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MARKET MATTERS 8 | Letters to the Editor 12 | Reading between the lines National Bank announced major changes to its broker services. One broker weighs in on the impact they will have 13 | News analysis The media paints a bleak picture of Canada’s housing future. Is there a bubble about to burst? Will we experience a hard or soft landing? 14 | Broker advice Dustan Woodhouse & Sabeena Bubber go head to head: On grace when competing with fellow brokers
52 42 | Market Snapshot CREA’s up-to-date stats on housing markets across Canada 48 | Public Professional Doren Aldana on using publicity to get your name out
52 | Etiquette Why manners matter in today’s business world
50 | Global Market matters Housing pressures across the world
54 | Multiple Means Multi-family homes are a hot product for investors 58 | Trustworthy Time Building trust can help give you a competitive advantage
24 COVER STORY
CMP’s Super Brokers The large brokerages are scooping up more talent than ever before. Find out what sets them each apart
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NEWS 18 | Product News A bite-sized guide to the industry’s newest products and appointments as they come down the channel
REGULARS 61 | Favourite Things 62 | The Toronto housing market still on strong legs
A y w
W s a L y
64 | CMP Service Directory
MARKETING 44 | Profile MCAP’s VP of sales urges consumers to use a broker 46 | CMA: Career Builder Former two-time CMA winner shares how the awards helped bolster her career
Twitter.com/ CMPmagazine Like Us on Facebook Canadian Mortgage Professional
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Accelerate your career with HLC With innovative programs, sales incentives and value added benefits, HLC Home Loans Canada empowers you to achieve more.
Contact a Regional Sales Director today. Grant Bennett
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• Geoffrey.Woodford@hlcmortgages.com • 1-866-217-5159
3877337 Canada Inc. is a subsidiary of CIBC Mortgages Inc. and carries on business as HLC Home Loans Canada (“HLC”) except in Quebec, where it carries on business as HLC Hypothèques Logis Concept and is licensed as a mortgage agency. HLC is licensed/ registered in Ontario as a mortgage brokerage under Licence #10423, in British Columbia and Nova Scotia as a mortgage broker, in Alberta as a mortgage brokerage and in New Brunswick as a credit broker. TM HLC Design is a trademark of CIBC.
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CONTENTS / EDITOR’S LETTER
NETWORKING COPY & FEATURES EDITOR Vernon Clement Jones STAFF WRITER Justin da Rosa CONTRIBUTORS Donald Horne, Dustan Woodhouse, Doren Aldana, Scott Dawson, Rob Butler COPY EDITOR Rachel Naud
ART & PRODUCTION GRAPHIC DESIGNER Alicia Chin
SALES & MARKETING ASSOCIATE PUBLISHER Trevor Biggs GENERAL MANAGER - SALES John Mackenzie MARKETING AND COMMUNICATIONS Claudine Ting PROJECT COORDINATOR Jessica Duce
CORPORATE PRESIDENT & CEO Tim Duce OFFICE/TRAFFIC MANAGER Marni Parker EVENTS AND CONFERENCE MANAGER Chris Davis
Editorial enquiries firstname.lastname@example.org Advertising enquiries email@example.com Subscriptions tel: 416 644 8740 • fax: 416 203 8940 firstname.lastname@example.org KMI Publishing 312 Adelaide Street West, Suite 800 Toronto, Ontario M5V 1R2 mortgagebrokernews.ca Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as CMP magazine can accept no responsibility for loss.
Broker networks. Their very name – at least in the waning days of 2013 – conjure up competition. Network consolidation, slowing home sales and tighter mortgage rules have set the stage for a showdown, one expected to lower their overall numbers. What will emerge as the end-result of that process is the subject of increasing speculation. At CMP, we firmly believe that if you must gossip, you should at least have the facts and figures to back it up. That is after all where we come in bringing you our biggest, fattest Superbroker feature ever. Read on starting page 10 for a comprehensive look at each of the major players in the broker channel and how their offerings continue to evolve with the changing and more competitive marketplace. As an added bonus, this month we also present some market forecasting from the head of the networks as each in 250 words or less examines the state of the business and what lies just over the bend. Each is a must-read. Start on page 11. So read on, and then drop us a note after you’re done. We’d also like you to make note of our early start to the nominations process for the Canadian Mortgage Awards. The process is so much more than a popularity contest and one designed to ensure brokers from across the country are considered for the industry’s most important accolades. See page X for a look at a past winner and what the award has done for her career. Cheers, Vernon Clement Jones
Contact the editor:
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WIN a $2,000 Travel Voucher
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Independently Owned and Operated. ®/™ Trademarks owned by Centum Financial Group Inc. © 2013 Centum Financial Group Inc. The intent of this communication is for informational purposes only, and is not intended to be a solicitation to anyone under contract with another mortgage brokerage operation.
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fussy. 01-11_TOC_Editors Letter.indd 6
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Un In the world of banking, common sense has become surprisingly uncommon. Rules are piled on top of rules, making life harder than it needs to be for everybody. Well, thatâ€™s not how we operate. We strive to do right by our broker partners in a way that simply makes sense, like our Edge B mortgage program that offers solutions to customers without traditional credit backgrounds and who are underserved by large banks. Weâ€™re Bridgewater Bank, and thatâ€™s just how we do things. Bwballstarportal.ca
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CONVERSATIONS / LETTERS TO THE EDITOR
LETTERS TO THE
EDITOR RE: LENDERS REPLY (CMP 8.10)
LENDER LETDOWN I appreciate that several of the lenders took the time to acknowledge the survey results and suggest areas that they plan to improve their service in. I do not appreciate that many of the lenders in the survey did not provide feedback on the broker feedback. That is not respect. - Max
GOOD ON Y’AH! GOOD ON ME! Congratulations to CMLS and Merix. I love it that two of my biggest lender partners are on the list this year. I see it as a vindication of my choice in lenders for my clients. I know that satisfying the client is important to these lenders, but I also appreciate the service they provide me. That is just as important in ensuring that we all win with a given transaction. - Chas
Join the debate at mortgagebrokernews.ca
Comments from Mortgagebrokernews.ca on the news stories making waves in advisor waters
RE: NATIONAL BANK COMMISSION CHANGES (CMP 8.10)
UNHAPPY BROKER So, when National Bank says these changes are to “ensure continued strategically controlled growth through the broker channel”, what they are really saying is that they want to limit the growth via the broker channel, a message echoed in past by their CEO. - Unhappy Broker
REACTION ROUT @Unhappy Agent, I think NBC was actually telling the truth when they say they are making these changes to stay active in the Broker Channel. I think we should all try to act like business people in this industry and stop acting like commission driven hustlers. - Ron Butler RE: RELIABLE REFERRALS (CMP 8.10)
ALL SYSTEMS GO You cannot overstate the importance of building referrals into a broker business model. In this market brokers have to rely on referrals not only from past clients but referral partners. I know that keeping those channels open is where brokers often fall down and that gives me an opportunity to build relationships with those partners if I show my respect and gratitude. - Phil Grant
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MARKET MATTERS / READING BETWEEN THE LINES
Subject: Changes at National Bank Mortgage Broker Services/Services aux courtiers hypothecaires
National Bank Mortgage Broker Services would like to acknowledge and thank the mortgage broker community for supporting and entrusting their clients to National Bank. At National Bank, we remain committed to our multi-channel distribution model in which the mortgage broker channel plays a very pivotal role in new customer acquisition.
As with any financially healthy business, each year it is important to re-evaluate and make adjustments to ensure sustained and improved margins to ensure continued efficient strategically controlled growth.
At National Bank Mortgage Broker Services, we are proud of the transparency that we have become known for in the mortgage broker community, and in that spirit we introduce the upcoming changes effective November 1st, 2013.
Subject: Changes at National Bank Mortgage Broker Services To ensure a competitive and fair compensation structure for all products and terms, the following commission changes will be implemented:
In early October, the National Bank of Canada revised its status and compensation programs for brokers, placing a greater emphasis on efficiency. The move, according to the bank, was a show of its dedication to the broker channel. â€œWe are committed to the broker channel and we look forward to doing business with brokers going forward. The brokers have been very supportive of usâ€? Mark Squire, director of Mortgage Broker Services at National Bank told CMP Magazine. Industry players are divided on whether the changes will work in their favour. We asked one broker to weigh in.
1. Elimination of quick close: a big loss for
the brokers, it seems that National is not closing many of those and wants them eliminated. These deals work wonders for refinancing or transfers.
2. But are they doing it because they are not closing enough of them or is it to give an advantage to their own sales force? After all, they they lost a big chunk of their mortgage specialists lately and they might want to keep what is left. 3. Volume bonuses vs efficiency bonuses: this
comes down to probabilities. What is better for the bank 10 $1-million deals or 40 $250K deals? What is the difference ? I think if they have 40 clients instead of 10 they will have four times more chances of making the mortgage more profitable by selling more insurance and opening more bank accounts(with fees) Also cross-selling investments and bringing over other mortgages will likely increases
1 year term will be reduced by 10 bps to 40 bps 10 year term will be reduced by 10 bps to 115 bps
National Bank All-In-One will be reduced by 15 bps to 50 bps (paid on the authourized amount) Volume Bonus (VB) & Efficiency Bonus (EB) All deals submitted prior to November 1st 2013, the old commission structure will be used. All deals new commission structure. submitted 1st will Levelas of November Existing VBbe under the Existing EB New VB New EB Volume1Bonus and Efficiency 20 Bonus 5 10 10 2 20 10 10 20 To continue the evolution of efficient business over strictly volume, a change will be introduced in 3. 3 20 15 10 30 fiscal 2014 that will further reward efficient brokers.5.Efficiency Bonusâ€™ will be doubled in all tiers, while 4 20 20 10 40 volume bonus will be reduced to 10 bps.
National Bank Mortgage Broker Services would like to acknow community for supporting and entrusting their clients to Nation Volume Bonus will be changed to 10 bps for all brokers no matter how much volume is funded with Efficiency and Volume Bonus will continue to be paid on a monthly basis. All other requirements of National Bank.4. Volume will be the same fordistribution all independent brokers or ones within a which the committed toBonus ourcommission multi-channel model the EB program will continue to be the same. Please see the attached document for more details. brokerage network. pivotal role in new customer acquisition. impact volumes funding as of November These changes take effect November 1 2013 but will only Another exciting change to the Efficiency Bonus is all Red Carpet brokers will be eligible for all 4 st
1st. Brokers can expect to see the commission structure when receiving the VB & EB payments in levels. Non status brokers will be eligible for Level 1 and 2 Efficiency Bonus only. December for all funding in November.
As with any financially healthy business, each year it is import Removal of the 30 and 60 day Quick Close: adjustments ensure margins to ens 1.National Bank Mortgageto Broker Services willsustained be eliminating the 30and and 60 improved day rate hold as a standard rate offering effective November 1 2013.2.This change was required to help support both our brokers controlled growth. service expectations but to also support our operational requirements in providing exceptional service st
to our broker partners.
Our commitment is to provide competitive rates with longer rate hold term to assist brokers in obtaining a competitive rate for their clients all the while providing longer rate guarantees so to not always need to rush closing deals. This will also help support improved efficiencies for the broker and National Bank.
At National Bank Mortgage Broker Services, we are proud of t known for in the mortgage broker community, and in that spirit Red Carpet Program: effective November 1st, 2013. 4. Nothing is really set in stone, if this Many brokers have commented that our Red Carpet program continues to be one of the best in the proveshowever not successful with and industry, complicated to brokers understand all the details and aspects of the program. National they start losing market share, they your will have to Bank Mortgage Broker Services has taken recommendations and streamlined and simplified the program for fiscal 2014. reconsider.
Sales Commission New Offering:
For me, personally, this does not change much; To5.ensure a competitive and fair compensation structure for a # Funded Tier Option Option 2 I send deals where they should be1 sent regardless Deals commission will be the implemented: of compensation. Ichanges am5more focused bps discount +on giving Additional 20bps in broker comp 1 20 -experience 74 $250 client cash back best client than on an extra 10 or 15 5 bps discount + basis points. Things that matter most are speed,Additional 40bps in broker comp 2 75 + $500 client cash back Walid10 Hammami, 1 communication year termwith will be reduced by bps to and a good lenders. Trip of a Lifetime -the up to $30,000 in travel vouchers
broker with Hypotheca
10 year term will be reduced by 10 bps to 115 bps
Please see the attached document for all the rules and requirements of our Red Carpet Program.
National Bank All-In-One will be reduced by 15 bps to 5 12 | NOVEMBER 2013
All deals submitted prior to November 1st 2013, the old commi submitted as of November 1st will be under the new commissio Volume Bonus and Efficiency Bonus
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MARKET MATTERS / NEWS
CANADA’S LUCK MAY SOON RUN OUT – AND IT’S A SENTIMENT SHARED BY MANY PUNDITS. In his recent article for Forbes Magazine – “Bubblecovery: Why Our Economic Recovery Is Actually An Illusion” – economic analyst Jesse Colombo likens Canada’s perceived recovery to that experienced in the U.S. in the early 2000s. “I consider the 2003-2007 economic recovery from the early 2000s recession to be a ‘Bubblecovery,’ as the growing U.S. housing and credit bubble led to renewed, albeit temporary, economic growth and job creation in sectors like construction, mortgage lending and other areas of finance,” Colombo says in the article. “As with the 2003-2007 Bubblecovery, I expect the current Bubblecovery to cause a devastating economic crisis when the post-2009 bubbles collectively pop. “Unfortunately, the next bubble-induced crisis
HOUSING STARTS PER 10,000 POPULATION
is likely to be even more severe than the last one because the global economy is in a much weaker state than it was in before the last crisis started.” Colombo expands on his theory by offering a list of today’s “most dangerous” bubbles – which includes Canada. “Canada is currently experiencing a real household debt and housing bubble that is even worse than the U.S.’ in 2006.” He evidences the fact that Canada’s household debt, as a percentage of disposable income, and housing prices have both surpassed the USA’s pre-recession. And if history repeats itself – and Canada suffers the same fate as its southern neighbour – the effects will reverberate throughout the mortgage brokerage industry. So what will happen if interest rates continue to climb, compromising homeownership? Not to be outdone, Maclean’s recently got in
on the “doom and gloom” forecasting with an article subtly titled “Why owning a home is bad for you.” It touches on that very issue. “What happens to families if interest rates rise is a growing preoccupation of economists, because a slowdown of Canada’s disproportionately large housing sector would likely unleash havoc in the rest of the economy,” the writer muses. “It would cast many new homeowners out of work... at which point their houses would become boat anchors. “A recent report by the Conference Board of Canada found that one in five first-time homebuyers meets the technical definition of ‘house poor,’ shelling out more than 30 per cent of pre-tax income on housing costs, while polls suggest some 60 per cent of first-time buyers wish they had amassed a bigger down payment.” - Justin da Rosa
THE HOUSE POOR EQUATION
Mortgage payment Interest, taxes Hazard and mortgage insurance
cent 30per of your income
Car payments Food Savings Entertainment
cent 70per of your income
80 70 60 50 40 30 20 10
Sources: Stats Canada, CMHC, Census Bureau
ONE BROKER WEIGHS IN The mainstream media has long been predicting a housing crash that never seems to occur but as new information and theories surface, one leading broker warns the day of reckoning may soon be upon us. “Unfortunately we weren’t paying attention to these warnings earlier on – we’ve been hearing this sort of thing for a while and nothing materialized,” Paolo Di Petta of Di Petta Mortgage told CMP Magazine. “If we continue to ignore these warnings, it will make the fallout that much worse; we’ve gotten lucky up until now – other economies have taken huge hits and we’ve been safe.” We may have been lucky up until now, but a halt in the market may be on the horizon. “It’s going to change the types of mortgages we’re going to do; it will slow down because there will be much less volume,” Di Petta said. “The mortgage changes, a lot of people will leave the industry because there won’t be as much business to go around.” All the negative media may discourage would-be homebuyers from entering the market, leaving brokers to fight among themselves for what remains while also competing with the big banks. Still, it’s an opportunity to focus on the value propositions that set brokers apart from their mortgage specialist counterparts. “This is the most important time for us to push our education as part of our service,” Di Petta said. “Brokers have been pushing rates for the longest time and they are going to be the ones to suffer. “We’re the experts in the field and should be educating clients to make good decisions. It’s one of our main differentiators versus our competitors.”
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MARKET MATTERS / BROKER ADVICE
TACT. Will this be a Battle Royale? Will it degenerate into name calling? Nope, not in this article – and that’s precisely the goal where brokerto-broker competition is involved
TAKE ONE – DUSTAN WOODHOUSE Often we brokers find ourselves competing with a bank or a credit union representative but rarely do we find ourselves competing with another independent mortgage broker. When this does happen there are a few things worth considering. All of which involve tact. Tact is spelled with a “T” for good reason; T stands for Think. The “T” precedes the “act” for good reason. One of the first things to look at when first reviewing a client’s credit bureau is always “recent inquiries.” Have they been shopping around (which in itself is not an issue); more importantly have they told you about it? Do they let you know you are part of a Battle Royale, or simply let you know that things did not work out with the previous lender? You want to know why things did not work out and you want
to know if the client has misunderstood the purpose of a broker. Misunderstood at least as far as my own definition of “broker” is concerned. I like to explain to clients that they should really be giving their application to one broker as we all, generally speaking, have access to the same lenders and rates. Prior to casting their personal data around they should endeavour to satisfy themselves that they are working with a professional who will respond to all questions and concerns in a timely and appropriately detailed fashion. Is there a strong rapport being built from the get-go? Picking two brokers to pit against each other to compete for rate alone is a zero-sum game for the brokers. And it is not one I wish to play. As such I always defer to the broker that came before me,
Dustan Woodhouse Dominion Lending CentresCanadian Mortgage Experts
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call to the lender rep or the other broker is not a bad idea. I try to pick up the phone whenever possible in these instances, only ever with the client’s permission though. You would never call a competing broker? You are missing out. The hard phone calls to make are often rewarded with the most useful and enlightening dialogues. A few months back I had a situation like this with a Mortgage Centre broker that I handled as professionally as possible; picked up the phone, called the broker, even offered a split and to buy lunch and talk the file through. At that time I was unaware that DLC was making a move to acquire The Mortgage Centre and indeed the specific broker is now somebody I will be bumping into at DLC events. There are those aforementioned winds of change at work. At the end of the day, it is a small world and playing nice with people, even people you think you may never see again, is simply a good habit to form. You will sleep better at night for it.
TAKE TWO – SABEENA BUBBER
Sabeena Bubber Verico Integre Mortgage Partners
encouraging the client to stick with them if they already have an application in the works. There is no point in expending energy on a race to the bottom. We brokers are all on the same side of the equation; admittedly a bit more so when we come from the same network. Although those winds of change are always blowing as well. So, in general, assume that all brokers are your co-workers, teammates and, ideally, friends in the industry and life will be smoother. If the client decides that broker No. 2 is their preferred path, this can create challenges for the client themselves, as most people are non-confrontational by nature and hate to deliver bad news. It can put the client in an awkward position. Your job is to shepherd them through this process and keep the client calm. On occasion a well-placed phone
When I started as a broker, 19 short years ago, I took a code of ethics and responsibility course. Its title explains it all. There was a lot of relevant and important information for mortgage brokers to live by. The specific code of ethic that I have always lived by is how we
If the client decides that broker No. 2 is their preferred path, this can create challenges for the client themselves, as most people are nonconfrontational NOVEMBER 2013 | 15
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MARKET MATTERS / BROKER ADVICE
dialogue about other brokers, whether it be to our clients, to other brokers, or on the Internet or social media platforms. Essentially, the rule is quite simple (something I learned in Kindergarten): If you don’t have anything nice to say, don’t say anything at all. How we speak about each other speaks volumes about our industry. If we congratulate our clients for dealing with a broker instead of a bank, our message as an industry is getting through. As an industry, if we are going to elevate ourselves to obtain market share away from the banks, (the other three out of four mortgage deals) then how we talk to our clients about each other is critical. However the tone should not be. Whether I agree with how a certain broker is handling the client is not something that I have control over. I only have control over how good a job I do with my clients so that my referral sources do an excellent job of recommending me. I have seen some brokers, in some public forums, say defamato-
ry things about another who seems to have gotten an impossible rate, or some other such miracle that I personally couldn’t perform. I have asked clients to provide me as many details as possible so that I can understand how they could do what I didn’t think could be done. However, I don’t speak poorly of my colleagues. It’s a small business and I want to be here for a long time. Gossip can be a hurtful thing for all parties involved. Publicly calling out a broker, especially with only limited knowledge of what is really happening (perhaps the client is simply faking a rate to make the breakup easier) is a risky move at the best of times. More now than ever before, we all live in glass houses. Conclusion: Treat competing brokers as you would wish to be treated yourself. Communication is often the cure.
Publicly calling out a broker, especially with only limited knowledge of what is really happening is a risky move at the best of times
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SOLUTIONS. ADVICE. MOVE.
RMG Mortgages is a division of MCAP Financial Corporation | Ontario Mortgage Brokerage no 10600 | Ontario Mortgage Administrator no 11790
Visit www.RMGmortgages.ca or contact one of our Business Development Managers to learn how RMG Mortgages can help you create homeownership opportunities. NOVEMBER 2013 | 17
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MARKET MATTERS / PRODUCT ROUNDUP
PRODUCT NEWS AND INDUSTRY ANNOUNCEMENTS A bite-sized guide to the industry’s newest products and appointments as they come down the channel WHO: TMG THE MORTGAGE GROUP WHAT: NEW ADDITION TO ITS MORTGAGE PERKS PROGRAM KEY FEATURES: • • • • •
Enables companies to offer employees a mortgage interest subsidy plan as part of their Employee Benefit program. Available to companies with any number of employees Current portfolio includes an employee base ranging from 150 – 7,000 Mortgage interest subsidy can help attract and retain quality employees Employers can choose whether subsidy is taxable or non-taxable benefit; one of which can be $25,000 tax-free relocation subsidy
They say: “The Mortgage Perks Plus plan is not a one-time subsidy, but will continue as long as the employee stays with the same company,” explained Ming Wong, Head of Group Mortgages. “While banks offer similar plans, the employee can only choose the bank’s product. The TMG Group Mortgage Plan offers employees more choices and options from a variety of preferred lenders.”
The broker’s resource for
Real Equity Lending for Homeowners
Greg Kakuno 18 | NOVEMBER 2013 604.329.6067
Paula Hutton 403.278.6200
Sue Foster 905.299.6971
Hugh Doggett 905.299.6951
Trevor Bowie 902.894.7700
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repeatedly shown us what
it means to go
Ranjit Minas, Underwriter Greg Martel, AMP Mortgage Expert, DLC Lyndsie Beale, Account Manager
“Their turnaround time is incomparable to other lenders!” At First National, we’ve spent the last 25 years working hard to exceed brokers’ expectations, and we will continue that commitment towards the next 25. Behind the scenes
35852 FN25ad Greg 12-19_News.indd 19CMP Ev1.indd 1
Thank you mortgage brokers for 25 years of shared success. Ontario Mortgage Brokerage License No. 10514
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FEATURE / BROKER HEADS
BROKER HEADS WEIGH IN ON THE
STATE OF THE INDUSTRY The industry is in constant flux and you better believe the heads of our super brokers have a finger on its pulse. They share their thoughts on the past, present and future of the brokering industry
PAUL THERIEN, VICE PRESIDENT, OPERATIONS, CENTUM
In our industry today, we continue to face challenges with a changing economic landscape. Consumers are wary of the future, and although Canada has largely been protected, world events continue to influence us nationally. It is our belief we can best protect our franchises by working with them to build a sustainable brand and business model, one that offers opportunity for growth while still maintaining the entrepreneurial spirit of our franchise owners and their agents. Canadian consumers are among the most savvy in the world, they have high expectations. Younger generations have higher levels of education on average, and they are much more comfortable researching their options. As these younger generations continue to move into the workforce, it will change the dynamic of how we as service providers accommodate their needs. Not just in the mortgage industry, but across all industries. In 2011 CENTUM made a strategic decision to change the way we do business and place a stronger
focus on quality, sustainability, and challenging conventional thinking. As a result today we are smaller more closely aligned network of franchises across Canada that produce higher volume while providing the consumer with higher levels of service and expertise. We continue to innovate and enhance the way we do business by thinking beyond the confines of our industry. CENTUM is a network consisting of outstanding individuals who care about their customers and believe in what they do. We are a proud, and strong, family of mortgage professionals and entrepreneurs.
GARY MAURIS, PRESIDENT, DOMINION LENDING CENTRES â€œBusiness is like family and relationships. There will always be challenges and differences of opinion, but we can overcome these obstacles by uniting, cooperating and being open to other perspectives. Liquidity and available of funding sources at competitive costs will continue to affect our product offerings and especially the success of new entrants. We have to continue to support our lending partners
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who have supported us for years and who have demonstrated that they’re committed to the broker channel long-term. We also have to continue to work with all three insurers, and urge Ottawa to level the playing field between insurers, to mitigate consumer risk and make it fair so that we continue to be competitive in our offerings. As an industry, we have to begin demanding that our associations either work closer together or merge, because the duplication of events and initiatives is becoming nauseating and very expensive for the average agent. We have to continue to educate consumers on the value of using a mortgage professional and work towards urging our governing bodies to allow a nationwide term such as mortgage professional, mortgage broker or some other title much like the real estate industry has done with the universal nationwide term ‘Realtor’. We need to work together to stop the confusion. And, finally, it’s important to get the various superbrokers and independents working together to collectively push these initiatives as a united group so that we don’t continue to see fractioning of our industry, and the ‘divide and conquer’ mentality that has neutralized our consumer market share and public awareness campaigns.”
CAMERON STRONG, CEO, INVISMORTGAGE INTELLIGENCE As an industry, we critically need to bring in new blood via bank and insurance reps, which will help build a stronger foundation for the industry and help our lenders grow. We’ll stagnate if we just continue to poach from each other. Our goal shouldn’t be number of brokers but quality, well-trained brokers. We need to turn mortgage brokering into a sought-after profession and bring in graduates and MBAs that have fresh ideas and new perspectives. At Invis-Mortgage Intelligence, we thoroughly scrutinize all hires and our focus on quality vs. quantity has given us average production per broker that is higher than the industry average. We’re proud of that. And our brokers appreciate that our tough compliance standards protect their reputations. Our ultimate goal is for our brokers to be mortgage consultants for life through training, niche and segmentation marketing strategies, excellent CRM programs and relationships with like-minded financial professionals. This results in a better customer service experience but also builds a stronger fence
around our clients. Our top-of-the-line marketing support is helping our brokers target growing customer niches, and our access desk acts as a product knowledge centre and deal coach with top status rates, resulting in incredible broker efficiencies. Brokers continually need to focus on creating long-term annuity income to create stronger futures and to help get through tough economic times. Invis-Mortgage Intelligence brokers are embracing this concept with our best-in-class iprotect mortgage insurance and private label mortgages that pay automatically at renewal.
RON DE SILVA, CEO, REAL MORTGAGE ASSOSCIATES “One of the biggest challenges that we as an industry face, is the lack of awareness by the general public of brokers and the value we represent. The broker market share has been hovering around 30 per cent for many years but is struggling to rise further. Growing market share can only be achieved by increasing public awareness of who we are and what we do well. Increasing public awareness is a responsibility that all the stakeholders in the industry must take on, equally. Hypothetically, based on an industry funded volume of $75 billion and a compensation of $750 million(100bps), if every broker committed 10 per cent of the gross income, we would collectively be investing approximately $75 million annually for marketing and public awareness messaging of who we are and what we do well. This investment may rival what the Big 5 chartered banks collectively, spend annually on mortgage marketing in Canada. Theoretically, doesn’t this suggest that in a few years the consumer would be considering an independent mortgage broker first, before they go to the bank branch on the corner? Doesn’t this suggest that our 30 per cent market share will grow to 40 per cent and 50 per cent in a few years? There are many more benefits to this growth in awareness that simply can’t be quantified. More awareness will attract more quality people to become brokers. The quality of broker education will increase, quality of brokers will get better, consumer decision-making will get better and more lenders will enter the industry. Makes sense, doesn’t it? Start today! Don’t wait for the other broker to do it first. Do your part and the other guy will follow. Have a great Holiday Season!”
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FEATURE / BROKER HEADS
MARK KERZNER, PRESIDENT, TMG THE MORTGAGE GROUP The broker channel has always been and continues to be resilient. Despite the market challenges the industry has faced beginning in 2008 and continuing until today, we have maintained market share because brokers represent the best solutions for consumers looking for mortgage financing. At one time, some thought that a broker’s success and advantage was based on offering better rates, but that’s not been the case. We continue to lead share with first-time homebuyers and have actually increased share over the past five years with both refinancers and renewers. As brokers, one of our key value propositions is choice. This involves finding the right lending solution for each client’s unique needs. In this market, we continue to prove ourselves as the clients best advocates. We must keep up-to-date with all the changes to ensure the needs of our clients are met. Much like the speed of changes in technology, our business has also evolved at a rapid pace. Arming ourselves with training and support tools are vital for our continued success. Education has become one of the pillars of TMG and we are recognized as one of the market leaders in training. As a company, TMG constantly explores ways to use technology to help our brokers be more efficient and effective. More than anything else TMG is its people. From the most dedicated and passionate staff (winners of the 2013 CMP Employer of Choice Award) to its professional, empathetic and caring brokers, TMG represents leadership in the broker channel and strength and stability for consumers.
COLIN DREYER, PRESIDENT/CEO & JOHN KELLY, COO, VERICO Generally VERICO and members of the VERICO Network are “glass 3/4 full” type people. We feel very positive about the future of our industry, profession and organization. Notwithstanding, we are well aware that changes in the regulatory environment have resulted in significant challenges for our lending partners, and consequently this has driven change in the broker channel too. Regardless, the challenges facing the mortgage broker industry today are, by and large, the same as they have always been, namely remaining competitive and relevant with our customers and our lenders. So long as Canadians continue to value the professional services offered by brokers, and brokers continue to provide competitive products and servic-
es to customers, we are in great shape. Ensuring that this always happens relies on a number of factors. The first key factor is ensuring that our lenders are able to profitably provide us with competitive products for our customers. Without competitive mortgages, where would we be? Today, there are fewer lenders overall and less of Canada’s most well-known bank brands that deal through brokers – and that is a challenge for us. These challenges are a result of regulatory and capital market changes impacting lender liquidity and opportunity. Brokers didn’t drive these changes, and so unfortunately we can’t really solve it. That being said, we can be an important part of the solution for our lenders. Supporting efficiency and cross selling is a big part of increasing channel productivity. The second key factor is ensuring we offer value added services to our customers that distinguish us from other sales and retail channels we compete with, whether online, bank branch, tele-direct or roving rep. Simply offering low rates won’t cut it in the future… All lenders, including ours, can do that directly. A broker’s secret weapon is expertise, professional advice, convenience and full service delivery. That’s why Canadians should prefer getting their “great rate” from a mortgage broker rather than a competing channel. Increasingly, consumers have become discerning shoppers of mortgage and banking solutions. Yes they expect great rates, and aren’t sheepish about asking, but they also want the experience to include convenience, unbiased advice, and a sense of recourse and security. Building long term relationships with customers is the key. This requires a shift away from the hunt, kill, eat and repeat mentality and methods of yesterday to a customer base farming approach. All of which requires a significant investment in technology and retraining for all brokers VERICO has invested in industry leading technology and training that helps our brokers deliver the kind of customer experience our brokers need to offer in order to compete and win in today’s market. This technology, called BrokerBase, automates the CRM and follow up activities that ensure customers keep our brokers front of mind for referrals and repeat business. It also helps our brokers and suppliers cross sell - which enhances the points of relevancy and connection to our professional services. Where there are challenges, there are opportunities. BrokerBase supports VERICO brokers to capitalize on these opportunities and ensure continued growth in their business in the broker channel.
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COVER / SUPER BROKERS
The pool of independent brokers is shrinking as more professionals choose networks to take their business to the next level. So what do these super brokers have to offer? Justin da Rosa finds out what sets them apart
GETTING IN THE HEADS OF
SUPER BROKERS As the old cliché goes, “the grass is always greener on the other side.” And although it is often viewed as a meaningless platitude, it has merit… in some cases. This month we hear from loyal veterans who have dedicated decades to their brokers and relative newbies who were enticed to make the switch. We also hear from several brokerage behemoths, who dish on what sets them apart from their peers and how they are revolutionizing the industry.
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CENTUM COMPENSATION • • •
We offer the industry’s most aggressive royalty plan Franchise owners have 100 per cent control in determining their agents’ compensation The following services worth $40,000/year are provided at no further charge: • Day-to-day detailed accounting management • Industry-leading back office technology, Online Office • A powerful, results-oriented CRM system • A fully staffed service department offering one-on-one help and advice to our brokers • Upfront and residual revenue generation opportunities include commissions from: • Equipment leasing • Mortgage protection plans • Deposit product offerings (GIC, RRSP) • Other ancillary products and services
BROKER MODEL • • • •
Centum has over 2,700 mortgage agents and over 220 locations A large number of our franchises produce mortgage volumes from $50 million to $500 million Centum was founded in 2002 and has been present in every province throughout Canada since inception All of our franchises are independently owned and operated.Centum is owned by the world-recognized Charlwood Pacific Group of companies which includes Uniglobe Travel International, Century 21 Canada, Century 21 Asia Pacific, and Real Canadian Property Management Group
ANCILLARY SERVICES • • • • •
Full Franchise training system exclusive to CENTUM Our products target specific consumer needs thereby allowing our agents to close more deals Our white-label product, CENTUM Primo, consistently has the lowest mortgage rates in Canada Our exclusive partnership with 4 Pillars Debt Consulting enables us to offer products for consumers who are credit challenged We take care of our brokers so they can focus on building their business. We provide the following services at no further charge: • Consumer marketing plans, collateral and tools • Commission advancements • An aggressive national advertising campaign that produces leads • Underwriting administration and compliance services • A fully integrated back office that provides: • Training, website management, social media, payroll, compliance, franchise administration, marketing and communication Our productivity enhancement tools and education have proven to increase an agent’s production by four times their normal level. Our tools include: • Broker and agent financial planning tools • Our PEP education process provides specific and timely knowledge for our agents that produce immediate results
LEAD GENERATION • • • • •
Our aggressive marketing strategy provides brokers with vital qualified leads directly through our website Our website traffic alone has doubled to over 70,000 unique visitors/month We develop exclusive partnerships with industry leading companies to deliver bottom line results for our brokers. For example, we have a marketing partnership with Century 21 Canada Ltd. and benefit from their over 8,000 Realtors and over 2.1 million visits they receive on their website/month We are continuously developing customized marketing pieces for our brokers and agents to help secure new business
COMPLIANCE & PAYROLL • •
CENTUM has centralized accounting services relieving the franchisee of the burden and time required for collection, reporting of, and distribution of lender payments Efficient same-day direct deposit to franchisees
I’ve been a loyal Centum franchise owner for nine years. They allow you the independence to work your own model of business and you can use their tools to enhance your business opportunities. - Enza Venuto NOVEMBER 2013 | 25
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COVER / SUPER BROKERS
DOMINION LENDING CENTRES COMPENSATION •
All franchise owners receive a 95/5 split (on volume bonus as well). Owners decide how to pay their agents.
BROKER MODEL •
We’re a 100% franchise model.
ANCILLARY SERVICES •
Newest ancillary offering – DLC Visa Program – consists of a line of six DLC branded Visa cards. A fabulous cross-selling opportunity for the DLC network, we’re the only brokerage in Canada to have our own branded line of Visa cards. This product enables our brokers/agents to offer an unsecured DLC-branded Visa to all their current and past clients, and they’ll get paid on the total yearly client spend in perpetuity. With interest rates starting at 9.9% and several other stellar features, this program is among the most competitive Visa offering in the country. EnRICHed Academy financial literacy youth training program developed by DLC to teach the fundamentals of finance in a fun manner through an interactive DVD series and workbook. EnRICHed Academy appeared on CBC’s Dragons’ Den, and is endorsed by dragons Bruce Croxon & Jim Treliving. Many DLC agents are certified EnRICHed Academy presenters, opening doors for them to present this much-needed program in schools across Canada. First mortgage brokerage to offer equipment leasing deal desk. We purchased a successful leasing company in 2008 and rolled it out across the country. Our referral program offers a referral fee to our agents simply for providing a name and contact details for a leasing deal that successfully funds. DLC Commercial Division pays our agents a referral fee for simply providing a name and contact details for a commercial deal that successfully funds. Every new deal that arises from that referred client also results in a referral fee, and all residential opportunities are referred directly back to the agent. No more will residential agents miss out on getting paid on commercial deals. Plan B Mortgage Services was created to offer the DLC network exclusive access to expert Alt-A, B and private underwriters. The division is being rolled out across Canada (now in BC, AB & ON). Referring brokers receive a split on a funded deal they refer as well as the same split on any future alternative deals arising from that referral. Exclusive line of white label products through Dominion Mortgage, providing competitive rates and commission pay-out (upfront and trailer).
LEAD GENERATION •
I’ve been a broker since 1986 and I went around to a number of large brokerage agencies to see where I would hang my hat and it came down to Dominion having the best support for brokers. Nobody else compared to the service they could provide for me. - Jim Rawson
As part of our extensive ongoing national advertising campaign, including our Dominion Lending Centres Don Cherry endorsement deal, which reaches local marketplaces across the country, we drive consumers to our corporate site – www. dominionlending.ca – where they can search for agents or offices in their area. Any leads that come in to our Head Office are distributed to our agents on a rotational basis free of charge. This Fall, we launched two new commercials – one to promote the free DLC Hockey Pool (www.dominionhockey.ca) and a second to appeal to the family demographic that knows a home is more than just a mortgage (kids’ commercial appearing on specialty channels such as HGTV). The free DLC Hockey Pool was first launched during the 2013 NHL playoffs and awarded more than $25,000 in cash and prizes – $10,000 grand prize. The NHL regular season pool, which is currently underway, is a premium lead generation tool that enables our brokers/agents to have Canadians sign up via a banner on their website. Our system tracks who signs up via which website and then provides a spreadsheet to each agent with contact information for everyone who signed up at their site and gave permission to be contacted. This is a unique lead generation tool. Last Spring we began a DLC Family Day sponsorship of home shows in Vancouver, Calgary & Toronto. During one day of each home show, DLC Family Day provided a number of perks to attendees. All DLC clients received free admission throughout the home shows, and DLC agents were not charged for tickets redeemed on the designated DLC Family Day. This Spring, we’re sponsoring in Vancouver, Calgary, Toronto & Ottawa. DLC Learning Academy – a step-by-step mentorship program for newcomers to the industry as well as those with two years or less experience in the industry – helps bring in deals quickly. The program is highly endorsed by DLC franchises who have taken advantage of it, as it’s ensuring greater success for newcomers. This is great news for both DLC and the industry. DLC Marketing Support Desk is a one-stop email system for the entire network when they need assistance with everything from ad creation to help with DLC tools to everyday questions that require a quick response. The emails are assigned a number for tracking purposes to ensure they’re opened and resolved in a timely manner. This helps DLCers bring deals in quicker through help with advertising, branding and growing their businesses with various DLC tools, systems and technology.
COMPLIANCE & PAYROLL •
Our constant focus on compliance ensures every mortgage professional across Canada has access to ongoing education and up-to-date compliance information from regulators and industry associations. We actively communicate this information.
We have a complete reporting system set up for franchise owners and offer very detailed compliance procedure training. All of this is, of course, overseen by head office. Typically within 48 hours of head office receiving payment from lenders, agents receive their commission.
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DLC offers an abundance of free ready-to-use templates, including articles, advertisements, client and referral partner letters and forms, website banners, and PowerPoint presentations that we’re always updating to serve the needs of our network, as well as live weekly webinars on a variety of new topics. We also offer free custom work for advertising and communications. In the past year, we’ve also: a) Launched the inaugural free DLC Playoff Hockey Pool for the 2013 NHL playoffs, and then launched the first NHL free regular season 2013/2014 DLC Hockey Pool as a premium lead generation tool for the entire DLC network (full details above under Lead Generation). b) Officially announced the Dominion Lending Centres unsecured Visa Program consisting of six branded cards that our network can use as another fabulous cross-selling initiative to both past and present clients (see Ancillary Services).
c) Introduced the DLC Learning Academy – a step-by-step mentorship program for newcomers to the industry as well as those with two years or less experience in the industry who are funding less than $10 million per year (full details above under Lead Generation). d) Began a new Dominion Lending Centres Family Day sponsorship program of the Spring 2013 home shows in Vancouver, Calgary & Toronto as one more way to brand ourselves direct to consumers. This initiative was so successful that we’re doing this sponsorship again in Spring 2014 with the addition of the Ottawa home show (full details above under Lead Generation). e) Held our highly successful 2013 Dominion Lending Centres National Sales Conference in New Orleans (www.dominionlendingevents.ca), which saw 350+ conference attendees and more than 400 participants at our evening events. We are coming home to Canada in 2015.
It’s time for a new perspective.™
Your Source For • Personal Loans • 2nd Mortgages • Construction Mortgages
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COVER / SUPER BROKERS
INVIS – MORTGAGE INTELLIGENCE BROKER MODEL • • • • • • •
Full service brokerage with highly competitive compensation model with different commission splits for those new to the industry up to the very seasoned high-volume broker Personal branding flexibility Network Partner model in Ontario gives ability to work under own brand/license at top commission split No monthly fees! No royalty fees! No locked-in contracts! Opportunity to become a shareholder
ANCILLARY SERVICES • •
I started with Mortgage Intelligence almost 13 years ago. I left and came back because it felt like I was coming home; it’s comfortable and a great place. People are going to deal with you based on your own merits, not your brokerage, but I felt very comfortable coming back to Mortgage Intelligence.
• • • • • • • • • • • • • • • • • • •
Experienced regional support for training, business & marketing planning, team building; feet on the street! Placement desks so all brokers can enjoy top lender status, assist with their inter-provincial deals and get access to product specialists to help with tough deals at no cost Broker websites with global feeds so rates, content and news are continuously updated along with easy management of SEO Mobile websites with updated rates, news and excellent mobile calculators CRM options to fit each broker’s business model Graphic design services Content library for email and mail, blogs and social media Video library for TV, websites, digital display, emailing and social sharing Automated weekly rate mail Daily lender rate sheet with an economic update with articles for reposting, tweeting and blogging Automated monthly newsletter Intranet site with branded materials for marketing and relationship management Realtor feature sheets with demographic & neighbourhood information Free HTML email program to customize and target messages Reporting for business monitoring IT Support National conference and PD Days with AMP credits Forums to discuss deals and other business issues with peers Corporate benefits program Discounted and best E&O rates and coverage Award winning community and culture through national charity Angels in the Night
LEAD GENERATION • • • • • • • •
Easy to offer and competitively priced iprotect mortgage insurance builds a fantastic annuity income Home and auto insurance referral fee program. Just four referrals a month can give brokers $3,360 in additional income each year. Private label WealthLine and Partner Mortgage with excellent rates, features and ability to earn annuity income with automatic payment at renewal. With no retention team, brokers are always in control Robust and compliant lead generation programs through several established financial planner networks We are the first National Mortgage Brokerage to bring web shopper leads to our brokers with SEO, google adwords, multiplatform marketing including social media through our partnership with Kanetix. Industry-leading corporate websites getting traffic and leads Leasing and small business loans referral programs Access to private and commercial lending experts
COMPLIANCE & PAYROLL • • • • •
e-compliance process through expert exchange Compliance required for all brokers, regardless of the model they are working under with the company Excellent compliance protects brokers’ reputations! Weekly automated payroll by direct deposit with detailed statements and customized team setups A key differentiator is payroll and compliance for those at the highest splits, not available at other brokerages
- Peter House 28 | NOVEMBER 2013
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At Invis-Mortgage Intelligence significant strides have been made to help our brokers turn their “jobs” into businesses through diversified income streams and long-term annuity income. In a tightening market, we have responded by growing our financial planner relationships and by bringing web shopper leads to our brokers. And we provide industry-leading content for email/mail, social media, websites, and blogs. Key differentiators include: • The strongest regional support team in the industry, with recent additions – Sarah Putnam for Toronto, Toronto East and Mississauga and Trevor Gordon for Ottawa and Atlantic • Compliant lead generation through a growing network of financial planning networks, and online SEO expert Kanetix. • Access Desk that offers ALL brokers status rates, status service levels, full finders fees, and a designated underwriter. The Access Desk is free and brokers keep their clients.
• Best-in-class iprotect mortgage life, disability and critical illness insurance that builds fantastic longterm annuity income. • Unitas – Home & Auto insurance program that pays referral fees and provides the best E&O insurance in the industry. • Private label WealthLine and Partner Mortgage have no retention team, automatic payments at renewal and competitive pricing and features. • Top-of-the line marketing support. In a slower market, a broker’s database becomes everything. We have CRM options to fit every broker model, from those that just need persuasive copy for their own programs to those that need a full system and support. In a tougher market, we stand by our commitment of no long term contracts, no monthly fees, and that clients always belong to their broker. Our tough compliance standards are even more critical in today’s environment.
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COVER / SUPER BROKERS
MORTGAGE ALLIANCE A little something you should know about us before you read this. Everyone in this survey is probably going to exaggerate. Our philosophy isn’t about chest beating and tooting our own horn. It’s not in our cultural DNA. Rather, we tell it like it is, share the
highest degree of professionalism and treat everyone like we want to be treated. Maybe that’s why we attract so many like-minded brokers. That speaks and creates volume.
COMPENSATION Everyone is different and each situation is unique. Right? That’s why we offer a killer choice of compensation models available for: • Entrepreneurial new brokers; dynamic top agents; progressive team leaders; passionate franchisees; avant-garde flat fee affiliates. Our network is composed of large highly trained and supportive national sales teams. We also have a prosperous coast-to-coast franchise community. And there’s more, a booming affiliate network too. In fact we are one of the top in each category. The mortgage entrepreneurs within the organization genuinely seem to appreciate the many services and compensation choices available. Hey, that’s what they tell us and our mortgage volume keeps increasing every year so we must being doing something right.
ANCILLARY SERVICES Just the facts. • Three unique Branded Mortgage products • Guaranteed Issue Creditor Life Insurance program • Term, Home or Auto Insurance • Registered, Non-Registered and TFSA GIC’s
• • • • •
Investment Products Closing Centre Services Leasing Commercial lending services No BS
I have been with Mortgage Alliance for 10 years. In this period, it has grown to be as super broker, but continues to be a friendly, supportive and progressive place to work. - Ad Lakhanpal
OK, here’s where the rubber really hits the road. Wish we had more words allotted for this section. • We offer a unique ‘bank’ (get it?) of systems and strategies including a National Branding campaign that raises the profile of our brokers and the company while directly generating consumer leads to our brokers’ phones/websites. • Our brokers even use the Mortgage Alliance branded jingle as their cellphone ring tone and get leads from that. Seriously. That jingle has some powerful awareness. • We hate templates. That’s why the organization provides personalized marketing consulting. It keeps our marketing department working long hours but we supply the pizza. The reality is every mortgage professional (and their trading area) is unique. So should their self-branding materials- that’s why it works better at creating leads. • We also have a ton of hard copy and email-based lead-generating communications for customers, prospects and referral sources that are integrated within our MortgageBOSSTM- which makes it automatic and super easy to use. • The Adviser e-newsletter - Weekly – keeps our brokers top-of-mind and fosters leads (over 200,000 referral sources). • The C.C. (Customer Communication) – Monthly- a timely e-letter that creates retention, leads and referrals (Goes to 300,000 Canadians) • IMPACT-5-year term- a customer followup program that protects and expands the client relationship from cross-selling, referrals and repeat purchase. (Included on one in three mortgage transcations ) • Mobile App – Ongoing- Real-time access and delivers new offers. • E-Direct – Life stage – Sends timely messages to prospects and customers to act. • Lion’s Share Program – Integrated technology that stabilizes customer experience and creates loyal customers for life. 80 per cent of mortgage consumers managed through the Lion’s Share process are repeat buyers. • Social Media – Daily- we create specific posts designed to engage and activate our broker’s on-line communities to contact them. It’s not just about lead generation tools; you need the right knowledge too. That’s why an integral part of lead generation comes from our sales training, education and networking through Mortgage Alliance University circa 2006.
COMPLIANCE & PAYROLL •
Compliance: This is the one guy nobody wants to get a call from. And that’s why he’s got your back. Dedicated, in-house, on-your-side compliance officer. Our brokers maintain the highest level of professionalism and our compliance officer supports them at every corner (not literally) when needed. We offer a paperless online compliance process for agents and franchisees to Compliance Officers with licenses in BC, Alberta, Saskatchewan, Manitoba, Ontario and Quebec.
Payroll: This is very cool. Integrated with the compliance systems with receipt of commission notices and direct deposit of commissions every business day. Our brokers can view their deal status and paid or pending commissions in real-time using MortgageBOSSTM. Payroll services can be performed on the behalf of the franchise companies at their option at no cost. Doesn’t everyone offer daily payroll?
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COVER / SUPER BROKERS
MORTGAGE ARCHITECTS COMPENSATION •
Whether you are an independently owned and operated franchise or broker directly licensed under Mortgage Architects, the compensation models are aggressive and enhanced by the opportunity to earn back commissions due to MA’s unique lender relationship
BROKER MODEL • •
The MA brokering models cater to all business types. Whether you are an independently owned and operated franchise or a broker who would like to be directly licensed under Mortgage Architects, MA has a solution for you. Franchise programs for independently owned and operated brokerages – NO franchise costs
ANCILLARY SERVICES •
• • • •
Mortgage Architect’s unique lender relationship enables them to offer 4 unparalleled compensation models where Brokers can earn in excess of 100 per cent commission, earn points, trailer fees and ownership at no additional cost. Central Underwriting Strategy GIC strategy Equipment Leasing & Accounts Receivables purchasing Commercial Mortgages
• • •
Alternative Mortgage Solutions Strategies Consumer financial services programs AT NO CHARGE - Proprietary automatic CRM product integrated with origination software to increase touch points with your clients and leads. AT NO CHARGE - Each mortgage professional will be provided with a website Strong focus on training and support
COMPLIANCE & PAYROLL •
My decision in picking which superbrokerage to join came down to two main factors; Trust & Professionalism. From top to bottom, its evident when you deal with anyone at Mortgage Architects head office that you’re part of a friendly, family-like team, who, at the same time, are exceptionally skilled and knowledgeable professionals. - Bruno Mangiardi
Compliance is made easy and seamless with a document management system that is integrated with the internal Intranet resources so that all docs reside within the application for future use while empowering our compliance officers to review the documents quickly in order to process payroll efficiently Franchises are offered a compliance management platform
Mortgage Architects enters 2014 with incredible momentum. The organic growth and recent acquisition of Argentum Mortgage and Finance Corp has positioned Mortgage Architects (MA) as a one of the leading organizations in the brokerage industry. As a result of these growth strategies, MA has attracted much attention from brokers this year. MA’s leadership, lender strategies and proprietary systems remain unmatched. The diverse structure at MA caters to a variety of business models to enable brokers from across the country to select a model that works best for them. Brokers may be directly licensed with Mortgage Architects or may choose to operate as an independently owned and operated franchise. Mortgage Architects is the only brokerage that is strategically positioned with its own lender (not a white label); this yields both short- and long-term revenue opportunities for MA brokers. This unique structure allows Mortgage Architects to offer enhanced compensation and product resources to their brokers. Mortgage Architects offers four compensation models where brokers can earn in excess of 100 per cent commission, earn points, trailer fees and ownership at no additional cost. No other mort-
gage brokerage in the country enables brokers to earn ownership without the burden of financial investment or other risks associated with ownership. Mortgage Architects is strongly committed to empowering its brokers towards lead maximization and assisting with the growth of their business. This commitment has been made quite evident in the organizational focus on creating effective end-consumer advertising to increase broker’s lead generation and client retention. Ignited by their proprietary systems; all marketing pieces are personalized and sent on behalf of the broker to create constant contact with prospects, clients and referral partners. Personalized marketing pieces take the form ad-hoc campaigns, greetings, rate sheets, features sheets, renewal letters, newsletters and more. Being able to leverage marketing and technology platforms allows brokers to focus on their core strengths and growing their business. Mortgage Architects also prides itself on its commitment to supporting and growing their network of brokers through education, training, best practices and knowledge sharing amongst brokers throughout.
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COVER / SUPER BROKERS
THE MORTGAGE CENTRE COMPENSATION • •
• • • •
The Mortgage Centre collects a nominal royalty fee based on the dollar volume funded by the lender. Our typical royalty fee is less than the average competitor, allowing our franchises to use the additional revenue the way they want to grow their business. With our unique and exclusive royalty model; additional revenue earned but not limited to; volume bonus, efficiency bonus, trailer fees or other objective targets are directed to the franchises. As described in our business model, franchises retain 100 per cent of trailer fees which stay with them in perpetuity. The Mortgage Centre does not apply a royalty fee or commission split on private lending. All revenue earned through private lender placement fees are exempt from royalties. Our independently owned franchises negotiate competitive commission splits directly with their respective agents based on experience, quality and volume. Each Mortgage Centre office independently owned and operated within our franchise network.
BROKER MODEL • • •
New franchise cost is $16,500 plus HST. The Mortgage Centre Head Office provides onsite and/or webinar support during initial setup along with ongoing training to ensure a successful launch of a new franchise. Our contracts with franchise owners are based on a five-year mutual commitment. We have presence coast to coast, except in the province of Quebec, with approx. 85 franchises and over 1100 agents.
ANCILLARY SERVICES •
The Mortgage Centre (MCC) is a division of Dominion Lending Centres, allowing our network to offer exclusive, niche products such as MCC Centric White Label that is not available through other broker networks. Leveraging this relationship our members enjoy a significant discount on credit bureau costs. Members of our network offer creditor life insurance via MPP (Mortgage Protection Plan). This offers another avenue for our network agents to create an ancillary revenue stream with multiple methods of payment (upfront and/or residual fees offered). The Mortgage Centre created unique mail campaign (Stay in Touch) for its members allowing them to offer clients or referral sources a personally branded hard copy output every other month. A cost-effective approach to active and ongoing communication with their database. In addition, each member of our network has access to communicate a personal branded email newsletter to their database on a monthly basis via MCC Communicator Tool. The Mortgage Centre Head Office provides ongoing training, support and development via monthly webinars throughout the year. In addition, on-site sales training and mentoring programs are available for new and existing agents of our network. This has been instrumental in creating greater efficiencies and higher agent retention within the network. In addition, we have a secure Intranet site with a host of business tools, advertisements and templates that support our network in growing their business. Other programs available include MCC Client Connect (CRM Solution), MCC Lender Connect (Deal placement assistance), MCC Client Communicator (Monthly Newsletter) The Mortgage Centre hosts an Annual Conference for the entire network focused on sharing of best practices and personal development.
LEAD GENERATION •
Client prospect leads generated through our public portal (mortgagecentre.com) are evenly distributed to franchise owners based on geographic proximity. Agent prospect leads are handled and distributed in the same manner.
COMPLIANCE & PAYROLL • • •
Franchise licensee is responsible for provincial compliance requirements. Ongoing training and support is provided by head office, in accordance to provincial legislation franchises have access to a policy and procedures Manual, which was developed to govern franchises and assist in the compliance process. Franchises are provided detailed reporting and payment weekly through The Mortgage Centre Head office via EFT.
The core success of The Mortgage Centre revolves around a consistent philosophy of “growth through quality acquisition.” This strategy keeps the integrity of our network high and presents opportunities to members that aren’t available through other brokerages. The strength of our brand with its ties to
our long history in the Canadian mortgage space, afford our network the flexibility to grow deeper relationships with referral partners and provide a calming influence with the majority of prospective clients. By leveraging this sound infrastructure, our independent franchise owners have the ability to
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market and co-brand The Mortgage Centre, creating greater visibility and flexibility. In June of 2013, we partnered with the biggest mortgage broker in the country, DLC, and together our volume of over $20 billion allows us to use our economies of scale to provide our network with the best in class tools, products and technology. It is our core belief that innovation comes with investment and we are investing in the best people and resources in order to give our brokers and agents a competitive advantage in the marketplace. With the MCC-branded CRM platform and state-of-the-art websites free to all our agents and brokers, MCC Centric Mortgage, our unique white label that pays our agents on renewal and a trailer fee, our access to leasing and commercial, our Unsecured PLC, our SIT program, a personalized email newsletter, branded templates, new creative advertisements and much more, we arm our brokers and agents to be as successful as they are willing to be in this competitive environment. These tools were developed in conjunction with an existing platform on our Intranet (Mymortgagecentre.com) to create greater awareness and efficiencies for our franchise business model. This support will further enhance our position as one of the most efficient brokerage networks in Canada. We have enhanced our ongoing agent training with qualified and certified Buffini Mentors. This improves the value proposition for owners allowing them to recruit qualified candidates knowing there is a training support mechanism in place. We believe the training support leads to a higher quality mortgage agent with a greater propensity to succeed. The Mortgage Centre continued to sustain growth year over year by leveraging our relationship with business partners and market lenders.
It is our core belief that innovation comes with investment and we are investing in the best people and resources in order to give our brokers and agents a competitive advantage NOVEMBER 2013 | 35â€‚â€‚
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COVER / SUPER BROKERS
REAL MORTGAGE ASSOCIATES COMPENSATION •
All franchises, senior brokers & affiliates receive 100 per cent of the commissions (finder fees & volume bonuses). No Splits. The cost of association is $750 per month OR a Pay Per Deal program. Our model has remained constant since we opened in 2006. The corporate volume bonus paying lenders qualifies you for an added 23 bps on average automatically as part of the network membership. We operate our corporate head office on the fees we get. We don’t charge for advertising or origination software. Trailer commissions and fees follow the agent where ever they choose to go.
BROKER MODEL • •
There is no cost to purchase a franchise. Our licensed affiliates are not expected to carry and promote our brand. Their businesses operate under their own brand names. Standard termination clause is 30 days. Agents/brokers that don’t have their own licensed broker firm can join our corporate store, Real Mortgage Associates (RMA under the same compensation model. On average, over 65 per cent of the RMA agents/brokers have been in the industry for over 13 years. New agents to the industry joining our firm must work with a manager/trainer. The manager/trainer’s compensation is tied directly to funding of mortgages by the new agents ensuring the highest level of support for new entrants.
ANCILLARY SERVICES • •
File auditing and compliance services are provided for franchisees, affiliates and RMA brokers in Ontario. Payroll is direct deposit and conducted weekly for RMA and twice a week for franchisees and affiliates.
LEAD GENERATION •
Lead Generation: RMA markets 40 localized mortgage websites. (eg: HamiltonMortgages.com). All the RMA brokers/agents are promoted. This service is free.
COMPLIANCE & PAYROLL •
RMA agents/brokers have access to an in-house commission advance program.
It’s a great company to work for. RMA allows me to be very independent in the sense that I pay my desk fee and that’s it. That’s not to say I can’t pick up the phone and ask for advice, because they’re there. What I like is they allow you to keep everything I’ve earned; a lot of the super brokers take a split. Another thing I really like is that we have two major players have a lot of experience, the CEO, Ron DeSilva and David Yuzpe. Both of them have a lot of years in the industry so they’re great to have and they’re really nice people. - Mary Macfarlane
I officially started with RMA a month ago and I’ve been in the industry since 1981. Primarily, the compensation model is what drew me to RMA. It’s a format that allows us more self-promotion as opposed to a more corporate promotion. The team of individuals that work with me, we were more interested in branding ourselves and after 32 years I don’t need any corporate branding. I’m not saying one model is better than the other -- I was with DLC for five years – the model I am with now, and the people I work with, is a better model for us. - Rod Smith
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NO IT’S TIME TO SEE WHY OUR
MIGHT BE YOUR YES
NO TERM CONTRACTS
NO AD FEES
NO ADMIN HEADACHES
We’re so confident you’ll stay with Mortgage Architects that we’ll let you join with no commitment. You’ll love not worrying about your commissions, payroll, technology and compliance. Add our free marketing tools and we know you’ll be saying yes to MA.
JOIN US TODAY! JOINMA.ca /contact
© Copyright 2013, Mor tgage Architects Inc., all rights reserved.
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COVER / SUPER BROKERS
TMG THE MORTGAGE GROUP COMPENSATION •
TMG’s philosophy is to develop partnerships that reward production; the more business, the larger share of revenue. Commission splits are determined by an established percentage of revenue generated on an annual basis. There are no franchise fees. TMG centrally manages the brand, monitors compliance issues and takes care of payroll. Our compensation is internally consistent and externally competitive.
BROKER MODEL •
Since 1990, TMG The Mortgage Group has operated as a full-service, national brokerage company. Unlike franchise models where each individual franchise has to be licensed as a brokerage, the 700+ brokers, associates and agents in TMG’s network operate under provincial licenses across the country. This allows TMG to foster strong national relationships with regulators, mortgage associations as well as lenders, ensuring consistency across the country. For independent brokerage companies looking to expand while continuing to operate under their current brand, Powered by TMG The Mortgage Group™ provides the infrastructure to reduce operating costs, accelerate growth, and enjoy all the benefits of a full-service brokerage.
ANCILLARY SERVICES •
An industry leader in broker support and training, TMG TV offers leading-edge webinars and webcasts while BrokerNET provides brokers with a secure Intranet with daily interest rates, industry news, marketing tools, resources and more. While DOC Central has regulatory compliance covered, TMG’s dedicated Deal Centre provides broker assistance with applications and exclusive promotions, and a Customer Relationship Management Program offers an easy way for brokers to manage client communications. TMG has also developed a variety of client solutions that generate additional revenue for brokers. From TMG Branded Mortgage products and insurance programs, to merchant cash advance programs, the company continually looks for new opportunities to provide value to its broker team.
LEAD GENERATION •
TMG is focused on delivering four fundamentals to its mortgage team: Leadership, Culture, Innovation and Support. As such, TMG provides direct access to experienced executive and regional management; an open, progressive, entrepreneurial environment; progressive, proprietary technological solutions; and extensive training, tools, and marketing systems to help brokers generate and cultivate leads.
COMPLIANCE & PAYROLL •
I like the management, more than anything. Most people want to manage me and I’m hard to manage and they give me the freedom to make some choices. They are the classiest, most decent people I’ve ever met. - John Thompson
TMG’s broker model simplifies compliance and payroll. The proprietary DOC Central system provides paperless document imaging. Regulatory compliance and privacy standards are met, policies and procedures are monitored, and all data is secured and held in a sophisticated internal and external back-up storage system. TMG’s automated accounting and payroll system is centrally managed by TMG employees, at no cost to brokers.
Since 1990, TMG has steadily grown its presence in the Canadian market with a culture of promoting professionalism in a family-oriented environment. The driving principle has always been and continues to be supporting brokers and the clients they serve. All of TMG’s programs, systems, training and technologies are tested against that principle: Does it support brokers in their business and does it assist the client? TMG has developed some of the best lender relationships in the industry, which stems from a corporate philosophy that lenders ought to be treated like customers. The company’s contribution has not gone unrecognized in the industry. In 2011, TMG was honoured with the Canadian Mortgage Award’s top award for
Network Brokerage of the Year. In 2012, the company was named one of the Best Companies to Work for in B.C. TMG was awarded with CAAMP’s Partners Excellence Award as well as MBABC ‘s Pioneer Award for Lifetime Achievement. In 2013, the company won Employer of Choice at the Canadian Mortgage Awards and later this year Grant and Debbie will be inducted into CAAMP’s Canadian Mortgage Hall of Fame. “In a market that seems to be changing by the day we do not take our business, our brokers or our customers for granted” says Mark Kerzner, president of TMG. “So much of our success is based on the relationships we have developed, and we continually look for new, innovative ways to enhance a broker’s value with the end consumer.”
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important to have a
Aaron Deakin, Account Manager Jeff Cody, Mortgage Broker/ Managing partner, MortgageBrokersOttawa.com Matthew Littzen, Underwriter
lender that cares, First National
is on my team.”
“They are continually supporting us and working to help us succeed and I respect and trust them very much.” At First National, we’ve spent the last 25 years proudly teaming up with brokers to help them build successful businesses. And we will continue that commitment for the next 25. Behind the scenes
Thank you mortgage brokers for 25 years of shared success. Ontario Mortgage Brokerage License No. 10514 NOVEMBER 2013 | 39
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2013-09-06 12:16 PM 07/11/2013 2:17:01 PM
COVER / SUPER BROKERS
VERICO COMPENSATION • • • • •
Commission splits - 100 per cent commissions; 100% volume bonus; each licensee determines agents splits Volume bonus splits –100% commissions; 100% volume bonus; each licensee determines agents splits Proprietary loan products with trailer fees Three-pronged revenue stream opportunities through our BrokerBase platform using our exclusive relationships with Industrial Alliance, CHIP and Home Trust Deposits. Revenue opportunity through our exclusive relationship with Liquid Capital
BROKER MODEL • • •
VERICO conceptualized the Mortgage Broker Network model and continues to be the first and largest Mortgage Broker Network in Canada Stringent application process that ensures the caliber of our members reflect the high standard of VERICO’s reputation. Your Brand. Your Business. Your Way. VERICO supports members in all aspects of their business and fosters the entrepreneurial spirit.
ANCILLARY SERVICES •
• • • • • • •
Industry leading Tools and Systems - We have leveled the playing field with a proprietary suite of tools and the support system to help our broker present themselves professionally with all the collateral that bank reps have access to. Exclusive Lender Relationships with financial benefits Four Private label mortgage products with financial benefits Trailer Fees Deposit brokering profit centre opportunities VERICO Insurance for mortgage life protection and critical illness In-house preferred suppliers including: Rogers Wireless, The Brick, Petro Canada Corporate leasing
• • • • • • • • • • •
Wealth Management Newsletter generator Free Website Creator Education and Training with world renowned Brian Tracy group. Training Support from VERICO’s member services team Full Resource Centre Branding, Marketing and Advertising Support PR and Media outreach Enterprise level CRM system Consumer Newsletters Branded Mortgage Product... and MUCH MORE!
COMPLIANCE & PAYROLL Compliance • Individual licensee audits his/ her own business’ transactions • VERICO members operate their businesses using best practices and comply to regulations to the highest degree. Payroll • Verico Dynamics Payroll system • ADP payroll • Lone Wolf • Lenders pay directly to licensees • Individual licensee operates his/ her business independently and have their own payroll system.
2013 CMP #1 Top 75 Mortgage Broker, Jim Tourloukis, was, in his words, “blown away” by the results of VERICO’s systems and tools. Year after year, and without long-term contracts in place, top industry members and top producing originators such as previous CMP #1 winners Calum Ross and Gord Pipkey, continue to stay in the VERICO Network. This is a testament to the value that VERICO offers to brokers.
Not only is VERICO built on reputation but we are offering systems that deliver results to your bottom line and support your business growth. In 2013, VERICO launched BrokerBase, a new marketing and lead generation platform that levels the playing field between bank reps and mortgage brokers. This strategic platform allows brokers to position themselves as their clients’ one and only point of contact and also offers brokers additional revenue streams. With a few clicks of the mouse, VERICO members
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I am thrilled to be back. The move back to VERICO has already paid dividends in spades. Within 24 hours of turning on VERICO Dynamics and its automatic marketing emails, I received 5 real deals and another 76 inquiries from leads. Those results speak for themselves. -Jim Tourloukis
can create a complete and strategic online presence that drives leads and referrals. VERICO is providing all the support, tools and marketing collateral that positions VERICO Mortgage Brokers as the experts that clients can trust. In an environment that is extremely rate-focused, we are presenting new opportunities for VERICO Mortgage Professionals to have a different kind of discussion with clients.
VERICO white label products service the needs of clients through every stage of their lives. Whether they are trying to move into a bigger home for an expanding family or wanting to cash in some equity for college funds, a VERICO mortgage can help clients achieve all their financial goals With the launch of BrokerBase, VERICO members can outcompete the competition and get MORE REFERRALS! MORE LEADS! MORE RENEWALS!
PREPARE YOUR CLIENTS FOR
UPS, DOWNS, TWISTS AND TURNS!
DID YOU KNOW?
79% OF CANADIANS have no individual disability insurance!**
• 44% of Mortgage Protection Plan® claims are made in the first two years of a mortgage!1 • Nearly half of mortgage foreclosures are due to medical problems!2 Make sure your clients are covered!
36% OF CANADIANS
say no one has approached them about insurance.**
58% OF CANADIANS
find it difficult to decide on the type of insurance to buy.**
Mortgage Protection Plan® is offered by Credit Security Insurance Agency Inc. (“CSIA”). ®Registered trademark of Benesure Canada Inc.; used under license. 1 According to 10 years of MPP claims data. 2 Get Sick, Get Out: The Medical Causes of Home Mortgage Foreclosures, Health Matrix: Journal of Law-Medicine, 2008** SOURCE: Manulife Financial survey of 1,000 Canadian homeowners between the ages of 30 and 50 with household income of $50,000 to $150,000 per annum. Conducted on-line by Research House, March 2001.
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NATIONAL PICTURE AT-A-GLANCE This month’s roundup looks at the most recent data on residential new and resale listings The Canadian Real Estate Association (CREA) released its monthly sales numbers for all of Canada and, although the market has normalized following a sluggish start to the year, the organization foresees a slowed market in the coming months. “While the momentum for sales activity began improving a few months ago, it may be losing steam after having only just climbed back in line with an average of the past 10 years,” said Gregory Klump, CREA’s Chief Economist. “Even so, one can see large year-on-year changes when comparing activity to a month like September 2012, when sales dropped to the lowest level for that month in more than a decade.” Specifically, the national average home price reported a slight uptick of 0.8 per cent from August to September and an 8.8 per cent year-over-year rise. Sales increased on a year-over-year basis in three-quarters of Canadian markets, bolstered by increases in British Columbia (43.2 per cent increase), Northwest Territories (23.5 per cent), Alberta (20.8 per cent) and Ontario (18.5 per cent). “Sales activity across much of the country has improved in recent months following a slow start to the year and new listings in some areas have not kept pace,” said CREA President Laura Leyser. “Depending on where they are, there may be a bit more competition among buyers for limited inventory in the months ahead.” However, the year-to-date numbers paint a more pessimistic picture, as 10 of the 12 provinces and territories saw a percentage drop in sales activity. Atlantic Canada reported the largest drops with Nova Scotia dropping 13.8 per cent, Prince Edward Island dropping 10.1 per cent and Newfoundland & Labrador dropping 9.9 per cent.
64.3 per cent GREATER VANCOUVER
91.7 per cent BATTLEFORDS
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SALES ACTIVITY BY PROVINCE
British Columbia: Source: CREA
43.2 per cent
20.8 per cent
(year-over-year percentage change)
Saskatchewan: 8.2 per cent
5.4 per cent
18.5 per cent
5.7 per cent
New Brunswick: -5.2 per cent
19 per cent PORTAGE LA PRAIRIE
-7.6 per cent
37.2 per cent
Prince Edward Island: -11.6 per cent
Newfoundland and Labrador:
5.1 per cent
NORTHERN NOVA SCOTIA
Northwest Territories: 23.5 per cent
-39.4 per cent
NOVEMBER 2013 | 43
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PROFILE / BROKER
LENDER GOES TO BAT FOR BROKERS MCAP’s VP of sales urges consumers to use a broker “At MCAP, we believe a professional mortgage broker is a consumer’s best option”, explains Gino Tieri, the company’s vice-president of sales. MCAP originates its residential mortgages exclusively through the broker channel and this has been its business model over the past 30 years. “As the broker channel goes, so goes MCAP. Mortgage brokers are our business partners in the truest sense of the word and our success as a lender depends on brokers earning the trust and loyalty of Canadian consumers. We feel that we have a responsibility to contribute to the success of our broker partners and it’s one that we take very seriously. ” Tieri leads MCAP’s national sales and broker support team and he is proud of the company’s long track record in supporting the broker channel. “Going back to the firm’s beginnings more than 30 years ago, if a prospective consumer contacts MCAP directly
MCAP’s Broker Advantage program includes efforts to promote the benefits of mortgage brokers to consumers in a wider context about a mortgage, they are referred to a broker in their area and we take the time to explain why a broker is their best option,” says Tieri. MCAP formalized its strategy of promoting the services and benefits of professional mortgage brokers a few years ago when it launched a program called Broker Advantage. The goal of the program was initially to provide brokers with tools and resources which were designed to help make consumers understand the reasons brokers really are their best option. From customized posters for their offices to personalized marketing materials brokers can use, broker relationships are strengthened when customers see materials from a lender which
tells them that they have made the right choice. “Some consumers still aren’t sure exactly what a mortgage broker does. Our Broker Advantage initiative sets out the benefits to consumers in four easy-to-understand points,” Tieri explains. “When we talk about what brokers offer to consumers, we describe these four benefits: Choice, Advice, Service and Savings. Our Broker Advantage posters list these four benefits and I think each one of them creates a clear and easy to understand consumer benefit,” Tieri says. “Our supporting printed material details each of the four benefits and I really believe they build a level of comfort for consumers.” MCAP’s Broker Advantage program includes efforts to promote the benefits of mortgage brokers to consumers in a wider context. “Validation for a consumer who has already sought the services of a broker is one thing – and it’s important to do that - but we also wanted to generate more of a general message to consumers as well”, Tieri adds. “For example, we recently submitted an article to a magazine read by commuters in the Toronto area which talks in some detail about the consumer benefits of using mortgage brokers. The article has generated strong readership and it only mentions MCAP in the context of its support for brokers. Our strategy is more about getting the word out about brokers than it is about MCAP.” As MCAP’s Broker Advantage strategy is about helping mortgage brokers succeed in growing their businesses, MCAP’s technology offerings for brokers –highlighted by its award-winning secure broker portal called Professor - are designed to help brokers conduct their business more efficiently and focus on adding real value for consumers. “When I describe what Professor is and what it can do, I keep coming back to efficiency. Brokers succeed by generating business and helping their clients get the best mortgage,” says Tieri. Professor makes the administrative part of their jobs easier and faster. Brokers can check the real time status of their deals
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The Year ahead
reality out there instead of trying
in progress, upload documentation, review MCAP’s to sell around it, then people will credit and lending policies and engage in discussions trust us.” withBut their underwriter. a one-stop any efforts the “It’s industry may resource for brokers which them to spend more time undertake as a allows whole will have no effect if individual brokers don’t do focusing on what they do best,” explains Tieri who theirthat parts, which means giving says more enhancements are on their way for clients theinbest value-added service, Professor the coming months. improving efficiencies and funding The MCAP approach to supporting brokers ratios with lenders, and of course, includes an ongoing to promote placing clients witheffort the right lendersthem and the benefits can provide to consumers as well as a for theirthey needs. commitment provide brokers of with “Focus ontothe best interest thethe tools they client fi rst and foremost,” said need to manage and grow their businesses. “As a Therien. “We are at lender, a crossroads: wededication to monoline mortgage MCAP’s either go back to being the person and support of the broker channel in you Canada is longgo to when the banks say no as it was standing and consistent,” says Tieri “and we will 25 years ago, or become truly trusted continue our strategy of promotion and advisers to to execute our customer and move up support for level.” the broker CMP channel. Brokers are our to the next partners and that isn’t going to change.”
7.1_CoverStory.indd 48 44-45_Profile.indd 45
Source: Mortgage Insights: Highlights from CAAMP’s Fall 2011 consumer and industry surveys (CAAMP/Martiz Research Canada)
of homeowners say they are in a good position to weather a potential downturn in the housing market
NOVEMBER 2013 | 45
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PROFILE / WINNING WAYS
& WINNING WAYS u.s.
U.S. housing market worse than thought
The number of Americans who bought previously occupied homes rose in October. But the National Association of Realtors says it overstated more than three million sales during and after the Great Recession, showing the housing market was weaker than previously thought. The private trade group says sales rose four per cent in October to a seasonally adjusted annual rate of 4.42 million. That’s below the roughly six million homes a year that economists say are consistent with a healthy housing market. But it’s ahead of 2008’s revised sales, now considered the worst in 13 years. The trade group revised its sales from 2007 to 2010 down 14 per cent, from more than 20.6 million to nearly WHERE ARE THEY NOW? 17.7 million. Among the reasons for the lower figures, The Canadian Mortgage Awards (CMA) rewards the Realtors group says: changes in the way the Census excellence and recognizing thoseshifts who excel in various Bureau collects data, population and some sales facets the industry; being of counted twice. but what tangible affect can one have on a career? One two-time winnerand believes The Realtors consulted with government private housing experts, the Federal the recognition played aincluding role in her upwardReserve, trajecthe Department of Housing and Urban Development, tory. the Mortgage Bankers Association, the National “After winning (The Mortgage Centre Award for Association of Home Builders, mortgage giants Fannie Best Lender BDM of the Year in 2012) I became a Mae and Freddie Mac and CoreLogic, a California-based team inside sales at Merix, doing training data lead firm of that first raised doubts about thethe annual and coaching,” Rachelle Gregory-Marshall told Mortnumbers earlier this year. gageBrokerNews.ca. “The award my CoreLogic has estimated that theshowed Realtorsthat group overstated in 2010 by at least 15 per cent. success andsales experience helped recognize that.” numbers could affect how economists ItThe waschanging the second award Gregory-Marshall had view the trade group’s data. It could also affect companies won, following her 2010 recognition for The Mortthat use the figures for hiring and expansion plans. gage Sales Centre Award for Best Newcomer Lender BDM are measured when buyers close on homes. winner. She was gracious inbefore crediting But many deals are collapsing that her point.former employer, withsaid helping the first One-thirdMerix, of Realtors theyher hadwin at least one award. contract “Merix had just, theperpast years, scuttled in October, upover from 18 centcouple in September. Contracts beingsales cancelled for several reasons: launched (its)are inside program that was a lot Banks have declined mortgage applications; home
inspectors have found problems; appraisals showed a home was worth less than the bid; a buyer lost a job before the closing. More than two years after the recession officially ended, many people can’t qualify for loans or meet higher down payment requirements. Even those with excellent credit and stable jobs are holding off because they fear Percentage of that home prices will keep falling. Sales are also homeownership being hurt by a decline in first-time buyers, who costs, including are critical to reviving the housing market. mortgage payments, Sales have fallen in four of the five years utilities and property since the housing boom went bust in 2006. taxes that take up a Declining prices and record-low mortgage rates typical household’s haven’t been enough to boost sales. monthly pre-tax At the same time, home construction has income in Vancouver begun a gradual comeback and should add to the more accessible than what brokers were used to,” and Toronto, economy’s growth in 2011 for the first year since she said. “BDMs are on the road a lot and that new respectively (RBC the Great Recession began in 2007. Last month, Housing kindEconomics of sales model put us outbuilders there and attracted broke ground on an annual rate of Trends and I was so accessible customers because and able 685,000 homes, theto government said recently. Affordability Report) answer questions.” That was a 9.3 per cent jump from October and pace since And now, Gregory-Marshallthe is fastest the Manager, In-April 2010. Most economists say home prices will keep novation and Evaluation at Paradigm Quest. A career falling, by at least five per cent, through 2012. shift she believes was helped along by her CMA Many forecasts don’t foresee a rebound in prices awards. until at least 2013. “Being in sales, everything is allThe about highnumbers. rate of foreclosures has made I had the numbers but it’s hardresold to puthomes your finger onthan new ones. The cheaper median of award a new home is roughly 30 per whether customers like you,” she said.price “The cent above the price of one that’s been occupied showed that I was good at developing relationships. twice thesales normal markup. Investors are It helped me become more of abefore coach– to other taking advantage of the discounts. people in the company.” The housing market is struggling even as the broader economy has improved in recent months. Voting for the 2014 CMAs – set for May 9 – is now The economy grew at an annual pace of two centvideo in theon July-September quarter. Many open and we’ve put together a per helpful how economists expect slightly better growth in the to vote. October-December quarter. CMP
What kind of effect does winning an award have on a broker’s business? We caught up with two-time CMA award winner Rachelle Gregory-Marshall to find out
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12-01-18 10:51 PM 07/11/2013 2:18:58 PM
The 8th Annual
Official Ballot Accountants
THE LIBERTY GRAND | MAY 9th, 2014
Join the Ranks of CMA Winners Winning a CMA continues to be the most prestigious and recognized accolade for the mortage and finance professional in Canada, so make sure your peers are recognized this year by nominating them!
NOMINATIONS NOW OPEN
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To Nominate: E: email@example.com
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BUSINESS STRATEGY / SECRET #9
THROUGH PUBLICITY It’s a great way to get your name out, writes Doren Aldana, and keep it there
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SECRET #9: THEY LOOK FOR INNOVATIVE WAYS TO GENERATE PUBLICITY. Superstar mortgage professionals love publicity because it gives them massive free exposure from a credible source, and in the financial industry, your credibility is everything! The average mortgage professional sees publicity marketing as daunting, time -consuming and intimidating. It's no wonder they never get around to doing it! Superstars, on the other hand, see publicity for what it is -- a powerful launching pad that can elevate their positioning in the marketplace as a mortgage celebrity, authority and expert faster than anything else. They understand that they get paid more for WHO they are, than WHAT they do. That's why they make it a top priority to implement innovative techniques that compel the media to give them coverage. Let me give you a good example of this. In 2006, I met an amazingly successful mortgage broker from Owings Mills, Maryland by the name of Brian Sacks. At that time Brian was one of the highest-producing mortgage brokers in the US. Brian has since retired but by the end of his remarkable career, he had closed over 5000 loans in excess of a billion dollars! As you
Doren Aldana is considered by many to be Canada’s leading Mortgage Marketing Coach and has won the “Best Industry Service Provider” award two years in a row at the 2012 and 2013 Canadian Mortgage Awards. Since 2005, he has been dedicated to helping mortgage professionals attract more clients with less effort, regardless of market conditions. For a free copy of Doren’s new CD titled, “21 Secrets of Superstar Mortgage Brokers,” visit: www.SuperstarMortgage Broker.com
PUBLICITY SUCCESS SECRET: if you provide the media with what they want, which is quality newsworthy content, they’ll give you what you want, which is quality free exposure can imagine, being the fledgling marketing coach I was at the time, I was very curious to know what exactly Brian was doing to attract so much business.
After a short time of analyzing his marketing, I discovered one of his secrets: publicity marketing. Brian was a genius at positioning himself as a recognized leader in the mortgage industry and he did it by harnessing the power of free publicity. He became a resident expert for NBC. He has also appeared frequently on CBS and ABC. He was also a contributing author for The Business Journal, The Daily Record, The Mortgage Press and The Mortgage Report. Brian appeared nationally in over 42 states on the topic of mortgage financing and credit challenged buyers. To put it lightly, Brian’s articles, radio and TV appearances generated massive publicity -- and income -- for his business. If he had to pay for advertising to get the same amount of publicity that he received through his articles, radio and TV appearances, it would have cost him hundreds of thousands of dollars. PUBLICITY SUCCESS SECRET: if you provide the media with what they want, which is quality newsworthy content, they’ll give you want you want, which is quality free exposure from a credible source. Always remember to offer some free information (like a free report, guide or CD) at the end of your article or interview, so people have a compelling reason to contact you. In my Mortgage Superstar Coaching Program, you will learn several simple strategies, techniques and tactics to make yourself and your business more newsworthy. You will also receive templates with sample press releases that you can copy and utilize for your own use. With my proven systems, you’ll have the keys to unlock unlimited free publicity for your mortgage business. In next month's 10th secret, you'll discover how Superstar mortgage professionals maintain a pristine position in the marketplace. This might sound dull but you're about to learn a critical lesson that can make or break your career success. Stay tuned...
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DATA / HOUSING MARKET
HOUSING MARKET PRESSURES A country’s cost of living can have a major impact on its property market. As goods and services get more expensive, potential house hunters begin to think about holding off on that property purchase and avoiding taking on mortgage debt. The good news, however, is that – while consumer prices are expected to rise on average by 2.1% in the U.S. next year, according to IMF estimates – things could be a lot worse. Belarus, for example, suffered a staggering average consumer price increase of 59.2% last year, making its predicted figure of 20.5% for 2013 something of a respite. Troubled neighbouring states Sudan (35.5%) and South Sudan (45.1%) also saw consumer prices skyrocket last year, while Iran (30.6%), Ethiopia (22.8%) and Malawi (21.3%) also saw worryingly large average consumer price increases.
CANADA 2012: 1.5% 2013*: 1.5%
2012: 2.8% 2013*: 2.7%
FRANCE 2012: 2% 2013*: 1.6%
2012: 2.1% 2013*: 1.8%
2012: 2012: 2.4% 2.4% 2013: 2013*:1.9%* 1.9%
PORTUGAL 2012: 2.8% 2013*: 0.7%
SWITZERLAND VENEZUELA 2012: 21.1% 2013*: 27.3%
ARGENTINA 2012: 10% 2013*: 9.8%
2012: -0.7% 2013*:-0.2%
2012: 3.3% 2013*: 2%
2012: 5.4% 2013*: 6.1%
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Source: IMF World Economic Outlook
2012: 5.1% 2013*: 6.9%
GERMANY 2012: 2.1% 2013*: 1.6%
2012: 59.2% 2013*: 20.5%
2012: 2.6% 2013*: 3.0%
2012: 1% 2013*: 0.8%
2012: 0% 2013*: 0.1%
2012: 30.6% 2013*: 27.2%
ETHIOPIA 2012: 22.8% 2013*: 8.3%
HONG KONG 2012: 4.1% 2013*: 3.5%
2012: 9.3% 2013*: 10.8%
2012: 35.5% 2013*: 28.4%
SINGAPORE 2012: 4.6% 2013*: 4%
2012: 45.1% 2013*: 15.5%
MALAWI 2012: 21.3% 2013*: 8.1%
AUSTRALIA 2012: 1.8% 2013*: 2.5%
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BUSINESS STRATEGY / ETIQUETTE
WHY MANNERS MATTER
Business etiquette is still a vital consideration for 21stcentury brokers, and the way you conduct yourself at work can have a huge effect on how successful you are, argues Nikki Heald Have you ever been in a business situation and witnessed an event that was so cringe-worthy it left you saying “Really?” If so, think about the impression that behaviour left on you and the negative connotation attached to it. Perhaps you think that the way you conduct yourself at work doesn’t really matter too much. Well, think again! Understanding correct etiquette (or protocols) not only provides you with an edge over competitors, but also influences whether or not you eventually make the sale. Your conduct can also mean the difference between whether you stand in line to receive a promotion or not. Savvy businesspeople appreciate this and incorporate business etiquette into their daily interactions to ensure success. While the word ‘etiquette’ may seem out of date or even old-fashioned, the simple fact is that common courtesies still prevail. Etiquette is about respect, good manners and good behaviour. It is not just about one of these, but a combination of all of them rolled into one. Clients and colleagues have an expectation that you will conduct yourself professionally, civilly and appropriately. Bad manners leave an unfavourable impression and this can often be difficult to shake.
MAKE TIME FOR MANNERS Unfortunately, in today’s high-tech, fast-paced world, our belief may be that we are too busy or have more pressing things to do than practice 52 | NOVEMBER 2013
correct protocol. Sending a simple ‘thank you,’ replying on time, exchanging business cards correctly or returning a call appear to have gone by the wayside. You might assume that manners are automatic or ingrained in us by the time we become adults, but that may not always be the case. Some do not place a high priority on implementing common courtesies. Of course, we all know to use ‘please’ and ‘thank you’; however, people in the business world need to appreciate that there’s more to business protocol than that. During the first few seconds of meeting someone, perceptions are formed, and first impressions can be long-lasting. Presentation, body language and behaviour are critical as there’s only a small window of opportunity in which to impress. Do you have confidence and integrity? Are you friendly and self-assured? Are you capable and knowledgeable? Do you appear trustworthy and ethical? These are just some of the assumptions clients and colleagues will form about you. Indeed, Sir Richard Branson (interviewed on page 10) in his book Losing My Virginity says: “I tend to make up my mind about people within 30 seconds of meeting them.” Interestingly, a lot of research has been conducted that supports Sir Richard’s proposition. Etiquette is also essential at work functions. From a management perspective, employees are professionally on display when they are
07/11/2013 2:21:44 PM
networking, attending client meetings and conferences. Senior managers often observe the way staff conduct themselves at these gatherings, as behaviour may reveal true character. In this day and age, many business functions are surrounded in social occasion; however, they are not social events. For those seeking career progression, be mindful that work functions are strictly business and not the time to gain a reputation as the office stripper or party animal.
FROM WORKPLACE ETIQUETTE TO ‘NETIQUETTE’ What about workplace etiquette? Perhaps you have a team member who likes to shout across partitions, talk loudly on the phone or constantly interrupt others. Alternatively, you might know of the serial CC’er – the team member who likes to copy all staff into their emails? Thankfully, such behaviours can be fine-tuned and refined. Professional conduct is by no means limited to face-to-face transactions, but also extends to your online behaviour or ‘netiquette’. The use of social media in business is ever-increasing, so knowing the correct rules in this arena is just as crucial. Websites, Twitter, blogs and LinkedIn are an extension of your brand, and again, any content or comments must be appropriate. Unfortunately, most behaviour that is perceived as disrespectful is actually unintentional, and the person who practised it didn’t quite understand the rules for that situation. I really believe that most people don’t purposely set out to embarrass themselves or others. Implementing the correct rules for networking, client entertainment, meet-and-greet, handshaking and distributing business cards may seem a little daunting if you’re not sure what to do. However,
While the word ‘etiquette’ may seem out of date or even old-fashioned, the simple fact is that common courtesies still prevail the great news is that business protocol can be learned and, with practice, will become second nature. Good manners costs you nothing; however, the value is that you will gain in credibility, confidence and ultimately your bottom line.
Business etiquette tips Let others speak, and don’t monopolize conversations. No one appreciates a whinger, whiner or bragger.
Nikki Heald is a corporate trainer, presenter, businesswoman, founder of Corptraining, and co-author of “Views on the Way to the Top.”
Stick to appropriate eye contact. Flirtatious and intimate glances may lead to trouble! Avoid getting intoxicated at business functions – it can be career limiting! No one likes a bone-crusher or wet fish. A firm, professional handshake will do! Avoid brandishing cutlery when speaking during a meal. Your companions may become scared of where it might end up!
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PILLARFINANCIAL.CA 07/11/2013 2:22:53 PM
FEATURE / COMMERCIAL CONSTRUCTION
Y L I M A Y F L I I M T L A F U M MULTI-
AND 6 KINDS OF SENSE FOR INVESTORS Multi-family real estate investments may offer the greatest return on investment for commercial real estate investors, writes commercial agent Tarun Gupta CLIENT QUESTION: My partner and I own six rental houses and a duplex. We want to continue to grow our real estate portfolio. With house prices and interest rates creeping up again, should we sit tight or continue to buy more homes? -R.H.
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ANSWER: Single-family home prices and the cost of mortgages are on the rise again, yet incremental increases such as we are now seeing merely keep step with the economy, presenting no real threat to your investment plan nor a compelling reason to curtail your commercial real estate activities as a residential property investor. Nonetheless, in generalperhaps especially in times of rising residential prices -multi-family real estate will offer the greater return on investment (ROI). Multi-family capital costs do not tend to keep step with inflation, but stay well back from the bidding war environment of desirable residential listings, while enjoying higher returns. Residential rental income streams can and generally do keep pace with inflation. Just look at your duplex when considering a multi-family property investment. Assuming the rental of your single-family homes and the duplex are all at market rates; examine the cost per dollar ratio of each of your other holdings versus your multi-tenanted property. The cost difference between the duplex and a single-family dwelling is somewhat negligible when compared with the income streams each property yields. No longer a ‘best kept secret’ amongst seasoned real estate investors, Canadian Real Estate Magazine even titled 2013 “ The Year of the Multi-Family Property,” citing predictions in the Morguard’s influential 2013 Canadian Economic Outlook and Market Fundamentals Research Report. Author Keith Reading underlines, “Generally tight conditions in the rental market” and forecasts a continuous rise in rents while occupancy rates hover around 98 per cent. The authoritative 2013 Emerging Trends In Real Estate report agrees, echoing Canadian sentiments: “The multi-family bandwagon rolls on” with “positive
Small apartment buildings and plexes make investment sense and dollars
Small walk-ups are popular and can provide a good rental income stream
demographics” and a move away from suburban areas and back into increased urbanization as, “More people willingly forsake space and yards for greater convenience and avoiding car dependency.”
CMHC & Conventional Mortgages for:
Single Family Alternate Equity Lending:
Multi-Family Rental Properties Senior’s Housing Projects Commercial Properties Construction Projects
Toronto CMHC/Conventional Financing Phone: 416-368-3266 Email: firstname.lastname@example.org
Equity Take Outs Purchases/Refinances Homeowner or Rental Flexible Income Verification
Calgary CMHC/Conventional Financing Phone: 403-237-8795 Email: email@example.com
Vancouver CMHC/Conventional Financing Single Family Financing NOVEMBER 2013 | 55 Phone: 604-685-1068
07/11/2013 2:23:22 PM
FEATURE / COMMERCIAL CONSTRUCTION
6 MULTI-FAMILY FACTS FOR INVESTORS
Multi-Family Properties Have Healthier Cap Rates
Tarun Gupta is leading real estate sales agent with Royal LePage Real Estate Services Ltd and an expert on small-scale commercial properties ($3 million to $10 million) in the GTA.
A desirable capitalization or cap rate is the single most important factor in gauging the investment worthiness of any rental property. Cap rates calculate a property’s true net operating income then divide by its price. Properties with higher cap rates are generally more desirable investments. A cap rate of 6 per cent and above is highly desirable, and anything in the rarified air of double digits will have investors flocking for pro forma statements. Small apartment buildings and townhouse complexes, for instance, tend to hit the highly desirable 5 - 6 per cent + mark.
The ROI Also Rises
A multi-family property’s ROI will almost always come out ahead of a single-family dwelling’s for the simple reason that your cost of service will always be lower divided among additional units than when hung like a yoke upon one door. All of your costs will be lower per unit in a multi-tenant situation compared to a single-family dwelling, each requiring separate services and with individual property tax bills. Multi-family dwellings are enjoying low and lowering vacancy rates, Higher returns on investment is what every investor aspires to.
Multi-Family Means Multi-Rent Profits
Becoming more prized as the cash cow we all want at pasture, rolling in green, multi-family housing can provide a steady income stream that keeps cash flow ahead of and well above costs, allowing the investor to reap financial benefits by allocating profits. Five or more units is often where investors comfortably cover their margins. Build scheduled rental increases into leases written for longer than two years. Multiple rents rise exponentially, while most costs rise incrementally and predictably, each year. Reliable rents are most assured by well-maintained properties.
Multiple Income Streams Make Expense Sense
Rental rates depend on supply-and-demand, rising with populations, and at a faster trajectory than associated costs. A steady market for your units is a
hedge against inflation and keeps your cash flow streaming in. When any cost rises, or capital outlays are necessitated, even when there are vacancies; any multi-family rental is better equipped to absorb an added expense due to multiple income streams. Even two vacancies coinciding in a five-plex can meet the mortgage in a pinch, compared to a vacant house with no income while empty and contributing nothing to its upkeep.
Lower Closing Costs Compared To Multiple Single-Family Homes
Every residential home you close escrow on comes with closing costs. The same applies to commercial real estate and, again, the numbers add up in favour of the multi-family investment. Closing multiple rentals as one Title versus multiple single-family properties, each with individual deeds, presents a sizable savings in capital costs.
Maintenance By the Numbers
While less is generally more, when it comes to maintenance, more units mean less maintenance cost per door. Contract repair and maintenance work out to a well-reviewed property management company that provides references. This could be at the outset of your career as a future land baron, or decades in. The choice is a personal one for every investor – one that will enable larger avenues of investment than when attempting to maintain every property you own yourself. Dwellings nestled together are logically easier to maintain, so will get you a better rate for service than multiple units scattered throughout a city or region. When putting assets in the hands of tradespeople, you want to choose them carefully, so make sure their licences are in order, and that they have a proven track record of routine and emergency maintenance services. And, when you put your assets into the hands of any tenant, it’s important to set the standard of care by example of how you expect your property to be treated. Maintenance is king when it comes to attracting and keeping quality tenants. Make every door you own yield higher profits and enjoy lower vacancy rates with consistently high maintenance standards.
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CG_Ontario_CMP_Andy 13-09-23 10:51 AM Page 1
Mary Putnam, AMP
Darren Kirk, AMP Vice President, Regional Sales
Director of Sales, Ottawa, Quebec & Atlantic Canada
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Marco De Paolis, AMP
Vice President, Sales & Marketing
Director of Sales, Western Canada
Director, National Accounts
Mike Klassen, AMP
Director, National Accounts
President & CEO
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Canada Guaranty Mortgage Insurance Company 877.244.8422 I www.canadaguaranty.ca NOVEMBER 2013 | 57
07/11/2013 2:23:30 PM
BUSINESS STRATEGY / TRUST
TRUST: THE NEW COMPETITIVE ADVANTAGE Australia may have been spared the worst effects of the GFC, but its powerful legacy continues to haunt all financial services firms. One word sums up the sector’s biggest problem and its greatest opportunity. That word is ‘trust’, argues Omer Soker
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Manifesto’ at Goldman Sachs. Is it any wonder they distrust whether the industry has learned any lessons? Not only has reputation suffered but so too has perceived performance and perceived behaviours.
THE EFFECT ON BROKERS
Capitalism runs on trust, and it was a lack of trust that brought the system to its knees during the financial crisis in 2008. Ironically, it was a lack of trust that permeated between the very financial institutions – both government and private sector – whose role it was, and still is, to serve as our fiduciaries. As the crisis unravelled, trust was further eroded: in the infallibility of markets, the sustainability of iconic institutions, the quality of executive leadership and the wider purpose of business itself. But it is the financial services industry that has taken the biggest hit in terms of trust. Part of this is logically due to the role it played in the crisis, which still bears its ‘financial’ name. Secondly, the fiduciary nature of the industry’s relationship with a customer’s money adds considerable weight to the responsibility it has to act in a trustworthy manner, which raises both expectations of behaviour and condemnation for breaches. Added to this, customers have witnessed incessant financial scandals throughout 2012, including allegations of mortgage fraud at Deutsche Bank, money laundering at HSBC, Libor manipulation at Citi and Barclays, rogue traders at UBS and, of course, the infamous ‘Muppet
What does this mean for mortgage professionals? How can they drive demand in the sector, meet the expectations of savvy customers, or add value by educating key clients on wealth creation? Trust is measured not only in terms of reputation, performance and behaviour but also in the specifics of transparent, fair and objective customer engagement. It provides an exceptional opportunity to not just restore lost trust in the greater system but also to use the creation of trust through responsible recommendations as a new competitive advantage. The enormity of the crisis has, perhaps unfairly, tainted all financial services firms, and this is the reality they must now work to change. The 2013 Edelman Trust Barometer reinforces the crisis of confidence in leaders themselves, with trust in business 32 points higher than trust in its leaders to tell the truth. This means the lack of trust ignited by the crisis has grown personal, with the onus now on leaders themselves to start restoring it. Michael E. Porter, a leading authority on company strategy and the competitiveness of nations, says that the legitimacy of business has fallen to levels not seen in recent history. One of the dangers he cites is that this diminished trust may lead governments to set policies that further undermine competitiveness and sap economic growth. Trust needs to be restored by the financial services firms themselves, not only to avert the intervention of more government regulation but also to keep in line with customer expectations. Ethical Consumer’s research shows that between 5 per cent and 10 per cent of buyers are always ethical, while 60 per cent to 75 per cent are sometimes ethical and influenced by availability and choice. In other words, the majority NOVEMBER 2013 | 59
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BUSINESS STRATEGY / TRUST
The majority of buyers ... favour companies demonstrating trustworthy behaviour of buyers are influenced by ethics, and favour companies demonstrating trustworthy behaviour.
Omer Soker is a corporate speaker, trainer and the founder of the Ethics of Success Corporation. This article is an edited extract from his new book on business ethics, trust and engagement, The Trust Future.
Another fundamental point of difference today, from the past, is the ready availability of information and ‘mass connectivity’. The restoration of trust and growth now takes place in an environment of transparency and accountability. There are no shortcuts. This time, the world is watching. Armed with knowledge and social media, consumers are holding financial services firms accountable to act with ethics. As consumers fully realize their newfound power, they are increasingly wielding it to change the way business is conducted. The crisis has also strained the trust between companies and their employees, which can be measured by the amount of gossiping, venting and complaining that goes on under the surface. Most leaders are too weak to address this because they are scared of conflict and don’t know how to build the trust that resolves it, in turn creating a vicious cycle. Organizational ethics will restore trust because ethical leadership demands that issues such as a lack of resources, inappropriate pressure, mixed messages, lack of oversight, wasted productivity and internal politicking are addressed. Talented employees are quickly realizing they don’t have to be compromised by this kind of conduct and are selectively targeting the best-practice employers they want to work for. Financial services firms must earn and maintain the trust of their employees by acting with integrity to get to the truth of what’s causing a problem, and then fixing it. Once this is done, the onus can shift to employees to deliver. In the 1500s Niccolò Machiavelli argued in his book The Prince that cruelty restored order and obedience. During the Industrial Revolution in the 1800s businessmen were able to ignore social justice to increase profits. In the 1980s, ‘greed was good’ on Wall Street. In 2013, companies no longer
have such control over markets, customers or employees, and need new tools of engagement. Our global system, too, is now so interdependent that our interests are becoming aligned. Financial services firms need to serve customers and communities better in order to serve their own interests. UQ Business School engaged Dr Graham Dietz and Dr Nicole Gillespie for a study on building and restoring organisational trust, and found three characteristics leaders need to build trust: Competence: the knowledge, skills and experience to do the job Benevolence: people want to feel their leaders have their best interests at heart Integrity: the adherence to a set of clear principles such as honesty and fairness
Ultimately, trust can only be created by behaving in a trustworthy manner on a consistent basis and delivering on integrity, competence and benevolence. Trust arises through respect, transparency, knowledge and diversity of ideas and influence. These are not new concepts. They are fundamental aspects of our true nature. To access them, we need to ‘unlearn’ many of the stereotypes we have been taught about business. In particular, we need to unlearn that control and command systems are effective, that secrecy and deceit enhance value, and that benevolence and integrity are actions that business often associates with weakness or naivety. For mortgage professionals, it starts with better questioning at the customer interface to understand fully and act on their needs and concerns. Recommend not just property-related options when asked for bigger-picture guidance, and you will find, in the long run, your trust will be rewarded. To restore trust in modern-day commerce, financial services firms need to change customer perceptions around ruthless, manipulative or hard-talking advisers being good for business. We need to unlearn many of the outdated, often unchallenged concepts we link with success, and open our minds to an evidence-based, pragmatic review of how integrity, benevolence and competence will drive commercial success in the financial services future.
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PROFILE MORTGAGEBROKERNEWS.CA / FAVOURITE THINGS
Favourite things Deepak Bansal, Mortgage Broker at Dominion Lending Centres in Mississauga, Ont. Favourite Mortgage Product: The five-year Variable in most cases; it all depends on what product best suits my client’s needs.
Favourite Place to Be: Outdoors for a run, or catching up with family & friends.
Favourite Drink: On a hot sunny day, an ice cold beer on tap hits the spot.
Favourite Book: The Monk Who Sold His Ferrari by Robin Sharma. It’s inspirational and full of rich wisdom - “Your ‘I CAN’ is more important that your IQ”. Fiorella Fromager
Favourite Music: Reggae, Jazz, and Hip Hop - They all give me a good vibe!
Favourite thing about working in the Mortgage Industry: Meeting people, making friends and building long-lasting relationships. It’s such a great feeling to make a positive difference in someone else’s life.
Favourite Vacation Spot: Jamaica – beautiful weather, friendly people, fresh lobster & jerk chicken cooked right on the beach. Yeah Mon!
Favourite Movie: Casino with Robert De Niro and Joe Pesci Favourite Celebrity: Denzel Washington in American Gangster
Favourite Sport: Hockey and Soccer
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GUEST / COLUMN
TORONTO HOUSING MARKET
25-YEAR APPRECIATION ONLY 3.4% PER YEAR No cause for alarm! Toronto real estate market still on strong legs, writes Lachman Balani Over the last few months many reports have come out corroborating the stability of the housing market in Toronto and Canada-wide. Some even point out that the plunge of 21 per cent in housing starts in August that negated the effects of the huge jump in starts in July only further cements that future supply will be contained as the trend in the value of building permits has become relatively flat since the beginning of 2013. Sales in August and September have been hectic
SALES 1988-2012 100,000 90,000 80,000
60,000 50,000 40,000 30,000 20,000
10,000 ‘88 ‘89 ‘90 ‘91 ‘92 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12
Source: Toronto Real Estate Board website
with this year’s sales up 21 per cent and 30 per cent respectively each month over last year. Prices average higher than last year. There has been no crash, despite forecasts by Capital Economics and a few others. The Toronto real estate market overall is hale and hearty. I have, in previous articles, already mentioned that the government’s tightening of the mortgage rules last July would not toll the death knell for the Toronto real estate market nor will the Canada Mortgage Housing Corporation’s (CMHC) recent announcement that it will limit insurance of home mortgages. TD economist Diana Petramala, who specializes in the housing market, estimated rates could rise anywhere from 20 to 65 basis points, or the equivalent of 0.2 per cent to 0.65 per cent due to this announcement. She noted that, historically, this is a minor increase.
In other words mortgage rates are still cheap by historical standards and so people will continue to buy
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Their homes have increased in value by less than the inflation rate and there has been no real return on investment -- in fact it is a negative return on investment roof repairs, window replacements, several coats of paint every sixe to seven years, redoing basement? Overpriced? Our home? Heck no, it’s highly underpriced!” As seen in the above simple example- most home owners do not think their homes have increased as much in value as they should have. Their homes have increased in value by less than the inflation rate and there has been no real return on investment -- in fact it is a negative return on investment. This is why the housing market will still keep marching on. AVG. SALES 1988-2012 600,000
“Affordability will still remain in the housing market,” she said. Which means more people will buy and there will be no crash in the immediate future. I have, in the past, given reasons as to why the housing market will not crash in Toronto based on price, affordability and very cheap mortgage rates. But as CIBC chief economist points out in the face of increased mortgage rates, “overall, the days of very cheap mortgages are going to be replaced by cheap mortgages.” In other words mortgage rates are still cheap by historical standards and so people will continue to buy. However, let us look at the Toronto housing market from another price metric angle. 25 years ago (the amortization period of a mortgage at that time) the average home price in Toronto was $230,000 (see table below from Toronto Real Estate Board) and today it is hovering about $530,000. This means the average home price has only appreciated about 3.4 per cent per year, which by any standard is not excessive, meaning there is no reason for a downward spiral given this scenario. Let us examine it further. A couple who bought a home 25 years ago at $230,000 and paid 25 per cent down (what was needed in those days for a conventional mortgage) took out a mortgage for $172,500 and gave $57,500 as down payment. Even though the rates were very high then, let us say that over the course of time they paid an average of five per cent (very conservative estimate) on their mortgage leading to them paying a total of $358,500 ($230,000 plus interest of $128,500) for their home. Using a very linear calculation, as most people do, the couple says “Hey my home cost me $358,500 and now it is $530,000 – that means an increase of 1.60 per cent per year- like that’s below inflation- so why is anybody saying the Toronto real estate market is overpriced. It’s under priced! What about a return on our investment of say even a puny three per cent? Nothing? And what if we include kitchen upgrades,
‘88 ‘89 ‘90 ‘91 ‘92 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12
Source: Toronto Real Estate Board website
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Radius Financial www.radiusfinancial.ca Ph: 1 877 369 6398 Inside Front Cover
Bridgewater Bank www.bridgewaterbank.ca Ph: 1 888 837 2326 Page 7 HomEquity Bank www.homequitybank.ca Ph: 1 866 522 2447 Page 23
Pillar Financial Services www.pillarfinancial.ca Ph: 613 282 1242 Page 53
Canadian First Financial www.canadianfirst.com Ph: 1 866 601 7632 Page 16
Tribecca Finance Corporation www.tribecca.ca Ph: 416 225 6900 Page 27
Home Loans Canada www.hlcmortgages.com Ph: 1 866 452 1821 Page 3
INVIS Mortgage Intelligence www.invis.ca â€˘ Ph: 1 866 854 6847 Pages 9
Mortgage Architects www.mortgagearchitects.ca Ph: 1 877 802 9100 Page 37
Scotiabank www scotiamortgageauthority.com Ph: 416 350 7400 Page 10 & 11
RMAI Financial Group www.rmaifinancial.com Ph: 1 866 955 7624 Page 35
Canada Guaranty Mortgage Insurance Company
www.canadaguaranty.ca Ph: 1 866 414 9109 Page 57
First National Financial LP www.firstnational.ca Ph: 416 593 1100 Page 19 & 39
Mortgage Protection Plan www.mppbroker.com Ph: 1 866 677 4677 Page 27
Home Trust www.hometrust.ca Ph: 1 877 903 2133 Page 31
First Canadian Title www.fct.ca Ph: 1 800 307 0370 Page 29 Broker Networks
MCAP www.mcap.com/brokers Page 17 and Inside Back Cover
VERICO www.verico.ca Ph: 1 866 983 7426 Outsert
Genworth Financial Canada www.genworth.ca Ph: 1 800 511 8888 Outside Back Cover
Capital Direct www.capitaldirect.ca Ph: 1 800 959 9290 Page 18
ROMSPEN Investment Corporation www.romspen.com Ph: 1 800 494 0389 Page 1 Technology & Software
Marlborough Stirling Canada www.morweb.ca Ph: 1 877 626 2022 Page 2 Real Estate
Canadian National Association of Real Estate Appraisers
Centum Financial Group Inc. www.centum.ca Ph: 1 604 257 3940 Page 5
www.cnarea.ca Ph: 1 888 399 3366 Page 46 Services
Peoples Trust www.peoplestrust.com Ph: 1 800 663 0324 Page 55
Dominion Lending Centres www.DominionLending.ca Ph: 1 888 806 8080 Page 33
Best Points Travel firstname.lastname@example.org Ph: 1 800 551 8786 Ph: 416 251 9944 Page 45
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why a Mortgage Broker?
Only mortgage Brokers can provide the range of products from various lenders to meet your specific needs.
Mortgage Brokers offer alternatives in selecting a mortgage product that are best suited for your client’s situation.
Mortgage Brokers are available to meet when & where it is most convenient. They manage the mortgage process to ensure a positive experience.
Mortgage Brokers save you money by providing, on average, lower interest rates*.
Discover the MCAP Broker Advantage. To learn more, please visit: www.mcap.com/brokers
* According to CAAMP’s study**, those who renewed or renegotiated with a mortgage Broker reported an average rate decrease of 1.4% compared with 1.0% among all renewers. **CAAMP January 2011 study — Canadian Mortgage Channel: Industry Perceptions Consumer and Broker
mcap.com/brokers MCAP Service Corporation Ontario Mortgage Brokerage #10515 Ontario Mortgage Administrator #11692
07/11/2013 2:25:26 PM
GEN_STRATEGY_4_CMP_Layout 1 2013-03-19 6:59 PM Page 1
Weâ€™ve got the strategy for your success. Genworth Canada makes homeownership easier by providing a complete suite of mortgage planning tools and homeownership education resources at Genworth.ca. The recently redesigned website is loaded with new features to help mortgage professionals access and share information quickly. Find useful tools like home buying calculators, marketing programs and accredited training to help you grow your business.
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07/11/2013 2:25:33 PM