CMP 9.10

SYNDICATED MORTGAGE SHOWDOWN

REALTOR REFERRALS RAMP UP YOUR EFFORTS

MORTGAGEBROKERNEWS.CA ISSUE 9.10 | $6.95

‘KYL’ KNOW YOUR LENDER

SPECIAL REPORT 2014

YOU SPOKE. THEY LISTENED. THIS IS WHAT THEY SAID.

WHICH LENDERS RE-PLEDGE THEIR COMMITMENT?

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CONTENTS

MARKET MATTERS 4 | Editor’s letter 6 | Letters to the editor 8 | Reading between the Lines: Unlicensed syndicate mortgage providers create quite the stir

FEATURES 16 | Broker advice 34 | Brokers on Lenders 2 We held back last month. Check out some even more in-depth analysis

10 | News analysis

42 | Independent no longer Q&A with a leading broker who recently joined a major network

20 | National pictureat-a-glance

50 | Forum discussion Syndicated mortgages

NEWS

issue

9.10

LENDERS’ REPLY 22 COVER STORY

Lenders reply Brokers have spoken, but now it’s the lenders’ turn to reply

OppOrtunity is Often simply a matter Of seeing it first.

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MARKETING 52 | Taking your personal brand from ‘now’ to ‘wow’ 56 | Exit Planning

REGULARS 62 | Favourite Things 64 | CMP Service Directory

58 MARKETING

Branding and your brokerage

2 | OCTOBER 2014

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CONTENTS / EDITOR’S LETTER

MORTGAGEBROKERNEWS.CA

COPY & FEATURES SENIOR EDITOR Vernon Clement Jones STAFF WRITER Justin da Rosa CONTRIBUTORS Mike Parker, Jess Spoto, Olivia D’Orazio, Doren Aldana, Nikki Heald, Craig West, Julian Vieceli COPY EDITOR Rachel Naud

ART & PRODUCTION SENIOR GRAPHIC DESIGNER Red Redrico

SALES & MARKETING ASSOCIATE PUBLISHER Trevor Biggs GENERAL MANAGER - SALES John Mackenzie MARKETING AND COMMUNICATIONS Claudine Ting PROJECT COORDINATOR Jessica Duce

CORPORATE PRESIDENT & CEO Tim Duce OFFICE/TRAFFIC MANAGER Marni Parker EVENTS AND CONFERENCE MANAGER Chris Davis

Editorial enquiries 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.

LENDERS ON BROKERS (AND LENDERS) Last month’s issue featured honest broker feedback – the good, the bad and, in some cases, the ugly – about their lender partners. And instead of shying away from the criticism, several lenders have brazenly decided to reply to those very brokers.

And their message is loud and clear: They are here for the long run.

Seven leading lenders collected the feedback, analyzed it and crafted well thought-out responses to their broker partners. Flip to page 22 to see what your lenders have planned for the future.

This month also features a second installment of the Brokers on Lenders feature; it’s become so robust – and the broker participation so impressive – that we’ve had to spread your feedback over two issues.

That concludes on page 32.

And finally, one of the things revealed in this year’s brokers on lenders survey was the increased importance of Realtors as referral partners. You can find a handbook on getting the most out of these partners on page 40.

Thanks for reading and check back next month for our Broker Lifestyle issue.

Cheers, Vernon Clement Jones Editor

CONNECT

Contact the editor:

vernon.jones@kmimedia.ca

4 | OCTOBER 2014

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CONVERSATIONS / LETTERS TO THE EDITOR

MORTGAGEBROKERNEWS.CA

DON’T GET A SWELLED HEAD, LENDER NO, REALLY, DON’T RE: CMP BROKERS ON LENDERS (CMP 9.9) Brokers praise for their lenders doesn’t always flow like water, but this year’s survey offered a tidal wave of feedback on how those banks and monolines are meeting the needs of both mortgage professionals and their clients.

Good job, guys!

I think shows...that Merix should have offered the traditional compensation choice to brokers long before it revamped Lendwise. Obviously trailer fees have their place, but brokers still want upfront options.

Good going, Merix.

-G. Harris I am new to brokering, but I think we need to really increase the lines of communication between lenders and brokers. I hear colleagues complain about lenders and then the lenders talk about efficiencies and the deal quality not being what it should be.

I think that both sides are right, but we have to really own our own problems in order to find the solutions.

-Chris Botvinkic

We have lost lenders over the last couple years as everyone knows, but those that have remained are making real strides in how they service the broker channel and our clients. Congratulations. We are moving ahead.

-Jay Markoffsky

Thank you, lenders. We could not do our job without you.

-Michael Taylor

6 | OCTOBER 2014

The latest results from the Brokers on Lenders survey are proof that lenders will learn from their mistakes and improve their offerings, but not all of them. Some of them are obviously not going to change their product because they are not really interested in servicing broker clients, by that I mean the banks are not interested.

Brokers need to acknowledge that discrepancy.

-Justin Mercer ERING BOLD BROK PRIVATE NUANCEDRATEGIES ST LENDING

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MARKET MATTERS / READING BETWEEN THE LINES

SYNDICATED

SECOND LOOK

Syndicated mortgages are a potential lucrative and useful tool in many brokers’ toolboxes but FSCO’s warning about unlicensed syndicated mortgage providers has created quite the stir.

Mike Parker, mortgage broker and exempt market dealing representative with Sloane Capital Corp. reads between the lines

1

2

3

4

5

8 | OCTOBER 2014

MORTGAGEBROKERNEWS.CA

• Although many agents and brokers who offer syndicated mortgages on real estate development projects saw this as a negative alert, FSCO’s warning was aimed at protecting the investing public. It was not targeted towards licensed agents/brokers who are being compliant in marketing and offering suitable mortgage investments.

• The warning does, however, serve as a strong reminder to our broker community to ensure that we are protecting our clients and ourselves through material risk disclosures, suitable recommendations, and in general, being compliant in our daily business.

• Generally speaking, I believe that syndicated mortgages can be a great alternative to traditional investments. I also believe they can be a good financing vehicle for real estate developers.

• As a licensed mortgage broker and exempt market dealing representative, I feel what may not be being addressed properly by “Joe/Jill Agent” is in-depth client suitability through KYP and KYC. I don’t feel there is enough emphasis being put on confirming appropriate investment recommendations. Items such as investment over concentration may not be reviewed properly with clients. With an exempt market security, there are over-concentration limits and the OSC will monitor - it is just one of the factors that must be considered when offering an appropriate trade for an investor.

• Regardless of the current regulations in Ontario, I believe licensed mortgage professionals need to consider real estate development syndicate mortgages as a security and not paint them with the same brush as a private residential 1st,2nd,3rd mortgage investment on a single-family home in an appreciating neighbourhood.

OCTOBER 2014 | 9

MARKET MATTERS / NEWS ANALYSIS

MORTGAGEBROKERNEWS.CA

SEPTEMBER MARKS IMPRESSIVE RECOVERY SOUTH OF THE BORDER

STATS

With all the talk of a potential U.S.-style housing crash, it’s about time to check in with our American neighbours and see just how well their market is recovering. The answer may shock you.

“Sales of new single-family homes in the U.S. surged by 18 per cent to 504,000 annualized units in August 2014 to mark the highest level since May 2008,” states a recent report from RBC Economics. “The robust monthly gain, which handily surpassed expectations for a 4.4 per cent rise to 430,000, built on a 1.9 per cent increase in July (to 427,000) that was initially reported as a 2.4 per cent drop (to 412,000).”

For years following 2008’s financial crisis, United States real estate has been an attractive investment for Canadian homebuyers and brokers who cashed in on recordlow housing prices. Further, scores of Americans left their homes to rot when the amount of money owed greatly surpassed the value of their respective homes.

Those days, however, may finally be behind us.

“The sharp rise in August reflected solid gains across most regions of the country, with sales surging in the West (50.0%) to their highest level since January 2008 and in the Northeast (29.2%) following two consecutive months of declines,” the report states.

“Sales rose modestly in the South (7.8%) and remained unchanged in the Midwest in the month.”

STATS

In last month’s issue we asked brokers to rate their lender partners in the following categories. But just how important are each of them to brokers? Read below to see how industry players rank the following lender feature.

34%

UNDERWRITER SUPPORT

WHICH LENDER FEATURE IS THE MOST IMPORTANT?

0%

11%

TRANSPARENCY OF COMMISSION

INTEREST RATES

1% 8%

BROKER SUPPORT

5% 7%

9%

CREDIT PRODUCT RANGE POLICY

BDM SUPPORT

source: MortgageBrokerNews.ca poll

10 | OCTOBER 2014

+1%

-0.2%

MANUFACTURING

GOODS-PRODUCING

+0.2% SERVICE-

AGRICULTURE

PRODUCING INDUSTRIES

INDUSTRIES

+2.4%

25%

TURNAROUND TIMES

IT/TECHNOLOGY

JUNE GDP GROWTH

+2.3% UTILITIES

+1.5%

MINING, OIL AND GAS EXTRACTION

0% OVERALL GDP CHANGE Source: RBC Economics

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MARKET MATTERS / NEWS ANALYSIS

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STATS

7 6 5

FORECAST ASSUMPTIONS

BROKER BUSINESS PLANNING 2014 AND 2015

4 3

2014 2015

2 1 0

1.00

1.75

BoC overnight rate (year-end)

2.35 3.30 5-year bond yield (year-end)

1.2

1.1

Population growth (y/y)

6.9

6.6

Unemployment rate (Canada) Source: RBC Economics

BANK LOBBYISTS TO BLAME? A frustrated broker has speculated about OSFI’s decision to back away from forcing banks to share risk.

“The bank lobbyists seem to have made short work of this idea,” James Robinson said on MortgageBrokerNews. ca. “Good sign of who really runs Ottawa.”

The Office of the Superintendent of Financial Institutions (OSFI) announced in October it will not force Canada’s banks to assume more mortgage risk, despite calls from many in the industry for them to do so.

“This is an initiative that really belongs to the government as a whole,” newly appointed OSFI superintendent, Jeremy Rudin told reporters following a speech at the Economic club of Canada, according to the Globe and Mail. “It’s something that, if there’s an interest, it would be an issue for the Minister of Finance to lead.”

It’s a potential policy that created quite the stir among industry pundits in late summer, with the Canada Mortgage and Housing Corporation (CMHC) confirming it is considering implementing risk-sharing measures.

12 | OCTOBER 2014

“In our role as an adviser to government, we are evaluating a range of ideas on future improvements to our housing finance system, including risk-sharing with lenders to further confront moral hazard, future sandbox changes if housing markets are to become less stable, and increased capital requirements,” CMHC President and Chief Executive Officer Evan Siddall told the Saint James Club in late September. “Lots of work has been done on how corporations can better manage commercial risks, but in my view, too little attention has been paid to government’s management of tail risk.”

However, it seems as though OSFI has passed the buck to the finance minister who, himself, recently intimated the government will not make any major changes to the mortgage lending industry in the near future.

“We’re looking at things, but we’re not going to be doing anything dramatic,” Oliver said in an interview in Cairns, Australia, according to the Financial Post. “We don’t see the need for it.”

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COMMERCIAL PROSPECTS NOW AND IN THE FUTURE Brokers are being forced to jockey for position in a shrinking commercial lending space in one of Canada’s hottest markets but those who put in the work will benefit from increased valuations.

254 commercial properties were sold in the GTA year-to-date, down from 279 sales a year ago.

However, the average sale price on a per-square foot basis for industrial, commercial, retail and office properties are up.

“By all accounts, the Canadian economy is on a solid footing.

However, one component of growth that has lagged is business investment,” Paul Etherington, president of the Toronto Real Estate Board said in a recent release. “ As consumer spending remains strong and exports improve, the expectation is that business investment will also pick up. In all likelihood, this improvement would include an uptick in commercial property sales.”

The total amount of leased space is also up year-over-year, with 2014 seeing 6,059,755 square feet of commercial real estate space being leased.

“We have seen solid growth in the Canadian economy recently. Some of this growth was based on strong export numbers, particularly as it relates to goods produced for markets in the United States,” Etherington said. “Export based production is obviously tied to industrial firms, so it makes sense that we saw an uptick in industrial leasing.

“Consumer spending has also remained an important driver of economic growth in this country. This bodes well for a continued uptrend in leased commercial/retail space

14 | OCTOBER 2014

MORTGAGEBROKERNEWS.CA

STATS

PROSPECTS FOR MAJOR COMMERCIAL PROPERTY TYPES IN 2014 INVESTMENT PROSPECTS Retail

6.06

Apartment

5.95

Industrial/distribution Office Hotels

5.79 5.70

4.43

1

5

Abysmal

Fair

9 Excellent

DEVELOPMENT PROSPECTS Industrial/distribution

5.72

Retail

5.64

Apartment

5.43

Office Hotels 1 Abysmal

5.28 4.25 5 Fair

9 Excellent Source: Emerging Trends in Real Estate 2014 survey.

Note: Based on Canadian respondents only.

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KNOW YOUR CLIENT, KNOW YOUR LENDER

As more and more Canadian borrowers find themselves either weighed down by high debt loads or self-employment, the lending world is changing, writes Jess Spoto of Auxilium Mortgage Corporation. She’s offering a refresher on that increasingly important business segment While B lending, also known as alternative lending, grows in popularity, the recent rule changes set out in B-20 and B-21 have helped strengthen its credibility as a reliable source of lending.

The idea of lending outside of the A-realm may sound frightening at first, but it’s really an opportunity that will assist in rounding out your client base and income.

Speaking with Kam Brar, founder of Auxilium Mortgage Corporation and a veteran in the auto industry’s subprime lending, he explains why B lenders are vital to have on your team and covers key elements to consider when dealing with alternative lending options.

What factors make an application drop from being approved by an A lender to a B lender?

While there are many different factors that can shift a borrower from A to B, the major ones are important to note.

“Clients with high debt ratios or less than perfect credit history are fairly common in light of it all,” said Brar. “At the same time, anyone lacking income and/or the down payment verification, anyone who is recently bankrupt, self-employed, divorced, ill, or in a rushed timeframe to fund 16 | OCTOBER 2014

their mortgage loan could all fall under B borrowers.”

What special needs can B lenders cater to more so than conventional lenders?

B lenders are perfect for individuals that are missing a major component of their application, often times criteria that banks and other lenders would require to approve a loan.

“B lenders can cater to those having issues due to self-declared income or bruised credit from late payments or collections – usually due to illness or divorce. While there is still criteria they must meet to be approved, primarily equity, B lenders are more able to look at the bigger picture.”

What are the challenges of dealing with B applicants?

In addition to the limited selection of B lenders, the complexity of B borrowers’ applications, and impending time constraints, brokers handling these types of situations have even bigger hurdles to overcome.

“On the borrower side of things, you’re going to be selling them higher rates and fees when using a B lender. Typically, clients will object to the higher

MORTGAGEBROKERNEWS.CA

rates and fees so you as a broker have to learn to overcome it. If you as a broker believe, ‘I would never pay that rate,’ then how are you going to get a client to want to pay it?” said Brar.

With lenders, the challenge is to convince them that it makes sense for them to get involved in the deal.

“You must present the case in a way that they’ll be able to easily assess the situation, the solution and their exit. You need to have an action plan that will explain how you plan on rebuilding the client’s credit so that they can return to an A lender,” said Brar.

What are some tips for working with B Lenders?

When working with a lender, you should always tell the entire story, honestly. Ultimately, the lender will discover any details you avoided sharing, so don’t skip a beat.

“To help with the process, gather all the information you’ll need from the client upfront, ask questions and do your due diligence. The more work you do ahead of time, the less likely you’re going to run into problems with the file,” said Brar.

Since the first lender you approach may not agree to the deal, it’s important to have multiple backup plans.

“Different lenders offer varying degrees of rates and fees, you need to have more than one on your team. You can’t put all your eggs in one basket and expect that lender to approve your deal,” explained Brar.

If the lender won’t agree to your proposed deal, you should then ask yourself questions such as “Is there a family member I can involve in the deal?” or “Is there other equity I can pull from somewhere?” You should always be thinking about different ways to get the deal funded and approved.

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MARKET MATTERS / BROKER ADVICE

It’s also important to discuss fee and payment requirements with the lender. Are they going to do interest only? Do they want amortization? Overall, the most important question to ask is “What won’t they do?”

“You need to know what the lender will and won’t do deal-wise. This means what kinds of properties they’ll lend on, what kinds of clients they’ll work with, what kinds of situations they’ll handle, and what kind of loan-to-value they want to be. Every lender has a unique set of parameters,” said Brar. “You’ll also want to check in periodically with the lender to see if they’ve made any changes.

Typically, B lenders don’t send out big announcements like A lenders do, so you’ll want to phone and ask what’s going on. Plus it gives you a chance to connect with the lender.”

Remember to always be courteous to the lender, and to not get upset if a deal is declined.

“You cannot battle. You may win the battle with the lender, but ultimately you lose the war. The next time you have a deal, they’re not going to be so agreeable to talking to you,” explains Brar, adding, “These are people you want to have longterm working relationships with – you want to foster that.”

As a broker you should also be prepared to assist if a collections problem arises. “If you take the approach that you’ve collected your fees and are done with the deal, then that is something the lender is likely to remember in the future, especially when you’re looking for the next approval. Instead, stay in touch with the client so you’ll know if anything changes and be able to be proactive if need be.”

The bottom line is you should be engaged in the process and know the product.

Why is it important to have a B lender on your team?

B lenders round out your options. Ideally, you want to be able to offer your clients as many choices as possible so that they don’t have to turn to another broker who can offer the options you lack.

“If you lose your client to a broker who can solve their problem, then the chances of them returning to you or recommending you, are far

18 | OCTOBER 2014

less likely than if you could have offered the same service,” said Brar.

How would you recommend connecting with a B lender?

“These days it’s pretty easy to find B lenders,” said Brar, adding, “G is for Google.”

While the Internet, advertisements and referrals are all great ways to connect with B lenders, the ideal situation is to acquire your own stable of lenders.

“At Auxilium, not only do we have our own B lenders, but we’re also in the process of setting up a new private fund. The fund will assist our clients and current brokers, and it will also be available to other brokers,” explained Brar. “Anyone interested in finding out more about our funding is encouraged to contact us.”

What are some secrets to successful B lending transactions?

“Know your client, know your lender,” said Brar, adding, “That’s my mantra.”

To be a successful broker, there are a few noteworthy tips to remember. First and foremost, strong communication with the lender and a smooth application process with the client are crucial. You must know what both parties need and want.

Since most B lenders don’t like lending for long terms, it’s your job as a broker to present a solution to the lender. You must be able to show them how their involvement is going to solve the problem, and also their exit. For example, their exit could be that the client refinances or sells their house.

Bottom line is you’re showing the lender why it makes sense for them to get involved.

When it comes to your client, you’re likely to find success if you follow these four simple traits: honesty, transparency, clarity and forthcoming.

“The client is counting on you for guidance and support, and your work doesn’t end when you collect commission,” said Brar. “It’s an ongoing relationship with your clients, just as it should be an ongoing relationship with the B lender. That’s why it’s so important to be forthcoming and lay all your cards on the table.”

MORTGAGEBROKERNEWS.CA

As a broker, you should be looking for lenders with these same traits; for your own sake, and the sake of your clients. Working with a lender that practices clear policies and thrives on getting the deal done is vital. On the other hand, if you’re working with a lender that is most concerned with earning interest and fees, then you’re going to be in trouble.

Lastly, to be successful it’s important to make the client aware of the pros and cons of their lending situation.

“As brokers we can be empathic, but we shouldn’t be sympathetic because we’re not in the client’s situation. It’s easy to think ‘I wouldn’t pay those rates or that fee,’ but your clients are in a different situation. You must ask yourself if the product you’re offering provides a solution for the interim, and also if you have a game plan to provide longer term relief as well,” explained Brar. “There has to be a solution for your clients. It has to be a win for them. They’re going to pay in the short term, but they shouldn’t be paying in the long term.”

What do you think the future looks like for B lenders?

“Not only is alternative lending here to stay, but it will definitely grow and morph in new directions as more and more regulatory changes come through from the government,” said Brar.

What advice would you give to a broker getting into B type lending?

“You have to be forthcoming with people, don’t be embarrassed about the fees or rates, those things are paramount. You have to come to terms with the cost of doing business on the B side, the sooner you do, the more successful you’ll become.

You’ll realize the terms are fair in light of the situation, which will allow you to have an easier time presenting it to clients as such. If you don’t believe in the product or you think the conditions are not reasonable, then your client is going to sense that,” said Brar, adding, “You have to become comfortable that what you’re providing, and believe that what your clients are getting is valuable and worth what they’re paying for it.”

Paula Hutton BDM - Prairies paula@vwrcapital.com

Sophie Bush Marketing Manager sophie@vwrcapital.com

Call us toll free 1-866-907-5407 Lending Areas: · · · · ·

British Columbia Alberta Saskatchewan Manitoba Ontario

· · · · ·

Complete focus on residential lending Broker-centric processes to make your life easier Flexibility to tailor solutions to your clients needs Diverse range of residential mortgage options Choose your own broker fee

As one of Canada's most diversified residential private lenders, everything we do is aimed at ensuring you can present your clients with the right mortgage at the right time.

For more information on our lending guidelines and rates, contact our team today!

www.vwrcapital.com OCTOBER 2014 | 19

STATISTICS / PROJECTED RESIDENTIAL SALES ACTIVITY

NATIONAL PICTURE AT-A-GLANCE Source: CREA

Sponsored by TM

The good times may be coming to an end for brokers and Realtors Brokers who lamented the early year slump have likely made up for the lost business, according to recent stats that point to continued strong summer sales. But will the trend continue into fall and beyond?

“Sales activity in recent months has remained stronger than was anticipated earlier this year,” said Gregory Klump, CREA’s Chief Economist. “Listings and sales this spring were deferred due to unseasonably harsh weather, which subsequently supported activity once the delayed spring homebuying season got into gear. This trend was reinforced by a decline in mortgage interest rates.”

Seven provinces and territories enjoyed year-overyear sales increases in August, led by Northwest Territories (50 per cent increase), British Columbia (seven per cent), Prince Edward Island (5.2 per cent), New Brunswick (5.1 per cent), Alberta (3.8 per cent), Ontario (2.4 per cent) and Saskatchewan (1.3 per cent).

“Sales picked up in some of Canada’s most active and expensive real estate markets, which fuelled another national increase,” said CREA President Beth Crosbie. “Even so, the national increase in sales does not reflect local trends in many markets across Canada.”

Overall, Canada saw a 2.1 per cent year-over-year uptick in sales.

However, the flood created by deferred winter sales is expected to dry up, according to CREA. “The boost from deferred sales is still expected to prove transitory,” Klump said. “While national activity has yet to cool, sales were down from the previous month in the majority of Canada’s local markets, which may be early evidence that the transitory boost is fading. That said, low interest rates will continue to support housing affordability and sales activity.”

20 | OCTOBER 2014

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per cent

51.3

per cent

76.9

per cent Chilliwack

South Central Alberta

24

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Portage Moose Jaw La Prairie

TOP CITIES

September Sales Activity (year-over-year percentage change)

MORTGAGEBROKERNEWS.CA

HOT TO COLD: SALES ACTIVITY BY PROVINCE (year-over-year monthly percentage change)

+2.1 per cent

Northwest Territories: + 50 per cent British Columbia: + 7 per cent

Overall Canadian sales activity

Prince Edward Island: + 5.2 per cent New Brunswick: + 5.1 per cent Alberta: + 3.8 per cent

19.3

per cent

72.2

per cent Saint John Yarmouth

41.7

per cent

Ontario: + 2.4 per cent Saskatchewan: + 1.3 per cent

Chatham-Kent D+H CMT Mortgage ad final.pdf

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OCTOBER 2014 | 21

LENDERS’ REPLY

LENDERS’ REPLY A record number of brokers took part in last month’s Brokers on Lenders feature. They’ve had their say; now it’s the lenders’ turn

22 | OCTOBER 2014

There’s no question that lenders are in it for the long haul. They rely on brokers just as much as brokers rely on them – it’s the perfect symbiotic relationship that results in mutual growth.

And this year’s featured lenders are keen to share that message.

A total of seven leading lenders took the time to respond to their valued broker partners – even addressing some criticism that could have been swept under the rug.

Perennial top-ranked lender, Merix, stormed to the top of the rankings, once again, with its Lendwise brand and brokers gave equally impressive feedback to the Merix brand as well.

Relative newcomer – especially to markets outside of Quebec – B2B Bank has committed to continue improving its offering to its brokers going forward.

National Bank – the only big bank to send a reply to its broker partners – is, once again, unparalleled in its product offering, achieving the gold ranking for the second straight year.

Canadiana continues to make headway and catch brokers’ attention and they have committed to continue improving in the future.

CMLS Financial – our 2014 medal standings winner – has been listening intently to broker feedback for years and it certainly shows.

And last but certainly not least, Equitable Bank finished in the top-five overall in its first inclusion in the Brokers on Lenders survey.

As always, we thank our lender readers for their feedback on the Brokers on Lenders survey.

MORTGAGEBROKERNEWS.CA

innovative solutions and ideas to help brokers grow their mortgage business. For example, we have doubled our inside and outside sales forces to provide a stronger regional presence with local market knowledge.

Transparency of commission structure B2B Bank believes that transparency builds trust and confidence among our broker partners.

AVERAGE 2014 SCORES

4.25 4.00

Interest Rates We understand that interest rates are an important factor in this industry, but it’s only a part of the overall criteria that determines whether a broker will choose one lender over another. We will continue to aim to have competitive rates while focusing on the breadth of our alternative and expanded product suites.

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Overall service levels Recognizing that there were opportunities to enhance our service offering, in recent months, we hired additional staff to support our operations and underwriting, and also launched additional online tools to better support brokers, such as our Lending Locations tool and an enhanced online product library.

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Underwriter support B2B Bank recognizes that the ability to work closely with underwriters is key to a mortgage broker’s success. In 2014, we hired more underwriters to better service brokers.

Broker support IT/technology Broker Support – B2B Bank is 100% focused on brokers.

During 2014 we made significant investments in our sales and underwriting team, updated our web tools and content, and enjoyed a strong presence at industry events. B2B believes strongly in supporting and investing in the distribution of mortgages through the mortgage broker channel.

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Turnaround times 2014 was an unprecedented year for B2B Bank – highlighted by the launch of new expanded and alternative mortgages and huge volume growth throughout the year. In satisfying such a demand for these products, we see a great opportunity to continually improve our turnaround times.

Satisfaction with credit policy With the introduction of the alternative and expanded product suites in 2014, one of our primary focuses in 2015 will be the continued training and education of our broker partners on our credit policies.

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Lender reply: We are very appreciative of the continued support from the broker community and we welcome their candid feedback as it allows us to understand firsthand the challenges they face and the areas where we have the opportunity to improve.

Product range We have one of the most comprehensive product offerings in Canada. Our expanded and alternative mortgages reinforce our ongoing commitment to brokers by meeting the diverse needs of their clients – while also providing new business opportunities for brokers.

In

B2B Bank is still working out the kinks in its broker offering but brokers can be rest assured they are dedicated to growing along with their lender partners going forward.

OCTOBER 2014 | 23

LENDERS’ REPLY

4.40 4.05 3.70

AVERAGE 2014 SCORES

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Broker Support (2) We’re pleased to be awarded a Silver Medal for the Broker Support category which confirms the importance of offering unique, value-added programs to our broker network. With our depth of knowledge in the industry, we’re able to directly engage with our partners to help grow and enhance their business through meaningful sponsorships and educational programs ranging from complimentary Broker Sales Tool Kits, to educational YouTube videos and on-going seminars

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BDM Support (2) Our strategy and focus in our value proposition we offer to brokers appears to be well received by our broker partners. Developing cohesive relationships with our brokers by going deep and wide has proven to be mutually beneficial and leads to longlasting relationships. (Kim Kukulowicz, vicepresident Sales and Partner Relations)

Satisfaction with Credit Policy (4) To have received such positive recognition from our broker partners in this category is very rewarding. Together, brokers and lenders are working in an increasingly complex operating environment trying to find the perfect balance between meeting regulatory requirements and working through the deals. Views and opinions are not always aligned, but to have received such positive feedback from our brokers is reassuring that our efforts in communicating with you openly, and finding solutions together to make deals work, is recognized and appreciated.

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Underwriter Support (2) It’s most rewarding to have our broker partners recognize the underwriter support they receive from Equitable Bank. In an increasingly challenging brokering and lending environment, Equitable remains committed to providing consistent, knowledgeable and responsive underwriting support to find solutions to work through deals together. (Brian Leland, vice-president, Residential Credit)

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Overall Service (3) I feel this category encapsulates many of the other lender attributes reviewed by the brokers and to have been recognized so strongly by our broker partners is very rewarding. Our commitment to the broker channel and responding to what our broker partners need to run a successful business remains our top priority. (Brian Leland, vice-president, Residential Credit)

Product Range (4) Equitable Bank recognizes that a one-size-fits-all solution does not always work for brokers. Each client’s needs are different and we look for ways to provide appealing, flexible products designed to meet the needs of our brokers and our brokers’ clients. Beyond our Alternative mortgage product offering, our HELOC/Mortgage combination product and new Prime Evolution Suite of products enhance and broaden the range of products our broker partners have to appeal to a broader range of clients. (Brian Leland, vice-president, Residential Credit)

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Lender Reply:

during the year. Popular networking opportunities for brokers include our broker appreciation events, family and cultural days, in addition to supporting industrywide events. (Susan Carter, Sr. Director, Marketing, Communications and Investor Relations)

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Equitable Bank excelled in a number of categories and brokers are especially impressed with the lender’s broker support, underwriter support and BDM support -- three categories in which Equitable Bank excelled.

MORTGAGEBROKERNEWS.CA

We attribute our success to the strong partnerships we have created with our valued MERIX and Lendwise originators

We are humbled by your support and forever grateful

› Broker Support

› Overall Service

› Underwriter Support

› Satisfaction with Credit Policy

› Turnaround Times

lendwisemortgages.com

› › › ›

BDM Support Product Range I.T. Technology Transparency of Commission Structure

merixfinancial.com

LENDERS’ REPLY

MORTGAGEBROKERNEWS.CA

National Bank proved once again to be unparalleled when it comes to product range -- nabbing top honours in that category for the second straight year.

Lender Reply: National Bank is pleased to be recognized among the top lenders in Canada for 2014. This year was a challenging year for all brokers and lenders as new or revised lending policies were introduced by the lenders and insurers. We would like to acknowledge and thank all the brokers that have continued to support us over the years.

National Bank is especially proud of being recognized as Gold for the Product Range category.

This year marks the second year to be recognized at the Gold level and fourth year in a row that we have received recognition within the top three for this

division. We continuously strive to offer innovative and leading products and solutions for all of our clients. Our signature product, the National Bank All-In-One continues to be recognized as one of the best credit solutions, that offers our clients significant flexibility for daily transactional banking.

It gives our clients the opportunity to fully integrate their financing solutions and personalize it to fit their specific needs.

We were pleased with the improvement in the BDM Support however we would like to see our scores higher. National Bank is working on numerous initiatives that we are confident that will improve both the broker and client experience. We are excited by some of these enhancements and this feedback, as well as the comments that we collect from our Red Carpet brokers help validate the initiatives.

National Bank Mortgage Broker Services is looking forward to 2015 and the opportunities that lie ahead for everyone in the broker industry. The support and loyalty that the broker community has shown us over the past number of years is truly appreciated.

4.50 2014 AVERAGE 2014 SCORES

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Thank you to our Broker Network for choosing Equitable Bank.

Underwriter Support

BDM Support

Broker Support

Overall Service

Your support and partnership is greatly appreciated.

LENDERS’ REPLY

MORTGAGEBROKERNEWS.CA

Transparency of Commission Structure (GOLD) We believe that our brokers appreciate having a choice. That’s why we offer two compensation programs (Upfront and Renewal) to choose from on a per deal basis. While almost 75% of our brokers prefer their compensation upfront, we will continue to let brokers select the method best suited to their business needs.

CMLS takes him the honour of top medal winner this year. It received Gold in Overall Service Levels, BDM Support, Satisfaction with Credit Policy, and Transparency of Commission Structure.

Broker Support (SILVER) This business is all about supporting our brokers.

That’s why our team of regional managers, national underwriters and client servicing specialists work together with the common goal of supporting our brokers at all times with the service and solutions they need. We continually deliver on our promise of being competitive, experienced, and brokerfocused to help your business grow.

Lender Reply: Total Medal Standings What does winning the overall medal count and being ranked second highest across the board mean to us? That we’re delivering value to brokers and they appreciate our efforts. We took the feedback from last year’s survey and used it as a benchmark to enhance our service and solutions throughout the year. Such a solid ranking in a highly competitive environment demonstrates that we achieved our goals.

Turnaround / Approval Times (SILVER) One area where brokers asked for improvements was with our turnaround times. So we streamlined and automated some of our underwriting processes to turn deals around quicker. We also hired more staff, including more Underwriters, Document Specialists, a new associate director of national underwriting, and an escalation manager. A silver medal shows that our efforts have paid off.

Overall Service Levels (GOLD) A gold medal in Overall Service Levels is a significant accomplishment. What makes it even more noteworthy is that our residential mortgage division is not yet two years old. We’re proud of how our commitment to providing responsive underwriting, flexible credit solutions, and enhanced service has satisfied the needs of brokers.

Our team always looks to go beyond what is expected and deliver an elevated experience that makes all the difference.

5.00 2014 AVERAGE 2014 SCORES

Regional Manager (BDM) Support (GOLD) When we formed our Residential Mortgage team, we looked for BDMs that would not just grow the business, but also earn the respect of brokers. Our BDMs help brokers submit deals, structure successful applications, and understand our products. They’re committed to building relationships for the long-term and always look to introduce opportunities that will benefit brokers and their customers.

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The credit definitely goes to our regional managers, national underwriting team and client servicing specialists who worked together as one team with one goal – to support our brokers at all times with competitive, high quality solutions and extremely responsive service.

We view this top-tier ranking as evidence that we are truly delivering on our Customer Forward promise of putting our customers’ needs ahead of our own. We are committed to the broker channel for the long term and look forward to continuing to support your business success.

Dan Putnam Senior vicepresident, Business Development, Residential Mortgages

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Satisfaction with Credit Policy (GOLD) In a world where most lenders share similar credit policies, we differentiate ourselves with clear and concise information about our policies. Our regional managers work hard to ensure that brokers are always up-to-date on our product and policy details to avoid any ambiguity or confusion.

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We thank all the brokers who participated in the survey and appreciate the overwhelming vote of confidence.

Last year, we ranked among the top five Canadian lenders. This year, we moved up to second place overall with six medals.

ON LENDER

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Thank you to our broker partners for your

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Canada’s Mortgage Company is top ranked with brokers.

overwhelming vote of confidence that ranked us first in total medal standings, and the best in overall service levels, Regional Manager support, satisfaction with

GOLD

our credit policy, and transparency of our commission structure. The credit definitely goes to our Regional Managers, National Underwriting team and Client Servicing Specialists who worked together as one team with one goal – to support you at all times

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with high quality solutions and responsive service.

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OVERALL SERVICE LEVELS

GOLD

GOLD

BDM SuPPORT

SATiSfACTiON wiTh CREDiT POliCY

TRANSPARENCY Of COMMiSSiON STRuCTuRE

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CANADA’S MORTGAGE COMPANY.™ 40 years, 10,000 customers and 10 billion in assets.

A dedication to Customer Forward.

CMlS.CA

LENDERS’ REPLY

MORTGAGEBROKERNEWS.CA

BDM Support (8th) Our director of business development has a singular focus, how best to serve the broker and their client.

We plan for an increased sales presence across the country as we grow.

Canadiana received great feedback across the board for its broker offerings. The lender has also expressed its dedication to improving ever facet of its broker experience in the future.

Product Range (12th) Our focus continues to be to develop meaningful product that will resonate with our brokers and their clients.

Lender Reply:

IT/Technology (9th) In 2014 we launched our new website with new tools, more information and a more modern look.

Our aim is to provide a valuable resource to brokers and their clients. Look for enhancements in 2015.

Transparency of Commission Structure (8th) We offer a very competitive commission structure.

We distinguish ourselves in giving our brokers choice. The ability to select from the Upfront payment or Renewal option allows our brokers to control their client and their income in the years to come. We believe this to be the essence of true partnership with our broker supporters.

Overall Service Levels (4th) This is a testament to the whole team at Canadiana.

The collaboration of all parties makes for a great work environment and an excellent customer experience. Our team consistently works together to improve knowledge, skill level and best practices.

It is this quality throughout our team that allows us to set higher benchmarks of service in the future.

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AVERAGE 2014 SCORES

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Underwriter Support (5th) In my many years in the business, it is my pleasure to say this is the best credit team with whom I have worked with. Their dedication to servicing their brokers and understanding of the family moving into their new home is what distinguished them among their peers.

Broker Support (5th) Our singular goal at Canadiana is to help our brokers acquire a new client every day. Canadiana is committed to improving the broker and customer experience.

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Turnaround Times (5th) We understand the importance of turnaround time to a broker and we constantly strive to fine more efficiency. Under Carolynn Butler’s leadership and the addition of Philippe Galea, our new credit manager, we have seen great improvement in this area. Our underwriters, credit administrators and director of business development have a singular goal in mind, that is assisting you acquire a new client and maximizing your efficiency.

Satisfaction with Credit Policy (6th) Clarity of our policy guide has been a major focus for us in 2014. As we develop, our plan is to create and express policy in a fashion that is easily understood by our brokers and their clients.

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Overall Standings (5th) We are thrilled with the response from our broker partners. We have made some changes at Canadiana over the last year and this just shows us that our hard work isn’t going unnoticed. On behalf of all Canadiana, thank you! Our aim is to be No. 1 in your eyes in 2015.

PARTNERSHIP. EXPERTISE. TRUST. Welcome to the New Canadiana Our singular focus is to assist you in aquiring a new client with the right lending solution. We focus on earning your trust by providing exceptional service and support.

From all of us at Canadiana,

Thank You!

We’ve made some changes and we are glad you noticed. Thank you for our first showing on the Broker on Lenders Survey. We’re just getting started!

Interested in learning more? Here’s how to get in touch. We can’t wait to hear from you!

1-877-672-7219

info@canadianafinancial.com

Sweets for the Geeks, follow us at:

www.canadianafinancial.com

LENDERS’ REPLY

servicing, and everything in between. Winning the gold in this category legitimizes our claim that we are a true broker advocate.

Merix and Lendwise received a total of three combined gold medals. Further, brokers recognized Lendwise as the top lender in terms of average score.

Lender Reply: From all of us at MERIX and Lendwise, we would like to thank our supporters who took the time to fill out the survey and evaluate our efforts. We are very pleased with the results garnered, and quite frankly it would be easy to interchange the scores between MERIX and Lendwise as both brands have the same people, same policies, and same products. Winning the overall medal count is not only a reflection of our efforts but an indicator of the depth of our working relationship with our supporters; we’re humbled by their support and forever grateful.

Broker Support (GOLD - Lendwise) To me this is THE category; winning gold in this category means we’ve exceled at many disciplines.

It ranges from sales to credit; from compensation to

Underwriter Support (GOLD Lendwise / BRONZE Merix) Winning the gold medal in this category is due in large part to the commitment the entire company has made to adjudication and service; it is a reward to occupy two of the top three positions in this category. A willingness to work with customers regardless of deal structure is what sets one lender apart from another, and we’ve made significant strides in this category over the last few years and will strive to build upon our successes.

Turnaround Times (GOLD - Lendwise) Since the beginning of the year we have focused on Lendwise; these results are confirmation that with both MERIX and Lendwise you can combine exceptional service levels and increase your volumes simultaneously.

Overall Service (SILVER -Lendwise) For us, this category is of importance as it encompasses many facets of the underwriting process. It ranges from servicing credit solutions and supporting documentation, as well as

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MORTGAGEBROKERNEWS.CA

understanding our customers and treating them with respect. We have a commitment to our customer, the mortgage broker, to always become better at what we do, which is why we will never become complacent and will always strive improve in this category.

Interest Rates We are not disappointed to finish in fourth and seventh place in this category.

and they genuinely care about their customers, and always look for innovative ways to help grow their business.

Product Range (Bronze - Lendwise) Our overall score for product range is a result of clarity of the products that are offered. It is our goal to be able to provide a mortgage solution for all types of homeowners. We want to help you grow your business and partner with you to find the right solution for your customer.

Satisfaction with Credit Policy (SILVER - Lendwise) Within Lendwise, we’ve been able to articulate the credit complexity in a clear concise matter. There are lessons to be learned and we have every intention of transferring our learning to the MERIX brand. The real praise in this category rests on our mortgage brokers; they’ve been extremely patient under the reality of today’s credit policy environment.

Transparency of Commission (Bronze - Lendwise) We are pleased at the overall score for both brands.

MERIX and Lendwise have two completely different compensation models. Originators can choose the compensation model best suited for their business, one is not better than the other but they are different. We are delighted to give our originators options.

BDM Support (BRONZE - Lendwise) Our BDM’s have been acknowledged as one the best in the industry; we are appreciative to be acknowledged in this category. We look for two basic qualities when hiring our BDM’s, hunger and humility. They always want to do more but if a mistake is made they’re the first to raise their hand and take responsibility. Our BDM’s are genuine,

IT Technology (Bronze - Merix) Integrating our business with technology and providing tools for our customers has and always will be a priority for us. In the coming months our customers will notice a devotion to technology within the Lendwise brand, the same level of innovation as they have come to expect with MERIX.

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OCTOBER 2014 | 33

FEATURE / BROKERS ON LENDERS 2

BROKERS ON LENDERS

REVISITED

Our Brokers on Lenders survey is so comprehensive, we had to hold some of it back for the October issue. Read on for ways industry attitudes are being shaped and, indeed, changed in 2014

34 | OCTOBER 2014

MORTGAGEBROKERNEWS.CA

This year’s “Brokers on Lenders” issue (September) attracted record levels of participation from brokers wanting to have their say about their lender partners. Of course, this issue you now hold in your hands gives each of the profiled lenders a chance to reply to that broker feedback.

But before you get to that, sink your teeth into a comparison of how some of the trends have changed among mortgage brokers year-over-year. We’ve rounded up a number of categories and compared them side-by-side to last year’s answers Be warned: some of those changes may surprise you.

EXPERIENCE

69%

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vs 20%

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LESS THAN A YEAR OCTOBER 2014 | 35

FEATURE / BROKERS ON LENDERS 2

MORTGAGEBROKERNEWS.CA

RATE BUYDOWNS

WHAT PERCENTAGE OF YOUR DEALS ARE YOU BUYING DOWN RATE? 41% OF RESPONDENTS 0%

13% SAID

25% OR MORE

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46% REPLIED

MORE THAN 0%, LESS THAN 25%:

vs 18% OF RESPONDENTS 0%

2013

8.4% SAID 25% OR MORE

73.6% REPLIED

MORE THAN 0%, LESS THAN 25%:

36 | OCTOBER 2014

CMP ANALYSIS Surprisingly, more brokers now avoid buying down rate entirely this year over last, with 41 per cent of respondents saying they buy down 0 per cent of their deals. Compare this with a mere 18 per cent who reported the same last year and it’s obvious that many brokers are, somehow, finding a way to maximize profits on each deal.

Exclusive

Dominion Lending Centres & Mortgage Centre Canada

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FEATURE / BROKERS ON LENDERS 2

NON-PRIME DEALS

WHAT PERCENTAGE OF YOUR DEALS ARE NON-PRIME?

47% OF BROKERS

SAY 0-10% OF THEIR DEALS ARE NON-PRIME

6%

SAY 51-100% OF THEIR DEALS ARE NON-PRIME

18%

SAY 26-50% OF THEIR DEALS ARE NON-PRIME

2014

ON AVERAGE, 20.5% OF DEALS ARE NON-PRIME

29%

SAY 11-25% OF THEIR DEALS ARE NON-PRIME

vs

52% OF BROKERS 5%

SAY 51-100% OF THEIR DEALS ARE NON-PRIME

2013

ON AVERAGE, 18.6% OF DEALS ARE NON-PRIME

SAY 26-50% OF THEIR DEALS ARE NON-PRIME

27%

SAY 11-25% OF THEIR DEALS ARE NON-PRIME

38 | OCTOBER 2014

OF BROKERS IN 2014 SAID THEIR NUMBER OF NON-PRIME DEALS WENT UP YEAR-OVER-YEAR

40% OF BROKERS IN 2013 SAID THEIR NUMBER OF NON-PRIME DEALS WENT UP YEAR-OVER-YEAR

CMP ANALYSIS

SAY 0-10% OF THEIR DEALS ARE NON-PRIME

16%

43%

Brokers aren’t giving up on their prime business without a fight, according to our statistics.

Overall, 43 per cent of brokers this year said the number went non-prime deals wet up year-over-year, compared to 40 per cent in 2013. This, despite evertightening rule changes may be an indication that brokers – and lenders – are still able to find ways to work around these very hindrances.

News

InternatIonaL

MORTGAGEBROKERNEWS.CA

u.s.

U.S. housing market worse than thought

REFERRALS

&

90.6% 52.1%

The number of Americans who bought previously occupied homes rose in October. But the National Association of Realtors says it overstated more than three million sales during and after the Great Recession, showing the housing market was weaker than Percentage of previously thought. homeownership The private trade group says sales rose four per costs, including cent in October to a seasonally adjusted annual rate of PAST mortgage payments, 4.42 million.

That’s below the roughly six million homes CLIENTS utilities and property a year that economists say are consistent with a healthy taxes that take up a housing market. But it’s ahead of 2008’s revised sales, typical household’s now considered the worst in 13 years. monthly pre-tax The trade group revised its sales from 2007 to 2010 income in Vancouver down 14 per cent, from more than 20.6 million to nearly and Toronto, 17.7 million. Among the reasons for the lower figures, respectively (RBC the Realtors group says: changes in the way the Census Economics Housing Bureau collects data, population shifts and some sales Trends and being counted twice.

Affordability Report) The Realtors consulted with government and private housing experts, including the Federal Reserve, the Department of Housing and Urban Development, the Mortgage Bankers Association, the National Association of Home Builders, mortgage giants Fannie Mae and Freddie Mac and CoreLogic, a California-based data firm that first raised doubts about the annual numbers earlier this year.

CoreLogic has estimated that the Realtors group overstated sales in 2010 by at least 15 per cent.

The changing numbers could affect how economists view the trade group’s data. It could also affect companies REALTOR that use the figures for hiring and expansion plans.

Sales are measured when buyers close on homes.

INSURANCE But many deals are collapsing before that point.

BROKER FINANCIAL One-third of Realtors said they had at least one contract PLANNER scuttled in October, up from 18 per cent in September.

Contracts are being cancelled for several reasons: Banks have declined mortgage applications; home

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

More than two years after the recession officially ended, many people can’t qualify for loans or meet higher down payment requirements. Even those with excellent credit and stable jobs are holding off because they fear that home prices will keep falling. Sales are also being hurt by a decline in first-time buyers, who are critical to reviving the housing market.

PAST Sales have fallen in four of the five years CLIENTS since the housing boom went bust in 2006.

Declining prices and record-low mortgage rates haven’t been enough to boost sales.

At the same time, home construction has begun a gradual comeback and should add to the economy’s growth in 2011 for the first year since the Great Recession began in 2007. Last month, builders broke ground on an annual rate of 685,000 homes, the government said recently.

That was a 9.3 per cent jump from October and the fastest pace since April 2010.

Most economists say home prices will keep falling, by at least five per cent, through 2012.

Many forecasts don’t foresee a rebound in prices until at least 2013.

The high rate of foreclosures has made resold homes cheaper than new ones. The median price of a new home is roughly 30 per cent above the price of one that’s been occupied before – twice the normal markup. Investors are taking advantage of the discounts.

REALTOR The housing market is struggling even as the broader economy has improved in recent months. FINANCIAL INSURANCE The economy grew at an annual pace of two BROKER PLANNER per cent in the July-September quarter. Many economists expect slightly better growth in the October-December quarter. CMP

WHO IS YOUR STRONGEST REFERRAL PARTNER?

67%

vs

2014

1%

28%

4%

70.2%

2013

24.3%

2% 3.5%

THE BEST APPRAISERS IN CANADA ARE CERTIFIED AND REGULATED BY

LOOK FOR THE PROFESSIONAL DESIGNATIONS

DAR & DAC

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

28

mortgagebrokernews.ca

OCTOBER 2014 | 39

FEATURE / BROKERS ON LENDERS 2

MORTGAGEBROKERNEWS.CA

CONVENTIONAL DEALS

WHAT PERCENTAGE OF YOUR DEALS ARE CONVENTIONAL?

26% OF BROKERS

REPORT THAT 51-80% OF THEIR DEALS ARE CONVENTIONAL

3% OF BROKERS

REPORT THAT 81-100% OF THEIR DEALS ARE CONVENTIONAL

2014 22% OF BROKERS

REPORT THAT 0-25% OF THEIR DEALS ARE CONVENTIONAL

vs

49% OF BROKERS

REPORT THAT 26-50% OF THEIR DEALS ARE CONVENTIONAL

24% OF BROKERS

REPORT THAT 51-80% OF THEIR DEALS ARE CONVENTIONAL

5% OF BROKERS

REPORT THAT 81-100% OF THEIR DEALS ARE CONVENTIONAL

2013

21% OF BROKERS

REPORT THAT 0-25% OF THEIR DEALS ARE CONVENTIONAL

50% OF BROKERS

REPORT THAT 26-50% OF THEIR DEALS ARE CONVENTIONAL

40 | OCTOBER 2014

CMP ANALYSIS This year saw a slight decrease in the number of brokers who are able to fund a high number (81-100 per cent of overall deals) of conventional deals, with three per cent of brokers still able to make the vast majority of their income on conventional deals.

This is a slight decrease, yearover-year, with five per cent of brokers able to convert the same ratios in 2013.

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FEATURE / REALTOR

UNITED WE GROW

It’s a wonder more mortgage brokers aren’t working closely with real estate agents to push more deals more efficiently.

But, with the housing market stronger – and more competitive – than ever, it seems more and more brokers are embracing the “better together” mentality.

After all, united we stand, divided our business stalls.

The phrase can trace the use of its earliest version to Biblical times, but it’s more relevant now than ever.

Brokers across the country are working to expand their reach in a crowded industry and Realtor partnerships are frequently proving the best way to do it.

Kim Gibbons, a broker with Mortgage Intelligence, says it simply makes sense for brokers to have a pool of real estate agents to whom they can send referrals – those clients who have first come through the pre-approval process and who are now looking for a real estate agent to work with – and from whom they can receive new clients. It’s a reciprocal referral partnership of sorts.

“It’s a natural fit for a broker to be dealing with a real estate agent,” she says.

Omer Quenneville, a mortgage broker and real estate agent who often sees both ends of the transaction, says having a strong relationship with several agents can help brokers when it comes time to putting together a financing deal for a client. If you have a good relationship with the agent attached to the deal, he or she will more readily provide the pertinent information so that, as a broker, you have all the accurate details you need to provide your client with the best service you can offer.

“When you’re working with agents involved in the transaction, you can focus more on the clients’ needs because the agent will feed you information,” Quenneville says. “That way, you can put together the best package for the client. It always works 42 | OCTOBER 2014

better when you do it together.”

Broker Shubha Dasgupta says these partnerships enable both the broker and the Realtor to build on each other’s strengths, and make up for any weaknesses.

“You’re able to build a better relationship with the client if you have a relationship with the agent,” he says.

These types of relationships can also leave brokers with more time to perfect the financing end of the purchase without worrying about whether the deal will fall apart on the agent’s end. That peace of mind can leave you working at your best – and your most efficient. The teamwork involved when working closely with an agent can help push the deal through to approval more quickly and with fewer issues along the way.

“Nothing falls through the cracks so everything is accounted for and closes on time and without delay,” Gibbons says. “Dealing with real estate agents that you’re comfortable with, you know you’re going to get proper documentation and the property is closing on time.”

As with the greatest partnerships, the benefit is mutual. Re/Max Realtor Dave Embleton says the wider pool of finances that brokers have access to is a big benefit for his clients, and the trust he has in the brokers he works with helps him feel confident with his clients’ deals.

“I know it gets done right,” he says. “It alleviates one of the stresses of buying and selling property.”

MORTGAGEBROKERNEWS.CA

Another mutual benefit lies in the personable relationship that results. Dasgupta says agents who have close partnerships with mortgage brokers can rely on the broker to lend a helping hand when it comes to making an offer.

“One of the particulars, especially in the Toronto market because of the competitive nature [of the market], is the agent can call you late at night to determine the strength of the client and their finances,” Dasgupta says, “especially if it’s a bidding war situation.”

Dasgupta says he’s had his agent partners call him at all hours of the night to determine if their mutual client is financially stable enough to increase their bid. That type of service, while helpful to the agent, also results in higher customer satisfaction for brokers.

Then there is the added benefit of referral business. Outside of helping you craft a better deal for clients, agents will often send their own clients your way. And who doesn’t like more business?

“That’s where the value is for many mortgage brokers,” Dasgupta says of the referrals that come with these types of partnerships.

Dasgupta says his biggest source of referrals is from real estate agents, adding that he does about 30 or 40 deals each year by agent referrals. “Quite often, I work with the agent from the get-go,” he says, “from pre-approving the client to the closing, or from the offer to the purchase.”

“The volume of business that an agent does is directly related to how much they refer to you,” Quenneville says. “So if they do 10 or 20 transactions a year and they refer 10 per cent of those to you, you’re doing OK.” But, brokers, like their clients, should be selective when it comes to adding agents to their referral pool. With your reputation at stake, the last thing

you want to do is recommend a sub-par agent.

“You need to limit yourself to those who give reciprocal business and those real estate agents who are going to service your clients well,” Gibbons says.

“It’s better to deal with those agents who you know very well.”

Like good brokers, good agents aren’t always easy to find. Quenneville says office meetings are a good place to start your search for agent partners. He says you don’t necessarily need to begin prospecting right away, but instead try to meet people and expand your circle of influence and your network.

“People do business with people they know,” he says. “If they don’t know who you are, they won’t do business with you.”

Meanwhile, Gibbons says forging these partnerships is something that has happened more naturally for her. She’s added to her pool of partners throughout the years she’s been in the business, meeting different people through networking events or through other clients.

“I don’t target agents,” she says, “but it’s an organic thing that happens.”

For his part, Embleton says he looks for brokers who will work well with him and whose model of work better matches his own. He also looks for creativity in a broker.

“How are you going to put this deal together,” he asks. “If the client has a credit issue, how are you going to get around that?”

Either way, brokers – and agents for that matter – need to be more disconcerting and selective when choosing agents to partner with. Quenneville says quality over quantity rings especially true when it comes to forging real estate agent partnerships.

“A handful of very quality relationships are worth a lot more than throwing a big net to see what you can catch,” he says.

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MORE THAN 30 YEARS EXPERIENCE PILLARFINANCIAL.CA OCTOBER 2014 | 43

FEATURE / PROFILE

Independent no longer

He built a successful brokerage as an independent but in 2014, Lorne Rackel of Jayman Financial decided to join a major network. We caught up with him to discuss the move as well as his forecast for the independents that remain

44 | OCTOBER 2014

MORTGAGEBROKERNEWS.CA

It’s been a big year for Lorne Rackel and his brokerage, Jayman Financial. The team took home the Canadian Mortgage Award for Mortgage Brokerage of the Year (Fewer than 25 Employees) at this year’s awards. Just prior to receiving the honour, Rackel decided to hang his hat at a new home: Verico.

“It’s been a long journey; we started off doing about $110 million in mortgages and last year we finished up with $296 million,” Rackel told CMP upon winning the award. “We have the right people who really care and we treat the customer right.”

Rackel hopes to continue the growth with Verico.

There are “Real Advantages” to joining RMA MORTGAGEBROKERNEWS.CA

“The Broker Services Team at RMA are true professionals. They made the transition a smooth and seamless operation. Even the lenders were impressed!!!”

Bob Salisbury RMA Mortgage Broker Pickering, ON

CMP: Why did you decide to make the move from independent to join a national network?

Lorne Rackel (LR): There were multiple reasons.

We needed a CRM to help us with our database. We have over 10,000 customers in our base and we need to mine that potential volume. We also needed a program where we could define work queues to help us stay in touch with our approved customers. Most of our business is extended rate holds, so we need something to help us communicate and stay in touch to those customers on a monthly basis. In addition, at times we are put under rate pressure and attacks and we needed additional suppliers of promotional rates.

It’s in your best interest ™

Learn more about the advantages of joining our team at

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OCTOBER 2014 | 45

FEATURE / PROFILE

MORTGAGEBROKERNEWS.CA

CMP: Why the Verico network?

LR: We reached out to a few other networks. I prefer the monthly charge versus a fee on your annual volumes. We deemed the annual volume fee too costly so that reduced the list. I also liked the Verico Dynamics and I knew Colin from previous dealings and I trust him.

CMP: You have built your business on a number of strategic pillars. What are they and how does focusing on them help your company grow?

LR: We have five strategic pillars. They are internal and external growth, revenue streams, structure and technology.

CMP: How do you see the broker network evolving in the future?

LR: I am not sure how it is going to evolve. My best guess is likely more consolidation of networks.

Fewer choices in the future.

CMP: What is your business philosophy – not only as a broker but also as a business leader?

LR: I believe 95 per cent of all people want to do a good job. It is up to the company or business to create the right environment that propels people to excel and do the right thing that matters. You have to limit, control or eliminate the amount of entitlement and fear. If you can create an earning environment, everyone will have some successes.

Too much entitlement or fear reduces productivity.

CMP: This issue features our “Lenders Reply” feature. What are some of the areas you would like to see lenders focus on in the future?

What can they do to help the broker industry grow?

LR: I see very little advertising or promotion done on behalf of the broker world. We have done a TV ad earlier this year and we have just launched a media blitz via billboards, news print and radio reaching out to the consumer telling them about our recent win as brokerage of the year with less than 25 employees.

In addition, our ads are going to address the renewal market and we will track the results. It always seems the consumer has to find us (brokers) rather than us reaching out to them. Perhaps the lenders could promote us more via the media.

I cannot recall the last time I saw something promoting brokers on TV or in the paper. It seems we always have to self- promote our industry.

Lorne Rackel accepting his 2014 Canadian Mortgage Award for Mortgage Brokerage of the Year (Fewer than 25 employees).

46 | OCTOBER 2014

TODAY

IT’S THE DAY YOU FINALLY STOP FEELING...

DISCONNECTED! MORTGAGE ARCHITECTS IS MORE THAN A COMPANY, IT’S A FAMILY.

We believe that the measure of a company rests within its people.

We invest time into our people and empower them with incredible tools.

CONFERENCE An opportunity to get together, laugh and learn.

Join us in San Diego 2015!

TOWN HALL

EVENTS

Be in the know when we tour the country to let you know what’s going on!

We like to hold team building events to celebrate our network and take our minds off work.

Begin your journey to incredible success with MA!

JOIN US TODAY! JOINMA.ca

© Copyright 2014, Mor tgage Architects Inc., all rights reserved.

BUSINESS STRATEGY / SECRET #20

TESTING AND MEASURING

YOUR ROI Marketing is necessary, writes Doren Aldana. But are you doing your best to maximize the results?

SECRET #20: THEY TEST, TEST AND TEST TO MAXIMIZE THEIR ROI.

The purpose of testing is to develop maximum performance from every marketing effort and dollar invested. Frankly, I find it amazing how few mortgage professionals actually test and measure their marketing metrics and return on investment (ROI). If you were to ask them what their ROI is on their paid advertising campaigns, most of them wouldn’t have a clue! Most of them use what I call the S.W.A.G method – Scientific Wild Ass Guess!

They seem content to leave their destiny -- and profitability -- in the hands of hunches and guesswork.

Not testing and measuring your results is a BIG mistake for three reasons…

1

Your opinion doesn’t count. This might seem harsh, but it really doesn’t matter what you think about a particular marketing method. At the end of the day, the only vote that counts is the one that pays the bills – the vote from your client!

Nothing is good or bad except that which testing proves to be good or bad.

2

You can’t improve what you don’t measure.

How would you know something has improved if you’re not measuring it? Exactly.

Furthermore, studies have shown that just by the mere act of measuring something, your results can improve by as much as 30 per cent!

48 | OCTOBER 2014

MORTGAGEBROKERNEWS.CA

3

If you stick your head in the sand, one thing is for sure: you’ll get your ass kicked! In this case, ignorance is not bliss. Ignorance leads to unnecessary struggle, strive and suffering.

Ignorance of your numbers leads to wasted ad dollars and lost profits.

That’s why superstar mortgage professionals always track and measure their marketing metrics, especially on paid advertising. They put systems in place that allow them to test one ad concept against another, one referral system against another, one headline against another, one followup strategy against another, one call to action against another. I could keep going but you get the idea.

My point is this: when you test one approach against another and analyze the results, you will find that one approach outperforms all others, sometimes by a significant margin. You’ll be amazed at how many more leads you can generate or how much greater your ROI can be if you’ll take the time to test, track and measure your results.

For example, let’s say you placed Ad #1 in a newspaper for $1,000 and it generated 20 leads and two closings worth $4,500 in total revenue. Your cost of acquisition per client would be $500, with a total ROI of 350 per cent. Not too shabby. Now let’s say you place Ad #2 in the exact same newspaper, in the exact same location, the only difference is a change in the headline. The cost was still $1,000 but this time you got 30 leads and three closings worth a total of $6,600 and an ROI of 560 per cent! That’s a 210 per cent increase in your ROI, all because you bothered to test a new approach and track your results!

Don’t spend a single penny more on paid advertising without putting a tracking system in place, so you can hold each ad accountable to results.

This requires more than just asking prospects, “How did you hear about us?” -- although I would certainly recommend that too. I’m talking about putting a SYSTEM in place that tracks every lead, app, closing and dollar you generate from each and every ad dollar you invest.

Here are a few cost-effective ways for tracking your marketing results:

1

Toll Free “Call Capture” Hotlines -- this is also called a “24-hour free recorded message hotline”. Instead of just asking your prospects to call your office phone line or your cellphone, you can offer a free report or a free recorded message

that provides valuable information that helps your prospect make a more informed, educated buying decision. When a prospect calls the hotline to access or request this free information -- BOOM! -you just got a hot new mortgage lead. Now you can track how many leads came directly from each specific ad you run.

2

Text Capture -- this works on the same premise as example #1, except that it invites the prospect to request the free report or free property information (if you’re working with a Realtor) by texting a code to your request-info-bytext number. Again, this automates your lead generation process and allows you to easily track your results.

3

Web Forms -- this is the “online” method for lead generation. You can use this in conjunction with or in replace of the other two methods I already mentioned. If you use this method, be sure that all your prospects have a computer or smartphone with Internet access. In this case, you would invite the prospect to get access to your free offer by going to a specific website that points to a dedicated landing page. Your sole focus and goal with this page is to sell the prospect on the benefits of your free offer and to compel them to fill in their contact information and press the “submit” button. Don’t confuse them with too many options -- a confused mind always says NO. If you’re driving paid traffic to the page, just give them one option and one option only. Most importantly, use adtracking software, Google Analytics or a dedicated URL for each ad, so that you can measure the number of unique visitors, opt-ins, apps and closing you generate from each ad campaign.

In my Mortgage Superstar Inner Circle, I give you access to my Million Dollar Rolodex of topnotch vendors for tracking your marketing, including call capture hotlines, ad tracker software, text capture systems, etc. I’ll also teach you exactly what elements and variations of your marketing you should be testing and tracking, so you can start maximizing your ROI on everything you do – just like a superstar!

In next month’s final 21st secret, you’ll discover the No.1 secret that has launched successful mortgage pros into superstardom. I’ve saved this secret for last because it’s by far the most important.

Stay tuned...

Doren Aldana is considered by many to be Canada’s leading Mortgage Marketing Coach and has won the “Best Industry Service Provider” award three years in a row at the 2012, 2013 and 2014 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.

SuperstarMortgageBroker.com

OCTOBER 2014 | 49

FORUM / COMMENTARY

UNLICENSED SYNDICATE MORTGAGE PROVIDERS FSCO has issued a warning to Canadians about unlicensed syndicated mortgage providers. Readers on MortgageBrokerNews.ca were on both sides of the ensuing debate about the threat those investment pose to clients and the industry “The Financial Services Commission of Ontario (FSCO) is warning consumers that it has received complaints about some websites promoting syndicated mortgage investments,” an official release from FSCO states. “The businesses operating these specific websites are not licensed or registered to conduct this activity in Ontario.”

Syndicated mortgages are becoming increasingly popular among mortgage brokers; many of whom have added the lucrative products to expand their business offerings.

50 | OCTOBER 2014

MORTGAGEBROKERNEWS.CA

HERE’S WHAT BROKERS HAD TO SAY: “Thank you FSCO. A much needed heads-up to the consumer and the industry.”

John Bargis “First and foremost, I want to also commend FSCO for issuing the public bulletin referred to in this article … I am fully supportive of the regulator’s efforts, and am glad they are turning a more watchful eye on to this product, as I have recommended they do on other occasions in the interest of better consumer protection.”

“Many of the comments I see here, and many of the discussions I have had with others in this industry, show a major lack of understanding of the fundamentals at play when it comes to development financing in general, and raising equity via syndicated mortgage loans for development financing specifically.”

Glenn May-Anderson “The key to this is ‘some websites promoting these products are unlicensed.’ What about a company like Fortress that can only be sold through a licensed mortgage agent and submitted to a mortgage broker that only deals in one syndicate mortgage product? How is this riskier than a mutual fund salesperson selling 10 different companies’ funds, loading the clients up on DSC fees for seven years, more than likely not even knowing the top 10 holdings of any of these funds and also likely not knowing the fund manager’s name or track record?”

“Cory”

“To all who feel that there should be more specialized knowledge and better investor protection regarding syndicated mortgage investments for development financing, I couldn’t agree with you more. There will be a major announcement in this regard very soon which, I believe, should address most of the concerns mentioned in this thread.”

Glenn May-Anderson “For brokers who want to get involved in this type of referral arrangements, it’s your choice, just make sure you’re acting in your clients’ best interests and not your own pocket because if something goes wrong, the amount of money you can potentially be held liable for will far exceed the referral fee you will be paid.”

Lior Hershkovitz “The issue becomes that a normal (and I state normal) mortgage agent does not have the ability to understand these products. Even with proper training.

Ask 100 agents if they can explain in detail how an IRD calculation works. Most could not, yet they are out selling syndicated mortgage deals on commercial condo constructions. Has any one of them ever read a cost consultant report? Can they explain how the funding for commercial construction works? In my opinion, if you couldn’t underwrite the mortgage for the construction, you shouldn’t be selling the investors.”

Chad Robinson

®

OCTOBER 2014 | 51

BUSINESS STRATEGY / PERSONAL BRANDING

TAKING YOUR PERSONAL BRAND FROM ‘NOW’ TO ‘WOW’ When you Google yourself, what’s the first thing that comes up? Is this image consistent with how you want to be portrayed? Nikki Heald, managing director of Corptraining, explains the importance of consistent, personal branding

52 | OCTOBER 2014

MORTGAGEBROKERNEWS.CA

Today, it’s more important than ever for you to make your brand stand out. The term personal branding is certainly not new and has been bandied around for many years. Simply put, it relates to the way you market ‘you’ to the outside world. It’s about your professional profile and reputation. It’s about the value that others perceive you possess.

Branding incorporates reputation and credibility. It influences whether people will buy from you, do business with you or even want to associate with you. If you want to stand out from competitors and position yourself to win, then developing, fine-tuning or tweaking your current brand is the way to go. Yes, the good news is that you can shape and control your brand.

Personal branding should be an integral part of your overall marketing strategy and if you don’t particularly like the term ‘personal brand’, then substitute it for another term such as personal visibility, personal perception or professional profile. Ultimately, it doesn’t matter what you call it; the fact is, there is a proven link between projecting a professional image and success.

Celebrities are good examples of personal brand managers. They work tirelessly and consistently to promote their visibility in their fields of expertise.

They find ways to be unique and memorable.

However, you don’t have to be a superstar or celebrity to build a strong and unique brand proposition.

Whether you wish to market yourself for a new career, increased sales or diverse opportunities, it’s essential that your brand is genuine and promotes authenticity. How well you know yourself is vital.

Do you have a strong sense of your professional message? Do you know your brand story? Do you communicate your brand consistently using multiple sources?

Identifying what distinguishes you from others is no easy task, especially in the world of marked competition, but it’s unquestionably worth the investment. For those of you who own a business perhaps, you’ve spent loads of money on marketing campaigns to promote your business, but consider the last time you invested in you?

WHERE DO I START? The first step is to reflect upon your current brand and then determine whether this is your ‘ultimate’ or ‘desired’ personal brand. Ask others around you for feedback – clients, colleagues and your management team. What words do they associate

The reality is that you will lose control of how you appear online if you are not the one in charge of managing your presence.

Be mindful of what you publish or post

with you? What do they believe are your strengths?

What areas do they perceive you may be able to develop? What makes you different from others?

A clear understanding of what your brand looks like now as opposed to what you would like it to look like in the future allows you to identify those gaps that will require your attention.

Generally, the identifiable gaps will fall under one of the ‘Five Keys to Personal Branding’ that I have developed and use in my workshops: 1. Presentation – dressing to reflect your position and meet client expectations. Good grooming, hygiene and presenting an image that conveys credibility.

2. Communication – how you position yourself verbally, non-verbally and in written communication. Ensuring your online presence communicates the right messages.

3. Behaviour – how you conduct yourself at business events, meetings and day-to-day interactions. Demonstrating courtesy, respect and correct protocol for the situation.

4. Skills – ensuring you keep your knowledge and competencies up-to-date. Be top of game in what’s happening in your profession through training, mentoring and coaching.

5. Service – providing an exceptional level of service to both internal and external parties. Do what you say you are going to do and find ways to delight your clients.

After careful analysis of these five core areas and discovering the gaps, the next step is to determine what action you plan to undertake to take your brand from ‘now’ to ‘wow’. Remember, this will take time, energy and effort; it won’t happen overnight.

SOCIAL MEDIA AND BRANDING The growth of LinkedIn, Twitter, blogs and Facebook has made it even easier for prospective clients to research you; and believe me, they will. In this digital day and age, people rely heavily on social media and what you post is of interest to them.

People are using Google personally and professionally on a daily basis.

The first thing to do online is to find out what is being said about you and what information comes up in searches. Google your name and see how you go. What do social media sites reveal about you?

Does the content support the brand or perception you wish to convey to others? Could they be updated or improved to enhance your online OCTOBER 2014 | 53

BUSINESS STRATEGY / PERSONAL BRANDING

image? The reality is that you will lose control of how you appear online if you are not the one in charge of managing your presence. Be mindful of what you publish or post.

From a business perspective, LinkedIn’s

Whether you wish to market yourself for a new career, increased sales or diverse opportunities, it’s essential that your brand is genuine and promotes authenticity.

How well you know yourself is vital

Nikki Heald is the managing director of Corptraining, established to provide dynamic and modern training solutions appropriate to the insurance and financial service industries. Nikki co-authored the book Views On The Way To The Top, publishes numerous articles and her input is sought from various media channels. For more information, visit www. corptraining.com.au

54 | OCTOBER 2014

powerful position in search engines will mean that your LinkedIn profile will probably come up first.

Make sure you have a professional photo that creates a great first impression (not a dodgy one taken after a few ales), provide all necessary contact information, customize your profile URL, load your summary, skills and work history, add recommendations and honours or awards you have achieved.

Social media is just one way to promote your visibility and whilst blogs, articles and LinkedIn assist with this, video is the future of personal branding. Take time to create some short videos (ideally, no more than 90 seconds) about who you are, what you do and the value you are able to offer.

Load them onto YouTube, your website, LinkedIn or other relevant sites for current or prospective clients to view.

BROADCASTING YOUR BRAND So after all the time, energy and effort you’ve invested into cultivating your ultimate personal brand, you need to do something with it, otherwise you’ve effectively wasted your time!

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FIRST IMPRESSIONS...

DID YOU KNOW? From a career and social perspective, first impressions count. They also impact on your personal brand. It only takes a quick glance, for a few seconds for us to size each other up. While we may like to perceive ourselves as being nonjudgmental, unfortunately we are. With each new encounter, we evaluate and are being evaluated, so it’s essential to generate the right impression, particularly from a sales perspective. Generally, people buy from people they like. Additionally, how you are perceived internally is important if you want to progress in your career or be exposed to new or exciting job opportunities.

Reflect on your current brand and the impression you would like to convey to others. Consider your clothing and general appearance. Do you dress to reflect your role and meet your clients’ expectations? We know that not every situation in business requires full corporate garb; however, being well groomed and appropriately attired puts you one step ahead. Be mindful of your non-verbal cues and build on your first impression with a warm handshake and smile. We’ve all received the limp handshake at some point and never remember it favourably. Finally, ensure that your verbal communication backs up your professional image and demeanour. Use language that is suitable, professional and free from any technical jargon or slang. Three simple tips to get your impression right: 1. Immaculate presentation and grooming 2. Open and approachable body language 3. Appropriate and friendly speech

There are countless ways to communicate your value to both internal and external markets; don’t be shy – it’s your time to shine and get your name out there. Here are a few ways that you can build your presence: sponsorship, community involvement, networking, hosting an event, chairing a meeting, getting involved in committees, writing articles, newsletters or a book, producing a white paper or speaking at events.

Remember, discovering or enhancing your personal brand is not difficult and impacts significantly on sales and career advancement.

Your individual marketing campaign is essential to building credibility and confidence but must be backed up by consistent, day-to-day action. Have fun!

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BUSINESS STRATEGY / STRATEGY AND PLANNING

Exit

planning

Get the best price for your brokerage When it comes to maximizing business value and sale price, size does matter, argues Craig West

For many SMEs, succession and exit is the proverbial elephant in the room. And, irrespective of the countless books, seminars and newspaper columns devoted to the subject, business owners continue to ignore the basic principle that their enterprise needs to be prepared well in advance for sale in order to maximize value, price and successful exodus of the principals.

Like all things in life, there are a series or sequence of steps that must be adhered to in order to ensure a business is valuable, attractive and saleable.

The following factors have a heavy influence on the value of a business for sale and owners need to ask themselves these key questions to determine the sale readiness of their businesses:

BUSINESS SIZE Is the size of my business ‘right’ for my industry or market in order to maximize sale value?

Simply put, ‘size does matter’! There is plenty of research that supports the fact that businesses with a turnover of $5 million or more nearly always sell at higher multiples than their smaller counterparts.

56 | OCTOBER 2014

Whilst I am not in favour of growth for growth’s sake, designing your business to grow to at least this level of turnover will maximize value.

Achieving the scale required might include making acquisitions of complementary businesses/ opportunities, opening in other states or looking for baby boomer business owners ‘desperate’ to exit and retire.

Interestingly, the research clearly shows the top two outcomes baby boomers look for in a successful exit are not about the dollars; rather, they want assurance the business will continue after the exit (legacy) and that the new owner will look after the staff.

BUSINESS MODEL Clarity and sense of purpose and belonging are the next important factors.

Are the business owner and all the members of the team on the same page with their understanding of the business model?

Does every aspect of the business actually match the business model?

Is it a boutique or scale business and, even more importantly, is every aspect of the operation – customer service, online presence, the people employed, the pricing strategy, office location (even its layout and fittings) and marketing materials – all aligned to ensure they reflect the business model?

This is further supported by a key finding in a Pitcher Partners 2013 survey that the overall price was rated less important than continuity of the business and ongoing jobs for employees, with 69 per cent of respondents believing continuity of the business was important before they engaged in succession planning, and 89 per cent afterwards.

I met a financial adviser recently who told me he looked after high net wealth individual clients, was extremely good at what he did and, as a result, charged a premium. When he gave me a business card on very flimsy paper that looked like it had been printed as cheaply as possible, it clearly highlighted a misalignment within his business model.

REVENUE The ease of reading and understanding the business revenue is the next factor that has a significant bearing on the sale price. Is it an annuity-style income based on long-term contract, or does it depend on continually deriving new sales?

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Put simply, recurring revenue is worth more.

Businesses with clients on long-term retainers, extended contracts, or some type of residual income trail are far more attractive and valuable than those that need to make sales continually, every day, week and month.

Astute buyers will carefully examine the sales system/process (especially to identify if it is based on a key salesperson’s skill and networks) and the supporting marketing strategy and infrastructure.

SALES AND MARKETING Sales and marketing that run independently is vital for a business and needs to be able to generate new business, leads, enquiries and ultimately sales without relying on either the owner or a key person’s skill and sales ability.

SYSTEMS Businesses that are systemized and have a documented operational process will have a distinct advantage over similar operations that are on the market.

Systems save time, effort and money because they are far simpler to run, less stressful and generally far less risky and, as a consequence, are also more valuable.

The potential that they are performing well is greater and the level of specialized skill to run them is reduced and the lower risk is always more valuable.

EMPLOYEES Positively engaged, motivated and incentivised employees to perform and work are also an immense asset for any business.

Incentive plans that reward based on performance can easily be adapted in an employee share ownership plan (ESOP). This simple strategy substantially reduces one of the key risks for buyers – employees exiting the business after the owner has left.

It also provides a strong incentive for performance and their financial well-being (at least a part of it) is closely matched to those of the owner.

Employees with the same mindset as the business owner result in better performing, more profitable businesses with everyone sharing in the benefits.

RISK MANAGEMENT Far too many SMEs unwisely regard risk

management and compliance as something only large businesses need to worry about.

Corporate governance and compliance is often ignored by business owners, they fail to see that it adds considerable value as reduced risk can provide a source of the right type of buyers for the business.

In our experience, we often see deals fall over at due diligence stage when the buyer really investigates the substance behind the business.

Those with poorly prepared accounts, badly documented processes and little or no governance structures often fail to meet this hurdle.

OWNER DEPENDENCE It is the reliance of the business on the owner that can often be the deal breaker.

Can the principal take time away from the business for a holiday?

A potential buyer needs to see that the business is able to operate efficiently and effectively without the owner’s involvement. It reaffirms to a prospective buyer that many of the above operational attributes are in place and functioning properly.

START EARLY Ideally business succession should start the first day a business opens its doors and then evolve continuously until it is time for the owner to leave.

However, in the real world business owners get caught up in the day-to-day demands of running a business and pay little attention to succession and exit until they are on the eve of retirement.

Others postpone exit planning because the task seems too difficult or it is avoided because of the emotional issues involved. For many owners, it can be quite stressful to relinquish control of what has been one of their greatest achievements in life.

Family-owned businesses have special needs, some of which can impact on family harmony and relationships.

However, irrespective of the barrier or emotional roadblock, business succession is important to all businesses irrespective of size, market share or ownership and is not a process that can wait to the last minute to be implemented.

The sooner owners acknowledge the need to implement an exit and succession strategy, the better their prospects are to maximize value, sale price and comfortable exit following a lifetime of work and endeavour.

Craig West is a strategic accountant who has over 20 years’ experience advising business owners. He has written four books on employee incentives, succession planning, asset protection and exit strategies. Craig is the president of the Australian Chapter of The Exit Planning Institute and in March 2014 was appointed executive chairman of the SME Association of Australia. Visit www.successionplus. com.au

OCTOBER 2014 | 57

BUSINESS STRATEGY / MARKETING AND SALES

Branding and yourBrokerage Your brand could be your most valuable asset, argues Julian Vieceli.

Here’s how to make it count

Arguably, the most important asset for any company is its brand. Sustainable, powerful and successful brands can take years, even decades to build. They can be damaged very quickly and are often the soft target for new senior managers looking to make their mark on the company.

This article highlights the importance of the brand to an organization, its management, marketing and long-term strategic thinking – and finishes with some branding dos and don’ts.

Building and understanding a brand or a group of brands is a complex process and requires care and attention. Such care can result in a powerful asset that can have a range of benefits, imbuing your service with higher levels of recognition and awareness, allowing the ability to charge a price premium, promoting quality, and even protecting you from price competition.

Interbrand, a US-based brand valuation company, releases an annual report into the value (brand equity) of the top 100 global brand names. In 2013, the five most valuable brands in order were as follows:

Apple

Google

(US$98bn)

(US$93bn)

Coca Cola

IBM

(US$79bn)

(US$78bn)

Microsoft (US$60bn)

This value represents the amount of money it would take to buy the brand names from the organization, but not the physical assets. This illustrates the power of a brand name and the importance of a consistent, strong brand name over time.

BRAND MANAGEMENT The first stage of developing a brand is under­ standing what drives the organization, and what customer needs are going to be satisfied by the products on offer. The design of a brand is much more than just a name, symbol or typeface; it is a marriage of tangible and intangible elements.

These individual elements themselves are very important, but are part of a much larger entity – the brand.

58 | OCTOBER 2014

MORTGAGEBROKERNEWS.CA

Additionally, an organization must consider that every interaction or touchpoint with a customer is a potential opportunity to build or damage the brand, which means every employee of the organization is a brand ambassador. This is particularly so in the service industries, where the interaction with a company and its staff is vital to consumer satisfaction.

For many consumers, the brand is the point of reference and offers a shortcut to many other aspects of the organization. The brand name for consumers is a mnemonic, where the mention of the brand, the logo, or in some instances the colour, can bring forth a rush of emotions, associations, memories and meanings that can assist the brand to enter the small group of brands that consumers consider for purchase. Additionally, the colour (eg Cadbury’s purple), smell (eg Acqua di Gio by Giorgio Armani) or sound (eg Intel) of the brand can evoke images or feelings of joy, summer or quality.

The Holy Grail for brands is to be one that consumers consider for purchase (part of their consideration set), but more importantly, even for high-involvement products such as mortgages, to be the salient brand or the first brand that is recalled under a variety of conditions. If you can get your brand to be the first recalled, then you have the beginnings of a competitive advantage over the other players in the market.

BRANDING RULES The brand needs to be something that is: • unique • memorable • easy to pronounce • relates to the product at hand • makes sense to the consumer • is not too long • can be recalled easily These are some of the golden rules when developing a brand name. There are notable exceptions to every rule, but these are generally held up to be the standards.

CONSUMERS OWN THE BRAND If your organization is working with an existing brand name, then the most important thing is managing its position in the mind of the consumer.

A brand’s position is that space that it occupies in any consumer’s mind. It is an important piece of real estate, and it can change at the whim of the

consumer. It has been said that organizations manage the brand, but consumers own the brand.

Consumers are the people whose understanding and perception of the brand and brand image can change rapidly, which influences the outcome and how people treat the brand.

A second point to consider is that brands are not only owned by the consumer, but that perception can be just as important as reality. How a consumer or the market perceives your brand is crucial, and can determine the fate of your brand, just as much as the reality of what your brand does. You may be the No. 1 lender in Australia, but if someone else owns the brand position, it is hard to budge that brand. Again, you may have repositioned to be the best customer service brand in the market, but unless consumers perceive this, and unless they agree with the new position, this may be meaningless.

Many organizations have found this out to the detriment of their brands. McDonald’s is currently undergoing a positioning exercise with their campaign of answering honestly any question consumers put to them. It is an interesting exercise in response to some poor publicity about the slogan ‘100 per cent pure beef’, which was a brand and not necessarily a fact. Additionally, McDonald’s is trying to overcome the resistance to fast food. As another example, the perception of used car salespeople and politicians remains poor, even when they may actually be good citizens. The perception is always more important than the reality.

The design of a brand is much more than just a name, symbol or typeface

UNDERSTANDING YOUR BRAND When an organization is managing its brand it is important to understand what the brand means internally, and externally. Important questions you may wish to pose include: What is my brand? What does it mean? What are the associations with my brand? Asking consumers what words come to mind when they think of or hear your brand name is also a great strategy.

Brand associations are those words or images that come to mind upon hearing a brand name. It is important to get an instant reaction so that consumers are not filtering the responses.

Importantly, it does not matter whether the brand is real or has been concocted – brand names evoke associations and images. Additionally, these associations will be either positive or negative, and unique or common.

OCTOBER 2014 | 59

BUSINESS STRATEGY / MARKETING AND SALES

Julian Vieceli is a senior lecturer in marketing, the director of postgraduate education and program director MBA at Swinburne University of Technology (SUT).

SUT’s Faculty of Business and Enterprise offers a range of masters level programs to give you the edge in management.

SUT programs embed innovation, entrepreneurship and leadership in the learning experience, and the MBA has a five-star rating from the Good Universities Guide.

60 | OCTOBER 2014

Firstly, a brand needs to have more positive than negative associations. If a brand has many negative associations, then consumers will recall it to a rejected set, and this means that they will not consider buying it. If the associations are more positive, this helps to locate the brand against competitors, and in the industry. It is important to have positive associations to your brand despite the fact that consumers may be forgiving. This happens particularly with brands such as certain banks and mortgage brokers, where consumers may have more positive than negative brand associations recalled even though they are not positively predisposed to the particular institution.

Then we look at unique associations, which can be measured as the associations that reside with one brand and not the others. These unique associations are what help to differentiate your brand in the consumers’ minds, and they also provide a great point of difference for the organization. Even if the perception is different to reality, it can work to the advantage of the organization.

When you have information about brand associations it can be good to develop these associations into meaning for an organization. This will allow you to develop a short statement or a brand mantra that may be used to guide branding decisions. This is a short, three- to 10-word statement or series of words that sum up your brand and determine which components fit within your brand architecture. For example, Nike is authentic athletic performance and all of Nike’s branding fits this mantra. Disney is fun, family entertainment, and again, Disney makes decisions to maintain and protect this. It is a very useful exercise to undertake to develop a brand mantra or something that can be used very quickly to guide your branding decisions, and to guide your marketing decisions and even your purchases.

Organizations must continually ask if the decision fits the brand mantra and that should determine the behaviour of the organization with regard to branding decisions.

BRAND DNA An organization can also analyse its distinctiveness, novelty and associations to position itself in the market for the long term. Brand managers must analyse what makes the brand unique and different in the market. The brand must have something that is novel and makes it unique and interesting in the

MORTGAGEBROKERNEWS.CA

minds of the consumer. Additionally, it gives points of parity (what you need to compete in the space) and points of difference.

The word with regard to brands is to treat them with respect, nurture them, and help them to grow.

A good brand is generally a consistent brand.

Making changes is fine as brands must evolve, but make changes to the brand with care and with research. Understand what the brand, design, logo and typeface mean to the customers, and then make considered changes. Brands can be updated slowly over time ( just noticeable difference) or quickly (butterfly effect) but if they are updated then these decisions should be made with the consumers in mind, and the position and perception of the brands must be considered and managed.

Every interaction or touch point with a customer is a potential opportunity to build or damage the brand Consistency is the key for brands, although Google may be an exception to the rule. Google has the confidence, as a clear market leader, to change its logo daily to reflect important world events or historical figures. Generally, it is best to offer consumers what is known – consumers like to buy from organizations that are familiar and who they trust, and the brand is one way of communicating familiarity and trust. There has even been a move to brand love, where consumers develop feelings of love toward a brand (e.g. Apple).

Pay attention to how your brand is perceived in the market, how it is viewed both internally and externally, and be consistent with what you do with it. Don’t change the brand without reason or make rash decisions and make sure that the brand matches the products, and the organization.

It is important to invest in marketing support to assist your brand management. Marketing should be seen as an investment and not an expense, and gaining further knowledge in the area of marketing and branding can be one way to invest in your brand and your business.

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PROFILE / FAVOURITE THINGS

Favourite things

Geoff Bamford, Mortgage Specialist with Dominion Lending Centres Mountain View

Favourite Sport: My favourite sport is fishing/jet boating but I have spent more time playing golf in the last few years ... which can be more frustrating than some of the new mortgage rules.

Favourite Music: I like a wide variety of music.

Favourite Movie: A Few Good Men

62 | OCTOBER 2014

Favourite Vacation Spot: Florida Keys for fishing and Pebble Beach for golf.

MORTGAGEBROKERNEWS.CA

Favourite Celebrity: Jack Nicholson.

Favourite Place to Be: On the water or golf course with friends.

Favourite Food: Sushi or filet with blue cheese

Favourite Drink: Big Napa Cabernets

Favourite Mortgage Product: Variable products have been my favourite for the last eight years.

Favourite thing about working in the Mortgage Industry: Meeting new clients that eventually become great friends.

We Need 2 or 3 Good Agents for Alberta

B etter rates. Better products.

A portion of every funded mortgage will go to the Children’s Wish Foundation.

• We provide the work • We pay $50,000 salary plus commission • We’re very busy

Interested? Send resume to: info@mortgagestogo.ca (no phone calls please)

OCTOBER 2014 | 63

SERVICE / DIRECTORY

MORTGAGEBROKERNEWS.CA

Banks

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

Peoples Trust www.peoplestrust.com Ph: 1 800 663 0324 Page 51

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

HomEquity Bank www.homequitybank.ca Ph: 1 866 522 2447 Page 27

Pillar Financial Services www.pillarfinancial.ca Ph: 613 282 1242 Page 43

Mortgage Architects www.mortgagearchitects.ca Ph: 1 877 802 9100 Page 47

Canadian Financial Corp www.canadianafinancial.com Ph: 1 877 672 7219 Page 31

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

RMAI Financial Group www.rmaifinancial.com Ph: 1 866 955 7624 Page 45

CMLS www.cmls.ca Ph: 1 877 750 2657 ext 422 Page 29

Tribecca Finance Corporation www.tribecca.ca Ph: 416 225 6900 Page 17

TM

Non-Bank Lenders

速

VERICO www.verico.ca Ph: 1 866 983 7426 Insert

Commercial Lenders

First National Financial LP www.firstnational.ca Ph: 416 593 1100 Page 41

V.W.R Capital Corp www.vwrcapital.com Ph: 1 866 907 5407 Page 19 Insurance

Home Trust www.hometrust.ca Ph: 1 877 903 2133 Page 11

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

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

D+H Limited Partnership www.dhltd.com Ph: 1 866 345 6449 Page 21

MortgageToGo.ca www.mortgagetogo.ca Page 63

Axiom Mortgage Partners axiommortgagepartners.ca Ph: 1 866 504 0516 Page 7

Marlborough Stirling Canada www.morweb.ca Ph: 1 877 626 2022 Page 2

MCAP www.mcap.com/brokers Page 13

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

Merix Financial www.merixfinancial.com Ph: 1 877 637 4911 Page 25

Dominion Lending Centres www.DominionLending.ca Ph: 1 888 806 8080 Page 15 & 37

Broker Networks

Real Estate

64 | OCTOBER 2014

Canadian National Association of Real Estate Appraisers www.cnarea.ca Ph: 1 888 399 3366 Page 39

At B2B Bank, we’ve got more ways to get your mortgage deals funded with: A full suite of conventional, expanded and alternative lending solutions Regional teams with local knowledge A wider range of qualifying criteria for a wider variety of clients

BANKING THAT WORKS FOR BROKERSÂŽ b2bbank.com/mortgages | 1.800.263.8349 All mortgages are funded by, registered in the name of, and administered and serviced by B2B Bank. Mortgages are subject to credit approval by B2B Bank. Some conditions apply. B2B BANK and BANKING THAT WORKS FOR BROKERS are registered trademarks of B2B Bank.

HELPING YOU DELIVER. The HomeOpeners® App is now available. This web-based App helps you close the deal with better mobile resources than ever.

Genworth Canada recognizes that busy mortgage professionals need access to resources that will help their clients through the homeownership journey when they are on the move. With features like the ability to send customized emails from mortgage calculators, product videos, business updates and geolocation-driven account manager contacts, this App will help support your business wherever you are.

Visit www.Genworthmobile.ca or scan the QR code.

Watch the HomeOpeners® video series and learn more about Genworth Canada’s mortgage insurance products: www.Genworth.ca/HOV 800.511.8888 | Genworth.ca | Homeownership.ca |

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