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COMMERCIAL LENDING GUIDE What brokers need to know about the current state of Canada’s commercial mortgage market – including how to jump in MAKE THAT DEAL HAPPEN Three subtle ways to gain potential clients’ trust

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DECLARING INDEPENDENCE Mortgage Edge founder John Bargis on why brokers should strike out on their own

REGULATIONS AND RATE HIKES Why it will be harder for Canadians to buy homes this fall

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CONTENTS COMMERCIAL LENDING GUIDE COVER STORY

Thinking of trying to break into commercial mortgages? Five veterans of the commercial space offer their take on the current market and what brokers need to do to navigate it

22

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CONTENTS

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UPFRONT 04 Editorial

The only constant is change

06 Statistics

36 PEOPLE

44 32

BROKER INSIGHT Angela Calla reveals how embracing change catapulted her to the top of the mortgage industry

Why commercial brokers shouldn’t expect their lenders to chase a hot market

INDUSTRY ICON

16 Mortgage Edge’s John Bargis outlines what brokers must do to survive in a constantly changing industry

Brokers weigh in on Warren Buffet’s Home Capital investment

10 News analysis

The Bank of Canada’s long-awaited rate hike has finally arrived – should your clients be worried?

12 Technology update

14 Broker network update

Brokers’ role in reassuring buyers

40 FEATURES

PEOPLE

08 Head to head

Cutting-edge tech could soon change the game in the mortgage industry

FEATURES

GIVE UP THE CHASE

How buyers are responding to the stress test requirement

SAY NO TO DULL MEETINGS You don’t need to have fewer meetings – you just need to have better ones

19 Opinion

Why the government should talk to brokers before making more changes

FEATURES 38 All about the Loft Broker Portal

Home Trust debuts its latest tech offering

42 Avoiding burnout

Six ways to keep stress from taking over your life

PEOPLE 46 Career path

Doug Adlam won big by reinventing the traditional brokerage

44

48 Other life

Chilling out with snowboarder Leo Addington

FEATURES

HOW TO LOSE A DEAL IN .07 SECONDS

Is your body language working against you?

2

MORTGAGEBROKERNEWS.CA CHECK IT OUT ONLINE

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UPFRONT

EDITORIAL

More changes, more frustration

F

rustration doesn’t seem like a strong enough word, but that’s likely what many key industry stakeholders have been feeling this month.

After all, it was mere months ago that many lenders, network heads and brokers – including Dominion Lending Centres’ Gary Mauris, Paul Taylor of Mortgage Professionals Canada and Ajay Soni of the Canadian Mortgage Brokers Association – met with MPs and other government officials to discuss mortgage rules.

Their number-one request? That the government pump the brakes on further changes until the full effects of last year’s new rules are fully felt and properly measured.

The proposed changes will result in prospective homebuyers qualifying for 25% less mortgage money than before As it turns out, the industry was largely ignored. This, despite claims that the group had made a positive impression and had forced many politicians to question the mortgage policy approach that had been implemented to date.

It’s likely being taken as an affront to the industry – that the government just doesn’t seem to care what it thinks, despite promises to include its feedback when considering future policy measures.

So here we are in early August, preparing for yet another round of intrusive changes from the OSFI, which plans to increase supervisory efforts for residential mortgage underwriting, including potential changes to Guideline B-20. Those changes would amount to another stress test – this time for all uninsured mortgages – as well as tying LTV measurements to local market conditions and prohibiting certain co-lending arrangements.

But what impact will they have? One broker broke it down into simple terms: The proposed changes will result in prospective homebuyers qualifying for 25% less mortgage money than before. That, coupled with an already increasing qualification rate, means Canadians will have an even more difficult time obtaining a mortgage this fall. And that’s frustrating not only for the industry, but for would-be buyers as well.

www.mortgagebrokernews.ca ISSUE 12.08 EDITORIAL Editor Justin da Rosa Writers Joe Rosengarten Libby Macdonald Ephraim Vecina Kimberly Banks Heather Turner Copy Editor Clare Alexander

CONTRIBUTORS Trevor Daly Matt Malouf Karen Gately Anneli Blundell

ART & PRODUCTION Design Manager Daniel Williams Designer Loiza Caguiat Production Manager Alicia Chin Advertising Coordinator Kay Valdez

SALES & MARKETING Associate Publisher Trevor Biggs Vice President, Sales John Mackenzie National Account Manager Trevor Lambert Marketing and Communications Melissa Christopoulos Project Coordinator Jessica Duce

CORPORATE President & CEO Tim Duce Office/Traffic Manager Marni Parker Events and Conference Manager Chris Davis Chief Information Officer Colin Chan Human Resources Manager Julia Bookallil Global CEO Mike Shipley Global COO George Walmsley

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10/08/2017 7:40:52 AM

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UPFRONT

STATISTICS

Stressedout buyers

Yukon

35

HOLDING STEADY

Brokers face a shrinking pool of borrowers as last year’s mortgage rule changes start to bite A MORE constricted market is emerging as the legacy of last October’s mortgage rule changes. Assessing a borrower’s ability to repay based on the Bank of Canada’s qualifying rate – which is far higher than the rates many would be able to secure in practice – was perhaps the most controversial of the changes. Indeed, it has altered the game for a good proportion of would-be buyers: An analysis by Mortgage Professionals Canada

14.5%

found that 20% of those likely to qualify based on actual interest rates would be shut out by the stress test.

While the most common response among such consumers is to defer their homebuying dreams while they accumulate a more substantial down payment in order to satisfy the test, others seek to supplement their down payment via borrowing from family or from other lenders.

While the stress test has had a major impact on insured mortgage lending, the housing market overall has been seemingly immune to its effects.

Increased consumer confidence brought on by a strong economy bolstered average sales numbers in many provinces during the first half of the year, but there were a few notable drops – particularly in Newfoundland and British Columbia (which was also reeling from its provincial government’s market-cooling measures).

KEY Average sales per month, Dec. 2016–May 2017 Change from one year prior to new regulations

20%

Estimated proportion of consumers shut out of the market by the stress test

$56,000

Average increase in down payment needed to pass the stress test

6

Years it would take the average buyer to save up this amount, if saving 10% of their income

37%

Canada

Percentage of consumers who expect home prices to increase at least 11% in the next five years

44,722

0.6%

Source: Consumers’ Perspectives on Homebuying in Canada, Mortgage Professionals Canada, June 2017

WHAT TO DO?

THE SCRAMBLE FOR BIGGER DOWN PAYMENTS

Clients squeezed by the new regulations most frequently opt for a less expensive purchase or strive to increase the amount of their down payment.

A smaller pool of borrowers is the new reality for brokers: MPC estimates that consumers shut out of the market by the stress test would need to increase their down payment by an average of $56,000, though the figure is much higher in some areas.

HOW CONSUMERS ARE MEETING THE STRESS TEST OBLIGATIONS

ADDITIONAL DOWN PAYMENT NEEDED TO MEET STRESS TEST

45%

Increasing their down payment amount

20%

Buying farther away than originally intended

$81,000 $63,000 $52,000

45%

Buying a smaller/less expensive home

7%

Don’t know

39%

Delaying their purchase

5%

Other

Source: Consumers’ Perspectives on Homebuying in Canada, Mortgage Professionals Canada, June 2017

6

$94,000

$41,000

$41,000 $25,000

Greater Greater Manitoba and Vancouver Toronto Area Saskatchewan

BC and Alberta

Ontario

Quebec

Atlantic Canada

Source: Consumers’ Perspectives on Homebuying in Canada, Mortgage Professionals Canada, June 2017

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Newfoundland & Labrador

6.9%

20

16.0%

301

Northwest Territories Quebec

5.6%

6,797 British Columbia

Prince Edward Island

17.1%

8,141

3.6%

162

Alberta

9.6%

4,754

Manitoba

1.0%

1,220

Saskatchewan

New Brunswick

4.5%

939

8.9%

634

Ontario

Nova Scotia

0.7%

819

6.1%

20,900

Source: Consumers’ Perspectives on Homebuying in Canada, Mortgage Professionals Canada, June 2017

GRINDING TO A HALT

INSURANCE DROPS

While some consumers reported plans to augment their down payments by seeking loans from family or tapping RRSPs, most often, strapped would-be purchasers are opting put their home-buying plans on hold, further contributing to a slowing market.

Perhaps the most overt proof of the shrinking of this market segment is the 41% year-over-year reduction in insured mortgage lending in the first quarter.

2016

$12bn

40,000

16%

20,000

3%

0

14% 0%

80,000 60,000

30%

Other

$15bn

10%

20%

30%

40%

50%

Source: Consumers’ Perspectives on Homebuying in Canada, Mortgage Professionals Canada, June 2017

$9bn

Total units insured in period*

$6bn $3bn $0bn

$8.25 billion

31%

100,000

48,746

Withdrawing from an RRSP Seeking a gift or loan from family members Getting a loan from a financial institution Getting a loan from employer

43%

82,834

Delaying purchase

2017

$14.34 billion

HOW CONSUMERS PLAN TO BOLSTER DOWN PAYMENT FUNDS

Total insured volumes

*Three months ending March 31

Source: Mortgage Loan Insurance Business Supplement First Quarter, CMHC, 2017

www.mortgagebrokernews.ca

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10/08/2017 7:45:46 AM

UPFRONT

HEAD TO HEAD

Is Home Capital Group truly out of the woods?

Many see Berkshire Hathaway’s investment as a vote of confidence, but has it put Home Capital back on solid ground?

Chase Cooper

Scott Nazareth

Dmitri Ivanov

Mortgage associate Dominion Lending Centres

Mortgage agent Dominion Lending Centres Home Capital

Mortgage broker Mortgage Intelligence Home Mortgage Advice Team

“‘Out of the woods’ is not the correct analogy in this case, but having Warren Buffet’s company step in definitely gives Home Capital a compass to navigate out. The company has made every effort to ensure confidence in the public and broker channel, and those who know the company stand by them and continue to support them.

Confidence is starting to come back as company shares rebound, and deposits have increased substantially over the last half of June. Home Capital is an extremely resilient company, and I am sure they will find themselves ‘out of the woods’ in the future.”

“The media has included Home Capital Group within its narrative of a housing bubble, which has been an almost decade-long narrative. The words ‘alternative lender’ sound different from ‘Canadian bank.’ Home Capital Group will remain in the limelight – and I think that Warren Buffet stepping in will give investment advisors that crucial extra vote of confidence in offering Home Capital’s GICs to their customers.

The enormous drop and rebound in the stock price, from $6 to nearly $20, indicates very extreme volatility. In the short term, Home Capital’s restructuring efforts will increase its liquidity.”

“Loan performance was not an issue for Home Capital; nonetheless, Home Trust was the last resort for many non-conforming deals. Home Trust was financing long-term mortgage loans with short-term TFSA funds and cashable GICs; the Berkshire Hathaway deal will help offset liquidity issues. That said, we don’t know what will happen with locked-in GICs upon maturity. Investors may pull out.

Warren Buffet looks for underlying value. Berkshire Hathaway issued a new loan based on current book value and cash flow generated by the company.

Berkshire’s involvement helped restore some investor confidence.”

OK BY THE ORACLE OF OMAHA Berkshire Hathaway’s announcement in late June that it would be providing a new $2 billion line of credit to Home Capital was heralded as an endorsement of the underlying strength of the business by chair of the board Brenda Eprile, who said it “marks another major step in the rebuilding of confidence in the company.” Berkshire, led by fabled billionaire investor Warren Buffet, also purchased a 38% equity stake in Home Capital. Buffett himself spoke glowingly of the troubled lender, saying that “Home Capital’s strong assets, its ability to originate and underwrite well-performing mortgages, and its leading position in a growing market sector make this a very attractive investment.”

8 www.mortgagebrokernews.ca

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10/08/2017 7:47:02 AM

UPFRONT

NEWS ANALYSIS

The rising tide of rates The Bank of Canada increased its benchmark for the overnight rate for the first time in seven years.

It’s a positive sign for the economy, but what does it mean for homebuyers – and brokers?

CANADA BECAME the second G7 country to raise its interest rates in July – following the United States’ own move earlier this year – by raising its benchmark to 0.75%. The move was expected: Canada had experienced its strongest economic growth spurt since the 2008 recession, and recent data contributed to the BoC’s confidence that such growth will continue. In announcing its decision, the bank also cited strong global economic strength, while acknowledging softened oil prices and inflation, the latter of which is expected to be temporary.

“The global economy continues to strengthen, and growth is broadening across countries and regions,” the BoC said. “The US economy was tepid in the first quarter of 2017 but is now growing at a solid pace, underpinned by a robust labour market and stronger invest-

at home, which has been bolstered by household spending.

“The very strong growth of the first quarter is expected to moderate over the balance of the year but remain above potential,” the bank said. “Growth is broadening across industries and regions and therefore becoming more sustainable. As the adjustment to lower oil prices is largely complete, both the goods and services sectors are expanding. Household spending will likely remain solid in the months ahead, supported by rising employment and wages, but its pace is expected to slow over the projection horizon.”

While the economy is chugging along at an impressive clip, housing – a vital component of the country’s economy – has eased nationally.

And the rate hike, which has already impacted

“A small BoC rate hike would reinforce the multi-faceted steps to calm the broader housing market” Dr. Sherry Cooper, Dominion Lending Centres ment. Above-potential growth is becoming more widespread in the euro area. However, elevated geopolitical uncertainty still clouds the global outlook, particularly for trade and investment. Meanwhile, world oil prices have softened as markets work toward a new supply/ demand balance.”

The bank also pointed to a strong economy

10

those with variable-rate mortgages, is expected to slow demand even more.

“Prices and sales have declined in the Greater Toronto Area and surrounding municipalities since the Ontario Fair Housing Plan announcement in late April,” observed Dr. Sherry Cooper, chief economist for Dominion Lending Centres, in a recent analysis of the

rate hike. “However, housing activity has gained momentum in Montreal and Ottawa, while Alberta stabilizes and Vancouver posted a modest bounce back from the swoon following its August 2016 imposition of a foreign buyers’ tax. The underlying strength in many housing markets is the reason why policymakers are proposing new rules to tighten mortgage lending.

“This time, OSFI – the regulator of financial institutions – is proposing that banks stress test non-insured borrowers at two percentage points above the contract rate,” Cooper continued, “despite the fact that non-insured borrowers are putting at least 20% down on their home purchase. A small BoC rate hike would reinforce the multi-faceted steps to calm the broader housing market.”

But brokers should strap in – while this current rate increase will surely curb some housing demand, pundits are already forecasting further rate hikes later in the year.

“The next date for a rate-setting is September 6, but most observers do not expect any change until the October setting,” says Craig Howie, an agent with Neighbourhood

www.mortgagebrokernews.ca

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KEY DATES FOR THE BENCHMARK RATE Highest point in the past decade 4.5%

Dec. 3, 2007 Dec. 4, 2007

4.25%

Jan. 22, 2008

4% 3.5%

Mar. 4, 2008

3%

Apr. 22, 2008 2.5%

Oct. 10, 2008

2.25%

Oct. 21, 2008 Dec. 9, 2008

Dominion Lending Centres. “Right now the odds are in favour of another increase, likely another 25 basis points.”

While many industry players and, indeed, homebuyers are worried about rates, it’s the looming spectre of further mortgage rule tweaks that has Howie concerned.

“While that amounts to a doubling of the BoC rate in just four months, it still falls short

mortgages in the near term.”

The OSFI announced in early July it will be increasing its supervisory efforts for residential mortgage underwriting – specifically focusing on Guideline B-20, which it also announced potential changes to. Those changes include requiring a qualifying stress test for all uninsured mortgages, requiring that LTV measurements remain dynamic and adjust for

“It is far more likely that impending changes in mortgage rules ... will have a much sharper impact on mortgages” Craig Howie, Neighbourhood Dominion Lending Centres of a full 1.0% increase that the big bank economists see as the threshold for a change in consumer borrowing habits, including mortgages,” he says. “It is far more likely that impending changes in mortgage rules being considered by the federal banking regulator, the Office of the Supervisor of Financial Institutions, will have a much sharper impact on

local market conditions, and prohibiting co-lending arrangements seemingly designed to circumvent regulatory requirements.

“OSFI wants to tighten up requirements for uninsured mortgages, with a more onerous stress test for buyers, among other measures,” Howie says. “Nearly half of all mortgages in Canada are now uninsured, and financial

1.5%

Jan. 20, 2009

1%

Mar. 3, 2009

0.5%

Apr. 21, 2009

0.25%

June 1, 2010

0.5%

July 20, 2010

0.75%

Sept. 8, 2010

1%

Jan. 21, 2015

0.75%

July 15, 2015

0.5%

July 12, 2017

0.75%

Global financial crisis starts to take hold

Rate stays static until the oil price crash

institutions governed by OSFI hold about a third of that total. By one estimate, that could see the growth of mortgage originations trimmed by 1%, to about 4.5%.”

While the regulator says it is currently receiving feedback from industry stakeholders, any broker who has been around the block knows it’s nearly a foregone conclusion that once a regulator conceives of a new policy, it’s almost a guarantee it will go through.

Between the record-low interest rate environment appearing to come to a close and further mortgage rule tightening in the offing, it will be an interesting year ahead for homebuyers – and mortgage brokers.

www.mortgagebrokernews.ca

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UPFRONT

TECHNOLOGY UPDATE NEWS BRIEFS CIBC launches new mobile platform for credit scores

In collaboration with Borrowell and Equifax Canada, CIBC has announced a new extension of its CIBC Mobile Banking App platform that will allow users to securely access their Equifax credit scores, which will be updated quarterly. The app will use Borrowell’s online platform and filter the relevant information from credit bureau data compiled by Equifax. Initially available exclusively on mobile, the service will be available online later this year. CIBC has assured customers that the add-on will be considered a ‘soft’ credit inquiry that will not negatively impact a user’s overall score.

New technology drives the next evolution of rate sites

Rate sites could soon become even more ubiquitous thanks to new technology. Case in point: Google Home’s voice-activated commands, which can connect buyers with mortgage rates. RateSupermarket.ca vice president Janine White explained how the technology works: “You actually build a functionality that is compatible with Google Home or [other smart home devices], and the trigger word would be, ‘Ask Rate Supermarket …’ which comes to our technology and goes to our [broker] partners we currently engage with.

Google Home then tells them what the lowest rates available are.”

Casalova acquires property management firm

Online real estate marketplace Casalova has completed its acquisition of GTA firm My Property Managers [MyPM] and its $35 million in assets under management. The

transaction represented Casalova’s first acquisition since the company started in 2014. As part of the deal, all MyPM customers will benefit from a $50,000 rent guarantee and $50,000 in vandalism protection.

“We believe in creating a seamless one-stop experience for our clients,” said Casalova CEO and cofounder Ray Taaeb. “This means that people can now buy, rent, manage and sell properties all through Casalova.”

Canadian fintech adoption rate has more than doubled

Fintech adoption in Canada has more than doubled over the past two years, from 8% in 2015 to 18% today, according to EY’s 2017 Fintech Adoption Index. The firm pointed to the increasing pressure on the financial services industry to “develop simpler, more transparent, customer-centric” products. “Canadians know more about the fintech options available than they did two years ago, and this trend is going to continue,” said EY Canada fintech leader Ron Stokes.

“We’re seeing what used to be a competitive mindset turn into a desire to collaborate.”

Number of tech-literate seniors is on the rise

More and more Canadian seniors are making good use of the internet and apps to access various services, according to a new analysis from HomEquity Bank. In a recently released report, the bank revealed that its average client is approximately 72 years of age. “Contrary to popular belief, online and digital usage among seniors is rapidly increasing,” the report said. “Previously, HomEquity Bank received almost all inquiries through a call centre. Now, 90% come through our website – we predict this will only continue to grow.”

Drastic changes on the way?

Technology like distributed networks and artificial intelligence could dramatically alter mortgage professionals’ day-to-day lives

The growing influence of automation and next-generation communications technology across all industries is introducing a fundamental disruption into how society is structured, and a recent study provides a tantalizing look at the changes that could be ahead for the real estate sector.

In a white paper published in mid-July, consulting firm Avison Young predicted that the greatest shift would stem from the remote accessibility that is a natural consequence of distributed networks and opensource platforms.

“E-commerce, fintech, co-working, big data, autonomous vehicles and blockchain technologies are distributed-network systems that logistically change where and how work gets done,” wrote Avison Young managing director Amy Erixon, the author of the white paper. “For real estate professionals, these technologies’ distributive aspects pose the biggest challenge when it comes to forecasting property performance outcomes. Distributive technology holds the promise of equal access to opportunities and significantly enhanced consumer value propositions.”

The paper also posited that the real estate sector’s continued relevance will depend on its ability to rapidly respond to the workplace’s appetite for ever-greater computational power, along with improved resiliency and cybersecurity.

12 www.mortgagebrokernews.ca

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Avison Young allayed fears surrounding artificial intelligence, suggesting that industry professionals learn as much as they can about this nascent technology to ensure they can make the most of it.

“Put in the hands of humans, AI can help find solutions to vexing problems, and timeconsuming processes can be streamlined,”

“AI can help find solutions to vexing problems, and timeconsuming processes can be streamlined” Erixon wrote. “An AI system in dynamic interaction with changing surroundings or morally impactful decisions needs context to make judgements. Can we program a machine to follow social, cultural and emotional norms that underlie the essential trust underpinning societies? Some researchers think we can, but these systems sometimes surprise their creators.”

In addition, emerging trends in automobile production and operation will make themselves felt in real estate. The most important of these might be the growth in ride-hailing and ride-sharing options, which “corresponds with a significant reduction in the need for parking spaces in major cities and rising tolerance for distance commuting,” Erixon wrote.

Q&A

Robert Mogensen Mortgage consultant THE MORTGAGE ADVANTAGE FINANCIAL SERVICES

Years in the industry 15 Fast fact Mogensen holds a degree in marketing from the University of British Columbia

Why social media is crucial How have new technologies like apps and online platforms changed the way you conduct your business?

When I first got involved in the mortgage industry 15 years ago, most of my business was referrals from family and friends.

Although that is still true now, people who do not have any connection with me increasingly manage to find me through the internet. This demonstrates the importance of one’s reputation on the web, as well as your presence on social media platforms.

Is it advisable for a mortgage professional to maintain multiple social media accounts, considering their already heavy workloads?

Definitely. I believe it is important to have a presence on all major platforms: Facebook, Instagram, Twitter and LinkedIn. These days, potential clients use these to verify that you are truly a factor in your industry. If you’re not visible, it says something about your lack of engagement in current technology, especially to millennials.

It may be somewhat of a burden for busy brokers to keep up with social media, but I believe that a few minutes spent each day to keep your online presence fresh and current is very important. Younger clients and first-time buyers are looking at your content on these platforms, and if they are not relevant and current, the perception may be that you are not in touch with the current market.

How has new technology affected your schedule?

It’s had some impact on my time. I regularly check message notifications to make sure I haven’t missed something from a potential or current client. I now actively check and return any messages or inquiries received through multiple platforms, whereas I only had to contend with email and phone calls before.

How should mortgage professionals reinvent themselves to adapt to these changes?

In my opinion, ensuring a clean and cohesive flavour or message across social media accounts is important. Conflicting themes or disjointed information about yourself can create the impression of a disorganized business. There must be a common ‘look’ or ‘theme’ that ties all of your social media platforms together, in the way you are presenting your business to the public. Otherwise, you risk giving the impression that you and your company are not as organized as they should be.

I’ve noticed many business owners – including mortgage brokers – with social media pages that had their most recent entries six months ago or more. The perception this leaves me with is that you have stepped back from your business. If you choose to have a presence on one or many social media accounts, keep them current; otherwise, you’re probably better off not being there at all.

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UPFRONT

BROKER NETWORK UPDATE

DLC’s Cooper weighs in on jobs market The network’s economic expert offers her take on the impact of the latest unemployment numbers

cator of rising incomes, as employment shifted from part-time to full-time jobs.”

Despite this, however, wage levels saw only a modest 1.3% year-over-year growth – unchanged from June 2017, “but still better than the record-low gain of 0.7% in April,” Cooper said.

She added that the economic strength demonstrated by increased employment has been reflected in the generous increases enjoyed by the Canadian dollar recently.

“Canada’s economy is now the strongest in the G7, posting growth of 3.7% in the first quarter”

More than 10,000 new jobs were filled in Canada in July, and according to Dominion Lending Centres chief economist Dr. Sherry Cooper, this indicates a shift into a less intense gear for a segment recently running on overdrive. The July gains contributed to a slight decline of 0.2% in the national unemployment level, down to 6.3% – representing the best rate in nearly nine years.

Notable month-over-month decreases

NEWS BRIEFS

in unemployment levels were observed in New Brunswick, Nova Scotia and Manitoba. Meanwhile, joblessness intensified in Newfoundland, British Columbia and Alberta, although that province appeared to still be on the road to recovery with a 1.5% year-over-year increase in payrolls in July.

A related development was the significant increase in hours worked over the past year, which Cooper said is “a reliable indi-

Brokers split on pending regulation changes

In light of the OSFI’s July announcement of proposed changes to its mortgage underwriting guidelines, MortgageBrokerNews.ca asked its readers whether they believe the regulator is overreaching. Perhaps surprisingly, sentiment was somewhat split. A slight majority – 55.3% – believe the OSFI is becoming too intrusive when it comes to regulating the mortgage industry. An additional 40.5% of brokers said the regulator was within bounds, while 4.2% were undecided.

“In recent weeks, the Canadian dollar has risen sharply, and borrowing rates have increased significantly,” Cooper said.

“Canada’s economy is now the strongest in the G7, posting growth of 3.7% in the first quarter, likely followed by a whopping 4% gain in the second quarter.”

That economic strength was a major impetus behind the Bank of Canada’s decision to raise rates, she added, and it could inspire further rate increases later this year.

“Canada’s economy remains strong, causing the Bank of Canada to raise interest rates [in July] for the first time in seven years,” Cooper said, “and we believe that another rate hike is likely later this year, despite still muted inflation.”

British Columbiabased DLC brokerage expands

DLC Bluetree Mortgages has expanded in its home base of Kelowna, British Columbia, by launching Bluetree Mortgages West and welcoming DLC Innovative Mortgage Solutions to its team.

The union has created a new brokerage with around 40 agents. Bluetree Mortgages was originally launched in 2012 by broker Andrew Macrae, who will act as founding partner and VP of operations after the merger; the executive team also includes VPs Gord Dahlen, Kris Gibbs and Marcey Barber Dion.

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Q&A

Alexander Lavender

Networks are lifelines for up-and-coming brokers

Mortgage agent CENTUM HOME LENDERS

Years in the industry 2 Fast fact Lavender previously worked in the hospitality industry for 15 years at his family’s restaurant

What are the biggest challenges that your clients tend to face?

I think that the biggest problem is that everyone has a unique situation. It’s impossible to find a box in which to fit all – or even most – of my clients, as they have different circumstances and backgrounds. For cases involving lack of income or bad credit, you have to use your problem-solving skills to get around that or mitigate it.

I also tend to get a lot of business from those who have been declined by the banks. These institutions have their own rigid rules, and knowledge of those criteria allows us brokers to explore other opportunities that might fit the clients’ situations, whether they might have some credit issues, or they’re new to Canada, or they don’t have a down payment.

What are the benefits of being part of a network?

There’s so much to learn, especially for someone like me who is relatively new in this industry. You really need to have a strong support network – a group of skilled individuals around you who can help you in the ways that matter the most. Without that, I would’ve been lost, because there is no textbook that will teach you to do any of the tasks expected of you. Most of it will come from trying and doing it yourself – and

Ontario sees record-low mortgage arrears

Brokers in Ontario are operating in a curious environment: Late payments of mortgages in the province have declined to levels last seen in 1990, just before the crash that led to a massive growth in the number of delinquencies. According to the Canadian Bankers Association, Ontario’s mortgage arrears – excluding those from alternative lenders and private mortgages – declined by 18.4% annually in April, a level matching the lowest in Ontario’s 27 years of data. Delinquencies represented just 0.11% of all mortgages in Ontario.

likely failing, because things change so fast in this industry. Failing and growing, and asking questions of someone who has been through almost all of the situations that you might encounter – for me, that’s the ideal setup for learning, especially because I’m a kinetic learner who understands things more quickly by doing and interacting.

I also think that, at least out here in Nova Scotia, I bring a new dynamic, because I cater primarily to those in my age range of 25 to 35 years old. The older generation of brokers here might not be able to properly use social media and the other things that my generation is heavily wired into, so having a knowledgeable support network of like-minded individuals becomes even more important.

How do you see the market evolving, considering the growing influence of millennial buyers?

I think the market is going to become far more competitive because there is such a wealth of information. This allows virtually anyone to do their own research before they make a purchase. You’re also going to see more clients who would prefer to do things at home and on their own schedules, so brokers who can respond to that – those who can work outside the traditional 9-to-5 – will definitely have an edge.

Mortgage Architects broker develops lender database

Mortgage Architects broker Lynn Gorman has announced Niche Sheet, a database that is home to 16 lenders and their respective underwriting policies. Brokers subscribed to the service can input various criteria for their clients – such as property type and unique income situations – to find information on relevant lenders and each of their 70 different niches. Currently, the program’s major focus is on the Alberta market, though it contains national policies.

Niche Sheet requires a subscription, but brokers can sign up for a free 30-day trial.

OSFI snubs mortgage industry’s concerns

The OSFI has apparently ignored the broker industry’s calls to put a stop to mortgage rule changes until the impact of the last round is fully realized.

The OSFI announced in July that it plans to tighten supervision for residential mortgage underwriting. “They’re just not being patient enough,” said DLC broker Dustan Woodhouse. “I am, frankly, a little surprised by this relentless pace of change. It doesn’t really seem like they’re giving things a chance [to see what impact the changes will have].”

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PEOPLE

INDUSTRY ICON

ONWARD AND UPWARD Mortgage Edge founder John Bargis has been through many of the industry’s highs and lows – and he’s sounding a warning about what might soon alter it PLATITUDES ABOUT hard work and dedication often get tossed around when discussing the challenges facing the mortgage industry. But the reality, according to John Bargis, founder of Mortgage Edge, is that the current regulations will constrict the industry and force out a large number of brokers.

“The industry will shrink, that’s for certain,” Bargis says. “Essentially, people who remain in the industry have to reinvent themselves. The highly spiked punch bowl the industry has had the privilege of drinking from for the last 15 years is now gone. Really, what you’re going to see is an exodus of a lot of people who didn’t take the time to understand the industry, who were just order-takers – those who don’t properly understand how to put together a file and how to work with lenders. Lenders are going to increase their expectations of mortgage brokers and agents in the sense that they will require a lot more due diligence – which, frankly, is a wonderful idea.”

Prime pedigree It’s a sobering assessment, but one brokers would be wise to heed, given Bargis’ experience. He got his start in the industry at a time when it was much smaller than it is today – and he left behind a cushy banking career that he’d held for more than eight years to do so.

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“I honestly wasn’t the bureaucratic type – I didn’t like the set hours, the structure, and I had that sales mentality and entrepreneurial spirit,” Bargis says. “Although I did well in the banking industry, the entrepreneurial spirit kept calling. At the suggestion of my wife, I looked into becoming a mortgage broker.

“I rolled up my sleeves, sat down, called all my contacts and started to generate business,” he recalls. “I called on family and friends, all my spheres of influence. The real estate curve was on a 90-degree angle downward, so really what I had to do, as a former institutional employee, I had to start understanding what an equity

“The highly spiked punch bowl the industry has had the privilege of drinking from for the last 15 years is now gone. Really, what you’re going to see is an exodus of a lot of people who didn’t take the time to understand the industry, who were just order-takers” “I didn’t know much about it; I thought it was an industry that offered financing options of last resort,” he continues. “I quickly realized it was an industry that offered choice to customers.

It wasn’t as well known back then as it is today.

I think we were generating 2.5% to 3.5% of all mortgage origination at the time. Things have changed, and it has evolved since then.”

As a fledgling broker, Bargis quickly became the top-producing agent in his office.

transaction was; I had to understand how to put together private transactions. I had to understand how to work for a deal as opposed to just following guidelines. The basket and the range was much larger in the broker industry. From the agency perspective, I was extremely productive.”

Bargis stayed with his original brokerage until 1995, when he decided to strike out on his own. In 2000, along with a group of other influential industry players, he started Invis.

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PROFILE Name: John Bargis Title: Vice-president Company: Mortgage Edge Based in: Toronto Years in the industry: 20 Career highlight: “The people I’ve met throughout the industry. The lender partnerships I’ve built have all been very rewarding.”

Career lowlight: “I’ve got a lot of tire tracks on my back. The politics, basically, is something I could have done without. The lack of integrity and sincerity really sets me off.”

At that time, he was recognized by MPC (then called CIMBL) as the highest-grossing broker in the country – doing $155 million in volume over 500 transactions.

He helped manage Invis – and chair CIMBL – before once again striking out on his own. In 2003, he founded Mortgage Edge, an independent brokerage that does upwards of $1 billion in volume per year.

But Bargis wasn’t content to merely manage a brokerage. In 2014, he helped start the Coalition of Independent Mortgage Brokers of Canada.

“The coalition is a cooperative of 30 brokerages across the country,” he says. “We do over $5.5 billion a year. The idea behind that is to bring some really prominent people who understand the industry together to try to provide

better quality to the lender partners by essentially putting together a group of people who know how to manage their business as entrepreneurs and don’t let their business manage them. We’re looking for that entrepreneurial spirit where they want to manage their business long-term and grow.”

A major reason behind the coalition, Bargis says, is that it gives independent brokers the power of numbers and gives them an in with many lenders they normally wouldn’t have access to, or that would require the backing of a national network due to the volume bonuses afforded to larger entities.

“It’s actually the best revenue model on the street,” he says. “Technically, you earn everything you make except one basis point. You don’t pay

on anything we don’t bring to the table.”

Expect a culling Going forward, Bargis says he expects the industry to shrink by 30%, and agents and brokers who don’t adapt to the new reality of higher expectations will be weeded out.

“There’s going to be some serious reflection required,” he says. “I think anybody who doesn’t have the entrepreneurial thought process and spirit, [who doesn’t] have the ability to understand the direction of the industry and what the expectations are, you’re not going to survive.

“You need to be with a house that actually has some solid management behind it,” he adds, “and really understands the business and trains well – one that spends lots of time training and

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PEOPLE

INDUSTRY ICON

has some serious lender reach. When I say ‘house,’ I don’t mean the network – I’m talking about [brokerages]. Even the network guys are split into franchises.”

Bargis believes networks will become less important in the future and that more brokers will choose to go independent.

“You’re going to see the smart ones moving toward independence,” he says. “I don’t think there’s going to be room for the larger network models, if you will. The volume is going to

“The structure was good, but it’s still very much in its infancy. What have all these changes done? The industry has been screaming to add the term professionalism to what it is we do for a living. I think these changes are finally going to force us to be that professional the industry has been longing to be recognized as. I’m already seeing it.

“I chair government relations for the CMBA,” he continues. “I can tell you there are going to be some surprises coming down the pipe with

“You’re going to see the smart [brokers] moving toward independence. I don’t think there’s going to be room for the larger network models, if you will. The volume is going to decrease drastically, and it’s really about the brokerage, not the network” decrease drastically, and it’s really about the brokerage, not the network. What does the network really do for you? It’s the brokerage you’re with that makes the difference.

“There’s this misconception out there that there’s management at the top of the networks,” he adds. “The reality is the management happens at the franchise level, at the independent level.

If the franchise isn’t getting a whole lot of value from the network itself and their revenues are decreasing and they can’t provide value to employees, what do you have?”

Looking ahead It’s clear when speaking with Bargis that he loves the industry he works in. He mentions the people he has met and, of course, the clients he has helped get into the housing market. But that doesn’t mean it’s all sunshine and rainbows.

“I think it lacks a good structure,” he says.

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expectations that agents and brokers do their due diligence and actually play the role of that professional when they’re dealing with consumers.

We’re very well paid for what we do, and we have to step up.”

Bargis also expects another round of mortgage rule changes this fall, which will have a major impact on the industry, just like the sweeping changes of years past.

“By virtue of the fact the rule changes are taking place, a number of borrowers aren’t going to have the ability to borrow like they were in the past, whether it be for a purchase or a refinance,” he says. “The idea was to do exactly that: to curb borrowing. The industry will pull back. I’ve got some friends in the real estate market; they’re worried. And frankly, they should be. I wouldn’t have made the changes that abrupt … but it is what it is, and we have to deal with it.”

JOHN BARGIS’ CAREER TIMELINE 1980

1982 Juggles school and banking part-time

1986 Starts as a banker full-time

1990

1989 Joins the Mortgage Factory

2000 Co-founds Invis

2003 2000

Works in real estate acquisition and construction

2003 Founds Mortgage Edge with his wife, Tina

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UPFRONT

OPINION

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

Brokers know best Recent rule changes have put undue pressure on the industry, writes Trevor Daly, and the government needs to listen to brokers before implementing further regulation MUCH HAS changed since the early days of mortgage brokering. The misconception that mortgage brokers were only used by those who couldn’t get a mortgage through regular channels has been dispelled as more and more people have seen the benefits of turning to a broker. While 20 years ago, mortgage brokers may have been looked upon in a less than favourable light, they now lead the industry.

Over the past couple of years, as we have continued our growth and strengthened our place in the industry, several changes have occurred that have produced ripples in the financial marketplace and made this a time of tremendous change for those financing homeownership. We have seen a rise in the minimum down payment for houses over the $500,000 mark, an increase in homeowners’ default insurance premiums, and changes to the default high- and low-ratio insurance requirements, which put the people who have saved up for a larger down payment on par with those who have not. Other recent modifications include increased premiums for mortgage default insurance and a reduction in amortization periods, which again has the practical effect of limiting consumers’ buying power.

The CRA has also gotten involved with changes to the mortgage industry by adding requirements to mortgage insurance rules to standardize eligibility criteria for both high- and low-ratio insured mortgages, including a mortgage rate stress

test and closing loopholes surrounding capital gains tax exemptions on the sale of a principal residence. These changes have, in many cases, made it increasingly difficult for would-be homebuyers to qualify for a mortgage; often, this results in these hopeful consumers considering the use of alternative lenders.

Concurrently, we’ve witnessed the complications faced by Home Capital Group after

ratios are well within the norms of the big banks. Our marketplace can handle having multiple choices when it comes to where clients can get a mortgage, and we should not limit their decision-making abilities by offering fewer options.

The experience gained by dealing with a variety of lenders, insurers and clients gives mortgage brokers a unique perspective.

We are expected to know when and how to place our clients into a certain product out of an array of products so diverse it takes play sheets, updated training, and continual reading and discussion to know for certain the ins and the outs of each well enough to know what would best fit the client. Parliamentary testimony from such industry figures as Gary Mauris and Dustan Woodhouse has furthered both government and public understanding about the role that mortgages brokers play in helping Canadians purchase homes.

The regulatory changes implemented last year would have been viewed in a more positive light if the government had consulted with the industry prior to implementing the changes rather than after

“Our marketplace can handle having multiple choices when it comes to where clients can get a mortgage, and we should not limit their decision-making abilities by offering fewer options” it was discovered that income on some loan applications had been falsified. As a result, some brokers and brokerages were suspended. Instead of limiting the fallout, the powers that be chose to handle the situation in a punishing way.

Alternative lenders seem to be taking the brunt of the recent changes in the industry at the same time that their ability to service the marketplace has been limited severely.

Financial stability in the market seems to be the driving force in these changes, but they don’t seem to take into account that alternative lenders’ risk management

the fact, especially since these changes affect every person hoping to purchase or refinance a home in Canada. We are looking forward to more dialogue within our industry, with the regulators and with the government in the hopes of increasing the ability of all Canadians to make their homeownership dreams a reality.

Trevor Daly founded Ontario-based DLC Home Capital Solutions in 2006 and has driven much of its success over the last 10 years.

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10/08/2017 7:57:32 AM

FEATURES

SPECIAL REPORT: COMMERCIAL LENDING

COMMERCIAL LENDING GUIDE CMP caught up with a few of the people at the top of Canada’s commercial mortgage sector to get their advice on how brokers can gain a competitive edge in today’s evolving market COMING OFF a remarkable 2016 that saw record-breaking property sales, the Canadian commercial real estate market shows no signs of slowing down in the latter half of this year. Toronto and Vancouver are leading the momentum, but the rest of the nation is at their heels with recovering economies and a wealth of opportunities available for brokers.

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Recent surges in immigration, coupled with an abundance of capital in the industry and increasing interest from worldwide investors, have catapulted the nation’s economy into a position ripe for growth and stability. Despite decreasing land supply in the GTA, optimism remains high that major urban markets will remain able satisfy

increasing demand – which means there are many deals still to be made.

The mortgage professionals on the following pages have capitalized on Canada’s burgeoning commercial real estate market, and they’ve come together to share their knowledge and perspectives on where the sector is and where it’s heading.

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secondary or tertiary market. People come with what I call B-quality or C-quality deals, and they’re wondering why it’s taking so long to get their deals done. It’s because everybody’s chasing the same quality deals and the same quality borrowers. At the same time, the yields are coming down, so the pricing is coming down for the good deals and borrowers, but it’s almost going up for weaker deals and borrowers.

NOAH MINTZ Vice-president Vector Financial

CMP: From a lender’s perspective, what is current state of the market?

Noah Mintz: I’d say it’s still a very competitive market, and there are probably more players than ever – more private lenders, a lot of capital available.

There’s a lot of money chasing good deals. If you’re a strong borrower and you’ve got a strong location – within half an hour or 45 minutes of Toronto – I think there’s a good track record in the commercial market.

On the other side of it, it’s very difficult to get things done if you’re an inexperienced borrower or if you’re in the

CMP: What challenges are impacting your business and brokers today?

NM: The biggest challenge right now for lenders is managing the expectations of both the borrowers and the brokers.

Everybody wants things to get done quickly and with no hassles. But everything is taking longer because of all the regulatory requirements. So borrowers push the brokers, and brokers push the lenders.

Everyone thinks they can close in three weeks, and it’s almost impossible.

Because there’s such a fight for quality, everyone’s trying to do the same deals, and you don’t want to jump into a deal.

Sometimes people have some urgency to put money up; you don’t want to do that, and you may just have to lose the deal because it doesn’t meet your credit requirements. So the challenge is that

you want to maintain your underwriting criteria and standards, regardless if it’s taking a little bit longer and regardless of the competition. You don’t want to let that dictate what you’re doing.

CMP: There has been a lot of talk about high demand and lack of supply. How is this affecting the commercial market?

NM: We’re seeing a lot of demand for land loans in the commercial space. More developers are trying to acquire multiple contiguous sites – a land assembly. People are buying a bunch of land and going through the entitlement process in order to bring their own lots on. So it could be a twoto three-year cycle in order to get there, but that’s what they have to do in order to make it happen.

CMP: What are common mistakes you see commercial brokers making?

NM: I would say the biggest mistake I find is that brokers tend to do mass emails to all lenders and say, ‘Have a look at this loan,’ as opposed to taking the time to get to know all of their lenders and who fits into what niche for lending. Good brokers take the time to know who would be a good fit, and they send their package out to one or two people and focus on those lenders.

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FEATURES

SPECIAL REPORT: COMMERCIAL LENDING

ANDREW RAMDEHOLL Vice-president, commercial origination MCAP Financial Corporation

CMP: What’s your take on the current state of the mortgage industry?

Andrew Ramdeholl: I think the industry as a whole is robust and evolving. Thirty years ago, less than 10% of the Canadian populace used a mortgage broker or even knew what a mortgage broker did.

Most recently, more than 30% of the populace uses mortgage brokers for all types of mortgage financing – residential and commercial. It is my expectation that over the next decade, that will rise even more as technology and a more tech-savvy populace turn to electronic

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connectivity to guide them through their mortgage transaction.

The commercial real estate market is expected to stay robust throughout the year, and demand for commercial real estate remains higher in most areas of the country. I believe this is a result of the slight shift in our economy these past few years as businesses have shifted a large portion of the workforce into the services sector. This bodes well for the commercial mortgage brokerages that operate within Canada and the Canadian real estate market as a whole.

CMP: What are the major challenges you face when working in commercial real estate?

AR: Really understanding what a client is looking for in the long-term and shortterm. By understanding a potential client’s long-term plan, a commercial mortgage broker can then provide the best options for the client. [Sometimes] clients looking for commercial financing often get caught up in the headlines of local media and miss out on potentially successful financing options.

Another challenge when working in the commercial real estate market is when an agent or broker does not understand the business a client owns. Understanding the [business’s] growth potential and fallback strategies are keys to presenting a transaction to a perspective lender. There is a wide misconception in the industry that location is all that matters; however, as an example, a publicly listed corporation may have a property in a Tier 2 or 3 area.

If a broker fully understands the client and presents it accordingly, location may not actually be a deal-breaker from a lender’s point of view.

Often, prospective commercial clients tend to shop around for the best rate; however, in many cases, the product that carries the best rate may not actually be what’s best for the client in the long run. If a broker really understands the transaction inside and out, then in some cases, the structure of the financing product is more beneficial to the client in the long run than the actual interest rate. This is a definite challenge in our industry, as many brokers tend to just quote rate.

CMP: What are the benefits of working in commercial mortgages?

AR: Variety! No two deals are the same. Every property and every client is different; no commercial property is exactly the same when considering the physical aspect, the covenant, the environment/industry and the management of the property.

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“Get a mentor or industry veteran to guide you through your first few transactions – brokering a commercial transaction is far different than residential” CMP: What’s your advice to brokers who are looking to make the transition into commercial mortgages?

AR: First, get a mentor or industry veteran to guide you through your first few transactions – brokering a commercial transaction is far different

than residential. Debt service coverage ratio [DSCR], working capital ratio [WCR] and debt-to-equity [D/E] are just a few of the additional analysis components that should be included in the submission of a commercial application.

Next, you must really understand the

commercial lenders you choose to work with. Not all lenders operate the same way or offer financing on the same products.

Each lender has their own lending criteria and their own product offerings for specific transactions. A good idea would be to meet each commercial lender you choose to work with to better understand what they can or cannot finance.

Finally, always ensure the submission of a complete commercial application package. A complete application submission could mean the difference between a file closing in a month or in a year. After this point, you should be off to the races with your commercial transaction.

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FEATURES

SPECIAL SPECIAL REPORT: REPORT: COMMERCIAL COMMERCIAL LENDING LENDING mortgage. Commercial lenders can customize the loan payment schedule to each borrower’s specific requirements.

Residential loans typically do not have prepayment penalties and can be paid off at any time. A commercial loan will have restrictions on prepayment, which are designed to preserve the lender’s anticipated yield on a loan. Should the borrower settle his debt on a loan prior to the maturity date, he may be required to pay penalties.

CMP: What has been the most interesting deal you’ve closed?

SW: We funded a developer for a term of 16 months, six months closed, on a multimillion-dollar land loan to get him through to the application stage with the exit being a construction loan with a financial institution. He initially bought the site and closed a year later. Within four months of our funding, he sold the site for more than double the purchase price – a win-win for all parties.

STEVEN “SKIP” WALTERS Senior vice-president First Source Mortgage Corporation

CMP: In your 30-plus-year career, how have you been able to successfully build your business?

Steven Walters: Honesty and integrity are obviously the most important characteristics you can have. Your reputation will most likely precede you, and even if it doesn’t, these are core values in any industry. Second, two of the best strategies one can employ to be successful are to network and to constantly market oneself.

CMP: What are some of the common challenges you face in commercial mortgages?

SW: The usual: changing government

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agendas, fluctuating interest rates, and the rise and fall of employment rates. Basically, change is the challenge. We don’t have crystal balls on our desks when making loans or making decisions. We don’t know what will happen that may rock the foundation of our loan.

CMP: What are the differences between residential and commercial mortgages?

SW: Unlike a residential mortgage, where the mortgage is given to an individual, a commercial mortgage is made to a company. Commercial mortgages have higher interest rates and typically shorter terms. A business plan is just as important as a credit score for a commercial

CMP: What skill sets are transferable from residential to commercial brokers?

SW: My own past work history is varied. I started off as a real estate broker, then a leasing officer for a development company, from which I moved into the world of property management and then made the leap to acquisitions. Along the way, I enrolled in appraisal and real estate finance courses, networked constantly and then completed my mortgage broker’s licence.

Throughout my career, I was able to decipher real estate market trends, grow my salesmanship, and understand construction and the building envelope.

By wearing all these hats, I came to my present position with a wealth of knowledge and expertise that serves me well today. You may be a great people person or excel in finances or have a great network. All of these are transferable and will stand you in good stead as you make the transition.

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FEATURES

SPECIAL SPECIAL REPORT: REPORT: COMMERCIAL COMMERCIAL LENDING LENDING

GREGORY VORWALLER

CMP: Where do you see opportunities in the market?

GV: Trez Capital sees a lot of promise in the residential development and construction financing marketplace. This is particularly evident in Toronto and Vancouver, both of which are experiencing strong in-migration (in line with worldwide urban migration) and a coinciding economic growth and demand for housing, which, relative to historic norms, means there is an undersupply.

Balanced with a strong pipeline of opportunity, Trez Capital is taking the market by the proverbial horns as we provide financing to investors and owners looking to reposition income-producing commercial properties. Providing financing for assets in transition is a core part of our business model.

President Trez Capital

CMP: What are the biggest challenges in Canada’s commercial market?

Gregory Vorwaller: The Canadian market is, to a large extent, fully valued. This means there’s generally an oversupply of capital, meaning borrowers have a vast array of lenders from which to choose. In this buoyant market, many brokers focus on selecting the cheapest source of capital; however, a highly experienced real estate developer will understand that pricing is only one factor to consider and that many other variables come into the equation.

As such, brokers would serve their clients well by sourcing competitive financing solutions that are based not only on price, but also on qualitative attributes. It’s what sets apart the best brokers. For example, the certainty of execution and the experience to understand complex projects enable a lender to structure a bespoke solution for borrowing clients.

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CMP: What effect are the Toronto and Vancouver markets having on the commercial space?

GV: With the growth of major cities such as Toronto and Vancouver, there’s a positive impact on the demand for housing. The

makes a great commercial broker?

GV: There are three main factors that, in my opinion, make for a top broker; each quality is something I look for in each of the staff Trez Capital employs.

First and foremost, a strong, fundamental knowledge of real estate analysis is vital. In roles such as underwriting and credit analysis, an individual can gain significant knowledge that will really help a fledgling commercial broker career.

For example, when a request for financing is presented to a lender such as Trez Capital, the amount of time it takes to review and proceed to the next steps is significantly impacted by how the broker summarizes the key terms and what metrics are provided.

Second, because commercial clients are typically quite sophisticated and financing solutions have a significant impact on the success of a project, it’s smart to offer more than just one financing solution.

It’s also important to remain in contact throughout the project. If any unforeseen events require an update or change to the financing solution, the client should be

“Brokers would serve their clients well by sourcing competitive financing options that are based not only on price, but also on qualitative attributes. It’s what sets apart the best brokers” increased demand, born out of both cities’ swelling populations, creates opportunities for real estate developers to expand to the suburbs just outside of major metropolitan centres. There are also opportunities to renovate existing properties within the city in an effort to boost rental revenue – a much-needed source of housing.

CMP: From your perspective, what

helped through the change, which can then be addressed with the lending institution to mitigate risks.

Third but by no means least, it should always be remembered that commercial mortgage brokering is a people business.

A commercial mortgage broker should be able to cultivate strong relationships and enjoy working with others. Ultimately, it’s an important key to success.

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FEATURES

SPECIAL REPORT: COMMERCIAL LENDING ‘wait and see’ attitude instead of providing the borrowers the financing they are asking for – it’s an opportunity for us. When the market becomes somewhat more conservative, our business actually grows and does better as more borrowers come to us for our services.

That being said, there is no lack of liquidity in the market. Whenever a project presented to lenders is easy to understand and fits within their policy, they will go ahead and fund it. So our job as brokers is to make it easy for the lender to get to the finish line and show them that the project being presented makes sense.

In my opinion, the opportunities are excellent right now. As the lenders have chosen to be more conservative, that pushes borrowers toward good brokers such as us to help them secure the financing they need.

MICHEL DURAND CEO Mortgage Alliance Commercial

CMP: What’s the biggest challenge you face when brokering commercial mortgages?

Michel Durand: The biggest challenge is setting the right expectations for both the borrower and the lender, for whatever project needs to be financed.

More often than not, there is a huge gap between what the borrower believes the merits of the project are and what the lender perceives the merits to be.

As a commercial mortgage broker, the biggest challenge is bringing all ends to the middle and getting everybody to the finish line as diligently as possible. That means staying on top

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of every aspect of that project’s financial requirements and how it relates to every part of every professional’s required input in that project.

CMP: Where are the opportunities in commercial real estate?

MD: The commercial side of the mortgage industry has not been affected in the same way the residential side of the industry has been over the last couple of years. The challenges are not there on the commercial side. When the commercial real estate sector does well, our business does well.

When lenders tighten up their policies – as they are doing now, taking a little bit of a

CMP: What factors are impacting the commercial space currently?

MD: I think one thing that has affected commercial mortgage brokers the most is the changes in regulatory requirements that have been imposed on the lenders.

These changes, as far as I’m concerned, are reasonable and certainly required, and dealing with them is not very difficult.

There’s more due diligence required before approving any commercial mortgage – the list of required documents and meeting anti-money laundering requirements simply mean that more documentation on the borrower’s history, background and source of funds is required. As long as the borrowers know and understand what these requirements are and how they’re going to benefit [from] expediting the process and getting loans approved, the borrowers are usually quick to supply whatever information is required.

What I see all too often is brokers trying to cut corners and asking the lenders to just process the loan the way they used to because they don’t want to frustrate the borrower. I think that’s the wrong attitude

to take. If you’re trying not to frustrate the borrower, odds are you’re going to be frustrating the lender, who will be investing the most amount into the project.

CMP: What’s your outlook on the performance of the commercial real estate market over the next couple of months?

MD: There’s an enormous amount of purchasers who want to purchase assets that are all too rare; there’s not enough product in the market for the number of purchasers looking for opportunities. I firmly expect that both borrowers and lenders will be able to meet

their performance objectives by using competent, qualified and experienced commercial brokers.

CMP: What should brokers know if they’re interested in moving into commercial mortgages?

MD: Make sure you have access to the tools, lenders, professionals and environment that will allow you to address the needs of your clients, regardless of the asset class you’re looking to finance. Brokers who are not in this space underestimate the differences in the required underwriting to get loans approved for different asset classes. How

to underwrite, justify and mitigate the risks related to a condo construction is entirely different from a multi-unit residential refinance, or a plaza financing, refinancing or purchase. Every asset class has a different set of requirements, and if you do not understand those requirements, you will not be able to justify and mitigate them to the lender.

So my advice is, don’t focus on the money or the splits that you’re going to have, but rather focus and align yourself with a mentor or with a brokerage operation that has been successful on the commercial mortgage side so you can be in the best position possible.

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FEATURES

COMMERCIAL LENDING

Give up the chase

First Source’s Steven Walters explains why commercial brokers shouldn’t expect their lenders to chase the market, despite its current heat

IMAGINE THIS scenario: A developer has a site tied up for $3 million, purchased on paper just shy of two years ago and now ready to close. The appraisal was completed by a reputable firm and is valued today at $4.8 million ‘as is.’ The purchaser has completed a number of studies, has met with the city and is ready to make submissions for approval. The site now falls within the official plan, and the city wants it rezoned for higher-density residential development. The zoning approval will allow the purchaser to build his intended stacked townhouse development and increase the value substantially.

Closing is a month away, and the purchaser goes to his bridge lender for a 12-month loan, which should take him through the balance of submissions and eventually to an approval and exit with a construction lender. The purchaser brings his entire required document file to your meeting, along with the appraisal, and requests a loan representing 68% LTV. Simple math places this loan at $3,264,000. Once you subtract legal and arranging fees of approximately $80,000, the purchaser is left with a loan of $3,184,000 on a $3 million purchase. (For the sake of simplicity, let’s assume costs to date are $184,000.)

How does a prudent lender analyze this?

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On one hand, 68% LTV appears safe. Also, with zoning likely to be granted in six to eight months, the value of the land will only increase, further reducing risk.

However, the purchaser will have zero equity. All invested capital is being removed, so there will be no cash put in. The lender is basically purchasing the property and using the market lift or appraisal surplus to justify the transaction based on the equity of $1.8 million ($4.8 million – $3 million).

Recall that other than some studies and actually tying up the property, nothing has been done to the property to increase the value of the site. The zoning is the same as it was a year and a half ago.

Sooner or later, this market has to lose steam. A commercial lender must be cautiously optimistic.

In the present, we must remember lessons from the past to better understand our future A lender who lends on this scenario is chasing the market. The purchaser will close his acquisition with no skin in the game. The market and the market alone is responsible for tremendous lift. It’s akin to saying that you started with a good idea a year and a half ago, that it was valuable

then, but now that you’ve thought about it all this time, it has even greater value.

Sound like hot air? It is.

However, there is a big difference in this case, which is that the change in land use to provide higher density is measurable.

So, even though virtually nothing has been

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done to improve the land, the value per buildable square foot increases from the time the official plan changed and at various stages of development. Low interest rates, steady immigration and the limited supply of housing have also fuelled a tremendous increase in developable land value.

As we all know, an appraisal is a value assessed to a property at a specific moment in time. Unfortunately – or perhaps fortunately – these are unprecedented times.

Commercial lenders should put far more onus on the purchase price rather than on appraised values. One must look carefully

at comparable sales prior to deciding on the amount to lend and consider a cushion toward some kind of market correction.

Should the market take a drastic turn due to major changes in unemployment, increased interest rates or a catastrophic event that stops or drastically slows down the pace of demand for housing, land prices and real estate in general will decrease in value.

It’s been a long time since we heard the ‘r’ word: recession. However, sooner or later, this market has to lose steam. A commercial lender must be cautiously optimistic. In the

present, we must remember lessons from the past to better understand our future.

I am not advocating that lenders stop lending until the market cools. Rather, I’m strongly suggesting not to get caught up in recent large increases in land values. Don’t chase the market – it’s not sustainable, and someone is going to get hurt.

Steven “Skip” Walters is the senior vice-president of business development at First Source Mortgage Corporation.

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10/08/2017 7:59:30 AM

SPECIAL PROMOTIONAL FEATURE

COMMERCIAL LENDING

Expand your options Whether you’re stuck with a deal the banks won’t touch or are trying to gain a foothold in the commercial space, FundingCentre.ca explains how co-brokering can open up new opportunities

MORTGAGE BROKERS face challenges and obstacles at every turn when packaging a deal: deadlines, keeping up with industry changes, and government and lender guidelines. Every deal is like a puzzle – some much harder than others. What’s crucial to the puzzle is understanding a client’s situation and knowing which lender to place that deal with in order to best service the client’s financial needs. The problem most brokers face is not having the experience and established connections to place those hard-to-fit deals with the right lender.

Years ago, the team at FundingCentre.ca saw the need for alternative lending solutions. Because conventional lending is so different from alternative lending, we found brokers often shied away from going into the ‘dark side’ of alternative lending. Turns out alternative lending isn’t so much the dark side when the banks have said no and your clients are left thinking they have no more options.

Before you throw in the towel on that deal you’ve already worked so hard on, only to

Co-brokering is a winwin for everyone – you win the business and retain your reputation and client, and your otherwise out-ofoptions client gets the financing they need receive an endless brigade of declines from A and B lenders, consider co-brokering as an option. It’s a win-win for everyone – you win the business and retain your reputation and client, and your otherwise out-of-options client gets the financing they need.

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How do mortgage brokers benefit?

As your expert co-broker in complex commercial and private deals, we will present your application to our specialized funding sources where your application has the best chance of approval. This will undoubtedly save you countless hours of work while ensuring you secure the most appropriate financing package for your client. Our expert staff, with decades of combined industry experience and technical expertise, have been carefully selected to ensure we deliver exceptional results.

As a residential expert, you can now offer your clients a broader range of services.

We act on your behalf as your alternative/ commercial deal partner and never turn down a deal based on current market conditions or strict regulatory restrictions.

FundingCentre.ca offers the most competitive commissions and referral fees in the industry. We value our relationships with all of our brokers and referral sources. Your client stays your client. We do not solicit your customers.

By partnering up with FundingCentre. ca, you immediately gain access to what is possibly the largest and most comprehensive portfolio of funders operating within the commercial and private lending markets.

You benefit from an unparallelled choice of funding sources for those time-consuming, complicated, hard-to-place deals.

Our experts have many years of experience in the commercial and private lending fields. Our simple motive is to sell the deal to the lender and then secure the borrowers.

This, in most cases, is a tricky and complex task. Whether it’s a multi-family builder or a land developer, we know how to speak the language of commercial lending.

The ramifications of losing a deal, losing a client and harming your reputation are practically irreversible. We simply want to get the deal done so that all parties are satisfied. Visit our site at www.fundingcentre.ca for more information and to get that deal approved.

We act on your behalf as your alternative/ commercial deal partner and never turn down a deal based on current market conditions or strict regulatory restrictions WHAT TYPES OF DEALS CAN YOU CO-BROKER? Equity take-out/foreclosure prevention With real estate prices on the rise, tapping into the equity of a home makes high-rate debt consolidation a no-brainer. Why not suggest your clients use the equity in their home to pay off their credit card debt, personal loans and have enough to for some home improvements or even take that long-awaited family vacation without losing the stellar conventional rate on their first mortgage?

Or for clients who are facing or have dealt with foreclosure who are an automatic no for the banks, why not show them an alternative way to tap into their equity – quickly and stress-free, without any strict rules and document requirements?

Construction/land deals Most conventional lenders won’t even look at a land deal or offer a low LTV for both land purchase and construction.

Red tape and strict guidelines restrict large developers or custom home builders, especially when there are no permits, building plans/budget or rezoning application to get financing. Our team can get that land purchased. Once the plans, budget or rezoning application has passed final reading, we can finance the construction portion – potentially up to 100%.

Rental/investment property A client is looking to purchase a rental property to enhance their portfolio. Their current home has a large source of equity. Going through conventional lenders requires rental worksheets, an appraisal with market rent value and the ability to only use 50% to 80% of the rental income to debt service the new mortgage, property taxes and heat – or they only offer a low LTV. Not to mention, some lenders also have a maximum number of doors. We can use the equity in a client’s home as a down payment and purchase the rental/ investment property using 100% of rental income.

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PEOPLE

BROKER INSIGHT

A lifetime’s work Angela Calla talks to CMP about becoming a mortgage broker at 22 and why brokers need to embrace change in order to thrive in the modern market

CMP: What made you get into the mortgage broker industry?

Angela Calla: I got into the industry at a very young age – I was licensed as a mortgage broker at the age of 22. I always had a passion for real estate, but I didn’t want to be a Realtor. Sitting around the dinner table growing up, I was always interested in money, money management and investing. However, I didn’t want to be a financial advisor because they tend to favour people who are already wealthy – they get compensated based on assets under management, and I didn’t think that would be the best way to help the average person to get ahead.

Homeownership was a really important part of our immigration story to Canada and one of our core values as a family. So, when I learned what a mortgage broker did years later when I was a marketing representative for a restoration company, it seemed like an opportunity to marry my passions. Upon reviewing what the job entailed, I immediately worked toward getting my licence.

CMP: How would you describe your time in the industry?

AC: It’s been really exciting. Every day you’re learning something new, regardless of your experience in the industry.

CMP: What are your thoughts on the recent regulatory changes?

AC: We’re in a constantly changing economy, but we also have a collision of circumstances because we’re seeing a great shift in our

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demographics. I believe that as a result of that, we have to adapt accordingly.

I understand why the government is doing what it’s doing, but I can’t say I’m on board with all of it. The end result will balance the market a little bit more favourably, but it will certainly create some shortterm challenges. Those challenges stem from wages being stagnant for decades, and that makes it difficult for Canadians.

That’s why our focus has always been on long-term planning and not transactional.

You have to plan to get ahead. In every market, there is a winner and someone who doesn’t get ahead. You have to do whatever you can to put yourself ahead of the curve because we know how difficult it is for anyone who is not in the upper middle class to be able to attain homeownership.

CMP: Recent stats show that the total number of homes sold nationally fell 6.7% in June – the biggest monthly decline since 2010. Has your business been affected?

AC: It doesn’t really affect me. My busi-

ness is not primarily focused on real estate transactions; I focus on the management of individual mortgages. So, because change is constant, there is always an opportunity for us to be assisting by proactively managing our clients’ mortgages.

CMP: How do you react to such changes in market conditions?

AC: Every time there is a significant change in the market, the first thing I do is run to the numbers. I look at the data to find out who is going to be vulnerable, who can benefit and who needs to change their plan.

I immediately take care of my own clients first before I make the information available to the public. For every story that comes out, we generally have data telling the story before it happens.

CMP: What’s the secret behind your success?

AC: Getting in front of changes in the marketplace and understanding exactly who is going to be impacted and then planning accordingly. I am not afraid of change – I

CALLA’S ADVICE FOR OTHER BROKERS “If you don’t like change, this is not the industry for you. If you don’t thrive on change – if it’s not exciting to you – this is not for you. Everything is going to change every day in this industry; nothing is stagnant. Think about what you can automate and how you can improve. If you are not driven to look at those things every day, I would suggest being a leader in this field is not for you.”

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FAST FACTS: ANGELA CALLA

Started in the industry at age 22

Works at Dominion Lending Centres National in Port Coquitlam, BC

Focuses on residential mortgages, from first-time home buyers to serious real estate investors

Is an active real estate investor

Host of The Mortgage Show on CKNW AM980

“Every time there is a significant change in the market, the first thing I do is run to the numbers. For every story that comes out, we generally have data telling the story before it happens” embrace it, and I thrive when it’s happening.

I bring clarity to complex situations, and I bring a plan to every client. If you are not willing to continually find ways to improve and look into yourself, how can you be a better leader and better influencer?

CMP: What do you get up to in your

spare time?

AC: I love playing with my kids. I love going to the water park with them, running around the mall, going to the library – I love doing anything they want to do. I’ll play with trains, dolls, anything; I just really enjoy being with them and not on my phone, not plugged in.

A regular guest on City TV’s Realty Television and Breakfast Television

Consistently ranked on DLC’s Top Producers list

Repeatedly recognized as a CMP Top 75 Broker, Young Gun and Woman of Influence

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SPECIAL PROMOTIONAL FEATURE

LOFT BROKER PORTAL

All about the Loft Broker Portal

Home Trust’s new broker portal promises to increase efficiency by streamlining the application process. Pino Decina, the company’s executive vice-president of residential mortgage lending, explains how it works I AM extremely pleased to tell you that the first phase of Home Trust’s new Loft Broker Portal rollout has been completed. We are now ready to embark on the final segment of our launch plan and make Loft available to our entire community of broker partners.

We are far from finished with Loft development. There are further enhancements already in the planning stages, and you will hear more about these new features in the coming months. In the meantime, for those who have yet to get started with Loft, I encourage you to start using it today so you can see for yourself how it can help you better serve your clients.

While the Loft Broker Portal offers many useful features, I’d like to discuss three key elements in particular that will transform the way you work with Home Trust. Let’s start with what I think is the single most important objective of Loft: making it easier to manage your entire pipeline of deals with Home Trust.

On Loft’s Applications screen, you can see at a glance all your active client applications in real time, including the all-important current funding status for each deal. In addition to the default view showing your updated deals, you can also take advantage of a comprehensive search function, as well as standard sorting and filtering features. These features enable you to drill down and view each deal in greater detail.

The Applications screen is ideal for quickly identifying any outstanding conditions that

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could be holding up the progress of a specific deal. Typically, this is due to a missing supporting document, but if it’s something more complex that you require assistance with, Loft has you covered by enabling direct online communication with Home Trust.

With the online communication tools available within Loft, you can send emails or text messages to the Home Trust underwriter assigned to each file. A copy of each message will be saved to the deal application and will be available for you to refer to later directly from

the Loft interface.

For those times when you do need to speak with your Home Trust representative, we’ve added a ‘click to call’ feature that works with your smartphone. This will initiate a phone call to your Home Trust contact by clicking a single button in the Loft screen.

Recognizing that effective communication must be a two-way street, Loft also serves as a message hub where you can receive messages from Home Trust. Important notices, including rate updates and other exclusive

The broker information and mortgage applications in this screenshot of the Loft Broker Portal are fictitious and include sample data for demonstration purposes. Product names referenced are actual products.

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WHAT BROKERS HAVE TO SAY “Loft has been a welcome tool for MonsterMortgage.ca. The increased efficiency has allowed our team of agents to complete mortgage files faster and get on to the next deal quicker, resulting in enhanced customer satisfaction and more business.”

Vince Gaetano, MonsterMortgage.ca

“A great way to manage your applications. Kudos to Home Trust on the introduction of Loft.”

Bill MacDonald, Invis

“Great job on the new portal.

It is very user-friendly with everything at your fingertips. Great job to all who put this together – it is awesome!”

Glenda Lannon, Cal LeGrow Financial

content, will be ‘pushed’ to you through Loft, ensuring you always have the most recent updates from Home Trust at your fingertips.

Finally, the Application Detail screen helps you manage the documents that must accompany each mortgage application. Not only does this screen identify missing documents for the application, but it also provides the ability to upload the required document directly. What could be more convenient?

To forward the document and have it automatically included in the application file, simply click the Upload button that appears next to the required document and follow the prompts. We’ve even made it possible for you to submit photos for certain documents from your smartphone or tablet.

Of course, you can also download documents through the Application Detail screen, including the final commitment letter. The

commitment letter will be available for download immediately after the deal application has been approved and ensures that your clients receive confirmation of the approval as quickly as possible. Other forms and documents are also available to download, such as our standard Gifted Down Payment form, which is used to declare the source of any down payment funds obtained by way of a gift from immediate family members.

While on the topic of document management, Home Trust’s preferred means of receiving new client applications is through the Loft Portal. I realize that not everyone is currently using Loft, and while we won’t ignore non-Loft-generated deals at this point, please understand that it is our intention to make Loft mandatory in the near future. This is why I ask that you start working with Loft now to be ready for when we do make the

transition to a Loft-only environment.

I hope this brief look at the Loft Broker Portal has provided you with a good sense of how Loft can help you better serve your clients and reduce your workload. But if you need a little more incentive to convince you that you should be using the Loft platform, here is another fact that will help make your day a little brighter: It’s incredibly easy to get started with Loft. Simply type go.hometrust. ca/loft into your browser to access the Loft information site. Here you will find links to a more comprehensive Loft overview, a Loft starter guide and a Loft FAQ. The entire Home Trust team is very excited about the move to Loft and the benefits Loft can bring to your business. As always, if you have any questions or need assistance to get started, please contact your Home Trust representative.

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FEATURES

MEETINGS

Say no to dull meetings Business strategist Matt Malouf explains how getting the rhythm and subject of your meetings right can turn tedious encounters into business turning points THE KEY to great management, whether your staff members are local or overseas, virtual or in your workplace, is regular communication and a good meeting rhythm. Think of meetings as the pulse of your business: If it’s not beating regularly and rhythmically, then inevitably you’ll get an unhealthy system.

In the 15 years I’ve spent working in or with growing companies, the companies that are consistently growing and achieving their goals are those that have established a routine and rhythm of having meetings. The faster they are growing, the more meetings they have. While this may sound counterintuitive or even crazy, I need to clarify that I’m not talking about having a meeting for the sake of having a meeting. I’m talking about having short meetings that are run to time, with a specific structure and agenda.

Most meetings are poorly run, demotivating and, to be frank, a waste of everyone’s time. If run properly, your meetings will be inspiring and positive and enable the business to grow at a faster rate.

A big key to running successful meetings is to prepare for them properly. This is why daily, weekly and monthly reports are so important.

The reports are designed to give you the information required to run a short and productive meeting. This way, the meeting can cut through the information-gathering stage that often takes up the majority of most meetings

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and get straight into constructive discussions and/or sharing.

A great meeting rhythm I have implemented with many companies is a daily meeting (sometimes referred to as a daily huddle), a weekly meeting and a monthly meeting.

Daily meeting or huddle – a must in growing companies A daily meeting or huddle is a short meeting (five to 15 minutes) designed to support discussions around tactical issues and provide short updates. This is a great way to bring everyone together, keep everyone focused, and build a culture of camaraderie and teamwork.

While this may seem like overkill, this is a

mented well, the daily huddle will save you time, reduce impromptu conversations and increase the efficiency of information-sharing.

I have worked with many organizations that have implemented this well, and the results are immediate. Your team will be more aligned, and you will be able to control the internal energy while accelerating the growth

I’m not talking about having a meeting for the sake of having a meeting. I’m talking about having short meetings that are run to time, with a specific structure and agenda practice that many fast-growing companies around the world have implemented and are practicing on a daily basis. You may feel like you don’t have the time to conduct such a meeting or that you are having enough interactions already, so you don’t need another meeting. In my experience, when imple-

of your company. Let me delve a little deeper into the structure and limits that lead to a successful daily huddle.

Timing It is recommended that you set the start of the daily huddle at an odd time, such as 10:10 a.m.

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with less people.” It is for that reason that I recommend you involve the maximum number of staff members. The ideal number to keep the meeting short and allow a good exchange of information is 10 to 20 people. In larger companies, I would recommend you create a daily huddle in each department and another daily huddle with the heads of departments.

Agenda The last point to consider is the heart of the daily huddle: the questions. The agenda should be the same every day – only three items long (allowing up to five minutes per item). An agenda that has worked with many of my clients revolves around the following three questions: Did you achieve your primary focus yesterday?

What is your primary focus today?

What obstacles will keep you from completing it?/Where are you stuck?

or 12:12 p.m., to make it memorable. Starting at an odd time often leads to people being on time, believe it or not. As this is quite a short meeting, you don’t have very much time to waste. So it is important to the success of the huddle that you start and finish on time.

(Ideally, the meeting shouldn’t go for longer than 15 minutes.) In the beginning, I recommend getting someone to time the meeting and to end the meeting regardless of whether the agenda is finished or not.

Setting In order to the keep the meeting short, it is best to conduct the daily huddle standing up.

This keeps the energy high and will help you to avoid extending the conversation – people don’t want to have to stand for too long.

Participants Verne Harnish, author of Scaling Up and a leading pioneer of the daily huddle concept, says, “In general, the goal is to have more people in less meetings, not more meetings

The meeting rhythm will depend on the role and the organizational culture.

Depending on what other meetings are scheduled, I usually have a daily meeting with my personal assistant. That daily meeting is critical to her role and her ability to support me in what I’m doing. Those meetings are prebooked one month in advance.

It’s a 15-minute meeting, and the conversation starts with, “How can I help?”, and then my assistant will give all the updates for the day. The meeting shifts when she says, “Matt, how can I help you?”, and then I update her on what I need done. While hosting this meeting, we use Asana, our project management tool. We both have it open and make changes in real time so we can both see the capture of those tasks and make sure they get managed properly.

Weekly and monthly meetings The second meeting type is the weekly meeting, which is a 50-minute meeting with a clear agenda that talks about the critical progress updates within a business. It engages

conversation to help people understand and gathers feedback from the team on what the business should keep doing, stop doing and start doing.

When it comes to one-on-one, team, weekly or any other meetings that follow an agenda, culturally it’s good to start with: What are your wins for the week, and why do they matter?

What has been your biggest challenge, and why does it matter?

What have you learned in the past week, and how can you apply it?

This helps set a positive mood and tone for the meeting, providing a chance to celebrate individual victories as a team and praise individuals in front of the team. ‘Wins and positives for the week’ could be the first item on your meeting agenda. From there, move on to the remaining items. I always end my weekly meetings with these two questions: As an organization, based on the past seven days, what should we stop doing?

As an organization, based on the past seven days, what should we start doing?

These two questions allow people to voice their concerns or frustrations, as well as provide ideas or solutions that can enhance the business.

Monthly meetings follow a similar agenda to the weekly meetings, except you need to add a strategic layer to them. By this I mean you should check in with the company’s goals and solve any major challenges to enable you to continue moving forward.

Edited excerpt from The Stop Doing List (Wiley, $27.95) by Matt Malouf Matt Malouf is a business strategist and the author of The Stop Doing List, which draws on Malouf’s work with big businesses and startups to help business owners free up time to build their businesses. The Stop Doing List is available in bookshops and online.

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FEATURES

BURNOUT

Avoiding burnout Leadership expert Karen Gately explains the six typical drivers of burnout in business leaders and offers practical tips to help you avoid them

HAVE YOU ever reached the point where you felt like you simply couldn’t go on? Have you found yourself losing concentration and lacking the motivation to do the things necessary to drive the performance of your business? It’s common for CEOs and senior leaders to experience periods of disengagement from their roles and teams due to the extreme exhaustion they feel, and many fail to recognize the state of burnout they have reached.

Burnout is a state of emotional, mental and physical exhaustion caused by excessive and prolonged stress. Typically reflected in our energy and behaviours, burnout unquestionably undermines any CEO’s ability to lead a thriving organization. Despite its devastating impacts not only on job performance but also on quality of life, many of the senior leaders I work with fail to take the necessary steps to avoid reaching this state of exhaustion and disengagement.

The following are six typical drivers of burnout in business leaders and some tips for how to avoid them.

1

Overcommitting

There are always more things you could do in any given day. But the reality is that it isn’t possible to explore, plan and execute all of the ideas and even priorities you are likely to have. Your ability to invest energy and resources wisely depends on your ability to know what matters most. While deciding what you will do is important, arguably more so is deciding what you won’t.

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TIP Create a business plan on one page.

Identify the priorities that will have the greatest influence on your success, and anchor your focus, and that of your team, to them.

Review progress regularly, and identify ways in which you need to bring focus back to these critical objectives. Strike things off your to-do list that add little value and distract you from your main mission. Learn to say no.

2

Avoiding

The need to make tough decisions and have difficult conversations is inevitable when leading a team or organization. And yet so many of the leaders I work with avoid them.

Strike things off your to-do list that add little value and distract you from your main mission. Learn to say no The consequence of failing to address issues is continuing to live with the stressful impacts of underperformance and uncertainty. Fear of having the conversations or implementing the actions necessary to drive change is common among leaders who experience burnout.

TIP Work with someone who is able to guide you in shifting the thoughts and feelings that cause you to hesitate to do what is necessary.

Find a mentor or coach you trust to challenge your thinking and hold you accountable for dealing with issues that arise.

3

Executing poorly

Even when decisions have been made, executing them can be difficult. Most often what I observe are senior leaders who recognize what needs to be done but fail to act decisively.

These leaders fail to apply disciplined approaches that ensure priorities are achieved.

Commonly, a lack of planning, review, and deliberate decision-making about priorities and resource allocation leads to costly mistakes and wasted resources. The pressure and workload demands on leaders and teams when things go wrong can be immense.

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and the desire to be with our friends and family. We’re likely to reach burnout if we fail to give our mind, body and spirit the nurturing needed to thrive.

TIP Establish routines that ensure you take time out for you. Switch off the tech­ nology that allows you to stay connected with your work world, and spend time with the people you love and doing the things that energize your spirit. Maintain a level of activity and diet that allows your mind and body to be healthy.

6

Worry and regret

Reflect for a moment on how much time and energy you waste worrying about things that are outside of your control. How often do you worry about things that haven’t yet happened and may never happen? Do you expend vital energy on concerns that can’t be resolved? Feeling helpless and regretful drains our energy and is likely to erode our resolve to keep striving.

TIP Develop your organization’s ability to manage projects well. Develop your own ability to set a clear vision, establish prior­ ities and drive change. Also develop the capabilities of leaders at all levels of your organization to drive strategic priorities through to successful implementation.

4

Aiming for perfection

Let’s face it – worrying about being perfect all the time is stressful. Many of the perfectionists I have worked with have recog­ nized this tendency in themselves but have failed too see the seriousness of its conse­ quences soon enough. The simple truth is that none of us or our businesses are perfect.

Investing unnecessary time, energy and resources in striving for standards beyond what our staff or customers expect is a

common reason CEOs are overworked.

TIP Understand the 80/20 rule and apply it. The rule states that 80% of your outcomes come from 20% of your inputs. The impor­ tant thing to understand is that in your life, 20% of the activities you do account for the majority (80%) of your happiness and success.

5

TIP Recognize when you are worrying.

Start by asking yourself whether the problem is something that can be solved, and whether it can be solved by you. For example, is the problem something you’re actually facing, or is it just a ‘what if ’? Is your concern realistic?

Can you do something about it or prepare, or is it really out of your control? If it’s an unsolv­ able worry, recognize that fact, put it out of your mind and move on.

Avoiding burnout comes down to making necessary and balanced choices – those that allow you to deliberately invest time, energy and resources in achieving what matters most.

Know when to let things go, choose to focus on today, and keep an eye on the future.

Work-life imbalance

We all need time away from work to slow down, unwind and recharge. No matter how much we love our work, if the time we spend doing it disproportionately consumes our focus and energy, our health and rela­ tionships are likely to be impacted.

It’s difficult to avoid feeling stressed when conflicted between the demands of our job

Karen Gately is a leadership and people management specialist and the founder of Ryan Gately. She works with leaders and HR teams to drive business results through the talent and energy of people. Gately is also the author of The People Manager’s Toolkit: A Practical Guide to Getting the Best from People and The Corporate Dojo: Driving Extraordinary Results Through Spirited People.

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FEATURES

SALES

How to lose a deal in .07 seconds We don’t like to think about it, but our body language can make or break a deal.

Communications expert and broker coach Anneli Blundell explains how to put one’s best foot forward WHEN DEALING with large financial decisions, clients are often nervous or anxious before they step through your door. Some brokers may be fortunate enough to receive ‘warmed-up’ clients through networks, recommendations or research, but many new clients are already on guard and may treat you with some trepidation.

Your ability to make a favourable first impression through a strong personal connection is paramount to getting the deal off to a good start. How a client experiences you in the first few moments of your connection will determine how quickly they will trust you, how hard it will be to fix any potential errors, how forgiving they will be should any occur and how likely they’ll be to refer you.

Regardless of whether clients arrive ‘warm’ or ‘cold,’ every new client is won or lost in the first few moments of contact. Your brochures, referrals and social media presence can only get you so far; the real test is when your reputation collides with reality.

You are the enemy until you prove otherwise Within .07 seconds of meeting new people, we unconsciously decide if they are ‘friend’ or ‘foe.’ A look, feeling or gesture can determine our decision. If there’s something about you – your behaviours or mannerisms – that aren’t like me or don’t make me feel comfortable, you become my foe, and my guard goes up.

My view of you narrows automatically, and I begin looking for evidence to justify my gut

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feeling that something’s not right. I become less responsive, more skeptical and harder to win over.

As a broker, your job is to steer your clients’ initial impressions and direct their unconscious decisions about you. You need to get into the friend category as quickly as possible before any instinctive impressions negatively (and perhaps unjustly) colour the way they view your expertise.

How do you make a favourable impression when impressions are formed so quickly?

Let’s explore three key components to getting a jump on the right first impression.

1

Project a sense of calm

If you arrive at a client interview stressed, frustrated, flustered or even mildly annoyed, it will leak out in subtle yet solid ways and affect your clients’ feelings toward you. As much as we have evolved to be rational, logical creatures, we are still very instinctive when it comes to reading people – we sense when there is something going on, and we respond without thinking.

When people try to suppress negative emotions, it causes the blood pressure of the other person to rise. If you’ve ever walked into a room when two people have been arguing but stopped before you entered, you’ll know what I mean. Your blood pressure goes up and your chest tightens as you sense something is going on.

Your emotions are contagious, and your emotional state creates the conditions for connection – for better or worse. If your client enters the room and you are holding onto frustrations or stress, they will feel it.

Before you can say ‘good morning,’ you’re in the foe bucket.

Be in a positive emotional state – calm, relaxed, happy. (Funny cat video, anyone?)

2

Smile with your eyes

The question we ask ourselves (unconsciously) when deciding whether someone is a friend or foe is: Does this person like me? We judge this based on how warm and friendly they appear toward us. Smiling is the obvious first step to showing this; however, not just any smile will do. The key here is

GET YOUR BODY LANGUAGE RIGHT Win deal

Calm, relaxed state

Stressed, anxious, frustrated state

Smile with your eyes

Smile with your mouth only

Steady eye contact

Diverted eye contact

Creates a friend classification = More trust, less resistance, easier to close the deal

to smile with your eyes, not just with your mouth. A genuine smile (or, as psychologists call it, a Duchenne smile) reaches the eyes and causes the orbicularis oculi muscle to contract. This raises the cheeks and forms crow’s feet around the eyes.

When we receive a tight-lipped smile or even just a ‘mouth’ smile (which doesn’t reach our eyes), we become steered toward foe. In fact, if we don’t smile at all or smile too late in the initial greeting, we cause people to shut down altogether. When people are faced with a blank or neutral facial expression, they interpret it to be a negative facial expression.

And of course, negative means you don’t like me, which means an automatic classification into the foe bucket.

Invite your whole face to the smile party.

3

Lose deal

Make eye contact

Looking at someone when you greet them is crucial to making a great first impression. However, the quality and quantity of your eye contact is key. Your gaze must be steady and soft, not shifting, darting or too intense. And there’s more – once your initial connection through the eyes has been made and the talking begins, it’s critical to keep up the same cadence of eye contact when your clients are speaking.

This might sound obvious, but not every­one has a natural preference for looking at

Creates a foe classification = Less trust, more pushback, harder to close the deal

another person when that person is talking to them. Several clients of mine prefer to listen with their ears by turning their head to the side (appearing to look out the window) as the other person talks. This causes the other person to immediately start shutting down, as they interpret that cue as a lack of interest.

Make eye contact early and keep it steady.

Although your client assesses your experience and tries to make a rational, logical decision about the value of your expertise, they are unconsciously steered by their emotional and instinctive interactions with you. Their first impressions, gut feelings and general sense of you will outweigh your history or ability to get the deal done – every time.

When choosing between you and another broker, your prospective client’s decision is in your hands – or more specifically, your mood, your smile and your eyes.

Anneli Blundell is an author, speaker and communication expert who helps her clients improve their communication, influence and engagement for better business results. She is the co-facilitator of Broker Essentials, a one-day training to fast-track broker development. Her book, Developing Direct Reports: Taking the Guesswork out of Leading Leaders, is a practical guide for developing performance on the job. For more information, visit anneliblundell.com.

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PEOPLE

CAREER PATH

TO GREATER HEIGHTS Doug Adlam has dabbled in several different careers, but nothing spurs him on like mortgages

Adlam was raised in a household immersed in real estate – his parents owned a firm in Mississauga. He credits this background and a childhood spent playing hockey for providing the foundation for a successful career “Real estate was very familiar to me; that and the teamwork I learned from hockey are the two main factors my business has been based on”

1980

GROWS UP IN A REAL ESTATE FAMILY

2000

FINDS MARKETING

2001

CONSULTS HIS WAY INTO MORTGAGES While still a student, Adlam took on a role as a consultant for the company created by his parents, Champion Mortgage, which they launched to complement their real estate business. His expertise on branding and marketing helped the business capitalize on mortgage brokers’ surge in popularity

An undergraduate marketing management degree was followed by a master’s in marketing and consumer studies after Adlam read a fateful magazine article “There was a huge article in Maclean’s about the pros and cons [of post-grad study]; I realized I wasn’t done learning. Marketing allowed me to learn more about people and refine skills, from management to accounting to consumer behaviour. I worked for two agencies full-time while I was in school to give myself more opportunity”

2007

DESIGNS A NEW BROKERAGE A research project on mortgage brokering resulted in Adlam generating a business plan for a new kind of brokerage “I did it for fun in my spare time. The industry had grown so quickly that it had many challenges connected to the rapid growth, but also opportunities that accompanied those challenges. I built out a plan for a customer-focused business that was designed with the next 40 years in mind, not the next 30 days”

2007

MOVES TO THE HEAD OF THE CLASS Degree in hand, 26-year-old Adlam got a job as lecturer at his alma mater while simultaneously working as a linesman with the Ontario Hockey League “I felt I had a good grasp of how to make lectures interesting and entertaining to point where people would want to come to class. I had three career paths on the go – being a professor, hockey refereeing and marketing”

2017

WINS TOP HONOUR Adlam and his team won big at the Canadian Mortgage Awards, walking away with the award for Mortgage Brokerage of the Year, Fewer Than 25 Employees “It is truly an honour to be able to bring this award home. In our industry, this is like winning the Stanley Cup!”

2011

CHOOSES A PATH After turning down a sought-after full-time refereeing gig and making the decision to leave academia, Adlam encountered skyrocketing success when Champion posted 134% year-over-year growth

“Our model puts our clients and employees first; when the lines of communication are open, people love what they do and look forward to coming in to work every day”

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PEOPLE

OTHER LIFE

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

Deep powder day on the slopes above Whistler, BC

24

Countries in which Addington has coached snowboarding

3,833

Estimated number of times Addington has put on his snowboarding boots

6,872

Number of students Addington has trained

CHAIRMAN OF THE BOARD For Leo Addington, the best place in the world is on a snowboard THE MOMENT Leo Addington tried snowboarding in the mid-’90s, he was hooked. “The first time I rode powder, I never looked back,” says Addington, a broker at Vancouver’s Synergy Mortgage.

That’s fortunate for the novice boarders Addington started to coach in a quest to fund his snowboarding habit.

“I was already helping because I’m a

teacher at heart,” he says. “I realized I was spending time teaching snowboarding to kids for free, so I started a snowboard club. It fit in with my entrepreneurial spirit.”

Ultimately, Addington’s coaching sideline became so successful that he coached the Canadian national teams at both the Vancouver and Sochi Olympics. These

days, Addington no longer coaches, but he still loves to get out on the slopes.

“Now I snowboard for me, and it’s just mine,” he says. “I can drive up to Whistler and snowboard all day. It’s part of my weekly physical routine: either running, yoga or snowboarding. And I’m always super happy the next day or two after snowboarding.”

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Asif Kasim Asif is a top mortgage specialist with a successful DLC mortgage team.

But he’s MORE than that.

Asif puts his community first. For more than a decade, he’s hosted a charity golf tournament where the primary recipient of the donation is Dr. Roz’s Healing Place. It’s a centre that helps empower women to make positive changes through the cultivation of a holistic lifestyle.

The shelter also focuses on youth at risk, a cause close to Asif’s heart. He formerly served as board president of the centre and has raised thousands of dollars for the charitable organization.

This is what success looks like when you’re a part of Team Blue. Isn’t it time you join a company that appreciates what you do – and who you are – both on and off the job.

Dominion Lending Centres —

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