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AMBA 411 SYMPOSIUM: FRAUD AND CRIME PREVIEW WADING THROUGH THE PROPERTY WATERS SUMMER 2014

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Romspen ������������������������� 40

RECA: 8 MANDATORY SERVICE AGREEMENTS

CANADIANS AND MAINTENANCE 9 BEFORE SUMMER ROAD TRIPS

MORTGAGE BROKER DOS, DON’TS 10 AND REMINDERS IN FORECLOSURES

EVENT PREVIEW: 12 AMBA 411 ON FRAUD & CRIME

CASL IS LIVE, 16 NOW WHAT?

COVER STORY: TIPS FOR 17 BUYING A RENTAL PROPERTY

GIDDY UP! 20 2014 AMBA CONFERENCE PHOTOS

2014 AMBA 22 AWARD WINNERS

FLIP FLOPS, FLIPPIES, 25 THONGS OR JANDALS

PRIVATE MORTGAGE 27 LENDERS FORUM UPDATE

WADING THROUGH 28 THE PROPERTY WATERS

PRIVACY AND 32 DATA BREACH THREATS

V.W.R. WELCOMES 37 PAULA HUTTON

OTHER FEATURES���

Manager's Report 6 Industry News 26Member Profile: Gay Andrews 34AMBA Calendar 38

PresidentGord Appel TMG

Past PresidentRon McClenaghan Invis

Vice PresidentAdil Mawji Invis

TreasurerPhil McDowell Mortgages Are Marvellous

MembershipDale Koeller Calvert Home Mortgage Investment Corp.

MembershipTracey Robinson Mortgage Protection Plan

Regional Outreach Cathy Sehn Verico Brokers for Life Inc.

Risk ManagementKevin Weeks Weeks Law

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SUMMER 2014 CONTENTS

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SUMMER 20146

The world today is about collaboration, sharing of information and industries forming collective bodies that can help protect, innovate and sustain� The mortgage broker industry has been maturing with the channel developing many multi-province brokerages, strong regional players and independents who are finding lucrative niches for themselves� What we have yet to do is follow the examples out there of how and when to put aside competitive interests to work together�

Would you ever have thought a lucrative partnership could evolve between large multinationals from different channels? In 2012, Coca-Cola, Ford, Heinz, Nike, and Procter & Gamble formed a collaborative group focused on developing products made entirely from plants� The concept was to accelerate the development and use of 100 percent plant-based PET materials and fibre in products produced by these companies� PET, also known as polyethylene terephthalate, is a durable, lightweight plastic that is used by all the companies mentioned, in a variety of products and materials including plastic bottles, apparel, footwear and automotive fabric and carpet� In July 2014, Ford announced it had successfully integrated discarded tomatoes skins from Heinz ketchup production process into plastic to reduce the use of less environmentally friendly materials� What partnerships could be possible for a united broker industry?

With increasing regulation from multiple sources, the industry increasingly needs to ensure good working relations at both the provincial and federal levels of government� Companies such as Apple, Google, Microsoft, and Facebook, compete on multiple levels, but are not afraid to pool resources and approaches when it comes to lobbying, such as their 2013 push-back on privacy, data security, and advertising� How much of a pool could be put together to promote the use of a broker if we were all swimming together toward the same vision for the industry with pooled resources?

Prior to the broker industry, I had the pleasure of working in the automotive aftermarket with manufacturers and retailers that ranged from small and medium domestic operations to large multinational corporations� Each company had to deal with municipal, provincial and federal regulations� By working collaboratively through their association, they were able to share best practices, learn about the rules within a province before they entered it and lobby as one voice� When an issue arose where access to repair information was being restricted, a

coordinated effort from the grassroots of the industry via provincial groups resulted in a private members bill federally receiving a majority vote on the first reading� The second reading was not required because the effort was enough to bring the large, well-connected car manufacturers to the table for what ended up being a very successful, voluntary solution�

What does this mean for our industry? It means AMBA has been working with the Mortgage Brokers Association of British Columbia (MBABC), the Independent Mortgage Brokers Association of Ontario (IMBA) and more recently the Mortgage Brokers Association of Atlantic Canada (MBAAC) to share ideas, knowledge and resources because we understand that as individual associations we have a strong role in provincial activities, but collectively we can be stronger in areas that span the borders, such as education� With the recent talks opening up to include the Canadian Association of Accredited Mortgage Professionals (CAAMP), we hope to realize even greater levels of collaboration� There is a new national securities regulator that B�C� and Ont�, have signed onto, while the MBRCC is growing in momentum as well� There has never been a more important time to harness the expertise of the provinces with the resources and scope of the national body�

As our members, your viewpoints and well-being are paramount to AMBA� Our goal is to ensure the longevity and health of the broker community in our province� We need to fight for an equal playing field amongst everyone involved in brokering and an overall bigger share of the mortgage pie� As you see ongoing communications regarding the association discussions remember to voice your thoughts, indicate your support and get involved, if you are not already, with your provincial association� A collective voice is stronger than any one individual company or person … Let us know your vision for the industry and how associations can ensure your business remains viable� Be part of the solution!

Deborah Keshen AMBA General Manager

MANAGER’S REPORT

SUMMER 2014

SUMMER 2014 7

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SUMMER 20148

On July 1, written service agreements became mandatory when a mortgage broker establishes a client relationship�

The Real Estate Council of Alberta (RECA) has developed sample documents for use by mortgage brokers to comply with this requirement� These sample documents include:

Representing the Borrower Service Agreement

Acting as an Intermediary Service Agreement

Borrower Consent & Disclosure When you Represent the Lender

The move toward mandatory written service agreements followed extensive consultation with the industry� RECA worked with its Mortgage Brokers Advisory Committee to develop the new sample agreements�

The content from the existing Disclosures on Relationship and Compensation have been incorporated in these new agreements� The new agreements meet the requirements of the Real Estate Act Rules relating to disclosure of relationship and compensation, and written service agreements, as well as the requirements of the Personal Information Protection Act, the Fair Trading Act and new Canadian Anti-Spam Legislation�

A brokerage may customize the documents to suit its needs. These sample forms or content are not mandatory for use. The documents meet the requirements the Real Estate Act Rules provide for credit bureau consent, privacy legislation consent, and consent to continue to send commercial electronic messages to borrowers after the funding of the transaction.

You may convert the forms to electronic format and use electronic signatures� You must meet the requirements of the Real Estate Act rules for electronic documents�

Written service agreements inform borrowers about what they can and should expect from their relationship with their authorized mortgage broker� The agreements:

describe the responsibilities and services of the mortgage broker

outline the obligations of the mortgage broker and the borrower

set out the fees (if any) or how the mortgage broker will receive their fee

give consent to collect, maintain, use, and distribute a borrowers’ personal information

address any potential conflict of interest scenarios

give consent to 'pull' a credit bureau on the borrower(s)

give an option for the borrower to receive electronic messages from the mortgage broker after the funding of the transaction

Mortgage brokerage professionals were already required to use written service agreements when working with lender clients (Real Estate Act Rules s.73), and they were also required to make a number of written disclosures to borrower clients (Real Estate Act Rules s65(c), so the move toward mandatory written service agreements has been fairly straightforward�

RECA: MANDATORY SERVICE AGREEMENTS

For more information about the requirement for written service agreements and to review sample agreements, please go to the Consumer Relationships menu in the Industry Professionals section of www.reca.ca.

SUMMER 2014 9

Close to 50 percent of Canadian travellers admit that automotive maintenance is not prioritized in

their vacation plans.

With the days of pleasant weather here and more on the way as the summer ramps up, many people have vacation on the mind� And while June through September means different things to different people, vacation season is almost assuredly one of the things Canadians associate with this time of year�

With the exception of those on "staycations," summer also means increased travel, particularly on the nation's roadways� Getting to these vacation destinations wouldn't be possible without a vehicle that's well maintained, but for far too many people, a car's upkeep isn't something that's high on their list of priorities�

Nearly 50 percent of adults confessed that a maintenance check was not the most important thing for them to do before hitting the road, according to a recent survey performed by Canadian Tire� Yet, despite this, of all the concerns that adults said they were most worried about on a road trip, one in four said that their vehicle breaking down was their top concern�

Graham Jeffrey, associate vice president for the Toronto-based tire retailer, indicated that far and away, the proper upkeep of an automobile is the surest way to avoid car problems, many of which can lead to a group auto insurance claim if a breakdown results in an accident�

"The most effective way to stay safe on the road this summer and avoid any surprises is to ensure that your car is in good working order before your head out on a long road trip," said Jeffrey� "So, if you don't want to find yourself on the side of the road dealing with a maintenance issue, think safety before snacks and hit your service center�"

While a thorough maintenance check with a mechanic is the best way to ensure that everything is in proper order, there are several tasks that motorists can take on their own� Perhaps the most important one of them all is examining the tires�

Transport Canada has a resource that motorists can use to better understand what they should do with regards to tire maintenance prior to piling into the car for the annual getaway�

PROPER TIRE INFLATION IS CRITICAL A key component of tire upkeep is ensuring that there is the proper amount of pressure in each of them� Transport Canada noted that it's not enough to simply eyeball tires to see if they look like they could use some air� Estimates suggest that 50

percent of vehicles on the road in Canada at any given times have at least one tire that's underinflated by 10 percent or more� A tire can be underinflated by as much as 20 percent without being able to tell the difference - even for a well-trained eye�

Tires all have their own specifications for how much air to apply� This information should either be in the owners' manual or on the wall of the tire� With a high quality gauge, infuse each tire with the appropriate amount of pressure, making sure that it's evenly applied� There should be a gauge that shows the amount of pressure per square inch that the tires have�

There are those who argue that keeping a tire slightly underinflated isn't such a bad thing, as it makes the ride smoother� However, it's best to keep tires as close to the recommended amount as possible because it optimizes road trips by not using as much gas, Transport Canada noted� In other words, underinflated tires consume more fuel and also put more wear and tear on the treads of tires because more surface area is being used�

This article is by The Personal Insurance Company provider of home and auto insurance to Carewest employees. For more articles on prevention and for more information on home and auto insurance, visit www�thepersonal�com/amba�

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SUMMER 201410

MORTGAGE BROKER DOS, DON’TS AND REMINDERS IN FORECLOSURES

Denise Hendrix, Hendrix Law

I was privileged to be able to speak at various seminars in Kananaskis at the 2014 Giddy Up Broker Round-Up� The interaction with the AMBA members and the questions asked gave rise to different points of discussion with each group� The following is a summary of some of the tips and information DOs, DO NOTs and REMINDERS discussed in the seminars

DO: Always pull title to any property you are working on — 99 percent of the lawyers who handle foreclosure files register Certificates of Lis Pendens on the title to the property to give notice to anyone pulling title that a mortgage is the subject of legal proceedings� Pulling a copy of that Certificate of Lis Pendens from Land Titles will give you the name of the lawyer handling the foreclosure file� You will want to contact that lawyer rather than contacting the lender directly�

Note that a record at the credit bureau will be made when a borrower is in foreclosure� This is not made by the lender or the lender`s lawyer� This is an automatic process upon the issuance of the Statement of Claim in the Court of Queen`s Bench of Alberta� The Business Prospects publication will also list all parties involved in foreclosure proceedings that have been commenced that month�

Note that you will need the written consent of the Borrowers/Defendants to speak to any lawyer regarding the file� Please make sure that you obtain this written consent and have sent it to the foreclosing lawyer before you contact them by phone or concurrently when you contact them by email or fax�

Treat the foreclosing lawyer with respect and courtesy� They are not your enemy or the enemy of the defendant� Their job is to enforce the mortgage security that is in default� They are absolutely interested in getting their clients paid out in full or current and will assist you to obtain the necessary information for that to occur� The best approach to any situation is based upon the spirit of cooperation�

Remember that the foreclosing lawyer does not administer the mortgage for the lender� If you require a payout statement or arrears statement, they will have to request it from their client and provide it to you in writing� This may take a few days to obtain and provide to you� Please be patient�

Remember that, generally speaking, if a mortgage has been referred to legal proceedings, the lender has made numerous efforts directly with the Defendant to try to bring the mortgage into good standing�

DO NOT: Assume that the balance owing on any mortgage is what is shown on the title to the property or in the Statement of Claim� There are costs associated with foreclosures that mount quickly, and lenders pay charges that form a priority to their mortgage such as outstanding condominium fees, outstanding property taxes, outstanding residents association fees, irrigation orders, development fees, legal fees and prior mortgage arrears� Solicitor client costs and property inspections are also charges that must be paid by the defendants to redeem their mortgage�

Ask the foreclosing lawyer’s office give you a list of their current foreclosure files� Due to privacy laws, they cannot provide them to you�

Use the foreclosing lawyer to educate you about foreclosure files and the process� The defendant/borrower pays for the time that a lawyer is involved on their file� Establish a good relationship with a lawyer that you do business with to assist you in those situations and who you can talk with about the foreclosure process so that the defendant is not paying for your education�

Demand that the lender re-instate a line of credit� A line of credit is due and payable in full, on demand� There may be exceptions where a lender is willing to reinstate the line of credit, but that is an exception to the rule and there is no legal obligation of a lender to reinstate a line of credit once it is in default�

Demand that a lender capitalize the arrears and costs owing on a mortgage to their mortgage balance� The lender has no legal obligation to added defaulted debt owing to the principal balance owing on a mortgage� There may be extremely rare circumstances where some lenders will consider capitalizing outstanding mortgage payments on the mortgage� This will result in the increase in mortgage payments to the borrower� This is an extraordinary remedy and is very unusual�

Demand that a lender renew the mortgage and accept arrears if the mortgage is matured� The lender has no legal obligation to continue its arrangement with the defendant once the term has expired and the mortgage has matured�

SUMMER 2014 11

REMINDERS: The redemption of the mortgage can mean either payment of all the arrears owing on the mortgage or full payout of the mortgage (and in both circumstances, all costs and expenses of the foreclosure)� Whether you have to pay arrears or the full payout will depend on whether the mortgage is a line of credit, a matured mortgage or a mortgage that has not yet matured� Only in circumstances where the mortgages have not yet matured can the arrears and costs be paid to stop the foreclosure proceedings� The Right of Redemption of a Defendant to the date that there is a bona fide arms length sale to a purchaser for value by either the court or the lender�

If you are representing a purchaser who is buying a foreclosure property, you must recognize the limitations on the purchase contract�

The property is bought as is, where is, on possession� This is different than as is on the date the property was viewed by the purchaser�

There are absolutely no representations or warranties with respect to the state of the property�

There is no guarantee of possession on the closing date� Possession may be delayed to remove defendants and their belongings from the subject property� Your purchasers should be prepared with their living arrangements and their movers for this occurrence�

The defendants cannot sell the property unless they can clear title� There are rare exceptions� Make sure when you are looking at refinancing that you have balance statements on all encumbrances on title to know what the total net figure is required to clear title for new financing�

A foreclosure will not stop based upon a hypothetical� If the property is listed for sale, that is not the same as having an unconditional sale, closing in a reasonable period of time, in an amount sufficient to clear title� If the borrower has applied for mortgage financing or is working on mortgage financing, that is not the same as having an unconditional refinancing, closing in a reasonable period of time, in an amount sufficient to clear title�

A foreclosure appraisal is based upon the current market value of the property in a foreclosure situation� This is a property that is being sold as is, where is, on possession, without representations and warranties� Because of those conditions that affect the marketability of the property, a foreclosure appraisal may not show at the same value as a property being sold under normal marketing conditions�

A tenant is subject to foreclosure proceedings and gets notice of those foreclosure proceedings� Once a property is in foreclosure the relationship between the lender and the tenant is governed by the foreclosure proceedings� The Residential Tenancies Act does not apply as between a lender and a tenant, only as between a landlord and a tenant�

There are always specialized exceptions to rules and standard practices in every area of law� The foregoing items are not meant to provide legal advice but to provide some general tips and trade practices

to assist a mortgage broker in dealing with foreclosure properties�

SUMMER 201412

WATCH FOR UPDATES ON TWITTER #AMBAFRAUD

Keynote Speaker JEREMY NICHOLLS Servus Credit Union, Corporate Security Manager

As a former British Police Detective with 20 years of experience, Jeremy moved to Canada in 2007. He became Alberta’s first Investigator for the Land Titles Office where he investigated property, land and mortgage fraud, as well as developing protocols to strengthen security through the registration process. Currently employed by Servus Credit Union

as a Corporate Security Manager, Jeremy continues to investigate mortgage fraud, as well as developing techniques to reduce the risk of mortgage fraud for the Credit Union. Jeremy is a fully qualified Financial Investigator (UK) and is currently the President of the Canadian Prairies Chapter of the International Association of Financial Crime Investigators.

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Speaker MIKE SHAIKH Former Police Commissioner and ASC Board Member

Mike Shaikh is Senator-Elect for Alberta and Past Chair of the Calgary Police Commission. He is a successful businessman, a tireless volunteer and philanthropist. He is also director of Alberta Children Hospital, Education Matters and many more organizations.

He is a Fellow of Chartered Accountant, University of Calgary Distinguished Alumni, recipient of Alberta Centennial Medal, the Queen’s Diamond Jubilee medal, Rotary International Integrity Award , Immigrant of Distinction Award and Citizen of the Year Award for 2013.

Past board member of:Calgary Police CommissionUniversity of CalgaryCalgary Police FoundationAlberta Securities CommissionCanadian Air Transport Security AuthorityKiwanis Club of CalgarySenator for University of CalgaryPeople For Progress FoundationCanadian Association For Police GovernanceAlberta Law Enforcement Response Team

AMBA'S 411 ON FRAUD AND CRIME SCHEDULE9:00 — 9:15 am Opening remarks and welcome

9:15 — 10:00 am Keynote Speaker Jeremy Nicholls - Servus Credit Union, Corporate Security Manager

10:00 — 10:20 am Coffee break

10:20 — 10:50 am Speaker Mike Shaikh - Former Police Commissioner and ASC Board Member

10:50 — Noon Expert Panel — Experiences Along The Mortgage Chain Moderator: Equitable Bank Vicki Wearmouth – Regional Illicit Drug Operations/Prosecutions Specialist Chris Hayduk – Detective BAU/TOS CREB President - Mr. Bill Kirk, president Genworth Francis N.J. Taman, Barrister & Solicitor (Bishop & McKenzie)

Noon — 1:00 pm Lunch & Networking

1:00 — 2:00 pm Spot the Fraud - Interactive session with audience. Cases given and audience asked to identify where the fraud was or could have been identified Marie Dyck – Manager, Mortgage Insurance Fraud Prevention at Canada Mortgage and Housing Corporation

2:00 — 3:00 pm Closing Speaker – Economic Outlook for Alberta and Housing Outlook/Forecast Todd Hirsch - Chief Economist, ATB Financial

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SUMMER 201414

Spot the Fraud MARIE DYCK CFE AMP Manager, Insurance Fraud Prevention Canada Mortgage and Housing Corporation (CMHC)

Marie Dyck is the Manager, Insurance Fraud Prevention at CMHC where she co-ordinates fraud prevention, fraud training & awareness and fraud loss mitigation initiatives within CMHC’s Insurance Sector. Marie is a member of the CAAMP Mortgage Fraud Prevention Subcommittee and a past winner of the CAAMP Outstanding Achievement Award. She lectures on mortgage fraud at the Canadian Police College and regularly presents to lenders, brokers

and other industry partners. Marie believes that “fraud is an industry problem requiring an industry response” and actively participates in initiatives focused on working together to fight fraud.

Marie is a Certified Fraud Examiner and has worked exclusively in fraud detection and prevention for over 20 years. Her previous experience includes debit and credit card fraud, e-commerce fraud and others.

Alberta’s Economic Outlook TODD HIRSCH Chief Economist, ATB Financial

Todd joined ATB Financial in May 2007 as its Chief Economist. As the bank’s top economic expert, he tracks and analyzes developments in Alberta’s and North America’s economy.

Todd’s ability to translate the latest economic numbers into compelling and easy to understand stories is also valued by local and national media. He provides economic commentary for CBC, CTV, The Globe and Mail, The Business News Network and the BBC  and other local, national and international news outlets. In 2011, he was recognized as one of Alberta’s 50 Most Influential People by Alberta Venture magazine.

Todd received his BA Honours in Economics from the University of Alberta and an MA in Economics from the University of Calgary. Since completing his education

in 1993, he has held a series of economist positions at a variety of for-profit and public sector organizations, including the Canada West Foundation, the Canadian Pacific Railway and the Bank of Canada. For almost a decade, Todd taught economics at the U of C.

Todd has been recognized for his service to his field and community. In 2011, he was named a Rising Star by Oilweek magazine and one of Alberta’s 50 Most Influential People by Alberta Venture magazine. He was recently honoured by the federal government with the Diamond Jubilee Medal.

A highly sought after speaker, Todd presents to over 250 groups a year in Alberta, across Canada and internationally. In February 2012, Todd released his first book, The Boiling Frog Dilemma: Saving Canada from Economic Decline.

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SUMMER 2014 15

In 2010, Maclean’s magazine wrote a strong article on the issues around mortgage fraud in Canada, suggesting:

Statistics are not collected nationally, so nobody really knows how big of an issue it really is;

These white-collar crimes are difficult and time-consuming for police to investigate;

Nobody makes money spending time preventing fraud instead of selling mortgages, so it gets ignored.

At the time, the Bank of Montreal had uncovered a mortgage scheme that amounted to $70-million in mortgage funds with the banks losses estimated at $30-million� The scheme involved lawyers, mortgage brokers, four of the bank’s own employees and a Calgary MP� Not much has changed� Alberta continues to thrive and so does the criminal side of mortgages� Resources and the ability to deal with these crimes remain a challenge, and the degree to which the industry as a whole focuses on its role within the issue has remained relatively small�

Fraud is owned by every aspect of the mortgage industry, but the relative lack of dialogue leaves everyone trying to tackle the issue on their own� The Maclean’s article quoted the chief executive of Home Capital Group as saying more resources needed to be directed toward this topic� That is the goal of the

upcoming symposium, 411 on Fraud & Crime, that the Alberta Mortgage Brokers Association (AMBA) will host on October 8, 2014 at Mount Royal University in Calgary� The philosophy behind the event is that if we talk about it, with real Alberta examples and side by side with all branches of the industry (including real estate agents, appraisers, lawyers etc�), then the issue can start to be tackled�

The magazine article indicated that mortgage fraud is straightforward, but in this instance they oversimplified matters� Title fraud is not the same as flip fraud for instance, and being aware of the variety is an important first step to recognizing the red flags� In October, AMBA has put together a strong lineup with an Edmonton-based fraud investigator, a former police commissioner and ASC board member, a panel of industry professionals, including a police detective, government body, real estate agent, broker, and appraiser, a session on red flags� Economist Todd Hirsh will also provide an update on Alberta to see if the booming economy will continue (big economy is great for business but means an appeal to criminals as well)�

Maclean’s quoted Greg Draper, a forensic accountant in Alberta and former RCMP officer, as saying indifference to the issue is in part because, "nobody gets shot over mortgage fraud and the Hells Angels don't typically come and burn down your house�" But the industry’s professionalism is damaged when these frauds come to light and everyone gets tarnished with the same brush� Identifying the issues before they arise is a lot easier than dealing with the clean up after they occur� Let’s talk about what is happening in Alberta� Mark your calendars for October 8, 2014 and attend the 411 on Fraud & Crime Symposium�

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SUMMER 2014 16

CASL IS LIVE, NOW WHAT?By Miro Bracic

July 1, 2014 has come and gone and Canada’s Anti-Spam Law is live� So what has changed? Nothing�

As an industry, brand and marketing plays a big part in how mortgage brokers, lenders and industry partners do business� Many have assumed that CASL will change this, that the new rules will prevent us from getting our messages to clients� What we’ve actually learned is that the new rules will help provide our industry with the ability to better communicate to those who have specifically requested communication�

CASL has provided some stronger guidelines as to how and what we communicate to clients, but it in no way has stopped the message. Remember, CASL has asked us to:

Identify clearly who we are;

Make sure we have permission;

If we don’t have permission, determine whether we can still send messages and get permission.

None of these rules prevent messages from being sent� The basic premise of these rules is simply to ensure we CAN send emails, texts or any other form of Commercial Electronic Messages

(CEMs)�

STOP THE SPAM While none of us believe we send spam, sending electronic messages to those who don’t want it is a form of spam� On a daily basis, we receive emails from people/organizations that we don’t have an existing relationship with, or

individuals we don’t know�

CASL helps to stop this. We can now ensure that messages we receive will be relevant to what we want, what we’ve asked for and, most of all, from people we want to hear from.

With this in mind, we can now better direct our messages� Our focus will be with the individuals who want to hear from us, who are interested in our information and, most importantly, feel that they are receiving information that is relevant to them�

There are those who will ask to be on your ‘Do Not Contact’ list so, yes, you must stop sending CEMs to those individuals� However, that does not mean you can’t get your brand and marketing pieces out to those people as well� While this may sound archaic, using your phone to make calls is still the best way stay in touch other than a face-to-face discussion� Talking to someone is not an electronic message� You are free to keep in touch with every individual you know by picking up the phone�

Don’t forget about snail mail, either. Send a personalized birthday card, a letter congratulating your client on a new home, maturity notifications for those who are coming up for renewal, or any other items you would like to put out there. Paper mail is still a very viable solution to stay in touch. I know for me, personally, anything other than the standard bills is welcomed in my mailbox!

For more information about CASL or inContact’s Snail Mail program, please feel free to contact me� And, yes, consider this expressed consent to add me to your electronic communications� Thank you and remember, stay CASL compliant!

Miro Bracicmbracic@incontact�ca647�521�6433

SUMMER 201417

RENTAL PROPERTY

FOR BUYING ATIPS

Article Sponsored by

Jody Robbins, Special to AMBA Matters

Having somebody pay off your mortgage for you sounds pretty good, doesn’t it? While rental properties aren’t guaranteed money, most experts agree they are one of the best, tangible long-term investments a person can make�

“It’s like someone offering to pay into your RSP account for 20 years� You wouldn’t turn it down,” says Kellie Bent, a Calgary-based realtor and property investor� Here’s a look at the advantageous and risks associated with buying a rental property�

WHY OWN A RENTAL PROPERTY?Besides the obvious benefits of writing off expenses and interest on your mortgage, rental properties can be a sound investment for any extra equity you’re unsure what to do with� It’s also considered good side business if you’re looking to generate extra income�

Bill Biko of Mortgage Alliance/ S&R Mortgage Group was looking for a revenue stream that would allow his family more freedom�

“It’s something tangible, unlike a stock or RSP investments that could eventually disappear,” he says� “Real estate has its cycles, but if you have a long-term window, it can be a wonderful investment� In 25 years you could have a fully paid-off property with rental income�”

SAVVY SKILL SETAs lucrative as getting into the rental property game may be, it’s not suitable for everyone� Investing in real estate is a people business�

“If you don’t like working with or talking with people, you might as well stick with buying real estate stocks or REITS� The more you talk and interact, the better the deals will be when they’re presented to you and the easier it’ll be to raise capital to build your portfolio,” suggests Don R Campbell, Senior Analyst with the Real Estate Investment Network and a best-selling real estate author�

The real estate market isn’t foolproof. Potential investors need to have a high tolerance for risk and feel comfortable leveraging themselves. While not a requirement, it’s also useful if you’re handy. With the trades market being so busy, it’s often easier (and cheaper) to do small renovation or maintenance jobs yourself.

Most importantly, you need to be willing to put in the necessary time and effort� This involves researching potential properties, understanding to whom you want to rent, and dealing with issues along the way� When running smoothly, budgeting an hour a month per property is realistic� Once you have a vacancy, however, it can take several days to rent out, in addition to being deluged with phone calls�

SUMMER 201418

“As much as real estate is touted as a passive

investment, it’s very hands-on,” says Biko�

WHAT TO LOOK FOREveryone knows location is

the No� 1 rule in real estate, and always considering the re-sale value

of your investment is key� Some believe you should invest in the neighbourhood you live in to keep an eye on things, but for many, that gets too personal�

Biko, who’s dealt with more than 1,000 tenants is his career, opts for a multi-stream approach, preferring properties with suites so the mortgage is covered even if one unit is unoccupied�

“In Calgary, you can buy a residential home in Tuscany for $400,000 and get about $2,000 a month in rent versus buying for $100,000 less in Dover and getting more rent from it by renting upstairs, downstairs and the garage,” he says�

Consider whether renovations are needed immediately. While it’s more hassle initially, you’ll likely be able to command more rent and should have less work to do later besides typical wear and tear. That said, nobody needs a money pit, so if you’ve found a property with several issues, carefully consider the costs of repairing major items.

“You have to be very smart when picking rental properties� You have to know what you’re paying out and crunch all the numbers before purchasing,” says Bent�

Over-renovating a property is also a major no-no�

“Making it up to the standards the owner would want to live in rather than what the market expects for the neighbourhood causes issues� They end up spending too much and it can take years to recoup if the neighbourhood doesn’t allow for higher rents,” warns Campbell�

ROOKIE ERRORSMany novice investors jump in without doing their due diligence on financing options, the neighbourhood or even the property itself. Being too trusting is also typical behaviour of those new to the field. Allowing a tenant into a property without first collecting their damage deposit can end poorly.

Strategic investors don’t buy because the property is cheap, especially in the hopes its value will increase over time.

“That’s gambling and speculating – not investing,” notes Campbell. Savvy investors purchase only after they’ve found a fair price in a region they’ve identified as having long-term growth potential.

There’s also an assumption that if someone qualifies for a personal residence mortgage, they also qualify for a rental property� Mortgage Brokers know this is not the case, but many consumers don’t understand the difference between the mortgage approval process on personal residences and rental property�

BUYER BEWAREAlthough there are many advantages, owning rental properties isn’t a one-way ticket to Easy Street� It’s important for investors to know their limitations and the risks associated� Educating tenants takes time and if not done properly, you’ll be dealing with more 3 a�m� phone calls to fix a leaky toilet than you ever thought possible�

Getting taken advantage of by renters is also common, whether it’s not paying the rent on time or leaving the property in a depreciated state when they move. Damage deposits only go so far and, in many situations, not far enough.

It’s essential investors have a long-term picture� Unloading property is a much longer, more arduous process than selling stock�

“You can’t eat a brick,” says Biko� “You can have a ton of equity in a property, but that money isn’t available to you until you sell or mortgage it�”

FOUR TIPS FOR SCREENING TENANTS

Understanding whom you’re renting to is paramount to making your rental property investment as hassle free as possible� Depending on the rental market, you might not always have the best selection� Here are four tips to help you find good renters�

1. Check all references. Beware of scams where potential rentals give their friend’s phone number. Make sure the references are accurate, such as current and previous employers.

2. Talk to all previous landlords. You don’t necessarily want to talk to their current landlord (who may want them out so badly, they won’t divulge all the dirt). Talk to previous landlords to get the real scoop on prospective tenants.

3. Check ID to ensure you’re screening the correct person.

4. Perform a credit check to ensure there’s nothing nefarious in their background.

ARE PROPERTY MANAGERS WORTH IT?Using a property management company to advertise and rent out the property, plus deal with any issues that arise, is more hassle-free than doing it yourself� But it can eat into profits� Savvy investors know to calculate the cost of using a property manager when running the numbers to make sure such an arrangement is worthwhile�

For Bent, going with a property management company was well worth it� Through them, she realized several of her properties were 15 percent below market value� The 10 percent fee charged by her property managers was still below the additional rents received�

SUMMER 2014 19

“Property managers can deal with all the pain� They’re great for getting you the best value for your property and dealing with issues in timely fashion, if you don’t have that time,” says Bent�

Biko recommends managing properties on your own at first to learn the ropes�

“Nobody’s going to take as good of care of your property as you will,” he says�

BEST PRACTICESTo be successful, all experts agree you need to act like a business owner, not a landlord� Think of tenants as customers who receive a quality product from you at an attractive price� Manage your expenses as any business owner would and reduce them, but not to the point of damaging the quality of your product, advises Campbell�

“With this outlook, you can weather the inevitable market ups and downs and be able to attract quality tenants even in tough market times,” he says�

Successful investors look long-term, a minimum of five and ideally 25 years out, and are always ready to act when a new opportunities arise. Campbell stays prepared by having a complete financial overview and backing documents ready long in advance of finding properties. He also recommends having a quality mortgage broker review the documents to identify potential information gaps needed in advance of submitting an offer for financing. 

It’s as essential to maintain a spreadsheet for all expenses and revenues, factoring in vacancy potential, as it is building up a nest egg in case of unforeseen costs� Three months of mortgage and tax payments is a nice cushion that lets you sleep at night when unexpected issues and vacancies arise�

You’re only as good as your team, so ensure you have a lawyer, accountant, Realtor and mortgage broker on your side who have investment real estate experience. Campbell recommends interviewing several, checking to see if they own any property themselves, so they can help identify problems in advance. “There is a big difference between those who have this specific experience and those who do not,” he stresses.

Finally, remember to get that damage deposit and make sure the lease has strict policies, so you have reasonable grounds to terminate if necessary�

For general tips and guidance on being a landlord (and a free course on how to screen tenants) visit: www.theeducatedlandlord.com, as well as: www.servicealberta.gov.ab.ca/pdf/tipsheets/Information_for_landlords.pdf

For information and resource about evictions in Alberta visit: www.albertaeviction.com

SHARE THIS HELPFUL ARTICLE WITH YOUR CLIENTS A PDF OF THIS ARTICLE IS AVAILABLE IN THE MEMBER ZONE UNDER MEMBER RESOURCES

Call us today for more infomation

888.752.4642Dale Koeller, William Charlton & Dean Koeller

WE PROVIDE NICHE LENDING FOR:

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SUMMER 201420

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SUMMER 2014 21

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SUMMER 201422

AwardWinners

2014

Paula Hutton V.W.R. Capital Corp.

The volunteer award is chosen by the AMBA executive� Volunteers are at the very heart of what makes AMBA successful� We have a great staff team, but they could not possibly pull off all of the activities, communications and represent us as well without the support, time and expertise of the industry professionals who volunteer with the Association�

Volunteer Award

Douglas Whelpton Verico Worry Free Mortgage

The Leadership Award was renamed this year from the Executive Award to recognize the true nature of what the Association is trying to recognize� This award recognizes an individual who has been a leader in terms of involvement in the industry, promotes the use of a broker, and has provided encouragement to other brokers, given input on industry issues and generally has a positive impact on the industry or their own company�

Leadership Award Formerly the Executive Award

Derrick Leue LMS Prolink

This award recognizes individuals who have gone above and beyond in terms of promoting brokers, educating the industry and working in partnership, with not only the industry, but also the Association�

Partner Award

KananaskisKananaskis

SUMMER 2014 23

Pat Kelly The Mortgage Group

This award recognizes those who have represented not their company, but their industry and/or their association for the betterment of our profession�

Ambassador Award

Gary Siegle Invis and Mortgage Intelligence

The President’s award has been renamed to the Bill Patton Memorial Award� This prestigious award is given to an individual who has contributed to their industry, association and community over the years to create positive change� Bill exemplified the very best of what the AMBA award tries to recognize and for that reason the AMBA board was thrilled to be able to recognize him in this manner�

Inaugural Bill Patton Memorial Award Formerly the President’s Award

Optimum Mortgage

Congratulations to our first place winner Optimum Mortgage� They have won a free booth registration in the 2015 trade show! Cedar Peaks Mortgage took second place and V�W�R� took third�

Conference Winning Booth

Mark Herman Mortgages Are Marvellous

Winner Axiom $5K Cash Giveaway

Toll free: 866-698-5388Residential:Michael Gough: mgough@lanyardgroup.comMike Saba: msaba@lanyardgroup.com

Commercial:Mike Saba: msaba@lanyardgroup.comBrian Chelin: bchelin@lanyardgroup.com

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Interest Rates Starting from an Incredible 5.75%

$1,000,000 - $15,000,000

High-End Single Family:• L/V: Up to 65%• Interest Rates: from 5.75%• Fees: from 1.5%

Income Producing Properties:• L/V: Up to 75%• Interest Rates: from 5.75%• Fees: from 1.0%

Condo Inventory:• L/V: Up to 65%• Interest Rates: from 7.0%• Fees: from 1.5%• Flexible Partial Discharge

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SUMMER 2014 25

FLIP FLOPS, FLIPPIES, THONGS OR JANDALS

Tim Hurlbut, Alta West Capital BDO Alberta

Flip Flops, Flippies, Thongs or even Jandals� What you call them depends on where you come from�  

Regardless of what you call them, why would I write about flippies in a mortgage magazine? How do flippies relate to mortgages?

Those of you who have ever had the pleasure (or displeasure) of golfing with me will know that I upset the traditional golfers when I wear my flippies on the course� Yes, I wear my flippies every time I golf� They are my “golf shoes” and of course they do not have spikes� 

So why do I wear them? Why not wear traditional golf shoes with spikes? After all, aren’t golf shoes designed to provide the support and grip I need to really wind up and drive the ball long and straight down the fairway? Why wouldn’t I use all of the tools available to succeed in what typically can be a frustrating sport? How can I possibly swing as hard and drive as far wearing flippies as the guy beside me in full golf attire?

Well, of course I can’t� Don’t get me wrong, I can hit a ball� I can comfortably drive 300 yards with or without my flippies� But the point is I don’t want to hit it hard, I want to put the ball where I need it — accuracy is more important than the distance� By wearing flippies I am forced to slow down, swing a little softer and ensure that I place the ball where I want it� I am forced to think a little about where I can take my next shot from and possibly even the shot after that� By slowing down, the result is better golf and lower scores�

Not every shot ends up quite where I want it. I’m not that good. If I were, I’d be a professional golfer and not in the mortgage game— but you get my point. Slowing down and paying more attention to detail and accuracy whether on the golf course or working with mortgages can be a good thing. Giving thought to the next shot or the next deal is more important than driving that extra few yards.

When brokering a deal, particularly one on the ‘B’ or ‘private’ side, you owe it to yourself and particularly to your client to slow down� Get to know your client� Know what motivates them� Understand how they got in the situation they are in and how they intend to get out�

Find out what shots need to be played� Do they need financial advice? Maybe they need a good accountant or bookkeeper? Understand that they may require more than one shot to get where they want to be� You may place them with a private mortgage for now, but how are you then getting them to a ‘B’ deal and finally on to sink that ‘A’ deal?

Think about it — by slowing down and not just getting that tough deal off your desk as fast as possible, not only are you more likely to have a satisfied client but you’ll likely have repeat business�

Some will need more of your help, others will need less, but be prepared to put on your flippies and slow down� I think you will find it worthwhile for your clients and your business�

As a caveat to my example of flippies, please do not wear them with your dress pants� 

private lending

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1-888-554-9075

SUMMER 201426

ALBERTA ‘SANDWICH GENERATION’ HAS $491,000 SAVED FOR RETIREMENTAlbertans in the so-called ‘sandwich generation’ on average have currently saved the most money for retirement compared with other regions of the country�

A BMO Nesbitt Burns study, released in August, said Albertans in that generation, which are aged 45-64, have saved $491,000 - much higher than the national average of $258,000�

In the survey, Albertans said $970,000 was the average amount needed in order to have an ideal retirement lifestyle� For Canadians, it was $818,000�

The study also found that: 53 per cent of the sandwich generation in Alberta, and 55 per cent nationally, are currently caring for their children, aging relatives or both; 32 per cent in Alberta, and about one-third in Canada, currently care for a parent or older relative; and 47 per cent in Alberta, with 39 per cent nationally, are concerned that being in the situation of caring for others will impact their ability to meet key financial goals, including saving for retirement�

The survey found that 76 per cent of Canadians, and 72 per cent of Albertans, are finding the stress of everyday living is affecting their long-term financial goals�

CANADIAN HOUSE PRICES CONTINUE UPWARD SWING IN JULY Canadian home prices showed momentum in July, rising 1�1 per cent from June, according to the Teranet-National Bank house price index�

Victoria, Ottawa, Toronto and Quebec City had the highest month-to-month increases, and 10 of the 11 cities that the index tracks saw prices rise from June� The outlier was Winnipeg, where prices have ticked down for three months in a row�

The 1�1-per-cent national gain marked the first time in five months that prices rose by more than the historical average for that month� It was the eighth month in a row that prices rose from the prior month�

On a year-over-year basis prices across all the markets rose 4�9 per cent� Calgary’s prices were up 8�2 per cent from the prior July, Hamilton’s 7�1 per cent, Toronto’s 6�6 per cent and Vancouver’s 6�1 per cent�

Edmonton saw prices rise 3�7 per cent from a year earlier, Victoria 2�5 per cent, and Montreal 1�5 per cent� Winnipeg and Ottawa’s prices were each 0�1 per cent lower than a year earlier, while Quebec City and Halifax’s were each down 1�2 per cent�

HIGH HOME PRICES SEND 35 TO 44 AGE COHORT TO TOP SPOT FOR DEBT Canadians who were aged 35 to 44 in 2012 have racked up more debt, relative to their net worth, than their peers did in the past�

That’s one of the findings in a new Royal Bank of Canada report about rising leverage, which dug through Statistics Canada data from 1999 and 2012 (the years for which data on debt, broken down by age group, were available)�

Not only is this particular age cohort more levered than people in that age range had been in 1999, it is more levered than any other age group is at the moment� And that makes this group more vulnerable to any economic shocks, especially in the housing market�

Home prices are the main reason that they’re so indebted�

Even though mortgage rates are lower than they were in 1999, those aged 35 to 44 in 2012 have been making larger average monthly mortgage payments than their peers had been back in 1999 because they’ve taken on larger mortgages� “As a rough approximation, the monthly mortgage payment on a 25-year mortgage at market rates and average mortgage debt outstanding has risen much more sharply for the 2012 cohort of 35-44-year-olds compared to their 1999 equivalents than for other age groups,” the report says�

But mortgages aren’t solely responsible for this group’s leverage�

SURVEY FINDS HONESTY NOT ALWAYS THE POLICY FOR SOME LOAN APPLICATIONS A new survey has turned up some troubling findings: Nine per cent of Canadians admit to being “not entirely truthful” on an application for credit or a loan, and 10 per cent said they think that it’s actually okay to inflate annual income when applying for a mortgage�

Those were some of the results of an online survey of 1,500 people that was done for Equifax Canada, a company that’s best known for tracking consumer credit scores�

Canada’s banking regulator, the Office of the Superintendent of Financial Institutions, highlighted income verification when it issued new guidelines for mortgage lenders in 2012�

INDUSTRY NEWS

SUMMER 2014 27

Submitted By: Dean Koeller

WHY IS PRIVATE SO IMPORTANT?Over the last several months, private mortgage lending

has experienced a change in the type of business that it is

underwriting. There is definitely a growing need for private

mortgage lending that has a greater flexibility of options

than what is available through the financial institutions that

are regulated by mortgage insurance and the Office of the

Superintendent of Financial Institutions (OSFI).

One of the biggest advantages for mortgage brokers with

private mortgage lending is that the these mortgage products

are for all intents and purposes only offered through the

mortgage broker channel which provides an effective

competitive advantage.

Private mortgage lenders offer mortgage brokers a unique set

of products. With no insurance restrictions, private mortgage

lenders can be flexible in their lending to meet specific

circumstances of your clients. Even if you do not specialize in

alternative products, it is important to know what options are

available.

The following are some situations that may apply:

Time sensitive transactions

Investment properties

Construction financing

Non-conforming property

Foreclosure situations

Poor credit

Bridge financing

Variability of income

Business for self

THE PRIVATE MORTGAGE LENDERS FORUM (PMLF) FOCUSHere is a summary of some of the issues our group is focused on today:

Celebrating the results of a letter-writing campaign in partnership with The National Exempt Market Association to oppose the proposed amendments to NI 45-106, which would restrict an individual’s ability to invest in the exempt market. Over 371 letters were sent to regulators in Alberta and over 1,000 across Canada. We are hopeful that these letters will deliver a clear message to regulators.

PMLF Industry Code of Conduct has been approved by the membership.

There are a total of 20 membered companies participating in the PMLF, representing more than $1 billion in mortgage financing.

HOW TO LEARN MORETake the time to learn more about the private mortgage lenders in your area and understand how they can help you be more informed and offer more solutions to meet your clients’ needs. As chair of the Private Mortgage Lenders Forum, Dean Koeller is available to answer any questions, 403.278.0249, dean@chmic.ca.

FORUM UPDATE

1.

2.

3.

SUMMER 201428

By Gay Andrews, Caplink Financial

As lenders, we are constantly asked, “Will you lend on this type of property?” and “What loan to value will you go to in this market area?”

Those property types vary from high-end homes in small-market areas, to mobile homes on leased land, to non-conforming properties� Market areas can range from very remote locations to major urban centres� As a result, these questions are not always easy to answer without having a bit more knowledge of the true market area or a good description of the property in question�

For example, we may receive a request to finance a property in Westlock, but when we do some due diligence we find the property is actually located in Westlock County� This could mean the loan to value we would have offered on a property in Westlock would be higher than one that is actually in Vimy, Westlock County� While both properties may be acreages, the smaller market of Vimy makes it more risky to a lender�

While private lenders will typically lend on a variety of different and even unique properties, in unusual market areas, or to a higher loan to value in some areas as compared to that of a conventional lender, knowing your private lender’s guidelines is very important� As each private lender has their own niche market area and even property types they will lend on, they also have different investors who will take different levels of risk� It is important that you as a mortgage broker have a few private lenders that you deal with to ensure you have all of the market areas and property types covered to assist your clients�

Of equal importance is being able to wade through and understand the different property types and market areas to know how they are viewed by a lender for their level of risk� Knowing a little bit about it from the lender’s perspective may assist you in being able to know where to get your deal done and even how to package the deal properly to the lender�

As discussed above, property types are a factor when considering lending on a property� Rates and fees may

WADING THROUGH THE PROPERTY

WATERS

SUMMER 2014 29

MOBILE HOMES ON LEASED LANDThis is a mobile home situated on a site where the land is not owned by the mobile home owner� As the land is leased by the mobile home park, you cannot put a conventional mortgage on this product type� The security a lender can obtain is a security agreement (chattel) over the mobile home that is registered with the Personal Property Registry (PPR); this is the same as if you lend money for a client to purchase a car� The lender requires the serial and model number of the mobile in order to properly register the mobile� In most cases, the lender will also require a Tri-Party Agreement in order to further ensure their security is protected� A Tri-Party Agreement is a document that is executed between the landlord (mobile home park), the tenant (borrower) and the lender� This agreement states that should the borrower default under the site lease, the landlord will notify the lender in order to allow the lender to cure the default and then take the necessary action toward their borrower�

Not every mobile home park is the same� Some are located in more attractive areas or are better managed than others, so lenders take that into consideration as well�

MOBILE HOMES ON OWNED LANDAs above, this would be fixed to the property but the land it is situated on is owned and titled to the mobile home owner� As this property has the ability to obtain registration at Land Titles, you can place a mortgage on this product type� In some cases, the lender may also register a security interest with PPR, so the serial number and model number would be required�

In both instances, the loan to values will vary with each lender due to age, size and condition of the mobile as well as where the mobile is located and zoning of the land� It is important to get the make, model and serial number of the mobile for the lender� Some lenders may also require the manufacturer’s name, year of manufacture as well as the Canadian Standards Number (CSA)� This certification label (sticker) is usually located on the inside the door of the electrical panel� In older mobiles, these labels may have been removed over time� You might find the information on the unit’s undercarriage structure on the front (tongue)� You can also check with your client to see if they have the original sales invoice�

Whether they are on owned land or leased land, to prevent the structure from overturning, a mobile must be anchored to the ground� This is done in a variety of ways, but typically they are tied down with a piling system (cement or screw piles) and can be on a foundation or a blocking/cribbing system also known as a surface or pier mount foundation� If the mobile is only resting on wood pilings and not anchored, even if on owned land, a lender may either require the owner to properly anchor it or may only consider land value for lending purposes�

be set according to the property types� For example, a raw land deal will most likely be a higher rate than a single family dwelling (SFD) as the demand of the SFD would most likely be greater than that of raw land, so less risk� Market areas are also important� If we had duplicate properties located in Edmonton and Camrose, they would have different values due to land costs in that market area but would also have different resale markets due to supply and demand�

Another factor a lender will consider is areas dependent on a particular resource or industry� Let’s look at Hinton� While its market is steady, should the Coalspur Coal Ltd�’s Vista thermal coal project come to fruition, this could create a potential of more than 500 permanent jobs, not only increasing Hinton’s population but it also increasing that market area’s demand for housing and other development� If it goes through, it will be a good market area for some time� But someone wanting to buy into the market area now

in anticipation the mine will go through will most likely not receive the higher loan to value from a lender as if the mine was in place�

Typically, high-end homes, acreages and smaller market areas are the properties that lose their value quickly when there is a recession� Private lenders that understand this and their markets have a lot of years of experience with these cyclical trends and have amended their lending guidelines or practises based on their past experiences�

Below I have highlighted some of the property types we receive the most questions about� This by no means covers all of the types of properties lenders will lend against� This is meant to be a brief discussion and is not intended to be an exhaustive review�

MOBILE HOMES

SUMMER 201430

VACANT LANDUnlike raw land, vacant land is land not currently being

utilized� It may have utilities and some infrastructure in place� An example would be a new subdivision lot that has all of the utilities ready to go for a new build� Loan to values are typically higher on vacant land than that of raw land�

FARM LANDAn important question to ask any borrowing client up front if they are looking for financing on land of any form is whether they earn any farm income� Even if they do not farm the land themselves but lease out their land to someone else, if they declare farm income on their taxes they are deemed to be a farmer� This is an important issue for lenders as this allows a borrower, in a foreclosure situation, to be protected under the Farm Debt Mediation Act� Meaning the borrower is given the opportunity to mediate their debts before any enforcement can be commenced� If borrowers choose mediation, the enforcement (foreclosure action) is stayed (put on hold) as much as six months� This delay in the process not only adds additional costs to the lender, there is a market fluctuations risk that could also affect the lender’s ability to recover their mortgage amount and costs�

Note: It is actually a good practise to ask all of your clients if they earn any farm income� They do not have to live on a farm to earn farming income� If a borrower earns any income from farming, they have the ability to mediate their debts with Farm Debt Mediation�

ACREAGESMost conventional lenders will restrict the amount of acres that will be considered in the valuation of the property, and most likely will not put any value to any outbuildings, corrals, sheds, etc� They may only consider the home, garage and up to 10 acres� A private lender will usually allow for the total acreage as well as all assets on the property (assuming they have value)�

If the acreage is located rurally and the property is on well water, a lender may require a water potability certificate to ensure it is fit for human consumption� Some properties have a cistern or tank for holding water, but a lender may still require a water quality test for a holding tank�

Loan to values may be determined due to the population in the direct area and the proximity to a major urban centre�

Note: As above, confirm if there is any farming income�

RAW LANDRaw Land means that the property is in its original state — no services or any kind of development has been done on the site (no infrastructure, grading)� As raw land typically does not generate any form of income, (exception being farm land which I will discuss later) without this cash flow a lender typically will only consider a lower loan to value for these types of properties� Depending on the zoning and what is in the surrounding area, an environmental report may be also be required�

RAW LANDFARM LAND

VACANT LAND

LEARN MORE:

SUMMER 2014 31

NATIONAL PARK LEASESThere is a regulation of the Canadian Government under the Canadian National Parks Act which is known as the “need to reside” rule� This basically means someone who wants to own and reside in a National Park must be able to swear a statutory declaration confirming that they can be defined as an eligible resident within the requirements of the regulation� Simply stated, the buyer must be someone who will either be primarily employed or operating a business in the National Park� An exception is that you could rent out your property to a tenant who is eligible� These properties are leasehold, which requires an executed lease agreement�

PROVINCIAL PARKSAs above, these properties are a leasehold and not a fee simple titled property� The Provincial Park leases typically do not have a need-to-reside requirement, or may have a little more lenient and relaxed policy about this�

With both the national and provincial leaseholds, some lenders may either lend on a lower loan to value or not at all due to the restrictions surrounding the leasehold or the requirement of the need-to-reside restrictions�

This is but a small sample of the different property types on which lenders will lend� Hopefully, this provides you with a bit more insight as to why lenders will amend their loan to values in certain markets or on certain properties� Bottom line — while it is important to know your client, you should also know your market� And, most importantly, know your lender�

Remember, this is a transaction for you but it is an ongoing relationship for the borrower and the lender�

PARK LAND

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PRODUCTION SPECIFICATIONSProject #: 37037 Date: Jun 10, 2014 CD: PR: Margot PM: C M Y K

Client: First National Size: 8" × 5" AD: Paolo PD: Sarah CW: PMS #

Project: Residential Ad Campaign Bleeds: 0.0" GD: warren PMS #

Deliverable: Print Ad Fonts: Gill Sans PMS #

File Name: 37037 FN ResidAd AMBA Keys Ev2 Copy Deck: Lang.: English

2014 © Bond Brand Loyalty. The fonts/images and related software included with the attached electronic mechanical are owned and/or licensed by Bond Brand Loyalty Inc. They are provided to you as part of our job order for your services, and are to be used only for the execution and the completion of this job order. You are authorized to use the fonts provided by Bond Brand Loyalty Inc. in the execution of the job order, provided that any and all copies of the Bond Brand Loyalty Inc. fonts shall be deleted from your systems and destroyed upon completion of this job order. You warrant and represent that you have secured the necessary licenses for the use of Bond Brand Loyalty Inc. Licensed fonts in order to execute our job order and will abide by the terms thereof.

Bond Brand Loyalty | 6900 Maritz Drive Mississauga Ontario L5W 1L8 SLUG DV1 |  June 2/14

F I N A N C I A L L P

Strength in numbers. firstnational.ca

Our keys to success. Our commitment to you.

First National provides the experience, technology and service to ensure you the broker do more business. What’s more, we’re here to help your customers realize dreams beyond simply taking the keys, like solving debt concerns to fulfilling dreams with clever refinance solutions. Together we arranged 41,330 mortgages in 2013.

That’s strength in numbers.

41,330.Just a few of the keys

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SUMMER 201432

Derrick Leue President, LMS PROLINK Ltd.

News of the latest cyber breach has become a near daily occurrence� The incidents that get public attention are just the tip of the iceberg� Most cases don’t become public knowledge because there is: a) no legal requirement to notify affected parties in Alberta unless the Privacy Commissioner specifically requires a notification to be made; or b) because organizations fear reputational damage if they publicly disclose the event� As we continue to rely more heavily on digital data records, cyber risk is an exposure that all mortgage brokerages should anticipate and plan for through enhanced policies and procedures, and appropriate insurance coverage�

According to The Ponemon Institute’s 2013 Cost of a Data Breach Study, more often than not, human error or network system problems are the culprit in a data breach (59 percent of cases)�

Smartphones, laptops, tablets, and USB storage devices, to name a few personal electronic devices, have rapidly changed how we interact with data and networks�

COSTS OF DATA BREACHES

As data breaches have grown in number, the costs associated with a breach continue to rise. The costs of a data breach can be crippling for small businesses that have to pay for the expenses associated with a breach. Certainly, remedial and restoration work has to be done on servers and data files. Notifications might also have to be made to those affected, such as customers, lenders or prospects. For example, if a company is required to notify individuals whose personal information is stolen or lost, and provide those people with monitoring services, the costs to the company could be thousands of dollars.

The interruption to your daily business and possible legal actions by customers for their costs incurred can also add to the expense of a data breach. A breach may cause you reputational damage, which could require you to hire public relations professionals to help mitigate the damage.

PRIVACY AND DATA

BREACH THREATS

SUMMER 2014 33

Contact The PROLINK Insurance Group:Website: www�lms�ca/amba E-mail: AMBA@LMS�CAPhone: 800-663-6828; Derrick Leue President, LMS PROLINK Ltd; E�DERRICKL@LMS�CA

COVERAGE OPTIONSSince it is often not a matter of ‘if’ a data breach will occur but ‘when,’ brokerages may also want to consider implementing some type of risk transfer through insurance.

Traditional insurance products, such as a commercial general liability or commercial property insurance, do not provide coverage for third-party liability exposures or an interruption to your business when a cyber-attack causes a denial of service that adversely impacts a company’s operations. Some of the RECA-approved errors and omissions / professional (“E&O”) liability policies may extend limited coverage for third-party liability exposures arising out of a privacy breach. There is rarely coverage provided for your own direct costs incurred as a result of a breach impacting your operations (e.g., the cost to notify affected persons or to cover loss of revenue) unless the policy specifically states that ‘first party’ expense coverage are included. ‘Cyber’ insurance is a new form of policy that is designed to respond to direct costs incurred on a first-party basis following a data breach, as well as to third-party liability claims arising from that data breach.

Liability insurance is complicated, which is why AMBA has partnered with LMS PROLINK Ltd� (www�LMS�CA/AMBA) to provide members with a professional insurance program that can be customized to meet the unique needs of each member� The E&O Plus+ insurance program available exclusively to AMBA members offers cyber liability coverage starting at only $35 per year when you bundle it with your E&O Plus+ policy� Contact the AMBA Insurance Program specialists at LMS PROLINK to learn more�

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At Optimum Mortgage, we specialize in alternative

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in working with our brokers to understand the whole

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Let’s get to work. Contact your BDM today. T. 1.866.441.3775 / F. 1.866.477.8897 / optimummortgage.ca

Sensible solutions for your self-employed clients.

SUMMER 201434

Gay Andrews is one of the principals and Executive Vice President, COO of Caplink Financial Corporation, one of Western Canada’s largest private mortgage lenders, as well as a founding member of Camrock Capital, which is a real estate investment asset investment firm�

Gay has been in the mortgage industry for more than 30 years� In 2010, Gay completed her Masters of Business Administration from Cape Breton University, specializing in Community Economic Development� She is a licensed mortgage broker in B�C� and Alberta, as well as a member of many industry associations� She has served two terms on the Alberta Mortgage Brokers Association (AMBA) board�

TELL US A BIT ABOUT YOURSELF …

WHERE ARE YOU FROM?I was born and raised in Victoria, B�C� and moved to Edmonton 18 years ago�

WHAT ARE A FEW OF YOUR HOBBIES?I love fly fishing, skeet shooting, kayaking and hiking with my dogs, but mostly spending time with my family�

HOW DID YOU GET STARTED IN THE BUSINESS?I was a banker for most of my career, but after moving to Edmonton, I decided to make a career change� I was recruited by Caplink (as their first employee), which at the time was only just over two years old� A few years later, I became a minority shareholder and

then in 2011, I bought out the other majority shareholder and now Caplink is owned by myself and Brian Menges�

WHAT DO YOU LOVE ABOUT MORTGAGES?In the private lending sector, every deal that comes across your desk has an interesting story or problem that needs to be solved, and as no two transactions are alike, it keeps it exciting� Larger institutional lenders are often more formula driven — it’s less about people and more about process� While we view ourselves as in business to solve a temporary credit problem a client is having, to be able to help them through their situation to enable them to then obtain institutional financing is very rewarding�

PLEASE TELL US A LITTLE ABOUT YOUR COMPANY...Caplink was founded in 1997� It has grown into one of Western Canada’s largest private lenders� We have both syndicated investors as well as two mortgage investment corporations (MICs)� We offer mortgage brokers the extensive knowledge and lending capacity required to fund a wide range of residential and commercial properties up to $20 million� Due to our experience and broad funding capabilities, Caplink can customize financing packages to accommodate first and second mortgages, blanket mortgages, bridge financings, business for self, poor credit, bankruptcy settlements, foreclosures, hard to verify income, off balance sheet financing and other specialized financings� Caplink will finance residential, commercial, retail, industrial, multi-family, recreational, and acreage properties� www�caplink�ca

Caplink is licensed as an Exempt Market Dealer, Investment Fund Manager and Restricted Portfolio Manager in B�C�, AB, MB and in SK as a financing corporation�

AMBA MATTERS MEMBER PROFILE

Gay Andrews

SUMMER 2014 35

Nemo and some good scotch

HOW LONG HAVE YOU BEEN WORKING IN THE BUSINESS?I have been in the mortgage brokerage business for 15 years and banking for 18 years prior�

WHAT IS YOUR EXPERIENCE WITH AMBA?In addition to volunteering for many events and working on the committee to revamp the mortgage brokers course, I also served as a director on the board from 2006-2010�

WHAT IS YOUR VISION FOR THE MORTGAGE INDUSTRY?I believe our goal should be to see mortgage brokers become the primary source for mortgage financing for consumers� While there are a lot of consumers that recognize the benefits of using a mortgage brokers, we still need to do more work with the national and provincial associations and governments to get the word out� This could be accomplished if we work hard together to ensure that the industry stays true to being built around professionalism, education and remembering the ultimate goal is to assist the client’s needs�

WHAT OTHER PROFESSIONAL ASSOCIATIONS DO YOU BELONG TO?In addition to the industry associations; Alberta Mortgage Brokers Association (AMBA), Mortgage Brokers Association BC (MBABC), Alberta Private Lenders Forum, I am also a member of NAIOP (Commercial Real Estate Development Association), Edmonton Executives Association (EEA), Northern Alberta Economics Society, the Mortgage Loans Association of Edmonton (MLAA) and a board member of the Edmonton CREW (Commercial Real Estate Women) Association�

IN SUCH A COMPETITIVE MARKET, HOW DO YOU STAY AHEAD OF YOUR COMPETITION AND REMAIN SUCCESSFUL?In the private lenders realm, we all have our own niche market that we focus on� That can be by way of product type, market areas or risk tolerance� We pride ourselves in the fact that we have stayed true to that over the years� We believe that makes it easier for the mortgage brokers to know what we types of deals we will do�

We have been very active in the industry both through AMBA and directly with the industry members on teaching members how to market and sell private mortgages� The course we created

outlines how to recognize, package, and sell the deal the benefits of the transaction to both a lender and client� We want brokers to have all of the tools they can to assist their clients in all facets of the industry which includes private lending�

It’s all about relationships and we pride ourselves in building meaningful relationships that are built on trust, communication and progressive thinking as our broker relationships are invaluable to our continued success�

WHAT ASPECTS OF THE MORTGAGE INDUSTRY DO YOU FIND MOST CHALLENGING?

In my company it is always a challenge for us to manage our investor yield expectations against the market (borrowers) lending rate expectations� It is a balancing act for us to find those deals that meet our investor expectation regarding risk and rate against the market that is looking for higher risk and lower rates�

PLEASE SHARE THREE FUN FACTS ABOUT YOURSELF...I am a pet lover� I currently have two dogs and a cat� All of my cats through the years have been rescues and each one has been a polydactyl (meaning they have extra toes)� My current cat, Nemo, has seven toes on each of his paws and he has one front leg shorter than the other (hence his name) and his tail is in the shape of a ‘Z’�

I have won a couple of singing competitions�

My favourite drink is single malt scotch�

Continued on next page...

Fly Fishing

SUMMER 201436

PLEASE SHARE THREE FACTS ABOUT YOUR COMPANY...In 2003, Caplink purchased another private lending company, Equiplan Mortgage Investors (Equiplan)� Many of the Equiplan investors have stayed with us for more than 24 years and now their children and grandchildren are also investors�

MEMBER PROFILE

Gay AndrewsCaplink currently has eight staff; we have two mortgage investment corporations (MIC) and hundreds of syndicated investors�

In addition to working hard, we also like to play hard in our office� We hold lunch and movie events, pot luck lunches, with a game twist, go bowling and mini golf in the winter, and we just recently took the staff to the Cher concert� Recently for my 50th birthday the staff decorated my office with pictures of my favourite actors and singers along with 50 bras! For Brian’s 50th ,we put 50 black balloons in his office�

HOW LONG HAVE YOU BEEN AN AMBA MEMBER?I have been a member of AMBA since 2003�

WHAT’S YOUR FAVOURITE AMBA EVENT?I would have to say that my new favourite is the Alt-A Symposium, but I also enjoy the smaller events such as the recent Edmonton networking event�

HAVE YOU EVER BEEN RECOGNIZED FOR ANY INDUSTRY ACCOMPLISHMENTS?I have received a few awards outside the brokerage industry, however directly within the industry, I was the recipient of the 2010 AMBA Executive award and have also been a two-time nominee for CMP Alternative Broker of the year�Caplink Financial Corporation | Suite 2200, 10104 103 Avenue, Edmonton, AB T5J 0H8 | www.caplink.ca

“Alternative mortgage options to meet your client’s needs.”

Specialists in Private Mortgage Lending At Caplink we offer: > Competitive rates

> Fast approval times

> Unparalleled experience in private mortgage lending

> No beacon score concerns

> The ability to set your own fee

> Access to large capital base

> Flexible terms and renewal conditions

Submit your applications

through Filogix, fax

1-888-226-8834 or by email

documents@caplink.ca

Or give us a call to discuss your deal 1-888-429-0114

Residential

Helen Neufeld ext. 215 Helen@caplink.ca

Commercial

Gay Andrews ext 236 gay@caplink.ca

Caplink Financial Corporation | Suite 2200, 10104 103 Avenue, Edmonton, AB T5J 0H8 | www.caplink.ca

“Alternative mortgage options to meet your client’s needs.”

Specialists in Private Mortgage Lending At Caplink we offer: > Competitive rates

> Fast approval times

> Unparalleled experience in private mortgage lending

> No beacon score concerns

> The ability to set your own fee

> Access to large capital base

> Flexible terms and renewal conditions

Submit your applications

through Filogix, fax

1-888-226-8834 or by email

documents@caplink.ca

Or give us a call to discuss your deal 1-888-429-0114

Residential

Helen Neufeld ext. 215 Helen@caplink.ca

Commercial

Gay Andrews ext 236 gay@caplink.ca

SUMMER 2014 37

V.W.R. CAPITAL WELCOMES PAULA HUTTON TO THEIR TEAMBy Sophie Bush, Marketing Manager V�W�R� Capital Corp�

In July 2014, V�W�R� Capital Corp announced Paula Hutton as our new Business Development Manager (BDM) for the Prairies� With over ten years in the Alberta mortgage industry, Paula brings tremendous experience, knowledge and personality to the role� I speak on behalf of the entire V�W�R� team when I say we are thrilled to have Paula onboard� She is already achieving brilliant results� Watch out Prairies, here comes Paula Hutton!

I had the pleasure of joining Paula at this year’s 2014 AMBA Conference� V�W�R� is indeed lucky to have her� With the opportunity to get to know Paula more, I am impressed with her can-do attitude and dedication to the industry� She never questions going the extra mile and gives

so freely of her time to those in need� It’s the little things that count in this industry and I am thrilled these actions don’t go unnoticed�

On behalf of V�W�R� Capital Corp, please join me in giving Paula another round of applause as the successful recipient of the AMBA Volunteer Award for 2014� We congratulate all the finalists in this category for their incredible efforts and wish you all the best for the year ahead�

As for AMBA 2014, what an event! This has by far been the most action packed, informative and horse thieving grand time I’ve

had at a conference to date� It was fantastic to put faces to so many names and meet so many more� Thank you to everyone who organized, sponsored and attended this event�

Here at V�W�R�, we’re committed to delivering practical solutions brokers can rely on� In Paula’s experience , “When dealing with private lending, you have to know what your clients’ needs are and have a level of understanding that is outside the box of standard bank guidelines� We have a team that is tuned into this market and lending is quickly funded or quickly declined� The level of integrity and attention to detail is a great benefit to working with the Team at V�W�R�� And, did I mention our common sense approach? There is no greater feeling than knowing that everyone ‘gets it’�”

Do you want help in working through a private deal with timely advice? An approach to lending that is simple and where you can set your broker fee? Paula is your BDM� Responsible for working closely with mortgage brokers in Alberta, Saskatchewan and Manitoba, Paula can help provide knowledge and expertise to convert lending opportunities into closed deals with V�W�R��

So what are you waiting for? Contact Paula Hutton toll-free at 1�866�907�5407 or by email at paula@vwrcapital�com� Experience the best with V�W�R� Capital Corp today!

Paula Hutton BDM - Prairies

···

Lending Areas:· British Columbia

· Alberta

· Saskatchewan

· Manitoba

· Ontario

www.vwrcapital.com

Experience you trust

Complete focus on residential lending

Broker-centric processes to make your life easier

Flexibility to tailor solutions to your clients needs

Diverse range of residential mortgage options

Choose your own broker fee

As one of Canada's most diversified residential private lenders, everything we do is aimed at ensuring you can present your clients with the right mortgage at the right time.

For more information on our lending guidelines and rates, contact Paula Hutton today!

·

paula@vwrcapital.com

·

1 866 907- -5407-

SUMMER 201438

AMBACALENDAR & BRIEFS

STAFF CHANGES

Please Note: August 14, 2014 was Renee Price’s last day with AMBA. We had the pleasure of working with Renee as she filled a one-year maternity contract for us. We wish her the best in her new role with a local company.

WELCOME BACK TO A FAMILIAR FACE

We’re excited to welcome Samantha Gill back to the AMBA team as of September 8, 2014. After a year’s leave, she will rejoin the team as the Membership and Education Coordinator.

SEPTEMBER 2014OCTOBER 2014

MARK YOUR CALENDARS!

ANNUAL GOLF TOURNAMENT

September 18, 2014Innisfail Golf Club

BOARD ELECTIONS

September 2014Watch for the call for nominations!

AMBA 411 ON FRAUD AND CRIME October 8, 2014Mount Royal University Continuing Ed Building

DECEMBER 2014

ANNUAL GENERAL MEETING/ HOLIDAYS EVENT

December 3, 2014AMBA Office Atrium Calgary, Alberta

AdID: 582904 PublicationID: CIM-H0512

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CapitalDirect EDIT Novemeber2013 4/16/12 4:17:22 PM

Trevor BowieBusiness Development Manager

Atlantic Provinces

Phone: 902 | 894.7700Fax: 902 | 894.7736

Toll Free: 866 | 830.7734tbowie@capitaldirect.ca

Business Development ManagerOntario

Phone: 905 | 299.6951Fax: 905 | 824.7095

Toll Free: 800 | 814.2578hdoggett@capitaldirect.ca

Hugh DoggettGreg Kakuno Business Development Manager

British Columbia

Phone: 604 | 329.6067

Toll Free: 800 | 625.7747

gkakuno@capitaldirect.ca

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rose AMBA.indd 1 2/20/2014 12:36:37 PM

Romspen Investment Corporation is a non-bank mortgage lender specializing in commercial real estate across Canada

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