CMP 10.05

A TROJAN HORSE? Behind the banks’ special rate offers MORTGAGEBROKERNEWS.CA ISSUE 10.5 | $6.95

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ISSUE 10.5

CONTENTS

CANADIAN MORTGAGE AWARDS

24

COVER STORY

Get the inside scoop on this year’s big winners at the CMAs

We make buildings appear and problems go aWay. Romspen Investment Corporation is a non-bank mortgage lender specializing in commercial real estate across Canada and the United States. With over $1.5 billion under administration, we offer customized mortgage solutions for term, bridge and construction financing from $4M to $100M. Blake Cassidy | 800 494 0389 | www.romspen.com

DATE:

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ISSUE 10.5

CONNECT WITH US Got a story, suggestion or just want to find out some more information?

CONTENTS 50

twitter.com/CMPmagazine plus.google.com/+MortgagebrokernewsCa facebook.com/MortgageBrokerNewsCA

UPFRONT 04 Editorial

How low is too low?

06 Statistics

Millennials are primed to enter the housing market

08 Head to head

A credit union’s 1.49% promotional rate sparks a debate about special offers

40 FEATURES

TIME TO OWN THE RENTAL SPACE

A leading alternative lender explains why rental properties are a growing segment of the mortgage industry – and how brokers can capitalize

PEOPLE

10 News analysis

A new way brokers can arm themselves against the big banks

12 Broker network update FEATURES

BE A BETTER NEGOTIATOR Want to master the art of negotiation? Follow these simple rules

52

BROKER PROFILE

More buyers are getting family assistance with home purchases

14 Private lending update

There’s still a market for private mortgages, even in today’s low-rate environment

16 Opinion

Should mortgage brokers follow financial advisors and adopt and upfront-fee model?

PEOPLE 55 Career path

G fi

56 Other life

M to to

After 30 years in the restaurant industry, Bev English made a wise move to mortgages

BC broker Dustan Woodhouse has hit upon a winning strategy for increasing his renewal business

46

Ottawa broker Lisa Theriault competes for clients by day, and as a bodybuilder by night

L

*A

FEATURES

CLIENT SERVICE EXCELLENCE

MORTGAGEBROKERNEWS.CA

to make your brokerage stand out

CHECK IT OUT ONLINE

Today’s clients demand more than ‘service with a smile’ – here’s how

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UPFRONT

EDITORIAL

www.mortgagebrokernews.ca ISSUE 10.5 EDITORIAL

A low blow?

A

re there rules for the race to the bottom? It’s a question mortgage professionals are asking themselves after a rate site unceremoniously (allegedly) bumped a broker’s low-low offer from its listings.

The allegation, of course, was that the rate was simply too low to be true, at least for the vast majority of rate shoppers using the site to canvass the field for the best mortgage terms available. Steve Pipkey’s 2.44% on a five-year fixed was indeed the lowest on the site at the time and attracted more eyeballs, and presumably leads, as a result. “There was no warning,” Pipkey recalls. “They didn’t just pull our rate; they kicked us off.”

Most rate site brokers rely on that trade-off, sacrificing some commission to win a deal destined to go to the lowest, and not the highest, bidder While other reasons may have been articulated, the one that stuck in Pipkey’s craw, he says, was the site’s assertion that his rate was simply unachievable for 90% of the people looking to get approved. The case centred on allegations of restrictive terms around closing and the need for mortgage default insurance. Pipkey disputes most of those points, but what he’s not denying is that the rate is very much dependent on a rate buy-down.

He’s not alone. Most rate site brokers rely on that trade-off, sacrificing some commission to win a deal destined to go to the lowest, and not the highest, bidder.

That Pipkey appeared to go too low is raising questions about the sustainability of a strategy so dependent on cannibalizing commission. For veterans of the brokering trade, the questions are asked with a definite edge to their voices, revealing worries that the channel has lost its way. In other words: “What happened to our true value proposition?” For the ‘realist’ broker, the questions are best boiled down to one very practical assertion – rate is king – or rather, kingmaker.

But the Royal Bank of Canada and others of the Big Five are much more likely to win that crown, with reserves that allow for the kind of deep discounting brokers – no matter what their volume – would struggle to achieve. That’s one of the reasons even some brokers devoted to the rate site model secretly smiled when that controversial rate was yanked. After all, how many were really ready to match it?

Vernon Clement Jones, editor

Editorial Director Vernon Clement Jones Senior Writer Justin da Rosa Writers Olivia D’Orazio Jordan Maxwell Executive Editor – Special Features Ryan Smith Copy Editor Clare Alexander

CONTRIBUTORS Nikki Heald James Laird

ART & PRODUCTION Design Manager Daniel Williams Designers Joenel Salvador Loiza Caguiat Kat Vargas Production Manager Alicia Salvati

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UPFRONT

STATISTICS

Millennials everywhere

Gen Y could soon make up a massive portion of your clientele – this is where to find them THE MILLENNIAL generation – those aged 15 to 34 – are one of the largest population groups in the country, and many are approaching the age at which Canadians typically purchase their first home. Statistics indicate that millennials with high-paying jobs are much more likely to choose homeownership over renting.

However, a large number of millennials

have chosen to put off their dreams of homeownership. Why? As a group, they typically spend longer in post-secondary school and have a tendency to delay other life milestones, such as getting married and having children. In addition, home prices have risen to astronomical heights, making renting a popular option in many of the country’s more in-demand cities.

MARRIAGE AND MILLENNIALS A staggering majority of millennials are remaining single for longer, further delaying homeownership

18.6%

2.4%

79.0%

Married

Other (separated, divorced, widowed)

Single

Source: Stats Can, 2011

THE GREAT MILLENNIAL DIVIDE: OWNING VS RENTING

THE COST OF HOMEOWNERSHIP The average income of millennial homeowners is significantly higher than that of renters, suggesting the cost of homeownership is a barrier for Gen Yers Owners

Renters

$93,038

About half of Canada’s provinces have more millennial owners than renters – so the other half could be on the cusp of a tidal wave of Gen Y buyers British Columbia Alberta Saskatchewan Manitoba

$80,216

Income

Ontario $60,825

Quebec

$51,789 $47,703 $33,974

New Brunswick Nova Scotia Prince Edward Island Newfoundland

30 to 34

25 to 29

Under 25

Age Source: Stats Can, 2011

0

100,000

200,000 Owners

300,000 Renters

400,000

500,000 Source: Stats Can, 2011

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MILLENNIALS IN CANADA After Baby Boomers, millennials make up the largest demographic in Canada – and a good portion of them are getting to the age at which they’d enter the housing market for the first time.

HOUSING PRICES PROHIBITIVE

WESTERN PROVINCES HAVE MORE MILLENNIALS Gen Yers make up about a quarter of the total population in each province

Some millennials are forced to put off buying a home due to the high average housing prices in provinces such as British Columbia and Ontario

30%

25%

20%

British Columbia

Alberta Saskatchewan Manitoba Ontario

Quebec

New Nova Scotia Prince Newfoundland Brunswick Edward Island Source: Stats Can, 2011

British Columbia - $639,405 Ontario - $453,646 Alberta - $385,804 Saskatchewan - $298,574 Newfoundland - $282,350 Quebec - $267,054 Manitoba - $262,441 Nova Scotia - $217,881 New Brunswick - $169,840 Prince Edward Island - $164,774

Source: CREA, February 2015

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UPFRONT

HEAD TO HEAD

Are branch-only special rates fair?

Mortgage profesionals weigh in on whether branch-only special offers from broker lenders create an uneven playing field

Jake Abramowicz

Elisseos Iriotakis

Ross Taylor

Mortgage agent Mortgage Edge

Co-CEO Safebridge Financial Group

Owner Ross Taylor and Associates

“[Mortgage brokers] can sugar-coat it all you want and say you’re offering people “mortgage planning advice,” but at the end of the day, that commission surely drives some or all of you to a certain degree.

Recently, a credit union offered a substantially low rate, and it caused me to lose two deals.

Was I happy about it? Absolutely not, but do I think it’s fair for them to offer in-branch specials like this without extending the offer to us, the brokers? 120% it is.”

“It definitely complicates the message and confuses the consumer, so from this perspective, it would be nice if both channels were consistent. However, I am a big believer in competition and the awareness that such a marketing campaigns brings to the industry.

To be honest, I lost a $750k mortgage to the 1.49% Meridian offering in the last few weeks; however, I was also able to capture a number of new clients who called in asking about this offering. You win some and lose some in this game.”

“I think some people forget these lenders have business models far more diverse than simply sourcing mortgages from our broker network. These poor lenders have a very narrow mortgage product line they can offer their clients, and rare is the day they can make such a splash that they can put a sustained dent in our business.

Leave them alone to run their business, have their moments of glory, and let’s get on with running ours. Do you really want to exclude yourself from such lenders’ future offerings? That would be short-sighted.”

SPARKING THE RATE WAR Meridian Credit Union recently announced it is offering an 18-month fixed-rate mortgage at 1.49%, stoking the flames of the rate war. It’s the lowest posted mortgage rate in Canadian history. Although several brokers quickly applauded the product, Diane Medeiros, manager of media and stakeholder relations told MortgageBrokerNews.ca that the rate is only available through the branch network. This isn’t the first time Meridian has offered special promotional rates exclusively in-branch. A year ago, the credit union offered a 2.99% five-year fixed through its branch.

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to Dominion Lending Centres agents & brokers for dominating the CMP Top 75 again!

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UPFRONT

NEWS ANALYSIS

The banks’ Trojan horse?

Things were already tough for brokers fighting their way through the most competitive marketplace in decades. But the re-emergence of big banks’ special offers has given brokers an unlikely weapon BEWARE OF banks bearing gifts – i.e., special promotional mortgage rates. It’s the blunt advice of brokers not the slightest bit bashful about criticizing the big boys as they present the consumer with an offer he simply can’t refuse.

One by one, those special rate promotions came down the pike this spring from broker competitors such as TD, BMO, RBC and even the relatively small player Meridian Credit Union. Quite a few proffered deals that shaved hundreds of basis points off their posted rates, in some cases bringing interest on a five-year fixed mortgage below 2.70% – well out of reach for brokers unwilling or unable to buy down.

– on the rates and everything,” says Invis agent Angela Wong-Liao, aka the Mortgage Lady.

“Currently it’s the big banks – RBC, in particular, because they don’t deal with brokers, and the Bank of Montreal and CIBC – all of them don’t deal with brokers. It’s not always about pricing; it’s about other things, too.”

That makes positive messaging to clients increasingly hard to convey as banks bombard them with their own marketing spin in newspapers, online and in the form of television commercials that eat tens of millions of dollars in ad spend.

In late March, RBC took to the airwaves

“With any big bank, I always point out how they calculate penalties, versus how monolines do” John Greenlee, The Mortgage Centre But even where those rate discounts were within a broker’s capacity to match – or even better – the marketing muscle of players such as RBC, with its ‘employee pricing’ deal, just can’t be ignored. That speaks to the kind of lingering bias consumers still have for the banks – and don’t brokers, especially those in smaller markets, know it.

“Competition, competition, competition

with its annual ‘employee pricing’ campaign, dangling 2.69% on a five-year fixed for mortgage borrowers looking to pull the trigger before July 3. The move – the lowest promotional five-year rate among the Big Five – propelled RBC into the lead.

It was not alone, however – CIBC also rolled out special offers on fixed products, namely an introductory 1.99% interest rate on the first

nine months of a four-year deal. That rate shoots up to 2.83% for the rest of term.

But lost in the fine print for homeowners and buyers biting at the bait are the potentially adverse effects of going with a special rate so removed from a bank’s posted one. The dangers of interest rate differential have handed brokers a tool to fend off competition directly stemming from the glut of discounted rates.

“With any big bank, I always point out how they calculate penalties, versus how monolines do,” says The Mortgage Centre’s John Greenlee, an agent working in the Durham Region, some of Ontario’s most fertile ground for originations. “To me, the dangers are, if you’re in a position where you have to break your mortgage – a life situation or maybe a job loss, or you want to move up and buy a new house,

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CALCULATING INTEREST RATE DIFFERENTIAL It’s an easy formula more and more brokers are pulling out to show clients just how much a discounted special rate from a bank can cost them once all the calculating is done

A. Date of mortgage B. Maturity date C. Term left D. Current rate E. New interest rate F. Mortgage balance The calculation:

[F x (D - E) / 12] / C = IRD or you have to break the mortgage to extend your amortization – you could end up paying thousands of dollars more in IRD penalties than you would otherwise.”

calculate penalties,” he says. “If a client is with one of those banks already, I’ll use their current mortgage statements, if they’re coming up for renewal or something like that, and I’ll

“We brokers can go to non-bank lenders and the IRD calculation will stay on the discounted rate versus [at a bank]” Angela Wong-Liao, Invis Greenlee and other industry pros are deftly using the bank’s own mortgage calculators – a consumer protection measure swept in by the federal government two years ago – to bring home the point.

“I’m using them to show how they’d

show them exactly the information that’s on their mortgage statement – how it affects their mortgage directly, using [the bank’s] own website.”

Wong-Liao is doing the same for the growing number of cases where clients are

focused on winning competitive bank rates with very short shelf lives.

The special rates “are actually a benefit for a mortgage broker,” she says. “We can go to non-bank lenders, and the IRD calculation will stay on the discounted rate, versus to a bank where they actually use the posted rate [to calculate IRD]. The IRD rate is less if the deal is with a non-bank lender. So actually it’s an advantage to [using] a mortgage broker, and I let them know.”

Mortgage professionals also are asking clients to look deeper into those special promotions – to look behind the eyes of that Trojan horse, so to speak. They point to any other restrictive terms lurking within – from meagre prepayment options to quick closing restrictions. They’re often more than enough to put clients on high alert.

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UPFRONT

BROKER NETWORK UPDATE NEWS BRIEFS Leading team defects to new network Mortgage Architects recently announced the addition of Zena Shekarabi, Eric Akbar and Ali Etemadi to its ranks. MA hopes this highfunding group will further grow its influence in Ontario.

“We are excited to be working with Mortgage Architects and all the great people on their team,” Etemadi said.

“From technology to marketing, MA has the support structure to help us succeed in the competitive marketplace.” Etemadi credits the network’s “integrity, veracity and support” for encouraging her team to make the switch.

Broker merger results in regional powerhouse

Verico Premiere Mortgage Centre – already considered the largest brokerage in Atlantic Canada – has merged with Mortgage Advantage.

“We’ve always operated at a high level of service with the best mortgage professionals in the business,” said Verico president Don MacVicar in an official release. “This partnership allows us to offer new and existing clients access to the services, technology and market intelligence that comes with being part of a larger group. It’s something we’re excited to bring to our clients.”

Network economist: Rates to remain steady

It was a bold rate prediction made by a solid source, but one that has already been shot down by the channel’s leading economist.

Former Bank of Canada advisor David Wolf told Bloomberg that the

bank will eventually axe its overnight rate to 0%, joining a number of other countries that have done the same.

However, Dr. Sherry Cooper, chief economist for Dominion Lending Centres, told MortgageBrokerNews.ca that such a move is “very doubtful – [it] would mean three more rate cuts and take mortgage rates down another 50 bps.”

Network exec: Broker market share isn’t shrinking

Brokers are increasingly relying on the alternative space to fund deals, but one industry leader believes the educational standard has lagged behind growth.

“Today there is a larger crosssection of brokers accounting for the business because they’ve been forced into that space,” says Albert Collu, president of Mortgage Architects. “I do agree there has been growth, but I am concerned about some of the implications. One of the things I’m seeing with a lot more consistency is because the alternative space is growing, we’re seeing more and more brokers … embarking on the space with next to no experience.”

CMP #1 broker signs 10-year deal Collin Bruce of Dominion Lending Centres Mortgage Mentors has decided to stick around with his chosen network for another decade.

“We signed a 10-year renewal with Dominion Lending Centres, [and] I’m proud to be part of the best broker network in the country,” Bruce said.

For the second year in a row, Bruce took home the honour of top broker by volume in CMP’s annual Top 75 issue, funding $331,520,352 in 2014.

Bruce has operated his own DLC franchise since 2009.

The ‘bank of mom and dad’ More people expect to receive assistance from family members for first homes and upsizing You’ve got a young couple in your office expecting to upsize their home. How can they afford it so early in life? According to a new study, a large percentage of them will be turning to family members for help.

According to BMO Bank’s 2015 Home Buying Report, 42% of current homeowners looking to upsize their homes will ask family for financial assistance. And 42% of first-time homebuyers in Canada expect parents or relatives to chip in for their first home, up 12 percentage points from last year.

“Whether buying a first home or moving onto another home, we’re seeing more and more buyers embark on the journey with help from family,” said Martin Nel, vice president of personal banking products at BMO Bank of Montreal. “It’s important for both buyers and their family to discuss their budget and the expectation for financial help. Creating a detailed savings plan and building an afterpurchase budget can help determine what is truly affordable.”

First-time buyers asking for assistance from family expect to get about 12% of the average cost of a home toward their purchase, according to BMO. Upsizing buyers, meanwhile, have slightly grander expectations: They expect family members to chip in an average of 20%.

About half of upsizers and 40% of first-time buyers who expect help say they wouldn’t be able to afford a home without it.

The report also found that buyers looking to upsize are expecting to spend around $473,900. First-time buyers’ budgets are a little tighter this year, down to an average

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$312,700 from $316,100 last year.

But first-time buyers may be forced to bust their budgets, as new data shows that nearly half are willing to enter bidding wars to get the home they want – a significant spike from 35% last year. Meanwhile, only 36% of upsizers would be willing to enter a bidding war.

Population growth in the 25-34 age group is increasing at a steady pace, according to BMO economics. That means increased demand among first-time buyers, especially in the major markets.

“It’s important for both buyers and their family to discuss their budget and the expectation for financial help” “The increase in competition from a growing number of millennial buyers is helping to push up prices in some major markets, leading some first-timers to rely on financial support to help them enter the market,” said BMO Capital Markets senior economist Robert Kavcic.

42%

Percentage of both first-time buyers and upsizers who expect financial help

50%

Percentage of upsizers expecting help who say they couldn’t afford a new home without it

40%

Percentage of first-time buyers expecting help who say they couldn’t afford a home without it

20%

Amount upsizers expect family to chip in

12%

Amount first-time buyers expect family to chip in

Q&A

Ron Butler Mortgage broker Verico Butler Mortgage

Years in the industry 18 Career highlight Adopting the online discount mortgage rate model Career lowlight Mortgage rule changes that took high Beacon score, low loan-tovalue mortgages and forced them into higher rates through government-driven underwriting rule changes

Should networks lobby against regulations?

Should networks be cooperating to lobby the government against further tightening regulations?

There’s already a national body called CAAMP. Theoretically they’re the voice of the mortgage industry. For the networks to operate together – obviously that’s their choice. Typically, they’ve worked through CAAMP in the past. The more voices added to the mix, the better.

Do you think a coalition of networks operating outside CAAMP could be an effective lobbying voice?

I really don’t think the government could care less what we think. They think about what the public thinks. It’s an election year. They think about getting elected. That’s one of the reasons I don’t think we’ll see any changes to any mortgage rules prior to an election. The minister of finance is a member of the Conservative Party, and they want to get reelected.

So the government isn’t listening to industry groups?

All these people have vested interests. It’s like people who own gas stations asking for higher gas prices. Everything we say is taken with a grain of salt, because we represent people who have a vested interest in prices continuing to go up and mortgage activity continuing to grow. That’s how we get paid.

I believe the government listens to submissions, but I don’t believe we have an impact on their decision-making.

But you don’t think significant rule changes are on the immediate horizon, either?

We have pretty tight mortgage rules in Canada. That’s a fact.

The housing market in this country is driven by tremendously low interest rates. In many cities, pricing is not up. The price of homes is probably down a little in Ottawa. It’s probably down a touch in parts of Alberta, down a touch in parts of the Maritimes. The superheated cities are always the same suspects – Vancouver and Toronto. A national government to try to change policies by zeroing in on two cities is hard to figure out.

If the government chooses – and again, I don’t think they will – to create punitive rules to simply throttle house purchases, they can do so. There are all kinds of tools they can use. Do they want to? I don’t know. We have tough underwriting in Canada, but they have the ability to make it much more difficult. It’s just a question of whether they want to do so. … Will the government step in? Not until the election’s over; that’s just the way the world works. Will the government listen? Yes. Will we affect their thinking? I doubt it.

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UPFRONT

PRIVATE LENDING UPDATE

Will record-low rates hurt private lenders?

With mortgage rates hitting rock bottom, private lenders may find it harder to explain their higher rates

if consumers will buy that reasoning. “In 1989, fully qualified first mortgages were in the 10.75% to 11.50% range, non-qualified first mortgages were roughtly one-half to one percent higher through companies like Municipal Savings and Loan, and private second mortgages were between 15% and 16%,” he says. “So in those times, there was a 35% rate premium between a fully qualified first and a private second. Today, the private second rates are about four times the fully qualified first mortgage rates. I don’t begrudge

“It’s not a hard sell because those who apply for private mortgages do so based on need”

Now that mortgage rates are at record lows, private lenders may have a tougher time selling clients on higher rates. That’s why it’s important to properly manage client expectations, says David Vyner of New Haven Mortgage.

“I would say it’s the broker’s job to inform the borrowers about what is going on in the marketplace. Whether ‘A’ lenders’ rates are 2.5% or 4% and the non-bank lenders’ rates are significantly higher, say 7–8%, even if we were to match the ‘A’ lenders’ drop in rates by 25 basis points, it’s still significantly higher,” Vyner says. “It’s pretty much safe to assume

NEWS BRIEFS

the majority of non-bank lenders will not drop their rates in sync; it’s a different marketplace.”

New Haven Mortgage, a non-bank lender that operates in Ontario, has no plans to drop its own rates, Vyner says.

“Our lending matrix and rates will remain the same; the institutional ‘B’ lenders may, but generally I don’t suspect non-bank lenders to follow suit,” he says. “We don’t deal directly with the homeowners, but if I were to wear the broker’s hat, I would explain that our cost of money has not changed, and we still have to maintain a certain spread to be profitable.”

But broker James Robinson wonders

More investors to turn to private funds?

Investors who are buying multiple properties are finding it harder to secure financing, according to a BIV.com article, which highlights that many banks and mortgage lenders are imposing limits on the number of properties an investor can finance. Scotiabank and National are noted as being the only big banks that will still lend for large portfolios. Recent rule CHMC changes are also blamed for the restrictions, which are forcing buyers to go to private lenders, commercial financing or to arrange mortgages through multiple lenders.

the privates for these rates ... but they have to expect a little pushback from consumers.”

There has been much discussion in the media about falling rates; last month, an Ontario-based credit union offered an 18-month fixed-rate mortgage at 1.49% – the lowest posted mortgage rate in Canadian history. With all the talk of rates, will it be tougher to convince clients to pay higher rates for private money? Not according to one broker who specializes in the space.

“It’s not a hard sell because those who apply for private mortgages do so based on need,” says Shawn Allen of Matrix Mortgage Global. “Clients are educated, and they’re smart. It’s not like an ‘A’ client shopping for rate, it’s a client looking for a solution.”

Professor worried about private mortgage market

Yale lecturer Vikram Mansharamani is concerned about the growing number of private mortgage deals being funded in Canada.

“Where I get very concerned is in this private mortgage market that’s starting to emerge,” he said in an interview on Bloomberg television. “You have individual homeowners – respectable, [employed], high-credit, quality homeowners – who are borrowing off their home equity lines and lending to individuals who can’t get access to credit.”

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Q&A

Shannon Hillman Mortgage broker Capital West Mortgages

Years in the industry 21 Career highlight Being a founding partner at Capital West Mortgages Community involvement Member of the Mortgage Brokers Association of BC, Canadian Association of Accredited Mortgage Professionals, and the Mortgage Investment Association of British Columbia

Non-traditional mortgage options becoming attractive Clients are increasingly in need of options outside of ‘A’ lending. Isn’t that a bit ironic considering the current low-interest-rate environment?

There are many options for borrowers who do not qualify for a conventional bank mortgage, including institutional lenders like BlueShore Financial.

BlueShore has a ‘non-traditional’ portfolio with lending criteria that meets some of the nonqualified borrower’s needs, lending on equity and credit versus full debt-servicing requirements.

There are a number of non-traditional lenders, and after that, there are numerous MICs in the market with varying lending criteria opening up funds for foreign investors, immigrants, the self-employed and credit challenged. MICs like Pacifica Mortgage Investment Corporation are very active in this space.

Pacifica, for example, funds over $50 million in new mortgages per year.

Do brokers who specialize in alternative lending expect a surge in inquiries, and how are they preparing to deal with rate-focused clients?

We are finding there are many more brokers in the industry who are now focusing on the non-traditional mortgage market, as the traditional ‘A’ market is extremely competitive, and there is more demand for non-traditional. Pacifica sees demand arising due to the tightening of lending criteria from the banks. OSFI, the regulator for the banks, has put

Region calls for review of private mortgage lending

One industry professional has asked for an “in-depth” review of private mortgage lending after discrepancies were found in approval rates for white and black applicants in Durham Region, just outside Toronto.

“There appears to be – and I say ‘appears to be’ – a discrepancy in amount of loans generated and approved based on race,” Walter Haglund of Urban Design Ventures told the local newspaper, The News and Observer. “The only way that we will know is an in-depth analysis.”

significant pressure on the banks to tighten lending guidelines, particularly with respect to debt-service requirements. This general tightening has made the non-traditional mortgage market much more attractive for brokers and lenders as well as a very good alternative for non-conventional borrowers.

So to answer the question, do we expect a surge in inquires for non-traditional mortgages? The answer is yes, and the good news for the consumer and brokers is that this marketplace is becoming more competitive as many other lenders, such as Pacifica and BlueShore, compete for business in an attempt to earn a higher yield in this low-interestrate environment.

Innovation is key for all segments of the broker market – how specifically for alternative mortgages?

In order to provide brokers with better access to alternative mortgage products, BlueShore Financial and Capital West Mortgage launched Capital West Mortgage Alternative Mortgage Centre in the fall of 2014. We felt that brokers needed easier access to alternative mortgage products and wanted to find a way to simplify the process by bringing together an institutional lender’s non-traditional portfolio and a mortgage investment corporation. By offering brokers access to both mortgage products, we have been able to provide better service, faster commitments, one underwriting department and a more simplified process.

Man charged with private mortgage fraud

Andrew Lewis is charged with defrauding 33 victims to the tune of $7,527,630, solicited through a number of companies registered under his corporation, Lexxco. “Lewis … solicited money for investments in private mortgages, offering rates of return of 10%,” according to the official statement of allegations. “Lewis advertised the investments as safe and secure, and in exchange for their investments, he provided investors with promissory notes promising the return of their principal at the end of the term.”

Private lender criticizes promotional rate

One Canadian private mortgage lender has spoken out against the recent record-low mortgage rate posted by Ontario credit union Meridian. The 1.49% rate comes with a string of conditions and is only good for 18 months.

Canadalend.com president Bob Aggarwal warns there is always a catch: “An 18-month fixed rate might initially look attractive,” he says. “But the cost to borrow will climb if rates increase in 2016.” He said the low rate is only one part of the picture and that using a broker will earn clients the best rate.

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UPFRONT

OPINION

GOT AN OPINION THAT COUNTS? Email mortgagebrokernews@kmimedia.ca

Commission through upfront fees?

Financial advisors are starting to move toward a fee-based model. Can that same payment structure translate to mortgage brokers?

A-SIDE MORTGAGE brokers rely predominantly on lender finder’s fees and volume bonuses to earn a living. These fees are based on the mortgage amount and the broker’s status with each respective lender, and are ultimately baked into the interest rate that the customer pays. This model allows brokers to advertise that they do not charge any fees to the consumer for their service. This type of messaging, as well as this fee model, have worked very well in our industry and others, such as the financial advisory industry, for decades. However, times might be changing.

Financial advisors, who place their clients in investment products such as mutual funds, ETFs and hedge funds, are moving to a fee-based model whereby the customer knows exactly how much the advisor is earning, instead of the commission being buried. This is happening because of a combination of regulatory requirements and the industry’s own choice.

For years, financial advisors’ message was similar to that of the mortgage industry: “We earn a commission from the fund that we place you in, so our service is free to you.”

However, without having to disclose their fees, advisors had incentives to place a customer in a product that offers the highest commission, as opposed to the product that best meets the client’s investment criteria.

The question is: Will our industry make a similar shift in the coming years? And if so,

is there an opportunity for brokerages to get ahead of the curve and move to a fee-based model in the near term?

Let’s start by exploring what an upfront fee-only brokerage model might look like. The brokerage would first need to determine how much they intend to charge per application,

achieved by providing 100% bought-down rates, including volume bonus upon closing.

However, in practice, this would be difficult, as many lenders have a rate floor that they won’t go below, and this rate usually still includes a finder’s fee of around 40 basis points. Further, most lenders will not allow brokers to use their volume bonus to buy down the rate – their systems simply are not set up to accommodate this.

All of this would mean that the broker would need to provide cash back to the customer in the amount of their remaining commission upon closing. So the superior interest rate would actually end up being more of a market rate-plus-cash back to the customer.

From start to finish, this is a complex model that would prove difficult to market.

For consumers to choose this model, as they are starting to with financial advisors, they would need to be frustrated with the existing system. However, unlike investment products, mortgages are fairly standardized and transparent, and therefore easy to compare.

The rise of educational rate sites has made

“Theoretically, this superior rate could be achieved by providing 100% bought-down rates, including volume bonus upon closing” and when their customer would be expected to pay. A broker’s work starts at their first interaction with the customer, so a fee-only model would require the broker to collect fees early on in the process.

Determining the size of the upfront fee that a customer would be willing to absorb would be challenging – I would imagine that any fee that is higher than the cost of a real estate lawyer (between $600 and $1,000) would be a very tough sell, even though this is significantly below the average fee that most brokers currently earn.

The only way a consumer is likely to choose to work with a brokerage that charges a fee upfront is if that brokerage can promise a superior rate upon closing, and back that up with strong service.

Theoretically, this superior rate could be

comparison even easier. If a broker attempted to place a consumer into a mortgage with a high rate or poor terms and conditions, that broker would likely just lose the customer to another broker or a bank.

At a high level, an upfront fee-based mortgage brokerage model does have some merit; however, consumers have not called for it, and it is unclear whether it would solve any identifiable problems. If a broker attempted this model today, they would likely face an uphill battle from consumers and lenders alike.

James Laird is the president and broker of record for CanWise Financial. He holds an honours bachelor of commerce degree from Queen’s University and has launched several successful entrepreneurial ventures.

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2/06/2015 3:42:17 AM

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MORTGAGES | CREDIT CARDS | RETAIL CREDIT | DEPOSITS

5/4/2015 7:33:52 2:48:28 PM PM 28/05/2015

PEOPLE

INDUSTRY ICON

ALBERT COLLU ON EVOLUTION He’s the head of one of the country’s largest broker networks, and he’s got a message for every broker in Canada: It’s time to evolve. His ideas on how to do it are nothing short of inspiring A MAN WHO works his way up to president of a large broker network within 15 years of joining the industry knows a thing or two about evolution.

Albert Collu honed his sales skills on the retail side of the tech industry before transitioning to the mortgage broker space, where he focused on alternative mortgages. Once it became clear that alt-lending was on its way out, he “caught the entrepreneurial fire” and founded Argentum with nothing but a business plan and capital.

In a year and a half, Collu had built Argentum into a company that produced $1.5 billion in volume and partnered with 537 brokers. He eventually merged Argentum with Mortgage Architects, where he currently hangs his hat.

He believes brokers need to collectively up their game to better stake their place in an increasingly competitive market.

The impetus is clear: CAAMP surveys suggest broker market share is shrinking, year-over-year.

“For all current mortgages on homes that were purchased during 2014 up to the time of the survey, 61% were obtained from a bank,” states CAAMP’s most recent annual mortgage industry report.

“Mortgage brokers had a 31% share.

Credit unions were the source for 6% of these mortgages, followed by 2% from life insurance or trust companies.”

However, Collu rejects the idea that broker market share is shrinking – it’s just harder to quantify because the business is changing and evolving.

market share has dropped; I believe the measurable number has been more difficult to put a finger on.”

Still, most agree: Broker share isn’t growing. And that may be due to a lack of evolution.

“I think the reason for that is brokers

“Brokers have not had to reinvent themselves.

We’ve traditionally been uni-focused on the mortgage transactions; we haven’t really looked at different ways to wrap ourselves around our clients” “Because the industry has changed in the last couple years, broker originations have not actually dropped. A lot of the space they’re embarking on to get mortgage solutions is not actually on the map as it relates to data sets,” he says.

“To be more specific – when brokers are starting to integrate with MICs, capital corporations, private mortgage [players], those things are actually representing a bigger chunk of our business than they were two, three or four years ago. I wouldn’t go on the record agreeing that

have not had to reinvent themselves.

We’ve traditionally been uni-focused on the mortgage transactions; we haven’t really looked at different ways to wrap ourselves around our clients,” Collu says. “We’ve done a very poor job, as an industry, at marketing, maintaining those relationships. A lot of brokers in the space are notorious for doing a great job until we close the origination and take the commission cheque, and thereafter, we really don’t do a good job with clients.”

But how do brokers start to chip away

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PROFILE Name: Albert Collu Company: Mortgage Architects Title: President Age: 42 Years in the industry: 15 Career highlight: Building Argentum from ground zero into a large company and growing Mortgage Architects to the point of doubling its originations in about two years Career lowlight: In 2007, watching the demise of the alternative mortgage space – “but I’m elated to see it bouncing back in light of tighter underwriting guidelines”

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PEOPLE

INDUSTRY ICON

at market share and earn as large a chunk as possible? It starts with a trend being embraced by many already, but one that needs to be implemented across the board, according to Collu.

“I think one of the changes we’ ll see, and we’re actually seeing it today, is that brokers are realizing that we need to diversify the products; that’s been made very clear to me, if you look at the behaviour in the market today,” Collu says.

long-term career and not just a way to make a few quick bucks.

“One of the things we have to be more cognizant of, as leaders, is attracting people to the organizations with those mindsets. And the types of people we bring in have to be dedicated to the career,” Collu says. “There are too many people doing other things and putting mortgages as a part-time effort, and that’s absurd, considering we’re

“There are too many people doing other things and putting mortgages as a part-time effort, and that’s absurd, considering we’re arguably managing the largest liability of someone’s life” “I think that brokers and lenders will be a little bit more symbiotic in terms of working together.”

When it comes to implementing a diversified model – one that focuses on more than just mortgages – Collu believes it will take teamwork from various levels and entities, from the regulators and lenders to the networks.

“It’s easy to say that the presidents of organizations, guys like me, have to get on a soapbox and encourage brokers to do certain things,” Collu says. “I can tell you, with respect to my colleagues out there, we’re all doing it. The thing is that we don’t have the influence on a large enough scale – there is a perception that we can influence originations and where those loans go, and the truth is we can, but it’s so minute, it’s not enough to be felt.”

However, Collu says, what can be done at the broker network level is actively recruiting the best possible individuals who will embrace the diversified model, and treat mortgage brokering as a

arguably managing the largest liability of someone’s life.”

As it stands, Collu believes the barriers to entering the industry have to be raised: a higher level of education, and perhaps one day, a professional designation.

A little more cooperation among industry associations wouldn’t hurt, either.

“The associations have got a major role, and the first thing they need, I think, is to put their arms together and intertwine themselves,” Collu says.

“They aren’t working well together at the moment. I think they have to be the voice of the mortgage broker in terms of sitting at the table at a federal level or a provincial level as it relates to regulators and lawmakers, and also being extremely strong advocates for heightening the awareness at the consumer level about what a mortgage broker actually is. Until people understand what we do, we can’t do it effectively.”

COLLU’S CAREER HIGHLIGHTS

2013 Named president of Mortgage Architects

2009 Founded Argentum, which was eventually acquired by Mortgage Architects

2006 Built First National’s alternative mortgage division as a national manager

2004 Served as AVP at Home Trust

2002 Started out as manager for a national mortgage brokerage

20 www.mortgagebrokernews.ca

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We can hardly wait for our

SWEET 16!

This is a big year for us.

It’s our 15th anniversary. And in this year, we are delighted with the recognition we received at the Canadian Mortgage Awards, winning –

National Broker Network of the Year and Best Marketing Effort of the Year We owe a very big thanks to our awesome brokers, staff and partners. It’s been a thrilling 15 years and we’re honoured to share this milestone with you.

Visit www.brokersloveinvismi.ca to see some of the reasons for these wins.

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28/05/2015 6:36:33 PM

FEATURES

COVER STORY: 2015 CMAs

THE MORTGAGE INDUSTRY

STRIDES DOWN THE RED CARPET

Sports milestones aren’t the only ones measured in threes – one broker clinched the industry’s Triple Crown at this year’s Canadian Mortgage Awards

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BROUGHT TO YOU BY

“WHAT DO you say? I really love what I do, and I work with great people,” said Edmonton mortgage broker Collin Bruce of Dominion Lending Centres Mortgage Mentors. “I don’t have a secret – work hard and love what you do.”

Bruce was among the 600 industry professionals gathered for the ninth-annual CMA gala at Toronto’s Liberty Grand, sponsored by Home Trust.

Bruce would take home not only the Bridgewater Bank Award for Mortgage Broker of the Year, 25 Employees or More, but also The Canadian Mortgage App Award for Mortgage Brokerage of the Year, 25 Employees or More. Earlier this year, the industry vet earned the top spot on CMP’s Top 75 list, thanks to a personal mortgage volume of $331 million.

The triple honours represent an industry first.

Overall, the awards cut a wide swath across the broker channel, with winners in 20 categories drawn from Vancouver and Toronto, but also smaller markets. It was produced by

KMI Publishing and Events – the organization that publishes CMP – and PwC returned once again as the official ballot accountants.

The celebration also speaks to the industry’s perseverance and victory over increasingly competitive forces. Brokers have been quickest to adapt, shifting to alternative lending to help borrowers struggling to qualify under stricter underwriting guidelines.

“I’ve been in the industry for 15 years, and I’m so proud to be a part of its growth over that 15 years,” said GTA broker Christine Xu of Mortgage Architects after her win as Alternative Lending Broker of the Year.

Today’s challenging market recommended the addition of a new award for the ninth annual ceremony: Diversifier of the Year.

First Foundation Residential Mortgages took home that honour for a business model that embraces insurance and other service offerings to build upon a core mortgage operation.

Last year featured a tie between two

networks for the National Broker Network of the Year award, but there was no sharing this year – Invis Mortgage Intelligence took home top honours.

“This is extremely gratifying, as this is our 15th anniversary,” said Cameron Strong, CEO of Invis Mortgage Intelligence. “Congratulations to our team and to the finalists.”

And the winners are ...

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FEATURES

COVER STORY: 2015 CMAs The Award for Best Marketing Effort of the Year INVIS MORTGAGE INTELLIGENCE

“It is great, awesome! We love this industry. Thanks to our brokers for how great they are and letting us serve them”

Marketing objectives for 2014: • SMART — specific, measurable, achievable realistic and time bounded • 90% of brokers score the marketing support “Excellent/Very Good” • Launch a mobile responsive website for brokers and provide considerable social media support

The Award for Employer of Choice

VERICO SAFEBRIDGE FINANCIAL GROUP

“It’s been a lifetime commitment, and we’re taking it one day at a time.

We’re glad to have been nominated and to have won” • Founded in 2005 by Chris Karram and Elisseos Iriotakis • On an annual basis, recognizes three individuals who most embody the core values of Experience.

Growth. Together.

• Focus on mortgage-centred financial planning

The CFF Bank Award for Best Newcomer, Mortgage Broker Firm VERICO XEVA MORTGAGE

“We’re elated. We have been recognized by the industry, and we are changing the industry” 26

• Eight founding partners have 175 years of collected experience • Xeva was created “by brokers, for brokers” • Core values: Inspire.

Guide. Lead. Achieve

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The Safebridge Financial Group Award for Best Customer Service from an Individual Office CHAMPION MORTGAGE

“I’m still shaking. I’m very surprised we were even nominated, and I’m more surprised that we won. It’s amazing that a relatively small company from Guelph can be recognized on a national scale” • Employs eight professionals in three offices • Uses financial advisor referrals as a large portion of business • Focuses on being a full-service brokerage

®

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FEATURES

COVER STORY: 2015 CMAs

BROUGHT TO YOU BY

The Kanetix Ltd. Award for Best Internet Presence MORTGAGE ARCHITECTS

“I’m speechless. The win validates what we’re doing.

Our online presence has been one of the biggest endeavours for us this year. It is so important”

• Website, www.joinma.ca, targeted at recruiting brokers • 96% increase in yearover-year direct traffic • 7,320,661 total online impressions

The Manulife Mortgage Protection Plan Award for Best Community Service Effort of the Year DLC REGIONAL MORTGAGE GROUP

“This is absolutely thrilling, and I just wish my whole team was here. It’s who we are – we’re a family, we’re a part of Red Deer, and it’s not enough for us to just focus on business; [we] focus on the community as well” • Have helped raise almost $2 million in the past 12 years • Founded Golf/Build A Kid to a Cure 12 years ago • Mulit-year nominee for Best Community Service Effort of the Year

The Home Trust Company Award for Alternative Lender Broker of the Year CHRISTINE XU, MORTGAGE ARCHITECTS - MONEY BROKER

• Close to 80% of business is alternative • Funded more than $108.4 million in alternative business in 2014 • About 30% of business is repeat

“I’ve been in the industry for 15 years, and I’m so proud to be a part of its growth over that 15 years” 28

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2/06/2015 3:39:30 AM

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News

InternatIonaL

FEATURES

&

u.s.

COVER STORY: 2015 CMAs 90.6% U.S. housing market worse than thought

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 previously thought.

The private trade group says sales rose four per cent in October to a seasonally adjusted annual rate of 4.42 million. That’s below the roughly six million homes a year that economists say are consistent with a healthy housing market. But it’s ahead of 2008’s revised sales, now considered the worst in 13 years.

The trade group revised its sales from 2007 to 2010 down 14 per cent, from more than 20.6 million to nearly 17.7 million. Among the reasons for the lower figures, the Realtors group says: changes in the way the Census Bureau collects data, population shifts and some sales being counted twice.

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

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

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

Sales are measured when buyers close on homes.

But many deals are collapsing before that point.

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

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

52.1%

Percentage of homeownership costs, including mortgage payments, utilities and property taxes that take up a typical household’s monthly pre-tax income in Vancouver and Toronto, respectively (RBC Economics Housing Trends and Affordability Report)

inspectors have found problems; appraisals BROUGHT TO YOU BY 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.

Sales have fallen in four of the five years The Vector Financial Services since the housing boom went bust in 2006.

Limited for Best rates Declining prices andAward record-low mortgage Commercial Mortgage Broker haven’t been enough to boost sales. of same the time, Yearhome construction has At the DURAND, begun aMICHEL gradual comeback and should add to the MORTGAGE ALLIANCE economy’s growth in 2011 for the first year since COMMERCIAL the Great Recession beganCANADA in 2007. Last month, builders broke ground on an annual rate of 685,000 homes, theto government said recently.

“I’d like thank my family …

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

He deserves to be here as Most economists say home prices will keep falling, by at least fi ve per cent, through 2012. much as I do. I’m honoured – Many forecasts don’t foresee a rebound in prices was a great group, and I until at this least 2013. tremendous amount of Thehave high rate of foreclosures has made resold homes cheaper new ones. respect forthan them all” 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 • Has more than 26 years of experience taking advantage of the discounts.

• Closed 90% of client deals in 2015 The housing market is struggling even • 41% of business came from repeat clients as the broader economy has improved in recent months.

The economy grew at an annual pace of two per cent in the July-September quarter. Many economists expect slightly better growth in the October-December quarter. CMP

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2/06/2015 3:39:52 AM

FEATURES

COVER STORY: 2015 CMAs

The National Bank Award for Lifetime Achievement in the Mortgage Industry ART APPELBERG, VERICO NORTHWOOD MORTGAGE

This year’s Lifetime Achiever has nearly three decades of experience in the financial services industry – and he’s just getting started.

“After 26 years, this is very gratifying; it’s like my baby,” Art Appelberg said in reference to his lifetime achievement award trophy. “I don’t have too much time for pride – it isn’t about what you did yesterday; it’s about what you do tomorrow.”

An MBA graduate of the Schulich School of Business at York University, Appelberg has almost three decades of experience in banking, accounting, credit risk, mortgage origination and lending. He has served as a senior financial analyst and manager of commercial card products with Scotiabank. Appelberg became an independent mortgage agent in 1989 and established Northwood in 1990. Since then, he has grown Northwood to one of the premier full-service mortgage brokerages in Canada, winning many awards of recognition, including Outstanding Contribution to the Industry, Highest Regional Sales Volume and Top Regional Producer.

In addition to a 10,000-square-foot mortgage office, Northwood also houses a very successful mortgage investment company and most recently opened a financial centre to offer clients a one-stop-shop for all their financial, real estate, investment and insurance needs.

With passion, great vision, fresh industry ideas and a never-ending appetite for continued growth and excellence, Appelberg continues on his road for success that he believes still has great things to come.

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BROUGHT TO YOU BY

The Street Capital Financial Corporation Award for Mortgage Broker of the Year, Fewer than 25 Employees JAMES LOEWEN, LOEWEN GROUP MORTGAGES

• Employs three salaried staff and four commissioned agents • Entered industry with RBC in 2004 • Funded more than $59 million in 2014

“I’m extremely shocked – we’re in very rarefied air here, given the other finalists. The win says that the small-town, simple idea of treating people how you like to be treated goes a long way”

The Centum Financial Group Award for Best Industry Service Provider MCAP

“We’re honoured to be recognized – it feels awesome. It’s a huge honour; we share this with all our staff, and I thank our brokers for their strong support” • Founded in 1981 • Employs more than 700 employees • Customer base exceeds 190,000

www.mortgagebrokernews.ca

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FEATURES

COVER STORY: 2015 CMAs

The WeCanLend.Com Award for Best Newcomer, Individual Agent or Broker BRIAN HOGBEN, MORTGAGE FINANCIAL CORPORATION

“I’m flattered, humbled, shocked and overwhelmed with emotion. I’m appreciative to be around all these people that I’ve only read about for years”

The Alt Mortgages Award for Best Newcomer, Lender Underwriter

KIM WEISHUHN, STREET CAPITAL FINANCIAL CORPORATION

“It’s absolutely amazing to win, and this is such an absolutely beautiful event”

The Dominion Lending Centres Award for Best Lender Underwriter of the Year PATRICK DELANEY, RADIUS FINANCIAL

• Has been in the finance industry since high school • Has been a broker since January 2012 • In 2014, approximately 30% of business came from repeat clients

• Brought experience as a broker with a large broker network • 13 years of experience with a big bank • Believes communication with brokers is key

• Started his career on the bank side • Joined Radius in 2012 • Helped team grow volume by 62% in two years

“It feels so euphoric. To have all that hard work … you take beatings, but to be recognized for the service is phenomenal. I have to thank the brokers I get to work with, because we both make it happen”

CMP

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FEATURES

COVER STORY: 2015 CMAs

The Award for Diversifier of the Year

FIRST FOUNDATION RESIDENTIAL MORTGAGES

• Revenue has grown 40% over the past three years • Employs 12 people • Board of directors and shareholders are active from advisory position

“It’s a real pleasure and honour to accept this inaugural award for Diversifier of the Year at the Canadian Mortgage Awards.

I couldn’t be happier about it”

The Bridgewater Bank Award for Mortgage Broker of the Year, 25 Employees or More COLLIN BRUCE, DLC MORTGAGE MENTORS

“Wow, thank you so much, everybody. [Being number one in] the Top 75 was exciting, but that’s just volume; to be recognized by your peers is something else” • Became a broker in 2006 • Only broker to win Broker of the Year, Brokerage of the Year, and top honours in the CMP Top 75 in the same year • Personally funded $331 million in 2014

• Employs 8 broker/agents

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personally funded volume by 50%

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FEATURES

COVER STORY: 2015 CMAs

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The Canadian Mortgage App 2014 Award for Mortgage Brokerage • Signed 10-year renewal of the Year, 25 Employees with DLC or More DLC MORTGAGE MENTORS

• Employs 30 agents

“What do you say? I really love what I do, and I work with great people. I don’t have a secret – work hard and love what you do.”

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The D+H Award for National Broker Network of the Year INVIS MORTGAGE INTELLIGENCE

• Over $140 billion in total mortgage originations • More than 325,000 clients • 10 regional offices

“This is extremely gratifying to have won on our 15th anniversary.

Congratulations to our team, to the finalists – thank you very much”

38

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FEATURES

ALTERNATIVE LENDING

TIME TO OWN THE RENTAL SPACE The rental property romance is blooming, and alternative lenders are looking to spread the love throughout the broker channel

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MAKING UNWORKABLE deals work provides alternative lenders with their bread and butter. That’s no less so for brokers, especially those ready to capture the business of a growing number of property investors looking to access lender rental programs.

“This is where a lot of the restrictions are in the industry: self-employed individuals who can’t get greater than 80%, and people buying rental properties who can’t get better than 80%,” says Marc Ruttenberg, CEO and principal broker of Paramount Equity Financial Corporation [PEFC]. “Yet with our methodology, we’re able to provide these individuals with 85% – sometimes even 90% – loan-to-value.”

That helping hand in the short-term is precisely what borrowers need to then transition to an A lender at 80% LTV down the road.

“Alternative lending has created that valuable proposition,” Ruttenberg says, “as it is not only a benefit for a broker to help find the client a good placement, but also for institutional partners to reduce their application load to lend over to CMHC.”

what the lender is looking for when sending in paperwork.

“What we look for from the brokers is a complete package,” she says, “and what we find is that some agents will send us a blurb, because they are used to submitting to A lenders. The email/summary will be around Beacon score, what their income is like, what the reason is for the refinance, when really what we need is just the meat of it.”

The “meat” is the property address and the loan-to-value the client is looking for, Shirani says. Information like the Beacon score is already at her fingertips.

For Lester Shore, vice president of Optimum Mortgage, the variety of borrower needs and investor profiles makes for a lot of options. “The Canadian rental market includes novice buyers with basement suites or one or two properties in their portfolio, as well as more sophisticated investors with many properties.”

In the case of Optimum Mortgage, it provides investors with Beacon scores of 650 or higher with an LTV up to 75% for revenue properties located in communities with pop-

“What we look for from the brokers is a complete package ... some agents will send us a blurb, because they are used to submitting to A lenders” Rosa Shirani, Paramount Equity Financial Corporation For rental property purchasers, it can be a double incentive, as they’re spared having to put down the money needed to go conventional but still can access funds at 80% or 85% without the added expense of default insurance.

ulations over 30,000.

“We take a common-sense lending ap­­proach and calculate affordability using an 80% rental offset,” Shore says. “A shortfall on debt coverage is deemed acceptable if the investor is considered to be able to absorb the shortfall.”

Know what your underwriter needs Making the underwriting work the first time is what can make or break a deal, says Rosa Shirani, manager of lending. She heads up the underwriting department at PEFC, and cautions brokers that they must understand

Alt-lending owns the mortgage space Alternative lending has been growing by leaps and bounds in this country, and Ruttenberg believes those numbers will continue to grow with B21 on the horizon.

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FEATURES

ALTERNATIVE LENDING

“Two-thirds of the mortgages created in Canada are alt-lending,” he says. “Brokers are finding it more difficult to find institutional lenders that can finance their good-quality, bank-finance clients – only because they fall outside of the matrix of CMHC.” The OSFI released its draft for B21 lending guidelines a year ago. They were subject to a consultation period that closed on May 23.

Rental properties proving popular A good portion of future growth in mortgages will be fuelled by rental properties, which are currently enjoying a renaissance – and nowhere is the rebirth of multi-family units greater than in one of Saskatchewan’s major cities.

The latest market report from Colliers International shows that in 2014 there were 176 new rental units completed in Saskatoon, and 340 more had been started.

Like other communities across Canada, the current inventory of rental units reflects the rent control crackdown introduced in the 1970s. According to the Star Phoenix, the city’s rental inventory is an average of 47 years old, and many properties need renovation.

Rents have increased – up $50 for a twobedroom apartment to an average of $1,091 – and in light of low interest and mortgage rates, that has made the city highly attractive to investors, especially with rents higher than Regina and Winnipeg.

In Toronto, Urbancorp shifted gears on its Kingsclub condo complex on King Street West, deciding instead to build three towers of rental apartments. It’s just another indication of why Canadian homebuyers are actively looking for primary residences that allow for an income suite.

No matrix here In the movie The Matrix, if you swallowed the red pill, you were able to leave the Matrix.

PEFC has definitely swallowed the red pill.

Not being a matrix lender allows PEFC the flexibility to provide institutional rate

42

BROKERS AND REALTORS SHOULD BE ‘BROS’ The relationship between mortgage brokers and the alternative lending stream is strong and a proven winner – so why shouldn’t a similar bond be struck with real estate agents?

Many brokers have already built relationships with real estate agents, finding that link in the chain to be highly lucrative when it comes to finding new clients in search of a mortgage for their new home.

For those who haven’t, Marc Ruttenberg, CEO and principal broker of PEFC, asks: What are you waiting for?

“Brokers should be partnering up with a lot of real estate agents and creating some relationships to allow the purchasers to take advantage of alternative lending, and to offer investors options in purchasing properties instead of funding mortgages,” Ruttenberg says.

There is an entire collective portfolio available, and as brokers become more aware of the options available to them, there is some valuable growth there, Ruttenberg adds.

“We’ve got some really great relationships with some very large real estate brokerages, and on both formats, they help them with the funding of their eventual purchases, and provide resolution to investors who are looking for arms-length, registered-plan, real estate-backed investments for cash flow or growth in their registered plan investment.”

Why some mortgage brokers are seizing upon this relationship may be a simple case of old dogs and old tricks, Ruttenberg says.

“As the alternative market is starting to grow, the competition is going to get more fierce, and the brokers are going to have to start relearning methods on how they can start to diversify themselves – generating multiple streams of revenue, alternative relationships with other industry members, to create sources of applications and directions. You can’t just rely on competing against the banks, and the alternative space is a different monster, where you can market to a public domain and bring in institutional-like clients.”

Ruttenberg suggests that brokers need to be more educated and know where to look for those application types. Working with real estate agents answers a slew of questions, since they have the purchasers, and those purchasers require financing. What kind of financing do they require – alternative or institutional? What is the majority of purchases right now – are they rentals? Are the purchasers homeowners? Are they first-time buyers?

“I think there is big growth in the rental market,” he says, “and the brokers need to [know] that there are ways to find these types of clients so they can bring these types of clients to us. If I take a good client to a bank, and I get the bank to give them a 25-basis-point discount in the standard rate, the client says to me, ‘Thanks for all the work.’ But that is all that really happens – they don’t stand on their rooftop and advocate about the greatness of what we’ve done.”

But, Ruttenberg points out, if brokers take that same client and introduce them to a product that allows them to put 10% down instead of 20%, because the product they are buying doesn’t qualify for high-ratio insurance, then the brokers are able to help them buy a rental property and get into an investment that could, within a very short period of time, see them exit out of that secondary loan.

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ALTERNATIVE LENDING financing in the first position, says Michael Anger, Marketing Manager & Investor Account Manager for PEFC, and to take on a secondary position with the same rate structure and with only a small fee, which means reduced costs compared to a CMHC insurance premium.

“In one or two years’ time, there is enough equity growth in the property that allows them to refinance and exit out of the secondary loan term, and now have a first mortgage locked in at a conventional rate,” Anger points out, “and they didn’t have to put as much money out of their pocket to initiate the purchase of the property, or the refinance for a restructuring of an equity takeout, or renovations or debt consolidations.”

For brokers, it drastically reduces the number of ‘hurdles and hoops’ that bank-

POISED FOR 75% GROWTH Purpose-built rental apartments are resurgent in the GTA, with eight buildings (2,458 units) under construction and 37 (9,207 units) proposed, according to a new report from Urbanation. Since 2005, 34 rental projects (6,723 units) have been built in the GTA. For years, condos have been the de facto supply of new rental units, but Urbanation’s senior vice president Shaun Hildebrand says renters place a premium on living in professionally managed rental apartment buildings.

“It’s a secure form of housing,” he says. “The unit owner isn’t going to sell it and force you to vacate.”

And amid eroding affordability, more people are choosing to stay put in rental properties. “The development industry realizes the demand for rental has longevity,” Hildebrand adds. “This is not a fad.”

According to a recent report by the OECD, Canada’s price-to-rent ratio is a whopping 66% higher than normal levels, which makes Canada the secondmost overvalued country in the world, only slightly behind New Zealand.

But according to author Nelson Smith of The Motley Fool, an online multimedia financial services advice site, this is actually good news for a company like Canadian Apartment Properties REIT, because “at some point, investors will be unwilling to buy up rental properties at such anemic cap rates.”

This creates less competition for the company’s apartments, writes Smith, since it has been forced to compete against amateur landlords hoping for price appreciation.

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“[Brokers and alt lenders are] the most important relationship, in my opinion.

It’s a romance that continues to grow” Marc Ruttenberg, Paramount Equity Financial Corporation approvable clients have to jump through, says Ruttenberg.

Romancing the loan What may have started as a shotgun wedding between mortgage brokers and alternative lenders when big banks began turning away deals, has blossomed into true romance, Ruttenberg suggests.

“It is the most important relationship, in

my opinion. It’s a romance that continues to grow,” he says. “We are in three provinces now: Ontario, Alberta and British Columbia.

And that is because of the great working relationship we have with our brokers. Those brokers are considered to be a part of our team.”

Looking back, Anger smiles when he reflects on how he and Ruttenberg came together at PEFC.

CONTACT US

“Paramount became the company it is today in 2006, which was prior to the Mortgage Brokers and Administrators Act,” Anger says. “We’ve been through the tran­sition in the industry of administrators having to become licensed. From my own experience, I had been a mortgage lender since 2002, four years prior to Marc starting this company.

“Our wives became friends through this New Zealand expat association,” adds Anger, who remembers Ruttenberg’s wife sitting at the kitchen table of their house talking with his wife – one mentioned mortgages and the other mentioned marketing, and both decided their husbands should meet.

“The whole conversation started between our wives,” Anger says, “and Marc and I have gone from there.”

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PEOPLE

BROKER PROFILE

The art of renewals Dustan Woodhouse provides an inside look at a new renewal program guaranteed – fingers crossed – to grow his $103 million volume. Jordan Maxwell reports BROKERS SUCH as Dustan Woodhouse are doing their best to take advantage of a scorching BC market heralded by skyrocketing home prices and sales gone gangbusters –not to mention the continuing interest from international buyers.

For some, going after new clients among the uber rich, both foreign and domestic, may be the way to go, but for Woodhouse, the goal this year is just one thing: renewals.

“With 1.1 million privately owned properties in BC, about 50% of which have mortgages on them, there are arguably more than 100,000 renewal transactions up for grabs in my home province each year,” he says. “This is a significantly larger market than purchase transactions, and one with far less pressure and much longer lead times than most refinance and purchase transactions tend to entail.

“As a broker starting out in 2008,” he continues, “I knew the above numbers – all of them – yet still made initial efforts to win some renewal business as the opportunity arose.”

While this is something more and more brokers

are trying to do (and not just in BC), it’s still not an easy feat. For Woodhouse, it’s been a challenge since day one.

“The real trick was maintaining my cool with clients’ last minute U-turn and holding the relationship together, hopeful that I would retain the client as a referral source,” Woodhouse says.

“The statistics we often hear are that lenders retain 70% of existing clients at the time of renewal. One popular broker lender boasts a current renewal retention rate of 91%,” he adds. “So it’s not an easy nut to crack. Good on brokers if they can reach those numbers, but it’s not easy.”

“There are arguably more than 100,000 renewal transactions up for grabs in my home province each year”

A new strategy

It’s been almost eight years since Woodhouse started out as a mortgage broker, and he has yet to achieve such numbers, but this year, he’s implementing a new strategy to try to get there.

Woodhouse has established a rate buy-down system that is specifically tailored to switching borrowers at the time of renewal. He says he realized

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he needed to change gears after failing to get his clients to switch lenders.

“I quickly learned that in the 11th hour, in particular once the payout statement was ordered, lenders would get far more aggressive than the market rates offered in the initial renewal letters sent to their clients,” he says. “Many clients would wind up sticking with their existing lender at that point. The time – and often the money – I had invested in the file was all for naught.”

As a result of his experiences, Woodhouse began writing letters to his clients, outlining market rates available while assuring them that the costs would be nil if they switched their mortgage to another lender.

According to Woodhouse, it served as a tool for the client to get their lender to cut the floor rate, something that most lenders would match – although some ultimately didn’t.

“Once in a while, the lender would not match the rate, or would make the process so difficult that the client would return to our office, truly grateful,” Woodhouse says. “Either way, the letter served as a tool for [me] as well. It built trust with what would be potential future clients, if not immediate clients.”

While he wasn’t necessarily compensated directly for his efforts, the approach has been a boon to his business, freeing him from what could well have been hundreds of fruitless hours over the past six years. It also has helped to build a stronger network of clients.

Looking forward The next step in his plan is to target existing clients who fit a specific profile dictated by lenders that support Woodhouse’s ability to offer a rate 0.20 percentage points below anything the client’s current lender can offer.

Because he’s targeting existing clients, he’s spared the time associated with having to build a client’s application. Also, because he’s already established trust and rapport with the client, this approach has created less work but garnered some positive results.

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PEOPLE

BROKER PROFILE

“It is my opinion that the gap between average BC income and the price of a detached home in Vancouver will continue to widen”

“With potential savings of $999.60 per $100,000 of mortgage balance over the term, it has gone over very well thus far,” he says. “The temptation to offer the same thing to said client’s friends, family members, coworkers, etc., should they be referred, is actually quite low – about 40 bps too low, in fact. It is simply too much to be done for half the commission in the full-service manner in which I like to work. I find that a brand-new transaction will typically consume seven hours of time overall.”

In a busy BC market, the new method has certainly helped to cut down the amount of wasted time while increasing his level of productivity and availability for each client.

Market matters In addition to this plan, Woodhouse’s attention has largely been focus on hot real estate market in Vancouver, which has been infused with foreign money from mainland China and elsewhere around the globe, causing home prices to skyrocket to record levels. The question he’s asked by most of his clients facing renewal: ‘Are these values sustainable? What if the trends of the past 30 years (increasing prices and lower interest rates) continue for another year, three years, five years, 10 years?’

“I have worked with one client in particular ... who has taken the wait-and-see approach since 2009,” he says. “In 2009, he could have purchased his target detached home in Vancouver East for $650,000, and today that same property is cresting $1,000,000. ‘Waiting and seeing’ has cost this client not only the capital gains and his preferred location, but also, thanks to record-setting low mortgage rates, the significant mortgage balance pay-down,” he says. “He has paid in excess of $120,000 in rent to live in a comparable home that would have cost him $60,000 in interest to have purchased. Today, his mortgage balance would be $60,000-plus lower, and as rates remain at record lows, he would be into

WOODHOUSE’S PLAN TO DRAW MORE RENEWAL BUSINESS Woodhouse stresses that his latest plan to capture more renewal business is not meant for the first-time caller. It is purely intended for existing clients who meet a certain set of core criteria: • Existing client (application already built = time saved) • Trust and rapport already established • Owner-occupied properties only • Maximum two properties on the application • Currently with a chartered bank or credit union (creates an IRD conversation) • No BFS stated income • Legals and appraisal not guaranteed to be covered (collateral)

a second five-year term at record low rates.”

He adds that if one looks at the local history of the market in Vancouver, two factors have caused price corrections or stagnation: economic crisis and exceedingly high interest rates. According to Woodhouse, statistics indicate that 99.69% of homeowners carry on making payments and eventually pull through until it’s time to renew.

“It is my opinion that the gap between average BC income and the price of a detached home in Vancouver will continue to widen,” he says. “The very limited supply of land, the lack of detached housing starts and the ever-increasing demand as migration and immigration continue will almost certainly ensure this comes to pass.”

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FEATURES

STRATEGY

How to be a better negotiator Contrary to what you might think, negotiation is not about ‘winning at all costs.’ Josh Masters explains that if you approach negotiation as a process where all parties achieve the best outcome, you may well find that you achieve more success in your dealings with others THE ART of negotiation is one that is truly underestimated in the corporate and small business world – many professionals fixate on playing either good cop or bad cop when it comes to sealing a deal. This turns what is actually a science into a gambling game where the high stakes don’t always pay.

The basic premise of negotiation is to work together with another party to achieve an outcome that works for you both. Rather than come from a traditional stance, where there’s a winner and a loser, it’s best to think flexibly.

In closing hundreds of deals throughout my career as a professional property buyer, I’ve learned a number of techniques to master negotiation that will have you getting what you need without damaging any relationships along the way.

Create a third position It’s important to remember that a negotiation is an exchange of energy. Place two people face to face, and they will feel confronted.

Pride, stubbornness and ego can get in the way because each person feels they’re being threatened personally.

Creating a third position, where both people turn to face the problem, diverts the intense energy of each person away from confrontation and focuses their attention on solving the issue. Separating the problem from the person avoids any personality clashes and reduces the chance of offending the other

50

person. Rather than reacting harshly to the other party not wanting to budge from their original offer because they’re ‘stubborn and unreasonable,’ you can instead focus attention on the problem. Take personality out of the equation, and focus on finding a solution rather than becoming defensive and equally unreasonable.

Look for the ‘why’ Most people will make a decision based on reason. Finding out what that reason is can be an invaluable strategy, as it gives you the opportunity to create a solution, often in return for what you want. For example, if a colleague has asked for a three-month

extended vacation during the business’ busiest time, you can negotiate on whether they can work remotely via email during some of this period.

Avoid getting personal No one likes to be attacked personally. Even when you’re negotiating through a third party, you have to assume that this third party may communicate your every word to the person you are trying to settle a deal with. So keep it polite and remember that you’re trying to get them to cooperate.

Playing the blame game or reacting negatively will work against your goals. Even when something doesn’t go your way, stay

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calm and be respectful, and remember that you may lose in the short term, but as long as your eye is on the prize, your long-term goals should come to fruition.

You also need to avoid thinking the worst of the other party. For example, just because they request that you make an upfront payment before receiving the goods does not mean that they’re going to steal your money. This can be difficult, as you don’t necessarily know the background of the person you’re dealing with in a negotiation. However, assuming the worst of the other person will rarely be productive – and remember, they may actually be thinking the same about you!

Be flexible The more flexible you can be toward the other party, the more likely they will be willing to give you what you want.

If you can decide what you want before you go into the negotiation, such as your best offer and what terms you can and can’t waver on, you often can give the other party what they want without having to sacrifice your position.

Think of the other person At the end of the day, a negotiation, however brief, is a relationship. If you fail to consider the other person’s feelings or what they want, then it is unlikely you will have much success.

If they are resolute about particular terms of the negotiation, it can be beneficial to withhold your judgment and put yourself in their shoes. Is there a reason why they’re being so firm? Is there something important to them that you haven’t considered? After all, you might very well do the same thing if you were in their position.

Having some empathy for the other person will often ease the pressure in a negotiation – enough to get them across the line on the other things that are important to you.

Using ‘if’ One of the secrets to a successful negotiation is to never give anything up without asking for something in return, even if it’s small. Using ‘if ’ through your negotiation is a good way to handle this.

If I give you … then I would like …

I’m happy to give you … if …

If you can … then I’d be more than happy to...

Use silence One of the most effective ways to negotiate is to stay quiet. This may not be appropriate in situations where there are five other parties all trying to win over your potential customer, but it can be invaluable when the other party is poised on a favorable outcome.

When you remain silent, you automatically get the ‘ball in your court,’ so to speak, which

“Creating a third position, where both people turn to face the problem, diverts the intense energy of each person away from confrontation and focuses their attention on solving the issue” leaves you with the power to make the next call. In the meantime, the other party waits in anticipation, hoping they may achieve their outcome. This can create the impression for the other party that the negotiation process may soon end with a good result and they can walk away happy. When you do come back to the table with a counter offer, their anticipation of closing the deal immediately will make the seller more willing to sacrifice items that they may have fought hard to get earlier, all because they’ve seen the light at the end of the tunnel.

Silence can be useful for difficult negotiations, as it can give the time needed for both parties to ‘cool off ’. Sitting back can give you the perspective you need to get a better understanding of the situation and provide you with a long-term view.

Avoid any confusion Sometimes it can be difficult to draw the line between offering help and asking for business, especially with people with whom you have developed a relationship within a casual setting.

If you feel you’re approaching a level of information that you think you should be charging for, it can be handy to say things like, ‘Call me if you would like to work together on something’, or ‘This is the sort of information I often provide to my client base’; that way, you’re being clear on your expectations for the future without severing the lines of communication altogether.

Strike a pose While most of us have come across an overbearing tyrant trying to win power by force, an equally destructive force can be approaching a negotiation lacking confidence and presence.

Harvard’s Amy Cuddy has a wonderful presentation on conveying ‘presence’ in front of peers, which shows that it can be as simple as the way you hold your posture before you enter the room. Two minutes with your head up, shoulders back and hands on hips can really provide the confidence you need to stand your ground and muster the courage to ask for what you want.

The biggest misunderstanding surrounding the art of negotiation is in its actual definition.

It’s important to remember that negotiation is not used to get the best deal possible or get the most out of someone for the least amount of budget; it’s about coming to the most positive outcome for all parties involved. The origin of the word negotiation comes from the Latin term negotiates, meaning ‘to carry on business,’ and with the right techniques, you will carry on closing deals, securing clients and building relationships.

With more than 15 years of experience, Josh Masters is a respected buyer’s agent and author of Why Property Why Now. Learn more at www.joshmasters.com.au

www.mortgagebrokernews.ca

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FEATURES

CLIENT SERVICE

Client service excellence – with more than a smile Clients are more demanding – and more fickle – than ever before.

One false move on your part, and they’re gone.

Nikki Heald reveals how to keep them happy – and keep them on your books

SO, YOU think you’re a great service provider? You always make sure you smile and have a pleasant demeanour. A friendly disposition and a smile are certainly important; however, in today’s competitive market, a smile is just not enough. The way we treat our clients is emerging as a critical differentiator for brokers and can provide a competitive advantage.

Today’s clients are savvy, less loyal and more demanding. They realize they have a choice and that you are not the only broker to choose from. Additionally, client awareness around service standards also has increased. Good, ordinary and average are simply not good enough. It’s about providing an experience for your client that makes them want to come back, as opposed to being forced or compelled to come back.

So, what is service excellence? Exceptional client service is about going beyond what is realistically expected. It’s about surprising –

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disappointment. From a client’s perspective, and often delighting – your clients, turning it’s the little promises you keep that matter them into enthusiastic referral sources who most. Returning a phone call, providing inforwill stick with you not only because you do mation or simply getting to know them on a great work, but because of the value you bring. personal basis can significantly As brokers, imagine if you could get existing clients to tell others DID YOU KNOW? impact the relationship.

Providing great service is about the value you offer. The really about consistency, and beauty of word-of-mouth realistically, that’s not too referrals is that they save on difficult for you or your team to marketing costs, cold-calling and the time it takes to network. achieve. For leaders, it is vital Great service is not just • 68% of clients will walk due to to communicate clearly to your doing your job, but establishing rude or discourteous service, employees the service behavan emotional connection with without any prior warning. iours that are expected with your clients. It’s about valueIt’s not safe to work on the both internal and external adding and finding ways to premise that no news is clients. Explain to your team good news. why service excellence matters, be unique. It’s about getting not only for the company or to know them and being heartfelt. Research suggests that client, but also for the personal emotion influences purchasing satisfaction experienced in making others feel valued. decisions six times as much as rationale. So, if something or So, what are some simple someone makes us feel good, we things you can do to enhance are more inclined to buy. • It costs five times as much to service excellence?

Remember, people do business win a new client as to retain an existing one. Remember to • Be responsive with people they like.

Unfortunately, many businurture these alliances, too.

Speed is everything, so try to nesses believe that delivering reply to your clients as soon as exceptional service will cost them too much you can and keep them in the loop and informed. Procrastination doesn’t help anyone, in staff time, training or developing service and you’re going to have to respond sooner or standards and procedures. These in-focused organizations are only concerned with later. May as well do it now! company profit and cutting costs, and give little thought to how to keep clients happy.

• Take time to listen Additionally, in these organizations, staff Avoid speaking, and really listen to what recognition and retention is low, which signifthey’re saying. It’s important you understand icantly impacts growth and profit. Training what your clients are communicating to you. yourself or your team on how to deliver That way, you will be able to successfully meet standout service is an investment that will their needs and provide the right solution. reap significant personal satisfaction and reward.

• Do what you say you’re going to do One of the biggest gripes in business today is Realistically, bad service is actually more that people simply don’t do what they say costly to your brokerage than the time taken to provide great service. Poor service influences they’re going to do. If you say you’re going more than just a negative customer experience to do something, then do it! It enhances your – it reduces revenue and drives up costs. It professionalism and personal brand, and damages public perception, credibility and demonstrates you value your client. market reputation. As we all know, a dissat• Know your stuff isfied client is more likely to spread the word about a poor service experience than a positive Your client’s perception is that you are the one. Nowadays, unhappy clients will take to paid expert. That’s why they’ve come to you social media platforms to broadcast their to handle their mortgage. So be sure to keep

Today’s clients are savvy, less loyal and more demanding.

They realize they have a choice and that you are not the only broker to choose from your skills up to date, and be on top of the game in your profession. Unfortunately, if you convey a lack of knowledge, then you risk ruining your credibility.

• Give a little If a client asks you to do something that really won’t cost you a lot in time or money, then treat it as an opportunity to go the extra mile.

By doing so, you not only have a contented and indebted client, but also someone who is more than happy to refer to you.

Finally, within the mortgage industry, brokers really should view their book of clients as their most valuable asset and develop a plan around taking good care of them. Most important, develop long-lasting personal relationships by keeping in touch regularly, both in good times and in bad.

As brokers, you’re not just selling a product, but providing expert advice that can significantly impact people’s livelihood and circumstances. So, if you haven’t given much thought to your service levels, then perhaps it’s time to conduct an audit. Remember, if you don’t bother to make the client feel valued, respected and important, then you can be sure your competitors will!

Nikki Heald is the managing director of Corptraining. For more information, visit www. corptraining.com.au.

www.mortgagebrokernews.ca

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MORTGAGE ARCHITECTS COLLIN BRUCE,

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N

C.

PEOPLE

CAREER PATH

I,

THE BIG SWITCH

ST

Y

S N,

UP S ON

For Bev English of Dominion Lending Centres Smarter Choice Mortgages, a career change has paid dividends

2015

STARTS SMARTER CHOICE TAX SERVICES “It’s one of the best things we ever did and where my connections to the restaurant industry pay off. I’m able to work with business owners for taxes and also cover their mortgage needs for both their businesses, if necessary, and their homes. It’s really propelled our business forward”

ES

D,

CE AL

0:24 AM

2013

BUSINESS PARTNER DIES

For two years in a row, English won the Consumer Choice Award for Best Mortgage Broker

“It was the first time I felt like we could expand the business into new territories, like exploring financial planning and things like that”

English experienced a major professional and emotional setback when her business partner, John Dearin, died of a massive heart attack on December 22, 2013 “It was tough for me to digest at the time, and since his wife had little experience in the mortgage industry to continue on, I decided to purchase a DLC franchise of my own and start Smarter Choice Mortgages”

2012-2013

WINS BACKTO-BACK CONSUMER CHOICE AWARDS

2008

BEGINS WORKING AS A MORTGAGE BROKER While working for Business Management Services, a sister company of DLC Mortgages, English was presented with the opportunity to become a mortgage broker “I attained my license and started going to work. I had a really good first year, and with my background in the restaurant industry and connections to other business fields, I was able to have success” English worked for almost 30 years in the restaurant industry before opting for a change “My kids were all grown up by then, and I’d spent the better part of my life doing my job for them, so finally it was time to do something for me. I’d always had an interest in the business end of the restaurant industry, so it was a natural transition”

2011

WINS BEST NEWCOMER AWARD One of the highlights of English’s second career has been winning Best Newcomer at the Canadian Mortgage Awards “It was a big deal for me. We were at the Liberty Grand in Toronto, and I was sitting with my business partner, John Dearin, who was so happy for me. I was shocked to just hear my name. It gave me great confidence going forward and helped me to keep moving in the right direction”

2005 GOES BACK TO SCHOOL

1976

STARTS IN RESTAURANT INDUSTRY

After leaving the restaurant industry, English went to Compu College to study accounting, payroll and business administration “It was a rewarding program that propelled me to where I wanted to go. After college, I worked at Trend Union, a credit reporting firm, and got my feet wet before I ultimately decided to go the mortgage route”

www.mortgagebrokernews.ca

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PEOPLE

OTHER LIFE

TELL US ABOUT YOUR OTHER LIFE Email mortgagebrokernews@kmimedia.ca

FIT TO FORM Ottawa broker Lisa Theriault is a pillar of strength in her day job and in her hobby LISA THERIAULT works as a mortgage broker by day, sifting through the competition and building her business in an attempt to prove that she is the best mortgage broker in Ottawa. In her spare time, she carries a similar approach and attitude toward her body.

Theriault began training for a bodybuilding competition in May 2012 after deciding that she wanted a challenge. Life after having kids can get a little stagnant, she says, so the Ottawa broker started training for her first competition and placed as high as second in one of the categories.

She continued to reach a high level of success both in the mortgage industry and in bodybuilding – she plans to participate in bodybuilding nationals next July.

“It’s all about being competitive, and both fields give me that. In bodybuilding, you have to sell yourself and really present and put your best self forward,” she says. “You’re compared to your competition and scrutinized for it, so there are a lot of parallels between being a mortgage broker and a bodybuilder.”

3

Years as a bodybuilder

20

Years as a mortgage broker

135

Pounds she can squat

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IT’S all ABOUT YOU

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