D+H Monopoly: Officially Over

It’s been a long time coming but D+H finally has real competition for Expert, the system that over 90% of brokers use to send applications to lenders.

DLC Group, a subsidiary of Founders Advantage Capital Corp., has purchased D+H’s competitor, Marlborough Stirling Canada Limited (MSC), for $5.5 million. MSC produces MorWeb software, a web-based order-entry platform for mortgage brokers.

DLC is purchasing 70% of MSC and another group, led by Geoff Willis, is buying the other 30%. Willis currently runs OTTO Mortgage Systems, which also makes software that automates the mortgage origination process.

Chris Pornaras is expected to remain president with Willis also joining the management team in some capacity. As such, we suspect that Otto—or at least much of its best functionality—will be merged with MorWeb sometime next year.

DLC “anticipates it can increase MSC’s market share by having more DLC mortgage brokers use the MSC platform,” says the company’s press release. That shouldn’t be too hard, given DLC’s 5,000 agents comprise 40% of the mortgage broker market and fund $37 billion a year. By this author’s back-of-the-napkin math, if DLC gets even half of those brokers using MorWeb it could pay for the purchase in 24 months or less.

Albeit, while DLC Group has ample volume to make MorWeb viable, it will take time to shift a critical mass of agents from Expert to MorWeb. “Changing peoples’ habits is dependent on user experience,” says DLC President Gary Mauris. “Users want better access to their data, integration to the CRM of their choice and a slick mobile platform, so these things will all be on the drawing board in coming months.”

Regardless of this deal, however, Mauris says “MSC and D+H will both remain key partners for DLC.

Speaking to CMT about his MSC growth plans, Mauris said, “We’re reviewing options and potential opportunities for additional partnerships. We’re also looking for ways to more economically serve our lender partners.”

Regarding third-party brokerage partnerships, some will question whether brokerages would ever use software run by a competitor. Clearly, however, DLC would be crazy to misappropriate its customers’ data—so those criticisms probably aren’t valid.

“We’ve never held broker data hostage and marketed to past agents’ clients,” says Mauris. “A broker’s client data is their data.”

The other consideration will be getting all lenders connected to MorWeb. TD and a few smaller lenders are conspicuously absent. Without TD, many brokers simply won’t use the platform. That should be a top 2017 priority for Mauris, Willis & co. as they invest in their new platform.

  1. Now it’s not just about whether or not Gary is going to invite you to his Christmas party, but whether or not he lets you even receive deals. Goodbye Morweb, we won’t be using it anymore.

  2. We won’t be using Morbweb any more. I hope DLC can get out of Morweb what they want from their own agents, which I am sure they can. Does D&H need a competitor? Absolutely. Their system is ancient and they refuse to update it due to having this monopoly. However, we won’t use a system owned by DLC or any other brokerage.

  3. I am hearing all the negativity but when it comes down to it, we agents do what we want to do and I agree, we are not always rational and it is us, not the Lender or Brokerage House that inputs deals in order to make a living. (on what ever system we are comfortable using)

    I very much doubt that anyone at DLC could get their agents on mass to switch to the Morweb/GoMax system. In fact, I would not be surprised if this new partnership starts charging monthly usage fees to agents and why not… I hate to say it, but why were the lenders fitting all of the bill to start with?

    Yes, individual clients mortgage data will be protected, but you can bet your bottom dollar that there will be more that one report floating around detailing $ volumes of mortgages written by all agents and firms as well as lender mix; Just like there is now. With new owners, who do you think will be looking at those reports and for what purpose? Doesn’t take a rocket scientist to figure that out expanded use! (Chinese walls or not)

    I am guessing that the Mortgage Broker channel is important to Banks/Lenders (not for profitability reasons) and I am also guessing that they would hate not having the appearance of being in control. Do you really think any lender would allow a Superbroker to dictate and change the landscape to advantage broker/agents?

    Ahh, but if this works, it must mean that even the Lenders as well as broker/agents are self serving and fragmented! Garry is VERY smart and driven person, so if anyone could make it work, it would be him.

    I wish him luck but I can not support such a relationship (no matter what secret commission/side deal is offered).

    1. Hey Jim, Thanks for the note. Some interesting comments in this thread, albeit the reasons to stop using MorWeb aren’t so clear to me.

      Here’s one guess at what happens next:

      * The platform is going to get a whole lot more functional
      * Lenders will enjoy better economics (relative to the alternative)
      * There will probably be some economic incentives for brokers to use the platform
      * The new owners will contractually assure all users that their client data will be protected.

      Knowing what I know, it’s hard to imagine DLC using the data to the detriment of users. It didn’t pay $5.5 million to alienate brokers and create a PR disaster.

      Perhaps they do use the data in aggregate to generate analytics reports, but really, what’s the risk there?

      For every user they lose for the reasons people cite, they’ll gain dozens more. And the industry will get a second strong Expert competitor (BOSS being the other), which brokers will need in order to compete in the digital marketplace.

  4. I am one of those brokers sitting on the fence…

    Two facts:
    Expert has become complacent with regards to the Canadian Mortgage origination part of the business and has been investing their resources in the US marketplace where they are obviously seeing a better return. MorWEB has not been able to capitalise on this fact and I think have likely lost more brokers than they gained. Perhaps it is due to certain key lenders not supporting them to the same extent as Expert, or perhaps MorWEB has been handcuffed by their off-shore owners? (Look at how many CEO’s they have gone through) What Marlborough has got going for them is lender specific products (Optimus and Omega) which I think are their mainstay products and these would be part of the purchase.

    As far as better economics, I was on the understanding that MorWEB had already moved away from the bps model that Expert is using and went to a flat fee that allowed lenders like ScotiaBank and First National to increase MorWEB users finders fees by 5 bps.

    I remember when we had LSS & Morty (back in the day) and I can tell you that by comparison LSS was incredibly antiquated and couldn’t hold a candle when it came to functionality and efficiency of Morty. But the majority of us still supported LSS right up to the end!

    D+H is also up for Sale and from what I gather, it is the entire D+H (not just Expert) http://www.dh.com/news-events/press-releases/dh-corporation-confirms-process-and-formation-special-committee
    Announcing they have set up a special committee of independent Directors to review a 3rd party purchase without a tabled proposal seems unlikely… but who knows?

  5. Hi Rob
    Very simply, I just don’t need the completion to have access to my database. Why would I? The 5 bps extra comp for using Morweb is great, however not worth the risk, no matter how small this risk is.
    The other part is why would I use a system that helps the competition.
    I guess we will all see how this play out.

  6. This really begs the question if Gary and company buys the Expert division of D&H (who have announced they are seeking buyers for the sale of the whole or parts of their company) does Jim start faxing deals to Lenders??

    Honestly, we all have to become rational in this business. Every mortgage broker should quit worrying about the petty squabbles and micro-issues in our industry and realize the Bank of Canada has issued a report very critical of our monoline lenders and tangentially the mortgage brokers who support them. This means both the Department of Finance and now the BOC are gunning for our side of the mortgage business. How does it feel to be part of an industry the highest levels of our Federal government want to curtail?

    We are in for the fight of our business lives for the next 18 months, let’s all start thinking big picture.

  7. We are very pleased with our acquisition of MSC. Our immediate plans are to get to know our assets and review all available options, within all the business units. This is a very robust system with over 30 years of dependable service and a very capable staff, which we intend to keep in place. I can assure you all one thing for certain; data integrity, confidentiality, security, service and contractual guarantees around all intellectual property and information will be at the core of our business model.

    We remain committed to the Canadian Broker space and know that the trust of our customers is never owed, never assumed, and never to be taken for granted. It has to be continually earned and that is our commitment in all of our operations.

  8. Congrats to DLC for this acquisition! This is what the industry (GALAXY) needs on the technology origination front. Competition usually is followed by innovation. For the longest time, D+H Expert (THE EVIL EMPIRE) has not innovated and its the take it or leave it platform that many brokers loathed. Expert’s strength was its long lender list, broker reluctance to learn and use MorWEB, poor new agent system training that inevitably lead to Expert system by osmosis, and D+H’s power over smaller lenders that it can shaft if those lenders do anything that they don’t like. These factors contribute and perpetuate the cycle that made Expert the monopoly it is today (DARTH VADER & THE DEATH STAR). MorWEB can easily gain market share now that it has DLC (LEADER OF THE RESISTANCE) capable of mounting offensive action against the choke hold and potential destruction from (DARTH VADER & HIS DEATH STAR)

    / || \
    / || \
    | || |
    | _______||_______ |
    |/ —– \/ —– \|
    / ( ) ( ) \
    / \ —– () —– / \
    / \ /||\ / \
    / \ /||||\ / \
    / \ /||||||\ / \
    /_ \o========o/ _\
    `–…__|`-._ _.-‘|__…–‘
    | `’ |

    I’m sure Gary already has plans to monetize this investment and drive ROI. I’m going to say it anyways. My advice to Gary is focus on implementation. You can have the best system (LIGHT SABER AND STARFIGHTER) for your franchises and agents (JEDI), but if they don’t use it (THE FORCE), then it’s not going to matter. They will continued to be seduced by the POWER OF THE DARK SIDE.

    JEDI…it really is upto you to use THE FORCE to break away and submit deals through MorWEB. Change is hard and can easily take a back seat to convenience and osmosis leading back to the DARKSIDE. But victory and the FORCE is with you and within you to overcome. MorWEB is easy to learn and use.

    Do the math…there are approx 12000 brokers in Cda. CAAMP (TRADE FEDERATION) will tell you 16000 but real producing brokers is more like 12k. DLC and the RESISTANCE can easily make a big dent in the EVIL EMPIRE’S monopoly in a short time order.

    Innovation, freedom, and peace is ahead for the GALAXY. Victory is yours!!

    (the above is opinion of the writer only and is in no way promoting the up coming Starwars movie…like you need to be convinced)

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