is. Investors must balance budgets with the expectations of a burgeoning marketplace. This is not a time to skimp on size or quality. Spacious medical suites with adequately-sized waiting areas, highly safe and durable finishes, and an abundance of equipment space is the best protection you can give your investment when seeking both tenants and future buyers. Whether creating six or 60 medical suites, developing a health care plaza in an appropriate location with more than adequate appointments is a sound investment that will yield the highest returns. Choose a contractor who is experienced in creating medical spaces. This is a highly specialized type of renovation best not left to chance. Look for a successful track record in health care renovations. Visit medical facilities in your area, making note of outstanding features. If there is a central waiting area as part of your design, try to add a fish tank or some other water feature. Even a small fountain has a soothing effect. That which is of comfort to patients is valued by health care practitioners, and may give you an inexpensive yet integral edge when resale time rolls around.
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ANCHOR MEDICAL PLAZAS WITH COMPLEMENTARY HEALTH CARE TENANTS Securing your first tenant is another important aspect of creating a successful facility. Anchor your developing medical centre with a pharmacy, lab, physiotherapist, dentist, optometrist or similar health care professional before offering space to physicians. While proximity to a hospital may supersede all other requirements, medical doctors do prefer to see a major support service in place before they will commit to a long-term lease. A pharmacy, for instance, is a premium leaseholder looking to anchor themselves in close proximity to prescribing physicians. Acquiring a long-term lease with a reputable dispensary helps establish your new facility’s credibility and feasibility. Another wise move for any commercial property catering to a dynamic clientele is to add a coffee shop or, depending on size, even a restaurant. You’ll attract more rental dollars and a solid leaseholder for this space if there is outside street access directly to a coffee bar than if customers can only access from the interior, such as with a lobby kiosk. A take-out window for foot traffic is also desireable, so as not to clog patient areas. Situate the food and beverage service so that everyone knows it’s there, but those
on restrictive diets are not forced to sit next to it. Whatever amount of space you can grant to food and beverage service, do so, and be sure to choose a reliable tenant who will be sensitive to their target market, with high-quality products and who delivers excellent customer service — all of your tenants and their neighbours may soon be counting on them to kickstart their morning, or to provide a quick, nutritious lunch in an otherwise unpalatable day.
SELLING YOUR HEALTH CARE FACILITY Buyers of medical centres are generally large corporations with deep pockets and strict parametres. Your commercial real estate agent can assist you in comparing facilities currently owned by multi-facility health care operators in your region. Taking this step early on in your process will help inform and guide both your location and renovation choices. Health care is very much a buildto-suit marketplace today, so taking time to be sure you are developing what the market most desires in medical facilities is more than an investment exercise, it’s your gateway to healthy profits.
CMHC & Conventional Mortgages for:
Single Family Alternate Equity Lending:
Multi-Family Rental Properties Senior’s Housing Projects Commercial Properties Construction Projects
Toronto CMHC/Conventional Financing Phone: 416-368-3266 Email: email@example.com
Equity Take Outs Purchases/Refinances Homeowner or Rental Flexible Income Verification
Calgary CMHC/Conventional Financing Phone: 403-237-8795 Email: firstname.lastname@example.org
Vancouver CMHC/Conventional Financing Single Family Financing 2013 | 41 Phone:OCTOBER 604-685-1068
07/10/2013 2:16:10 PM
FEATURE / SOFTWARE
THE NEXT GENERATION The 21st century broker needs an arsenal of high-tech solutions to keep up with the demands of their clients. Amy Rosenfeld explores the new and innovative solutions that are shaking up the Australian market, but poised to do the same thing here in Canada There is now little doubt that we are working, and living, in a technology world. In a market where the slightest competitive edge can make all the difference, brokers are looking for the latest drivers of efficiency and differentiation, and clients are insisting on it. Time-starved brokers are demanding services that eliminate errors, cut costs and save precious minutes; tech-savvy clients are demanding service that is personal, efficient and always available; and industry pressures are demanding that brokers streamline costs without skimping on service. 42 | OCTOBER 2013
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CRM software and broker apps have been called in to fill the gaps in a rapidly changing broker landscape. While aggregator software has dominated the market for many years, a number of independent software providers are stepping in with their own innovative solutions.
ON THE MOVE Technology has blurred the lines between work and play in the broking world, and increasingly clients expect their brokers to be available anytime, anywhere, says Stargate CEO Brett Spencer. Stargate has seen a steadily increasing demand for application-based software, especially with regard to the iPad, says Spencer, and as such the company is in the process of releasing a new version of its fact-finder tool, eFind. Stargate also has plans to release mortgage calculator and serviceability guide applications in the near future, and has seen strong interest in its two search engine applications, Mobbie and MyProductGuide. Mobile and tablet-based technology allows brokers to take advantage of work opportunities outside the office, Spencer says. “If you’re on the golf course or at a pub and somebody starts talking about finance, everybody chips in their two cents worth, and that’s the opportunity for a broker to be able to pull up that information on their phone and say, ‘You know what? This right here is available for you.’. “Brokers should always be going through that thought process: where can they get that next transaction from? And mobile technology gives them that opportunity because they have their office in their back pocket.” In the current market, brokers need to treat every person they meet, and every conversation they have, as a potential deal, Spencer says. “Software is only as good as the person using it, but what software does is it gives our brokers the ability to always be able to sell something to the customer. A broker doesn’t make any money sitting in their office on their bum waiting for the phone to ring. “Brokers generally run their own businesses, so if you’re not, as a business owner, ‘on’ 24/7, you may as well go and work for someone else digging ditches.” On top of 24-hour availability, today’s clients also expect service that is personal, relevant and fast, says Loanworks national sales manager Wayne Macartney.
Due to broker demands, Loanworks recently launched its KNX Marketing System, which integrates with the company’s Loanworks Product Suite but can also be used as a stand-alone system. “It has the flexibility to define any field/data you want to track for marketing purposes (eg settlement date, lender, product, referrer) and gives you true set-and-forget functionality for birthdays, loan anniversaries, etc.,” Macartney explains. “Broadly speaking, brokers are asking, ‘How can I target the right product or service to the right prospective client?’ This implies getting smarter by segmenting your client base and marketing to them strategically – this goes beyond a simple blast email campaign.”
TIME TRIALS The ability to maximize efficiency and productivity can be the difference between a top broker and the rest of the pack, but requests for more information and reworks are often holding brokers back, says Macartney. Electronic settlement has the potential to reshape parts of the industry, he believes, by introducing the ability to ‘fast-track’ settlements. “The question is being raised as to why you need a 90-day settlement period if you can efficiently improve, instruct and settle. Initially at least, this may prove to be a point of difference to the borrower. “The theory is that it will also take some of the risk out of being able to settle a deal, which may mean less headaches for the broker.” NextGen sales director Tony Carn says time lost through reworks is one of the top challenges brokers are facing today. NextGen’s ApplyOnline software links brokers’ CRM systems with lender processing systems, says Carn, capturing relevant data and highlighting gaps and discrepancies, reducing reworks and requests for more information. “At the moment, when lenders and brokers measure quality they do it retrospectively, at the end of the month or quarter or annually. They’ll look at their relationships and ask what their conversion rates were, what their rework rates were, and look at how they can improve those. What we have done very successfully over the last year is bring quality management forward to the point of sale,” Carn explains. A key advancement that NextGen expects to pilot OCTOBER 2013 | 43
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FEATURE / SOFTWARE
with broker groups in the coming months is the addition of a supporting documents tab to lender modules. This will allow brokers to upload and file all supporting documents, validate them against lender policy, and then submit them to the lender in one hit. “Feedback on that from lenders, brokers and broker groups has been really, really powerful to date. It’s a pretty major innovation and it is real leading-edge technology. That’s a real game changer that is going to radically reduce reworks, radically reduce costs, and improve SLAs for brokers,” Carn says. NextGen has also upgraded its lender lodge-ment modules to valuate every loan submitted against the Geocoded National Address File, a feature that Carn says has also produced a huge amount of positive feedback. “Not a lot of people fully recognize that it’s actually quite a substantial driver of reworks; many lenders reported it as one of their top three reasons. It can lead to things like valuations having to be done twice, to issues where addresses don’t match what’s in the contract of sale, to credit bureau checks being done, and documents having to be reissued.” Using ApplyOnline software allows brokers to ensure that every loan application is aligned to the credit assessment rules and policies of a lender before submitting it, says Carn. “It empowers them to have greater confidence that their requests for more information should be almost eradicated.”
JUGGLING ACT Diversifying revenue streams and increasing client wallet share has become a popular trend for brokers, but the paperwork involved and difficulties in switching between software systems and re-entering data can often be a nightmare for busy brokers, Carn says. NextGen has seen growth in electronic lodgements for revenue streams such as commercial lending, equipment finance, and leasing and risk insurance from a number of different providers in recent months, he reports. NextGen’s software brings all of these different lodgements into one manageable channel, providing a solution to many of the key challenges in lodging a variety of loans. “It comes back to the manageability of data quality; not having to refeed data more than once. If data has already been submitted in an application, you can then reuse that data to submit
a loan for a credit card or risk insurance or general insurance so it makes it low cost and efficient and makes for high-quality applications,” Carn explains. Stargate has also seen high demand from brokers to improve its interactions with third-party partners, says Spencer, and as such has partnered with software providers in other industries such as financial planning and insurance to allow easy two-way data transfers. “All of our big customers have talked about it and are saying it’s on their radar or they’re currently doing it, so it is a trend that we will see much more frequently.” Stargate’s ePass software allows brokers to connect themselves to third-party partners and creates a comprehensive record of referrals and interactions, Spencer says. “There are no errors and no replication of processes. You’re really collecting a full customer snapshot for all the external partners you’re working with, who you’re referring your customers to and who is interacting with your customers. We call it ‘capturing the financial desktop of the consumer,’ and if we can allow brokers to capture that financial desktop, then that consumer is never going anywhere.”
LOOKING AHEAD The coming years will see the advancement of the “mobile revolution,” says Spencer, as more and more functionality is taken out of CRM systems and put into applications. “We’re seeing that as a greater trend: the need to give brokers quick access to solutions rather than having to lug around a laptop. It gives the broker the ability to enhance their business and be able to sell more loans when they’re not really trying to be productive. “I think a lot of broker groups are still looking at CRM systems and getting their back office into gear, but I think there needs to be a degree of aggregation of software. When you look at everything that’s coming out, it’s all about e-lodgement capabilities being improved by each of the lenders, and that’s great, but that’s a very long way down the track. “The first point of technology for brokers needs to be at the point of sale; the stuff they can do on their phones or tablets.” Spencer also expects to see a shift away from Apple devices and on to other products as brokers
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FEATURE / SOFTWARE
“It empowers them to have greater confidence that their requests for more information should be almost eradicated” Tony Carn become more accustomed to platforms such as Windows. “I think iPhone had the advantage of being the first into the market, but I think, if not next year then very soon, Windows tablets will become even more popular than iPads for brokers.” At NextGen, the company has close to doubled the number of lenders it provides electronic
lodgement for in the past 18 months, and Carn is confident it is a sector that will continue to grow in the coming years. “The technology is there, and the uptake is definitely there. It is something that definitely has the attention of a lot of brokers and a lot of providers in the market, but I think we are now starting to see a more homogenized approach as to how they’re processed,” he says. Macartney agrees, and adds that brokers who don’t keep up with the rolling tide of software and CRM developments will struggle to keep a foothold in a competitive market. “To maintain a competitive advantage, you need to be leveraging your data and ensuring you maximise your productivity, while balancing the overhead of compliance,” he says. “The new generation of brokers will be totally tech-savvy.”
Desperate for Agents! We’re not lenders looking for brokers. We’re not Super Brokers looking to get rich on your 20%. We’re not motivational speakers trying to turn you on…That’s what we’re not. We are just a very busy mortgage brokerage that takes what we’re doing seriously. We adjust to rate and industry changes and we don’t complain about it. We believe that we are the best in Canada and lament that so many in this business are clearly unqualified. We are so busy. We need a few good agents fast. We provide the work you earn upwards of $100,000 or more. You’ll work hard but so you should for $100,000. We do everything properly. We’re actually mortgage professionals.
Interested? Send resume to: email@example.com (no phone calls)
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YOU SEE A 50-YEAR-OLD BUNGALOW.
WE SEE A POTENTIAL DREAM HOME. Want to know the real value of a property before moving forward with a transaction? Bring an AIC-designated Real Estate Appraiser on board. AACIs and CRAs are the real value experts, providing accurate, up-to-date valuations on all property types based on current and emerging market trends. You’ll thank them—and your clients will thank you.
Find a Real Estate Appraiser in your area by visiting online now.
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FEATURE / CANADIAN MORTGAGE AWARDS
ARE YOU READY? The 2014 CMAs are set to break new ground, with a wider nominations process and celebration of community spirit
The Canadian Mortgage Awards are back with a focus on charity and ready to honour this year’s leading industry players. We’re also tipping our hats to the hundreds of others who have claimed trophies over the last seven years, with a retrospective on their continuing contributions to the broker channel. Online submissions opened Monday, Oct. 14, 2013, giving nominees even more time to campaign before the event kicks off May 9 at the Liberty Grand in Toronto. PwC will once again act as awards auditor. Now here’s more of what’s new this year: CMP has put together a how-to video on nominations to guide you through the process and ensure finalists are once again drawn from across Canada’s broker channel. That aid, along with much more on the event’s future and its history, are on the CMA website, www.canadianmortgageawards.com. And once again, organizers are publishing the judging criteria for each award on the same web portal, inviting you to review that list before making your nominations. But above and beyond the nominations themselves, CMP is also identifying leading brokers in all award categories as deserving of a nomination and consideration by the judges – a collection of experts drawn from in and outside the industry. Really, the idea is to cast as wide and inclusive a
net as possible, say organizers ensuring the best and the brightest are put before the judges. Winning a CMA continues to be the highest accolade for mortgage and finance professionals in Canada. Past winners agree. “I’m ecstatic. I feel blessed just to be in the same company of those who were nominated. I’ve been flying at 300 feet ever since I got the news,” says Greg Nowik , with Mortgage Architects - Universal Mortgage Architects and recipient of the 2013 award for Mortgage Broker of the Year (Fewer Than 25 Employees) award. “I was completely shocked to win,” says another winner, Alyson Thiessen, with Get Er Done Girls Mortgage Intelligence. Her Red Deer, Alta., team took home the Mortgage Brokerage of the Year (Fewer Than 25 Employees) award this year. “We went to Toronto happy to be nominated and when they called our name, I was stunned,” she recounts. “What an honour to be recognized. We’re a little team from a little town in Alberta – but we have a huge heart!” And once again, the industry’s biggest awards will cap off the Mortgage Summit -- CMP’s professional development conference, set for May 8 and all about learning, innovating and networking. That activity comes just before the awards, which for the first time have partnered with Muscular Dystrophy Canada to put together a charity auction, featuring big-ticket items and focused on demonstrating brokers’ commitment to community. Presented by CMP and MortgageBrokerNews.ca, the industry’s biggest and most comprehensive celebration of excellence has grown exponentially since its inception. And the upcoming awards are primed to continue the tradition. For more information, visit www.canadianmortgageawards.com.
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The 8th Annual Official Ballot Accountants
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Nominations Now Open for the
Industry’s Most Prestigius Awards HOW DOES IT FEEL TO WIN? “Not only was it a tremendous honour to be presented with the Best Lender BDM award in Canada, it was a true validation to have been recognized by my broker partners and peers.” Jody Comeau, First National Financial LP
“It was amazing to see all the support received at that night from all the industry peers.” Giselle Miranda, Street Capital Financial Corporation
“What an honour to be recognized.” Alyson Thiessen, Get Er Done Girls - Mortgage Intelligence
TO NOMINATE: P: 1-855-283-2721
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Official Ballot Accountants
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07/10/2013 3:54:18 3:56:45PM PM 07/10/2013
BUSINESS STRATEGY / EXECUTION
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EXECUTION: THE HOLY GRAIL OF BUSINESS? It’s all well and good spending hours, days or months putting a business plan into place, but if you fail when it comes to putting it into action then you’re back at square one. Cyril Peupion explains how to follow through on your strategy A real issue for many businesses today is the lack of execution. According to recent studies, two-thirds of corporate strategy is never executed. Companies spend a lot of time and resources on thinking ahead, deciding their long-term vision and strategy. They engage consulting firms and their top leaders to do so. They involve many people and resources in producing a lovely Word document and numerous PowerPoint slides to display their plan and strategy, only to see that two-thirds of it will never be executed. The issue is rarely the quality of the strategy and action plan decided. One of the biggest challenges for companies today is execution. They might be clear on their strategy, on where they want to head. But if you look at what people are doing on a day-today basis, what they spend their time on hour after hour, you realize there is often a big gap between what they are doing and the company’s strategies and divisional goals, and the KPIs they are supposed to be working towards.
WHY DOES SUCH A GAP EXIST? In working with many businesses from all different
industries, we have observed that this gap is created by both organizational ineffectiveness and personal ineffectiveness. Here are a few simple examples of organizational ineffectiveness. Ask 10 people in the same business three simple questions: • What are the goals of your organization? • What are the goals of your team and how do they align with the goals of your organization? • What are your KPIs and how do they align with the goals of your organization? These are simple questions, but when we ask them we have found a few interesting things: • The majority of people do not know their organization’s goals. • The majority of people have no idea what their team, or they, should do for their organization to reach its goals.
PERSONAL INEFFECTIVENESS Personal ineffectiveness is different but has a huge impact as well. It all starts from a simple observation: most of us have never been taught how to work.
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BUSINESS STRATEGY / EXECUTION
Guess what? Last-minute crises will always happen. If you wait for a perfect time, you might wait a long time What a bold statement. However, in our view this is one of the most important reasons for lack of execution and lower-than-expected performance. Most people are committed to their role and want to do a good job. They are neither lazy nor unwilling. But they are not working efficiently – they work hard but not always smart. They have never been taught how to work. Over the years people develop work habits that are not the most efficient or effective. We are not born naturally effective. We have to learn the principles and practise them until they become habits.
HOW EACH PERSON CAN CREATE A DISCIPLINE OF EXECUTION Execution is a discipline and needs to become a habit. As Aristotle so rightly wrote, “We are what we repeatedly do. Excellence, then, is not an act, but a habit.” Leaders and their teams need to create a discipline of execution. Here are the bases of the discipline of execution we implement with our clients:
Cyril Peupion and his team at Primary Asset Consulting view their main focus as aligning people with the strategic objectives of their organizations by changing their work habits. Cyril is the author of Work Smarter: Live Better.
The first characteristic of highly successful people is that they are very clear on the goals they want to achieve and what they need to do to achieve them. To do this, you need to decide not only what to focus on, but also what you will not do. As the leadership expert Peter Drucker put it, “the key of strategy is omission.” That is, deciding what you will not do is as important as deciding what you want to do. Too many people take too much on and struggle to do anything well. Once a quarter, block off an hour with your team and ask each person to answer a simple question: “What are the two or three things that, if you did them extremely well over the next three months, would have a significant long-term impact on the team/division/company’s performance?”
Stick to two or three per person, no more. Yes, it’s hard. We always want to do too much.
Once a week, each person needs to review their three high-impact activities for the quarter and organize their coming week. These activities have to become a must, a priority. Book meetings with yourself in your diary to advance your three activities. Organize your calendar so that 60–80 per cent of your time is spent on them. This is easy to understand but harder to do. Very often the people we coach argue that they have a lot of urgent issues to attend to before having the time for these high-impact activities. Guess what? Last-minute crises will always happen. If you wait for a perfect time, you might wait a long time.
ACT DAILY – FOCUS
Be disciplined on a daily basis. If you have booked a meeting with yourself to spend two hours on one of your core high-impact activities, be 100 per cent focused on this topic – no distractions, no interruptions; no starting late, having a break or checking a few emails midstream. Ask yourself a simple question: why would you have less respect or be less prepared for a meeting with yourself than with a very important client? When you have a meeting with yourself to progress one of your high-impact activities, start on time, focus 100 per cent, and don’t allow interruptions and distractions.
A FEW LAST WORDS All of the above is simple but it is rarely applied, and, as a result, many companies struggle to achieve what was agreed in their strategic plan. Bain Consulting did an interesting study on strategy execution. They surveyed nearly 2,000 large companies and found that seven out of eight failed to achieve profitable growth, even though more than 90 per cent had detailed strategic plans. This is because the strategic plan is only the tip of the iceberg. Execution is what lies beneath and what will enable businesses to perform.
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FEATURE / MARKET FORECAST
MARKET FORECAST TD Economics is not only reading the tea leaves to forecast real estate activity in 2014 but also 2015. It’s one big bank’s take on what brokers can expect as they grapple with the real possibility of rising interest rates – not only fixed but also variable. Still, brokers beware: These forecasts are notorious for being tweaked and altered each quarter.
HOUSING STARTS PER CENT CHANGE
EXISTING HOME SALES PER CENT CHANGE
2013F 2014F 2015F
N. & L.
N. & L.
Forecast by TD Economics as at September 2013. Source: CMHC / Haver Analytics
2013F 2014F 2015F
Forecast by TD Economics as at September 2013. Source: Canadian Real Estate Association
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PROFILE / INSIGHT
MANULIFE’S MASTER The broker channel has been abuzz with speculation since the insurance giant’s 2012 purchase of Benesure — Canada’s biggest creditor insurance player. Will Manulife change that product lineup? Heck, will Manulife expand its mortgage lending? Manulife’s mouth...
CMP: Manulife’s purchase of Benesure made headlines across the country. What if any changes have now resulted to MPP offerings? Manulife Financial: We are now able to provide more opportunities for brokers to generate increased ancillary revenue through a broader range of insurance referral opportunities and by leveraging Manulife’s strong branding and awareness in the consumer market. The MPP offerings are strong as they exist today, but we continue to add enhancements to improve their competitiveness. CMP: Manulife has suggested that it will look to deepen its relationship with mortgage brokers in the coming years. In what areas specifically? What is the timeline? Manulife Financial: We are and always have been looking for ways to deepen the relationship with the broker channel and several of those initiatives are targeted for fall launch…including the introduction of our Term Insurance Referral program. This program will now allow brokers to provide their clients with access to professional insurance advisers who can provide term insurance in addition to Mortgage Protection Plan Life and Disability Insurance. We will also be introducing an innovative Direct Marketing Program that has been developed for the brokers, helping them with their efforts in targeting customer retention and renewal (which has long been statistically weak for the channel). The program also provides brokers with the opportunity to gen-
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erate increased compensation with respect to insurance from their existing client database. CMP: What would be the benefit of originating mortgages through the broker channel? Manulife Bank: Manulife Bank is committed to offering superior banking products to Canadians in the way that best fits their needs and preferences. To this end, we work with a variety of referral agents, including financial advisers, real estate agents and mortgage brokers to serve the needs of our clients. CMP: What is Manulife’s vision for the future of creditor insurance against the backdrop of an increasingly competitive and mature life insurance market? Manulife Financial: Creditor insurance, distributed by the broker channel, continues to be a strong opportunity to grow insurance sales within the Canadian market place. A vast majority of Canadians are either underinsured or not insured at all. In addition, the consumer knows they need more insurance but has either not gotten around to, or has not been approached to purchase it. Providing insurance options to Canadian consumers at the exact time of the initial transaction is a perfect opportunity to remind them of the importance of insurance…and in many cases based on younger firsttime buyers, a very economical time to do so. By providing creditor insurance and giving their clients access to professional advice on additional insurance needs, brokers understand they are building and strengthening their value to the client and at the same time helping to protect them. CMP: How have brokers responded to the Manulife purchase of Benesure? Manulife Financial: The purchase has been very well received based on the discussions we have had with our broker channel clients. We continue to enjoy strong and growing support and now that Manulife has acquired Benesure, we see this as a catalyst for even stronger confidence in our ability to provide clients with the protection they deserve. OCTOBER 2013 | 55
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FEATURE / RON BUTLER
HAVE WE GOTTEN TO THE POINT WHERE EVERY
‘BEST RATE’ IS A BOUGHT-DOWN RATE? By Ron Butler, Verico Butler Mortgage
The Canadian banking industry spends a lot of time thinking about Net Interest Rate Margins (NIMs). We used to call this the “spread”; it’s the difference between the interest rate the bank lends money out at and what depositors get as their interest rates, or the rate of return at which the loan is eventually securitized. In the last 10 years these NIMs have shrunk and they are under increasing pressure almost every quarter. Before anyone starts feeling sorry for the richest companies in Canada, understand that banks have become more efficient, more automated and more productive -- so they earn a profit at lower NIMs than in the past. But let’s assume that banks want more profit. So why are NIMs shrinking? Many reasons: banks are very competitive with each other for market share, they splash rate specials all over the media, and banks are also pressed by us, mortgage brokers, who have long been a source of competitive rates. All banks and monolines are affected today by the public’s ease
of obtaining rate information. The easier it is for the public to learn more about rates, the more pressure grows to develop lower rates. That leads to the question: to provide the lowest rate do mortgage brokers always have to buy-down rates? It is certainly not true for every situation, not true for every region but it’s a fact in many cases. In Manitoba, it would appear credit unions offer the lowest rates in Canada, so there is little need to discount there. Many clients value relationships over rate and are willing to go with their banker or broker’s recommendation in order to feel comfortable with the whole process. But every day more clients ask for a better deal because it is so easy to discover what rates are available. So have we reached a point where an inquisitive client will learn about discounted rates and want a better deal? The answer is “Yes” and every single day there will be more of these clients.
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MORTGAGEBROKERNEWS.CA Ron Butler
’ Many clients value relationships over rate and are willing to go with their banker or broker’s recommendation
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PROFILE / FAVOURITE THINGS
Favourite things Favourite Sport: To watch: Hockey To play: Softball
Favourite Book: Pillars of the Earth by Ken Follett
Favourite Movie: The Godfather Part II
Favourite Drink: Vanilla Vodka and Soda
Favourite Place to Be: In my backyard beside the pool watching my kids play.
Stephanie Barritt, Mortgage Planner, Mortgage Architects
Favourite Music: 80s Alternative
Favourite Vacation Spot: Turks and Caicos Islands
Favourite thing about working in the Mortgage Industry: I never have to present anyone with a bill for service : )
Favourite Celebrity: Ellen
t 4 t
Favourite Mortgage Product: National Bank All-In-One
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PROFILE / BROKER
BROKER BEHIND THE BENCH
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A former professional lacrosse player – and current broker – lands a job as coach for a national team Dedication to Canada’s “national summer sport” is netting one industry player the position of associate coach – not for this country, but for Israel’s national lacrosse team. And even more ironically, his job as a broker played assist on meeting that goal. “As a broker you are multi-cultural already and you encounter different cultures and values,” Brad MacArthur of Dominion lending Centres YBM Group told CMP Magazine. “Many of the kids are much the same; they aren’t from my backyard, they have different values and understanding, and working to get
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a deal done is very similar to getting a player to compete for the team.” MacArthur spent seven years in the National Lacrosse League, North America’s premier box (indoor) lacrosse league where he ended his career in 2007 with the Toronto Rock. An offencively minded defenceman, the Wallaceburg, Ontario native amassed 22 goals, 59 points and 153 penalty minutes in 92 career professional games. As experienced as he is as a player, though, MacArthur has spent even more time behind the bench. “I’ve been coaching at one level or another since I was 17-years-old, so over 20 years,” he said. Israel’s burgeoning lacrosse culture offers the opportunity for MacArthur to have a profound impact on the relatively inexperienced players. And he’s looking forward to tracking the progression of his players and the team, as a whole. “Israel is an up-and-coming nation and they have kids from all over the world who are eligible to play,” he said. “It’s all about assisting and developing and we’re going in there with some goals and to get better.” And with a lifetime of experience behind him, it’s no surprise he was chosen as the man for the job; and he’s thankful for the opportunity.
And with a lifetime of experience behind him, it’s no surprise he was chosen as the man for the job; and he’s thankful for the opportunity “It meant a lot to be chosen,” MacArthur said. “I’ve been involved in the sport since I was three; from every level from minor to professional. After leaving the NLL, this was the natural progression.” As for the team’s expectations, the coach knows he’s inheriting a developing group of talent. “We’re pretty realistic about our goals; Canada the U.S., and the Iroquois nationals are the elite teams and our goal is to eventually be in that group.” And that’s why MacArthur is happy to follow that progress one game at a time. “Our first game is going to be vastly different than our last game; how far we’re going to come from our first game to our last game is where the satisfaction will be,” he said. “I hope to help this team enter the elite group. Seeing their development will be really cool.”
SOLUTIONS RESIDENTIAL & COMMERCIAL LENDING
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GUEST / COLUMN
WHOSE CLIENT IS IT ANYWAY?
During a recent meeting with a representative for a lender, the conversation drifted to a topic that I’m sure is of interest to CMP readers -- client retention. More specifically, the question of “whose client is it anyway?” As we wrap up a potentially record-breaking renewal year (even comparing it to 2007/2008 volumes), there’s yet more discussion among brokers about lender retention efforts and tactics. In that category fall a number of examples: One lender’s renewal letter with a full-colour picture of a retention team representative, presenting him as the client’s “new mortgage contact”; and those lenders who offer renewal rates well below what we can, short of an aggressive, if not impossible, buydown. As recently as August 15, one lender continued to offer a two-year fixed 0.40 per cent below their broker rates to renewal clients. Perhaps it makes me sound a bit of the heretic to some brokers, but I simply do not understand why any of us are surprised or offended by such offerings. Brokers should not only understand why this is happening but they should consider gaining an understanding of the full dynamic. I know I wanted to and here are a few of my conclusions thus far:
Brokers must do a better job communicating with clients as renewal time approaches – a better job than the lender does. Brokers have the ability to do a superior job of communicating directly with clients throughout the term of the mortgage, which offers a tremendous foundation to build on at renewal time. Brokers should be sending their own form or renewal letter citing current market offerings along with our own smiling face printed on it. Both an email and a snail-mail version. Lenders and brokers each share a base motivation for retaining/moving a client at renewal, we each get paid only if one wins and the other loses. A fundamental flaw in the system one might argue. Let’s leave the trailer fee model debate aside for
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the purposes of this article, but it obviously plays a role in mitigating this win/lose scenario. Historically lenders have played the rate game with great success managing to lock the majority of their clients into higher-than-market rates, as long as this strategy is followed it presents an excellent advantage for brokers able to clearly communicate the true market rates of the day. Although the lender may be able to come from behind and match or even beat us on rate, at least they are now doing it with egg on their face. Always value integrity, your clients will too. People respect and appreciate straight talk. To brokers’ credit, we have done a very good job of educating the public on the concept of floor rates and spreads, so much so that fewer and fewer lenders are wasting time before dropping right to their own floor rate with the client. Lenders now understand what brokers have always understood; that the majority of clients do not want to haggle over interest rates any more than they wish to haggle over the price of a new car. Offer the sharpest deal right up front and lock things down. This approach earns client respect. The concept that there exists such a thing as a “broker lender” is not inaccurate, however, I believe that the definition varies widely. Attached to it are some unreasonable expectations on the broker’s part. Is a broke’rs lender one that gives up the client at renewal time without a fight? From a basic business perspective that would be a lender that would be unlikely to remain profitable and thus equally unlikely to stay in business over the long haul without alternative streams of revenue. In other words, banks are able to afford to be less effective on the client retention side, not that they necessarily are. The
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non-bank lenders are significantly more motivated to hang on to their sole revenue stream. They truly cannot afford to lose clients at renewal time, at the same time it is far more difficult for a broker to be able to afford to compete with the monoline lender at renewal time without sacrificing the aforementioned integrity. It only ever makes sense to move a client if there is a strong business case that you can present to the client. If the broker knows the current lender will match the rate in the 11th hour and the product is also a match, then that broker may be better served by acting as an agent to the current lender for the client and simply short circuiting the process to get the client the market rate. I do a fair bit of my business with the chartered banks, and often it is suggested to me that I am being foolish as I am giving up control over “my” clients. It seems to me that the main points of the exercise are being missed.
1. The client owns the client. 2. Lenders pay an upfront commission to brokers for “lead generation,” this is what a broker is to and for a lender; a generator of new clients. 3. A “broker Lender” is, in my opinion, a lender with strong products, fast and logical underwriting, and great client support post-funding.
Any businessperson is acutely aware that it is far more expensive to attract new clients (i.e. paying broker commissions) than it is to retain current clients. The broker’s role is lead generation for the lender; however, the broker’s role to the clients is to be a trusted adviser. On occasion that will mean assisting the client with staying where he or she is; on others, it will entail assisting him or her with the move to another lender. Neither the lender needs nor does the broker dictate the course of action. The client’s needs dictate the best course of action.
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Merix Financial www.merixfinancial.com Ph: 1 877 637 4911 Page 27
B2B Bank b2bbank.com/mortgages Ph: 1 800 263 8349 Inside Back Cover Bridgewater Bank www.bridgewaterbank.ca Ph: 1 888 837 2326 Page 7
Peoples Trust www.peoplestrust.com Ph: 1 800 663 0324 Page 41
HomEquity Bank www.homequitybank.ca Ph: 1 866 522 2447 Page 45
Radius Financial www.radiusfinancial.ca Ph: 1 877 369 6398 Inside Front Cover
MonCana Bank of Canada www.moncana.com Ph: 855-263-2265 Page 41
Mortgage Architects www.mortgagearchitects.ca Ph: 1 877 802 9100 Page 29 MortgageToGo.ca www.mortgagetogo.ca Page 46
RMAI Financial Group www.rmaifinancial.com Ph: 1 866 955 7624 Page 37
RMG Mortgages www.RMGmortgages.ca Ph: 866 809 5800 Page 17 Tribecca Finance Corporation www.tribecca.ca Ph: 416 225 6900 Page 63
Scotiabank www scotiamortgageauthority.com Ph: 416 350 7400 Page 25 Credit Union
IC Savings www.icmbs.ca Ph: 416 253 4007 Page 61
Home Loans Canada www.hlcmortgages.com Ph: 1 866 452 1821 Page 3
ROMSPEN Investment Corporation www.romspen.com Ph: 1 800 494 0389 Page 1 Technology & Software
Canada Guaranty Mortgage Insurance Company
Keystroke Quality Computing Inc. www.keystroke.ca Ph: 1 800 857 0558 Page 9
www.canadaguaranty.ca Ph: 1 866 414 9109 Page 35
Mortgage Protection Plan www.mppbroker.com Ph: 1 866 677 4677 Page 15
First National Financial LP www.firstnational.ca Ph: 416 593 1100 Page 19 & 21 Home Trust www.hometrust.ca Ph: 1 877 903 2133 Page 33
MCAP www.mcap.com/brokers Page 11
Marlborough Stirling Canada www.morweb.ca Ph: 1 877 626 2022 Page 2
Genworth Financial Canada www.genworth.ca Ph: 1 800 511 8888 Outside Back Cover
Capital Direct www.capitaldirect.ca Ph: 1 800 959 9290 Page 31
Canadian National Association of Real Estate Appraisers
www.cnarea.ca Ph: 1 888 399 3366 Page 12 Services
Centum Financial Group Inc. www.centum.ca Ph: 1 604 257 3940 Page 5
Appraisal Institute of Canada www.AICanada.ca Ph: 613 234 6533 Page 47
Dominion Lending Centres www.DominionLending.ca Ph: 1 888 806 8080 Page 13
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