Bank “mortgage specialist” tells lies about mortgage brokers

Below is the short version of a mortgage broker insider tsunami. A RBC mortgage specialist wrote and handed out a sheet of complete lies about how mortgage brokers work and what we do. She, and RBC, are in a very tight spot as we all knew that non-brokers spread lies as their only way to compete.

The best way to sum up what we really think is this reply taken from the internal comment board of the Canadian Mortgage Broker website:

ExRBC Mortgage Specialist on 19 Apr 2011 11:41 PM

Most so called RBC mortgage specialists have little in the way of any credit training, if any. They usually come from the ranks of side counter staff who are well known for their lack of knowledge. RBC Mortgage specialists have no ongoing training requirements unlike the AMP’s, and they certainly have no Ethical training.

There is an old saying in sales:”Only show what you know”. In this case (she) shows that she knows next to nothing about credit, her market or her competition.

She might as well have said: “If you want the best rate , go to a broker.”

I see this a great platform for mortgage professionals to have excellent conversations with clients and referral sources about the difference between us and the bank! There is no doubt about the advantages of using a broker, and I welcome this opportunity to talk about it!

RBC to brokers: We apologize

By Vernon Clement Jones | 19/04/2011 9:36:00 AM | 31 comments

Click here to find out more!

With multiple statements, RBC moved to distance itself from the controversial flyer of one of its mobile mortgage specialists – apologizing for its unflattering and inaccurate depiction of brokers.

“The RBC brand is defined by our clients and partners and we sincerely apologize for the inaccurate information that was presented in the document,” wrote RBC Public Affairs Advisor Nicole Fisher, in a letter to broker associations in Western Canada.
The bank was offering the same message in the east, with Ian Colvin, RBC’s senior manager for communications in British Columbia, telling Monday, “The opinions expressed in the document by the mortgage specialist do not reflect the positions, strategies or opinions of RBC. We are following up directly with this mortgage specialist to ensure future collateral accurately reflects the RBC brand.”
The crisis communication follows leak of a document written by an RBC mobile mortgage specialist in BC and trading in stereotypes about the broker channel. The flyer, in fact, purports to highlight the educational, philosophical and operational differences between brokers and bank-employed mortgage specialists. It effectively casts the former in a negative light.
“Brokers will charge set up fees and have other hidden costs you should be aware of,” reads the undated document  — “Understanding the difference between mortgage specialists and mortgage brokers.” An RBC logo and the name of one of its British Columbia mortgage specialists appear on the flyer.
It continues: “Brokers will farm out your mortgage to a number of companies and then will set you up with a financial institution based on only the lowest rate, no other factors.” And, it continues: “When selling your mortgage, the broker and the financial institutions reviewing your file may pull numerous credit bureau requests depending on their software capabilities.”
The RBC comments follow on the heels of a article exposing the document. Earlier attempts to win a comment from the bank and the author of the flyer were unsuccessful. RBC’s statements do not address what if any disciplinary steps against the mortgage specialist have been taken. Many brokers are now calling for formal censure.
“Let’s hope they do the right thing and remove this lady from their ranks,” wrote one broker commenting on the initial article Monday.
Still, others are concerned her attitudes may reflect the long-standing corporate philosophy RBC — the only big bank in this country that has never used external brokers.
“We are almost grateful that this has been put in writing because this is stuff that has been verbalized for years,” veteran B.C. broker John Ribalkin, president of Verico Nova Fiuancial Services and a CAAMP Hall of Fame recipient. “I’ve never minded competition as long as all parties maintain a fair and equitable level. The marketplace does not need demeaning comments from one party to another.”

Occupied downtown Calgary office space at 2008 level

This is great news for the housing market as all those workers are moving into Calgary and will need places to live. There are details of the increasing need for housing in my free reports and most of these people will need a Calgary mortgage broker.

Large blocks of space short in supply

CALGARY — Occupied office space in downtown Calgary has surpassed the level reached during the height of the real estate market in the second quarter of 2008.

A report by Colliers International says that occupied space has reached 33.7 million square feet in the first quarter of this year.

The overall vacancy rate declined one percentage point to 10.92 per cent which equated to about 393,000 square feet of positive absorption in the first three months of 2011.

“Much like in the latter half of 2010, oilsands companies continued to grow, with numerous new projects on the horizon creating additional office space requirements,” said the report. “Most of the activity can be attributed to the strong oil prices and resultant higher levels of activity in the sector.”

The recently-completed Eighth Avenue Place office tower absorbed 50,000 square feet last quarter. It is currently 88 per cent leased.

Development of the 49-storey, 1.1 million-square-foot EAP began totally on speculation with no leasing deals in place.

“With oil trading above $100 a barrel, leasing activity in the Calgary downtown office market is expected to remain strong throughout 2011,” said Colliers. “As more companies take on additional projects, the highly active oil sector will continue to recapture most of the jobs lost during the recessionary period.

“As employment increases, vacancy numbers will continue to decline. Good quality space is leasing quickly in the current market, as shown by the strong absorption numbers for the upper classes of office buildings … Large contiguous blocks of vacancy in all classes of buildings have become short in supply.”

Meanwhile, the Calgary Board of Education has officially put the downtown Education Centre building up for sale. The building at 515 Macleod Trail S.E. has been put for sale by public tender with a minimum bid price of $40 million.

The five-storey building is close to 91,000 square feet on 1.08 hectares of land.

“The final bid and sale price will ultimately be determined by prevailing market conditions,” said the CBE.

The board said the Armengol sculptures, commonly known as the Family of Man statues, are not within the scope of the sale. The future of the sculptures will be determined by the City of Calgary, the sculpture’s owners.

The offer for sale by tender will expire May 4.

The CBE said the building will be vacant by June this year as staff moves into the new Education Centre at 1221 8th St. S.W.

© Copyright (c) The Calgary Herald

The ‘thrill’ of buying a house

You walk into the open house, take one look and say to yourself: This is it. It’s the house I have to live in. Where do I pay? A bidding war? I’m in.

Over my years of buying houses, I never bought one that did not have that frisson moment, that thrill of finding a place so suited to my wants. Indeed, I have in the past decided that I wanted to buy a house in what seems, in retrospect, to be nanoseconds. (By contrast, I’ve taken weeks to decide on the right pair of shoes.)

It is no way to make an “investment,” to be sure. But, as I’ve previously discussed in this space, buying a house is perhaps the most uninvestment-like of investments.

Just about anyone who’s purchased a property or thought about purchasing knows that it is much about gut-feel, in which the senses can conspire to trump sense.

Now, as the major real estate selling season gets under way, along comes a survey commissioned by BMO Bank of Montreal to give statistical weight to the notion that intuition carries a particularly heavy weight in the house-buying process.

The survey by Leger Marketing found that more than two-thirds of Canadians cited a “good feeling” toward the property as a reason to buy. Meantime, though, good sense is not thrown out of that gorgeous bay window and into those manicured flower beds. More than 90% of house-hunters value affordability and location over resale value.

So, the axiom that there are three important things in real estate – location, location and location – might reasonably be replaced by the Three Ps: Price, place and personality.

Nevertheless, that resale value is not a big concern to these surveyed house-hunters – people between 25 and 45 who plan to buy a home within two years – is a telling sign of the real estate times.

With some dips here and there, Canadian house prices have been rising strongly for more than a decade. Indeed, even the recession created just a downward blip in the chart of ever-growing values, with the average national price rising 8.9% last month from the previous March (but just 4.3% excluding Vancouver).

As a result, most of the house-hunters surveyed might never have been aware of a housing market that was not rising. I suspect many in this 25-to-45 demographic believe house prices basically keep going up forever, that though they downplay resale value in the survey, the expectation for solid gains is, well, a given. (Any significant drop in prices would surely shake that belief.)

In recent times, investors have been asked if they are stocks or bonds. If you’re a stock, you are prepared to take on more investment risk. If you’re a bond, you are not.

Perhaps, though, many people are probably houses when it comes to investing. A home is both partly a stock and a bond – and somehow neither.

It is a bond because over the long term it will likely produce modest returns through the enforced savings required by paying down the mortgage. It is a stock because the gains could be outsized if the investor were to buy and sell at propitious entry and exit points for market-timing gains.

And it is neither because it is an “investment” with many moving parts and frictional costs. You don’t live in a stock or a bond, but when the house leaks, it costs money and cuts into the investment. Meantime, the costs associated with buying and selling a property are becoming more daunting in many jurisdictions, with some observers reckoning that a house is often a mediocre investment at best.

But most young first-time buyers and mover-uppers are not fazed by such commentary. Home ownership is a cornerstone of our culture, with 70% of the population owning properties and many of the other 30% looking to join the majority.

And the real estate industry has become far more adept at marketing and selling than in the days decades ago when I was in the market. Today, houses are often professionally “staged” to produce that frisson moment. Prices are sometimes set artificially low to produce that exciting bidding war and that extra frisson of “winning.”

A house, it is said, is not a home. And a home is not strictly an investment. But does a stock have granite counters? Does a bond have stainless steel appliances?

Financial Post

Experts best at brokering mortgage

Denise Deveau, Postmedia News · Mar. 30, 2011 | Last Updated: Mar. 30, 2011 4:04 AM ET

Cheryl Hutton and Aaron Coates always thought getting a mortgage would be a challenge. But within 18 days of visiting a mortgage broker, they were able to close a deal on a new townhouse in Calgary without a hitch.

Now in their early thirties, both have careers in the theatre, something Ms. Hutton says has been a bit of a sticking point with banks. “In our industry we never fit the paperwork guidelines ‘for the banks.’ For some reason, people don’t think we pay our bills.”

Although it was their first home purchase, Ms. Hutton says it was surprising how easy the whole process was once they had someone who could walk them through it. “He sat us down, told us what our options were, showed us that it was possible and explained all the steps we needed to take. If it wasn’t for him, we may not have made the leap.”

Sorting through a mortgage process and negotiating rates can be overwhelming for firsttime and seasoned home buyers alike. That’s why people such as Ms. Hutton and Mr. Coates turn to brokers to do the legwork for them.

Yet mortgage brokers will tell you that a good portion of home buyers out there don’t really understand what they do. “Part of the challenge we have in our world is that people aren’t really sure what a mortgage broker is,” says Gary Siegle, regional manager for Invis Inc., a mortgage brokerage firm in Calgary.

Brokers should not be confused with “rovers,” mortgage specialists attached to a specific financial institution who visit customers outside of banking hours, Mr. Siegle explains.

“They only deal with that bank’s product. A broker, however, is an intermediary whose job is to make a match between a lender and a borrower. We represent the individual, not the bank.”

About 30% of mortgages in Canada are done through a broker, according to Perry Quinton, vicepresident, marketing, for Investor Education Fund, a Toronto-based non-profit financial information service.

“The reason more people don’t know about them is because the banks are so visible. It’s easy to gravitate to them when you have your savings accounts, credit cards and investments there already,” Ms. Quinton says.

Going for the comfort factor could cost you however, she adds. “A broker has access to different lenders including banks, and can shop rates and features. A halfper-cent may not sound like much but that could make a difference of about $20,000 for a $250,000 mortgage amortized over 25 years. Any little bit helps.”

Mr. Siegle confirms that shopping around can deliver significant savings.

“Let’s take today’s average posted rate of 5.44%, and you get a point off that at your bank. So you think you just got a really great deal. But the vast majority of rates we deal with as brokers would be another 30 basis points lower -around 4.14%. And if you look at preferred deals that don’t offer features such as prepayment privileges, it can get as low as 3.89%. That’s another 25 basis points below what’s generally available.”

The reason for that is simple, he says. “We offer wholesale rates, banks offer retail.”

For anyone considering a broker, Ms. Quinton advises people to do a bit of groundwork first if they have the time.

“It helps to educate yourself about options and what you can afford. Look at all your living expenses, including student loans and credit card debt. Chances are you are understating those.”

Another thing to look into is the different types of available mortgages and features, including interest rates, payment frequency, amortization, cash-back programs and the ability to make lump sum payments.

“Knowing these things before you go in can save you a lot of money,” she adds.

Any mortgage broker you choose should always meet the right licensing and education requirements, so be sure to check their registration.

If you’re not completely prepared, however, that shouldn’t be a concern when working with a good mortgage broker, Mr. Siegle says.

“After all, mortgages are pretty much all we do. So even if you come in cold, good brokers will walk you through the process and ask all sorts of questions,” Mr. Siegle notes.

“You just need to be prepared to answer them openly and honestly so they can get you the best deal possible.

Beware sales pitch behind banks’ advice

Remember that banks are not your friends, they want you money.

Thursday, April 07, 2011

Whatever your branch recommends, do your homework. Remember that banks are essentially sales operationsROB CARRICK

Friendly faces in a depersonalized, online world – that’s your local bank branch for you.

Branch staff are glad to talk about your financial situation, be it debt, saving or investing. They’re also eager to sell you stuff, so it’s important to know how to talk to bankers before you go in.

Online banking is flourishing in Canada, as well it should because it’s cheap and convenient. But there’s a back-to-the-branches theme to a lot of what the big banks are doing today. There are now 300 TD Canada Trust branches open Sunday. Bank of Montreal is installing free coin-counting machines in its branches to draw people in. Canadian Imperial Bank of Commerce has just begun a marketing campaign that talks up CIBC as the place to go for financial advice.

Bank branches today are much less places to cash cheques and pay bills than they are sales centres for mutual funds, mortgages and lines of credit. Just recently, CIBC said consumer lending is the main driver of its growth plans.

One way to lend more is to attract new clients, something CIBC is trying to do through its Switch campaign. The basic idea is for people who deal with other banks to come over to CIBC for what it described in a news release as “expertise, advice and innovation.”

This represents a new phase in bank strategy. It’s no longer “come into our branches for advice,” but “our branches give better advice than their branches.”

I asked people in my Facebook community ( how much they rely on banks for advice and the response was on the whole quite anti-bank. But there’s a point here that may have been missed. People are becoming increasingly aware that they need to cut debt and save more, but lots don’t know how to do it. Banks can help.

Go get that help if you need it, but don’t go in uninformed.

First, you have to understand that banks are essentially sales operations. We have lifelong relationships with our banks, we share private details with them and we sometimes depend on them in moments of stress or hardship. But banks place service to clients in the context of generating revenue and profit for shareholders.

You may hear the word adviser used in the branch, but that’s just a euphemism for salesperson in most cases. Some branches now include people with serious financial planning credentials such as Certified Financial Planner (CFP) or Personal Financial Planner (PFP), but even they’re subject to work rules that suggest it’s all about the sale, not the advice.

Beware of bank products that are highly packaged rather than straightforward. Wrap products are a great example. The banks are selling these prefab bundles of mutual funds like crazy today and it’s not because they’re better than building your own portfolio by selecting individual funds. Rather, it’s because wraps often result in a higher-fee mix of funds than having a customer choose funds individually.

Bank mutual fund families include some top-notch products, so don’t dismiss them. But be wary if you notice a conversation with your banker turning into a sales pitch to buy in-house funds. Be aware that you can open up an account with your bank’s online brokerage division and buy any company’s mutual funds, as well as lower-cost exchange-traded funds, stocks, bonds and term deposits with higher rates from other banks.

Whatever your bank recommends you buy or do, ask for hard numbers to document any advantage to you. Then, ask to have the same analysis applied to alternative approaches. When you’re done talking, go home and do your own research. Be sure the rates your bank is offering for both savings and borrowing are competitive.

Why see a bank at all for help with financial matters? One reason, frankly, is that going to a bank for advice is better than living in a state of uncertainty and inaction. Yes, it would be ideal if everyone who wanted advice used an independent financial planner or investment adviser, but that’s just not happening. If the familiarity of a bank branch makes someone comfortable enough to ask for help, so be it.

It’s also worth noting that the best way for banks to sell products is to keep customers and build relationships. Self-interested sales pitches disguised as advice are relationship killers.



Tips for those seeking financial help from their bank:

1. Receiving advice of any sort does not mean you have to settle for less than ideal rates on borrowing and saving products.

2. Use the vast resources of the Internet to double-check the rates and advice your bank offers.

3. If it’s all about buying the bank’s mutual funds, flee (unless you specifically came in to buy funds).

4. Get in writing whatever your bank is offering you.

5. Be open-minded enough to recognize that you can get good advice from a banker.

Real estate: A ‘secret’ tax shelter

By Jason Heath

TFSAs have been a welcome addition to the tax shelter landscape in Canada, but they leave something to be desired for those with substantial assets and maxed out RRSP and TFSA room.

Film limited partnerships have disappeared, charitable donation tax shelters were flawed from the start and the investment tax credit for flow-through shares may or may not be extended in the next budget.

Real estate is often overlooked in the quest for tax reduction and deferral, let alone income generation and inflation protection. If real estate is all of these things, why doesn’t everyone own a rental property? The answer is simple – money.

It’s not that investors don’t have the money to get into the rental property market, because this can be easily accomplished with leverage and minimal monthly carrying costs. The problem is there is simply no money to be made by financial professionals when it comes to rental real estate. The result is that rental real estate is a secret tax shelter that few people ever consider.

Investment advisors sell stocks, bonds and mutual funds. Insurance agents sell insurance policies. Accountants sell tax preparation services. Real estate agents sell real estate, but they tend to sell real estate from a vendor to a purchaser to be used solely as a principle residence.

So rental real estate ends up being a golden goose, elusive, yet attractive.

According to Harvard professor Niall Ferguson in The Ascent of Money, “The original property game we know today as Monopoly was actually invented back in 1903 to expose the unfairness of a social system where a small minority of landlords [took advantage of] the majority of tenants.

“What the game of Monopoly tells us, contrary to its inventor’s intentions, is that it’s smart to own property.”

First, a lesson in rental real estate taxation. Rental income is taxable and rental expenses, including mortgage or line of credit interest, are tax-deductible. In many cases, if a property is financed, it will run at a loss for tax purposes creating a tax deduction against all other sources of income and therefore, a tax refund. In the meantime, real estate values grow tax-deferred until an eventual sale. Even if a property runs at positive cash flow for tax purposes, depreciation can be claimed to wipe out some or all of the taxable income inclusion.

Rental real estate has been described by some as the equivalent of a super-charged RRSP. What is a traditional RRSP? It’s a tax-deferred savings vehicle; contributions are tax-deductible; it provides a future income stream; and it’s an investment asset. Rental real estate incorporates all of these features, plus there’s no pre-determined maximum tax deduction limit like with RRSPs; withdrawals aren’t forced at age 71 like with RRIFs; contributions can be financed and the interest can be deducted, unlike RRSP loans; and the taxes paid on selling a rental property are at the 50% capital gains tax rate, unlike RRSP withdrawals which are fully taxable.

The Harvard and Yale endowment funds have more than 50% of their assets invested in non-traditional asset classes, like real estate. The Ontario Teacher’s Pension Plan, the largest single-profession pension plan in Canada, has 18% of their pension assets invested in real estate. Maybe Harvard, Yale and the OTTP know something the mainstream investment community doesn’t know.

Jason Heath is a fee-only Certified Financial Planner (CFP) for E.E.S. Financial Services Ltd. in Markham, Ontario.

Canada in middle of growth spurt, to lead G7 in first half of 2011: OECD

Canada is like the average student in the poor class, not the brilliant student in an average class. But, as Charlie Sheen says, “winning!”

By The Associated Press

OTTAWA – A leading international think-tank says Canada will lead its peers in the G7 in economic growth during the first half of this year. The Organization for Economic Co-operation and Development says the outlook for economic growth has brightened for all G7 countries, with the exception of Japan .

But the improvement has been most marked in Canada and to a lesser extent the United States.

“The outlook for growth today looks significantly better than it looked a few months back,” OECD chief economist Pier Carlo Padoan said in a statement.

“Growth perspectives are higher all across the OECD area, and the recovery is becoming self-sustained, which means there will be less need for fiscal or monetary policy support.”

Canada is now expected to grow by 5.2 per cent in the first quarter of 2011, and 3.8 per cent in the current second quarter.

Much of that growth has come from the resources sector in Western Canada and continued strength in the housing market in most parts of the country.

Germany is the next strongest economy, with growth rates of 3.7 and 2.3 per cent in the two quarters.

Overall, the Paris-based organization says the G7 economies excluding Japan are set to grow at an annual rate of about three per cent in the first half of 2011, well above the organization’s previous forecast.

The growth estimates given by the OECD are the middle of a range, meaning the rates could be slightly lower or higher.

The new forecasts exclude Japan because of the uncertainty over the full cost of damage from last month’s earthquake, tsunami and nuclear disaster.

The Canadian economy began the year with an impressive 0.5 per cent expansion in January that has set the stage for the strongest quarter in a year, according to Statistics Canada.

The performance was in line with market projections, but still was a mild surprise because many economists had worried of a possible payback after December’s equally robust 0.5 per cent gain in gross domestic product.

The strong back-to-back months put the economy on pace to grow by as much as 4.5 per cent in the first three months of the year, analysts have said. That’s two whole points more than the Bank of Canada’s now-dated estimate. At that growth rate, the pace of job creation should be high enough to continue pushing down the national unemployment rate, currently 7.8 per cent.

In the last year, the Canadian economy has created 322,000 jobs and has rebounded nicely from the 2008-2009 recession that battered the country’s manufacturing sector.

In some sectors of the economy, price pressures have been building, raising the prospect of higher interest rates down the road to fight inflationary pressures.

The next scheduled announcement on interest rates from the Bank of Canada is April 12, although the central bank isn’t expected to change its policy rate at that time from the current one per cent. Another announcement is scheduled for May 31, after the federal election.

Most economists believe Bank of Canada governor Mark Carney will leave a hike on the sidelines until July

Alberta’s raw materials will fuel small real estate boom

Comment – this is what caused the inital boom – high inter-province relocations to Calgary. Why? Do you know that Ft. Mac has the world’s largest oil reserves that are not government owned!

Kevin Usselman

The world wants what Alberta has an abundance of; namely energy, food, fertilizer and lumber.

Cutting Edge Research President Don Campbell has been tracking Canadian real estate for 19 years and he says the province is in a good position to cash in.

Campbell says vacancy rates are again on the decline while job creation numbers are on the rise.

He says Alberta’s economy is going to act like a magnet in the next 18 to 24 months and people need places to live.

Subsequently, Campbell has a rather bullish economic and housing forecast for the province and for Calgary in particular.

He doesn’t believe Calgarians are going to see another housing boom like the one experienced back in 2006-2007, but thinks sales and prices could rise anywhere from seven to 12 per cent by 2013.

Campbell is also glad to see the city moving forward with major transportation projects like the west leg of the LRT, although he’s disappointed more efforts aren’t being made to address the secondary suite issue.