Mortgage Broker

CMB MAGAZINE cmba-achc.ca winter 2017 | 13 risks that a prudent investor should know about before going into a high-risk investment, which the investor has been led to believe isn't the case. e promoters also know of the "commissionitis disease." If you: . pay high commissions of six to 12 per cent, which are way above market; . create a good story, have lots of glossies and a good website, and" names" attached to your company; . have good marketing and promotion, including giving money to charities with a big splash; . have a big-name law firm, and/or; . have a trusted trust company for RRSPs etc., that you can work with (and you can think of even more things that create credibility). People will be attracted to the product and will forego reading the documents, even though FSCO, their regulator, requires them to understand and be able to fully explain the investment. By the way: Do you think the same commentary concerning the public not reading and understanding what they are investing in applies to prospectuses and offering memoranda that are under the jurisdiction of the OSC? David Franklyn Lawyer Emphasize the positive Some comments on BC Home Partnership. MBABC hosted a great event on short notice: well run, a smooth timeline, quality speakers, a quality panel, and quality questions from the audience. Some key points were made for clarity, and [about] a few things there remains work on the B.C. government's part to do to bring us clarity. e main theme of all points made was that the program is largely being implemented with as much basic common sense as can be done, which was refreshing for sure. e following is not a detailed analysis – it is a 40,000-foot view. If we get down into the weeds and analyse the nitty-gritty numbers, can we find negative things, like the second-mortgage registration fees, flex-down premiums, a potentially higher rate on the 20-year payment portion, and an inability to pair this with a purchase-plus- improvements product, etc.? Sure, we can. But keep in mind that this program brings government players into the mix with many key players in our industry. And while we can complain about the details, suggesting that the program does very little good for very few buyers (which may prove to be the case), to complain about this would be similar to complaining about a volunteer nurse who only knows how to wrap sprained ankles. Hey, it's free, it's good-hearted, and it definitely helps somebody. Somebody. . Does it add complexity to a broker's life? Yes. . Do we need any more complexity in our lives at this time? No. . Does it add layers of confusion to buyers, realtors, sellers, economists, journalists, etc.? Yes. . Does it create thousands of person-hours of conversations about home buying? Yes. (Never a bad thing.) . When does the product launch? January 16. (Wow!) . Do we have detailed written updates from lenders and all the insurers as to exactly how it will be functioning? No. (Double wow!) Is that a bit odd? Well, it is a government program. And, hey, it will all get figured out eventually. Ultimately, this program is an opportunity to tell a (real-estate-related) story that is at worst neutral, at best helpful to some – at least a little bit. It is a well-intentioned program and a story worth telling that really hurts nobody. Our business is all about helping the client, and some clients will, in fact, benefit – just not as many as some might think. Dustan Woodhouse Let's work together Did you know agency representation for buyers of real estate didn't exist until 1995? Like some of you, I remember the amortization books we all had in the early 1980s. As a realtor, I had to be able to quote rough mortgage- payment numbers for clients to try to zero in on what they could afford as we discussed the buying process. Oh, wait: ose clients were buyers! at means in the 1980s they weren't actually clients. Before 1995, when buyer representation came into being, my client was the seller of the home I sold to that buyer. at was true even if I had never met the sellers before showing up to another agent's listing with the offer from my buyers. Realtors worked for and were accountable to the seller, because that's who paid us. Buyers got "caveat emptor." But we still had to be able to ballpark mortgage payments, so we all had these little books of mortgage tables with different interest rates and amortization periods. I believe my first book started at nine per cent and went up to 30 per cent, give or take a point or two. My very first mortgage was at 20.5 per cent over 25 years. An $80,000 mortgage almost sunk me. In order to sell that house, I had to borrow $8,000 to clear title aer all the penalties and commissions owing ate up more equity than I had in the property. Boy have times changed! Or have they? Times have changed, yet realtors are still generally paid by the seller – or, perhaps more accurately, through the transaction. Even though we now have agency relationships with buyers and agree with them on what our fee will be, we still typically look to the seller to pay that commission out of the proceeds of the sale. ere likely are two reasons for this continued

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