CMP 8.06

CMP crossCanada private lending guide

Mortgagebrokernews.ca issue 8.6 | $6.95

Debt ratios Number crunch-up IRD Intelligence Brokers got it!

Building a broker Agent training

W men of influence CMP’s salute to industry go-getters

OFC_OBC_Spine.indd 2

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mortgages that fit.

13/06/2013 1:31:05 PM

contents

market matters

FEATURES

6 | Letters to the Editor

46 | Commercial Thinking Survey Says... Highlights from CMLS’s Q1 report on Canada’s commercial mortgage market

8 | Reading between the Lines Tweaks to how lenders calculate debt-serving levels have untied broker tongues 12 | National Picture The Good, The Bad, and The Ugly – a market overview

50 | Investor Series Ramifications of MIC investment 60 | Broker Wish List One B.C. broker offers his educated take on channel changes likely to come by 2020

14 | News Analysis Death of a CMHC Refi; The Flaherty Effect

50

16 | Market Matters Training and Retraining – Maximizing an agent’s potential 22 | Private Lending CMP’s Cross-Canada Directory and Guide

36

issue

cover story

8.6

CMP’s Women of Influence Trailblazers and award-winning brokers are just a few of the women making an indeligible mark on the industry this year

License # 10172

some deals feelthe need for speed.

Romspen Investment Corporation is a non-bank mortgage lender specializing in commercial real estate across Canada and the United States. With over $1 billion under administration, we offer customized mortgage solutions for term, bridge and construction financing from $4M to $100M. Blake Cassidy or Pierre Leonard | 800 494 0389 | www.romspen.com

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June 2013 | 1

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contents

News 10 | Product News A Guaranty-ed win courtesy of Kim Luxton; Street Capital confirmed by CMHC

54

Marketing 48 | Business Marketing Don’t overlook the good old info package; there’s a reason why superstar brokers never do 54 | Insight Profile B20 Upside – a lot has changed for the better since the introduction of the new B20 regulations, says Optimum’s Lestor Shore

REGULARS 56 | Broker Profile This MCC agent lays out her case for why brokers are still very much needed to calculate IRD penalties – despite much-lauded bank calculators 62 | Favourite Things ad final_outlined.pdf 64 | CMP D+H Service Directory

23/12/2011

11:37:57 AM

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contents/ editor’s letter

Gender neutral?

COPY & FEATURES Editor Vernon Clement Jones Senior writer Donald Horne contributors Doren Aldana, Greg P. Shannon, Joe White, Tania Campfield, Al Kelly Copy editor Rachel Naud

ART & PRODUCTION gRAPHIC dESIGNER Alicia Chin

SALES & MARKETING Associate publisher 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

Editorial enquiries vernon.jones@kmimedia.ca Advertising enquiries trevor.biggs@kmimedia.ca Subscriptions tel: 416 644 8740 • fax: 416 203 8940 subscriptions@kmimedia.ca KMI Publishing 312 Adelaide Street West, Suite 800 Toronto, Ontario M5V 1R2 mortgagebrokernews.ca Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as CMP magazine can accept no responsibility for loss.

The broker channel’s reputation as a man’s world is increasingly more bark than bite. And that, make no mistake, is a good thing.

Don’t get me wrong, there is still an awful lot of barking going on: Men dominate the hard, cold numbers, in both brokering and lending. But those margins are shifting closer to parity, with more than 20 women claiming spots on the 2012 CMP Top 75. Their number is expected to climb this year ( just pick up the next issue of CMP and see for yourself ). But whatever the percentage split, the women of the broker channel come second to none.

Our first annual CMP Women of Influence is all about celebrating that excellence (see Pg. 36), with a list of 11 industry players helping take the bite out of any lingering reputation. To hear them tell it, the channel’s bad rep is largely undeserved.

So read on, and tell us if you agree. Look for some of those comments in the July issue, on our “Letters to the Editor” page. This month’s comments are on Pg.6. Just beyond that you’ll find CMP’s Cross-Canada Private Lending Directory on Pg. 22. It’s a must read for brokers scouting around for new partners in that realm—so too is our checklist for vetting private lenders (Pg. 24) Please, don’t forget to check out Pg. 59 for your personal invitation to participate in the CMP Top 75 and Small Market Top 20. Both lists celebrate another coterie of elite brokers; namely, those with the industry’s highest funded volume. Submissions close June 21.

Cheers, Vernon Clement Jones

connect

Contact the editor:

vernon.jones@kmimedia.ca

4 | JUNE 2013

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conversations/ letters to the editor

Letters

to the Editor Re: CMA Winners Revealed (CMP 8.5)

Re: Dress for success (CMP 8.5)

Kudos to you

We are “suits”

Matt Robinson

John Dearin

A great night and a very nice venue. Congrats, Cam and Jeff. Well done, gents!

Jeans and T-shirts are not condoned in our office.

Had an agent that felt jeans, ripped jeans at that, were the style of the day. We suggested he open his own brokerage and set the style there. Don’t know what he is doing these days.

Attaboy! Attagirl!

Mike Ablonski

Good work, brokers! Alberta men and women, you’re bringing home the hardware that you deserve and it looks good. Congrats, Doug Farmer.

c

Re: Kilt-up for success

Well-suited to a kilt Roy Miller

You have to hand it to Jackson Middleton. I have watched this guy in a room and watched how people come up to him, in a way that they do not come up to someone in a suit. But I still am going to wear my suit because I think it adds credibility.

88+12 No 12%

Yes 88%

Letters to the editor are welcome!

Due to space considerations, priority is given to those 300 words or less. We reserve the right to edit, condense or reject submissions for accuracy, brevity, clarity, good taste and legal reasons.

Writers must provide their full name, address and telephone number to verify authenticity. Please reference the article and send your letter to vernon.jones@kmimedia.ca

POLL

Should brokers consistently adopt business attire as a means of growing industry credibility?

6 | JUNE 2013

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In the world of banking, common sense has become surprisingly uncommon. Rules are piled on top of rules, making life harder than it needs to be for everybody. Well, that’s not how we operate. We strive to do right by our broker partners in a way that simply makes sense, like our new Advantage and Edge mortgage programs that offer a simple rate structure for all your customers’ needs. We’re Bridgewater Bank, and that’s just how we do things. bwballstarportal.ca

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13-05-27 11:39 AM 13/06/2013 1:39:05 PM

Market Matters/ reading between the lines

Reading Between

The Lines

Tweaks to how lenders calculate debt-servicing levels have untied broker tongues and how!

The buzz comes after Street Capital and First National changed their lending guidelines to include using Unsecured Revolving C three per cent of the balance of a credit card or line of 5 th"Effective immediately, three dimt onthly paym ree per cent ent for all re of credit in calculating a client’s debt-servicing ratios. volving unse Basically this the outstanding balance. cured credit Interest-only means that re will be payments ca ga That represents a change from relying just on the First Nationa rd le ss of th n no longer e l will debt se be used." rvice the paym actual payment owing on an interest-only payment to determine monthly debt ent at three pe y unsecured r cent of the credit, Secured Rev outstanding olving Credi balance. levels. Ostensibly, it also makes it harder to some t "We will take 4.

6 pe SLIDING SCALE MAXIMUM LOAN TO VALUE (LTV) – CONVENTIONAL (1 TO 4 UNIT PROPERTIES) r ce 3 of balance ow nt of the LIM clients to qualify, but arguably better reflects the true IT on ing. Exampl e would be on the LOC over a 12-mon We must also th period, re Select Greater Vancouver a $300k LOC, co nfi rm debt levels of a borrower. that the LO gardless payment to Non statemen Property Type Major Urban Centre* Urban C is seCentre* t as confirmat use wUrban cured agains ould be $1,1 Area (GVA)* io n" t a . pr 50. op er The debate will continue. But for now we’ve asked ty so we wou ld need a LO Owner Occupied 80% of the first 80% of the first Formula with C th 80% of the first $1,000,000 80% of the first $500,000 e Paul Therien, the director of$1,250,000 business development above exam ple: $300,000 Property Mortgages $750,000 x .046 = $13, 50% of the balance 50% of the balance 80 with Centum Group, to do a50% little reading between 0 / 12 = $1,1 of the balance 50% of the balance 50 the lines on the policy change.

Maximum LTV

>> Credit Policy Updates – May 8, 2013

Owner Occupied Property Mortgages 1. Street Capital’s policy clearly indicates that in the event

Purchase up to 95% LTV for 1 to 2 unit properties Purchase up to 90% LTV for 3 to 4 unit properties service ratiosup were calculated confirmed NET income, Refinance to 80% LTV foron 1 to 4 unit properties

not gross. of a secured line of credit, the 3 per cent rule does not apply, simply that it needs to be verified as secured.

UNDERWRITING REQUIREMENTS (INCOME) 4. I have heard stories from brokers for years where Salaried: Letter of Employment, Paystub that is dated no earlier than 60 days prior to the credit approval. they lost a deal because the client went out and made a 2. I have worked in this industry for over 20 years, the If the applicant wishes to include any bonuses or commission earned in their total income in order to qualify for credit the documentation major purchase. We are kidding ourselves if we think majority of it in credit adjudication for several companies. options are more limited. To use salaried income including bonuses or commission, refer to Fluctuating Income. that lenders also do not know that consumers do this.

We have always used 3 per cent for credit cards, and Part-Time/Hourly Wage: Applicant who is employed part-time or who works full-time but receives an hourly wage must provide proof of typically we considered any payments on large lines of their annual earnings via Letter of Employment, Paystub and Notice of Assessment (NOA) from the most recent 2 years 5. The restrictions on borrowing like this means that credit or other facilities with a zero balance.

Fluctuating Income / Overtime / Bonuses / Gratuities / Seasonal: If the applicant wishes to have these amounts included in the credit potentially consumers will get a better handle on their decision, supporting documentation must be provided. NOA from the most recent 2 years which must be supported by a current Letter of consumer credit, which should translate into mortgage 3. It has always been considered prudent lending Paul Therien, Employment and Paystub. opportunities in the future as people have more money practice. InRental fact when I started in the industry debtDirector of Business Development, Income: Lease agreement(s) showing the gross rental income from all units will be used to qualify. Market rents will no longer be in pocket to spend on homeownership.

Centum Group: considered.

Net rental shortfalls as calculated by the rental worksheet must be included as a liability in the total debt service calculation.

Child tax credits or refundable tax credits for childcare cannot be included as source of income.

Guarantor Income: No longer can be used to qualify. Only exception, if guarantor is spouse of the applicant and subject is being occupied as the matrimonial home.

DEBT SERVICING RATIOS INPUT RULES

1

Existing HELOC reported on the bureau as a revolving trade line the payment is 3% of the outstanding balance unless confirmation is obtained to confirm that the credit is a secured line. If secured existing payments may be based on credit limit and a Prime Rate Factor (4.35% interest over 12 months + 0.25% of limit over 12 months).

2 Liquid/Margin Secured Revolving Line of Credit: When reported on the bureau as a revolving trade line the payment is 3% of the outstanding balance will be used unless confirmation is obtained to confirm that the credit is a secured line. If secured existing payments may be based on credit limit and a Prime Rate Factor (4.35% + 0.25% of limit over 12 months). term, demand, and reserve loans as well (LTV) as Letter of credit or guarantor the credit bureau: Payment as 4 All fixed installment, SLIDING SCALE MAXIMUM LOAN TO VALUE – CONVENTIONAL (1 TO 4debts UNITon PROPERTIES) shown on the credit bureau unless it can be determined that the remaining term is </= 3 months and if term remaining is confirmed to be Select Greater Vancouver Major Urban Centre* Urban Centre* Nonon Urban </=Property 3 monthsType then payment is not included in TDSR. (ii) 5% of the reported outstanding balance if no payment is shown the credit Area (GVA)* bureau and if term remaining is confirmed to be </= 3 months then payment is not included in TDS. Owner Occupied 80% of the first 80% of the first

>> Credit Policy Updates – May 8, 2013

Property Mortgages

8 | JUNE 2013

$1,250,000 50% of the balance

80% of the first $1,000,000 50% of the balance APPRAISAL

Conventional Mortgage

Maximum LTV

$750,000 50% of the balance

80% of the first $500,000 50% of the balance

High Ratio (Default Insurance)

Purchase up to 95% LTV for 1 to 2 unit The properties A full appraisal is required for the following; Mortgage Default Insurer determines Owner Occupied Purchase up to 90% LTV for 3 to 4 unit property propertiesvaluation type Credit Bureau Score <610 Units >1 Property Mortgages Refinance Loan amounts >$600,000 Acreage >5 up to 80% LTV for 1 to 4 unit properties Property Values >$750,000 (GTA/GVA) Recreational/Cottage Properties 08-21_Market Matters.indd 8 UNDERWRITING (INCOME) Property Values >$600,00 (ROC) Transfer REQUIREMENTS In

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35852

FINANCIAL LP

“The

relationships are

genuine.

Doug Farmer, Calgary Branch Manager Valerie Kowalchuk, Watson Financial Corporation – MCC Patti Hyland, Underwriter

It’s like working with

family.”

“That’s why I know my clients are going to be well looked after.”

At First National we’ve spent the last 25 years focused on delivering outstanding service to you and homeowners. And we will continue that commitment towards the next 25.

Behind the scenes

08-21_Market 35852 FN25adMatters.indd Valerie CMP 9Ev1.indd 1

Thank you mortgage brokers for 25 years of shared success.

Ontario Mortgage Brokerage License No. 10514

13/06/2013 12:50:35 PM 13-05-27 2:46 PM

Market Matters/ Product Roundup

PRODUCT NEWS

AND INDUSTRY ANNOUNCEMENTS

A bite-sized guide to the industry’s newest products and appointments as they come down the channel

Who: Street Capital What: Approved as an issuer of NHA mortgage-backed securities and a seller under the CMB

The facts: The Canada Mortgage and Housing Corporation has now confirmed Street Capital as both an approved issuer of NHA mortgage-backed securities and a seller under the CMB – a dual designation set to help brokers, according to the lender.

The explanation: “It’s an important milestone for Street Capital, says Allan Silber, chairman and CEO of Counsel, Street’s parent company.

The approval allows Street to be an approved issuer of National Housing Act mortgage-backed securities (NHA MBS) and an approved seller under the Canada Mortgage Bond (CMB) program.

One partner. One platform.

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Delta 360 is your source for integrated platforms for:

“ We chose the Delta 360 platform for its many new features and how quickly the solution could be brought to market. We also were impressed by the technological advances the platform provides and how easily we could integrate it into our existing systems.”

u Underwriting u Advancing u Servicing u Tax Administration Chris Brossard, CEO, CMLS Financial u Retention Management u Whole loan & MBS Administration

Looking for an innovative technology solution for your business? Visit delta360.com to learn more today.

10 | JUNE 2013

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mortgagebrokernews.ca

Appointment: A Guaranty-ed win Who: Kim Luxton, appointed Director of National Accounts for Canada Guaranty What: The former head of ING’s broker services has now moved over to Canada’s up-and-coming default mortgage insurer. The changing role comes on the heels of Scotia’s decision to end broker originations. Luxton brings strong relationships to bear on her new duties, helping grow market share for a company focused on wooing lenders and mortgage professionals, alike.

Why: “Canada Guaranty is pleased to announce the addition of Kim Luxton to the Canada Guaranty team,” says Mary Putnam, VP of sales and marketing for Canada Guaranty. “Many of you will recognize

Kim from her previous role as director of broker sales for ING Direct. Prior to ING Direct, Kim led the Ontario sales team for First Canadian Title. Kim also has a vast lending experience with the credit union and trust company industry.

“She brings to Canada Guaranty proven relationship-building skills, customer service acumen, credit policy knowledge and strong adjudication skills.”

Kim Luxton

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The good, the bad and the ugly The Canadian Mortgage Market Overview for 2013 can best be described as a Spaghetti Western: The Good, The Bad and The Ugly.

The Good shows 3.7 million Canadians are mortgage-free with eight million having more than 25 per cent equity in their homes; while The Bad has Canadians losing more than $41 million by not shopping around for a better mortgage.

And The Ugly? The drop in housing developments, with 20-30 per cent fewer homes being built this year, and the associated job losses.

Information provided by RateHub.ca

industry

mortgage

stats

Market Matters/ stats

12 | JUNE 2013

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mortgagebrokernews.ca

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Market Matters/ News analysis

Q1 at CMHC

Total insurance-in-force

2012 $566.1B 2013 $562.6B

Death of a CMHC refi Are the latest CMHC numbers on refinances casting a pall over the future of the business?

Cue the sullen dirge and put on that black suit. It’s not that bad – yet– but refis through CMHC seem increasingly a thing of the past given Q1 results pointing to an almost 70 per cent drop, year-over-year. The dip in new mortgage volumes was not even half that.

More specifically, insurance volumes covering those new originations fell about 23 per cent in the quarter compared to the year-ago period. That’s stability personified, say some brokers more concerned about the 69 per cent plummet in refinance volumes at the Crown corporation.

Those mortgage professionals are also concerned about what the declines mean for their bottom lines and, more importantly, those of their most vulnerable clients.

“The government has been moving away from refinances even before the rule changes in July,” said Sarah Liles, a veteran of the industry. “And now with those changes, the clients that really need refinances for debt consolidation have to lose their homes or look for private funds that could ultimately sink them.”

Last July’s move to lower the LTV for insured refis to 80 per cent effectively blocked many homeowners from accessing equity in their homes.

The decision has been lambasted by brokers who have watched that end of their business shrivel up.

“The result of this is that a client with a high-ratio collateral mortgage will not be able to move their mortgage to another lender upon maturity,” High-volume broker Jim Tourloukis told MortgageBrokerNews.ca early this month. “That’s to the extent the home’s value keeps the mortgage high-ratio.”

But the fall in refi activity may continue, with brokers fearing the government is ushering CMHC out of that segment altogether.

The decline in business for CMHC falls in line with Jim Flaherty’s desire to curb household debt levels and end what many call homeowner abuse of refis.

Insurance volumes on new mortgages (yoy) -23%

Insurance volumes on refinances (yoy) -69%

The Flaherty effect CMHC’s policy growth is slowing down. All according to plan CMHC’s balance sheet is now revealing the full impact of Jim Flaherty’s tinkering, although brokers want to know if the scale of that decline also reflects more rigid underwriting.

In real terms, the drop means CMHC wrote $8.2 billion in insurance during the first three months of this year, less than half of the almost $19 billion it did during Q1 2012. The number of housing units that it insured fell 54 per cent to 52,078, from 114,045 in the first three months of last year.

While analysts are already blaming any decline in new policies on the tighter mortgage rules introduced in July, some brokers are openly suggesting the drop also reflects CMHC underwriting, which may be more rigid than its two competitors.

They’re also pointing the Crown corp.’s pull back from bulk insurance.

While other mortgage

professionals haven’t seen a gap in underwriting between CMHC and Genworth and Canada Guaranty, they are looking forward to taking a look at the Q1 financials of those two private-sector competitors.

“Overall I see that deals are getting more and more difficult to approve, but I think that’s at the lender level and not necessarily at CMHC or the other mortgage insurers,” Dan Page, with Mortgage Intelligence in Halifax, told MortgageBrokerNews.ca.

“It will be interesting to see the stats from the other mortgage insurers, though, to compare declines against CMHC.” Still, officials at the Crown corporation are cautioning against reading too much into any one quarter’s results.

“The numbers here are highly variable,” Brian Naish, CMHC’s CFO, told reporters. “As a result, there’s no significant trend you could see, whether it’s in condos or rural or multi-units or nursing homes.”

14 | JUNE 2013

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Market Matters/ Broker-to-Broker Advice

Training and retaining productive agents

Who better to hear from on the subject of maximizing an agent’s potential than from Joseph White, president of industry trainer REMIC Like many commission-based sales industries, the mortgage brokerageing suffers from high turnover.

The challenge for brokerages has been, and will continue to be, finding those talented individuals who are independent but disciplined; who are motivated by income but also by service to others; who exhibit expert interpersonal as well as analytical skills, and provide them with a path to success. To address these seemingly contradictory skillsets successfully requires a solution that is itself versatile while structured.

Our industry offers an ocean’s worth of training on “doing a deal,” but only a lagoon’s worth on generating business. Of course, there are seminars designed to motivate, but how long does that motivation last? Building a life-long career takes more than a temporary jolt of adrenaline; it requires perseverance and dedication to one’s profession.

16 | JUNE 2013

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CHIP

CHIP-CMP-Full_Grandma-ART.indd 1 08-21_Market Matters.indd 17

12-09-19 4:05 PM PM 13/06/2013 12:50:50

Market Matters/ Broker-to-Broker Advice

The amazing opportunity that our industry provides is that those with little or no background can, with a minor investment compared to other industries, obtain a licence to practice. A licence, however, doesn’t equal success. It’s an opportunity to build a better life The amazing opportunity that our industry provides is that those with little or no background can, with a minor investment compared to other industries, obtain a licence to practice. A licence, however, doesn’t equal success. It equals an opportunity to achieve success. It’s an opportunity to build a better life. Therefore, even though a brokerage can hire an individual with little or no experience, it should only do so when it is convinced that it can provide that person with a sound path to success.

It’s incumbent upon us as an industry to support those new agents in their quest for success. Their success contributes to the rising tide that lifts us all.

But success means different things to different people.

Some consider a specific income to be the benchmark to which success is measured, while others view it as a particular quality of life. Others view it as a combination.

In my opinion, success is the result of properly screening new applicants and then providing them with support and rigorous sales and technical training. New agents need to have the tools necessary for success so they can focus on generating new business; anything else is a distraction that ultimately may lead to their failure.

Screening Consider that when interviewing for a salaried

position, screening is crucial. Background checks, including contacting references, are standard.

Personality profiles may be incorporated. The same level of due diligence should be taken when hiring a commissioned salesperson. This person will be representing you and your brand and although not paying him or her a salary, you will be investing quite a bit of your time and energy into this person. As you well know, your time is valuable.

Support New agents need more than just technical support.

They need to feel as if they’re a valued member of your team. Starting a new career can be both financially and emotionally challenging. Be prepared to spend the necessary time and energy to get them quickly to a position where they’re making a positive contribution. As you can see, properly screening a new applicant will help weed out those who may not be able to contribute.

Rigorous Sales and Technical Training Sales training is more than just giving reading material to a student; it’s about doing. After conducting several studies, Albert Bandura, a Canadian psychologist, developed a theory of learning based on observational learning or modeling. The student observes and then

$48,000 Average equity takeout in 2012 Source: Maritz (Spring 2013)

18 | JUNE 2013

08-21_Market Matters.indd 18

13/06/2013 12:50:51 PM

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5/31/2013 12:50:52 9:09:27 AM 13/06/2013 PM

Market Matters/ Broker-to-Broker Advice

does. I believe that by incorporating modeling in sales and technical training, the student’s likelihood of learning and being able to execute what’s been learned is much greater than any other type of program.

Joe White is founder and president of the Real Estate and Mortgage Institute of Canada Inc. (REMIC). He has been involved in the development and delivery of Ontario’s previous mortgage broker licensing program (the Financial Services Underwriting, or FSU, program), through Seneca College since the mid-1990s, as well as the Mortgage Agent Program (MAP) and Mortgage Broker Program (MBP). He has instructed over 10,000 students and has been involved in the mortgage industry for over 20 years as an agent, VP of sales and MIC owner, among other key positions.

What should your sales training include?

At REMIC, we’ve developed a 12-month sales training program that focuses on the modeling theory. To put your agent on a path to success, I suggest beginning with business planning, followed by these topics: motivation, generating referrals, personal branding, database marketing, targeted marketing, networking, real estate agents, blogging, the philosophy of sales, advertising, Google Adwords, and social media marketing.

Retaining agents is the result of providing them with a clear path to success. That takes a dedicated, well thought-out approach. In doing so, you’ll not only increase your retention, but your agents’ overall job satisfaction and productivity. In the end, that will increase the entire industry’s market penetration, something that’s long overdue.

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Retaining agents is the result of providing them with a clear path to success. That takes a dedicated, well thought-out approach. In doing so, you’ll not only increase your retention, but your agents’ overall job satisfaction and productivity as well

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13/06/2013 12:50:53 PM

] [

why a Mortgage Broker?

Only mortgage Brokers can provide the range of products from various lenders to meet your specific needs.

Advice

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* According to CAAMP’s study**, those who renewed or renegotiated with a mortgage Broker reported an average rate decrease of 1.4% compared with 1.0% among all renewers. **CAAMP January 2011 study — Canadian Mortgage Channel: Industry Perceptions Consumer and Broker

mcap.com/brokers MCAP Service Corporation Ontario Mortgage Brokerage #10515 Ontario Mortgage Administrator #11692

08-21_Market Matters.indd 21

13/06/2013 12:50:54 PM

Private Lending/ Supplement

Private Lending CMP’s Cross-Canada

I

Directory and Guide Knowing exactly who your private lender is has never been so important nor so easy in this feature...

• Know your lender Pg.24 • Cross-Canada directory Pg.28 • Lender guidelines Pg.30

22 | JUNE 2013

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If private lenders ever suffered from a Rodney Dangerfield complex, those days are but a distant and not-so-humourous memory.

The fact is, say insiders, stand-up lenders in the alternative space are finally getting the respect they deserve thanks to mortgage rule changes and B20 guidelines. The profile boost has just as much to do with the slower real estate market and its impact on the volume of A deals.

Essentially, it means even some brokers who dealt in Triple-A business exclusively are looking to do more than just refer B and C clients to someone else.

“I would definitely say that there is greater interest in doing alternative deals,” says Karen Gibbard, broker at Verico Gibbard Group Financial and a CMA award winner. “I’m doing more and my business is really focused on A deals.”

She’s not alone, with many mortgage professionals even looking beyond the institutional players in the alternative sphere and to the MICs, syndicates and other smaller privates now picking up business

13/06/2013 1:44:07 PM

mortgagebrokernews.ca

that even 12 months ago went to the Big Five.

CMP’s Cross-Canada Directory and Guide is centred on assisting brokers as they make their way into the world of private lenders or look to grow B deals as a segment of their existing book of business.

This special guide has been years in the making for CMP, but also for brokers as they increasingly find real and critical need for private lenders. Those tighter mortgage rules introduced last July have opened the eyes of many who are looking to build stronger relationships with privates as a way of satisfying the growing number of clients unable to win mortgages with A-lenders and even institutional Alt-A players.

This guide will explore the benefits of finding the right partner in your neck of the woods and the importance of understanding that lender’s sweet spot. The centrepiece of the supplement is a snapshot of the private lending landscape in each of the major

regions of Canada, from the West to Central Canada and the Atlantic provinces. That Cross-Canada directory starts on Pg. 28.

8%

Homeowners taking out equity in 2012 Source: Maritz (Spring 2013)

This special guide has been years in the making for CMP, but also for brokers as they increasingly find real and critical need for private lenders

A SENSE OF...

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PH 1.866.441.3775 www.OptimumMortgage.ca

YOUR SENSIBLE LENDING PARTNER

June 2013 | 23

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13/06/2013 1:44:08 PM

Private Lending/ KYC

Know Your Lender Interest in private lenders has never been greater, but brokers beware, says MIC veteran Al Kelly, your due diligence starts with understanding your lender and their commitment level

24 | JUNE 2013

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D

mortgagebrokernews.ca

Do you know your (private) lenders?

Who has the best rates, fees, and terms for your client, and are they a reputable lender?

Private lending is a different market from “A” lending.

There are many more lender participants and each one is working under their own set of lending guidelines.

As a broker, you may know quite a number of the private lenders, or you may be new or unfamiliar with this part of the business, the lender participants, and the peculiarities they often bring in their commitments. Regardless of your exposure, it is an almost impossible task to know all the participants and their lending criteria.

I firmly believe that the vast majority of brokers and lenders work to the best interests of the industry, looking after the business and the borrowers in a manner that reflects positively on us all, but there are always going to be participants that work to their own agenda – on both sides of the industry.

Most lenders work diligently to look after their

own business interests, but not in a manner that is detrimental to the interests of the broker or their borrowing client. They are upfront about their requirements and reasonable when files go sideways (as sometimes happens).

However, there are lenders who just look for ways to collect fees with no intention of ever lending money, or those that try to pull the old “bait and switch” or use other misleading tactics to take advantage of clients who are in a difficult financial position.

How, as a broker, do you make the distinction between honest lenders and their less scrupulous counterparts, how to ensure you are working in your client’s best interest?

After all, you are the person that has to face your client at the end of the day and explain your actions and recommendations.

A new spirit in mortgage lending Dedicated to mortgage brokers at equity financial mortgage services we deliver a new level of responsiveness and common sense lending to the ontario mortgage broker community.

EquityFinancialTrust.com/Mortgage

Toll Free: 1.866.393.4891

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June 2013 | 25

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Private Lending/ KYC

1.

Al Kelly has been a MIC lender and mortgage broker since 1999. Most recently he has been working on programming and rolling out StrategicMatches.com.

The site is directly focused on bringing together mortgage brokers with non-traditional and/ or private lenders.

2.

A well-known lender is not necessarily the best lender for your deal. Lenders that spend a great deal of time and money on promotion will have to cover those expenses somehow.

They may be the most honest lender around, but they may also be more expensive than the competition.

Many lenders have very specific policies about collecting fees upfront. These are usually for very legitimate reasons; generally to cover possible legal expenses or other out-of-pocket expenses. You will have to read the lender’s terms and compare them to other commitments to determine the competitiveness of the offer for your client (are these fees normal in this market?) Be aware that fees are regulated quite differently from province to province.

3.

Get a written commitment before you present the lender offer to your client. Then, if there is a misunderstanding later, you at least have the commitment to refer back to.

4.

If the terms of the commitments you receive appear to be too onerous for your client, or you feel they are too restrictive, be upfront about this with your client. Make sure you point out both the positive and negative items on a commitment. Ultimately, your client has to decide if they are comfortable with the terms being offered.

confidence. With full disclosure upfront, there should be little reason for the lender to want to back away from their commitment.

6.

The appraisal can make or break your deal.

Bear in mind that the biggest cause for concern usually comes from the appraisal, so until that is completed and reviewed, you can never be too comfortable with a commitment or allow your client to get too comfortable.

7.

Be conservative with your property valuation – manage your client’s expectations. The lender will appreciate it, and chances are your deal won’t have to be revisited (or collapse) when the appraisal is completed. Again, it’s one less item for the lender to address negatively.

8.

In order to look after your client, you need options for them to consider. You may know a lender that will look after your particular client, but other lenders may have different or better offers for your client. I don’t specifically refer to rates and fees, but more the overall package that the lender offers. As with “A” lending, the lowest rate isn’t always the best deal for your client.

9.

Once you have options for your client, you should check out the lender who appears to be the best fit. If you don’t know the lender already, you can talk to colleagues or even call the local regulator to see if there have been complaints against the lender in question.

The more thorough you are in presenting your file, the less likely there will be misunderstandings with the lender later in the process. Always speak to the deficiencies in your file. Ask your client the tough questions and get straight answers. Back up whatever you can with documentation. Only then will you be able to present your file with

10. Bottom Line – If you have concerns about the lender or the offer from the lender, make sure you address those concerns with your client.

Your client may be under considerable financial duress and may need you to be the strong voice of reason at a time when their need for money blinds them to matters that should concern them.

Hopefully these steps will guide you and your client to a successfully funded mortgage with a reputable lender

Hopefully these steps will guide you and your client to a successfully funded mortgage with a reputable lender. Do keep in mind that the majority of private lenders are very reputable individuals and companies!

The private lending market is very active, even more so now that conventional lenders are working to tighter underwriting standards, and the market is much larger than most brokers realize. There are often lending options out there for even the toughest of files.

5.

26 | JUNE 2013

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13/06/2013 1:44:14 PM

WINNER 2013

Congratulations

to our award winners!

Mortgage Brokerage of the Year (fewer than 25 employees) Alyson Thiessen, Lesley Krawiec, Katherine Meadows, Cheryl Kowalsky, Sheila Tremblay

Best Newcomer â&#x20AC;&#x201C; Mortgage Broker Firm Marg Green, Donna Ramsay, Steve Heimbecker

Best Community Service Effort Invis-Mortgage Intelligence brokers, staff, and supporters

BoldResources.ca 22-35_Lender Supplement.indd 27

facebook.com/invismi 13/06/2013 1:44:15 PM

Private Lending/ Cross-Canada Directory

Private lending

Cross-Canada

Directory 4 3 1

Optimum Mortgage Antrim

1

VWR

4 PrimeWest Mortgage Investment Corporation

1

2 Interior Equities Corp.

Sun Mortgage Corporation

New Haven Mortgage Corporation

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13/06/2013 1:44:16 PM

mortgagebrokernews.ca

Word of mouth remains the best way to find a private lender, say broker veterans. But CMP’s first cross-Canada map of respected lenders – with a list of their guidelines (Pg. 30) – comes a close second

5

Castleton Financial SecurFinance

Pillar Financial

6

4 1

Equity Financial Trust

Pentor Finance

EZ Financial

8 Atlantic Signature Mortgage and Loan

7 First Swiss Mortgage Corp.

June 2013 | 29

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Private Lending/ Cross-Canada Directory

1. VWR Capital corp

VWR Capital Corp is a private mortgage lender specializing in helping those who have difficulty qualifying for conventional mortgage financing. VWR Capital lends 1st, 2nd, and 3rd mortgages in B.C., Alberta, Manitoba, and Ontario up to 75 per cent LTV on residential real estate. Non-income qualified, no minimum beacon score and we only work with licensed mortgage brokers.

Lending Areas • Major centres in B.C., Alberta, Manitoba, & Ontario • Niche/Focus • Residential real estate (homes, townhouses, condos, serviced land, bare land, acreages)

2. Interior Equities Corp.

• • • • •

Low lender fees starting from $500 24-hour turnaround time Loan sizes from $30,000 to $2,000,000 Affordable renewal fee Common sense equity lending

Lending markets: Our primary lending areas include the Okanagan Valley, selected areas in the Kootenays and larger urban centres including Vancouver Island Customer type: Those who are unable to qualify for traditional financing from conventional financial institutions Property type: Single-family and multi-family homes; commercial property; residential lots; manufactured homes on freehold lots Purpose: Purchase, refinance, construction

Max LTV: 75 per cent - Residential; 65 per cent Commercial Min Beacon: N/A Terms: One to two years Rate type: Fixed or Variable Max Amortization: Up to 35 Years Fees: Fees depend on the deal, but typically two per cent for residential mortgages, split 50/50 with the originating broker Preferred Loan Amount: $50,000 - $750,000

Residential 1st Mortgages Max LTV 75 per cent Lending Areas: Major Centres of BC and Alberta Minimum Beacon: NONE - LTV reduced if < 500 Min / Max Mortgage: $50,000 - $5 million Income Stated Income GDS/TDS: NONE - deal must make sense Purpose of Funds: Purchase, Refinance, Revenue Property, Interalia Terms: One to two years ( OPEN terms available) Amortization: 35 years - Interest only available for < 70 per cent LTV Brokerage Fee: 3 per cent - split 50/50 Lender Fee: No lender fee

Residential 2nd Mortgages Max LTV 75 per cent Lending Areas Major Centres of BC and Alberta Minimum Beacon NONE - LTV reduced if < 600 Min / Max Mortgage $50,000 - $3 million Income Stated Income GDS/TDS NONE - deal must make sense Purpose of Funds Purchase, Refinance, Revenue Property, Interalia Terms one to two years - OPEN terms available Amortization 35 years - Interest only available for < 70 per cent LTV Brokerage Fee five per cent - split 50/50 Lender Fee No lender fee Rates Call underwriter for quote Construction lending: LTV max. 70 per cent Based on appraisal as if 100 per cent complete; mortgage amt. $100,000 - $3 million

3. Antrim

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mortgagebrokernews.ca

Directory legend British Columbia, Alberta

4. Optimum Mortgage

This division of Canadian Western is a full-service Saskatchewan, Manitoba lender, providing mortgage brokers with lending solutions for their clients. We specialize in Alternative Ontario, Quebec Lending; our policy is and always has been to confirm the affordability of the deal.

Nova Scotia, New Brunswick, PEI, Our Alternative Lending products provide solutions Newfoundland and Labrador for borrowers who do not fit the traditional “A” lending guidelines. This includes borrowers who: are self-employed or commissioned with stated income, have a GDS/TDS that does not meet traditional requirements, have outstanding CRA debt, or earn additional “soft income” on the side.

Headquartered in Western Canada, we are proud to offer financing throughout Western Canada and Ontario. Our experienced team of underwriters will find the best solution, whether your clients are purchasing a new home, refinancing an existing property, or adding to their rental portfolio. Dependent on location, we will consider applications up to a maximum of 80 per cent LTV. We offer competitive referral fees and have fee or no-fee options available for your clients. We will consider beacons as low as 550.

For current rates and more detailed guidelines, please visit www.OptimumMortgage.ca.

Richard Earles

Business Development Manager 1-866-907-5407 richard@vwrcapital.com Twitter: @VWRCAPITALCORP

Your Private Mortgage Solution Funding Mortgages In: x x x x

British Columbia Alberta Manitoba Ontario

x Competitive rates and nominal lender fees x Purchases, refinances, ETO, and renovations x Rental properties, owner occupied, raw land, serviced land, small multi-family x No income qualification x No minimum beacon score

Your Underwriting Team: Dimitri Kosturos: VP Underwriting Richard Earles: Business Development Manager Leah Wilson: Underwriter

Send Deals To: info@vwrcapital.com Or Call:

1-866-907-5407

www.vwrcapital.com June 2013 | 31

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13/06/2013 2:42:14 PM

Private Lending/ Cross-Canada Directory

5. Pillar Financial

Touted as a “solution-based lender,” Pillar’s niche includes construction financing, rural and urban residential and debt consolidation. While Ontario is the focus territory, the lender has just won approval to lend in Nova Scotia.

We base our LTV on the collateral (real estate) and the rate is dependent on the client’s “Four Cs”: character, credit, capacity and capital.

Products: • Residential (Urban and Rural) • Construction & Large Renovation Loans • Bruised and Damaged Credit • Discharged Bankruptcy • Debt Consolidation • Equity Deals (No Doc 60 per cent LTV/ Low Doc 65 per cent LTV) • Bridge Financing • Short-term + Long-term • • • • •

Minimum loan amount $100,000.

Maximum Loan amount: $8 Million.

We pay 80 bps on EVERY deal from the two per cent lender fee.

Rates from 7.99 per cent and up (Keep an eye out for ‘Rate Sales’) Open and closed terms (one to five years)

Property types: • Single-family attached/detached homes • Townhouse freehold or condominium • Cottages (and islands) • Multi-family • Rural/Acreage (Well & Septic) • Agricultural Land, Working and Hobby Farms • Modular Homes • Vacant Land • Construction/Renovations Loans

“Yes”

has such a nice ring to it.

• • • •

Specialty Properties Student Rentals/Rooming Houses Mixed-use Waterfront and Building Lots

Construction • Self-builds and small contractors • two per cent underwriting fee (80 bps to broker) • one per cent per month interest on advanced funds only; open for repayment with no penalty • Draws based on level of completion - $150 + inspection • Use the construction draw calculator and submit your information to Pillar Mortgages underwriting team. http://www.robinsonsgroup.com/pillar/construction/construction-draw-calculator/ Residential Urban and RURAL! • Urban and Rural • Maximum 80 per cent LTV all over Ontario • No LTV restrictions for well and septic, low beacon score, self-employment • Purchases and Refinances • Two-per cent Underwriting Fee • Rates from 7.99 per cent & Up • Ability to raise fee and lower rate!

G

If you’re looking for an alternative to “no” – give us a ring.

We’re short-term solution specialists.

Debt consolidation, renovation, construction.

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Working capital for business & land purchase.

902-406-1250 atlanticsignature.com 13/06/2013 1:44:20 PM

B b

C

M

M

6. Equity Financial Trust

This institutional player is aggressively challenging the dominance of Home Trust and Equitable Trust in the Ontario market it now services. Its lending guidelines aren’t published, but here’s a thumbnails sketch: • • •

•

7. First Swiss Mortgage Corp.

• • • • • •

Min Beacon – no minimum beacon requirements Terms – one, two, three and five years Rate type – fixed rates open and closed Max Amortization – 35 years Fees – varies by deal – individually priced based on risk Preferred Loan Amount – minimum loan amount is $75,000 and max is $1.5 million

First Swiss Mortgage Corp. is a leading institutional lender offering first and second mortgages for residential and commercial properties exclusively through mortgage brokers.

• • • • • •

8. Atlantic Signature Mortgage and Loan

Customer type – individuals only Property type - single-family owner-occupied one to four units located in the extended GTA Purpose – private purchase, MLS purchase, new construction purchase, refinance, debt consolidation, equity take out, title transfer – all others on a case-by-case basis Max LTV – Max 80 per cent, we allow seconds behind us

Customer type: Individuals, business, commercial Lending territory: Across Ontario; Canada wide by 2014 Property type: Residential, commercial Purpose: Principal residence, commercial Max LTV: 95% Min Beacon: Credit score is not considered

• • • • • •

Terms: Usually 1-year open Rate type:starting at 8 per cent Max Amortization: Up to 40 years or interest only Fees: None, only self-insured lending fee capitalized Loan types: 1st, 2nd, residential, commercial Preferred Loan Amount: $10,000 - $1,000,000

A Halifax-based private, Atlantic bills itself as a common-sense lender, with “no minimum beacon score or maximum debt-servicing requirement. We will look at the property and confirm it fits within our guidelines, we will confirm the client’s ability to afford the mortgage and other debts and we need to understand the exit strategy.”

•

• • • •

Lending Areas: Nova Scotia, PEI and New Brunswick (All rural properties on a case-bycase basis) Position: 1st and 2nd mortgages Residential Real Estate, Mixed-use, commercial real estate, land, construction Rates from 9.99 per cent LTV up to 80 per cent on residential; up to

• • • • •

65 per cent on commercial Lender fees from four per cent 24-hour turnaround Loan Size: from $25,000 to $1,000,000 Common Sense Lending approach Terms: Six to 12 Months, Interest-only or amortized

Geared to Handle CONSTRUCTION CONSTRUCTION TYPES:

EXPERTS IN FINANCING FOR:

• Residential (urban and rural) • Land development • Renovations

• Builders and renovators • Land developers • Real estate buyers

Bring us your exceptional clients and get your blueprint for construction financing: Cam Delli-Pizzi

613 282-1242

Mortgage Administrator Licence #11209 Mortgage Administrator Licence #11209

22-35_Lender Supplement.indd 33

cam@pillarfinancial.ca

June 2013 | 33

MORE THAN 30 YEARS EXPERIENCE

E

PILLARFINANCIAL.CA

AC

PILLARFINANCIAL.CA 13/06/2013 3:27:37 PM

CA

m

mortgagebrokernews.ca

Private Lending/ Shop local

Broker,

You’d better shop around, but shop local, too

In real estate, it’s location, location, location, but in private lending, should it be ‘local, local, local’?

Don Horne reports There are many private lender horror stories out there – and the best advice for ensuring your next deal doesn’t join them is to shop local, says this year’s CMA-winner for alternative brokering.

“Alternative and private lenders can be great, but you’ve got to start local to know who you are dealing with,” says Adam Hale of the Mortgage Centre and winner of the 2013 Alternative Lending Broker of the Year award. “As for commercial deals, I don’t go into that world – they rarely close.”

Hale in his forthright style is speaking to the kind of challenges brought to light by one Ontario broker’s run-in with a West Coast MIC and a MortgageBro-

Flexible lending when you need it.

At Antrim, being flexible allows us to create the custom mortgage solutions your clients require. We provide a broad range of residential 1st and 2nd mortgages tailored to the needs of your self-employed, stated income, and low beacon clients. Furthermore, a common sense lending approach allows us to approve and fund deals fast.

Our friendly and knowledgeable underwriters look forward to helping you.

604.530.2301 · 1.888.550.6039 · applications@antriminvestments.com

34 | JUNE 2013

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13/06/2013 1:44:24 PM

mortgagebrokernews.ca

kerNews.ca article. The fallout over his two deals – including a commercial loan that failed to fund, but cost the client $9,000 in commitment fees – also spawned this CMP special supplement on private lending.

“I blame the broker in that deal a little bit, too,” says Hale. “It’s on his shoulders as much as on the lender. I see my role as a mortgage broker to protect the client and the lender. I’m Switzerland here.”

Other brokers and, indeed, lenders themselves stress the need to build strong relationships with private firms.

“In terms of dealing with the smaller private guys staying local has its benefits,” says Michael Graves, marketing manager and business development officer for Pillar Financial. “As for the larger privates, which tend to lend across several market, it’s just as important for brokers to get to know us and our guidelines.”

But regardless of a private’s size, says broker

Carolyn Callero, a mortgage professional needs to pore over the rule book and, indeed, the reputation of any alternative player before entrusting often-distressed clients to underwriter.

“I bet the horror stories happen because people don’t really know who the private lender is, specifically in regards to their credibility,” says the broker with Verico Premiere Mortgage Centre. “Or it could be that the client really should not have gotten the loan to begin with. Let’s face it: there are people out there who really can’t afford the second mortgage and should not even be getting it.”

But even assuming a qualified client, says Ron Swift, the CEO of Mortgage Architects, it’s to easy for a broker to become enchanted by promises of great funding.

“You come across a funding source, and you naturally want to take advantage of it,” says Swift. “Someone says they have a million dollars to put into a private mortgage, and it is easy to get caught up in that.”

June 2013 | 35

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13/06/2013 1:44:26 PM

feature/ 10 Most influential women

CMP’s Most

influential w men We’re highlighting some of the industry’s biggest go-getters.

And, yes, they’re women

36 | JUNE 2013

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13/06/2013 1:48:20 PM

T

mortgagebrokernews.ca

Twenty years ago, when consumers conjured up an image of a mortgage broker, the blurry picture of a man in a suit most likely came to mind. Well, that’s assuming any image arrived at all. Flash forward to 2013, and today’s savvy homebuyers are just as likely to imagine a woman in that suit as they are a man. The truth of that statement was never more evident in crafting CMP’s first-ever Women of Influence feature. While we identify 10 of those industry stars, it could just as easily be a 100.

This year’s list was compiled with the help of a focus group and CMP’s own editorial database. While it’s CMP’s attempt to both honour and recognize individuals who have made positive contributions to the channel, the list is also a celebration of the growing influence of women in an industry still in its infancy.

Note, however, this list is not a ranking, it’s also not scientific and it’s absolutely not CMP’s last word on the subject, but the magazine’s inaugural salute to broker women.

From controversial trailblazer of one of Canada’s most success rate sites to broker of record for a CMA-winning, all-women brokerage, the 2013 honourees cut a broad swath across the channel.

All of those accomplished professionals have role modelled professionalism for women and men alike and they’re just as eager to inspire now.

See why.

T

This list is not a ranking, it’s also not scientific and it’s absolutely not CMP’s last word on the subject, but the magazine’s inaugural salute to broker women

Alyson Thiessen Where: Co-owner, Mortgage Intelligence Get Er Done Girls, Red Deer, Alta.

Alyson Thiessen

The # of years in the business: 14 Career Milestones Worked at Canada Trust in Ottawa during university, gaining a love of banking.

• 2001-2004 Regional Mortgage -- Red Deer Fulltime Broker • 2004—founded The Get Er Done Girls from her living room.

In 2007 The Get Er Done Girls was 17 women and one man. This taught me a great lesson. Small sometimes is large. Today we are five women.

Why are you influential?

Over the past 10 years, people have come up to me and asked about what I have. “How do you do it?” There is no substitute for hard work. I am who I am from putting my nose to the ground and learning. From using excellent metrics in my business and, most of all, never, ever quitting. I have had some very rough years in the business, but I have never quit. Because of my experience and knowledge, I have a confidence that attracts people.

Lastly, I am truly a Get Er Done Girl.

Who’s influenced you?

The two females that have had the greatest influence in my life are my two children, Joanna and Rayna.

Challenges facing women brokers?

I am unsure if there are gender-specific challenges in our industry.

Is a list like this even necessary today?

Yes, I believe we are on equal footing. I don’t see it as men vs women. There are equal challenges in this industry whether man or woman, girl or boy :)

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feature/ 10 Most influential women

Alyssa Richard

Patricia Giankas

Where: President, RateHub, Toronto

Where: CENTUM Metrocapp Wealth Solutions Inc and ScoreUp (president & CEO), Toronto, Ont. The # of years in the business: 38

The # of years in the business: 3  Patricia Giankas

Why are you influential?

In both my personal life and my business career I have endured many trials and tribulations in all facets of life.

I had it all and then later lost it all, partly due to family illnesses. These life lessons only make you stronger.

Now I have returned with a vengeance. I am a visionary and my brain never sleeps. I have completed enhancing a software that increases credit scores and helps clients regain their financial health. I am now in a new chapter in my life. I have found inner peace in the acceptance that every experience is a life lesson.

All the chips are falling into place and the potential is endless. I am elated that doors keep opening!

Who’s influenced you?

The woman who had the greatest influence in my life was my very first manager in 1975. I was unaware that she had been suffering with cancer, but she came to work every day and worked very hard. There was a point when I thought she did not like me. She would inundate me with a lot of work and made me shed tears. Almost like the movie The Devil Wears Prada.

As she continued to pile work on my desk, I did not complain. It was my first office job. I did not quit.

I wanted to prove to her and prove to myself that I can do it. I was so much engrossed in trying to please her, that I never saw the twinkle in her eyes as she threw the work at me. A year later she fell in her bathroom and was off work. Two days later, she phoned me the evening before she passed and said that she loved and believed in me, and that she sees me being successful in life. It was a bittersweet moment.

Is a list like this even necessary today?

In business leadership, males and females can’t be categorized into gender-specific styles. Situation will dictate leadership style before sex does.

Career Milestones: After graduating from Queen’s in 2007, she worked two years with Bain & Company consulting in U.S. financial services. There she was introduced to mortgage websites and the power consumers can have by making better decisions with their financing options.

Left Bain & Company in 2009 to start RateHub.ca.

Alyssa Richard 

RateHub.ca: - We launched in 2010 - Now employes 11 full-time staffers - Ranking No. 1 on Google for many key mortgage rate search terms

Why are you influential?

I’m passionate about two things: building an online brand and empowering consumers. RateHub.ca acquires users exclusively online, which is a testament to our tools and resources, search engine optimization strategies, and partnerships with other websites such as Yahoo! Finance Canada, Kijiji, etc.

Who’s influenced you?

1) My mom is someone who believes she can do anything and, therefore, she tries until she succeeds.

2) When I first started RateHub.ca, one of my mentors was a woman named Lib Gibson. Lib played a critical role in helping me start the business.

Is a list like this even necessary today?

In business, I think men and women are on equal playing fields now, especially when it comes to acquiring talent, growing revenue and maximizing profit. But it hasn’t always been that way. Warren Buffett said he “was privileged to work during a period when it was only necessary to compete against half of the population.” In the financial services, which is still typically dominated by men, it’s nice to highlight women who are making positive changes in the industry.

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Dominion Lending Centres Presents

ring u t a e F

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13/06/2013 1:49:27 PM

feature/ 10 Most influential women

Maria Dominelli

Angela Calla

Where: Broker, Invis, Victoria, B.C.

Where: Broker, Dominion Lending Centres The Angela Calla Mortgage Team, Vancouver, B.C.

The # of years in the business: 10 years in the mortgage broker channel as an originator

 Maria Dominelli

Career Milestones:

Career Milestones:

Over 20 years of banking experience with three major chartered banks. Fulfilled many managerial roles including Branch Manager, Human Resource Manager, Audit, Customer Service, Commercial and Retail Lending Awards & Honours: - 2011 Invis Awards of Excellence - Winner of the 2010 Mortgage Broker Association of BC Community Service Award - 2010 CMP finalist for Community Service - 2004 – 2010 Invis Awards of Excellence recipient - 2008 Accredited Mortgage Professional of the Year Award, CAAMP

I was recruited out of high school for my first job as a marketing executive for a restoration company. I chaired a business club that led me into brokering.

- Host of The Mortgage Show on CKNW AM980 - Ranked 14th on the inaugural CMP Top 75 Brokers, with $81.2m in funded volume for 2011 Angela Calla 

Why are you influential?

Who’s influenced you?

Women influence me daily. The support and dedication women naturally have is amazing beyond words. My mother and close girlfriends are women who continue to reach out and inspire me daily. Being a new mother also has me in awe of how truly amazing women are.

Who’s influenced you?

My mother and sisters; The first female manager in my banking career.

I also have important influential males in my life such as my spouse and community leaders such as Mel Cooper, who chairs the Victoria Telus Community Board.

Challenges facing women brokers?

Challenges facing women brokers?

Is a list like this even necessary today?

It depends on the context. Men and women do communicate differently and we tend to set different expectations for each gender in a similar situation.

Why are you influential?

I’m always adapting to markets, trends and emotions, and I’m surrounded by great people. Most important, I always work hard to give our clients an upperhand on their mortgage financing. I am the host of my own radio show “The Mortgage Show” Saturdays at 7p.m. on CKNW AM980, am a repeated guest on morning shows and newscasts, as well as a contributor to many print publications across Canada.

It’s all about past experiences that have formed my values. I believe I have a lot of passion and integrity.

I like to help people realize the importance of their contributions toward a cause.

Same challenges all brokers face: adapting to change and modifying approaches to achieve our goals; time management; etc.

The # of years in the business: I’ve been licensed since 2004, but working full time as a broker since 2006

83%

Homeowners with min. 25% home equity Source: Maritz (Spring 2013)

I can’t say that being a woman has affected my career one way or another. I personally believe you can’t control other people’s emotions, female or male.

Jealousy, envy and the long list of unattractive qualities in my opinion don’t have a gender - it’s all about mindset.

Is a list like this even necessary today?

I’m not sure this list is “necessary”, but it sure is nice to be celebrated.

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Christine Xu Where: Broker, Argentum Mortgage & Finance, Unionville, Ont. The # of years in the business: 13 Career Milestones: Before entering mortgage business, I worked in banking and investment/financial planning business.

Who’s influenced you?

My mother. She was an English professor in China who taught Biblical English in a Christian seminary until the age of 80.

Is a list like this even necessary today?

Well, personally, I don’t feel being a female is a disadvantage. However, I have not failed to notice that in the business world today, no matter whether it is the mortgage brokering business or other related professions, that we are still living in a male-dominated world.

For instance, at the recent two industry events I attended – the IMBA Annual Conference Gala night and CMP Award Gala night – we only had pretty girls wearing sexy little outfits dancing Broadway or Hollywood style to entertain attendees. I have never seen good-looking Chippendale dancers (hahaha) in those business events. The Board of Directors for IMBA or CAAMP are predominately male, presidents of most mortgage brokerages are male, and so on and so on.

So, promoting female brokers, female business women and female leaders is a good thing.

Christine Q Xu

Marlborough Stirling

June 2013 | 41

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feature/ 10 Most influential women

Janet McKeough

Alice Chan

Where: President, Mortgage Brokers Association of Atlantic Canada, Halifax, N.S. The # of years in the business: 19

Where: Toronto, Ont. The # of years in the business: 25  Janet McKeough

Career Milestones: Bachelor of Business Administration (BBA) Major in Accounting, • 19 Years in Financial Services - 10 as a broker, nine with a chartered bank • Worked for several years in accounting and administrative roles with national and regional organizations.

Why are you influential?

I don’t really consider myself an influential person.

I try to always do the right thing on both a personal and professional basis. This leads to trust and respect which, in turn, helps others be receptive to your position or request.

Career Milestones: M.B.A. and B.B.A from York University. Started as a banker with HSBC and transitioned into the broker industry in 1988. Joined FirstLine Trust in 1992.

More than two decades in the financial and mortgage industry has been highlighted by innovative achievements such as the implementation of loyalty rewards programs and broker technology tools and systems while with Mortgage Architects and Mortgage Intelligence. At the latter, she served as senior-vice president from 2002 to 2006.

Alice Chan 

Why are you influential?

Who’s influenced you?

I launched a number of successful products (e.g.

FirstLine’s Designer ARM products, basispoints, Matrix mortgage, broker portals, etc.) and operating systems (Loyalty Points, commission payroll and compliance) throughout my career.

I have been fortunate to be surrounded by many strong women and men. However, if I had to pick one, it would be my mother. She was an RN at a time when professional careers for women were not common.

It was my mom. She taught me “Never give up” and that I have the ability to accomplish whatever I set my mind to do.

Who’s influenced you?

Challenges facing women brokers?

Challenges facing women brokers?

The same challenges as any broker looking to approve clients’ mortgages in the quickest amount of time with the most favourable terms and conditions.

I do not see any difference in challenges we face versus my male counterparts.

Is a list like this even necessary today?

Though I appreciate the compliment of being included in this list, I don’t think it is. There may be some careers where there is a gender advantage or disadvantage, however, I don’t feel that applies to the mortgage business.

Is a list like this even necessary today?

It is good to have such a list to highlight the success of female brokers. We are a more-reserved group and did a great job in not getting into the limelight too often.

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mortgagebrokernews.ca

Debbie Thomas

believe it’s more about my skill as an educator. I’ve also been the Mortgage Expert on Global BC TV for many years and worked hard to get the industry message out to consumers.

Where: The Mortgage Group, Vancouver, B.C. The # of years in the business: 23 Career Milestones: In July, 1990, Thomas and her husband and business partner, Grant, opened TMG, which operated previously as The Equity Centre. In the ensuing 23 years, they have been growing its presence in the marketplace from four brokers in a small office to more than 700 mortgage professionals across the country.

Why are you influential?

As the only female to own a successful national brokerage, I have a certain level of credibility; but I

Challenges facing women brokers?

One of the aspects I most enjoyed and what drew me to the industry in the first place was there was no gender disparity in terms of remuneration. The sky is the limit.

Debbie Thomas

Is a list like this even necessary today?

This is still a young industry, relatively speaking, and it continues to grow and evolve. It is vital that full-service national brokerages continue in the role as leaders and innovators. It’s also important that we continue to have strong female role models. So is the list still necessary? Until we, as an industry, have matured, I’d say “yes.”

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June 2013 | 43

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feature/ 10 Most influential women

Roslyn Goldmintz

Hali

Strandlund

Where: Verico RBG Mortgage Professionals, Toronto, Ont.

Where: President of Businesss Development, Fisgard, Victoria, B.C. The # of years in the business: 24

 Hali Strandlund

The # of years in the business: 26

Career Milestones

Career Milestones:

- the founding Director and the SVP of Residential Mortgage Investments & Broker Relations of Fisgard Capital Corporation.

- Past Chair of the Canadian Association of Accredited Mortgage Professionals (CAAMP) and a Past President of the Mortgage Brokers Association of British Columbia (MBABC) after having served two consecutive terms as the MBABC President.

Started with Credit Realty/Rosemont Investment Corporation in 1987 - providing residential and commercial mortgage financing through private syndication/participation - expanded career to include institutional brokering with Estate Mortgage and in 1998 started own mortgage brokerage company.

- Verico Canada National Advisory Council (NAC) past chair

Why are you influential?

Roslyn Goldmintz 

I have been an active and dedicated participant in our provincial and nationals associations (MBABC, AMBA, CAAMP), I strive to create a culture of learning and increased professionalism and have a totally open attitude towards sharing information and ideas.

IMBA: - Government Relations Committee, co-chair 2012 -Annual SnowFest ( ski day) event chair -Instructor, mortgage agent course

Who’s influenced you?

Relationships are very important. I’m good at developing and maintaining them. They are based on trust, integrity and honesty; qualities that perhaps allow me to have “influence.” I’m lucky to have, over the years, met and aligned myself with so many dedicated and reputable individuals in the mortgage and periphery industries.

Why are you influential?

Wow… I grew up surrounded by my grandmothers and mom, who are extremely strong matriarchal women.

Challenges facing women brokers?

I personally don’t have any challenges that are specific to being a ‘female’ but would sure like to encourage other ladies to go after leadership roles within their companies and industry associations.

Who’s influenced you?

A lot - too many to list - but they include political figures, writers, homemakers, entrepreneurs, athletes and survivors.

Most influential is my mother; she is the epitome of dedication.

Is a list like this even necessary today?

A list like this may provide enough information about some of the fabulous women we have in the mortgage industry that are doing amazing things to inspire other ladies to kick it up a notch and don’t accept the old argument that this is a male-dominated industry.

69%

Mortgage holders with fixed-rate mortgages Source: Maritz (Spring 2013)

Challenges facing women brokers?

Same as any other broker.

Is a list like this even necessary today?

The list is not necessary unless it provides a source of inspiration to females who don’t think having equal footing is possible.

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feature/ COMMERCIAL thinking

Survey says…

CMLS presented the first-quarter findings from their annual Canadian commercial mortgage market survey at RealCapital in Toronto recently. Here are some of the highlights: For the third year, CMLS presented the highlights from its annual Canadian commercial mortgage market survey at RealCapital 2013 in Toronto. CMLS’ objective with this annual survey is to help accumulate information on the size and composition of the Canadian commercial mortgage market, quantify annual originations, and gauge industry sentiments heading into 2013.

CMLS estimates the size of the Canadian mortgage market at approximately $170 billion. The 2013 Q1 Survey participants identified $105 billion of commercial mortgages outstanding, which combined with $27 billion of outstanding CMBS and NHA MBS provided insight into over $132 billion of commercial mortgages in Canada. Survey participants identified a further $11.2 billion of current construction loans.

180 160 140 120 100 80 60 40 20

35 Estimate

Estimate

Survey

Estimate

30 25

Survey

20

Estimate

Survey

Survey

15 10 5

2011

Got Plans?

2012

We should get together.

We’ve been underwriting real estate backed Construction, Bridge and 46 | JUNE 2013 Financing for over 35 years.

Equity 46-47_Commercial.indd 46

2012 ORIGINATION

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2012 Outstanding Balance

2011

2012

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W

+

4

0

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CMLS estimates 2012 originations at approximately $32.5 billion, a significant $4.5 billion (16%) increase over 2011. This year’s survey participants reported originations in excess of $23.5 billion; combined with 2012 CMBS issuances of $0.5 billion and NHA MBS issuances of $3.7 billion, total identified origination was more than $27.7 billion.

What else did we learn? Again, one-half of participants had floor rates in 2012, primarily to protect the all-in coupon. And while most lenders believe there will be as much or more capital available for borrowers, many have 2013 targets that are well below their 2012 origination figure. Key risks to success in 2013? Lenders feel there may be too much capital in the market and many have concerns about the direction of the Canadian economy. Without question, there is concern about the continued low rate environment and further cap rate compression pushing collateral values even higher. Finally, it appears lenders believe CMBS will make a more pronounced return in 2013, with most believing issuance will exceed $500 million for the year.

CMHC CMHC spreads have remained relatively flat in the first quarter of 2013. Coupons on five-year insured money are barely beating inflation at 2.15 per cent.

Ten-year money for large deals is the most competitive CMHC product fetching spreads of 95bps over GOCs or better.

CMBS Institutional Mortgage Capital followed up their July 2012 deal with a conduit securitization brought to market in February. Pool metrics were consistent with the previous deal at 63.5 per cent LTV and 1.46x

Got Plans?

debt coverage, although subordination levels decreased one per cent to 14% at the AAA level. Collateral provided a range of maturities making possible the inclusion of both three- and five-year bonds in the AAA strip. These classes helped the issuer achieve sharper pricing on a portion of the AAA tranche and open the deal up to bond buyers looking for a shorter term play.

Recent CMBS Issuances

IMSCI 2012-2

CMOT 2012-1

IMSCI 2013-3

Cut-Off Date

July 1, 2012

Oct 1, 2012

Feb 1, 2013

31

26

38

Cut-off Date LTV

63.5%

60.79%

63.5%

Cut-off NCF DSCR

1.44x

1.66x

1.46x

15%

15%

14%

# of Loans

AAA Subordination

The economic attractiveness of CMBS issuance has continued to improve as bond spreads have tightened and borrower demand for longer term fixed-rate financing remains strong. Indication is that several institutions are evaluating a return to the CMBS space in some manner, be it managing their own conduit lending operation or providing warehouse debt or equity financing to another. The major barriers in establishing a conduit platform are achieving a profitable scale, pace of loan origination to reduce warehousing costs, and restrictive capital requirements for IFRS issuers. In a small market where the historical peak of annual conduit lending failed to break $4 billion, there is a distinct first mover advantage.

We should get together.

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Loans from $1,000,000 to $15,000,000+ Financing for projects in southern Ontario Only

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June 2013 | 47

Brokerage # 10160 13/06/2013 12:56:01 PM

News

InternatIonaL

feature/ Marketing

&

u.s.

90.6% 52.1%

inspectors have found problems; appraisals showed a home was worth less than the bid; a buyer lost a job before the closing.

U.S. housing market worse than thought More than two years after the recession The number of Americans who bought previously officially ended, many people can’t qualify for occupied homes rose in October. But the National loans or meet higher down payment Association of Realtors says it overstated more than requirements. Even those with excellent credit three million sales during and after the Great Recession, and stable jobs are holding off because they fear showing the housing market was weaker than Percentage of that home prices will keep falling. Sales are also previously thought. homeownership being hurt by a decline in first-time buyers, who The private trade group says sales rose four per costs, including are critical to reviving the housing market. cent in October to a seasonally adjusted annual rate of mortgage payments, Sales have fallen in four of the five years 4.42 million. That’s below the roughly six million homes utilities and property since the housing boom went bust in 2006. a year that economists say are consistent with a healthy taxes that take up a Declining prices and record-low mortgage rates housing market. But it’s ahead of 2008’s revised sales, typical household’s haven’t been enough to boost sales. now considered the worst in 13 years. monthly pre-tax At the same time, home construction has The trade group revised its sales from 2007 to 2010 income in Vancouver begun a gradual comeback and should add to the down 14 per cent, from more than 20.6 million to nearly Secret They generate leads and#4: Toronto, economy’s growth in 2011 for the first year since 17.7 million. Among the reasons for the lower figures, using information products. respectively (RBC the Great Recession began in 2007. Last month, the Realtors group says: changes in the way the Census YouEconomics can’t showHousing me one superstar mortgage profes-on an annual rate of builders broke ground Bureau collects data, population shifts and some sales Trends andhave some form sional that doesn’t of anhomes, information 685,000 the government said recently. being counted twice.

Affordability That wastarget a 9.3 market. per cent jump from October and The Realtors consulted with government and product that theyReport) use to educate their the fastest share pace since private housing experts, including the Federal Reserve, All successful mortgage professionals theirApril 2010.

Most economists say home prices will keep the Department of Housing and Urban Development, area of expertise by giving away free information. falling, by at least five per cent, through 2012. the Mortgage Bankers Association, the National Why would you want to do this?

Many forecasts don’t foresee a rebound in prices Association of Home Builders, mortgage giants Fannie Well, the obvious reasons are: until at least 2013.

Mae and Freddie Mac and CoreLogic, a California-based 1. It positions you as an expert The in your highfield. rate of foreclosures has made data firm that first raised doubts about the annual 2. You become viewed as a trusted advisercheaper to yourthan new ones. The resold homes numbers earlier this year. median price of a new home is roughly 30 per CoreLogic has estimated that the Realtors group target market. centItabove the price of one that’s been occupied overstated sales in 2010 by at least 15 per cent.

3. Perhaps the most important: generates a conbefore – twice the normal The changing numbers could affect how economists stant flow of quality leads for your mortgage business. markup. Investors are taking advantage of the discounts. view the trade group’s data. It could also affect companies I truly believe that every mortgage professional The housing market is struggling even that use the figures for hiring and expansion plans. who wants to become a top producer needs economy to have has improved in as the broader Sales are measured when buyers close on homes.

Average mortgage rate their own lead generation information product, such recent months.

But many deals are collapsing before that point.

Source: etc.economy That should grew at an annual Maritz pace (Spring of two One-third of Realtors said they had at least one contract as a consumer guide, report, book,The 2013) per cent in the July-September quarter.

Many scuttled in October, up from 18 per cent in September. just be a given. You can’t show me one ultra-successeconomists expect slightly better growth in the Contracts are being cancelled for several reasons: ful mortgage professional who doesn’t have some October-December quarter. CMP Banks have declined mortgage applications; home way of leveraging their time by systematically

packaging your

power

Don’t overlook the good old info package, writes Doren Aldana, there’s a reason why superstar brokers never do

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48 | JUNE 2013 7.1_News.indd 28 48-49_Business Marketing.indd 48

12-01-18 10:51 PM 13/06/2013 12:57:02 PM

mortgagebrokernews.ca

educating multiple people at once using information products.

In fact, that would be one of the very first pieces of advice I would give to a new mortgage professional.

Once you decide on your target market, I would suggest you prepare a five- to 10-page consumer guide designed to help solve your clients’ financing problems, avoid costly mistakes, etc. When someone opts in to request this free education resource -BOOM! -- you just got a hot new lead! Then once they have consumed your valuable information, your credibility as a trusted adviser increases dramatically.

Then when the time comes that they need a mortgage, you become the only logical choice.

Information products come in all forms. They can come in a book or an ebook. They can come in special reports or consumer guides that you send via direct mail. You could record your live seminars or webinars and create an audio version on CD or video version on DVD. You could also create a series of emails that give one financing tip every few days that’s automatically sent to your prospects on autopilot. You could write articles for your local newspaper. You could host your own educational radio show. As you can

see, the possibilities are endless!

I think this one secret is extremely important, so much so, that if you are a mortgage professional and you don’t have some way of educating your target market outside of the usual one-on-one, face-to-face consultation, you need to make this your top priority!

Chances are, you like the idea of having your own information products but feel overwhelmed at the mere thought of trying to create one. That’s why, in my Mortgage Superstar Coaching Program, I provide a growing collection of Done4U lead generation reports and consumer guides, Done4U Monthly Client Newsletters and Done4U Articles. All you have to do is pop in your photo and your contact info and you’re good to go! You can even get my personalized assistance in creating your own info product from scratch – should you need it. I’ve got all the proven systems in place, just stick the key in the ignition and drive away!

In next month’s fifth secret, you’ll learn why superstar mortgage pros can have higher rates and fees than all their competitors and still have clients lined up around the block to use their services. Stay tuned.

Chances are, you like the idea of having your own information products but feel overwhelmed at the mere thought of trying to create one CMHC & Conventional Mortgages for:

Single Family Alternate Equity Lending:

Multi-Family Rental Properties Senior’s Housing Projects Commercial Properties Construction Projects

Toronto CMHC/Conventional Financing Phone: 416-368-3266 Email: toronto@peoplestrust.com

Doren Aldana is considered by many to be Canada’s leading Mortgage Marketing Coach and has won the “Best Industry Service Provider” award two years in a row at the 2012 and 2013 Canadian Mortgage Awards. Since 2005, he has been dedicated to helping mortgage professionals attract more clients with less effort, regardless of market conditions.

For a free copy of Doren’s new CD titled, “21 Secrets of Superstar Mortgage Brokers,” visit: www.

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Equity Take Outs Purchases/Refinances Homeowner or Rental Flexible Income Verification

Calgary CMHC/Conventional Financing Phone: 403-237-8795 Email: calgary@peoplestrust.com

Vancouver CMHC/Conventional Financing Single Family Financing Phone: 604-685-1068 Email: vancouver@peoplestrust.com

June 2013 | 49

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13/06/2013 12:57:04 PM

feature/ investor series

Ramifications of MIC

investment In May, Greg P. Shannon of Miller Thomson LLP walked you through the process of qualifying your MIC, but what, if any, ramifications await you on the other side?

50 | JUNE 2013

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A

A mortgage investment corporation (MIC) and its shareholders are entitled to special tax treatment under section 130.1 of the Income Tax Act. These special rules were introduced to attract more money to the Canadian mortgage market for residential financing, which is a growing multi-billion dollar industry in Canada.

Pursuant to these special rules, the income received or receivable by a MIC is effectively only taxed at the shareholder level by allowing the MIC to deduct taxable dividends paid to its shareholders, other than capital gains dividends, and by treating such dividends as interest in the hands of its shareholder.

Eligibility for Deferred Income Plans

MICs are generally authorized to issue voting common and non-voting preferred shares. Usually,

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13/06/2013 12:58:41 PM

feature/ investor series

‘An investment in an MIC is particularly attractive for these types of Deferred Plans because the MIC is generally not subject to tax nor do the Deferred Plans pay any tax on the interest they are deemed to receive’ Greg P. Shannon a MIC issues redeemable/retractable non-voting preferred shares to its shareholders with fixed dividend rates.

Shares of a MIC will generally be “qualified investments” for deferred income plans, including registered retirement savings plans (“RRSPs”), registered retirement income funds (“RRIFs”), tax-free savings accounts (“TFSAs”), deferred profit-sharing plans (“DPSPs”), registered education savings plans (“RESPs”) and registered disability savings plans (“RDSPs”) (collectively, “Deferred Plans”) provided that the MIC does not hold as part of its property at any time during the particular calendar year, any indebtedness, whether by way of mortgage or otherwise, of a person who is an annuitant, a beneficiary, an employer or a subscriber under, or a holder of, the Deferred Plan and any person who does not deal at arm’s length with such a person. In essence, this prohibits a MIC from holding a mortgage on residences of the shareholders of the MIC. An investment in an MIC is particularly attractive for these types of Deferred Plans because the MIC is generally not subject to tax nor do the Deferred Plans pay any tax on the interest they are deemed to receive. However, holders of TFSAs and annuitants of RRSPs or RRIFs may be subject to certain penalty taxes if the investment in the MIC is a “prohibited investment” for purposes of the Income Tax Act, “the Act.”

A MIC is also an attractive investment vehicle for Deferred Plans because currently the Canadian tax rules prohibit Deferred Plans from borrowing funds.

Deferred Plans are therefore restricted to earning income on funds contributed to them. Deferred Plans can enhance their income-generating capability by leveraging their available capital through investments in a MIC. Furthermore, although holders of Deferred Plans may wish to invest in mortgages, unless there is a considerable amount of money in the Deferred Plans, they will generally only be able to invest in one or two small mortgages at best. Such holders will be able to access larger pools of capital and invest in a significant number of mortgages through an investment in a MIC, thereby reducing their risk by diversification.

As with any investment that involves residential mortgages in Canada, there are several risk factors to be evaluated and considered. Many of these risk factors can be minimized by employing an effective mortgage portfolio manager or credit/risk committee and establishing very strict lending parameters, policies and procedures for granting mortgage loans, based on the underlying value of the security (i.e., restricting mortgages to a maximum of say 75 to 80 per cent of fair market value of the property (based upon current local fair market value appraisals).

52 | JUNE 2013

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13/06/2013 12:58:49 PM

Profile/ insight

Since the introduction of the new B20 regulations, a lot has changed for the better, says Lester Shore, vice-president of Optimum Mortgage.

B

B20 upside 54 | JUNE 2013

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13/06/2013 2:15:13 PM

B

B20 is now a fact of life for brokers, and there is a lot more due diligence being done, as lenders expect a lot more information from a client than ever before.

The underwriting guidelines for Residential Mortgages that OSFI, the regulator of all Canadian Financial Institutions, imposed on all federally regulated lenders and CMHC, have been in place for a year now. These underwriting guidelines were created at the insistence of the Financial Stability Board, the financial oversight organization of all G20 nations.

The creation of these guidelines is a direct result of the financial crisis caused by poor American mortgage lending practices.

The result of compliance with B20? Better quality borrowers being brought to lenders by mortgage brokers, and delinquency rates as low as they have ever been.

It is essential brokers get a good overview of the situation: the components of B20 in general terms and what it means to lenders; what it means to them, the brokers; and, then, how we at Optimum Mortgage are responding.

What Does this Mean to Brokers?

In terms of “A” business - not a lot has changed. As I suspect is the practice now, brokers must know their client, know their client’s financial circumstances and be satisfied that their client has the ability to repay.

For HELOC “A” clients, LTV on the HELOC portion of the advance has been limited to 65 per cent. Brokers can still provide their clients with an 80 per cent LTV option by combining the HELOC portion with a fixed or variable portion if the HELOC product allows, such is the case with our HELOC product Homeworks.

For clients that we call alternative lending clients, including “B,” NIQ and Stated Income clients, brokers have had to provide a little more information. The biggest challenge has been business-for-self (BFS) clients who do not have traditional income confirmation documents.

What Does this Mean to Optimum Mortgage?

Well in summary, not much has changed. Our previous underwriting policy was generally compliant with B20 regulations. We are primarily an alternative lender, which is we are a BFS and “bruised credit” mortgage lender. We have always conducted due diligence to determine the borrower’s ability to make

mortgagebrokernews.ca

repayments. We also offer “A” residential mortgages and have very competitive HELOCs, which is now limited to 65 per cent on the HELOC portion as a result of B20.

Prior to B20, we did not have stated TDS and GDS ratios in our alternative lending policy. Consequently, our underwriting policy will now include TDS and GDS ratio limits for our alternative lending products.

These limits will be significantly higher than “A” lending requirements as our main focus will continue to be on ensuring affordability for the borrower.

B20 does state that if a lender advances a “non-conforming mortgage,” the LTV is limited to 65 per cent.

At Optimum Mortgage, a non-conforming mortgage is one where a borrower has either (or both) a lower-than-average beacon score and/or the borrower’s ability to service the proposed debt cannot be confirmed to our satisfaction. Defining a non-conforming mortgage beyond this is difficult at this time. We suggest brokers work with our business development managers and underwriters on a case-by-case basis and clarification will become evident.

In response to the challenge of confirming income levels for BFS clients who do not have traditional income confirmation documents: for the last couple of years, we have requested bank statements as a means of doing so. That will not change. If a BFS client states he/she has income of $75,000 per annum, we would expect to see business bank statements that would suggest the business can afford to pay the borrower $75,000 annually. We may also need to see personal bank statements, demonstrating personal income at this level. This all assumes no traditional income documents, such as tax returns, are available.

We suggest brokers continue to ask their clients – “is this mortgage payment affordable?” Our expectation is that brokers are satisfied that their client can afford to repay this debt and we can see in their bank statements that the debt is affordable.

Broker Partner Program Optimum’s Broker Partner Program rewards brokers 10 basis points who use us at a higher efficiency, so long as the funding-to-close ratio exceeds 40 per cent.

Along with the bump in bps, those brokers who are in the program have their deals pushed to the top of the pile, ensuring a quick turnaround on all their deals.

A dedicated underwriter, application status updates and personalized BDM support all contribute to the 24-hour turnaround service.

June 2013 | 55

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13/06/2013 12:59:22 PM

Servic

Profile/ Broker

IRD, Meet Your

h c t Ma MCC agent Tania Campfield lays out her case for why brokers are still very much needed to calculate IRD penalties â&#x20AC;&#x201C; despite much-lauded lender calculators

D

Do clients still need brokers to help them with their IRD calculations considering that lenders have agreed to put them on their websites? After being in the banking world for 16 years and another six years as a broker, when I heard that the regulations had changed and that lenders now had to disclose how they calculated their penalties, I thought finally we wonâ&#x20AC;&#x2122;t be in a situation to have to refer the client to their original institution to find out what their penalty would be. Now it should be simple for myself and all brokers, as well as the consumers themselves to determine the penalty, yet itâ&#x20AC;&#x2122;s still not clear and concise and the variables used vary from one lender to another.

In the past , based on my previous experience in the banking industry, I was always able to get a good

56 | JUNE 2013

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13/06/2013 12:59:26 PM

Service_ad_Mike_K_CMP:Service_ad_Mike_K_CMP 13-05-10 1:11 PM Page 1

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mike.klassen@canadaguaranty.ca Cell 902.403.8086 Toll Free 866.414.9109 ext. 7058

13/06/2013 12:59:27 PM

Profile/ Broker

I was coming across more and more clients who had much higher penalties than we had calculated together and all seemed to be with the same type of lenders. I would ask the bank how they came up with that penalty and none of the staff seemed to be able to explain the formula idea of what the penalty was with those lenders that didn’t base IRDs on bond rates, etc. However, I was coming across more and more clients who had much higher penalties than we had calculated together and all seemed to be with the same type of lenders. I would ask the bank how they came up with that penalty and none of the staff seemed to be able to explain the formula used or calculation summary as they just punch the numbers into the computer and out pops a figure. Very frustrating! So, when the new rules came out, I thought things would be much more streamlined and things would be clear as day and the mystery with some lenders would be gone. Wrong.

One of the biggest changes that seemed to be happening behind closed doors was that the lender was now calculating their IRD based on the original discount given to the client on that lender’s posted rate. If there is two years left when the client is looking to pay out their mortgage, you would have to find out what that lender-posted two-year rate is now and then figure out what discount was offered when they took the mortgage three years ago. The clincher is that the discounts given off of five-year fixed rates are always larger than any lender would provide on a two-year posted rate, therefore creating a much larger IRD penalty than if the simple comparison IRD penalty calculation is done. By “simple” I mean comparing their current rate to the current rate offered by their bank for the term duration they have left on the mortgage.

I recently had a client who has a mortgage remaining of $206,000. He is three years into his fiveyear mortgage with the Bank of Montreal. His rate is 4.05 per cent and he received a discount of 1.70 percentage points:

Remaining term: 2 years Current Posted rate: 2 year, 3.05% Current balance: $206,000.00 Current Interest Rate: 4.05% Rate discount received: 1.70% Mortgage type: Fixed Maturity date: 2015/05/15 Penalty = $11,200 Conversely this is what his penalty would be, using a lender that uses a comparison method, making for a much lower penalty:

Remaining term: 2 year Comparison rate: 2 year, 2.690% Current balance: $206,000.00 Current Interest Rate: 4.04% Mortgage type: Fixed Maturity date: 2015/05/15 Penalty = $5,562.00 In addition, you may have noticed lately that fewer lenders are even communicating in their commitments what their pre-payment options are or how pre-payment penalties will be calculated. Having the calculations on the website definitely helps us know which method is used. However , if the discount method is used, we as brokers won’t be able to make the calculation if we don’t know what discount they originally recorded. Clients are still going to have to call their lender for the accurate figure.

Bottom line is make sure you know what your client’s needs are now and in the future and ensure you have a clear understanding of the lender’s pre-payment and penalty options so you can book the deal with the lender that makes most sense for your client.

58 | JUNE 2013

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07/06/2013 12:59:29 9:55:39 PM AM 13/06/2013

Profile/ wish list 2020

I can dream,

can’t I?

The future of mortgage brokers in 2020?

One national licence tied to one designation

This infograph may be more than a dream, with a leading B.C. broker offering an educated take on what changes will hit the channel by 2020. Are you ready?

A national licensing body simplifies the registration process and allow for out-of-province deals. It will likely combine a designation (eg. CGA/AMP) with licensing and so add more credibility to the profession.

One (national) broker association, combined with provincial associations:

Considering there is already some overlap with regard to conferences, especially with MBABC and CAAMP, by 2020, it will have made sense to roll all associations into one. Now, not all brokers can afford to pay all membership fees, and the synergy created by combining all associations into one will be viewed as beneficial to everyone.

When Michael Sjerven, principal broker at Verico Vivid Mortgage, looks to the future, he sees a significantly different industry than the one now facing professionals in and outside his Vancouver market.

“I do believe most of these changes will be here by 2020,” he tells CMP, “although, it could end up being only a few. It’s hard to predict, not unlike where interest rates are headed.”

But if brokers want to stay alive long-term and compete with the Big Five, argues Sjerven, “then I believe changes need to be made and this list reflects that coming reality. My hope is that these ideas will encourage some leaders to start working together on positive change for the industry.”

One national ad fund for brokers – supported by all brokers, networks and lenders:

This fund will be targeted, promoting “Mortgage Brokers” much like the ones Realtors and insurance brokers have. It may also be tied to the national designation (e.g. AMP). All networks, brokerages, suppliers and lenders contribute about one per cent of gross commissions. Perhaps, all other ad funds, such as DLC’s, have been merged into this new fund. The goal is to create more consumer awareness about mortgage

The broker’s resource for

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Greg Kakuno 60 | JUNE 2013 604.329.6067

Donna Adams 780.426.2145

54-63_Profiles_ Favourite Things.indd 60

Paula Hutton 403.278.6200

Sue Foster 905.299.6971

Hugh Doggett 905.299.6951

Trevor Bowie 902.894.7700

13/06/2013 12:59:30 PM

RMA_Maxine_05.09.13.pdf

1

13-06-04

11:35 AM

mortgagebrokernews.ca

This co-branded communication will create long-term revenue for agents brokers and, more broadly, educate them about the industry. The industry ultimately came to the point where it determined that the job was simply too big for any one network alone and that by combining efforts, we were better able to compete with the banks.

A minimum experience and/or education requirement for agents:

By 2020, everyone understands that the industry needed more professionalism. A formalized training regime prior to licensing and along with required work experience is used to strengthen the reputation of mortgage brokers and networks. Possible prerequisites include two to four years of postsecondary education, multiple standardized courses and two years work experience. Existing brokers already licensed are grandfathered in.

Compensation models focused on paying brokers for the life of the mortgage:

It’s fantastic that a growing list of lenders are now offering renewal compensation; however, by 2020 – along with greater broker support for lenders that enhance their retention efforts at renewals -- more people in the industry see the advantages of this type of partnership. This co-branded communication has create long-term revenue for agents and a better book of business for the lenders.

Streamlined compliance forms and simplified documentation:

In B.C., the brokers have many compliance forms to get signed, including a lengthy commitment, APR disclosure, form 10, consent, application and a mortgage protection waiver in addition to other conditions. That’s simply more documents than a bank rep is required to produce. By 2020, the industry will have decided to consolidate forms and come up with a standardized and streamlined compliance checklist. As well, a client agreement that protects a broker if a client opts to go elsewhere prior to completion is being considered.

June 2013 | 61

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Profile/ favourite things

Favourite things Kevin Stefanson, TMG The Mortgage Group Castle Mortgage Group, Winnipeg, Man.

with and

Sport: Hockey Downtime Activity: Spending time with my two daughters

Kevin Stefanson

Book: Blink by Malcolm Gladwell

Food: Sushi

Music: The Police

Drink: A very cold Heineken

Product: One that matches my client’s goals

Hobby: Coaching Vacation spot: Costa Rica

Movie: Star Wars, The Empire Strikes Back

62 | JUNE 2013

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13/06/2013 12:59:43 PM

acquiSitionS  Development  RenovationS  infRaStRuctuRe  Stabilization  Special uSe pRopeRty 85/35 85/15 75/25

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Salomon JameS capital gRoup chicago illinoiS 60606

Salomon JameS capital maRketS chaRlotte noRth caRolina 28210

800-504-8650

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Salomon JameS Realty & tRuSt DallaS texaS 75254

800-272-8132

13/06/2013 12:59:45 PM

service/ directory

Banks

Radius Financial www.radiusfinancial.ca Ph: 1 877 369 6398 Inside Front Cover

B2B Bank b2bbank.com/mortgages Ph: 1 800 263 8349 Inside Back Cover

Bridgewater Bank www.bridgewaterbank.ca Ph: 1 888 837 2326 Page 7

RMG Mortgages www.RMGmortgages.ca Ph: 866 809 5800 Page 45

HomEquity Bank www.homequitybank.ca Ph: 1 866 522 2447 Page 17

Tribecca Finance Corporation www.tribecca.ca Ph: 416 225 6900 Page 51 Commercial Lenders

INVIS Mortgage Intelligence www.invis.ca â&#x20AC;˘ Ph: 1 866 854 6847 Pages 27

Mortgage Architects www.mortgagearchitects.ca Ph: 1 877 802 9100 Page 15

RMAI Financial Group www.rmaifinancial.com Ph: 1 866 955 7624 Page 61 Technology & Software

ROMSPEN Investment Corporation www.romspen.com Ph: 1 800 494 0389 Page 1

National Bank www.nbc.ca Ph: 1 888 483 5628 Page 43

Delta 360 www.delta360.com Ph: 905 475 2360 Page 10

Non-Bank Lenders

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 46-47

Capital Direct www.capitaldirect.ca Ph: 1 800 959 9290 Page 60 Insurance

First National Financial LP www.firstnational.ca Ph: 416 593 1100 Page 9

Canada Guaranty Mortgage Insurance Company www.canadaguaranty.ca Ph: 1 866 414 9109 Page 57

Keystroke Quality Computing Inc. www.keystroke.ca Ph: 1 800 857 0558 Page 11

Home Trust www.hometrust.ca Ph: 1 877 903 2133 Page 19

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 41

Broker Networks

Real Estate

Canadian National Association of Real Estate Appraisers www.cnarea.ca Ph: 1 888 399 3366 Page 48

Mortgage Protection Plan www.mppbroker.com Ph: 1 866 677 4677 Page 20

MCAP www.mcap.com/brokers Page 21

Services

Optimum Mortgage A Division of Canadian Western Trust www.OptimumMortgage.ca Ph: 866 441 3775 Page 23

Centum Financial Group Inc. www.centum.ca Ph: 1 604 257 3940 Page 5

Dominion Lending Centres www.DominionLending.ca Ph: 1 888 806 8080 Page 39

Peoples Trust www.peoplestrust.com Ph: 1 800 663 0324 Page 49

Pillar Financial Services www.pillarfinancial.ca Ph: 613 282 1242 Page 33

TM

Fortress Real Calpital www.fortressrealcapital.com Ph: 905 787 9266 Page 53

Score-Up www.score-up.ca Ph: 416 479 9585 Page 13

Home Loans Canada www.hlcmortgages.com Ph: 1 866 452 1821 Page 3

64 | JUNE 2013

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