Name: Steve Huebl

Email: [email protected]


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Stocks downIf you want to know the winners and losers in Monday’s surprise mortgage rule announcement, peek at lenders’ stock performance.

Traders collectively decided, at least in the short-term, that the visible future is dimmer for second-tier lenders than for their big bank competitors.

The stock prices for most Big Bank challengers took it on the chin today. Here’s the scorecard for a sampling of them, as of Tuesday’s close:

Lender stocks

Most major banks performed decidedly better:

Bank stocks

Stock prices are partly emotion-driven so let’s see how things shake out in the next month or so. But the immediate opinion of those with money on the line is that Canada’s Big 6 are less impacted by the coming insurance restrictions.

More fallout from earlier today:

  • Investors handed Genworth (Canada’s second largest default insurer) its biggest intraday selloff since August 2009. The company estimated that:
    • Roughly a third of transactionally insured mortgages, mostly for first-time homebuyers, would “have difficulty meeting the [government’s] new required debt service test.
    • About half of its “total portfolio new insurance written would no longer be eligible for mortgage insurance under the new low-ratio mortgage insurance requirements.”
  • Multiple monoline lenders (including some of the biggest) announced that they were suspending new refinance, rental and/or business-for-self (BFS) originations. Expect more of that to come, unfortunately. These companies are now left wondering how they’re going to finance mortgages that can no longer be insured (mortgage buyers prefer insured product). They simply cannot lend under that uncertainty.

By Steve Huebl & Rob McLister

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A mortgage broker’s job comes with its share of uncomfortable moments. Telling a client that you can’t provide them with the appraisal they just paid for is one of them.

It’s an issue that comes up time and again, but one that’s frequently misunderstood. Appraisers and brokers cannot simply hand over appraisals to clients, despite the client being charged for them. Here’s why.

“It’s actually a fairly simple answer to be honest with you,” says Keith Lancastle, Chief Executive Officer of the Appraisal Institute of Canada (AIC), whose 5,000 members make up 80 percent of certified appraisers in Canada. “It’s one of those things where our members’ obligation is first and foremost to his or her client,” he said, and the “client” is almost always the lender, whose guidelines the appraisal is prepared under.

“If the [lender] wants to share a copy of the appraisal with the prospective homeowner that’s fine, but the appraiser cannot provide it because the [borrower] is not their client.”

Lancastle says it’s an issue that triggers ongoing inquiries to the AIC. Prospective homeowners are routinely trying to get their hands on a report, he says. But the association’s response is generally not what people want to hear: “It’s up to the member’s client if they wish to share the report with someone else.”

Aside from the fact that the lender is the appraiser’s client and therefore retains ownership of the report, Lancastle says there’s another reason appraisal reports aren’t freely distributed. “More often than not, lenders are reticent to give prospective homeowners a copy of an appraisal report because they could…[shop] it around” with other lenders.

Industry association Mortgage Professionals Canada notes that appraisal costs are like any other fees paid for by the client for the benefit of the lender. Other such fees include mortgage default insurance and title insurance.

“The expectation needs to be set with the client that the appraisal required by the lender is a non-refundable fee,” said Renee Dadswell, Manager, Professional Development at Mortgage Professionals Canada. “If the mortgage does not fund, the fee must still be paid, which is why it is often charged upfront to the client. Some brokers will negotiate with a client to refund this fee once the mortgage closes. In other cases, the lender may reimburse for the appraisal–once the mortgage funds.”

If a mortgage broker is directly asked by the client for a copy of the appraisal report, Mortgage Professionals Canada recommends seeking the lender’s approval prior to releasing the information to the borrower.

“But in order for that appraisal to be used for any other financing purpose, there needs to be more than just permission from the lender,” notes Jennie Hodgson, Vice President, Education. “The appraiser must agree and prepare a letter of transmittal, an appraisal update or, in some cases, a whole new appraisal.”

She adds that she is not aware of any lenders taking legal steps with a broker or brokerage for an appraisal being released without the lender’s consent. However, brokers should advise borrowers that the appraisal, if provided, is for information purposes only and cannot be used for financing purposes with another lender.

Providing appraisals to other parties without transmittal letters can even open brokers up to legal liability. If a broker gives a private lender an appraisal commissioned by another lender, for example, and the property goes into default and is liquidated for less than the appraisal’s value, Hodgson says it’s not unthinkable that the lender might “launch legal action against multiple parties, including the broker.”


Parting Note: While a lender is not necessarily obligated to release the full appraisal to the borrower, some of the information in the appraisal is the borrower’s personal property, and accessible to them under PIPEDA legislation. More on that.

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Last week Mortgage Professionals Canada (formerly CAAMP) hosted the mortgage industry’s biggest annual gathering of mortgage professionals.

The event took place at Metro Toronto Convention Centre, and was attended by 1,200+ brokers, lenders and suppliers. There were more than 70 Expo exhibitors and 540 attendees at the Hall of Fame/Awards Night.

If you couldn’t make the event, here’s a roundup of conference highlights:

CAAMP Expo

  • Guests had two days to check out the 70+ exhibitors and their wares—not to mention seemingly endless prizes, food and more alcohol than we’ve ever seen at the Expo. (Multiple exhibitors were pouring beer and wine at their booths this year.)
  • An overview of Expo developments can be found here.

CAAMP Gala

  • This year’s edition was hosted by comedian Lee Smart and included an appearance by former CAAMP CEO Jim Murphy, one of the award presenters for the evening.
  • Award of Excellence recipients included Sarah Schiess (Broker of the Year); Karim Awad (BDM of the Year); Richard Moxley (Financial Literacy Leader of the Year); Shane Bruce (Marketing Campaign of the Year); Conrad Neufeldt (Innovator of the Year); Kerri Reed (Mentor of the Year); and Jared Stanley (Underwriter of the Year).
  • This year’s Hall of Fame inductees were Boris Bozic and Alan Jette. For that story, click here.

Opening Ceremonies

  • Mortgage Professionals Canada unveiled the “big announcement” it had been teasing about for weeks. As you’ve no doubt heard by now, it was a name change to Mortgage Professionals Canada. Here’s more on that rebranding initiative.
  • The new Board of Directors for the association was also unveiled. Here’s the list of this year’s board members.

Broker Panel

  • It was a noticeably toned-down panel compared to previous years. Panelists included Kerri Reed (Verico Premiere Mortgage Centre), Peter Mancini (The Mortgage Centre – I Direct Mortgages), Mike Lloyd (Broker, DLC Canadian Mortgage Experts) and Croft Axsen (Jencor Mortgage Corporation). Axsen provided the most comedic relief, or gloom depending on how you look at it, with statements like: “The best part (about the mortgage industry) is that it used to be good.”
  • The panelists agreed there is much frustration across the industry due to stricter lending requirements. “Completing a file is so much more than it used to be. It’s a challenge today,” summarized Reed.
  • On consumers becoming more informed, Croft said this: “There’s an increased awareness about rates. Clients are coming in with expectations that may or may not be available.”
  • Axsen offered parting advice to brokers: “Understand the regulations and underwriting guidelines, but also push back against them or they’ll never change.”

The Art of Leadership

The final day of the conference featured five internationally renowned authors and thought leaders:

  • Vince Molinaro, bestselling author. He called on all those in leadership positions to recognize that there is a leadership contract: It’s an obligation to your business’s community… He said, “One of the biggest measures of a great leader is whether you’re leaving your company in better shape than you found it.”
  • Chester Elton, another bestselling author. He said great leaders create great cultures and get their people energized. In order to foster a culture where everyone buys in, you have to “engage, enable and energize your people,” he says, citing WestJet as a classic success story. He also said the workplace is comprised of five identities, each of which need to be rewarded differently: achievers, builders, caregivers, the reward-driven and thinkers. “Do you know your people and how to motivate and reward them?”
  • Amy Cuddy, Associate Professor at the Harvard School of Business (she delivered the second-most viewed Ted Talk of all time). She spoke about the effect that body language has on how others view us, but also on how we see ourselves. She cited “yoga science” that has proven how high-power poses and stretching can affect hormone levels, which in turn lead to psychological changes such as an increase in assertiveness, risk tolerance, competitiveness and confidence.
  • Captain Richard Phillips, Author of Hero of the High Seas, and inspiration for the movie “Captain Phillips.” As he recounted his harrowing tale of being taken hostage by Somali pirates in 2009, Phillips spoke about the virtues of leadership and how he put them into practice as the “floating CEO.” It was his job to “take care of the crew, the ship and the cargo, in that order.” While he had no formal leadership training, Phillips told the audience, “You are much stronger than you know,” especially when situations come along that force us to rely on that strength. “We all have pirate-like challenges in our lives that we need to deal with.”
  • John Mackey, Co-Founder and Co-CEO of Whole Foods Market, and bestselling author. He spoke about conscious leadership and culture, and that a conscious, “ideal” leader relies not only on IQ, but also analytical, emotional, spiritual and systems intelligence. He said the problem with many leaders today is that they’re not even capable of managing themselves. Instead, leaders should be dynamic and evolving, and acknowledge their biases and ideologies. “Ideologies are shortcuts to keep us from thinking, and they also stop us from growing.” He left the audience with a message that perhaps all of us can relate to: “A crisis is a wonderful growth opportunity.”
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Colleen SilittoShock and sadness are reverberating throughout Canada’s mortgage industry following an apparent murder-suicide that has struck painfully close to one of its own.

Axiom Mortgage President and CEO Michael Cameron took to social media to express his grief over girlfriend Colleen Sillito’s senseless death on Friday. The two had been dating since early May.

Sillito, a 46-year-old artist, photographer and mother of five, was reportedly killed by an ex-boyfriend in Fort Saskatchewan, where she lived.

“She was passionate about life,” Cameron wrote on his Facebook page. “She loved her children. Her ability to create beauty through her art, photography, pottery and music was generously shared with others. She lived a life full of adventure. She will be missed more than we can possibly express.”

Cameron, who also sits on CAAMP’s Board of Directors, has set up a GoFundMe page to raise money to help support Sillito’s children.

“This fund will be set up in trust for her younger children so that they can continue to bring their mother’s joy to the world,” Cameron wrote on the fundraising page. “Donate if you can but if you can’t please make a small gesture of kindness to someone else in her honour. She would be thrilled to know that her death was not meaningless and that she continued to inspire others to live a full life, love deeply and care for others.”

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RRSP HBPBorrowing RRSP funds to buy a home would no longer be restricted to first-time buyers under a Liberal government, the party announced today.

Liberal leader Justin Trudeau has proposed that restrictions on the Home Buyers’ Plan (HBP) be loosened to allow greater access to the program for those facing challenging or unexpected circumstances.

“We will modernize the existing Home Buyers’ Plan so that it helps more Canadians finance the purchase of a home,” says the Liberal’s housing policy. “We will allow Canadians impacted by sudden and significant life changes, such as job relocation, the death of a spouse, marital breakdown, or a decision to accommodate an elderly family member, to access the program and use money from their Registered Retirement Savings Plan to buy a house without tax penalty.”

The plan would not change the maximum withdrawal limit of $25,000, however. Some call that a mistake as the HBP has failed to keep pace with rising home values. Since the HBP started in 1992, home prices have rocketed over 200%, while the withdrawal limit has risen just 25%. That’s the very reason Conservatives recently promised to raise it to $35,000.

“I think our proposal to extend the capacity to invest — to draw from your RRSPs…responsible amounts to help the cost of a new home — is something that will help Canadians in concrete ways,” he was quoted as saying. “The reality is that too many Canadians cannot afford to buy a house.”

Like the Conservatives, the Liberals are also promising to “undertake a review of escalating home prices in high-priced markets — like Vancouver and Toronto — to determine whether speculation is driving up the cost of housing, and survey the policy tools that could keep home ownership within reach for more Canadians.”

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Street Capital FCStreet Capital, the broker channel’s #3 lender in market share, updated the industry on its bank licence application Wednesday, essentially saying there’s not much to report.

Its comments came as part of the 2014 year-end financial release from its parent company, Counsel Corp. (TSX:CXS)

“We do not want our stakeholders to draw any conclusions regarding the application process from the fact that no announcement has been made regarding receipt of Letters Patent to date,” Allan Silber, Chairman and CEO of Counsel Corporation, said in the company’s release.


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AlbertaHousingWe’ve seen the headlines about the softening housing market in Alberta and Saskatchewan. But how much of a threat do declining home prices there pose to the rest of the country?

Little, according to a report from National Bank of Canada (NBC).

While the Canadian Real Estate Association reports that seasonally adjusted home sales in Alberta and Saskatchewan are down 33% from November (compared with a 3% decline nation-wide), report author and Senior Economist Marc Pinsonneault says, “To date there is no indication that the hit to the Alberta and Saskatchewan housing markets has propagated to large centres elsewhere in Canada, such as Toronto and Vancouver.”


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2014 CAAMP Conference Wrap-up

caampforumLast week, Montreal played host to CAAMP’s Mortgage Forum 2014, one of the mortgage industry’s most important gatherings of mortgage professionals. Dubbed by some as “a networking event on steroids,” the event played host to 1,200+ attendees. It also included 65 booths at the two-day Expo and 525 attendees at the Hall of Fame/Awards Night — both excellent showings by historical standards. In case you missed the event, here’s a roundup of conference highlights:
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Working with Self-Employed Clients

Entrepreneur plan to startup success

Nick Tsimidis, Special to CMT

Self-employed borrowers have long been perceived as higher-risk applicants. It’s not surprising that they took it on the chin when the government started tightening mortgage rules.

That’s unfortunate, however, because this segment includes more people than one may think: lawyers, architects, accountants, contractors, mortgage professionals, investors and so on.


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Slowing Mortgage Market Examined

Falling-mortgage-growthDespite hot housing activity in some of Canada’s biggest markets, mortgage credit is growing at its slowest pace since 2001. That’s according to a recent TD Economics report.

The good news is that Canadian mortgagors are paying about $4 billion less in interest (on an annual basis) compared to before the recession hit. In turn, they are now “paying that much more in principal,” says TD.


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