Or is it? The U.S. November job report indicated that over 200k jobs were added to the work force, their dollar is soaring, the unemployment rate has been cut almost in half to where it stood in 2008, so what’s not to be giddy about? Well, there is data to support that consumer spending, housing starts, and job creation have flattened. So the question is what happens if their economy has flattened, while at the same time the overnight lending rate is going up? Some pundits are actually suggesting that raising the rates now gives the Fed some wiggle room if they have to lower rate, yet again, to stimulate the economy. It’s not as if this hasn’t happened before.  Like back in 1930′s, a rate hike, followed by a quick rate drop, all the while knee deep in the Great Depression. Yeah – that little historical nuisance.

So what does the Fed’s move to increase rates mean for us here in Canada? For the time being, not much. We normally walk in lockstep with the U.S. Fed, but we’re about to decouple from that standard practice, and continue on the path we are on today. The reality is that our economy is still too fragile to mimic the Fed’s move. The oil sector in this country has been hammered, and the fallout has been far reaching. Some are suggesting that oil could hit a low of $20 USD a barrel by March. The natural instinct is to scuff at such a suggestion, in the same fashion it was to scuff at the suggestion that oil would be $40 USD, when it was selling for well over $100 USD, a few short years ago. Today, the price of oil is $37 USD. The many variables which impact mortgage rates, cost of funds etc., means we might see an uptick in mortgage rates, but it’s still cheap money, and that cheap money will be available for the foreseeable future.  As we all know that poses a whole other set of challenges, like tightening mortgage rules to curtail borrowing. There’s always a yang to the ying.

For the time being Americans get to say that the worst is behind them, and that they are healed and can move on. They can put the ravages of the sub-prime mortgage crisis, and the near collapse of the global economy, caused by them, in the rear view mirror. For the rest of the world? More time and recovery will be needed before a deep breath can be taken.

I find it somewhat ironic that in the same month that the U.S. Fed will raise the overnight lending rate, a movie is being released about the sub-prime mortgage crisis. The movie The Big Short hits theatres today. The movie is based on a book, The Big Short, which hit the shelves back in 2011. The movie’s cast is rather impressive: Christian Bale, Ryan Gosling, Brad Pitt, Steve Carrel, and Marisa Tomei. The movie is based on a true story of a small hedge fund, which tried to warn everyone that the sub-prime mortgage market was nothing more than a glorified ponzi scheme. When no one would listen to them they said fine, we’ll bet on the market collapsing, and on the institutions who bought the paper. And the rest, as they say, is history. Unless, of course, you live anywhere but America, and are still waiting for your economy to completely heal.  For an industry that isn’t very “sexy”, I bet it makes for a good movie.

Until next time,

Cheers.

They say that timing is everything, and as cliché as that is, it holds  true in Jim Murphy’s case.  When Jim first joined CAAMP, it was raining mortgage applications. Hubris ruled; this was how it was going to be forever.  Then WAM!; 2008 comes along and forever changes our landscape. Jim’s knowledge and skill at navigating the hallways of Parliament ensured our voices would be heard. Prior to Jim joining CAAMP, we would be lucky to get a phone call returned from the Finance Department in Ottawa. Not long after Jim’s arrival, not only were our calls returned by the Finance Department, they began reaching out to CAAMP for data and input on mortgage related issues. Jim Murphy is invited to Ottawa every year for the reading of the new federal budget. He takes part in the lockdown process where certain individuals are given a sneak peek at the budget prior to reading. This process is more symbolic than anything else, but what a symbol it is for CAAMP and this industry to be able to attach itself to; how far we’ve come in such a short period of time. We were fortunate that the right person was driving the bus. Especially post 2008, when there was no clear road map to where we were all heading.

Reflecting on the six years that I had the pleasure of serving the board, and working closely with Jim, two things stood out for me. First, I cannot imagine what it would be like to have to break in a new “boss” every….single…year.  Yet, that’s exactly what Jim had to deal with. A new Chair and Executive turns over every year. Every Chair comes in thinking he or she will transform the association.  That’s so cute. Once you’ve earned the right to sit in the Chair’s chair, reality sets in. Jim was always patient and diplomatic with me when I served as Chair. My reality was that whatever direction I planned on taking CAAMP, Jim and his staff would be responsible for the successful execution of said plans, long after I was gone. Jim assisted me in seeing the light, and more importantly, the reality of the Chair’s role and what can and cannot be done in a short period of time. Second, Jim brought a calm demeanour to the role. During his time with CAAMP, his calmness would be challenged, over, and over, and over again. CAAMP is the 800 pound gorilla in this industry. It’s the biggest, it has the most clout and influence; therefore, it attracts the most attention. Many in the industry have served Jim Murphy, and CAAMP, a steady diet of shit sandwiches over the years. Yet, when served, Jim’s response would be, “Bon Appetit, everyone”.  Jim believed that CAAMP had to adhere to higher standard, and not respond in kind with “I know you are, but what am I”. A higher standard is a badge of honour that CAAMP wears proudly, and that didn’t happen by accident.

Jim will be missed, but he will be replaced. Jim helped to grow the association, and ensured that CAAMP could acquire talent when needed, and the need is now.  My hope is that Jim can walk away knowing that this industry, and CAAMP, is better because of his involvement. To Jim Murphy I simply say, thank you.

Until next time,

Cheers.

I headed back to my old stomping grounds this week – Vancouver.  DLC, Dominion Lending Centres, asked me to speak at their Owner’s Conference.  When asked if I would participate, the answer was quick – absolutely!  It’s a wonderful opportunity for me to meet with our customers and garner some insight into the cool and innovative things that DLC is doing.  Gary Mauris, Chris Kayat and Jay Seabrook of DLC have been very supportive of Merix, and if I can make even a small contribution to the success of their conference, I do so with pleasure. 

While in Vancouver, I was also pleased to be able to attend the 25th Anniversary Celebration of TMG, The Mortgage Group.  Wow!  I can’t believe how quickly time flies!  This is a homecoming of sorts for me.  Many, many moons ago, Grant and Debbie Thomas, Principal Owners of TMG, asked me to join their organization. I worked for Grant and Debbie for a number of years and upon reflection,  my time with TMG played a very important role in my career development and career path. I will be forever grateful for the opportunity they gave me and even more grateful for the enduring friendship which ensued.  Congratulations on your 25th Anniversary milestone!

Until next time.

Cheers,

I assumed that real estate bidding wars was specific to pockets in the Vancouver and Toronto market place.  You know? Big home values, big incomes – the bigger-better syndrome.  Alas, my assumptions were incorrect.  I made a stop in Winnipeg a few weeks ago to meet with some of our broker supporters, and I was surprised to hear how prevalent bidding wars are in the Winnipeg market place.  I guess I shouldn’t be surprised, given the Globe ran article recently about what to do if you find yourself in a bidding war.  People on the front lines are talking about it, and Canada’s self-proclaimed National newspaper is providing advice on what to do if you find yourself in real estate auction.  I’ll assume that real estate bidding wars are no longer a one off or the exclusive domain of larger urban centers.

Should we care? I think we should.

Some would describe real estate bidding wars as the free market economy at work- a willing seller and a willing buyer.  The flip side of the definition is; the manipulation of the real estate process, predicated on an unsuspecting and uniformed buyer.  An argument can be made for both definitions.  Here’s where I stand -

I think it’s an unseemly practice, and should be stopped or at the very least an attempt should be made to curtail it.  Here’s how it works, the real estate agent convinces the vendor to list their property for slightly less than market value.  The listing states that no offers will be entertained for a period of time, somewhere between five to seven days.  Enough time is given to view the property, and hope that perspective purchasers, especially those who are frustrated and disillusioned because they’ve done this a number of times and have no home to show for it, will submit an offer on the prescribed date.  The hope is the offer will be based on emotion, excuse me…market reality, and over pay.  And that’s what’s happening with greater frequency today.  I often wonder if purchasers who went through this process could do it over again, would they?  We’ve all made bad business decisions, it happens.  But if the purchaser feels like they were played, well, that’s not good for any of us.  The integrity of the real estate sales process is sacrosanct.

The best way to ensure that the integrity of the real estate sales process is not questioned is by way of transparency.  The Competition Bureau’s attempt to have CREA (Canadian Real Estate Association) publish the historical sale price for the listed property, is a step in the right direction.  CREA is fighting this because of “privacy” legislation. I find that interesting given that the information is already public, and one can find it if they have the time, and know where to look.  Finding historical sales data shouldn’t be laborious or treated as tradecraft.  We live in an age of instant information, and there’s no conceivable reason not provide this information to purchasers, and existing home owners.  If you want an example of how this can work, go to Zillow.com.  On this website is the listing of every property there is for sale in the U.S. It also provides estimated property evaluation, and historical sales activity for all properties.  It would be a valuable tool for anyone finding themselves in a bidding war.  If a realtor councils perspective purchasers to go in at “x” dollars, the council can be judged and validated as quickly as the purchaser can tap his/her tablet.  Transparency and information assists the purchaser to make a better decision.  A home is shelter, it’s also the biggest single investment decision that most people will make in their lifetime. 

There’s a self-serving reason why I would like to see theses bidding wars come to an end.  If the purchase price of the home is over market value, the appraisal is not going to come in.  That’s the point when everyone who was party to the over inflated purchase price runs for the hills, and start blaming those who are left to try and fix it, the mortgage broker and lender.  Rather unjust.

Oh yeah, my quick-fix solution is this, the mortgage amount is based on the purchase price or appraised value, whichever is lower.  We should add the listing to that as well.  That would pretty much end the gaming of perspective purchasers.

Until next time,

Cheers.

I get it, a mayor smoking crack, partying with escorts and hanging out with gang bangers is far more salacious, and garners eye popping headlines.  Throw in Rogers Communication paying in excess of $5 billion for the exclusive rights to televise Canada’s religious pastime, hockey, and it is understandable why something boring like an okay economy, and housing market not on the precipitous would get such little ink.  Frankly, as far as press coverage regarding the housing industry, this is the best we can hope for.  So when we hear the Governor of The Bank of Canada say, “The housing sector has been stronger than expected but is consistent with updated demographic data and a pulling forward of home purchases in light of favorable financing conditions”.  Excellent – a statement that elicits a yawn.  Or how about, “The Bank continues to expect a soft landing in the housing market”. Almost makes you sleepy.  I guess I could rant against the notion that the Bank of Canada “continues” to predict a soft landing but that would require energy, and I would need to take a nap first. 

As exciting as it is, the press may become bored with our industry, trust me, other words will be found to sell papers; words such as ‘bust’ and ‘bubble’ may be replaced by ‘disinflation’.  According to Investopidia, “Disinflation is commonly used by the Federal Reserve to describe situations of slowing inflation. Instances of disinflation are not uncommon and are viewed as normal during healthy economic times. Although sometimes confused with deflation, disinflation is not considered to be as problematic because prices do not actually drop and disinflation does not usually signal the onset of a slowing economy“.  By all accounts the Bank of Canada will be speaking to this issue going forward.  One way to combat disinflation would be if the Bank of Canada lowered the overnight lending rate.  Alex, I’ll take irony for $200, please.  But let’s not start that again.  Here’s to boredom.

Until next time,

Cheers.

I’m still getting used to the idea that upon the end of CAAMP’s 2013 Mortgage Forum, which officially opens this Sunday, November 24^th, it will mark the end of a six year journey for me.  My official duties as a board member, and as a member of the executive, officially ended at CAAMP’s most recent AGM.  As of the 27^th of November, someone else will be responsible to set the path and direction for future conferences.  Whoever the privilege is bestowed upon to lead the conference in the future will be comforted by the fact that they will work alongside the extraordinary staff at CAAMP.  Mike Ellenzweig and the rest of the company work tirelessly to put on THE premier event of the year in the mortgage broker industry.  No disrespect to all the other conferences, but it is what it is.  Every year, just before the ribbon cutting ceremony to officially open the conference, Michael says to me in his deep baritone voice, “Bo…it’s in God’s hands now”.  Who am I to argue with Michael that God takes time away from his busy schedule to oversee the Mortgage Forum?  I will miss Michael’s dry sense of humour.

I am also going to miss the regular interaction with all the CAAMP staff, especially Samir Asusa and Jim Murphy.  Samir very quietly goes about his business.  For the uninitiated, a CFO’S role may not appear to be glamorous.  Number crunching, contract review may not be what one would consider sexy, but if it’s isn’t done properly an organization can get into a whole heap of trouble.  Samir, in large part, has ensured that CAAMP’s financial footing is very solid, and he’s treated every dollar collected with the respect is so deserves.  As for Jim Murphy, CAAMP’s President, a hardy thank you on behalf of the entire industry.  Jim’s steady hand, and political insight, will ensure that CAAMP will be able to navigate both chartered and unchartered waters in the future.  Jim made my job so much easier, and for that I am very grateful.  To Cara, Alison, Jeannie and Rocca, thanks for prepping me.  And lastly, to my friend Hali Strandlund, who called me and convinced me to run for a second term so I could sit on her executive team, thanks for making that call.

Six years is a lot of time to invest or more accurately volunteer.  My thinking is that if you’re going to invest that amount of time, then DO something.  I bristle, that’s code for my inside voice saying. OH..SHUT…UP, when people talk about their own legacy.  Others will determine the legacy, not some egomaniac.  But I don’t think there’s anything wrong with taking stalk of what you’re most proud of.  For me it was a few things, some visible and some not so much.  Six years ago I started to campaign that we should change a couple of our by-laws.  The first change, limiting the number of board seats that any one brand could occupy.  I believed this could pose a huge risk to our association.  In theory, one brand could occupy every board seat, thus ensuring that every executive position was made up of board members representing one brand.  If that ever came to pass our membership numbers would contract, quickly.  Thankfully the board, and the executive, agreed to deal with matter before it ever became an issue.  The second by-law change that I am proud of is term limits.  Today, the by-law states that a board member can only sit on the board for six years.  For CAAMP to flourish, fresh blood, a new way of thinking and passion is required.  My belief was that time served beyond six years would mean that the board member has gone beyond his/her expiration date.  Everyone has a shelf-life, and I believed it was in the association’s best interest to avoid the “is it time you to step aside” debate.  The approval and passing of a term limit by-law ensured that the association ecosystem would continue.

In the visible category?  I am so proud of our efforts in the political arena.  CAAMP took a leadership role in lobbying the government and regulators.  We stated clearly to the industry that was going to be our mandate going forward.  Today, our opinion matters, and our research is sought out by the Ministry of Finance, and regulators.  As long as CAAMP continues to make a commitment in this regard, our voice will grow stronger.  We may not win or get everything we want, but then again who does?  At the very least now we cans say we have a seat at the adult table.  Another one for the visible category, I’m proud of the transformation we made to the National Conference; from re-branding it to CAAMP Mortgage Forum, to partnering with the “Art Of”, ensuring a line-up of speakers that couldn’t even be imagined in the past.  We now dedicate one day of speakers to our industry, and the second day to macro issues, which ultimately impacts all of us.

It’s been a hell of a ride, but now it’s time for people a lot smarter than me to take the reins.  To all the board members I had the privilege of serving with, especially Hali Strandlund, Joe Pinheiro and Daryl Harris, thank you.  To all the members of CAAMP, I’ll sum up my six years on the board in two words…”I tried”.

Enjoy CAAMP Mortgage Forum 2013.

Until next time,

Cheers.

I had such an experience earlier this week.  There I was, about to start a meeting with the Minister of Finance, Jim Flaherty and my mind went racing down memory lane.  For a split second, I found myself recalling the very first mortgage application I ever filled out. This was twenty five years ago.  I met my first customers on a Saturday morning, but as it was my first deal as a mortgage broker, I would have gladly have met them at 3:00am.  Oh, the knowledge I had back then.  For example, I was aware that mortgage’s was spelled with two “g’s”.  I was so wet behind the ears that I had to keep a drawer open in my desk so I could refer to an old Statement of Mortgage.  I wanted to make sure I didn’t miss anything, so I kept taking a peek at a completed Statement of Mortgage.  I had to resist the urge to laugh at the memory.

In a couple of nanoseconds I also thought about the first time a fledgling national association called CIMBL made their way to British Columbia to pitch brokers on why they should become members.  I was in attendance at the pitch. I remembered standing at the back of the room listening to CIMBL’s talking head, saying without embarrassment, “if you do not become members of this association lenders will not pay you a finder’s fee.”  I couldn’t help but think, “you fool, you just set this new association back by three years in British Columbia”.  I was wrong, it was five years.  There were many other thoughts that kept running through my head, especially about CAAMP, and how far we’ve come as an association.

But I had to clear my mind and prepare for the meeting with Mr. Flaherty. Jim Murphy, CAAMP President, Daryl Harris, CAAMP Chair, and myself were given the opportunity to meet with the Minister of Finance this week.  The purpose of the meeting was to share our thoughts and concerns for the mortgage broker market.  Both Jim and Daryl did an outstanding job, laying out the facts in a balanced and measured way.  It was our hope that the Minister of Finance would view our positioning points through the lens of consumer choice and the important contribution the mortgage broker channel makes to the Canadian economy.  Jim Murphy has done yeomen’s work on behalf of our industry in Ottawa and this most recent meeting added another layer to the relationship foundation between CAAMP and the Finance Department.  Kudos to both Jim and Daryl.

As for my role at the meeting?  I spoke briefly about the important role that mono-line lenders, like MERIX, play in the mortgage broker channel.  Most importantly, the choice we provide for Canadian borrowers.  I also spoke briefly about the contribution that mono-lines make to Canadian tax role.  Mono-lines provide greater choice for borrowers but they’re also job creators.  I made it very clear that we ask for no favour.  The mono-lines are prepared to compete but the nuances and difference between mono-lines and banks should be factored when making decisions which impacts funding for the mortgage broker channel.  The Minister of Finance stated that his office would consult with our industry about all the recent changes and what our needs might be going into 2014.

One of the things I am most proud about during my time on the CAAMP Board is the relationship which has been built with Ottawa and the regulators.  I wasn’t too long ago when it was difficult to get a phone call returned from the powers that be. Today, the calls are being returned and we have an opportunity to sit at the adult table. Influence cannot happen without dialogue.  I believe CAAMP’s efforts are being noticed.  It’s why we don’t hear the “cash grab” argument with the frequency we once did.  Today, even the haters have some difficulty arguing that the nominal cost to be a member is not worth trying to protect our collective wallets.

Until next time,

Cheers

For far too long the doomsayers have dominated the airwaves and print media.  I get it, it sells.  Crash, bust or apocalyptic meltdown gets more attention than a stable and balanced market.  But shouldn’t someone hold the doomsayers accountable or at the very least ask the question, “you were way off, please explain?”

Pellegrini attempts to do just that.  There was a great quote in the article from Canada Mortgage Trends, Rob McLister.  With respect to where prices may be at some point in the future, Rob said the following: “Anyone that purports to tell people where prices are going to be in two, three, fours years down the road is a fraud. Housing is stable at this point and there’s nothing on the horizon that we can say with certainty is coming that would derail the market.”

Facts and trends can be debated, and that’s healthy. The problem today is there doesn’t appear to be much debate.  Rob’s viewpoint, along with many other in the article, is not only refreshing but necessary.  A balanced story, irrespective of the topic, requires work.  It’s time for some to stop being intellectually lazy.

Until next time

Cheers

This week I had  the distinct pleasure to share the stage with Ron Swift, CEO of Pacific Mortgage Group,  Paul Grewal, President, Street Capital and Derek Norton,  MCAP Group of Companies during the monoline panel session at the CAAMP/MBBC Spring Conference & Trade Show. The panel discussion was about the state of the market and what our crystal ball says about the future of our industry.  To be totally frank I’m somewhat hesitant to participate on these panel discussions given some of my prior experiences.  I’ve been on panels in the past where panelists offered nothing but motherhood statements or they use the time to extoll the virtues of their own companies.  Being a part of some financial institutions gloried infomercial does nothing for me.   So now when I’m invited to take part in panel discussion, my agreement to do so will be based on who the other panelists are.  That’s why there was no hesitancy on my part when I was asked to participate at the conference in Vancouver. The gentlemen noted above know their stuff, and they speak freely.

I’m not sure what insights the audience garnered during the session but I can tell you I learned a few things.  For example, I have to remind myself that when I speak publicly I’m speaking to a much broader audience.  Someone mentioned to me, a few hours after the session, that there were a number of tweets during the panel discussion.  I’m still coming around to the notion that the social media is providing a vehicle for people to provide instantaneous commentary and judgement on what you’re saying.  Don’t get me wrong, even if I write “don’t forget twitter” on the palm of my hand prior to a public address it wouldn’t change my message.  What might change is certain phraseology.  After addressing audiences I always mentally critique my own performance and make note of things I could or should have said differently.  Today an improper or incorrect phraseology can become memorialized, thanks to twitter.

I always get feedback after participating at an event and the most recent event was no different.  The feedback is motivated by those simply being polite to those who wish to offer suggestions how the session could have better; which is code for how I could have done a better job.  No offense taken.

Until next time,

Cheers.

The issue of industry duplication is interesting and nobody has a clear cut answer as to how we can most effectively eliminate it. There was time when the CAAMP Mortgage Forum, previously known as the CIMBL Conference, was the go to event.  It was a unique opportunity in which all stakeholders could meet under one rooftop; equal measure of education, networking and socializing.  For many years the conference held its rightful place as THE event. But like everything else today, things changed.  The first wave of duplication started when the provincial associations decided to emulate the CAAMP Mortgage Forum.  Not suggesting that’s right or wrong.  What I am suggesting that if you have a conference with speakers, trade show, a gala event, guess what?  It’s a duck!  Geography does not change the experience, the format and the overall quality does.  Another contributor to the wave of duplication was made by CAAMP itself. A mini-me version of the national conference, regional symposiums, is in part, well, an imitation of the national conference.  Quack-quack.  The most recent wave of duplication is individual firms are now hosting their own national conferences, albeit in far more exotic locations. To be absolutely clear, I am not passing judgment on the wisdom of individual firms hosting such conferences.  If it works for them, and their employees are happy, terrific.  But if the format is the same as the industries national conference, as well as the Provincial one’s, foie gras anyone? Last but not least is the recent foray into mortgage conference world by a privately owned publishing company.  Certainly their propagative but the fact is they’re contributing to the duplication, and just because it’s theirs does not make it any different or special.  Can’t think of another duck reference other than the decision to create yet another conference is Daffy, as in the duck of course.  So there we have it a bunch of ducks, and I’m not suggesting any one is better than the other – just a lot of the same in our industry.
So what do we do as an industry going forward as it relates to duplication of conferences, golf tournaments etc.?  Firstly, we have to be completely honest with ourselves.  Do we really care? Or is this issue something for the industry to just grumble about?  I ask because last time I checked sponsorships and tickets are still being sold for the multitude of conferences being held across the country.  Everyone seems to attend and participate begrudgingly, but they still participate and attend.  So if you’re an organizer of one these conferences what do you make of this? I suspect the duplication debate will carry on, and in time we will find out if it’s a real or a perceived issue for the industry.  One thing is for certain, the industry desperately needs some creativity.  Kudos to those who care and are giving an honest effort do things differently, we need more people like you in the industry.

Until next time,

Cheers.