MBABC Conference – Day One

MBABCWhat a fun bunch of folks we have in our industry. You sometimes forget that, until you come out to an event like MBABC.

Every broker in our business owes it to themselves to spend the money, attend conference seminars, meet the lenders, get to know other brokers, bounce ideas off people, etc. At the very least you’ll pick up some valuable tidbits of info or make new friends and contacts.

Speaking of valuable tidbits, here are the top 10 nuggets we gleaned from day one at the conference:

  1. A bank executive on the lender panel said the government will announce standardized IRD penalties “within three months.”
  2. ING Direct will continue 35-year amortizations on conventional mortgages after March 17 (A brilliant move. ING will be one of the only banks offering them.)
  3. VP, Jim Smith, said Scotiabank was “morally obligated” to eliminate 35-year amortizations on conventional mortgages. When asked if interest-only lines of credit (with infinite amortizations) would be eliminated, the topic changed very quickly.
  4. We’re entering an environment where “individual brokers have less power and bigger brokers have more…Those (brokers) who rely on price will find it harder to survive.” – FICOM CEO, Caroline Rogers
  5. Bridgewater’s Todd Poberznick: “We feel that there’s an obligation (by lenders) to give smaller brokers a chance as long as they can meet funding ratios…” (Our industry needs more of this mindset. Otherwise, power will be concentrated in mega-brokers, and small brokers will be forced into pooling/co-brokering.)
  6. A lender comment to brokers regarding volume bonus in the future: “You’re going to have to earn it.”
  7. Resmor will eventually eliminate volume bonus and roll it into their finder’s fee, says Director Mortgage Servicing, Michael Cubric.
  8. One lender admitted that brokers have “10 times” the knowledge of that lender’s own call centre employees.
  9. “There will be a more concerted effort by banks to protect their turf against brokers.” – FICOM CEO, Caroline Rogers
  10. IFRS “is going to cost us.” — ING Direct’s George Hugh

More from day two, tomorrow…

  1. I’m bemused when bankers talk about their “moral obligations”. Who are they kidding? Banks profit from debt!
    I may be too young to remember but 25 years ago there was no such thing as a HELOC or all these “all-in-one” revolving facilities where consumers can constantly borrow against the value of their home. Back then, people took a mortgage to buy a home and made every effort to pay it off as quickly as possible. They didn’t see their home as a bank, they saw it as a place to live.
    But I’m guess that around the recession of the early 90s, banks found new ways of getting people to borrow money while minimizing the risk to the bank. Home equity was a brilliant strategy as most consumers were sitting on all this equity that isn’t liquid.
    Considering the banks have developed all these tools to keep people in debt and shackled to the institution, forgive me if I laugh whenever I hear the words “bank” and “morals” in the same sentence.

  2. “standardized IRD penalties”? I think this “executive” meant standardized disclosure. Too many different sources of mortgage investors to have a “standardized IRD penalty”. Maybe the “banks” will feel “morally” obligated to do this as well

  3. Lior – I take from you post that in order to be on the moral high road, we should eliminate mortgage secured lines of credit.

  4. Does this mean you have never put a client into a Home Equity Line of Credit since you are morally superior to the bankers?

  5. To be fair, people got along without HELOCs just fine.
    Ultimately it’s up to the consumer. These products are in existence because consumers keep using them. There are consumers out there, and I guess we’ll find out the real number once rates start going up, who aren’t aware of the interest rate risk and just how volatile the markets can turn. The big banks who are phasing out 35-year amortization have indicated they have a moral obligation to look after the consumer. In fact, they aggressively lobbied the federal government to make these changes happen.
    However, there’s a misalignment of interests underneath this whole charade. A bank can’t say they’re morally looking out for their clients’ best interests when the banks’ own interests is to profit from the debt and personal consumption habits of its clients. If clients aren’t borrowing so much, how can the bank make a profit? That’s why banks keep giving already heavily leveraged consumers more tools to spend.

  6. I think Lior is merely saying that banks are talking from two sides of their a s s.
    Politicians and gullible newspaper readers are the only people stupid enough to fall for the bank line about reducing debt burdens. Meanwhile any bank is thrilled to let me borrow $225,000 on a HELOC and never pay a dime of principal for 100 years???? It’s contradiction city man, and almost no one calls these idiots on it.

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