New Brunswick Broker Licensing

If you are a broker in New Brunswick, or are doing business in NB, this will be of interest to you. The NB government is now licensing all brokers. Here is an article prepared by a law firm outlining the details:

New Brunswick's New Cost of Credit Disclosure Act
New Brunswick has a new Cost of Credit Disclosure Act, c.28.3 (the "Act") and New Brunswick Regulation 2010-104 under the Cost of Credit Disclosure Act (the "Regulation"), both of which became effective on September 15, 2010. The Act substantially addresses New Brunswick's commitment to harmonize its cost of credit disclosure requirements with the laws of other Canadian jurisdictions in accordance with the principles and the harmonization template agreed to in 1998 by the federal, provincial and territorial governments. The provisions of the Act and the Regulation change significantly the disclosure requirements applicable in New Brunswick. The Act was passed in 2002 but was not brought into force until new regulations were passed.

Registration Requirement for Lenders, Lessors and Credit Brokers

Of particular note is that lessors who provide financing for personal, family or household purposes now must register under the Act in order to carry on that business in New Brunswick. Similarly, credit brokers who arrange, facilitate or attempt to arrange consumer credit must be registered to carry on this activity in New Brunswick. Lenders were required to be registered in New Brunswick under the former legislation, and the requirement continues under the Act, now referring to lenders as "credit grantors."

Overview

The Act requires credit grantors, lessors and credit brokers acting in the ordinary course of business to register under the Act unless they come within one of several exemptions specified in the Regulation. The Act only applies to lessors, credit brokers, or credit grantors insofar as their respective credit agreements or lease agreements are entered into primarily for personal, family, or household purposes. Lenders should note that registrations made under the previous version of the Act will remain in effect until such registrations expire.

The Act defines a "credit grantor" as a person who (i) has entered into, or who is negotiating to enter into, a credit agreement under which the person extends or is to extend credit to a borrower if the credit is not in respect of the sale of goods intended for resale, and the credit is for $100 or more or (ii) is an assignee of the original credit grantor's rights under a credit agreement. The Act defines a "lessor" as a person who (i) negotiates to enter into or who enters into a lease under which the person leases goods to a lessee or (ii) is an assignee of the original lessor's rights under the lease. The Act defines a "credit broker" as anyone who, for compensation, arranges, negotiates or facilities (or attempts to do any of the foregoing) an extension of credit from a credit grantor to a borrower.

A "credit agreement" is an agreement under which credit is extended and includes (a) an agreement in relation to (i) a loan of money, (ii) a credit sale, (iii) a line of credit, or (iv) a credit card, (b) a renewal of or an amendment to an agreement referred to in (b), and (c) a lease.

Mortgage Brokers and Mortgage Lenders

Parties who arrange the financings of mortgages must ensure they review the requirements of the Act and understand their responsibilities because the scope of the definition of "credit agreement" is broad enough to include mortgage loans (which the Regulation defines as a loan of money secured by a charge against real property). Accordingly, mortgage brokers and mortgage lenders will typically be caught within the definition of credit broker or credit grantor, as the case may be, and must, therefore, register under the Act. This is a significant change in the legislative framework since, previously, mortgage lenders typically were not required to issue disclosure documents to borrowers in connection with New Brunswick mortgage loans.

Given that it is now an offence under the Act to fail to provide the required disclosure information, lessors, credit brokers, and credit grantors will want to ensure that they understand and comply with the provisions of the Act and should review the Act and the Regulation in detail.

Summer Hours

I heard an great concept a few years ago...outwork your competition. We have all heard "work smarter, not harder". This goes along with it. Outworking your competition is easy during the summer. Lots of people are taking vacations but some are taking Friday afternoon off. What if you were to work those Friday afternoons when other were at the cottage or on the golf course. Just like that, you would be outworking your competition. Vacations are an important way to recharge the batteries. But you are usually not that busy during the summer months that you "need" to only work four day weeks. Top producers are often workaholics, but you don't need to work 20 hour days. Just be available and you will become a top producer.

Understanding Accelerated Payments

One of my brokers gave me this piece. I thought it was worth sharing.

Non-accelerated payments are calculated using 12 months worth of payments in a 12 month period.


Accelerated payments are calculated by incorporating 13 months worth of payments in a 12 month period. The additional month is divided equally among your payment to increase them.



Impact of Accelerated Payments

Contractual Amortization Impact on Amortization

40 years 8 years, 1 month

35 years 6 years, 3 months

30 years 4 years, 10 months

25 years 3 years, 7 months

20 years 2 years, 6 months

15 years 1 year, 8 months

10 years 1 year

5 years 5 months

Home Capital likely to double assets in four years

Here is an article out of this month's CMP Magazine...

Home Capital likely to double assets in four years
| Monday, 7 June 2010



Home Capital Group Inc., the mortgage lender whose stock outperformed Canada's eight banks last year, will likely double its assets in the next four years, reported Bloomberg Businessweek.

"We think we can be a C$20-billion ($18.9 billion)-plus company within three to four years because of the momentum we have," CEO Gerald Soloway said. The Toronto-based company had about C$12 billion in assets at the end of the first quarter, and reported a record profit of C$41.7 million.

Home Capital primarily offers uninsured mortgages to clients who can't get loans from Canadian banks. Since the financial crisis began, Home Capital president Martin Reid said half of 25 "decent competitors," including General Electric Co.'s GE Money and Accredited Home Lenders, have exited the C$200 billion market. Home Capital only does business within Canada, and deals mostly with lending, credit cards and deposit products.

Home capital fell C$1.02 to close at C$41.60 on June 4 on the TSX. The shares have fallen less than 1 per cent this year after more than doubling in 2009.

CAAMP Atlantic Wrap Up, Plus a Few More Things

CAAMP Atlantic has wrapped for another year. For me, it started on Saturday with a small social gathering involving a couple of brokers from NL. Sunday was the annual Invis/Mortgage Intelligence Boat Cruise around Halifax Harbour, followed by the Verico Cocktail Mixer, supper with the Home Trust team, capped off by a visit to a packed Lower Deck. Monday was the trade show and symposium. Lots of great presentations, but best of all was the time to see our brokers at the trade show. Monday night was the TMG mixer followed by another team supper and another trip to the Lower Deck. Tuesday was the windy golf day at Glen Arbour. Get time in the sun.

One of the big messages coming out of CAAMP was marketing and networking...how to grow your business. If you are not on to social networking today(Facebook, Twitter, Linkedin, etc.) then you will miss the boat tomorrow. CMHC estimates that only 3% of all business today comes from social networking. However, that is based on all age ranges. I would guess that if you broke that down to buyers between ages 25 and 35, that number would jump a lot. The "new buyers" are using social networking so much that they are not using traditional methods of communications (mail flyers and landlines are becoming a thing of the past). Think of a YouTube video that goes "viral" and gets 100,000+ hits within hours. How do you think word gets out about it...that's right, social networking.

The book I just finished is called The Purple Cow, and it has opened my eyes. The premise is if you drive by a field of brown cows, none of them stand out. But put a purple cow in that field and you will notice it. The same goes for marketing your business. If you jump on the social networking bandwagon too late, then you will be a purple cow among thousands and never get noticed. Social networking is going to catch on even more within months. So don't delay, have a go at it today.

Last thing is rates. We have seemed to have stabilized on the rate front. With the BoC rate hike really turning into a "non-event" and bond yields being fairly stable after the EU/Greek economic crisis, we hope to see rates stay this way through the summer. So let's get those clients off the fence and into their dream house today.

Chicken Little, the sky is not falling!

My kids are a little old for that story now, but it is a good reminder that even though Prime went up 0.25% this week and fixed rates are no longer at that "all time low", rates are still FANTASTIC! And while it is great for those inside the industry to debate this all day long, we need to get this message out to the buying public so that they have more than just the media's fatalistic view of things. The average consumer needs to know that sub 5% rates are worth getting into the game on - the home buying game that is. If the message is not being delivered, the home buyers will continue to stay on the sidelines, and when rates do go up over 5% (or even higher) that potential buyer will have missed their opportunity and will be out of the game all together.

But what can you do? Do you have a sign outside your office, a newsletter, an email list of potential clients, or even the ability to speak? Then start talking, telling people that now is the time to buy. It is fairly easy, after all, as mortgage professionals you are the ones clients turn to for advice.

Have a great weekend.

Another Bank Chooses Specialists over Brokers

HSBC announced that they were shutting down their broker operations last week. Add them to the list of banks who have pulled out of the broker channel or never came into "broker land". This list includes BMO and RBC. Plus other lenders available to the broker network also have specialists competing directly with brokers. They include TD, Scotia, and CIBC/First Line/HLC.

Monoline lenders only deal with brokers, making these lenders the best choice and most logical choice for brokers. There is a place for banks, but not necessarily the first choice.

Support the lenders that support you!