Mortgage Broker

Lenders monitor their market share like spy satellites monitor Iranian nuclear plants. That’s a big reason why Davis + Henderson’s quarterly volume report is so highly anticipated.

We got word of D+H’s 4th quarter 2010 results yesterday. Here’s what we’re hearing (these numbers reflect Q4 market share in the broker channel only):

• FirstLine is back on top, with the #1 share (~16%) of broker business in the 4th quarter.
• Scotia fell back to 2nd place in Q4, although it did do the most volume in the broker channel in 2010.
• First National and TD finished 2010 in 3rd and 4th place respectively, with each losing share overall.
• MCAP remained in 5th, with little change in share.
• The biggest movers in the top 10 were:
  • Street Capital, up two spots to rank 6th—posting impressive 65% volume growth in 2010. Street has an exceptional reputation for service and is strong at creating broker relationships (just make sure you send them a deal here and there or you’ll get cut off).
  • Macquarie Financial and ING Direct each fell a few spots to 7th and 9th respectively.
• Merix moved up one rank to #8. Almost no one could touch their 3-year deal in the fall.
• National Bank broke into the top 10 for the first time, with a 48.5% volume increase in 2010. That’s not surprising. National’s broker status program is second to none, its rates are strong, its products are flexible, and it’s been diligently working to improve underwriting efficiency. Moreover, the All-in-One is easily the most powerful readvanceable mortgage in the market.
• Coast Capital, a BC credit union, posted 2010 volume gains of 118%, on the back of exceptional rates and unique mortgages (like the You’re the Boss mortgage).

The above figures are from industry sources. They are not confirmed but are believed accurate.

What 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

Scotia Mortgage Authority is joining RBC as one of the only big banks with flexiblequalification rates for conventional mortgages.

For those with 20%+ equity, Scotia will now qualify you (i.e.  calculate your debt ratios) using payments based on the following rates:

• For Variable-rate mortgages: 3-year posted
• For 1- & 2-year fixed mortgages: Higher of 3-year posted or contract rate
• For 3- to 10-year fixed mortgages: Contract rate
• For the STEP Line of credit: 3-year posted (if standalone) or the highest above rate (if multiple terms)

Previously, Scotia used the 5-year posted rate to qualify conventional mortgage applicants who chose a variable or 1- to 4-year fixed term.

This policy change creates an advantage for Scotia in that it can now approve conventional clients whose debt ratios are temporarily elevated.

Insured mortgages with less than 20% equity will still be qualified using the benchmark 5-year posted rate, as per federal guidelines.

Up to 100% commission payout with no monthly charges or advertising fees. That’s what Pacific Mortgage Group Inc. (Pacific) will offer mortgage brokers.

Pacific is the parent of Mortgage Architects and MyNext Mortgage (soon to be “Radius Financial”).

“It’s a first in the industry,” says Meini Ickert, SVP of National Sales with Mortgage Architects.

The “catch”? Brokers must be Mortgage Architects franchisees and send up to 30% of their volume to MyNext Mortgage, the company’s exclusive lender. Here’s the full release with a complete breakdown of split levels.

“Our brokers are the only ones in the industry that have their own CMHC approved proprietary lender,” said Alex Haditaghi, Pacific’s CEO. Haditaghi wants to funnel volume to that lender by using 96-100% splits as a loss leader strategy. That’s because lending margins are notably better than mortgage brokerage margins—which are getting tighter all the time.

Here’s a complete rundown of Pacific’s new broker offerings.

If MyNext Mortgage offers exceptional value to clients (via outstanding rates, service, and features), it’s a unique strategy that could be effective. MyNext mortgages pay trailer fees as well, so that’s another bonus to brokers.