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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.
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 Centers 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. The next three episodes are going to be about our lenders and the different types of lenders that are in the industry today. We're going to start out with the bigger organizations that represents probably 20% of our book of business, at least headed off by MCAP itself. My guest today is Lee-Ann McEllister, ACC, we’ll talk about that later too, I think. Lee-Ann is the Director of Sales for MCAP, an associate certified organization coach with the International Coaching Federation; she leads a team of dedicated business development managers, supporting them to make an impact and help broker partners grow their business. After almost two decades in the finance sales, she believes work can be fun, and is passionate about creating an enjoyable atmosphere in everything she does. Innovation is the key driver for MCAP and Lee-Ann's success. She welcomes creativity, new ideas, and runs towards change. In 2020, and 2022, she was named woman of influence by the Canadian Mortgage Professionals and dedicates her time and energy as board chair for BC Lenders Group Association. She works closely with Habitat for Humanity in the Okanagan as board chair and chair of their family services committee. She's also a member of governance committee and community engagement and fundraising committee. She is passionate about providing a hand-up to families in their community. Lee-Ann is grateful for her part in the mortgage broker industry, and thinks that home ownership is a keystone to wealth and provides emotional security. Ladies and gentlemen, Lee-Ann McEllister.
Lee-Ann 02:01
Awesome. Thank you so much for having me, Len. I have to say I want to congratulate you on starting up this podcast. I was able to listen to some episodes. I was actually on a flight, so it was perfect timing to hunker down and give a listen. And I think a lot of people, they have this grand idea of starting a podcast, but it's actually about execution. So well done on executing this great idea.
Len 02:24
Yeah. that was the step that had been in my mind for some time and been encouraged by several other people. Heather for one, to do kind of get this off the ground, dual purposes for us that hopefully to educate the some of the industry as well, and the public in general, that there are a lot of things that we talk about. And it's funny, we use acronyms so easily, LOE and all of this kind of stuff. I'm going to do a whole one just on those, because I find with new agents, I'm talking the way we've spoken for the last 17 years, right? And they go like, what is that, right? So, anyways, you are someone definitely with the finger on the pulse of the market in Western Canada, ever-changing from BC to Winnipeg, because I've been in several of those cities over the last couple of weeks. What challenges do you think the Canadians are seeing in those markets?
Lee-Ann 03:18
You know, it's very interesting leading a team with such a great territory of Western Canada, because each province is so different; the challenges in each one have some similarities, but definitely some noticeable differences and challenges. So in BC, we're seeing extremely high housing costs, especially around the Vancouver area. Alberta has continued to see interprovincial migration driving up prices slightly. But even if you look at Alberta, there's a big difference between Calgary and Edmonton. So Calgary, you're starting to see a little bit of the pricing increase due to the lack of supply and greater demand. But if you take a look at Edmonton, they stay pretty steady. So, I find it interesting, even in one province, you can have such different pockets of different volatility in the marketplace. And then, of course, we have our Saskatchewan and our Manitoba markets, which seem to be very steady. I always let my son know, if you want to buy a house, you're going to have to move from BC to the prairies, because I'm just not sure if that is a dream that's going to be accessible for many young people in BC.
Len 04:32
Yeah, there's no question that, you know, they changed the rules on the CMHC coverage up to 1.5 million. But all I can think of is, okay. Your CMAC fee is now 4% on 1.5 million as well as your minimum down payment is $125,000 so granted, I don't know the average price. In Edmonton, for us, for our mortgage side, is our average mortgage is about $350,000. Which is a third-quarter or fifth, depending on where you are, of you know, other parts of the country. Recently, a little change. The Calvert report was out, and they're showing, you know, sales slowing down in Calgary because everything has moved up into that high 800 to one point. I just did two deals for clients from 10 years ago, but they moved to $1.1 million homes, right? So, big difference, 1.1 million here in Edmonton. Well, actually, we have one in the file right now that is 1.1 million. Got you an acre of land and 3000-4000 square foot house with a triple garage, right? So, and no neighbours, right? So, yeah, definitely some different pockets. Regina, 232,000, you can probably still buy a fairly nice home. Saskatoon is up a little higher, but different economy, right? A lot more than northern mining, and that goes through Saskatoon. And then we were in Winnipeg last weekend, actually, and it's Winnipeg, it doesn't change. It's a great place to own a rental property because I don't think they've changed the rent in years. And of course, mortgages are fairly reasonable. So your son's obviously a teenager or into his 20s. Maybe I'm not trying–
Lee-Ann 06:13
Teenager, yeah, we're already setting him up to move out, though.
Len 06:18
Give him a trade, send him here. We'll give him $5,000 credit just to get started in Alberta as well. So, so speaking of interest rates and prices, you know, I've always been an advocate that people are really still going to be shocked. I know we're getting close to that and dropping back into the 3% rate, but not as fast as everyone would wish it to and or has been predicting. So what, what does MCAP think? Or what do you think of where rates will settle out to over the next two-three years?
Lee-Ann 06:50
So, I'll speak for myself and my perspective and opinion. And you're right. We kind of wanted to see a sharp decline. I don't think that's going to happen. I do expect some gradual easing if we continue to see a softening of our economic conditions. And so I think we can expect more rate cuts. We've seen three decreases this year. We have two more coming up. Inflation is coming down. Unemployment went up .2% in August. And so I do think we're going to continue to see that softening, but I don't see us kind of taking that deep dive and that sharp decline that we saw in the past. The Bank of Canada's focus is on inflation control, so I think they're going to continue monitoring that. I found it interesting the last, you know, two, three years, watching how heavily tied we are to the US as well. So for any brokers out there listening, just making sure that they're staying up to date, not just on Canada's inflation, but also the US unemployment rates and inflation as well. But I do think with that sort of decrease, we're going to see that easing of payment shock for those renewing we still have a ton of 2020, and 2021, mortgages that are coming up for renewal, and that's been really hard for a lot of Canadians to see that payment increase so much with the cost of living also increasing. And then I get excited for any of those first-time homebuyers that have sort of been waiting on the sidelines to get into the market, and I think by having those decreases, it allows that opportunity for our first time homebuyers in Canada.
Len 08:27
Yes, there's no question that the hate to say it, but they were right about having the higher qualifying rate, because everybody was upset when it came out, but it became a reality, and it's probably going to hit if actually, is going to be not enough. When you compare that if you had a 1.89% or 1.9% mortgage, you know, a couple years ago, renewing next year at four, somewhere in the four range, I'm assuming, or guessing at anyway, that's going to be double your payments, your amortization is going to have come down. So you're pretty much stuck dealing with whatever you know, what A. possibly, whatever your existing lender offers you, because trying to switch it, it's going to have to be a really good deal to make up that difference, right?
Lee-Ann 09:13
Yeah, and when we think about rates, we have to think about the context of our historical rates as well. I remember getting my first home, and, you know, it was kind of like a “start the car moment” because we were under 4% and that was a great deal. So when we think back to, you know, under 2% or 2.5%, I don't necessarily think that's realistic.
Len 09:38
No, and it's not sustainable. Obviously, profit margins become very skinny at that point, and we don't. Over the years, we have seen a few lenders have to move out of the market altogether or sell off and move we were just talking about this the other day, actually about, okay, so you know, one lender that was bought by another one that ended up being bought by another one. I won't name names, but you know, you know. And then the person I was talking to said, well, HSBC got bought by RBC. So I guess it happens on all the levels, but the profitability, you know, makes, makes the difference of lenders staying in the business, right? So.
Lee-Ann 10:18
Yeah, I think so as well. And I think you also have to consider the cost of technology and how expensive it is to continue to upgrade your systems. And so if you are a business that's acquired by another business, you get the advantage of access to their already built systems.
Len 10:36
We're seeing that in the mortgage broker side, I think, as well that that's some acquisitions that happened in the last few months, where the reason is that A. you've got to be huge these days to actually be able to develop the technology to stay up with it, or some talking about philosophy and all of the changes they made the AML stuff that we've been seeing over the last two weeks is going to be great. It's going to save everybody a lot of headaches. But you're right. It's got to be you've got to make money at it. It's a business, and everybody goes, Oh, their banks making too much money. I don’t think you want a bank to go under because they weren't making enough money, right? So it's pretty important to do as well. You know, one of the things I always admire about MCAP is that there, and you talk about it all the time, is the blue culture. So maybe in lateness on what blue culture is, and what exactly are the core values of blue culture.
Lee-Ann 11:33
So I love that we have a term blue culture to describe it, and that was actually from our marketing expert at MCAP, Karen Fogle, because she had sort of seen our culture and seen how people show up for each other and for our clients and for our broker partners. We didn't necessarily have a name for it. We just kind of did day-to-day what we knew to do. We held each other accountable. But I would say our core values are around integrity, collaboration, innovation and accountability, and a beautiful thing happens when you work alongside people that have those shared values: you're able to have those really great conversations with each other, hold each other accountable, and you're all striving for the same vision and goal, and so I've worked at other institutions. I'm very proud to work at MCAP. I'm very proud of how our teams show up for each other, but also, there's this ability to have great communication across departments, and that's something I have not seen in my past experience where oftentimes organizations get so large that there's miscommunications between departments. Or I always use the analogy of, you know, you pass the ball to someone, and then they pass it back to you, and then you've got to pass it to someone, just to find someone to help you. But at MCAP, there's just this ownership where, hey, I can help you with that. I know the person. I'll take it off your plate. We'll get it done. There's discussions and conversations about how to be better all of the time. So I'll give a great example on our sales team. We believe in criticism, and we use that word criticism. I think for a long time, it was kind of hidden, where people were scared to give it, but the truth is, you can either take it or leave it, depending on what is offered up to you. But there's this sense that we all want what's best for each other. And so if we're letting you know something, so I often use, you know, checking your blind spot for you, it's, you know, an act of caring you want that person to succeed because you understand that each person, as they become more successful, it raises everyone up around them. And so I think collaboration is key to our success as well. And collaboration comes in many forms, but oftentimes, especially at MCAP, comes in the form of brainstorming and thinking outside the box, and, you know, not being strict with the rules of what does the future look like, but dreaming really big and then getting other people on board. And I think that is the foundation of any sort of innovative solutions that we're able to come up with.
Len 14:20
That's interesting, because just one podcast I did with someone else talking about our own organization, right? So it's someone quite high up once said, Well, you run like a family. I'm going like, Well, yes and no, but the whole basis of what Brokers for Life does, and it's, it's called collaboration, right? Everybody's trying to make everybody better, and everybody helps everybody because businesses don't cross each other, right? We all know lots of people, but, you know, it doesn't seem, after 17 years, we really haven't seen that happen, right? Very seldom.
Lee-Ann 15:00
Yeah, I think there's a difference between being competitive with each other and then actually understanding that you benefit from sharing your success and sharing your processes in order to make the entire broker industry stronger.
Len 15:14
And some of the fun things you have done, I hand out the format for putting your notes into the the deal to every new agent. Start here. Here's a guideline. This came from MCAP. It's been here, I don't know what, two, three years now, right? But it's just so much easier than me trying to say, Okay, well, tell them about this, you know. And the other part, of course, is that is, what are the issues? Figure that out before you send the deal in. So we know, right? And we can deal with them upfront if there are any. But it's good to hear that within management, I've worked for some huge companies, Brookfield being one of them, at one time, it was probably the worst cutthroat organization I've ever worked in. I'm going to name names in this one. They can't sue me anymore. You know, it to have that within yourselves where you can say that doesn't make any sense, we shouldn't be doing that and not have everybody lose their minds. It is pretty a unique situation. All of that is nice and warm and fuzzy. There's always lots of changes. Not everybody agrees with them, but you know, the industry keeps evolving, regardless of how it looks. But they become MCAP as a group has become so big, including RMG, which they had already, but then Merricks now, and all the Paradigm. So lots of changes within that has, I see some of the technology has flowed over, which is great, and is that part of their long-term vision, I guess, is to expand that so that everybody kind of looks the same. You know, my opinion on that already, but it's kind of good to see that they were able to do that and mesh those organizations together because they were all quite large at one time, right?
Lee-Ann 16:58
Well and I think it's great you need to be part of a multi-brand strategy, where there are sort of different companies underneath the umbrella. It allows for also different cultures for the employees, and also different partnerships with those brokers under each one. When it comes to systems and technology, that's what we were kind of talking about: how expensive it truly is. And so if you're able to build something that more than one brand can benefit from, that's where you're going to start to see, you know, the portals look the same. Maybe they're a different colour, but it's because they were built knowing that it had the capacity, it had the security, and it had the functionality. So we're really proud of our broker portal. So many people have worked on that for many years. And one thing I really do appreciate about MCAP is before we really launch anything, we take into account our broker feedback, so whether that's sort of running pilot programs with a select group of brokers so we can get the feedback and make changes before we go to a full launch, but other organizations I've worked for in the past, it's kind of like they put something out there and, you know, they don't want to hear any feedback, and they don't want to make any changes, and that's just not the right way to build a partnership with people.
Len 18:13
Again, goes back to the blue culture, right? That it expands beyond MCAP itself. It's also float over into the broker world as well, which is very cool to see. Technology was a good segue there because, of course, lots of different changes. I do remember talking to Megan at one time and saying that she was inundated with people wanting to their technology, to be attached to MCAP or to your portals and stuff like that. The big banks are very hesitant to do that. Scotiabank will never do that because they just don't want anybody attached to their system. I can understand that, I guess. Technology like Velocity. So, how much has that changed the underwriting side of it? I guess is that easier for the underwriters? I know they have to turn a corner there, where instead of me loading them up, I'm just now clicking buttons and sending it all at one time. You probably remember it one time where we used to fax everything. It's kind of the same thing, except I'm doing it electronically now, right? How has the underwriting side managed that change? Or are they managing that change? I guess?
Lee-Ann 19:18
Yeah. I guess this is where I get excited about where the future is heading because we have seen so much change in such a short amount of time. So I remember when I first started in the broker industry, it was emailing documentation, which was an absolute nightmare. If you were following up and saying, Hey, did you get this page, did you get this? Was the attachment too big? Was I missing a page? And so I find having the portals, especially direct connected, it is allowing for an easier flow of that information to get to our underwriting system. But I always think about the security of Canadians as well. So you're no longer emailing you should never be emailing that personal and sensitive documentation. It's just not a safe way to get us the information anymore. And I also like that there's programs where it kind of does the PDF converting for you. Gone are the days where, you know, we have to piece together 50 JPEGs into a PDF. So I think it's also easier for clients, they know that their documents are going to be safe. Cybersecurity is something that we should all be diligent about, especially when we take a look at our processes or the systems that we're using.
Len 20:31
Yeah, and Velocity, I've been preaching this one for a while. I finally got the whole team over there. We've been there for over a year now, but it was like, you send out the client experience. It gives them a list of documents to upload, whether they upload them or not. That that's always the issue, but there, everybody's getting a little better at that. It comes into the system. We can review it, you know, we can open them up within the cloud that they're in and check them over. Of course, we implement it fast key, a little bit ahead of Velocity, actually. So we're going to be using that again for NOAs because, you know, the government forms seem to be the easiest to manufacture. That's going to the new Velocity kick will be that the ID verification is built right in as well. So another step that's going to be automatic, and of course, bank statements, is already included in part of that, as we get the 90 days direct from the bank through Flinks, right? So, there really is a point where, once everybody gets their head wrapped around it, I think that you can have a complete check through file. Never print one copy, never email one copy of anything anywhere, and do it directly from to the portals for the lenders that are on board with that already, and it really makes us, makes me very happy, because we do audits. Of course, I was checking where the documents are and stuff like that, but it's that much more secure for the everyday client you know, to send me his NOAs is, you know, I don't want that, we'll get that for you. We'll get it in a secure manner and not have it ever show up in your email. So that's huge, right?
Lee-Ann 22:12
Well, and I think just the ease for clients to be able to use a portal, take a picture, upload it, and I also think for brokers, I love that you said you open them up and review them before you send them to the lender. That's a huge thing.
Len 22:26
I hope my whole team is doing that.
Lee-Ann 22:32
That was one concern I did have with that direct connection where, oh no, are they just going to press the button and send it to us? Because oftentimes, that's what causes the delay if you don't review them, and then we have a question, and then we're waiting for you to get back to us. So the review part is so important. But as you said, with the 90-day history of accounts, we're going to see that tighten even more when it comes to anti-money laundering regulations, and FINTRAC now getting evolved where there needs to be that confirmed flow of where has that money gone? And I think down payment is one of the hardest things to satisfy, depending on the client that you're working with. But what I find is clients love to move their money around.
Len 23:16
Some days, I just go like, Why? Why do you have seven bank accounts? What? What do really need in seven bank accounts? And it's always, and it's funny, because we just always, through the trainings, we work with our new agents for quite a while. Actually, we work with them their whole lifetime that they're here. But it's like to the point in some of them, I said, just spread them out. Come in the office. We'll have to print these, unfortunately, but we got to be able to circle where this dollar went from this count, and the woman literally had nine accounts. And it was like, I don't get it, millions of dollars might be a different difference, but, you know, the average bank account didn't probably have much more than, you know, five or $10,000 in it. So it made it to the point where, when lenders now look at that, because we're coming, everyone's becoming, although you guys are already aware of anti-money laundering, it's taken it to another level, where you know the one person looking at that as an underwriter might say this, no, we can't track it. We don't know where any of this money went, unless you're going to sit down and circle and date and cross reference everything. It's going to be; it's going to be tough and pulling seven bank accounts through Flinks that don't think that works either, right? So unless they're all the same bank, you get different cards for different accounts and stuff. So it'll be interesting. Security is key for us as well, right? There's no question already zero paper anywhere, but, you know, it's all stored within Velocity, that the other part of it, Velocity, is the final home for that as well, where we don't have to move those documents to another storage area.
Lee-Ann 24:53
Which is fantastic, because I remember back in the day when I worked from home doing mortgages, and you know, that is when you printed out paper, and I always found it so concerning that no one was checking on me to see if I was shredding properly. So, you know, there was probably so much data out there from other people not following the rules and getting that secure company to come and shred that documentation. And it's very sensitive data you have, you know, ID, all of their employment history, sometimes credit bureau. So, it's really important to keep that secure.
Len 25:29
Yeah, and, you know, the craziest one is, is a T4, you don't think about them. And talking with an agent the other day, said, well, I said, don't do that. Social Insurance numbers on it, your income was on it, their home address is on it, even more so than a Notice of Assessment, because the number and notice of assessment 15,000 or whatever the number is, now that combines everything for the year, but it doesn't actually break out total income, right? So, it's always interesting to watch how that the technology has moved us that farther down the line that you know there, there's talk of what will become a verified application through Velocity because we can also verify the property information through Opta, which is what the insurance guys use if you have bank accounts, if you have NOAs, if you have the identification verified, if you have everything else that goes in that file, you know, checked off before it ever goes to the lenders, then that's a huge step to, you know, to take us to another level. It was. Actually, I think it was about 2008 or nine, when we had to actually store everything, start to store everything electronically. So what was that? Somewhere between eight and nine, and I remember being in Fort McMurray doing 40 millions a year, documents, folders, boxes of them, because you had to store them somewhere. So I spent my entire Christmas holiday from almost the middle of December till January 1, shredding, scanning and shredding documents, right to the point that I burned out a shredder between Christmas and New Year. I think that was Boxing Day. It was on sale. Technology long way over the last well, you know, actually, really, that last five years has been the biggest change, right? And moves that quickly as well. So don't think we'll ask you what kind of training you would be, but that was very good. I got to thank you for your time today. I know you're a busy woman and have lots of cats to corral, so I really do appreciate you taking the time out to do this today.
Lee-Ann 27:38
I appreciate you Len, and I appreciate you having a platform to spread some awareness and education to brokers and consumers that are out there. I think right now, there is an overload of information that's available to people, and it's more confusing than ever. And so, you know, setting yourself up to be that expert to call on for either yourself or your team is really important.
Len 28:02
Appreciate it. Have a great rest of your day.
Lee-Ann 28:04
You too. Thanks. Len.
Len 28:06
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.