Click here to join our mailing list to receive the latest news and updates as they happen. Unsubscribe any time.

CAAMP Broker Panel – Part II

Here’s part II of our coverage of CAAMP’s Broker Panel from last week.

Once again, the panel featured four mortgage pros sounding off on lenders, regulations, broker technology and more. They were…

  • Ron Butler from Butler Mortgage
  • Dan Eisner from True North Mortgage
  • Peter Majthenyi from Mortgage Architects
  • Mathieu Lebrun from Multi-Prets Hypothèques

Here’s what they had to say:

On Banks:

  • Eisner: “We’ve seen prescriptive underwriting policies come out (from regulators)…and that’s really hamstrung the banks…There’s no more innovation…in product development…Pricing is the only tool for banks to grow their market share.”
  • Butler: “There’s no question that banks are our frenemies…They are the source of all mortgage funding in Canada…They are the richest companies in this country…They are tremendous competitors of ours.”

On broker-channel lenders:

  • Majthenyi: “Lenders are going to have to broaden their value proposition for the broker…I don’t think there’s any more space for more ‘A’ lenders.”

On selling monoline mortgages:

  • Lebrun: “The way I sell monoline lenders is by focusing on the advantages. The biggest advantage is the way they charge their penalties…Banks will focus on posted rate and monoline lenders will focus on the broker rate. So when you’re 3-4 years down the road, the interest rate [differential] is much smaller with the broker rates…Also, I downplay the name on the (mortgage) contract. Even…(banks like ING) can be bought out, so the name on the contract can change…The name is not that important. It’s the contract itself that’s important.”

On lenders leaving the channel:

  • Butler: “One of the principal things that mortgage brokers bring to the table is choice…Choice is value…More [lenders] is better.”
  • Butler: “We have 12 different (mortgage) awards dinners in this country that lenders have to support…That’s got to be borderline crazy…We don’t need that many awards. We don’t need the past president of everything to get an award…We don’t need lenders paying for frivolous things…Wouldn’t the lender be happy to pay for an appraisal if [it] wasn’t traipsing across the country going to every crazy trade show?…If we want to do more business we have to think about where our lending partners are spending money.”

On the relevance of meeting customers face-to-face:

  • Majthenyi: “To date, I haven’t had a problem (with not meeting my clients face-to-face)…The Canadian mortgage market is heavily regulated…”
  • Eisner: “It’s about results…[and] what the client wants.”
  • Butler: “Lenders have made a decision already about the quality of our business. That’s a fact…Every bank runs a discount investment firm where no one is ever going to see anybody…and they are good with that. So we can deliver on solid compliance.”
  • Butler: “You have to ask the question, ‘Does everybody want to go to the bank and line up with their paycheque on Friday like they did 20 years ago?’ I don’t think that’s ever coming back. We can’t ignore trends. It’s foolish…When I talk to bank executives about where they get financial advice…they say, ‘I do my own investing. I do discount stock trades. I don’t go to anybody at the bank for investing advice.’ …Believe me, senior bankers are smart people; when they’re telling you that they believe in DIY…(other) smart people are going to want to investigate their own types of investments. They’re going to want to investigate their own mortgages…just like they do with a lot of other things.”
  • Butler: “I’m not saying that do-it-yourself is for everyone because it’s not…There will be full-service mortgage brokers forever.”

On new regulations:

  • Lebrun: “The biggest change for me, is…refinancing to 90% loan-to-value. That being taken away and cut down to 80% has sort of handcuffed us and put us in a tricky situation when clients are pushed to refinance. They stop at 80% and then they have to [borrow] on credit cards and lines of credit to finish off what they need to do, which is not good.”
  • Majthenyi: “I do have some concerns about the limits to the self-employed programs and I do have some concerns that you can’t refinance a little higher, but generally speaking I embrace [Ottawa’s new mortgage regulations].”
  • Butler: “The issue that concerns me the most from a regulatory perspective…is the concept of a level playing field. If we have to generate 50 or 60 pages of down payment (documentation) and trace back every $1,000 of deposit that came from another source, we’re devoting a hell of a lot of time to that — when we should be doing something else…Let’s face it, the branch just says we have it on file and we’re done. That’s it….When we are having to produce so many more documents than others are having to produce, the question becomes, what’s the client going to think about that? The consumer is going to say, my bank says I don’t need to provide any of this, why are you asking for it? And that’s a tough spot to be in. We don’t deserve to be in that spot. I’m all ready to provide the documents, I just want everyone to have to provide the documents.”
  • Eisner: “Clients don’t understand down payment verification because you’re kind of like guilty before proven innocent…Clients want simplicity and this adds complexity. It’s really about educating and working with clients to manage expectations. There’s no easy way around that. We can just hope that banks aren’t too easy on them (relative to broker guidelines).”

On process and efficiency:

  • Majthenyi: “In our office…every individual has a unique [responsibility] and they’re not allowed to deviate from that…It’s such a predictable process…We’re cataloguing every hour we spend on a file.”
  • Majthenyi: “I spend almost 80% of my day marketing.”

Selling non-mortgage products:

  • Majthenyi: “10 years from now, a mortgage broker’s office will look completely different from today…(A customer may say), ‘I don’t have money for closing costs,’ (and we’ll say), ‘Let me open you an unsecured line of credit…’ Now you’re no longer (just) a mortgage broker…I think you’ll see more operations [that sell non-mortgage products].”
  • Butler: “We have to be very concerned that we’re properly licensed, properly insured and properly motivated to not assume a level of expertise that we simply have no training and education in…”
  • Majthenyi: “As Wayne Gretzky said, you have to skate to where the puck is going…Because we don’t want to compete on rate, we’re going to offer more (non-mortgage) products.”

On social media:

  • Majthenyi: “If you’re not doing social media and updating it regularly, you’re not in business…”
  • Eisner: “Everyone needs to be on social media….That’s just the base level to play the game.”
  • Lebrun: “Social media is…branding…(it’s not a) call to action.”

On broker technology:

  • Butler: “We have a backbone technology system in our business that (95% of brokers use) that communicates with our lending partners. This system is a decade old and functionally hasn’t changed since it started…It’s (essentially) an electronic fax machine…The reason we can’t do anything about it is because lenders pay. And if the lenders pay, [brokers] don’t have any say in how it operates. We could be brilliant underwriters if we had better background tech. We could do more for our lending partners…We could automate efficiencies…but we’re going to have to think about paying for it.”

On overrides being paid to brokerage networks:

  • Butler: “There are overrides being paid to superbrokers and networks that have nothing to do with anything but volume…So, OK, the superbroker needs money to function and the network needs money to function; that’s great…It’s probably not a lot of money. It’s probably just a few [basis points]…But…the most important people in this room are the people who push the (submit) button on a deal…Why can’t we back the money down to those folks?”