MEDIOCRE MARKETING MISSTEPS TO AVOID NEW LENDER LOOK AND LEARN
FEBRUARY 2013 / ISSUE 8.2 / $6.95
QUALITY REFERRALS MADE NOT MAGIC
KIT BAG L 2013
Forget your troubles! Pack up these 8 new tools in your old kit bag
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CONTENTS / ISSUE 8.2 MARKET MATTERS
8 | Reading between the Lines Those offers of 10 extra basis points on some high-ratio deals have won broker praise, but Robert Stanfield is going one better with his analysis
32 | The Fiery Four: There’s nothing fantastic about these four goodwill busters, say brokers
10 | Market Matters There are marketing mistakes almost all brokers make, but if you’re making all eight of these… 16 | Broker to Broker The truth is you don’t win quality referrals; you have to earn them, writes broker Dustan Woodhouse, debunking any myths about luck – good or otherwise 22 | Stats You’re either hot or you’re not, and this CMP infograph on real estate markets across Canada sums it up nicely
38 | Building big CMLS is moving into the residential channel this month and here’s what you need to know about its philosophy and its personality
36 | Google this Who better to give brokers the ins and out of SEO than a Google exec. At least that’s the thinking of Mortgage Summit organizer CMP 42 | Who’s watching you It’s not Big Brother, but it’s close say brokers concerned banks have too much control over how much they buy down rates 55 | Spray splash When this graffiti showed up in small-town B.C., no one was more surprised than brokers
COVER STORY 24 | CMP Kit Bag 2013 Here’s eight tools and services no broker should be without for their 2013 kit bag
8.2 ANYONE CAN DOTHE SLAM DUNKS.
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CONTENTS / ISSUE 8.2 COLUMNS
58 | Favourite Things
62 | Guest Broker lenders are trying to woo with higher compensation, writes Chad Robinson, but there is another way to win friends and influence people
60 | Broker Profile Verico Safebridge has high expectations for its agents and brokers, or is that too high? 64 | CMP Service Directory
46 | Employee mortgage benefits program: In this last instalment of an eight-part series, Doren Aldana scripts your performance for the actual employees
21 | Product News This month’s product and industry announcements, even before they come out of the proverbial box
50 | Commercial envy Residential brokers imagine commercial guys are living la vida loca, but they may be mal
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54 | MortgageBrokerNews Mashup Can you make heads or tails of this list of stories and why they got the most attention on CMP’s sister site
Like Us on Facebook Canadian Mortgage Professional
56 | Reporting for business Canadian Mortgage Trends Editor Rob McLister is growing the site but also his brokerage with a move to Verico
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Mark Buller Mark OntarioBuller South & West
Nicole Bernier Nicole Quebec Bernier
Angelo Froudakis Angelo Froudakis GTA & Ontario East
Geoffrey Woodford Geoffrey Woodford Atlantic Canada
British Columbia • Grant.Bennett@hlcmortgages.com • Grant.Bennett@hlcmortgages.com • 1-866-978-9919 • 1-866-978-9919
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GTA & Ontario East • Angelo.Froudakis@hlcmortgages.com • Angelo.Froudakis@hlcmortgages.com • 1-866-702-4994 • 1-866-702-4994
Ontario South & West • Mark.Buller@hlcmortgages.com • Mark.Buller@hlcmortgages.com • 1-866-236-5765 • 1-866-236-5765
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CONTENTS / EDITOR’S LETTER
SMILE, SMILE, SMILE! If you were to do as the marching song suggests and “pack up your troubles in your old kit bag,” what a heavy load that might make. Between the tighter mortgage rules, the more-cumbersome B20 guidelines and a slower housing market, it might also be hard to take the song’s other suggestion to “Smile, Smile, Smile!” But while CMP isn’t promising to remove that weight altogether, we have come up with our first Kit Bag list of essentials tools and services for 2013 – a bunch of stuff we think a mortgage broker shouldn’t be without in the challenging year ahead. So take a look, starting on P. 24, and think about incorporating some of those high-tech tools and broker services into your business. But before you rush to flip the page, let me remind of what else this issue offers: How about a list of the top four things lenders are doing to turn you and others off (P. 32)? CMP’s new senior writer Don Horner offers that fiery four as well as quick fixes for lenders looking to woo more of your business. How fitting that the list comes just ahead of the annual CMP Broker Sentiment Poll, this March. By the way, don’t forget to fill out your survey at MortgageBrokerNews.ca. This issue also takes a closer look at a new lender now getting ready to launch, with a full briefing on its terms, its product mix and its philosophy (P. 38). There’s also a comprehensive look at the challenges facing some commercial brokers even as many residential players join their ranks. Warning: the grass may not be any greener on the other side. See for yourself on P. 50. And allow me one last plug for the upcoming CMP Mortgage Summit, to say nothing of the Canadian Mortgage Awards. Both are coming up, May 9 –10, and your full participation is very much requested. Heck, we probably should have included it on our Kit Bag list for 2013. See why by logging onto TheMortgageSummit.com.
COPY & FEATURES Vernon Clement Jones Rachel Naud Donald Horne Chad Robinson Doren Aldana Dustan Woodhouse Jemima Codrington
EDITOR SUB-EDITOR SENIOR WRITER CONTRIBUTORS
ART & PRODUCTION
SALES & MARKETING
NATIONAL SALES MANAGER Trevor Biggs MARKETING AND COMMUNICATIONS Julia Comitale PROJECT COORDINATOR Jessica Duce
CORPORATE PRESIDENT & CEO Tim Duce OFFICE/TRAFFIC MANAGER Marni Parker EVENTS AND CONFERENCE MANAGER Chris Davis
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Mediocre Marketing Missteps to avoid new lender Look and Learn
February 2013 / issue 8.2 / $6.95
Quality referrals Made not Magic
Vernon Clement Jones Broker CONNECT
Contact the editor: email@example.com
kit Bag LIST 2013 2013 Covers and Spine.indd 1
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Forget your troubles! Pack up these 8 new tools in your old kit bag
21/02/2013 2:29:00 PM
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CONVERSATIONS / LETTERS TO THE EDITOR
LETTERS H T TO THE EDITOR
ING END One last rOar
January 2013 / issue
8.1 / $6.95
REvERsING couR a race tO the sE tOp TaxING TImEs realtOrs 1, brOkers 0
LIST 2013 If 2012 is anythi ng to go by, these ‘Hot’ industry players are set to heat up 2013
Re: Quitting the race to the bottom (CMP 8.1)
Wronged by rate cuts
The formula for success is simple as I see it: Attract > Convert > Close > Delight As we move strangers down the funnel, at every junction we have the opportunity to improve the conversion rate by adding value to the process, as Greg Williamson suggests. If it used to be 10 applications from 30 contacts, what can I do to get 12 applications per 30 contacts? If I can convert and close six of my applications into mortgages, what can I do to close seven? If I get 100 bps on average, how can I get 105? Knowing your baseline (conversion rates) is hugely
Covers and Spine
important, because if you don’t generate enough leads OR improve your conversion rates, the income you are hoping for will NEVER show up.
Not for the faint of heart
Greg is right, discounting rates is not for small teams and individual brokers. We discount a ton and in order to do it we had to tear apart our operation and rebuild it in a way that is totally different than what almost any other brokerage looks like. We are still tweaking it and likely we will be refining it for years to come. The single-most important thing to understand about rate sites and rate discounting is no mortgage broker gets to decide whether it will continue or not. Only the public will decide whether it works or not.
MortgageBrokerNews.ca Reader Poll WILL FALLING MORTGAGE ORIGINATIONS FORCE ING BACK TO THE BROKER CHANNEL?
24/01/2013 1:21:26 PM
Re: Hot List 2013 (CMP 8.1)
Where am I?
Some of the people on this list are great and really are set to make a significant contribution to the broker channel’s growth this year. I include Mike Cameron in that number, but there is also a few people on the list who may make significant contributions to their own business and not to brokers, in general. I hope their inclusion on the list will help to change their attitude of look out for No. 1.
Re: Tracking ING (CMP 8.1)
Last roar, indeed
ING will be missed, especially their broker support team. They were good guys. I think they will be back again though. ING simply doesn’t have the branch infrastructure to win new originations in this market. They need the mortgage broker channel more than we need them. They will learn this the hard way. BMO and the others did.
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.
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MARKET FIRST UPMATTERS / READ BETWEEN / MARKETING THE LINES MISSTEPS
THE LINES: A
n extra 10 bps on select high-ratio deals was an extra present brokers found at the bottom of their Christmas stockings in January. Lenders, including Street Capital, First National and MCAP, took many by surprise with those limited-time offers, coming on the heels of news ING plans to quit the channel in February. But that bonus of sorts was about more than wooing ING brokers, says industry vet Robert Stanfield, a senior mortgage agent with Invis. He reads between the lines and discovers that there are key reasons behind those extra basis points, which may still fall short of swaying established brokers. 1 Some of my lenders of “choice” are offering the extra 10 bps and I look at that as a thank you, but it does make me wonder why some lenders clawed back 5bps just a few months ago, replaced the 5 bps at the beginning of this year and are now offering an additional 10bps. It makes you wonder just how sincere they are when they state the margins in the broker channel are getting too low. 2 I would think the extra 10 bps are meant to attract brokers the lender may have never dealt with before, especially since ING has left the broker channel. The extra 10 bps will make a broker look at them where maybe the broker wouldn’t have previously. If it is just
field Robert tgSagteanAgent, Invis Senior Mor
to get new business, lenders will get the business if they offer better-than-average service, good products, competitive rates and competitive bps paid on a deal. 3 In going to a new lender for the 10bps, you would not have your regular/designated underwriter, which I would be uncomfortable with since deals may run into unfamiliar conditions or issues. Dealing with a designated underwriter that I have a relationship with is very valuable as it helps business get done quicker and I am familiar with the underwriter’s process in how he/she likes the deal packaged. 4 In the big picture of where my business goes, it is ultimately driven by the lender’s service to the broker, the lender’s service to the client after closing, products offered and rate. An extra 10 bps would not make me leave a lender that is meeting the qualities I look for in a lender. 5 I would prefer to get lower rates than an additional 10bps on the deal. By offering the extra 10bps, will the lender be forced to raise the rates quicker when the margins get too small? Withdraw the extra 10 bps so the margins are acceptable and we can maintain a lower rate and a competitive advantage over the Big Five in Canada. Plus, it just makes my clients happier getting a lower rate.
ed P h s i l b pu
>> Un AR FI N 5 YE
O ISSION ET : M M O SC :00pm A 10BP 13 @ 2 22, 20
3.14% Rate – d e t s o tP , Stree 3.04% – e bps! t bps! a 0 ys: 9 ys: 115 CEO R a a p p l m e a d Mo Progr 0 bps! pfront Street pays: 8 l ram U g e o d r o P M y Loyalt Trailer rogram P y lt a Loy nly. iness o 8 | MORTGAGEBROKERNEWS.CA New bus s. t down No floa als. nuary
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d. Insure CMHC e . b t s of 660 Mu beacon m u % Minim . S of 40 ations um TD im x a mortiz a M r a e y um 1 8 only, Minim 2.94% s. (CEO . o d t ie d f e li w ua dit wn allo Fully q ing Cre .94%). buy do r Street Pric 2 is m u s p im b l Max sion o own by 10 is m otiona m o d r prom a e using c 4% bought y 5 he 3.0 quest t rate is y you re notes. e r u n at an s n e deal hdraw r it u w Please o y e b n erm in ffer ca fixed t ffer. O
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8 WAYS TO MEDIOCRE MARKET MATTERS / MARKETING MISSTEPS
‘Mediocre’ - that's not exactly what brokers like to hear, but if you’re doing these ‘don’ts,’ writes coach Doren Aldana, you may be writing that all over your 2013
ittle things make a big difference. That’s true in marriage, parenting, and in marketing yourself as a mortgage professional. In the little time we have together, I want to remind you of – or, indeed, surprise you with – eight deadly marketing sins that mortgage professionals commit and that threaten business growth in any market, especially today’s challenging one.
SIN # 1 - WORKING 'IN' YOUR BUSINESS INSTEAD OF 'ON' YOUR BUSINESS I was working with a consulting client recently who was in a sales slump. I decided to perform a very simple diagnostic. I simply asked him to email me a
10 | MORTGAGEBROKERNEWS.CA
MARKET MATTERS / MARKETING MISSTEPS detailed list with all of his activities for the next three days, and then give me a call back. After reviewing his activities it was clear that he was in the "putting out fires" business because that’s where most of his time was spent. Rather than working "on" his business he was working "in" his business. This mortgage professional (and you) should be spending as much time as possible working "on" your business doing things like planning and developing “marketing assets” that work while you’re not working. These are what I call “High Leverage Activities” because they allow you to leverage your time so you can reap a higher long-term payoff. In his popular book, 7 Habits for Highly Effective People, Stephen Covey hammers this point home using his famous "Time Management Matrix." Dr. Covey emphasizes that too many business owners spend their time doing "urgent but not important" activities when they should be spending their time on "non-urgent but important" activities. Nonurgent but important activities such as planning and marketing generate continued and sustainable long-term growth.
This mortgage professional (and you) should be spending as much time as possible working "on" your business doing things like planning and developing “marketing assets
SIN # 2 - FAILING TO CREATE AND USE A MARKETING PLAN Last year, I was speaking at a national mortgage conference and had about 100 mortgage professionals in the room. I asked the crowd to hold up their hands if they had a current marketing plan that they use and refer to on a consistent basis. Only three hands went up! Studies have shown that small businesses that create and consistently use marketing plans experience an average of 30 per cent higher sales than their competitors. How would you like to increase your sales by 30 per cent or more? Proactive marketing is the key! Here are a few tips to help you create your marketing plan.
TIP # 1 Create a plan for mining the gold from your existing database of prospects, clients and referral partners. If done right, this will allow you to maximize your repeat and referral business. Think of ways to add value and cultivate the relationship with little meaningful touches over time. TIP # 2 Create a plan to attract more referral partners and motivate them to send you more referrals more often. The key to success is to develop a compelling, unique value proposition that positions you as an irreplaceable, indispensable asset on their team. TIP # 3 Create a plan for generating qualified mortgage leads independent of your clients or referral partners. I call this “Consumer-Direct Marketing.” For example, you could launch your own Employee Mortgage Benefits Program designed to get companies to endorse you to hundreds, even thousands, of their employees. TIP # 4 Block schedule at least 30 minutes every day to implement your marketing plan in each of the above three areas. Plan your work and then work your plan!
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MARKET MATTERS / MARKETING MISSTEPS
Many mortgage professionals believe that once you “close the deal” and the happy client walks out the door, then the deed is done SIN # 3 - FAILING TO IMPLEMENT SYSTEMS A system is a business process that generates predictable, consistent, and reliable results day after day. If you want to see a good example of a system, simply visit a fast food franchise like McDonald’s or Wendy's. Notice how they do the same things, the same way, every single time. Unfortunately, most mortgage professionals never take the time to "systematize" their business, which results in waste, chaos, and ultimately, lost sales. Sin # 1 is partly to blame for not getting around to creating and implementing systems.
SIN # 4 – NOT MARKETING TO YOUR CLIENT DATABASE Many mortgage professionals believe that once you “close the deal” and the happy client walks out the door, then the deed is done and you need to quickly move on to the next prospect. While that’s true, your next prospect (in the form of repeat or referral business) might have just walked out the door. Many mortgage professionals tend to think, "That deal is closed – they’re not going to buy another home or refinance any time soon so why waste my time on them? Let’s find a new prospect." Top producers, on the other hand, implement effective database marketing systems and, as a result, often get 60 per cent to 70 per cent of their business from their past clients through referrals and repeat business. That’s working smart, not hard. In your marketing plan you should be including customer appreciation events, monthly or quarterly newsletters, annual mortgage reviews, birthday campaigns, renewal campaigns, weekly email tips and relevant greeting cards – all of which are designed to stimulate repeat and referral business.
14 | MORTGAGEBROKERNEWS.CA
and you need to quickly move on to the next prospect
SIN # 5 - NOT TESTING AND TRACKING YOUR MARKETING EFFORTS John Wanamaker's famous 1886 quote sums it up very well: "I know that 50 per cent of my advertising is wasted... I just don't know which half!" There’s nothing worse than spending money on a marketing campaign and not knowing whether it worked. It’s even worse when you continue to spend money on a marketing campaign that you think is working, but really isn’t. Most mortgage pros use the S.W.A.G. method for tracking their marketing – Scientific Wild Ass Guess! The only way to invest in your marketing efforts with confidence is to test a campaign, track it, and measure your results. That’s why I recommend always offering something of high-perceived value and low risk to motivate prospects to respond. For example, you could offer a special report, seminar, or audio CD to get people to respond immediately via the phone or your website so that you can track your response. This strategy also allows you to capture your prospects’ contact information so that you can continue to follow up with them. Remember, the fortune is in the followup!
SIN # 6 - NOT FOLLOWING UP WITH YOUR PROSPECTS Studies have shown that 81 per cent of all sales happen on or after the fifth contact. If you’re a mortgage professional and you’re only doing one or two followups, imagine all the business you’re losing. Not following up with your prospects and customers is the same as filling up your bathtub without first putting the stopper in the drain! Here are four keys to developing a successful followup system:
1. Create a lead capture system that is accurate and reliable. 2. Develop compelling followup marketing campaigns that will drive traffic to your website or generate phone calls (i.e. weekly email tips, monthly client newsletter, etc.) 3. Systematize the process so that it happens day in and day out, the same way every time. 4. Automate the system as much as possible using Client Relationship Management (CRM) software and/or an outside mailing house to do your mailings.
MARKET MATTERS / MARKETING MISSTEPS
SIN # 7 - "SPRAYING AND PRAYING" Believe it or not, not everyone is a good prospect for your mortgage services. If that’s the case, why would you spend your precious marketing dollars trying to reach them? It doesn’t make sense. If everyone is your prospect, no one will be your customer. If you want to maximize your marketing magnetism, you’ve got to shift from being a vague generality to being a meaningful specific. Unfortunately, too many mortgage professionals blast their general marketing message using general marketing media such as radio, bus stop ads, newspaper ads, mass mail-outs, etc. I call this "spraying and praying." This approach is based on the premise that if you just throw enough yogurt at the fan, something’s bound to stick. The problem is, unless you’re a big dumb company with a multimillion dollar ad budget and no requirement for a positive ROI, you can’t afford to waste a single penny on useless ads. Instead of spraying and praying, narrow your focus onto a specific niche market that actually has a need for mortgage financing and then market to people just like them. If your ideal prospect is an apartment renter paying $1,500+ per month, then find the apartment complexes where those people live and market only to them. Your response rate will go up and your cost of acquisition per client will go down when you begin to target your market. Go narrow, deep and rich in your niche!
Instead of spraying and praying, narrow your focus onto a specific niche market that actually has a need for mortgage financing and then market to
SIN # 8 - NOT DIFFERENTIATING YOURSELF Did you know that your prospect receives, on the average, over 3, 000 marketing impressions a day! With all that clutter you have to compete with, how do you make your mortgage business stand out? How do you differentiate your business in a way that separates you from the competition? Obviously, it’s not going to happen by following the herd and touting the usual "best rates," "best service " and "unbiased advise." It’s like marketing incest out there -- everyone else is doing the same thing with ever decreasing results! You need to differentiate your business in a way that makes you stand out from the clutter and get noticed. A simple way to do that is to keep a close eye on the marketing that really captures your attention and make a note of it. Then borrow and modify those strategies and ideas to create your own unique and compelling message. When in doubt, notice what everyone else is doing, and do the opposite.
people just like
Let’s face it, most mortgage pros are committing one or more of the above marketing sins. If you fall into that category, there is hope -- you can repent and improve. My challenge to you is to take just one or two sins that are costing you the most in terms of profits and productivity, and focus on improving them first. Once you have them handled, move on to the next, and so on. Extraordinary business success is often the result of small incremental improvements over time.
MORTGAGEBROKERNEWS.CA | 15
MARKET MATTERS / MASTER CLASS
GOOD LUCK? Quality referrals are made and managed, writes top broker Dustan Woodhouse, laying out his plan
16 | MORTGAGEBROKERNEWS.CA
THE ORIGINS OF QUALITY REFERRALS A quality referral represents a transfer of trust. The client has some degree of trust in the person referring them to you, and, really, the higher that degree, the greater the likelihood of you not only getting the client’s application into the system smoothly and efficiently but also of retaining the client all the way through the financing process. It follows that the greater the trust placed in you early on leads to much less shopping around on the client’s part. It’s, therefore, key to instil confidence quickly. My understanding of the No. 1 way to instil confidence and build trust, in both clients and, of course, referral sources, themselves, is based on a key comment from a fellow far sharper than I, (his initials rhyme with RRP): "Position yourself as an expert." Those five words have been the foundation of much of my success in this business. I must confess that I neither seized this concept specifically nor pursued it single-mindedly at the time the advice was given. Rather it was over a period of a few years of doing all sorts of different
MARKET MATTERS / MASTER CLASS things to try and drive business that I realized simply having the knowledge to give a comprehensive answer to a mortgage- or real estate-related question is what people appreciated. That and chocolate. More on that later. The higher the quality data you supply your clients, then not only will it be easier for you to deliver to the next client, it will also be far tougher for any other lender or broker to poke holes in it. For instance do not talk about payment differences between interest rates, but rather calculate the specific interest expense difference. It is a different dollar figure and more meaningful to all clients once set out for them.
Product Open Prime +.50 Open Prime +1 Closed Variable P-.20
Balance $100K $100K $100K
GIVE REAL-LIFE EXAMPLES I often use this precise approach to break down ‘interest-only’ mortgages and closed variables: Clients are attracted to lines due to the low monthly payment. However, once you show them the actual interest cost of a line at Prime +0.50 per cent as compared to a closed variable at Prime -0.20, things change. Then we look at the true cost of the penalty to break a closed vs. the true expense of sitting in an open ‘penalty-free’ product.
Monthly Payment $289.56 $330.59 $410.03 (30yr)
Interest Component $289.56 $330.59 $231.00
Penalty to break Zero** Zero** $693.00
**Often an open mortgage will include a $500 penalty for early payout, although this varies from lender to lender and obviously makes a huge difference.
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MARKET MATTERS / MASTER CLASS As you can see by those detailed numbers the ‘crossover point’ (as I refer to the moment that the three-months interest penalty has been paid via the higher interest of an open) varies from 12 months to as little as seven months. Factor in a $500 early payout administration fee on an open and you can be down to two months before the open is, in fact, costing the client $100 per $100K per month more than a closed variable. At this point the conversation turns to prepayment privileges, another opportunity to demonstrate how superior your product offerings are to those of other lenders. (I try and avoid lenders that only allow annual lump-sum payments whenever possible.) Is the client truly going to pay the balance down by more than 15 per cent or 20 per cent in the next year? Are they truly going to pay it out completely in 7-12 months? If not then a closed variable makes far better sense. If you are educated on all of this yourself and can articulate it along with a few other related topics (i.e. lines of credit are ‘demand loans’ and the premium applied can be changed at the whim of the lender as was done in 2009), then at the end of this little exercise you have generally explained more about mortgage financing to your clients than any banker or broker they have ever encountered. What does that do? It creates trust. The client is justifiably confident in you.
Is the client truly going to pay the balance down by more than 15% or 20% in the next year?
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IDENTIFYING YOUR REFERRAL PARTNER Let’s talk about the question of who has the trust. The No. 1 option should be you, trusted for your expertise and detailed answers rather than generalities. Who else has a high-trust factor? There are lots of candidates – doctors, nurses, priests, schoolteachers, community leaders, notaries, lawyers, family members, friends, coworkers, accountants, insurance agents, financial planners and just all around genuinely nice people. Indeed, I’m sure there are more to add to this list. However I suggest that focusing on the folks who have the same sort of trust that you are going to have to offer the clients is the best starting point; i.e., trusted folks that already have similar client data on file. To that end, accountants, branch managers, insurance agents and financial planners all provide that good starting point. Very similar data is involved in their client interactions and thus a very similar sort of trust exists between them and the contacts you aim to make clients. From my experience, the smoothest transitions from "Hi I was told to call you" to my taking a detailed application come from referral sources such as these. Not exclusively, but typically. You may have noticed that I left Realtors off the initial list. This is because increasingly I believe that we are a source of quality referrals to Realtors, more so than Realtors are for us. Not to discount the opportunities for building strong Realtor relations for a healthy client experience all the way around.
MARKET MATTERS / MASTER CLASS The group of Realtors that I work with are top-notch professionals and absolutely have the trust of their clients; however, it is often a slightly different form of trust and the clients are sometimes wary of the Realtor being aware of how much money they make or of potential credit issues that exist. One must always keep in mind that a referral is an extension from that referral source in many ways and how you treat that client is absolutely being reported back to the source and will impact the likelihood of any future referrals flowing your way, or not. As such it is important to look at even the most challenging files as an opportunity for both the client and yourself. Perhaps it is an opportunity to do business two years from now, and if you give that client a roadmap to repairing their credit or budgeting for increased savings and then continue to stay in touch with that client, it will pay dividends in a variety of ways. That’s aside from simply being good for the soul. I have picked up client files where the previous broker told them outright that they would never own a home ever. Well that is just ridiculous. OK, perhaps it will take two years, but I say "here is what needs to happen, and yes you can own a home." Indeed, I have had more than a few clients who took as long as two years to get all their ducks in a row. However, working with them all the way through the process was rewarding to say the least. Often you are also creating a great referral source in that client through that behaviour. So this would be point two – Be a nice person, not just a well-informed one.
I have picked up client files where the previous broker told them outright that ‘they would never own a home ever.’ Well that is just ridiculous.
REWARD THE BEHAVIOUR
STATS Edmonton, Alta.
- year-over-year Jan. sales Source: CREA
20 | MORTGAGEBROKERNEWS.CA
The third key point; always reward the behaviour, the specific behaviour being the act of referring. It is not about whether the file goes anywhere immediately, or ever. The very fact that somebody got another individual to call you is worth, at a minimum, an instant thank-you email, followed with a phone call, perhaps, or, in my case typically, a thank-you card with a Starbucks gift card. (I use www.sendoutcards.com, which keeps the process smooth, simple and easy to repeat.) It is important to not differentiate your thankyou’s between files that fund and files that go nowhere at all. Again, it is all about encouraging the behaviour and keeping that phone ringing. The referral source did the job of making that much happen. Whether you get the deal done or not has nothing to do with their component of the job. Their work is done, act accordingly. Lastly, follow up with the referral source – something I have had challenges with in the past. Some referral sources really want to be a part of the action. They have a variety of reasons and motivations. Perhaps they want some credit for playing a role in a tough refinance situation getting sorted out, and that is cool – you are their expert and they handed the client over to you for expert attention, and it worked. You have made them look good. However, I have struggled with communicating much beyond "thank you, indeed we made contact" as it is a tricky balance between the client’s privacy and, in particular, their perception of privacy and the referral source’s good feelings. Sometimes files cannot cross the finish line and the client does not want the referral source to know this, especially to know why. I usually focus on the fact that I share nothing of that referral source’s life details with anybody ever, and thus I must do the same for the client they referred me – no matter what the relationship. Within my own business the bottom line has largely been position yourself as an expert and you will be sought after. After all, people like to refer business to people that make them look good.
MARKET MATTERS / PRODUCT ROUNDUP
ROUNDUP AND INDUSTRY ANNOUNCEMENTS A bite-sized guide to the industry’s newest products as they come down the channel Who: First National What: Restored 5 bps on 5-year fixed mortgages to an 80 bps finder’s fee. The facts: The reversal of that 5 bps cut is completely separate from the limited-time offer of an extra 10 bps on high-ratio deals First National brought to the market in January. That expired on February 15.
The reasons: “We have reduced our fees across the board,” Karen Biernaski, with First National, told MortgageBrokerNews last August. “But the speculation that this is tied to competition is not valid. We looked at it from a cost perspective.”
costs, so we made the decision to cut fees by 5 bps. “We circled the wagons for a few months, and have looked at what we were paying, what the competition was paying (in fees), and decided to tweak the system. “That is reflected in the new 2013 rates.”
The reasoning behind the reversal: “No one is going to be happy when they have a cut in commission,” says Ben Kawa, director of sales and strategic relationships with First National. “But at the time back in August, the cost of doing business for lenders was going up and we decided to cut
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STATISTICS / RESIDENTIAL RESALE ACTIVITY
This monthâ€™s roundup looks at the most recent data on residential new listings and resale activity
Northern, B.C. 16.2
Battleford, Sask. 61.2
Calgary, Alta. 31.6
Portage La Prairie, Man. 80.1
TOP CITIES Sales Activity
(year-over-year percentage change) Source: CREA
22 | MORTGAGEBROKERNEWS.CA
Sherbrooke, Que. 22.0
Muskoka & Haliburton, Ont. 71.4 Fredericton area, N.B. 33.2
Highland, N.S. 13.6
STATISTICS / RESIDENTIAL RESALE ACTIVITY
Sales Activity by Province
British Columbia: -16.0 per cent
New Brunswick: 5.6 per cent
Alberta: 3.2 per cent
Nova Scotia: -5.3 per cent
Saskatchewan: -12.5 per cent
Prince Edward Island: -39.4 per cent
Manitoba: 13.9 per cent
Newfoundland and Labrador: 2.3 per cent
Ontario: -0.4 per cent
Northwest Territories: 61.9 per cent
Quebec: -9.9 per cent
Yukon: 49.6 per cent
January home sales in Canada dropped 5.2 per cent compared to the same month in 2012, but CREA says not to put too much stock in those disappointing numbers. “Year-over-year declines in activity have received attention lately, and understandably so since they’re more exciting compared to the fairly steady month-over-month trend for national sales following changes made last year to mortgage regulations and lending guidelines,” said Gregory Klump, CREA’s chief economist. “If national sales activity remains stable near the levels we’ve been seeing since last August, then year-over-year comparisons will begin fading after the crucial spring buying season.” The number of home sales edged up 1.3 per cent on a monthover-month basis in January 2013. This marks the fifth month in a row that national sales activity has shown little change from levels in the previous month. Home sales picked up in about half of all local markets in January from December, including some of Canada’s most active markets. Greater Toronto and Greater Vancouver posted monthly sales increases of 5.6 per cent and 4.7 per cent, respectively, while sales in Edmonton climbed by nearly 10 per cent on the month. Activity gains there were partially offset by softer sales in Ottawa, the Fraser Valley, Montreal, Regina, London and St. Thomas, and Calgary.
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COVER / KIT BAG 2013
KIT BAG 2013
Don’t pack up your troubles in your old kit bag. Put in these eight new tools instead, and smile, smile, smile! Leave it to CMP to put a new spin on that First World War marching song – “Pack Up Your Troubles in Your Old Kit-Bag, and Smile, Smile, Smile!” Still sung by boy scouts from Prince George, B.C. to Gander, Nfld., that tune is just as relevant for mortgage brokers as they face a 2013 marked by uncertainty and heightened competition. That climate has placed even more pressure on mortgage professionals to arm themselves for the road ahead with all the tools and services a cutting-edge marketplace can provide. It has also provided CMP with its first-ever Kit Bag list, focused on sharing some of the high- and low-tech weaponry industry veterans are now using to create more efficiencies in generating leads, managing borrower files and cross-selling past clients on a host of revenueyielding services. So, smile, boy (or girl), that’s the style.
24 | MORTGAGEBROKERNEWS.CA
1. CLOUD COMPUTING “Cloud computing” has all but reshaped the way brokers access sensitive client files away from the office, and yet some mortgage professionals remain holdouts -- no matter how often they’re away from that desktop computer. 2013 could and, perhaps, should be the year to change that, say CMP readers. “In our industry, most brokers are making efforts to protect their clients’ sensitive data, however the constant risk of data loss or data theft can be greatly reduced for a small monthly investment that pays large ‘peace of mind’ dividends for both clients and brokers alike,” Dustan Woodhouse, a high-volume broker with Dominion Lending Centres Canadian Mortgage Experts on B.C.’s Lower Mainland, tells CMP. “Also not having any client data stored on the device I am carrying around is a relief.” Cloud computing offers on-demand network access to a pool of networks, servers, storage and applications, and unlike software, installed on a computer or server, with cloud computing, a broker logs in through a web browser and uses the power of the Internet to control software usage. In real
COVER / KIT BAG 2013
terms, it means the mortgage professional can create client applications in Expert while logged onto an office computer then to re-open that same file at another location – picking up exactly where he or she left off -- whether that other location is a laptop, hotel business centre or, given our Canadian home and native land, a BlackBerry. The data, or confidential client files, are stored in the cloud and not on the computer, ostensibly better securing sensitive information. Woodhouse`s uses extend far beyond the originations process. The platform also frees brokers from the office and gets them into the field without having to worry they’ve strayed too far from their applications. In fact, Woodhouse performs almost all his computing tasks in his system. The company behind the platform is based in Vancouver, with data storage for clients, via its servers, also in British Columbia. The location eliminates concerns about taking client information outside the jurisdiction, into the U.S. or elsewhere in Cyberspace. "The cloud has been around for years but for the big boys -- Microsoft, Google," says Abid Shah, senior systems adviser for Woodhouse's sevice,
IMOGO. "But what we`re talking about here is more than just a dashboard: it's a platform giving brokers access to all the applications that they currently use, plus their communications -- email and phone -through one secure access point. It eliminates the piecing together that many brokers are having to do, and because the data centre is in Canada, and not the U.S., it protects client confidentially from the Patriot Act and undisclosed access by American authorities." Woodhouse pays as little as $75 a month for the service, bells and whistle included. It's a nominal charge for the mobility it affords him as a selfdirected broker: “This service has allowed me to take vacations and still have the ability to be up to 100 per cent connected with the my office desktop from just about any computer at anytime, anywhere,” he tells CMP. “We encourage our clients to use a mortgage professional as we are well aware of the range of data out there, why would I not employ experts with regard to the security of my data – seems logical.”
MORTGAGEBROKERNEWS.CA | 25
COVER / KIT BAG 2013
2. THIRD-PARTY CRM Customer relationship management (CRM) is a model for managing interactions with clients and utilizing technology to organize, automate, and synchronize sales, marketing and technical support. In short, for brokers, CRM performs all the functions of a right hand, helping keep clients and records at their fingertips. That relationship has increasingly recommended third-party CRM platforms to brokers planning to make a move to another broker network or just looking at the possibility. Still, there are other reasons why more and more brokers are expected to place them in their 2013 kit bags. “You get better support, and can move with the times when new operating systems are introduced,” says Ken Quigley, president of Keystroke Quality, one of several third-party CRM providers. “A lot of industry-specific CRMS are not meant to work with other merging programs, like Microsoft Word. They tend to have a selfcontained bubble of apps, a lot of them need support for new operating systems, like Outlook.” Customization is also helping make third-party CRMs an easy sale. “You can customize it to meet all of the compliance needs, record every contact with a client, whether it is a phone call, email or during a meeting,” says Quigley, whose Sage ACT is gaining traction among brokers. “It is crucial for brokers to stay on top of renewals, to have better client maintenance and simultaneously be able to handle a bigger client workload. With the right third-party CRM solution, you can craft and tailor it to your specific needs.” What Quigley calls an “essential tool for any broker,” a third-party CRM should be fully compatible with PDA tablets and smartphones, able to do everything from configure to the latest operating systems on the market to self-populate a Christmas card list.
You can customize it to meet all of the compliance needs 26 | MORTGAGEBROKERNEWS.CA
You get better support, and can move with the times when new operating systems are introduced
3. E-SIGNING Broker Deepak Bansal doesn’t go anywhere without his iPad, and being able to close and sign a deal without shuffling through a mound of paper is a vital component of his electronic tool kit. “Electronic signing is fantastic, and I try to use it at every opportunity when I am signing a client,” says Bansal, with Dominion Lending Centres Mortgage Village. “Instead of hauling around 10, 15 or 20 pages of documents – depending on the mortgage – all I have to do is call up the contract on my iPad, and the client can initial and sign off with the stylus. No paper, no fuss.” Bansal incorporated the e-signing app back in April of last year. Many other brokers are adding it to their kit bag for 2013. “I tested out different apps, tweaked them, saw what worked and what didn’t. I finally settled on an app that I paid $10 for,” says Bansal. “There are free apps, but you basically get what you pay for. There are pros and cons for every different app, you just need to see what works best for you.” An advocate of third-party CRMs as well, Bansal sees the e-signing app as dovetailing with the goal of keeping his book of clients all within reach on his iPad. “Everything is there, and your renewals are all on file and maintained,” he says. “Clients who e-sign are automatically filed into my book, and it all works very well.” The principle of e-signing works like this: the mortgage contract is presented in pdf format on the iPad, and the client initials/signs where needed. “As the client initials the document, it is saved and locked,” says Bansal. “It is then sent on a secure network to my computer into the ‘safebox,’ and an email of the completed contract is sent to the client.” The two main applications Bansal uses for signings are EasySign and SignPDF. As for sending the signed documents to lenders, it depends on whether your tablet device is secure. “Documents that we get signed currently are all submitted to the lenders electronically or via fax. Lenders only receive a ‘copy,’ not the original,” he points out. “From a compliance viewpoint, FSCO is OK with brokers doing electronic signings, as the main thing we need to ensure is that client confidentiality is assured. For starters, having a pass code on our tablet devices is a must, as well as being on Apple iCloud allows you to use Find My Phone to track your device in the event it is lost or stolen, so you can wipe out all data virtually to protect your clients’ information.” Roughly 30 to 40 per cent of Bansal’s clients have taken advantage of e-signing.
Sally and Jim were so moved by the CHIP Home Income Plan they fell out of their rocking chairs.
News / KIT BAG 2013 COVER InternatIonaL
u.s. “It is an option, and I only offer it to those clients who are comfortable with the technology,” he points U.S.“Usually housingImarket than thought out. find it isworse the younger generation, The number of Americans who bought previously those who have grown up with computers, who take occupied homes rose in October. But the National advantage of it. For those who want to do it the Association of Realtors says it overstated more than old-fashioned way, I just set up the laptop and three million sales during and after the Great Recession, showingprinter, the housing market weaker than mobile and do it thatwas way.” previously thought. And aside from the green benefits of going The private groupattracted says salestorose four per paperless, why trade are clients e-signing? cent in October to a seasonally adjusted annual rate of “It’s different, unique – they find it interesting,” 4.42 million. That’s below the roughly six million homes says Bansal. a year that economists say are consistent with a healthy housing market. But it’s ahead of 2008’s revised sales, now considered the worst in 13 years. The trade group revised its sales from 2007 to 2010 down 14 per cent, from more than 20.6 million to nearly 17.7 million. Among the reasons for the lower figures, the Realtors group says: changes in the way the Census Bureau collects data, population shifts and some sales being counted twice. The Realtors consulted with government and private housing experts, including the Federal Reserve, the Department of Housing and Urban Development, the Mortgage Bankers Association, the National Association of Home Builders, mortgage giants Fannie Mae and Freddie Mac and CoreLogic, a California-based data firm that first raised doubts about the annual numbers earlier this year. CoreLogic has estimated that the Realtors group overstated sales in 2010 by at least 15 per cent. The changing numbers could affect how economists view the trade group’s data. It could also affect companies that use the figures for hiring and expansion plans. Sales are measured when buyers close on homes. But many deals are collapsing before that point. One-third of Realtors said they had at least one contract scuttled in October, up from 18 per cent in September. Contracts are being cancelled for several reasons: Banks have declined mortgage applications; home
Usually I find it is the younger generation, those who have grown up with computers, who take advantage of it
90.6% 52.1% Percentage of homeownership costs, including mortgage payments, utilities and property taxes that take up a typical household’s monthly pre-tax income in Vancouver and Toronto, respectively (RBC Economics Housing Trends and Affordability Report)
4.inspectors A CREDIT UNION have found problems; appraisals
showedcan a home was worth less than the bid; credit a Brokers be forgiven for having overlook buyer lost a job before the closing. unions in the past. Their teeny-tiny service areas, More than two years after the recession meagre compensation and product offerings did officially ended, many people can’t qualify for little to distinguish them from the competition. But loans or meet higher down payment forging a relationship with with at least one ofcredit those requirements. Even those excellent and stable jobs are holding off because they increasingly important lenders should be on fear the that home prices will keep falling. Sales are also must-do list of all mortgage professionals navigating beinglandscape, hurt by a decline in first-time buyers, who a B-20 say industry veterans. They point are critical to reviving the housing market. to “common sense underwriting” and product Sales have fallen in four of the five years development efforts likely to drive broker since the housing boom went bust in 2006. originations. Declining prices and record-low mortgage rates The OSFI move to cut maximum haven’t been enough to boost sales. LTV to 65 per At the time,for home construction cent from 80same per cent HELOCs offeredhas by begun a gradual comeback and should to thein a federally-regulated lenders has already add resulted economy’s growth in 2011 for the fi rst year since mini boom for provincially regulated CUs in Ontario the Great Recession began in 2007. Last month, and other provinces. There, regulators are refusing builders broke ground on an annual rate of to 685,000 impose those new rules on credit unions. homes, the government said recently. While it amay early determine That was 9.3 be pertoo cent jumptofrom Octoberhow and much business will result from that competitive the fastest pace since April 2010. Most economists sayhave home prices ramped will keepup advantage, credit unions already falling, by at least fi ve per cent, through 2012. their courtship of brokers with more generous Many forecasts don’t foresee a rebound in prices compensation and more and more competitive until at least 2013. interest rates for BFS clients, in particular. The high rate of foreclosures has made Marching to their own drum also means that resold homes cheaper than new ones. The many credit unions willhome continue to offer median price of a new is roughly 30cashback per mortgages and rates foroccupied cent above thelower pricequalifying of one that’s been before – twice the normal markup. Investors conventional mortgages. They’re two optionsare most taking advantage of the discounts. brokers want to keep in their kit bag for 2013. housing market is struggling evenlargest TheThe recent merger of two of Ontario’s as the broader economy has improved in players as well as the service area expansion of recent months. many The other CUs have also bumped up their economy grew at an annual pace of two user-friendliness. per cent in the July-September quarter. Many economists expect slightly better growth in the October-December quarter. CMP
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5. THREE MOBILE APPS Any broker worth his salt has a smartphone, an essential tool to keeping the office – and clients – at your fingertips. Here are three other mobile apps that will make your smartphone work better – and, indeed, smarter – for you in 2013: BREWSTER Brewster is an instant Rolodex. Between Facebook, Twitter and LinkedIn and all of your email clients, you likely have hundreds and perhaps thousands of friends and clients you stay in contact with. Brewster Mortgage Intelligence is a handy mobile app that pulls in contact info and announced that Steve Heimbecker, Marg Green, other details from all of those platforms and creates Donna Ramsay and Concierge in-depth profiles for each and every person. Using a Mortgage Group are joining relationship algorithm, the appthe automatically company. sorts contacts into favourites, trending and other lists – Green in Mississauga, Ramsay in even sending out gentle reminders when you’re Orangeville and Heimbecker in Waterloo, are equal owners in falling out of touch with someone. Concierge Mortgage Group. Concierge is a new boutique HERE ON BIZ brokerage firm that will focus on Your LinkedIn contacts are brought to life, and in elite and experienced brokers, person. With Here on Biz, you offering can instantly see needs-based exceptional which of your LinkedIn contacts (as wellservice. as otherThe goal is for customer LinkedIn users) are physically Concierge nearby, with the Mortgage Group to have offices contacts segmented into visitors andthroughout locals. You Ontario. Concierge simply have to request a connection and youwill canoperate as a network partner chat directly via the app, ideally setting up the with kind Mortgage Intelligence, developing its own of in-person encounters that keep you top of mind brand while taking advantage of with clients and leads. Mortgage Intelligence’s key
resources like compliance, payroll, exclusive mortgage products, marketing. An oldie but a goodie, this oneand interface can handle “Mortgage Intelligence offers all of your social media on the go. The HootSuite us competitive Mobile app allows for publishing to all of yourcompensation social and the support that Concierge networks – Twitter, Facebook, LinkedIn, etc – from needs to be successful,” one interface. You can schedule messages for said Heimbecker. optimum times, attach files and photos and shrink links. Advanced users can even set up streams for TMG The Mortgage monitoring customer feedback on social networks,Group is moving three of its regional leaders up the track clients and keywords across different corporate ladder, billing the move as platforms and more. in keeping with its philosophy of promoting from within. Effective Jan.1, 2012, Bud Jorgenson assumed the position of VP for the Prairie Region; Gord Appel, VP, Alberta Region; and Gerald Krahn, Ontario Region. “These three have already made positive changes in their respective regions,” said Mark Kerzner, president of TMG. “Their dedication to TMG agents and Top: Steve Heimbecker brokers is very important for the Middle: Marg Green Middle: Donna Ramsay company’s long-term success. They Middle: Gord Appel are a great asset to the TMG Bottom: Gerald Krahn family.” CMP
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COVER / KIT BAG 2013
6. TRAILER FEE LENDER It’s a tough sell that a slowing market has just made much easier as more and more brokers look to renewal-and trailer-fee options as a way of maximizing their return in 2013. “I, for one, am going to be doing more trailer-feeoption deals,” Mike Hattim, an agent with Dominion Lending Centres Forest City Funding tells CMP. “I’m truly starting to realize where the competition really lies now and it’s not just with other brokers or the banks, but also with some monolines.” Hattim is among the many brokers pointing to the “super aggressive” retention efforts of all lenders at renewal and the stymieing effect that is now having on switches. That competition most often comes in the form of renewal offers proffering rates 10 basis point or 20 off of the marketplace average. The growing challenge of collateral charges is also in the mix. But that enhanced rate competition – even before the threat of a switch – means brokers are locked out of the competition before it’s begun. Even among diehard supporters of upfront remuneration, the phenomenon only stresses the need to add at least one trailer fee lender to their 2013 kit bag. “I’m still really in favour of getting all my compensation upfront,” says Mick Noble, “but doing more deals with a trailer fee means that I can better withstand slower periods of home sales in the future. I just wish I had some of those now to draw on.”
7. REVERSE MORTGAGE LENDER Here’s one to add to your tool box for 2013, say a surprising number of converts to the whole idea of reverse mortgages. “The more competitive rates and the tighter underwriting guidelines at many lenders have made reverse mortgages more attractive,” says Invis agent Brad Compton. “I think they’re now an option more brokers will feel comfortable offering to the right client, especially older ones with the equity to pull out of their homes but without the income needed to qualify for a second mortgage or a refinance or HELOC.” This year Canada’s only national provider of reverse mortgages is offering rates as low as 4.95 per cent, at the same time they continue to welcome clients as young as 55 years old. The move in 2012 to bolster broker compensation has also expanded confidence in the product and the willingness to refer clients looking to take some of the hassle out of liquidating some of their home equity. Approval that requires no income, credit or medical qualifications is expected to become an even stronger selling point for both brokers and their clients in 2013, says Compton, who works both the Toronto and Halifax markets. That borrowers can also opt to make no payments at all for as long as they own and live in the home – unlike with a HELOC – is another.
8. YOUR BOOK OF BUSINESS “Playing by the book” may be the most important tool in your kit bag for 2013 as lenders and service providers float a raft of new-and-improved crossselling opportunities before brokers. Mortgage professionals who fail to keep closely connected with past clients are increasingly losing out on those alternative revenue sources -- from syndicate mortgages, GICs and credit cards to life, home and auto insurance, just to a name a few. “More products are better than less products,” says industry vet Ron Butler, tapping into the sentiment of a growing number of colleagues.
“Playing by the book” may be the most important tool in your kit bag for 2013 as lenders and service providers float a raft of new-and-improved cross-selling opportunities 30 | MORTGAGEBROKERNEWS.CA
COVER / KIT BAG 2013
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FEATURE / LENDER LETDOWNS
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FEATURE / LENDER LETDOWNS
Brokers are usually full of praise for lenders – well, sometimes – still they have four flaws guaranteed to spark broker ferocity, reports Don Horne Mortgage brokers perform a delicate balancing act, bringing together lenders and clients in what has been described as the most stressful event in a person's life – buying a home. So naturally, there can be tension, frustration, frayed nerves – and that’s just on the part of the broker. It begs the question how exactly are lenders contributing to that stress by pushing broker buttons, hampering their efforts and, effectively, sabotaging their deals? Here’s how some of the industry’s leading players answer that question, providing some of the insight CMP expects to see repeated in Broker Sentiment Poll results. They’ll appear in the March issue of the magazine, along with the kind of analysis only hundreds of online respondents can provide.
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FEATURE / LENDER LETDOWNS
LENDER LETDOWNS: 1. LACK OF TIMELY COMMUNICATION “Some lenders communicate well ,” says Jim Tourloukis, president of Advent Mortgage Services, and No. 2 on the 2012 CMP Top 75 Brokers list, “but many do not. One lender (one of the big banks) is so bad at communicating that I suggested to the senior VP that they just cancel all the phones for their staff to save them thousands of dollars, as their staff do not know how to use a phone.” Maria Kyle, with Dominion Lending Centres Vintage Financial, hates being left out of the loop when a lender makes a major policy change. “Lender makes a major policy change and ‘neglect’ to send out a notice to a broker and you find out when your underwriter declines the deal due to not conforming with the new policy. And you’re like ‘what new policy? When did that happen?’” Another bone of contention for Kyle is how the internal policies of some lenders can scuttle a deal. “Some lenders not only follow the insurers’ policies but then have their own internal policies. So you send a deal thinking it fits, say for example CMHC’s policy, and then you get a ‘decline’ because the underwriter advises that although it adheres to the insurer’s policy it does not fit their criteria,” says Kyle. “It’s like what? Two sets of rules?”
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2. LACK OF COMMON SENSE Tourloukis is frustrated by the lack of what can best be described as common sense. “Often times, lenders do a poor job thinking outside the box,” he tells CMP. They are quick to cite policies in order to decline a deal when in fact the deal is solid and makes sense. If fact, in some cases, a deal declined by a lender's broker channel will be accepted and approved by the same lender's branch.” But there’s more. “Some lenders do not allow their staff to make any decisions whatsoever,” he says. “For example, some lenders force their fulfilment departments to refer the deal back to the underwriter for the smallest of changes. “As an example, if a client's income was verified for as little as $10 less than what the application showed, the fulfilment associate has to send the deal back to the underwriter (even if the ratios are well in line!). This not only wastes the lender’s time, but it also delays the progress of the deal.” Another Top 75 broker is on the same disturbing page. “Where to begin, where to begin?” asks Collin Bruce, head of the Bruce Mortgage Team at Dominion Lending Centres Mortgage Mentors. “I completely understand that lenders are under serious scrutiny from OSFI and other regulators, but the lack of common sense among some underwriters is what drives me nuts. “What happens is the strong clients who can walk into their bank and get an instant approval, get put through the ringers by the underwriters.” Bruce points to an example from his own book, a couple where both had 750 credit scores and a combined $150,000 for a down payment from the sale of their old home, which means they’re seeking a mortgage with only a 60 per cent loan to value. “The client is a professional, but has only been at his job for six months,” Bruce tells CMP. “So they are asking for a two-year history, which I can understand at higher LTVs, but not at 60 per cent LTV. Just approve the deal with what we have.”
FEATURE / LENDER LETDOWNS
3. VOLUME VISION For others, the biggest beef is a lender’s demands for high volumes, at the same time it seeks high octane efficiencies from its broker partners. The contradiction is only compounded by that lender’s gripes about pooling. “More lenders want a really high funding ratio with a high volume, and it is hard for people to commit to it with the high volume requirement,” says Angela Calla, another Top 75 player with Dominion Lending Centres. “I tend to shy away from that, the high volume. I don’t want to pool; it’s not my style.” Calla argues that for experienced brokers, there should be an option as to whether a lawyer – and the associated fees – need be involved. “There shouldn’t be a barrier in place if there is an experienced broker involved.”
More lenders want a really high funding ratio with a high volume
4. LENDER LEAP FROG The handling of clients – or what brokers might better classify as interference – can create problems where none exist, say brokers. “Cross-selling of the client – the big banks are notorious for trying to cross-sell our clients all the time,” says Tourloukis. “Some lenders will do anything in their power to retain a client, at times forcing the client to jump through hoops just to take their business elsewhere. I understand that the lender should try to retain the client and that it is smart business to do so. However, forcing the client to personally call the lender to explain why they want to leave is outrageous (especially if the client has already given their lawyer authority to act on their behalf ).” For Collin Bruce, it is simply a matter of trust and respect, things that he as a broker look to lending institutions to provide. “It just makes brokers look so bad,” he says. “It is supposed to be easier, and we have all of these options.”
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FEATURE / THE MORTGAGE SUMMIT
Channelling success may increasingly mean googling it, or making sure consumers are googling you, say organizers of The Mortgage Summit
marketing exec from the king of search engines – Google – will deliver the keynote for the upcoming Mortgage Summit, guiding brokers on how to use SEO to tap into a king’s ransom of online borrowers. CMP’s The Mortgage Summit, coming to the Toronto Congress Centre May 9-10, will feature keynote speaker Fabricio Dolan of Google Canada, sharing his insider’s knowledge on how to generate more leads online, optimize search engine hits and send click-through rankings sky-high. “The Mortgage Summit allows licenced agents and brokers to grow their business,” says Chris Davis, CMP’s conference producer. “With networking lounges and meeting areas complementing first-class training from some of best teachers in the industry, it is an event that you cannot afford to miss. “In fact, we’ve made a concerted effort to make sure all agents can access it by offering admission at cost – at a very reasonable $62.” With 20 sessions, 40 expert speakers and more than 45 exhibits, mortgage professionals, lenders and solution providers will come together to gain strategic insight on how to increase their mortgage business with tactical training. Among those teachers are several CMP Top 75 brokers delivering master-class presentations on
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niche markets they’re using to succeed in a slowing environment. Those sessions run the gamut from Chad Robinson’s focus on small triplex deals to Christine Xu’s formula for tapping into new Canadian communities. Bridging the gap between brokers and Realtors, learning how to stand out in the broker channel and cost-effective marketing tactics are all just a small part of the two-day program. In addition to the speakers and workshops, the summit offers a unique mix of networking opportunities with direct access to the industry’s regional and national players. The summit not only fosters broker education, but is an excellent opportunity to establish business relationships and future referrals, says Davis. A celebration of the best in the industry, the May 10 Canadian Mortgage Awards will recognize the brightest stars across the entire spectrum of mortgage brokering. With 21 individual and organizational categories, the ceremony ensures both large and small players are recognized for their individual achievements nationwide. For more information, go online to www.themortgagesummit.com or call 1-855-2832721. You can also register for the event at firstname.lastname@example.org.
FEATURE / THE MORTGAGE SUMMIT
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FEATURE / BUILDING A LENDER
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FEATURE / BUILDING A LENDER
Ask any Roman architect, building a masterpiece takes time, and as Don Horne reports, building a mortgage lender is no different If Rome wasn’t built in a day, neither was your typical residential mortgage lender. Assembling an entire operation from scratch usually takes 18 months, which makes it all the more impressive that CMLS Financial could do it in seven. “It has been a monumental effort, starting from mid-July,” says Dan Putnam, senior vice-president of business development for residential mortgages. “We have 800 mortgage brokers who have signed up, and expect over 1,000 when we go live in a couple of weeks.” As one of the largest independently owned commercial lenders in the Canadian market with approximately eight per cent share, CMLS is ready to leverage that power for brokers in the residential
MORTGAGEBROKERNEWS.CA | 39
Dan Putn am
FEATURE / BUILDING A LENDER market. “A question we get asked all the time from brokers – what is your lender’s ability to fund mortgages?” says Putnam. “In addition to long-term relationships with several institutional investors, securitization programs and managed funds, CMLS Financial is one of only three non-bank lenders working in the mortgage brokerage space with approved lender status to issue and sell mortgages into the NHA MBS and Canadian Mortgage Bond (CMB) programs. “This gives us the kind of cost and liquidity advantages associated with direct access to these programs, and also it is important to remember we have over 35 years of lending experience, and we are familiar with the mortgage investing and lending space.” The landscape for brokers continues to change, with Putnam citing ING Direct’s departure and the effect it has had on brokers – many now scrambling to find new partners in a slow market. “We’ve lost significant broker-friendly lenders in recent years, and that’s why it is important for brokers to support the non-bank lenders,” says Putnam. “Choice is important, and it is good for the well-being of the industry to spread out the business. “One left last year (FLM), and brokers were left scrambling to find new lenders for their mortgages. Some very good lessons were learned from that.” Dan Putnam’s pedigree includes being president of the retired MortgageBrokers.com brand, having worked in the Canadian residential mortgage space for over 25 years. He has owned and operated a large regional mortgage brokerage, served as president of two national mortgage brokerage operations and was president of originations for a national residential mortgage lender. An Ontario board member for the Canadian Association of Accredited Mortgage Professionals (CAAMP), he also sits as chair of its government relations committee. It’s a commitment above and beyond the foundation-laying he did for CMLS. “I’m honoured and delighted to have such a first-class team in place for this exciting initiative,” CMLS Financial President Chris Brossard tells CMP. “We intend to build this business on the same foundation of exceptional service, broad array of products and services, best-of-class technology, and competitive pricing that has resulted in the outstanding growth of our commercial mortgage business.” CMLS wants to control as much of the customer experience as possible, says the exec, which is why it decided to manage all mortgage funding processes
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STATS Huron/Perth, Ont.
- year-over-year Jan. sales Source: CREA
and post-funding services in-house. “We are here to stay and we look forward to growing our business with our broker partners,” says Putnam, A major component of the residential division is the underwriting service, led by industry veteran Jill Porter. Putnam’s crediting her for putting in place an end-to-end underwriting process and making it more broker-friendly. “We’ve developed an SLA for application turnaround time of four hours,” he says. “That is impressive, and that is what brokers want.” Porter’s credentials include over 25 years in various senior credit-oriented roles with two of the largest residential lenders in Canada, and having worked in the prime and near prime mortgage markets. She also sits on CAAMP’s Professional Standards Committee. The compensation program for brokers can be broken down into two basic programs: an Upfront compensation program, and a Renewal compensation program. “The Upfront program is exactly that, paying brokers once at funding,” says Putnam. “The Renewal program pays upfront as well, but also pays the broker again at every CMLS renewal. Brokers choosing the renewal compensation option will have their name and contact details on customer communications sent from our servicing department so the broker relationship is maintained.” He’s also proud that the lender will allow brokers to select their compensation on a per deal basis, allowing them to manage their cash flow more effectively. That’s good news for brokers who are tired of commissions and rates being linked to portfolio volumes – at CMLS there aren’t any.
FEATURE / BUILDING A LENDER “Our interest rate strategy is to offer everyday competitive pricing to our approved broker affiliates,” says Putnam. “As such, we have no complicated clubs or tiers.” It’s a promise other new entrants to the residential end of the channel have made and brokers say they’ll be checking to see if CMLS keeps that egalitarian model beyond its first year. Yet another welcome addition to the residential division is the selection of Delta 360, Canada’s newest mortgage servicing platform provider, to support its entry into the residential mortgage market. “We chose the Delta 360 platform for its many new features and how quickly the solution could be brought to market,” says Chris Brossard, CMLS Financial CEO. “We also were impressed by the technological advances the platform provides and how easily we could integrate it into our existing systems.” Rounding out the team are Kevin Fettig, senior vice-president of risk, and Cheryl Preston, vicepresident of servicing residential mortgages. Prior to joining the residential mortgages
Our interest rate strategy is to offer everyday competitive pricing to our approved broker affiliates. As such, we have no complicated clubs or tiers
division in 2012, Preston held senior management positions with two of the largest non-bank mortgage originators/servicers in the country, as well as other senior posts, rounding out her 22 years of experience in the residential, commercial and residential construction mortgage sector. Fettig has held senior executive positions with a number of mortgage insurance companies, with more than two decades of experience in the mortgage and capital markets. “We are starting our launch in three provinces (B.C., Alberta and Ontario) with plans to expand to other provinces in the near-term,” says Putnam, still catching his breath from seven hectic months of preparation. “On day one, we will be offering a full product suite, with 1-, 2-, 3-, 4-, 5-, 7- and 10-year fixed-rate mortgages and two ARM products – 3and 5-year terms. All come with 20/20 prepayment options. “We will be well-positioned to compete in the market,” says Putnam.
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FEATURE / BUY-DOWN RESTRICTIONS
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FEATURE / BUY-DOWN RESTRICTIONS
IS WATCHING YOU Brokers may think they decide how much to buy down rates, but does that power really rest with Big Brother?
In George Orwell’s then-futuristic novel 1984, Big Brother was the tyrannical party leader who decided what was best for all, whether or not all agreed with him. In 2013, some brokers are arguing the Big Banks – and, indeed, many other lenders in the channel – may now have taken on that role, specifically around what level of buy-down is good for them. "Really, the decision should lie with the individual who is paying to buy it down -- the broker!” says Jim Tourloukis, owner of Advent Mortgage and a CMP Top 75 broker. “Some brokers are willing to work for 40-50 basis points and will buy down a rate to keep a client. The lender should be indifferent if a broker is willing to buydown a rate
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FEATURE / BUY-DOWN RESTRICTIONS as the cost is borne by the broker, not the lender." His word won’t likely be the last on the subject. There’s growing debate among some brokers as to whether lenders should remove maximum buydown restrictions and allow them -- and only them -- to decide just how low to go to retain a client. That kind of latitude is increasingly called for as the battle with the banks heats up again, with rate competition at its centre. Still, the need for greater freedom to buy down may be a moot point in a marketplace where for now, brokers appear to have the best rates. Some brokers are, in fact, referencing those highly competitive rates in arguing there is no need to buy down beyond the restrictions most lenders now apply. Most of those lenders allow brokers to offer rates at least 10 bps lower than what they offer on their rate sheets. Ostensibly, it means the modern-day Big Brother has provided them enough elbow room to save deals and keep competitors from undercutting broker offers. Still, a number of industry vets are already reporting a ramp-up in rate competition among banks looking to protect themselves against switches at or before renewal. That phenomenon – plus continued slowing in new home sales – suggests brokers may soon come under pressure to lower their rates beyond what some lenders currently permit. Other brokers also point to lender reward programs that have been built to facilitate buydowns as another reason why they should be permitted to discount more deeply. But buying down that low isn’t necessarily a winning strategy, argues Michael Celuch, an Mortgage Intelligence broker in Windsor.
Other brokers also point to lender reward programs that have been built to facilitate buydowns as another reason why they should be permitted to discount more deeply 44 | MORTGAGEBROKERNEWS.CA
Sending a message to mortgage lenders that we are willing to work for peanuts, is big cause for mortgage industry concern. And I’m not interested in a pay cut
STATS Simcoe & District, Ont.
60.3% - year-over-year Jan. sales Source: CREA
“I think what the lenders provide now is enough,” he says. “Going lower isn’t necessary, really.” But in setting buy-down restrictions, broker lenders may be looking out for all mortgage professionals by slowing the race to the bottom, say some mortgage professionals. “I can say buying down rates as an entrepreneurial mortgage professional operating a one-person business or a small team is a terrible strategy,” says Greg Williamson, broker and trainer. “Of course, the easier road is to just buy-down rates and race to the bottom with everyone else. The scary part is what if I win the race to the bottom?” Brokers may be better off focusing on their conversion rates, says another industry veteran Chris Richards, and fighting for greater buydowns may ultimately benefit lenders and not brokers. “Knowing your baseline (conversion rates) is hugely important because if you don't generate enough leads or improve your conversion rates, the income you are hoping for will never up,” says the MI mortgage professional. “Sending a message to mortgage lenders that we are willing to work for peanuts, is big cause for mortgage industry concern. And I'm not interested in a pay cut.”
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BUSINESS / MARKETING
The last step in developing an employee mortgage benefits program, writes Doren Aldana, is meeting the actual employees
oday’s article is the final instalment in my eight-article series titled, “7 Steps for Launching Your Own Mortgage Benefits Program.” If you’ve been following along, you know we’ve covered a lot of ground over the past seven months. I’ve literally taken you by the hand and led you through each step, from designing your mortgage benefits package, to creating a “Hit List” of companies to market to, to identifying the decision-maker, to creating and mailing your “Shock ‘n’ Awe” intro package, to following up by phone to book face-to-face meetings, to conducting a successful meeting. And now, in this last step you’ll learn how to promote your program to the employee population. You see, it’s not enough just to get your program approved – you need to promote the benefits of your program to the employees so you can turn them into happy clients! This final step is where all the money is because until and unless you position yourself as the company’s trusted mortgage adviser, you’ll never have the credibility necessary to win the employees as clients! So, how exactly do you do that? Well, here are a few marketing tools to consider.
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BUSINESS / MARKETING
MARKETING TOOL #1: LUNCH AND LEARN SEMINARS. This is the single-most effective, most profitable way to get in front of the employees because it’s got the highest level of what I call “Marketing Intimacy.” Lunch and Learns give the employees a chance to meet you, learn from you and witness your genuine desire to make a difference in their lives. And here’s the kicker: Anytime you’re in front of the room speaking to a group of people, whether it be two people or 200 people or 2,000 people, they see you with an aura of expert status –they see you as a trusted adviser. Just because you’re the speaker in front of the room, you gain instant authority as the expert. All you have to do is bring in some free pop and pizza (the ethical bribe to get butts in the seats) and then you stand at the front of the room and educate and entertain them for 45-60 minutes by providing valuable mortgage information. I call this “Edutainment” because you’re entertaining and educating them at the same time. Don’t miss that important point. After all, who gets paid more, entertainers or educators? Entertainers, by far! So be sure to make your presentations fun and engaging, not dull, dry and boring.
Here are a few topics you can cover at your Lunch and Learns: • How to stop renting and get into a home of your own sooner. This is a good topic for attracting first-time homebuyers. • How to instantly eliminate all your high-interest debts. This is primarily for homeowners who have over $10K in high-interest consumer debt and will help you attract more debt consolidation refi deals. • 11 questions to ask before getting a mortgage. This is for anyone who’s considering getting a mortgage and wants to learn the critical questions they need to ask before they sign on the dotted line.
MARKETING TOOL #2: POSTERS. You can build more exposure for your mortgage benefits program by strategically placing posters in high-traffic areas throughout the workplace. For example, you could place them in the cafeteria or lunchroom, on bulletin boards and in bathrooms.
MARKETING TOOL #3: PAYROLL STUFFERS.
I call this “Edutainment” because you’re entertaining and educating them at the same time. Don’t miss that important point. After all, who gets paid more, entertainers or educators?
Once approved by the company, you can get your flyers added to the payroll envelopes as a freestanding insert. As long as you pay for everything and perhaps hire someone to help stuff the envelopes, they shouldn’t have a problem with this. Imagine every time the employees get paid, they’re seeing another reminder about how they can save time, energy and money with their company’s in-house mortgage benefits program. Powerful stuff! The front of the payroll stuffer might say something like, “Need a mortgage? Save time, energy and money with your company’s Employee Mortgage Benefits Program.” And then the back of the flyer would provide an overview of the exclusive benefits of the program and, of course, your contact info. Like all your other promotional materials, it would be custom-branded so it looks congruent and professional. Remember, you need your marketing collateral to look like you have your act together – like you have a REAL program. Perception is reality. You can’t just wing this with simple Word documents and expect to be successful.
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BUSINESS / MARKETING
MARKETING TOOL #4: POSTCARDS. These would look similar to the payroll stuffers except they would have a place for the delivery address and return address on the back of the card. Like the payroll stuffer, the postcard would highlight the benefits of your program and provide your contact information. Obviously, you would pay for all the printing and postage and then you simply need to get approval from the company to mail to their entire employee list via direct mail. If the HR department is concerned about keeping their employees info confidential, you can just tell them to mail it themselves and then send you the invoice. In the end, it costs the company nothing and it gives you and your program massive exposure with the added advantage of third-party credibility – a great win-win!
MARKETING TOOL #5: MASS EMAIL. You can get approval from the company to send out a mass email to the employees once per month or as needed to promote specific events or special promotions.
Here are a few reasons for sending mass email: • The launch of your mortgage benefits program – announcing the exciting news that there are now more valuable benefits added to their existing employee benefits package. • Lunch-and-Learn events – promoting the specific dates and topics of each live event. This is another reason why you want to do Lunch-andLearn events as often as possible, because it gives you another reason to ask the company (whoever’s in charge of the marketing), to send out an email to promote your Lunch-and-Learn event. You can even build your prospect list by creating a branded registration webpage where the employees can RSVP for each event. This will help you build exposure for your mortgage benefits program every time you host an event. And in some cases, you can get the company to send out one, two, perhaps even three emails to promote each monthly event. How’s that for free publicity? • Free educational resources – if you have free reports, free guides, free webinars, etc., oftentimes the company is willing to promote these free resources to their employees because it doesn’t look like a sales pitch, it looks like a helpful resource that adds value to their employees. So you want to come up with ways to get in front of the employee population using education-based marketing to attract mortgage prospects to you.
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If you really want to create a stir in the office, get the gift basket delivered with a BIG billowing plume of helium balloons tied to it
Now, here’s a cool little tip you can use once you start closing deals. In fact, once you get the flame of a closed deal burning, this strategy acts like pouring gasoline on the fire – it causes a raging firestorm of referrals! Here’s how it works. Every single time you close a deal, you send a closing gift to your client’s workplace. For example, you could send your client a gift basket, a box of brownies, cookies, pecan brittle, etc. If you really want to create a stir in the office, get the gift basket delivered with a BIG billowing plume of helium balloons tied to it. Now that’s WOW FACTOR! The key is to make the gift something that gets people saying, “Wow! Where’d you get that?” You want your client to respond proudly by saying, “It was John Smith, my mortgage adviser. He helped us buy our new home!” You can’t get a better referral than that! But don’t stop there. Once you acquire a few happy clients, be sure to get their written testimonials and their approval to publish them in your marketing materials. Then you can start to feature these testimonials in your mass emails, at your Lunch and Learns, and when you meet with decision-makers to get your program approved at new companies. These testimonials will build your credibility and will turbocharge your marketing results. Alright. So there you have it. Those are the critical elements to be successful when launching your own employee mortgage benefits program. Just follow the seven steps I’ve laid out for you in this series of articles, and you’ll be well on your way to getting companies to endorse you to hundreds – even thousands – of their employees!
ABOUT THE WRITER: Doren Aldana is considered by many to be Canada’s leading Mortgage Marketing Coach and recently won the “Best Industry Service Provider” award at the 2012 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 online workshop on “How to Launch Your Own Employee Mortgage Benefits Program,” visit: www. Done4UMortgageBenefits.com
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FEATURE / COMMERCIAL CHALLENGES
ENVY? Don’t be a hater, residential brokers. Commercial guys increasingly have it rough, too, but they’re finding new ways to add value
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FEATURE / COMMERCIAL CHALLENGES
Right about now, some residential brokers may be casting a covetous eye at their commercial brothers and sisters, given cooling home sales and hopes for an early spring put on ice. But it may be a mistake to assume the grass is all summery greener over on the other side. "With all the headwinds that continue to plague our industry,” writes commercial giant Avison Young in its latest forecast for the Canadian commercial sector, “what we have been advising for the last three years will continue to be our mantra: stay patient, risk-manage your strategy on the buy-side, and take advantage of off-market and distressed opportunities when they present themselves." In other words, say a growing number of commercial real estate investors and, indeed, their brokers, the grass ain’t so green on their patch of ground. They are struggling to ferret out deals in a market where demand for existing quality properties far outweighs the supply. In fact, an increasingly meagre inventory of properties on the market will likely translate into fewer deals for commercial brokers in 2013, outside of the harder-to-come-by new builds. According to the Avison report, in Canada, the shortage of product and very low vacancy rates suggest there remains a real challenge for investorclients looking to buy and that directly translates
Stay patient, risk-manage your strategy on the buy-side, and take advantage of off-market and distressed opportunities when they present themselves into fewer opportunities for the brokers arranging their mortgages. Still, some commercial players are now doing something about it, helping smaller investors locate properties that are increasingly off-grid. Investors fishing for commercial properties will have to cast their nets wider than MLS and troll the websites of a growing number of "private" listings on the sites of real estate brokerages and others. “There’s such demand for multi-residential units these days that these properties practically sell themselves,” says veteran investor Paul Kandakos, the Toronto player witnessing an increase in the number of sellers opting for private listings. “It’s always been a tactic, but it’s becoming more prevalent because these properties are in such high demand.”
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FEATURE / COMMERCIAL CHALLENGES Others are echoing that analysis, arguing that as the demand for commercial properties grows, an increasing number of Realtors are asking sellers to play ball by taking those listings off of traditional directories such as MLS or CLS. Instead, they’re opting for listings within their own online networks. That effectively keeps fast-moving properties exclusive to those Realtors who can then claim commission on both ends of the transaction. “Typically you would look on the MLS or CLS to find these commercial properties, but what you’re not aware of is that a bunch of independent brokerages are listing these as well," he tells CMP. "So these are properties that investors aren’t even aware of.” The trend represents a shift in the market, with many commercial brokers taking note and actively steering more-novice clients off the MLS. For some Realtors, it means that long-time clients are dumping them as they play ball with these agents. Brokers are anxious not to be shut out the equation, one of the reasons they’re actively moving to serve clients above and beyond mortgage originations. There are, in fact, entire agencies set up to list “confidential” real estate for sale, popular fixtures for sectors such as hospitality, where even the hint of a building being put on the market could hurt business and worry existing tenants. Still, brokers should know the benefits to private listings as well as their drawbacks. For investors selling a commercial property, they skip paying commission to both a selling and buying agent. That makes it easier to negotiate a reduced rate with the one real estate agent handling both ends of the deal. Still, other sellers prefer to list on their own sites, do a bit of advertising and keep the commission for themselves, knowing the property will sell without a prolonged listing. For an investor
looking to buy a commercial property, Kandakos notes that knowing is half the battle. Looking beyond conventional listing sites will give savvy investors the competitive edge, he says. For their part, brokers are increasingly ready to give advice as they struggle to make sure they don’t get stuck in the same boat as many residential mortgage professionals. Compounding the difficulty is the growing number of owners deciding to hold onto commercial property longer, or indefinitely, given, among other market realities, the spike in rents. Another trend likely to hurt Canadian brokers is the spate of investors now going south to take advantage of the kind of distressed opportunities Avison points to. While U.S. markets have started to claw their way back from recessionary lows, commercial properties are still being snatched up at foreclosure auctions and other default-initiated proceedings. Still, there is potential even there for Canuck brokers to help investors access equity in their existing holdings in order to pump that money into property on the other side of the border – where the grass may or may not be greener.
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36.2% - year-over-year Jan. sales Source: CREA
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PROFILE / MORTGAGEBROKERNEWS.CA
#1. ING DIRECT MOVING TO CEASE BROKER #2. BROKER ORIGINATIONS DEFECTIONS 3. Bracing for another battle of the 4. Brokers: ING mortgage rules
6. Brokers Applauding Marketplace 5. Luxton: Were investigation Commited To spoils up for Help Workers grabs Transition 7. BRAVE BROKERS 9. Street Sweetens ENTER THE the Compensation 8. BROKER RAISES RED Pot DRAGONS’ DEN FLAG ON COLLATERAL MORTGAGE ABUSE
10. Realtors: Broker paid referrals appropriate
12. Brokers, meet your new clients
15. REFI CHANGES COME HOME TO ROOST
11. Broker Interest grows in CIBC class action
14. ING BROKERS YOU HAVE 13. Brokers accept olive branch from First COMPANY National
16. Broker: 18. Courts, industry Credit union Realtors rejecting 17. taking a hard line on facing renewal mortgage fraud bank referral fee concerns offers
If MortgageBrokerNews.ca had its say with more than 100 articles chronicling the industry between Jan. 13 and Feb. 13, it was brokers who had the last laugh. Here’s a ranking of the most read stories over those four weeks. Did MBN readers get it right?
19. Mortgage specialists push into the broker channel 20. Want 10 BPS more?
SPRAY IT; DON’T SAY IT Broker Doug Neufeld couldn’t resist snapping a photo of graffiti while at his daughter’s soccer game in early February, especially considering its endorsement of mortgage professionals. “I saw in Cloverdale during my daughter’s road soccer game,” says Doug Neufeld, a senior mortgage planner with The Mortgage Centre - Mortgage Negotiators based in Langley, B.C. “I couldn’t speculate how long it’s been there, but it appears faded.” The graffito tag had “Invis Financial” sprayed across a wooden wall supporting a fence at a recreational facility. As to who did it, or why, Neufeld can only guess. “Since graffiti is associated with rebellious youth,
PROFILE / BUSINESS
it jumped out at me as such a bizarre context for a logo from a service provider in our industry,” he laughs. “Standing there in the sunshine with my cup of Tim Hortons coffee on the sidelines, I felt inclined to share the surreal.” All theories of a broker wearing a three-piece suit, briefcase in one hand and paint spray can in the other, can likely be put to rest, especially considering the efforts of one Invis local to fight graffiti in Surrey’s historic town centre. In fact, the identity of the corporate-endorsing artist may forever remain a mystery. “It’s kind of the last thing you’d ever expect to see,” says Neufeld.
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PROFILE / BUSINESS
A BROKER The industry may sometimes forget CMT Editor Rob McLister is a broker. He doesn’t
ndustry players are familiar with Rob McLister, the man behind CanadianMortgageTrends.com, but how many know Rob McLister the mortgage broker and, indeed, the husband of a mortgage broker? “Actually, my wife, Melanie, started before me,” says McLister. “We bought our prior homes before getting into the mortgage brokering business. The experience with our bank and broker revealed inefficiencies and opportunities in online mortgage brokering. That largely inspired our move into this field.” The intervening years have seen many more moves, with the McLister team most recently changing broker networks. “Our move to Verico was driven by our need for high volume without added fees,” he says. “Verico offered flat-fee membership dues, and you don’t pay more on a volume basis. It is a better fit for us.” McLister`s Verico intelliMortgage has eight licensed agents, not including the support staff needed to manage a growing book. The broker/ editor is holding exact numbers close to his chest, but estimates volume for 2013 “will easily be in the nine figures.” Before becoming a mortgage planner with
56 | MORTGAGEBROKERNEWS.CA
PROFILE / BUSINESS Mortgage Architects for five years (2007-2012) and a partner at MyVirtualMortgageBroker.com (2006-2012), McLister was an equities trader for 11 years. A finance grad from the University of Michigan business school, he sees the Internet as an excellent tool for not only growing his consumer following but also his brokering business. “If you can capture eyeballs, you can convert them into customers,” he says, explaining that people looking for the best mortgage deal and rate usually start with an Internet search. “Consumers has grown more savvy, and they want to be better informed. “Using Google, or our website for information, nine to 10 people start their search on the web. From what I’ve seen, half of our business comes from referrals, and half from new leads from the website. Actually, as the consumer gets more educated, the broker’s job gets easier, he argues. Although, “consumers are less loyal, more price-aware. They don’t want to be ‘sold.’”
Actually, as the consumer gets more educated, the broker’s job gets easier, he argues. Although, consumers are less loyal, more price aware
- year-over-year Jan. sales
Having made the move to Verico, McLister says he’s already benefiting from its technical support -- a pleasant surprise. “We needed branding control, and we needed a flawless reputation, and we have that with Verico,” he says. “We really didn’t expect the level of support we’ve received. Their Support Portal is great; you go to the site, enter it, and they get back to you the same day.” It is CanadianMortgageTrends.com (CMT) that consumes much of his time, and much of his effort. “I’m the guy writing most of the content for the website,” he says. “It takes a team to ramp up, and we plan to ramp up by looking at hiring more staff. “People have a huge appetite for news and what is going on in the industry.” Currently living with wife Melanie in Vancouver, the founder and editor of CMT is now a mortgage columnist for The Globe and Mail. And he’s being fitted for more hats as we speak. “We’re looking at launching a rate comparison website, totally separate from the CMT website,” says McLister, who hopes to have the new project up and running in the next quarter. “It is where people begin their search, looking for the best rate, he says. “But there is more a broker can offer than just rates. “You start with the lowest rate then they get more information.” McLister sees the bulk of future client traffic coming from online sources. “It is the biggest change I’ve seen in the industry, people going online to compare rates,” he says. As McLister continues with plans to expand and grow the business, he does see the decline of the smaller independent brokers as inevitable. “They will be coming under a lot of pressure,” he tells CMP. “It is a volume business, and you need the large resources that a (network) can offer to survive and thrive.”
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Vancouver CMHC/Conventional Financing Single Family Financing Phone: 604-685-1068 Email: firstname.lastname@example.org | 57 MORTGAGEBROKERNEWS.CA
PROFILE / FAVOURITE THINGS
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Yes, Virginia, there is such a thing as 25% volume growth, in fact, at Verico Safebridge, it’s very much the goal
GOALGETTERS People over profit and abundance over scarcity. Those are the words Chris Karram, co-CEO of Verico Safebridge Financial Group wields like a sword of inspiration to lead his employees to the Promised Land of a better mortgage brokerage. That’s one where 25 per cent growth in personal originations for each and every agent is expected. “We stress character, people over profit, abundance over scarcity,” says Karram. “When all is said and done, we are a business – but we look for self-improvement, not competition.” It may sound like a warm and fuzzy message, but it’s key to Safebridge’s “Vision in Motion,” a catch phrase that reinforces personal growth, not inter-office competition. “We believe in getting the message out there,” says Karram. “We look for personal annual improvement of 25 per cent more volume over the previous year. “The real question is ‘Did you increase your volume?’ not who is leading the office in sales.” Even in a slowing market, anyone can increase sales by 15 per cent for 2013, says the brokerage head. Still, “25 per cent is a lofty, however, an
60 | MORTGAGEBROKERNEWS.CA
achievable goal.” Indeed, Karram points to a recent sales meeting where some brokers recorded 31- and 101-per cent increases. “Personal growth and goals have really levelled the playing field between junior and veteran brokers,” he points out. Part of nurturing this approach to become a better broker is mentoring and education. “We break down the sales process, find the best practices, and become actively involved in mentoring,” says Karram. “We also have lenders
PROFILE / BROKER come in for monthly meetings, showing how we can better work with them.” While the brokerage, one of the GTA’s largest, is driven by core values such as integrity, knowledge, respect, passion and execution, agents must bring some key attributes to the table. “We’re looking for integrity,” he says. “We can teach skills; we can’t teach character, because we are literally only as good as every member of the team. Everyone plays a substantial role.” Safebridge Financial Group was founded in 2005, but its origins reach back even further. The co-founders, Chris Karram and Elisseos Iriotakis, have gained years of valuable experience at organizations such as CIBC World Markets, the Ontario Teachers’ Pension Plan, The Mortgage Centre and Clarica. Karram’s goal is to make Safebridge a one-stop shop focused on the specific needs of clients. It means customers have access to mortgage, insurance, and investment services, which are all facilitated and serviced under the same roof. That all-inclusiveness is evidenced by the recent introduction of the group’s centralized underwriting service in February. Offering a flat-fee-per-transaction model, the service provides Safebridge brokers with a part-time support team without the hiring, managing, financial commitment and accounting that goes with it. It’s the latest value for Karram and Iriotakis’ agents, the partners having met through their mutual love of sports. For Karram, then a financial adviser at Clarica, and Iriotakis, a mortgage agent at the Mortgage Centre, it was literally on the basketball court. “We met playing basketball and realized the industries we were both in,” Karram says. It soon became clear they shared a vision for not only educating their clients, but educating each other on how to open doors. “One thing we did, even as we were just getting to know each other, was really become intentional with how to educate our clients,” hey says, “ but we also educated each other on how to open up doors when sitting with clients.” Safebridge Financial opened its doors in January of 2006 – the two founding members and one assistant. Today, Safebridge boasts 75 mortgage brokers and 10 financial advisers. Karram’s life before Safebridge was the catalyst to his helping form the company. “I’ve been in sales all of my life, always striving to be No. 1,” says Karram. “I remember one sales meeting (before Safebridge), and I ended up walking out of the sales initiative frustrated, not
Even as we were just getting to know each other, we were really intent on how to educate our clients, but also each other on how to open up doors when sitting with clients inspired. That made me think there must be a better way to do business.” Safebridge has two distinct operations under the one roof: the mortgage side and the financial advisory side. “We’ve actually branded the company as one and really try to provide big-picture planning for our clients,” Karram says. “It’s important for clients to know that we have all this in-house, under the Safebridge group of companies, to provide them with this full package.” With the recent addition of the flat-fee underwriting service, Safebridge, says Karram, is staying on message by providing broker support and client satisfaction. “It’s people over profit,” he says.
MORTGAGEBROKERNEWS.CA | 61
GUEST / COLUMN
RIDE AGAIN If Scotiabank really wants to win the hearts, minds and the deals of ING brokers, there’s one sure way to go, according to Chad Robinson, and it doesn’t involve a 10 bps bump-up
f Scotiabank is really interested in winning over those mortgage professionals once loyal to its ING Direct, it should consider a longrequested little initiative called renewal fees, says Chad Robinson of Verico Best Interest Mortgages. “Ten bps (basis points) is nice, but if you offer a renewal program, it would send a clear message,” says the CMP Top 75 broker based in Ottawa. That tack would be different from the steps other broker lenders took the days following news of ING’s planned departure. On the heels of Scotia’s move to sever ING’s connection to the broker channel – a decision focused on limiting any overlap between it and Scotia’s model – Street Capital, MCAP and First National all came to brokers with an extra 10 bps compensation on a select number of mortgages. While the push to write more CMHCinsured high-ratio deals factored into the collective decision, brokers are convinced the sweetened pot had everything to do with winning over ING brokers. In the face of that kind of increased competition, it might be better for Scotia to go the renewal-fee route instead, suggests Robinson. “No chartered bank has offered a trailer or renewal model,” he tells CMP. “If junior
62 | MORTGAGEBROKERNEWS.CA
GUEST / COLUMN agents place some of their business with trailer model lenders it will provide a steady stream of cash flow in the future. Many industry veterans wish these kinds of options were available a decade ago.” Many of them continue to hope Scotia or TD will adopt an automatic renewal system to reduce switching competition, but also to reward brokers for their continuing, and, in some cases, growing, support. “I don’t know what they’ll do or won’t do,” says David Hetti, an Invis agent in Oshawa, “but if the banks that use the broker channel are willing to talk about it and do move to offer renewal fees of even 15 basis points that will strengthen their relationships in the broker channel, where the monolines already benefit from higher broker loyalty.” The suggestion is a tacit acknowledgement of the strong pulling power Scotia still exerts on brokers. It’s also a more overt acknowledgement of the strong client retention those lenders already enjoy at renewal, whether the borrower comes by way of the broker
channel or the branch. Brokers are generally cut out of that equation, something a 15-bps renewal fee would change. “It would also encourage brokers to work with the banks at renewal instead of against them,” says Hetti. “It would also reward us for bringing in that business initially.” The cooperative approach is something several monolines have already adopted, with others moving to introduce trailer fee options for their brokers. The model Hetti is proposing represents a slight departure, although it also hinges on brokers staying in close communication with clients both before and during renewal time. There may, in fact, be growing incentive for banks to cooperate with brokers, as those mortgage professionals increasingly look to switches – both at and between renewals – to lift sagging bottom lines. In offering renewals Scotia would reduce broker attempts to move clients to other lenders, in the process minimizing the competitive forces that mandate lower interest rates.
The cooperative approach is something several monolines have already adopted, with others moving to introduce trailer fee options for their brokers
Chad Robin son
SOLUTIONS RESIDENTIAL & COMMERCIAL LENDING
416-253-4007 MORTGAGEBROKERNEWS.CA | 63
SERVICE / DIRECTORY
RMG Mortgages www.RMGmortgages.ca Ph: 866 809 5800 Page 31
B2B Bank b2bbank.com/mortgages Ph: 1 800 263 8349 Inside Back Cover
Bridgewater Bank www.bridgewaterbank.ca Ph: 1 888 837 2326 Page 11
Tribecca Finance Corporation www.tribecca.ca Ph: 416 225 6900 Page 35
Home Loans Canada www.hlcmortgages.com Ph: 1 866 452 1821 Page 3
Mortgage Architects www.mortgagearchitects.ca â€˘ Ph: 1 877 802 9100 Page 7
ROMSPEN Investment Corporation www.romspen.com Ph: 1 800 494 0389 Page 1
HomEquity Bank www.homequitybank.ca Ph: 1 866 522 2447 Page 27
RMAI Financial Group www.rmaifinancial.com Ph: 1 866 955 7624 Page 29 Technology & Software
National Bank www.nbc.ca Ph: 1 888 483 5628 Page 55
D+H Limited Partnership www.dhltd.com Ph: 1 866 345 6449 Page 2
Vector Financial Services www.vectorfinancialservices.com Ph: 1 866 483 8018 Page 51-52 Insurance
Capital Direct www.capitaldirect.ca Ph: 780 868-0550 Page 21
Home Trust www.hometrust.ca Ph: 1 877 903 2133 Page 13
Canada Guaranty Mortgage Insurance Company www.canadaguaranty.ca Ph: 1 866 414 9109 Page 45
Keystroke Quality Computing Inc. www.keystroke.ca Ph: 1 800 857 0558 Page 23
Genworth Financial Canada www.genworth.ca Ph: 1 800 511 8888 Outside Back Cover
Marlborough Stirling Canada www.morweb.ca Ph: 1 877 626 2022 Page 17
MCAP www.MCAPBROKER.com Ph: 1 866 289 7389 Page 9
Teranet www.teranet.ca Ph: 1 866 237 5937 Page 41
Argentum Mortgage and Finance Corp www.argentummortgages.ca Ph: 1 888 402 7436 Page 37 Real Estate
Peoples Trust www.peoplestrust.com Ph: 1 800 663 0324 Page 57
Canadian National Association of Real Estate Appraisers www.cnarea.ca Ph: 1 888 399 3366 Page 28
Centum Financial Group Inc. www.centum.ca Ph: 1 604 257 3940 Page 5 Credit Union
Radius Financial www.radiusfinancial.ca Ph: 1 877 369 6398 Inside Front Cover
64 | MORTGAGEBROKERNEWS.CA
Dominion Lending Centres www.DominionLending.ca Ph: 1 888 806 8080 Page 19
IC Savings www.icmbs.ca Ph: 416 784 0200 Page 63
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