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Mortgage Solutions for the every day Canadian mortgage consumer. Are you thinking about becoming a mortgage broker learn first hand what you should look for in a brokerage and what you need to be successful.
Transcript
Len 00:02
Welcome. My name is Len Lane, and I am the founder and president of Brokers for Life Inc, and we are Dominion Lending Centres in Western Canada. The topic of our podcast will be about what we consider to be Real Life Mortgage Solutions.
Len 00:20
Welcome back. Our special guest today is a gentleman who is an icon in the mortgage industry in Alberta. He has a very long history of working for several of the banks in the industry, especially with Royal Bank, which is where we met, he was a market specialist and I was a lowly homebuilders manager and in our show home in North side of Edmonton probably, it's been a long time. And he has a background in not only being the market specialist but being a sales manager, as well as a licensed Realtor at one time, as well. So, very well versed in the real estate industry in Edmonton to the point of one point actually being the President of the Edmonton Home Builders Association. I can't remember what it was called in those days, but—
Ray 01:06
It was called the Greater Edmonton Home Builders Association, yes.
Len 01:13
EVA, yes. Anyways, my special guest today is Ray Meredith, and now a full-time mortgage broker with Brokers for Life. Welcome. Because you have such a background in in the banking side, I thought you'd be the perfect person to kind of maybe discuss with what you've seen as the differences between the two sides of the industry, your knowledge, of course of how the mortgage specialists work and now somewhat of how the mortgage brokers work is a chance for us to maybe do some comparison. So what's the glaring difference that you see between the two types of employment, I guess, if you want to call it.
Ray 01:55
There’s actually quite a few, I would say probably the first is the option for a variety of different products as a mortgage broker, versus working for just one lender. While that, I've always been a big believer that, you know, your strongest skill set is also your biggest Achilles heel. So, while we may have a ton of options to find lenders, it can get a little confusing to understand what everybody's nuances are, you know, you kind of get yourself down to probably three or four, maybe five lenders that you get comfortable with, you get to know their products, the benefits of each of their products, and then you kind of stick to those, obviously, you're going to have one-offs for private lending and things of that nature. That would be probably the biggest one. The second one, I would say is the fact that you are an independent contractor, that you are self-employed and while you do have you as the broker on record for where we are, and we have to answer to RICA, bottom line is the business is ours to run how we see fit, provided that we are of course, following the rules. I think that the feeling of freedom, I don't remember ever feeling is in control of my own career as I do now. Even when I was at the bank, you know, as you know, I've worked for them all. So it's, yeah, I know, I have an ATB, too. So, the bottom line it's very much an independent small business world that we live in. And you need to treat this, like it is your business, not like a job.
Len 03:28
And that's one point I've always made to people. It's like, yes, we have a broker. But really what we have is an aggregation of 28 small businesses, right, everybody is running their own business, to the best of their ability, and it's up to you what you put into it. And that's what you get back out of this industry, right?
Ray 03:49
Oh, absolutely. It's, you know, similarities in the roles would be you get out what you put in, like you just said, very, very true. I mean, it's like if you don't succeed in this business, it's through nobody's fault, but your own. In my own humble opinion, because you're the one that needs to motivate yourself, you're the one that needs to go out and be in front of people all the time. You as a broker are the one that controls how busy or not busy that you are. So to me if you're not successful in this industry, it's because you're not doing those simple small things, which is being in front of somebody pretty much every day.
Len 04:23
And that doesn't change, right? It doesn't like I've literally sold everything from nuts and bolts to houses. It is that same thing if you don't see anybody in your show home for a week at a time you better go figure out a way to get somebody into your show home because everybody always jokes about my analogy about the making popcorn, right that more kernels in the pot and more popcorn you got to make out of it. So, what do you think was one of the easiest things for you to grasp in on the broker side?
Ray 04:55
The easiest thing was just the ability to connect with the different BDM’s at the different lenders So, I would say that's probably the first thing that you should do is get to know them. Because a BDM will make or break the difference, if you have issues with a file in dealing with them. I've had encounters where I've, you know, some BDM’s are more responsive than others. And you know what that dictates where my business goes to? Because I am, as you know, I'm like anybody else, if you're really good with your clients, and you're constantly in contact with them, they're more than likely to refer you business. And I look at the same viewpoint with BDM’s, that if they are not as engaged with you, as you are with your clients, then maybe you should find a different lender. That, to me is probably the easiest thing that I found out very quickly. The other part is, it's very easy to get yourself all confused by the amount of information out there as well. It's like drinking from a firehose, as I used to say to my new people, I hired as a martial specialist, and it really is, you just have to kind of sit back and just kind of take your time, and it does take time. I mean, I've been at it now a year, and I still, there's way more to learn for me.
Len 06:11
Yeah, and you know, that's part of the training that we do as well, we really tried to start people off with just five lenders. Because there are 20, yes, no question. And a lot of them are cookie-cutter, they all do the same things. But like you said, they all have the little nuances. What do they do better? Are they better with self-employed, or they battle better with rentals? Or, you know, just private sales? I have several lenders that I just tell everybody, don't send them a private sale, because it goes into a whole nother queue. And it'll take weeks to get done. Right? So, you probably realize that I really don't hold sales meetings, per se, we have training sessions. How much of a difference is there do you think in, well, I know, there's a lot of difference in the amount of paperwork and reporting that you have to do as a broker as opposed to working for one of the big five.
Ray 07:01
I would agree with that. I think our documentation out here is far more, there's a lot more of it, I would say. I also feel, and that's not to say that the banks do less of a job. It's just that out here because I think you're personally liable for everything that you do. Documentation is extremely important that is done in a timely fashion. And it's done in an organized fashion, and you have an idea what you're doing because you make a mistake out here, you could be liable for it.
Len 07:35
It’s very important that well, you know, reviewing a document is a priority, so that we know exactly what we're sending to a lender there. There's no question that that definitely has to be considered, especially given that one works, of course, under the Bank Act, and there's probably a lot more leniency as far as coverage, I guess. But uh, you know, I'm still responsible for the same amount of paperwork, just to the depth that we go into making sure that we have things right before we send them to a lender, right? So.
Ray 08:06
Very true. I will say that one of my difficulties is the difference between insured and insurable. And I mean, the reason why it's difficult for me is because with banks, you don't have to worry about the difference. Plus, the last time I did mortgages full time, there was no difference between rental properties, regular purchases, and now we have a whole plethora of different rates, depending on the products that you're dealing with, be it rental, lawn rental, and also the different rates depending on your financing, whether you're financing 65%, or 80%, or 95%. So, that probably is still the biggest issue I have, is just getting my head wrapped around those different rates. And that's because we're dealing with monoline lenders, which is why I insure insurable which I get all that. But it's just a matter of just kind of keeping that top of mind.
Len 08:57
Yeah, it's definitely an area that the banks, Scotia in particular that we deal with that has an advantage in that area, right? The only rate change they have really is that 30-year amortization. Other than that, you know, it's just a mortgage. And when you're working out for your own book of business, and that's that is the difference, I think, right? Learning what's insured, insurable and uninsured took me quite a while. I probably lost 20 deals in that first six months, because I'm going, Oh, that sounds like it’s this. And turns out, no, that was insurable. You just, you know, you had to get your head wrapped around that the qualifying rate was what was making the difference, right? So yep. So you've worked in a lot of different areas of the bank, not just as a mortgage specialist. How does the technology differ between the big five banks that you've worked for and what we're using today?
Ray 09:57
I would say the first biggest difference are CRM. by the fact that any bank really does not have a CRM to speak of. So, there's nothing about reaching out to clients on a regular basis, like you just can't do it. So, I would say the technology that we have out here in the field, compared to banks, second to none, absolutely second to none. And, for me, that's probably the biggest factor that can help your business. Because ideally, when I was coaching mortgage specialists in the bank, I would always indicate, Hey, your client is your next, next piece of pie. So, make sure you continually can't constantly keep in touch with them. But when you're in the bank, they don't really have any CRM to be able to kind of drip on the client on a regular basis. So, you have to set up your own. So, I would say that's probably the largest difference. From a software standpoint, I mean, each of the banks use their own product-specific kind of thing. Once you get used to Velocity that we use, I think Velocity is a terrific program, I still find the CRM a little cumbersome to use, and always have difficulty every month sending out my newsletter. But I eventually get around to getting it done. But the programs that they do set up for you are phenomenal. Absolutely, phenomenal for birthdays, anniversaries, you know, renewals coming up in four to six months, annual, it's just, to me the software, it's just night and day better in our world than it is bank world.
Len 11:24
And there's no question, you know, and I think the bank was kind of the same mindset as the new home industry, right, where our good friend Ray, rest his soul, he would always tell me that I was only as good as my next deal, right? So, you're back out hunting six or 700 clients on my own in that CRM program. My phone's gone crazy. So like, you may have to shut it down a little bit. Try and keep up with everything and everything else that I'm doing. So, that's great. MPP, Mortgage Protection Plan. One of the best coverages as far as I'm concerned, and I'm concerned, I've looked at three others, and we've always ended up back with MPP. How does that compare with the life insurance offers that the banks have.
Ray 12:10
Well, first off, they pay us better. I will say–
Len 12:14
Oh ya, no question eight times premium. And after 90 days, and no club X is pretty hard to beat. Yeah.
Ray 12:19
Pretty hard to beat, I find the NPP process. I like the fact that it's built into Velocity as well. I think that's very handy. The fact that Manulife typically I think, I don't know if he even quoted or not, but I'm pretty sure they've got like about a 97% payout on any claims that are made, or it's definitely above 90%, for sure. Which leads me to believe that like most lenders, the product-specific insurance is actually a very vital part. From my perspective, I wish it was integrated a little bit better into the system for calculating payments for clients. Because that way, you can introduce it earlier in the conversation. Versus now you kind of gotta wait a little bit. But to me, it's, you're doing your client a disservice by not having a good in-depth discussion on what kind of insurance they have. Because to me, product-specific insurance is no different than, say, your investment portfolio that you have, you know, many different types of investments, I think insurance is no different. You need product-specific insurance, I think you need outside types of insurance. Most people have insurance through work, but I still am a firm believer that even if you do have, you know, benefits through work, I still think outside of insurance is important because it's a group insurance through your work. And if you ever leave your work, and something happens with your health, then you're kind of screwing yourself by trying to get outside insurance. So, if you have outside insurance, and I've had it all my life, besides all the group benefits, I think it's an excellent thing because the disability especially not so much the life because to me, the disability is the most misunderstood insurance product out there. And most people if you ask them, I mean, every single sales meeting I've ever had as a sales manager with my team of people, when I sat down and said, Okay, you guys are bankers, you work at a bank, what's our disability policy? And I can guarantee you 99% of them could not answer that question. So, most clients are no different. So, that's why if you start and have a discussion around disability, you get very little pushback.
Len 14:22
Yeah, and you know, younger guys are always invincible, but I have had more phone calls over the years, from I flipped my Skidoo, long story there. My quad went over backwards broke my hip, I'm 26 years old about to work for the next six months, maybe longer, right? So it is an inexpensive when they're young and that that's always the crazy part that something that they don't pay attention to. And the other part, of course with MPP is that they underwrite everything upfront. It's not at the time of when you need to claim it and that's why the payout is so high. That they've already done that part four so that the client is covered right from the start. So, what do you think the mortgage broker world could do better?
Ray 15:12
What could we do better? That's actually a really tough question. I mean, we've got our regulators, we've got different associations attached to it. I believe personally, that if you're going to, it's kind of like me being involved in a Homebuilder Association, you alluded to earlier that I'm a past president. And at the time, I decided I was making a living from that industry. So, I decided to volunteer in it. And that's kind of why I got involved because I believed in kind of giving back to an industry that I'm making a living from. And I still think that that's not a bad thing to do in our world either. Be it get involved with that. But as far as getting things better, while we could improve the course, I will say that, mortgage broker course is the worst course I've ever taken in my life. And since AMBA, has taken it over from RICA, I don't know if it's improved. That would be one thing that I think should be improved. I believe the industry is really trying to present us as the professionals in the industry that we are, versus how people view realtors and us as used car salespeople kind of idea, not that I want to put those in a bad category. But that's kind of you know what I mean? I think the professionalism that we're developing is improving, because so many bankers are realizing that's not where they should be in are coming into our world. And I think the professionalism that they bring, because one thing banks do very well is they train their people very, very well. And I mean, I know lots of bankers that have now just decided to come into the mortgage broker world, because they're done with the banks, they're just tired of being there. Because you get to a point after so many years of working for them that your tolerance level becomes lower. So.
Len 17:03
It's interesting to watch how many have and major producers of course, right leaving the banks for the broker world. And I think I always have a great example of one of the BMO reps that was in Fort McMurray when I was up there about how much business they can do. But pay-wise, I won't name her name. But you know, basically, I did 42 million, she did 70. And she only made $1,000, more than I did. So, three times twice the work almost and, you know, not being paid for it the way that she could have been, right?
Ray 17:38
And I mean, different individuals work at banks for their own personal reasons. So, if you are feeling the need that you want to have benefits that you want to be part of a team and somebody almost kind of look after you, if you will, then being a mortgage broker wouldn't be what you want, because, in this world, you are entirely on your own. And it has to be self-motivation to get yourself going. Even as broker of record, the training that you do provide is very handy and very helpful. But it's not your job to motivate me. That's my job.
Len 18:12
Now, if I've learned nothing over the 17 years of doing this, you can't motivate people, it's either there they have the will to go out and to do this business, or to do any kind of business for that matter. And that's, you know when we're hiring, that's part of what we look for people that have some kind of entrepreneurial background, sales background is great. I have literally been on commission for the last 30 years, I haven't had a good salary-paying job. And then that 30 year stretch. So, there's so selling new homes, you name it literally hits old nuts and bolts before that and wielding rod and things like that. So, it's yeah, it's definitely it's not something I can't teach motivation. I can talk about it all day long. But if you don't have that drive to get out, and go chase business and make a business for yourself because of CRM programs, that's actually what we're doing right? In that the, you're gonna build something that you don't have to chase eventually, which is kind of where I am. And a lot of other people on the team are at that point where it's, you know, it just it's coming in the door regardless. Right. So, it's almost ready to do that kind of covered a lot of the differences, I think, between the two, obviously differences in the regulation, being under the bank act or being under the Real Estate Council of Alberta. I'm licensed in six provinces, so it's different in every province across the country. But it all comes back to that same thing that we're doing Real Life Mortgage Solutions, and we're calling that for a reason because it is and it's important to people that we do a good job, right, so yep, no. Anyways, Mr. Meredith, I corrected spelling of your name on the podcast here. So, thank you for your time this morning and have a great rest of the day.
Ray 20:02
All right. Thank you, sir. Have a good one.
Len 20:06
Thanks for listening today. I hope you found the information that we provided to be useful in your mortgage journey. And remember, you can always find our associates at www.brokersforlife.ca/associates. Have a great day.