The Mortgage Broker Summit

With many thanks to Gary Mauris, President of Dominion Lending, and his presentation called "Build a Killer Business by Referral"  Dominion Lending University for brokers I attended yesterday.

 Update Facebook Status Each Week
         Use the "Facebook Status Examples" Script

Facebook is "The" social networking application of today's young adults between 25 and 40 years old.  This just happens to be the target demographic for new home purchasers.  Who is it that mortgage brokers want to reach?

 Add to Your Database Every Day

Your database is your basket of opportunity.  Without anything in your basket your business cannot grow, and you cannot make a living without potential clients.  The fundamental job of sales is prospecting for new business.

 Send Out Letter to Database
          Use a "Letter to Database" Script

If you don't talk to your prospects and suspects on a regular basis, how do you expect them to know to call YOU instead of your competitor when they need our services.


 Master the Killer Elevator Pitch
          Use a "Develop a Killer Elevator Pitch" Script

Don't be shy.  Tell everyone you know what you do, how you do it, and why it should matter to them.

 Make 4 Calls Every Day
          Use a "Good News" Script

Personally I think 4 calls is much too few.  However, better 4 than none.  Most sales people who fail, fail because they never actually get to work at all.

 Send Out 20 Sincerity/Coffee Cards Each Sunday
          Use "Sample Handwritten Scripts"

Sincerity/Coffee Cards are a great idea for improving your sum of positive karma in the world.  These aren't actually about getting business.  They are about thanking the universe for all of its gifts to you.

 Ask for Referrals Daily
         
Be proud of what you do.  Ask people to refer others to you so that you may be of service to them.  Never be shy about the value of what we do.  Remember, we touch people where they live.  What we do matters, when we do it right.

 Reward Referral Behaviours Not Results Immediately

Be generous.  If someone sends you a referral thank them immediately and generously.  Remember, you are not incentivizing them to make you money, but rather to allow you the opportunity to provide service to others.  Whether you make a dime or not on providing a service doesn't diminish the value of the referral, and the implicit trust implied by it.   Send Out an Article From the Media Twice a Month

Keep in touch with your database with relevant and useful information from the media.  This will reinforce your authority as an expert, and as someone who is determined to provide meaningful value to your contacts even before they have bought anything from you.
         
 Meet Clients Face-to-Face

Meeting clients face to face is simply good business, where possible, and it eliminates most of the people who are simply rate shopping.


 Give Excellent Service

If you aren't in the business to provide excellent service, then you're not really in the business.

It’s been a while since I spent any serious time talking about recent mortgage developments in Canada. As mortgage brokers we are most concerned about being able to give our clients the best possible advice in these rapidly changing times.
This blog is designed to be a bit of a primer on major changes for home buyers, and some implications for our clients going forward.

The single biggest element that is changing is the end of the road of ultra cheap mortgages, whether for residential owners or for commercial property owners. While higher interest rates appear to be negative for the average residential consumer there is some potentially good news underlying the rising cost of money. Interest rates increase on positive economic news regarding productivity gains, employment gains and growth in the overall economy.

Ultimately, money is a commodity, especially when it comes down to the international trade in debt, represented by the Bond Markets, and increasing demand for debt both by governments and non-governments alike, represents a higher demand for it. Supply and demand are managed, to a degree by central banks around the world, with several explicit goals – first among those goals the prevention of run-away inflation as was experienced in the western world during the 1970’s and 1980’s.

During the recent recession starting a couple of years ago caused by the US housing meltdown, another major priority shifted the focus of central banks from inflation to the prevention of economic collapse and a potential worldwide depression. This resulted in central banks lowering the cost of debt by reducing the prime rate to historic low levels, .25% in Canada, for example, but also led governments to spend substantially more money than they have coming in from taxes from all sources, leading to ever increasing amounts of debt. However, all that debt has been slowly increasing the demand for debt capital by the same governments that have been overseeing the decline in interest rates designed to stimulate the economy.

Supply and demand have both been profoundly affected by government policies in Canada, and in our major trading partners. The world governments have been radically increasing their demands for debt capital and therefore putting increasing demand on the available capital. All of this demand is now showing up on the bond markets, forcing up the cost of debt to everyone, including consumers, business and governments.

Interest rates are going up. Most economists are expect them to rise around 2.25% in the next couple of years. What does that mean in regards to mortgage rates? This is a more complicated question than it appears, because mortgage interest rates are a consequence of a variety of forces in the marketplace rather than simply a function of supply and demand on the bond markets. The Bank of Canada prime rate is .25% right now, and most think it will rise in June or July by some amount. Nobody is guessing by how much it will rise, but my guess is that it will rise by about .5% in July and another .5% sometime this fall. But of course I could be completely wrong, or even way too low.

What I am correct about at this point is that the general trend in interest rates is up, both for fixed rates and for variable rates, both for consumers of residential mortgages and others. Assume that rates will rise to levels at or near the average rates for the past ten years or so, ever since the government first established inflation as the number one priority for the Bank of Canada.

Prudent advice would be to anticipate as much as a 3% interest rate increase over the next 18 months to two years. For most consumers this would suggest that locking-in fixed rates would be a sound policy, unless you have a lot of flexibility to deal with substantially increased monthly expenses for mortgage payments.

Also, don’t buy more than you can reasonably afford. Normally this would seem like elementary common sense, until you realize that 60% of new mortgages last year were variable rate ultra cheap mortgages, which could easily double or triple in cost for the next two years. Anybody who bought a house based on being able to keep his interest payments to around 2% is in deep trouble, and I hate to think about what these means to thousands of home buyers who bought very expensive homes at very cheap rates.

http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2010/04/banks-see-275-rate-hike-in-19-months.html

This brings me to the second major issue facing borrowers, changing mortgage rules by governments and mortgage insurance companies. On April 19 a new regulatory regime has been imposed on mortgage insurance back mortgages.

For residential mortgages there are a number of new rules including a need to qualify for the Ban k of Canada Five Year Posted rate to any mortgage with a term shorter than five years, or for any variable rate mortgage. Applicants for five year term or longer mortgages will need to qualify on the basis of the contracted rate. This is a major change from current practices, and is in response to the high percentage of Canadians obtaining variable rate mortgages in these times of extremely low interest rates. The concern by the government is that people are taking out these ultra cheap mortgages without any ability to support them when the variable rate rises to historically more normal rates in the future. By forcing people to qualify at the higher rates it will reduce the exposure of the marketplace to a meltdown caused by a lot of people having to sell their homes because they can’t afford their mortgages as a result of rising interest rates.

Refinancing a home will also now be restricted to 90% Loan to Value instead of 95%, in an effort by the government to discourage Canadians from draining all of the equity out of their homes to pay off consumer debt. The general feeling is that if you have more equity in your home you will be less likely to default on your mortgage.

These two changes are both substantial, and in the author’s view, necessary, although not necessarily on the basis of any technical evidence supporting the policy change. Defaults in insured mortgages in Canada show no evidence of weakness or increasing defaults. However, it is prudent given the likeliness of rate increases to reduce the exposure of ordinary Canadians to default through bank loans.

Implications for revenue property borrowers and commercial borrowers will follow in my next blog.

Mortgage experts like to think of ourselves as professionals, that is, providing a value added service to the business of helping our clients obtain mortgage financing for their homes and businesses. Most spend a lot of time in professional development, learning new skills , keeping up with the changing face of the mortgage loan industry, and keeping an eye on the constantly evolving economic reality faced every day by our borrowers (and our lenders).

But many of the people who work in our industry, if pressed, would agree that the single most challenging aspect of our work is ensuring that we have a sufficient flow of new business opportunities, so that we don’t run out of clients just about the time we become knowledgeable enough to be of real service to them.

Somehow the idea of prospecting for new business seems incongruent with being a professional adviser, a little like getting our hands dirty when we really want to appear to be above the fray, and beyond the need to market ourselves and our services.

Far from it! Getting out there in front of people and winning their attention is precisely the mark of a professional. A true professional knows that he/she has something valuable to share with the borrowing public, and that the public will never get the benefit of that value if he/she doesn’t grab their attention.

So it’s not that professionals shouldn’t promote themselves, or market themselves aggressively. But rather how they should do so, rather than if they should.

So here are a few points to improve both effectiveness and the professionalism of your marketing efforts:

1. Share your skills, knowledge and expertise freely with potential clients. As mortgage experts we know a lot about mortgages, financial planning and debt. Most of the time the only time we talk to potential clients is when they are looking to buy a house or remortgage a property. In order to be the expert relied up at decision time, you need to be the adviser they trust in regards to these subjects even prior to the need being expressed. Instead of sending out messages asking for business to your potential marketplace, try asking people how you can help them achieve their goals through what you know and do.

2. Become a genuine expert on your potential client. It is more important than ever to know your client. Inside and Outside. Front to Back. Lenders will tell you that it is important because then your applications are far more likely to be funded, because you will provide accurate and sufficient information for a lender to make a mortgage loan offer to your client. It will improve your credibility with your lenders as well, as you become a mortgage expert they know that they can rely upon. You will make it worthwhile for them to invest the time and money in underwriting your deals. Even more significantly, however, knowing your client will demonstrate to that client that you actually care enough about them to provide them with comprehensive and caring advice. They will know that you aren’t just plugging applications into the system and hoping for the best.

3. Don’t hesitate to reach out to new prospects. In fact, dedicate a substantial part of your day every single day to reaching a specified number of new prospective clients, and then adding them to your database of people who know you as a mortgage professional. When I was a young man just learning the ropes in the life insurance business, more than thirty years ago, my sales manager insisted that I make 25 telephone calls every single day, before noon, and not quit calling new prospects until I had made at least 2 appointments to meet with potential clients.

4. Educate. Educate. Educate. Provide resources and important information to your prospective clients, on subjects they want to know more about. How do you know what they want to know more about? Ask them. And then do your homework to provide them with information that helps them achieve their objectives. Every time you make yourself useful to someone else, you gain their respect and likely, their future business.

The Canadian government came out swinging today against renters in an effort to slow down a rise in housing prices caused by owners of rental properties. Up until now well qualified rental property owners could purchase homes to rent to tenants with as little as 5% down payment, which has meant that many relatively ordinary Canadians could participate in the rental marketplace as owners and landlords, ensuring a solid supply of rental housing in a market where home ownership has become increasingly difficult to achieve.

By deliberately restricting access to mortgage financing by non-owner occupied buyers even further the government has made it significantly more difficult for revenue property owners to finance their properties.

Of the 12.4 million households in Canada, more than 8.5 million, over two-thirds (68.4%) owned their home, the highest rate since 1971. At the same time, the proportion of Canadian households that rented their home slipped from 33.8% in 2001 to 31.2% in 2006. About 3.9 million households rented their home in 2006. Canada Statistics 2006
As a whole Canadians are home owners, with nearly 70% of Canadians owning their own homes, according the last Canadian Census report on the subject in 2006. What is hidden in the statistics, however, are the very real limitations on revenue property ownership, which were increased by the Federal Government’s announcement today.

According to both the Minister of Finance and the Bank of Canada Governor there is no housing bubble in Canada right now, despite record low interest rates. So today's changes in mortgage rules, which include the restriction on revenue property borrowers, are a preventative measure designed to ensure that a housing market bubble doesn’t occur. If it does it will not be as a result of speculative buying by revenue property owners funded by CMHC insured mortgages - at least that is the logic of the government's position.

Not that this will necessarily prevent a housing bubble from happening, as there were recently great fears that a housing bubble was developing in China, where there has never been high ratio mortgages available, either for homeowner occupied buyers nor for investors. So limiting access to high ratio mortgages doesn’t actually prevent an overheated marketplace from getting out of control, it merely slows it down a little.

In the meantime today's changes will make it harder for landlords to increase their housing stock, putting significant upward pressure on the existing housing stock, particularly in Vancouver and Victoria in BC. This will make it easier to increase rents. Since rental vacancy rates are already extremely low, any upward pressure on prices will make availability that much more difficult.

The move to restrict investment mortgages to 80% LTV or lower was window dressing, according to most economists. But it is window dressing that has potentially disastrous consequences for renters, especially and including those on the margins of society, where the cost of housing has increasingly led to homeless in the past few years.

Why the CMHC insured mortgage borrower feels morally superior to the “orphaned” homeowner facing foreclosure because of the credit crunch.

Lenders ask federal government to back special billion-dollar fund

Records obtained under the Access to Information Act show that a lobby group representing these lenders has warned the federal government that, unless taxpayers offer help, they will be forced to foreclose on as many as 30,000 homeowners over the next three years.

These “orphaned mortgages,” as the industry is calling them, are held by customers who have impeccable payment histories.

But they can't be renewed because the credit crunch has shut off the funding pipeline of non-bank lenders, the lobby says.

This wave of forced sales and evictions will hit its crest this coming year when nearly half of these mortgages – most of which were issued during the real estate boom of 2007 – will not be renewed, the mortgage companies say.

An article in the Globe and Mail last week revealed that the government of Canada is being asked to create a mortgage guarantee that will allow lenders to renew millions of alternative and subprime mortgages coming up for renewal in the next three years. The government is being told that if they don’t step up to provide a fund or guarantee, these homeowners will lose their homes to foreclosure because the lenders involved can no longer source funds from their traditional bond marketplace due to the collapse of the international mortgage backed securities marketplace.

There has been a lot of comment in various mortgage blogs and articles about these alternative and sub-prime mortgages with the following comments being made by various mortgage brokers and mortgage borrowers who either serve the “A” mortgage marketplace, or who are themselves “A” quality borrowers. I have read the following comments –

These “orphaned” borrowers, as they’re called, don’t qualify for a mortgage. They must be doing something wrong. In actuality, they don’t qualify because their loan-to-value is too high, or their income/debt ratios are poor, or their credit is shoddy, etc.

It’s important to remember that, when a subprime borrower gets an 11% mortgage (a rate quoted in the article), it’s supposed to be temporary.

You’d be nuts to pay that rate for long. The idea is to pay it for a year, get your act together (settle up debts, get new credit, establish repayment history, etc.), and then refinance with a prime lender.

Mortgage broker, Vince Gaetano, thinks that much of this really boils down to “a predatory lender who has earned an 11% yield and a mortgage broker who has been paid handsomely” and may have provided “bad advice.”

In the end, the hard truth is that some disasters can be avoided…and not everyone deserves to be a homeowner.
These comments are contained in a blog at Canadian Mortgage Trends, a blog written (usually well written) on December 10th, 2009 following a business story in the Globe and Mail which was written by Greg McArthur and Jacquie McNish in a story about how the sky is falling, again, in the Canadian mortgage and housing business.

The responses to the blog are even more expressive, if that’s possible, given the highly emotive nature of the original blog, but here are some of them –

"Makes you wonder how healthy they are if the borrowers can’t re-qualify."

Some people should be renters for their own good.

Are these lenders the top tier banks, life insurance companies? I thought that Canada was supposed to be the envy of the internation lending community. Why should they need government intervention?

Great job on analyzing this story. I read the story in the paper and wanted to know a real analysis and here it is! Not every person should be homeowner is the key. It is not an inherent right to "OWN" a home and in many case renting is much better financially. The government should NOT be bailing these people out.

In response to Monty's post, these lenders were NOT banks, life insurance or trust companies. They were mortgage companies only in most cases, and not operating under the bank act. They would fund these mortgages and in most cases sell them as asset backed commercial paper. Well, when the bottom fell out of the ABCP Market and there was no investor appetite for these products, most of these lenders folded, left the Canadian market or tried to pass themselves off as Prime lenders (hint ~ starts with an X).

At any rate, because they were not operating under the Bank Act, these mortgages did not have to be insured, so they could take any borrower that they wanted at any LTV and charge handsomely for it. And one of the worst of the bunch is the one lobbying now for government support.

Wendy you're right in the case of GMAC, but that doesn't change things. It's still not the government's job to bail out people who don't qualify for a mortgage.

Hopefully you can get your credit back above 600 by renewal.
What is wrong with these comments? Aren’t they just stating the obvious? Aren’t subprime borrowers basically bad people who made stupid decisions, or people who are just plain “crazy”as suggested by the original blog? Who says that the government should “bail out” these irresponsible people anyway?

What’s wrong with the whole tone of the conversation is that it perpetuates a point of view so common among lenders and brokers, and among high Beacon score individuals, which is that qualifying for an insured mortgage is morally superior. “People who don’t qualify for this insurance shouldn’t be allowed to own houses at all”, according to this perspective.

This point of view is similar to the old Calvanist idea that prosperity is next to Godliness and poverty is evidence of evildoing, and badness. Being unemployed is evidence of inferiority. Even self employment (which disqualifies many from getting insured mortgages) is inferior to wage employment where someone else takes responsibility for providing a wage.

In Victorian England the equivalent statements basically led to children from poor homes being rounded up and put into poor houses, and men and women going to debtor prison for an inability to pay their debts.

Recent changes in bankruptcy laws in Canada may reinstate these old laws, it now being much tougher to go bankrupt.

Middle class Canada, and their bankers are having a field day at the expense of those poor unfortunates who didn’t take good enough care of themselves, and now risk losing their homes and their financial futures.

And this is good?

My next blog will talk about how all those people who don’t have insured mortgages are subsidizing all of those self satisfying people who do, and whose tax dollars support CMHC and the National Housing Act while they themselves gain no benefit from programs that were initially set up for the sole purpose of providing affordable housing to people who otherwise wouldn’t be able to buy a home. Also, how a facility specifically designed to distribute wealth to the less fortunate has actually transferred billions of dollars into the hands of the upper middle class and the wage earners.

Poor people be damned, and self employed, commission based, or otherwise contracted employees as well.

Bank of Canada maintains overnight rate target at 1/4 per cent and reiterates conditional commitment to hold current policy rate until the end of the second quarter of 2010
OTTAWA – The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1/4 per cent. The Bank Rate is unchanged at 1/2 per cent and the deposit rate is 1/4 per cent.
Things are looking much better in the world economy after experiencing the significant financial meltdown that began last October. The environment has recovered more than what was expected at this point in time, although fundamentals in the recovery process have a ways to go.

Here at home, Canada’s situation has vastly improved. The growth we’ve witnessed is supported by governments investing billions of tax dollars into the system which has created a rise in personal wealth, improving availability of loan capital for most consumers, higher prices on items such as houses, and stronger business and consumer confidence. As positive as these indicators are, a higher Canadian dollar will also slow growth and halt inflation for the next six months or so.

The loonie’s strength is expected to offset the favorable developments we’ve seen since July. The more international investors take a liking to the Canadian currency, the longer it will take the economy to re-employ the thousands of workers who were laid off throughout the recession.

The Bank of Canada now expects our economy to be driven internally rather than relying so heavily on external factors. Growth is anticipated to be slightly higher in the second half of this year and to average slightly lower over the balance of the projection period. The Canadian economy is forecasted to grow by 3.0 per cent in 2010, and 3.3 per cent in 2011, after contracting by 2.4 per cent this year.

The Bank predicts that inflation will return to 2% levels sometime in a couple of years due to the persistent international weakness. The output gap will be closed in the third quarter of 2011, one quarter later than it had projected in July. Translation: rates aren’t going up anytime soon.

When the BOC reviews all the evidence, it concludes that deflation or at least, declining inflation, will be more a reality than inflation of 2%. Given all the above, the Bank of Canada isn’t changing its previous announced rates. Furthermore, the young economists that predicted the BOC would radically increase rates to cool the red hot housing market were incorrect.

The analysts predicting a decline in house prices and sales due to rising interest rates based on the prime rate are also likely heading in the wrong direction. I use the term “likely” mildly as the BOC has been wrong before and could change their minds if the economy proves to be substantially stronger than anticipated.

In summary, as fundamentals in our economy continue to improve the risk of a rate hike may not really be that far away. However, a strong loonie will continue to stifle growth so it may take longer than expected for the economic landscape to rise again. Confusion reigns supreme, at least, it appears to among economists.

Professional Mortgage Brokers know that marketing and lead generation are fundamental to their success. What many of us are less sure of is who to target and what marketing methods will produce the best results. It pays to understand who you are targeting, whether geographically, demographically or through lifestyle choice.

I spent a few hours today reviewing Statistics Canada and Wikipedia to gain a better understanding of the demographic trends affecting the mortgage industry, particularly in Vancouver and BC.

To my surprise, BC was the fifth fastest growing jurisdiction in Canada including the territories and provinces between 2001 and 2006. Of the provinces, BC ranked third at 5.3% after Alberta at 10.6% increase in population, where as Ontario showed 6.6%.

Ontario grew the most with over 750,000 new residents compared to Alberta’s 315,000 and BC’s 205,000. If these trends continue Alberta will trump BC in population within the next twenty-five years.

It is important to note that these figures represent five years of growth from immigration, internal migration and live births. These numbers are key to understanding and will help a broker target his or her market with more effectively.

The growth in BC of 205,000 people between 2001 and 2006 is equal to about 40,000 people per year. Natural resource dependant areas are declining, particularly in BC which is experiencing rapid urbanization and a larger number of our population is now residing in south western BC. There were actual declining populations in Vancouver Island north of the Comox Valley, the Cariboo, most of northern BC and the southeast corner of the province also saw declines.

There are a couple of other trends to be aware of as well. Major centres are increasingly attracting a disproportionate number of ethic and visible immigrant minorities, while losing less educated Canadians born here. The cities are becoming more ethnically diverse, younger and better educated than the rest of the province.

Contained in these statistics are clues to more effective use of marketing resources for a broker. If you work in Metropolitan Vancouver or Victoria, focus on youth, educated buyers, ethic communities and urban lifestyles. Figure out how to reach and serve these audiences and you will find a gold mine.

Mortgage broker market penetration in Canada has risen steadily over the years but we still fall far short of U.S. statistics for origination at 75%.

There are many reasons for the fact that Canadians continue to renew 90% of their home mortgages, refinance 85% and initiate over 50% through banks and lenders directly, as opposed to the U.S. where brokers are responsible for much higher percentages in all three categories.

The reason for this is partly because of the industry’s history which began years earlier in the United States. Also, in Canada the mortgage broker industry was perceived as being the lenders of last resort to whom borrowers went when all other alternatives had failed.

There are a few reasons given for the disparity between the two countries. For starters, Canadian banks offer a higher level of customer service, are more regulated and have a stronger reputation than their American counterparts.

Canadian consumers aren’t usually concerned about losing everything due to bank failure or that their home mortgage will suddenly be owned by a questionable lender. The one area our banks seem to fall short however is in the quality of mortgage service.

Although tied selling is illegal in Canada (and in most of the U.S.) Canadian banks have demonstrated a high competency in attracting their clients to a multitude of products and services ancillary to their original transaction, whether a new mortgage or a savings account. Canadian banks boast that they offer one stop shopping for mortgages, loans and investments to qualified customers. And they do, but does it meet the client’s specific requirements? Much of the time, it’s a one size fits all situation.

The consumer’s dilemma is that they already have a high degree of trust with their bank, and are unaware of alternative choices. This is where “we” as an industry need to provide further education to the marketplace about what it is we actually do.

When a consumer qualifies for a bank mortgage and has an idea of what he/she needs, traditionally the primary service offered by a mortgage broker is to obtain a lower rate through their various lending sources. Definitely an important aspect of the job, however to beat the bank we need to do much more.

For example, there have been times where I have witnessed an individual (who should have qualified) get rejected by their bank because the loans officer was not experienced enough to assess their complex situation. This is a big point of differentiation where an experienced mortgage professional would add significant value.

The following lists a few ways banks operate when it comes to mortgages that will give brokers greater points of advantage:

• The bank generally doesn’t give consumers the best rates available even within their product group unless a consumer is aggressive and prepared to go elsewhere. The banks will however offer brokers their most competitive rate and terms because they know the broker is knowledgeable of what's available, and that they are a major source of business for the bank.

• The banks could choose to be competitive however it is in their own self interest to renew or refinance at higher rates. As long as consumers continue to finance their mortgage blindly and neglect shopping around, this state of affairs will continue.

• Bankers aren’t properly trained to seek out the client’s best interests and are more focused on process administration rather than client care. The bank's priorities and policies eclipse client needs every time. Banking loan officers and in-house brokers are extremely busy and are trained to complete the application process as quickly and efficiently as possible. Time is a luxury they can’t give to a client due to many others also waiting in line for service.

• As mentioned above, banks don’t lend money to people who fall short of their black and white style criteria. The bank employee who rejects an individual’s application may not have been properly trained to understand that person's particular situation.

• Banks don’t really care about consumers' best interests. There is no conflict of interest for an employee working for the bank, or for a mortgage broker working primarily for one bank. Their focus will always be on whoever is providing them with a paycheck. It’s not that the bank employee prefers this but rather that it is the nature of the business.

To change perceptions and increase the use of mortgage brokers by consumers, we as an industry need to:

• Be obsessively client centered. This sounds obvious but is often not the belief held by many consumers. Take the time to know your prospective client thoroughly. Recommend solutions rather than sell products. The right solution to a client's problem is critical to meeting their needs, even the ones they may not know they have until walked through all of the relevant issues.

• Be helpful even to those you don't do business with immediately. There are brokers out there who can be just as jaded as some bankers when it comes to serving people. If a potential client is in deep trouble, perhaps facing bankruptcy or foreclosure then find it in yourself to provide the client alternative resources and support. Mortgage insurance companies such as Genworth and CMHC, as well as bankers are making serious efforts to provide bridges to people with temporary problems.

• Market the industry and our broker brand. Offer support to our national and provincial associations to continue public relations and marketing efforts. Large brokerage companies through their communications should also lend a hand to enhance the public’s perception of broker value.

• Improve training and new broker support. New brokers need a lot more support than they currently get from most brokerage companies and new brokers should be encouraged to work in full service and support organizations. Mentoring of new brokers is critical. If the industry is to have a differential advantage against the banks it will be in the area of professional customer service and support. Quality service is the root of professional development.

• Tell the public the truth. The industry as a whole needs to have greater transparency regarding the nature of the relationship between the banks and the brokerage industry. Don’t obscure financial and mutually beneficial relationships especially if they may impact consumer choice. Clients are not ignorant and will understand that bonus driven relationships with preferred lenders may be contrary to their best interests. Brokers will be surprised how borrowers react to candor.

I hope the information presented in this blog sheds some much needed light on an industry that is rapidly growing and changing. If you have further comments to add, please don’t hesitate to do so.

I spent a couple of hours today meeting with my business partners in Dominion Grand Development Group Inc., the owners of a controlling interest in Trillium Accessible Mortgage Corporation.  There was palpable excitement when we discussed the new direction we are heading with Dominion Lending Centres Trillium-Accessible, our licenced mortgage brokerage company and frachise acquired from DLC two months ago.

It has been a busy last few months working on the business strategy that depends entirely on our ability to facilitate the success of our team of brokers, above and beyond what they might have achieved on their own.

We believe that brokers deserve a company committed to their professional and personal success where the fundamental business strategy is completely focused on the individual professional and what he or she needs to thrive - from the beginner to experienced high volume producer.

There's a lot that goes into building such a company and we recognize that brokers know exactly what they need from a firm.  We are committed to becoming a full service brokerage office providing enhanced support and powerful marketing resources that make choosing us a profoundly intelligent choice.  Programs will be developed with our brokers and back office team to ensure they do what they are intended to.

I'm excited about the opportunity to build something unique over what currently exists in the industry.

The First Few Steps on a Long Road


How about you talk about how easy it is to get a broker’s license in Ontario--2 months of an easy course load and magic--you are a broker, not an agent a broker, just have 2 years underwriting, or agent experience under your belt, and you are offering to give the world mortgage advice with a license, and this is acceptable to CAAMP? How is that enough education? How about dealing with some of those topics. Canadianmortgagequestion
To qualify to become a mortgage broker in British Columbia is pretty easy, and high turnover among new brokers reflects ease of entry. Even becoming a Designated Individual, with the full responsibility of running an independent brokerage company is without significant legal barriers. The only legal requirements to becoming a mortgage broker is to pass the Mortgage Broker’s Course and Examination, (provided through The University of British Columbia - Sauder School of Business), pass a Criminal Records Check, and be of “good character” in the eyes of the Financial Institutions Commission of British Columbia, the provincial regulator in BC responsible for overseeing mortgage brokers.
To pass the course requirements an individual also must pass a Basic English literacy test.

What this means, of course, is that people with widely varying backgrounds enter the business with vastly different levels of education, experience and skills.

Once a person has obtained their Certificate then he or she must work with a brokerage company for a minimum of two years before going out on his or her own.

The industry, recognising the need for a consistent standard of professional development, has developed a variety of training courses offered through The Canadian Association of Accredited Mortgage Professionals and the various provincial associations such as the Mortgage Brokers Association of BC. A designation, the Accredited Mortgage Professional ("AMP"), has been developed at a national level, to recognise individuals who have (a) been licensed as brokers for a minimum of two years, and (b) have completed an ethics course. To maintain the accreditation an AMP must attend a certain number of continuing education programs during the year, every year.

So these are the entry points to the industry.

Most successful brokers, however, come to the industry with more training and education, and/or relevant experience than the minimum required. In achieving success the quality of the support provided by the mortgage brokerage company is also essential for a new broker. Many new brokers enter the business working for brokers whose business model is simply not designed to foster professional development or enhance the chances of success of a new broker.

It is my personal belief, based on experience, that most new brokers require significantly more supervision and support than currently provided by many brokerage companies in Canada. This is one of the reasons I joined Dominion Lending Centres, because with DLC the broker manager is not totally on his own in providing support to the new broker and adequate supervision to all brokers working for the company. There is a combination of courses available from the Canadian Association of Mortgage Brokers, the Mortgage Brokers Association of BC, and Dominion Lending Centre supported on-line training and periodic Webinars. These are supplemented by ongoing in-house training on a regular weekly basis.

In addition to formidable training resources, a new broker also needs coaching and mentoring, on a one-to-one basis. Trillium-Accessible Mortgage Corporation has a formal Mentor Program, designed to facilitate the success of a new broker. The real key to success for a new broker is a personal development plan worked out with a senior broker that includes business planning, marketing and personal development aspects. Without a well thought out business strategy a new broker is sure to struggle, if not fail altogether. In our company, as in other well managed brokers across Canada, new brokers gain the benefit of working with seasoned professionals, taking as much support and guidance as they need.

A few things to consider before signing up for the licensing course.

Money

It will take some time to obtain your license, and once you do, it will take even more time to build the business. A new broker should plan of having to live on their savings or other resources for the first year, even though they should begin to earn money before that.

Skills Inventory

Being a mortgage broker is not a job, but a professional services business. There is a lot to know and a lot to learn. The more you know before entering the business the better off you will be once you start. A good general business background is good, if supplemented by academic training in business, even better. This is a sales business so you best have strong personal selling skills, as well as good work habits.

Values Inventory

This is a profession. There are many opportunities for tests to your ethics and integrity, including many completely unexpected. If you don’t have a strong moral compass, get one, or don’t go in the business. It will destroy you.

Life Balance

Being a mortgage professional is much more than just a job, and doing it well means that your work will spill over into all aspects of your life. This makes life balance, if anything, even more important and you will need to know where and when to draw the line between your personal life and your work. Fun is important, don’t forget to practice.

si3x7z45gw

Regardless of who in the Mortgage Brokerage industry you talk to, one of the common themes expressed by all is the constant need to market your services and attract new potential clients, whether borrowers or lenders, as the case may be.

During the last few years there has been a major shift in marketing methodologies. This seismic transformation speaks to future changes in the industry presaged by some rather remarkable emerging trends.

There are three major trends I can identify that will change the life of the average mortgage broker in ways you might not have guessed. Whether I’m right or wrong, only time will tell, but either way brokers should pay attention.

First Major Change

Everyone is aware that advertising and marketing itself is undergoing radical change. Just putting an ad in front of a potential client is no longer sufficient in attracting significant business. A combination of internet sourcing of news and information, and decreasing reliance on tradition media, means that marketers need to become much more sophisticated in the future than they have been in the past.

Mortgage brokers are included in this evolution. The shift in media methodology is leading to increased use of social media including things like Facebook and Twitter. It’s a lot more work than just running classified ads in the weekly papers or even buying clicks from Google, or other online resources.

This trend will accelerate with the current meltdown of traditional media ad revenues, increasing rather than recovering after the recession is over. The amount of money spent on advertising and marketing won’t go down, it will simply move into new areas of electronic media.

Second Major Change

The day of the truly independent mortgage broker, unattached to a major franchise or national organizational may well be coming to a close. There were many reasons why our company acquired a brokerage franchise with a major player (Dominion Lending) but the single most compelling reason is that there is strength in numbers. Being a part of the largest company in the industry wins points with lenders, insurers and the public.

Bonus structures with lenders and selective agent arrangement make it more likely for a broker to be successful if they have greater access to a number of lenders. Back office technologies and intranet resources are now essential, rather than simply nice.

A national advertising program to backstop our own marketing efforts, most particularly to emphasize the national brand, is helpful in establishing a broker’s bona fides with new clients, many of whom he will never meet in person.

No individual broker will be able to sustain a marketing effort sufficient to combat market awareness without a major player behind them. Public awareness of the majors will make it increasingly difficult for an independent brokerage firm to be able to reach their target audiences.

Third Major Change

Financial services agents and brokers in other closely related fields have undergone a process recently started by mortgage brokers in Canada. Mutual fund industry self governance in the form of the MFDA (Mutual Funds Dealers Association) and other industry associations have taken on responsibility for their own regulatory enforcement.

In Canada there is effective mortgage regulation basically in three provinces, BC, Alberta and Ontario, each with their own regulatory framework. Efforts at the national level by provincial Premiers are leading to increasing free trade sentiment across the country. There needs to be consistent regulatory oversight in financial services from coast to coast.

The immediate consequence of this is the increase in regulations and oversight by various provincial authorities. One aspect of this is that mortgage brokers can expect to see more frequent audits and more ambitious regulators over time. Current fraud cases in the public eye have increased pressure on regulators to show that they are indeed on top of the bad apples in business.

The largest effect of these changes in regulatory affairs will be the increasing role of compliance in dealers, and the necessity to allocate additional resources to it. Mutual fund dealers discovered that the only way to afford proper compliance was to be large in size, so that the compliance costs could be spread over a greater number of agents.

Conclusion

A combination of powerful forces are causing major shifts in the mortgage brokerage industry leading to increasing consolidation into a few mega brokerage franchise or national companies. Traditional advertising techniques are giving way to social network marketing and other nascent trends. An increasing cost of infrastructure and backend administration is making the lives of small brokerage companies more and more untenable.

Bigger may not always be the preferred way to go as a broker choosing an associated firm, however in terms of the future of the industry larger brokerage companies will have a significant advantage. This is why we are seeking to grow our agency to a substantial size so that we can provide the type of services and support needed in today’s highly competitive and increasingly regulated marketplace.

Mortgage brokers come from many different walks of life. The most common paths to this career choice are (a) former bank employees and (b) realtors. Both of these groups have an advantage going in. They are both experts in various aspects of real estate and mortgages. Their previous work provides them with a great introduction to the work of being a broker.

The problem for those entry points, however, is that being a mortgage broker is a fundamentally different type of work than either of those two careers. It is useful to point out a couple of obvious differences for each.

People choose to work for a bank generally because they like job stability and regular work hours. They also tend to expect a regular salary they can count on. Although a broker can make a lot of money it takes a while build a consistent income. If you have a flair for promotion and marketing, and you don't mind the occasional late night at work, then this career could be just what you need.

Many former bankers try to become mortgage brokers. Some succeed beyond their wildest dreams. Many more don't. Those who do are very happy they made the change because it is a career with real jets. Those who don't feel like they should have made it, but often don't understand what they did wrong.

The main thing for bankers to know before making the leap to becoming a mortgage broker is to become successful as a broker you will need to learn how to market yourself and your services. When you worked for the bank the bank they supplied the leads and as an idependent broker (essentially self-employment), you have to generate leads yourself . And it is harder than it looks.

The second category of jumping off points is former realtors (and other real estate professionals). In some ways former realtors tend to do really well, if they were successful at all as realtors. The reason that a successful realtor might choose to become a mortgage broker is that mortgage brokers tend to work more rational hours, and never have to work an open house.

Realtors and mortgage brokers share a lot in common in terms of training and background requirements, as well as an ongoing commitment to lifelong learning. Realtors are used to having to promote themselves and their services, and don't expect the company to do that for them. Realtors also understand the real estate sales process and are often extremely successful at working with other realtors to obtain mortgage clients and leads. This is because they also understand realtors.

A lot of former realtors who have become mortgage brokers did so because they could stop having to do open houses, and generally avoid working outside of business hours. These aren't good reasons for picking mortgage brokering as a career. They're both true, however being a mortgage broker has its own hidden obstacles, some of them significantly more challenging than attending to an open house or having to work on weekends or evenings.

Don't get me wrong, I think that both banking and real estate are great foundations for a mortgage broker to have, and do give a new broker a bit of a leg up in getting started in the career.

Let's summarize what this tells us about mortgage brokerage in terms of the types of people who are most likely to succeed:

1. Marketing, marketing, marketing. First of all brokers have to be comfortable and eager in marketing themselves and their services to everybody they meet. Brokering is selling, and don't you let anybody ever tell you differently.
2. Training. Lifelong learning has to be a passion because the mortgage industry is constantly going through significant changes. We are providing an essential service in turbulent times and as a broker you need to understand the economic context of mortgages. Education is the foundation of being good at this career choice, once you have a client to provide service to.
3. Self confidence. If you need someone else to provide you with a salary or a guaranteed income then don't become a broker. This is a career totally dependant on your own moxie. Your team can help you but it can never do it for you.
4. People person. You need to like them. If you are the kind of a person who is sought out by others for your advice, or who always finds yourself helping others then you might find this career a perfect job.

There are of course a number of requirements to complete before you can become a mortgage broker. Each province in the country sets up different regulatory regimes you have to get through but they all boil down to a license course and fees. The legal requirements are only the first step.

But before you take that first step you might want to spend a little time talking with a mortgage professional, and see if the life we lead appeals to you.

This is for brokers. Mortgage brokers. Other people are welcome to join in the discussion, but the whole point of this is to appeal to brokers. In this blog we are focussing on things that matter to mortgage brokers. Career advice. Professional opinions and advice. How to do this or that... Where to find?

I have an ulterior motive for doing this blog. If you are a mortgage broker in BC I'd like you to consider joining my company as a broker. I think you will find the atmosphere warm, the opportunities superb, and our attitudes designed to encourage and support your personal and business success.

But that's just my ulterior motive. I really like working with people and helping people achieve their dreams. That's my personal mantra. Helping someone else succeed is fundamental to my personality and goals for life. So, I want to be there for you and help you achieve something wonderful with your life. Ya, I know. Bla bla. But really, I mean it.

I would also like this blog to be of interest even to brokers who may never work for me, or who aren't even in British Columbia or Alberta.

For the first few entries I'm going to talk about mortgage brokerage as a career choice. I'll include links to official sites and services, but I'll do more. I'll talk about the work, the job and the opportunities realistically and with information that will actually help you decide whether or not this career might actually be for you or not.

So pay attention. I hope my comments, and the comments of my readers, are helpful in making your decision to become a mortgage broker in BC, and then possibly about coming to work in our firm as a member of my team.

If this career is for you, it can be the best job in the world. You can make an excellent income doing work that matters to your clients. Every day is different, and yet, as you grow and develop as a professional broker, you gain a profound sense of satisfaction in your professional skills. If you are service oriented and LOVE people, then this might be the career for you.

At the end of the day you go home having done something of consequence. You will also have made a good living doing it.