With the stroke of a pen, Dominion Lending Centres (DLC) has solidified itself as the largest mortgage broker network in Canada. That’s thanks to its acquisition on Thursday of Mortgage Centre Canada (MCC) from CIBC.
The purchase price was undisclosed but estimated in the mid-single-figure millions. Sources guesstimate that MCC’s net income was somewhere around a million dollars a year, but that may be off.
With this acquisition, DLC gets a company boasting 160 storefront locations, 1,133 mortgage professionals and $6.9 billion in yearly mortgage volume.
This now puts DLC a shade under $20 billion in annual production, says company President Gary Mauris. “We’ve always felt that with volume comes opportunity,” he told CMT.
$20 billion is a dominant number that every lender and supplier in the industry should respect. It translates into 26-27% broker market share, DLC estimates. That gives the company significant bargaining power—something that could translate into special deals for DLCers down the road. (It’s getting harder and harder to be a small independent in this business.)
Up until this point, DLC and Verico had reportedly been neck and neck for the title of top broker network by volume. Now DLC has that crown for itself. Verico reportedly looked at the MCC deal but passed.
Mauris seems intent on winning the hearts and minds of his new colleagues. “MCC agents don’t work for us, we work for them,” he says. “I promise you, we are going to hit it out of the park for them.”
DLC has offered to retain all MCC management, including its President Eddy Cocciollo. DLC will keep both brands and run them side-by-side, à la Invis and Mortgage Intelligence.
All in all, given that MCC brokers won’t see a change in their splits (royalties), it seems like a win for all brokers involved. If there’s one downside, it’s that MCC brokers may lose the ability to route deals to CIBC. But Mauris says that loss would be offset by new lending products available only to DLC brokers.
The entire deal reportedly took DLC two-and-a-half months to negotiate with CIBC.
Sidebar: Despite selling MCC, CIBC says it has no plan to make any changes at its in-house brokerage (Home Loans Canada).
Rob McLister, CMT
I wonder which model will be more popular with their new brokers:
DLCs at 5% + $150 a month or MCCs at 2-3 bps with no ad fee?
You get what you pay for. Working at MCC compared to DLC, is like working in the dark. Thanks for turning on the light and giving me tools I can use.
With the trend in buydowns, 5% may soon be equivalent to 3%. So the two models won’t be that dissimilar.
How much of that $1 million profit will be left after CIBC stops subsidizing MCC’s expenses?
This adds value for both sides and that equals a big win.
I think this is a very positive move for the broker channel. We have experienced lots of bad news in the market many lender, exits, policy restrictions, and slowing housing market. All while we are faced with big bank dominance hitting the broker market across the country. If we are going to compete , we need to get w bigger voice , if we are going to fight for more market share, or even maintain our market share, broader product offers, competitive pricing , etc, we are going to need a bigger voice. Given the large super brokers don’t seem to be able to collaborate together and take a lead , consolidation is vital.
We don’t see anyone else doing a lot of investing in the broker channel these days. Good for DLC.. Who clearly made a big bet on expanding, it can only be a good thing to be part of a large network that now carries such a big voice with the banks. 20b is a big voice.
Net $1m?! Who would pay 5x net for $1m in net annual income?? The top brokers in the industry would each make more and deal with 5x less bs.
CIBC probably would’ve given it away for free. they probably can’t believe their luck that someone would pay anything for what’s about to be worth exactly nothing
Dear Dc and Ex-Edmonton Mortgage Broker,
The value of any business has multiple factors that determine whether or not the business merits a certain multiple. In the case of MCC here is what we liked;
The owners and agents are some of the best in the industry and operate strong businesses.
The Brand is 24 years old and highly visible in many communities.
The management team is excellent and has navigated through some difficult periods despite limited support and investment from the parent company.
The Intellectual property, and the rights associated with those.
The opportunity to really invest and help the existing agents/owners grow their business through cross selling and bundled services.
The benefits of scale and shared services when it comes to technologies and human capital.
The negotiating advantage and product opportunities that comes with marketshare and size.
We want to continue to invest in our industry and space and this acquisition was one that we are very proud of. I cant wait to get to know the entire MCC team and earn their loyalty.
Could we have over-paid? I guess its depends on how you determine value. We think we got tremendous value and would have paid more for the quality of company and team that makes up Mortgage centre Canada.
I do appreciate your concern though, but we’re ok. THX
Over paid? Buying up any independent sales force has risks, but based upon Gary’s approach to business with DLC, I am not sure that many MCC offices would jump ship in the short run. Also, Dominion has enticed a number of large MCC brokers to DLC over the last few years, while MCC has been in “transition” with positive responses from those making the change, so Gary has some knowledge of the MCC culture, and his stated respect would seem genuine. From the initial presentation made, there appears to be a healthy atmosphere, and a hope for good things to occur with the old addage that both parties can win. If the fit works, the money paid will not be an issue.
re dr mortgage note
Dr mortgage is an MCC owner, to offer full disclosure
True hey?
To some people, buying a home right across the street from a school would be a major advantage, whereas for others it would be a major disadvantage.
That’s why people have garage sales; one man’s junk is another treasure.
I think what is more important, is making the most from an opportunity! Congratulations and best wishes to all the parties involved.
I wonder if the new fee structure being offered to MCC agents will be offered to existing DLC agents?
What new fee structure? Isn’t it the same old fee structure MCC has always had?
I doubt they will let DLC franchises out of their existing 7 year contracts to take the MCC model.
Gary and DLC People can spin this in anyway they like but here are the Facts:
DLC is 95-5% plus Monthly Advertising & 7 year commitment
MCC is 98-2% No Advertising and only 5 year commitment.
SO will Gary Run 2 separate brands for next 2-3 years? I highly doubt that! Because if I am a DLC franchise owner will request to move to MCC and get 98% Split and don’t pay any advertising!
If I am a MCC franchise why would I go down on my pay and get 95-5 plus pay monthly advertising payments?
The Word on the Street was that DLC offering all MCC franchises signing bonuses to join his company. So if you were a $200 Million Franchise, you would get a $200,000 Signing bonus but you need to sign a 7 year deal, now those MCC franchises are free agents! they didn’t get anything and CIBC got that money. If I am a MCC franchise why wouldn’t I go to Verico, Mortgage Architects or Alliance and get a signing bonus anyway?
I fully expect that there will be many changes coming to MCC and their business model but for now Gary and DLC is doing a good job calming these people up!
John B.
love the conspiracy theories that everyone always comes up with on DLC signing offices. quite funny and ill informed.
Besides everything everyone knows, 95/5 and advertising fund, the DLC broker support and training is light years ahead of a lot of other companies.
The training and coaching that is available online is phenomenal. What most brokers want to know is that their parent company and franchise have their back and support them. Whether through innovative tools, advertising, coaching or the odd gentle push to lean in and learn a new system. This is so evident with my franchise and especially DLC that having to pay the advertising fund is a small price to pay.
Having access to great support and training comes at a cost and is more than fair.
This is not a conspiracy theory, this is the truth from a real DLC mortgage consultant.
Joe, I have seen the DLC technology and I have seen several other super broker’s technology platform! I hate to break it to you but DLC is way behind of many of them.
DLC technology and marketing is nothing compare to Mortgage Alliance “Boss” platform, Mortgage Architects “Eximius” or even Axiom “CRM Platform”! have you seen Mortgage Intelligence marketing materials? They are great and way ahead of DLC!
What is it with DLC brokers and Cult like mentality. “We are the best and everyone is against us!”
I am also tired of the lip service of DLC and Gary trying to portray himself as the saviour of the Broker industry. So CIBC leaving the mortgage broker industry is good because DLC bought MCC? so if DLC wouldn’t have bought MCC all these 1200 brokers would have left the mortgage industry?
With regards to the DLC advertising and marketing fund, I have an issue if this fund was supposed to get me more customers and build me a brand. But if My money is used for signing bonuses, buying MCC or other companies then I would have a serious issue! I would find that very unethical.
Two things going to happen. One every one moves to 98-2 which means DLC just said goodbye to 65% of their current margins or everyone will move to 95-5, a 7 year commitment and an advertising fund!
John, You are ill informed, out of touch and spewing vile untruthful rhetoric. Call me anytime John to get the facts. I have always had a lot of respect for you but frankly I’m stunned you would make such ignorant untruthful, misinformed statements like this.
As for as the Adfund at DLC we have followed the RE/MAX model and it’s certainly worked well for them.
I am happy to discuss the differences between our two models and publicly commit to both brands long term.
I understand you have been around a long time John, and are entitled to your own opinion but this kind of garbage is shameful. I wish you only the best…
[Edited]
Logic dictates that Gary spent a lot of time thinking about the differences in the two models and how he would manage those issues before he wrote a cheque for millions of dollars. Whether a broker is pro or anti DLC; any thinking person would say Gary made a bet on the successful future of mortgage brokering in Canada. I am part of the Verico group to achieve bonus levels with a few companies we only use sporadically. I would never join DLC for a dozen reasons but I don’t understand why there is a reason to be angry about someone putting millions down as a bet on the future of mortgage brokerage in Canada.
Mr. Mauris, this is the real John Bargis not John b. I am deeply disappointed that you did not bother to confirm the true identity of the author of the post that you make reference too. I would have expected much more from an individual such as yourself. In future I would strongly recommend that you pick up the phone for a conversation between two professionals rather than getting involved in this nonsensical exchange.
Respectfully yours,
John Bargis
[Ed. Note: CMT has spoken with Mr. Bargis who confirms he was not the source of the post in question.]
Dear JohnB,
I have spoken with John from The Mortgage Edge and he assures me those are not his comments. Thank you John from The Mortgage Edge for your call.
To the JohnB posting comments including misinformation and untruth’s, we’d appreciate you posting your First and Last name rather than hiding or passing off as others.
You may want to focus on getting better rather than wasting everyone else’s time having to read and respond to your garbage.
Rob, I’d like to first congratulate you on providing such a well put website for our industry. Your unbiased articles and insight into our industry on topics that affect us on a daily basis are top notch. On that point I would like to suggest that going forward you only allow comments from participants who are willing to provide their first and last name. This would avoid the mishap between Mr. Bargis and Mr. Mauris. I have the utmost respect for both these gentlemen and it is unfortunate that they had to deal with the above due to an author who is unwilling to put his/her name behind their words. Thanks again and keep up the great work!
I for one would hate to see anonymous comments gone. People have a right to express themselves under the freedom of anonymity so long as their posts are not libellous. That is the best feature of this site and a major reason I come here.
Hey Ron…..I tend to agree with you for the most part. One should have the ability to post their opinion without concern of backlash, as long as the comments posted are constructive observations, and not slanderous in nature – (and of course as long as the author is not impersonating someone else, which was not the case above).
In my case, Mr. Mauris simply jumped to the incorrect conclusion that JohnB was John Bargis, which he has already acknowledged was an error, and apologized.
In future, it’s important that we all keep in mind that when a story breaks on any one industry issue, individual or firm, commentary will follow, and those being written about must be prepared to accept praise, criticism, or both. It’s just part of the territory. The key for the operators of sites like CMT, (which I do follow), to closely monitor unethical activity and disallow it…..Just my opinion….The “Real John Bargis.”
Who decides what is an nonconstructive and unethical opinion? I can see banning comments with slander or impersonation but other than that, we’re all adults here. We don’t need a censor.
Hi Vince: Thanks for the gracious and much appreciated comments.
When it comes to attaching real names to user posts, there are important considerations. One of the concerns is that it would reduce reader feedback drastically. That would diminish the free flow of ideas and be a detriment to the community as a whole.
It’s also extremely difficult for message board operators to police user names and confirm identity. Due to this challenge, I’m not aware of any large-scale online forums that actually do it.
Fortunately, instances like this are uncommon and the comment moderation system catches most serious issues. But it is an admittedly demanding challenge.
Hi John: Appreciate the feedback. Sorry you got caught up in these third party exchanges. Comment moderation is meant to be a safeguard but with never-ending posts and the need to constantly make judgement calls, it’s evidently not foolproof. Cases like this are rare but I absolutely agree it’s essential to try and mitigate identity confusion in reader posts.
All the best,
Rob
Most of the people whining about anonymous comments seem to be on the receiving end of those comments. How coincidental.
Even though I don’t like business practices of Gary Maruis or DLC for my own personal reasons. I believe they are actually doing this business a favour. If Mortgage Brokers don’t stand up together and face RBC, TD, BMO, CIBC head on, mortgage brokers are going to get crushed and become a thing of the past.
The more volume a company like Verico or DLC have, the more likely the banks are going to reconsider when thinking of cutting the broker channel out of a product or a service in the future.
Imagine what the banks would do if DLC, Verico and Mortgage Alliance joined forces.