To The Pointwith Boris Bozic
Commentary, Opinions, Thoughts and Discussion on Current Events, Politics and The Mortgage Industry

0 Comments Candidly Speaking (Part 1)

Article written by Boris Bozic on the 05 Jul 2011 in Canada,Mortgage

“…it’s all fun and games until someone loses an eye…”

I recently had an opportunity to participate in a lender panel discussion. I would like to thank Colin Dreyer and John Kelly of VERICO for graciously inviting me to participate, (VERICO Business Forum in Las Vegas) and for providing and open forum to discuss industry issues. I was struck by the candor of all the panelist’s but I guess I shouldn’t be surprised because leadership requires facing difficult questions, and having an answer. The panel was made up of industry leaders and kudos go out to Moe Forget, Tim Mezik, Jim Smith, Paul Grewal, Hali Standlund, Ron Swift and Mark Squire. Ducking difficult questions and preparing sanitized responses is the easy way out, and no one on the panel took the safe route.

I enjoyed listening to the responses of the other panelist’s. For example, Tim Mezik, Ron Swift and Jim Smith were asked if there respective institutions would ever consider offering trailer fees as a form of compensation. Tim Mezik, and Ron Swift responded respectively by saying maybe and possibly. Jim Smith, in no uncertain terms, said “no”. His position is understandable when you consider that banks are in the customer acquisition business. Therefore, they do not see the need to perpetually pay for a customer that they have already purchased. On the other hand, we at MERIX have a different philosophical viewpoint. We try to balance the need of our enterprise, combined with the needs of our suppliers, the mortgage broker. I believe there is room for both models, and choice in the market place is critical.

I was asked two specific questions about our industry. Firstly, do I believe there’s a level playing field today. Secondly, what is one thing that a lender can do today to ensure long term sustainability, and what can mortgage brokers do in kind.

With respect to a level playing field, do I believe that it actually exists?  Today I can state unequivocally the answer is “no”. Anyone who would suggest otherwise would at the very least be disingenuous. At the very worst they would be insulting everyone’s intelligence. Here are some examples of why a level playing field does not exist today:

  • IFRS accounting rules are being implemented this year. Without getting into the specifics, the amount of capital which has to be set aside relative to the funding of mortgages is increasing. Let me ask you this simple question, which entity do you believe is in a better position to deal with capital issues, a bank or a mono-line? Answer, big advantage for the oligopoly.
  • Resource allocation, including marketing budgets, is another huge advantage that banks have over mono-lines. These expenses are factored into the entire bank’s expense line. Therefore, their marketing budgets, and their cost to schmooze brokers, is pocket change for them.
  • The CMB allocation is another huge factor in the bank’s favour. Why? Because the banks have access to a balance sheet as well as the CMB. The mono-line’s today are faced with a finite number relative to volumes. The banks on the other hand can fund as much as they have an appetite for. They may be satisfied to fund a finite dollar amount due to margins and market share, but that’s their choice, and they can make that choice based on their business needs. Today, the mono-lines do not have that luxury.

All this being I said, I say the following: boohoo…

I don’t expect anyone to shed any 20110704-083031.jpgcrocodile tears for the mono-lines. That’s life, that’s business. As matter of fact many of the challenges we face today are no different than what we at MERIX faced when we launched our business close to seven years ago. We are the guppies swimming amongst the whales, and that hasn’t changed since day one. Frankly, I don’t mind that one bit. All it means is that we have to work harder, be smarter and fight tooth and nail for every market share percentage point. This is the classic story of David and Goliath. It’s not easy going to a gun fight with slingshot and a rock, but it’s the terms of battle we embrace. As my mother would want to say, “it’s all fun and games until someone loses an eye”. We at MERIX plan on having 20/20 vision for a long time to come.

I’ll address the second question in Thursday’s blog.

Until next time.



Subscribe to these comments

Wayne Campbell, AMP Website Reply

I couldn’t agree more!

We’re streetfighters; we eat what we kill.

July 07 2011 15:43 pm Boris Bozic Website

Hi Wayne, thank you for taking the time to comment on my blog.
The eat what you kill mentality has to change, but given that mortgage brokers are such great street fighters, will find a way.


Peter Puzzo, AMP Website Reply

I truly enjoy reading your “to the point” blogs. Keep up the good work and you can expect my continued support.

July 07 2011 15:42 pm Boris Bozic Website

Hello Peter, it’s nice to hear from you. I’m having fun blogging. It’s a great way to stay connected with our supporters.
Thanks so much for your support and if I can be of any assistance don’t hesitate to contact me.


Al Cardenas Reply

Hi Boris,

Your blog is great. I’m a Merix customer and I think that being able to have a direct channel to the insights of the head of your largest creditor quite unique. I just want to add that using a broker was the best decision we ever made.

July 12 2011 09:52 am Boris Bozic Website

Hello Al,
Thank you so much for the kind words. The blogging world is a new experience for me but must admit I'm enjoying the experience.
If I can be of any assistance in the future feel free to contact me directly. My email address is boris.bozic@merix

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