Len 00:02
Welcome. My name is Len Lane, and I am the founder and president of Brokers for Life Inc., and we are Dominion Lending Centers in Western Canada. The topic of our podcast will be about what we consider to be Real Life Mortgage Solutions.

Welcome back. Season four. It’s crazy to think that when we started this, the average podcaster only made about two or three episodes. I guess we’re at episode 37. The start of season four. We are talking today to Chris Woodhouse. Now Chris’s background is quite interesting. When we got looking at a little bit more, I didn’t realize you were actually a mortgage broker at one time.

Len 00:45
I was, yeah.

Chris 00:50
A few years ago, right? But obviously, over on the lender side, since almost a decade or more with… I have a feeling you’ve been hanging around with the same guy all the way through there, by the looks of this.

Chris 00:57
Yeah, I did do the brokering side for a bit, just found that a lot of folks were using just two specific lenders that were in the area that I was. And then I met a gentleman by the name of Paul Grewal who asked me if I’d be interested in running the lender space. So I did that. I had a great time at Street Capital. We ran a lot of great numbers, and ultimately RFA took over. I stayed with those folks for a bit, and then, ultimately, it feels like a nice little homecoming where I’m joining Paul again. So Paul’s obviously a great mentor and somebody that I definitely hitch my wagon to.

Len 01:29
Yeah, excellent. So I was on the website this morning. I love the intro. Don’t find too many with music in them, and the drum beat is always exciting. Looks like a very seasoned executive team. So maybe let’s talk about how this all became about.

Chris 01:47
Yeah, right before Covid, Paul was looking to do something down in the mix space, trying to create a bigger mix that would probably be looking to buy. Mix that would be pennies on the dollar. Unfortunately, a little thing called Covid came into play, and that same dollar was now worth $1.25 so you’re paying a little bit more of a premium than what was anticipated. During that time, he decided to pivot himself. Leon and Paul had known each other from previous worlds back in the CIBC days, they started to have a couple cups of coffee, couple lunches, and decided that they wanted to enter into the insured and triple space, and ultimately in the mid-market, alt space. So that’s where the ball started rolling. Towards the end of last year, Paul and I ran into each other, and we started some conversations about, Hey, how would you feel about joining a startup? Obviously, we took a little bit of time back and forth, and ultimately, I made the move. And I can tell you that anytime, joining with, you know, Paul and Leon is always going to be a great thing, and we’re establishing something that’s pretty unique over here.

Len 02:54
Right. And that that was kind of one of the thoughts in putting questions together. So what makes Highclere different from what you’ve experienced in the past?

Chris 03:05
And this is no disrespect to anybody that I’ve worked with previously. Obviously, the people are what makes the difference in any organization, and from the top down, I mean, Leon’s got a great skill set with capital markets and securitization. Paul brings a ton of experience, as we all know, into the mortgage space. I’ve been around for a long time. Daredia has been around for a long time in this space, and it’s just collectively, we’ve all grown together, and we’re all pulling on the same rope. Which, again, other places that I’ve worked in the past has also done that, but it’s just it was really unique, joining from the ground level up where everybody’s opinion matters, everybody’s pulling on the same rope to create a very unique culture, and more importantly, a very transparent culture, which is something that we’re thriving on.

Len 03:53
Just from the short amount of time that we’ve had experience with your underwriting and so forth. Is there more of a vision about using technology?

Chris 04:04
Tech is really helpful. I’ve always been tech-averse. For those of you who’ve ever listened to me before, my tech skills range from “Have you turned your computer on and off,” and that’s about the extent of my personal knowledge. But at the same token, AI is becoming a lot more to the forefront, same thing with ChatGPT and all those other great things. So AI is the backbone of our underwriting system. Now, it’s not going to replace the folks that we currently have. It’s just going to help be a very good assistant. And what I mean by that is, if you’ve got somebody who’s 19, you send in a file and it shows that they make $2 million annually, it will just red flag it to say it’s not saying that it’s not true. It’s just very uncommon. So at the end of the day, maybe you want to focus on this area. Everything else kind of looks good. The more that we feed into it, the more it becomes a lot quicker, a lot smarter, and is able to help us underway those deals a lot quicker and a lot more efficiently.

Len 05:00
Yeah, and that’s not uncommon for a 19 year old who knows AI and ChatGPT to be making a couple million dollars a year, but not the norm by any stretch. You actually have to get out of your mother’s basement. It’s interesting to watch, right? We’re seeing a lot of technology, but not as fast as you would think, right? It’s still a lot of hands on being done with the lenders, you know, doc review, things like that, where, and of course, if we could ever get the CRA to get their act together and help us with the income verifications, right? That technology will probably push us, you know, ahead a decade just in cutting out the amount of fraud, right? Which, of course, is overhead for everybody. And for you, but for the consumer as well, right?

Chris 05:50
And as a new lender, we’re very cognizant of the fact that we may be a target for fraud, right? The misconception is that the new lender is desperate for business. Let’s just throw stuff. I can tell you, we do have a lot of great systems in place, not only humans, but we also have the ability to validate a lot of things. And you know, obviously, if it looks like a duck and doesn’t quack like a duck, we’ve got a concern. There’s definitely a lot of tools in the US that we’re exploring. For sure, Equifax down in the US has a very good system on how to validate income, and it’ll probably go to Canada. It’s just a little bit slower to market, for sure, but there’s a lot of great tools out there that we can look to utilize.

Len 06:29
Right. And sometimes it’s slower just because there isn’t the volume to support it, right? It’s strange that that is one of the things, but when you push through, you know, tens of thousands, if not hundreds of thousands of inquiries a day. Equifax is going, Yes, we can do that for you, but for sure, when you take 1/10 of that number, there’s a little slower to set it up, right. So…

Chris 06:53
For sure. And I would think, Len, the other thing that’s that we’ve got a benefit of is that we are growing strategically. So we’re not just casting a net widespread over the top of everybody. Our initial phase is to deal with the folks that we have, you know, a reputation, with a relationship with, and start to broaden from there. So it’s, again, we’ve got a very selective pilot group that we’re dealing with out of the gates, and it’s just, you know, this is what we’re looking for. Anything else we’re not interested in, right? So we set out some pretty firm guidelines for sure.

Len 07:24
Right. Yeah, and that’s that’s good, because we’ve seen fast growth in the past and not do so well. So let’s talk about that growth. Obviously, Ontario and Alberta, and what happens after that?

Chris 07:38
So we’re approved in Saskatchewan. Saskatchewan, we’re just waiting for one final piece before we completely go live. British Columbia is next on the docket. We’ve got our we’ve got our application in and the analogy I always use, which is kind of a say elementary but we’ve all, we’ve all seen them, it’s like the Domino’s Pizza. You don’t get that little app that says, hey, the pizza has been in the oven. We’re checking it for quality. It’s how people ever enjoy your food. It’s, you know, you send off the email, you’ll get a couple correspondences back, and eventually, kind of get that, Hey, congratulations. You’re now officially licensed. Saying that, we’ve also got our applications out in the Atlantic region, with the expectation to be across Canada by the end of 2025. 2026 will be the time that we look to jump into the Quebec market. Obviously, there’s a couple different things that we have to make sure that we adhere to. For example, we gotta have a brick and mortar shop in Quebec. In addition, all the literature needs to be bilingual. So there’s a little bit more of an undertaking and for a startup, it’s something that’s going to be happening. It’s just not immediately, for sure.

Len 08:37
Right. Yeah, and being licensed myself in six provinces that I understand the BC process. I’m not sure what it is completely. I’m kind of amazed that Saskatchewan was done before BC, but…

Chris 08:52
We were a little surprised as well. But you know what? We’re happy about it, that’s for sure. Yeah, tell you that not being part of this process previously, and getting the exposure to it now, there’s some uniqueness across the board with each province not saying they’re right or wrong. It’s just obviously different from what I’ve seen in the past. So it’s been a great adventure going through this, that’s for sure.

Len 09:15
Yeah, and it’s… as everybody is licensed under different jurisdictions, right? Under like BC, Saskatchewan, we’re all lumped in with the financial planners and the insurance guys, right? So Ontario’s like that as well. Alberta is just where the real estate council that’s it, right? That’s the only entity. That’s Service Alberta. Anyway, I did a podcast with Gary on his way out to have the industry here the other day, he still says that’s not the government, but I don’t think so, but of course, Nova Scotia picked up pretty much what Ontario was doing. I think that’s quite similar. I didn’t do Nova Scotia, but your… New Brunswick rather, because it falls under the Quebec category with us, where it’s got everything’s got to be bilingual, right? So, if we are a bilingual mission, but province by province, it’s different all the way across.

Chris 10:17
Of course, absolutely, yeah,

Chris 10:20
That’s good. That’s a good growth plan. So the next step, of course, into the soft-B market, as I like to call it, is that in the books as well?

Chris 10:29
Yeah. So, we’re in the process right now of meeting our regulatory requirements. So there is a certain number of deals that we have to get done once we finalize those. Obviously, everybody does their quick reviews, and then we’re going to dive into the mid-market Alt. I think that’ll be… I think that’s a space that’s needed in the industry. I think this was one of the bigger drives as well for myself to jump. Obviously, the leadership group is the main reason why I jumped over to Highclere. But this is an interesting time for folks to look at Alt stuff. And, you know, I was looking at some stats the other day. Insured and insurable average beacon score was 722. In the mixed space, it was 725 so it’s not the old mentality where folks used to say, Oh, if you’re going mixed, it’s because you’ve got poor credit or some credit issues. It’s, you either have a massive portfolio of rental properties, because that’s what you’re looking to dive into and you’re reaching the global limits of different lenders, or it’s that you don’t really qualify based on your traditional means for yourself employed borrowers. Meaning you’re not declaring your full taxes. The money’s there. It’s just you’re not declaring it with CRA, obviously, right? So for us, we think that this is a good spot if you have a traditional Alt lender that’s declined a deal. And before you jump into that mixed or private space, we’ll fall right in between the two of them, a better rate than a mixed, a little bit higher than your traditional Alt, less documentation, and some more innovative products. One of the products that we’re looking to launch, which would obviously be a very comparable American-type product, would be a 30-year, fully open term mortgage. Now why do I think that type of product is important? You know, there’s a lot of time planned, and you would know this from your years in brokering, you got a client that walks into your office. Hey, next year I’m going to declare my taxes or, Hey, next year I’m going to have my credit score all cleaned up, and I’m going to be an A client when I walk into your office next year. I don’t think that generally happens as regularly as we might want it to. So I think by having a fully open 30-year term mortgage, you can break it on month 17, if somebody’s come back to the table with, you know, a better credit score. Or there’s going to be folks that just say, You know what, I’ve qualified for this deal. I’m happy with the interest rate. I’m happy just continuing the way I go and just continuing to play. So the nice part about it is it’ll pay you upfront, but it’ll pay you almost like an annuity as we continue down the path.

Len 12:47
Oh, cool. Yeah, that’s probably a part of the market that you know that person that walked in the door and says is going to do that? They… the successful ones might be 15% of them, one and a half and the half will take an extra year, but it’s always interesting to see we spend a lot of time, and we teach that through our brokerage as well as, like, you might be a private deal today, you know, six… a year from now, hopefully you’re a soft-B deal, and then, you know, a year after that, the end of the a market, but it’s pretty rare that it actually follows through. You know, people coming out of bankruptcies and things like that. Consumer proposals are huge right now. I can podcast next week with Dan Sanders last time at the moment, but we’ve done several with MNP, right? So, they do more consumer proposals than they do bankruptcies, mainly because consumer proposals, when it’s put in place, it’s signed off, and that’s it. It’s done, right? You pay it out, and then your proposal is done. The bankruptcies aren’t like that. I didn’t realize that, right? They can be ongoing if your money changes, or you can get an inheritance and, you know, change bankruptcy yet again, right?

Chris 14:04
And so many think that they’re going to be better, you know, this time next year, and that sort of stuff, the challenge becomes, a lot of times life happens, right? You can almost guarantee, you and I would say probably 99% of the folks had no idea about that little thing that caused a massive wrinkle in their business plans called Covid, right? When everybody did their business planning at the start of that year, most folks didn’t have it. I can tell you right now, I was in Jamaica when everything started shutting down, so there was no chance that I had that in my plan. So it’s obviously a good lesson that, you know, not everybody is going to be in a better position. Because again, that probably set folks back, you know, five years or so. This was the bills that may have piled up. So life happens, and we’re looking for an option that can, that can help people.

Len 14:44
And unlike mortgage brokerages, who went up by 100% almost in some cases, I’m sure. When rates went to 1.98. I’m talking to a lot of those people this year so far, they’re not happy about the new rate. But, yeah, it’s funny. You know? I flew home from St Lucia from an MCAP event two days before the lockdown. Startup. Off the plane, got home two days later, was… I guess we’re staying home for a while.

Chris 15:14
I’m actually one of those people that… whose deal is coming up for renewal. I’m currently sitting at 1.39 and it comes due in February. So rates look like then.

Len 15:26
Hopefully down a little bit. But I don’t think that’s going to be the case. So, but, and there’s a great segue into what do you think the outlook is for the markets?

Chris 15:38
You know, right now, it’s obvious there’s more inventory right now than there is some folks buying. We obviously saw that the rates today stayed the same. I don’t think that we’ll see those sub 2% rates coming down anytime soon. I think we’re kind of starting to see a more normalized high threes, low fours to the mid fours. I think that’s kind of a safe place for us right now, I think that you’re starting to see some other Alt and mixed lenders drop their rates, because, again, it’s getting pretty competitive out there. But I don’t think you’ll see those days of the sub 2% that are coming back, and if they are, they’re going to be for not very long. I think that it’s kind of normalized in the mid threes and mid four type range right now.

Len 16:21
Yeah, and that’s, I think something like, the 20 year average is 4.5% or something like that, right? So we’re not too far off of that on one side or the other, although I did get a note this morning that a couple of the big fives are actually moving their rates up. I don’t know if they’ve hit their targets yet. Maybe that may be why.

Chris 16:38
Yeah, I haven’t read that.

Len 16:41
But that was a text that was a heads up. Coming Friday, you’ll see some higher numbers, which doesn’t make much sense to me at this point, but because the movement hasn’t been that big in the bond right? So just 3.08 this morning or something?

Chris 16:58
Yeah, we send out the bond rates every morning to our internal staff, and it hasn’t been an EKG chart, that’s for sure. Yeah, I’m surprised by that move. I’ll have to double check to see what’s going on.

Len 17:08
Yeah, well, and it’s 3.045 so it actually came down today, some from yesterday even. So I’m not sure that may just be an internal thing, but there’s always movement, it seems, going on in the markets, and that’s just the way it is, right? So when you start to think about having that other niche, that that’s an interesting thought as well, but when you’re talking about private lending, I saw one, I got a call yesterday, and the guy go, Well, I’ve got a private and it’s out of BC, I’m going, like, okay, so. And when he told me the rate, he said, Well, we’re taking a move into the B market. And I’m going, like, you’re only one and a half percent higher than the B market, right? And so I’ll go like that, right? A very good number. You should really do your thing per year with that, and then look at it, right? So especially because it was a rental. So..

Chris 17:59
Are you finding a lot of private or mixed are renewing clients? Are you finding that they’re kind of giving the “we’re not going to renew and you need to find another home?”

Len 18:10
You know, I haven’t seen a lot of that this year yet. We have in other years, of course, right and pending, and that’s more, probably more on the syndicated side, right where the dual investor or two investors are saying, No, we’re not going to redo this one, and they have to go somewhere else. So, but yeah, and this year, I haven’t seen a lot of that, and I do see a lot of private stuff. I had the good fortune when I first started, that was a lot of the business that I was doing, and learned it quite quickly, quicker than most. And with the push for RICA this year, is, of course, to have the course. I don’t know if you’ve taken the course or if you have to take the course. It’s four units. It took one of my newer agents, took them seven hours. So it’s a full day if you’re going to sit down and do it, and that’s not a bad thing. So we have live training in the fall. We’re just going to follow through with the idea of, let’s learn a little bit more about private lending. So we’ve got around, we call it slow dating, and not speed dating, because they’ve got, like, 19 minutes with five different private lenders, right?

Chris 19:19
It’s interesting that you said that you’re okay with that, because I was gonna say, unpopular opinion. I actually think that’s better. I know that sometimes people don’t want to spend, you know, the 7-10 hours working on something, but at the end of the day, you know, you’re dealing with people’s finances and having that ability to be almost like that one-stop-shop. I know my private stuff. I know my Alt stuff. Obviously, I know the A stuff, right? And it’s nice to see your folks while you educate them to graduate from that private to the Alt to the A and then you’ve got a client for life. So I think that’s great personally. And maybe that’s an unpopular opinion, that it’s seven to 10 hours or so, but I think it’s great that your team is dedicating that much time to learn the process.

Len 20:00
Yeah, and we’ll spend half of that day just talking about private lending and fraud awareness. One follows the other in some cases, right? But yeah, no, it’s… we haven’t done a renewal course in Alberta for 10 years, right? Okay, so if we’re spending seven hours every 10 years, and I don’t think that’s a whole lot.

Chris 20:23
Hey, less than an hour a year. That’s great.

Len 20:26
You know, if you look at Ontario or British Columbia, I’ve done so many courses in British Columbia that the MBA BC I’ve been… I’ve run out of courses. I’ve taken everything they have over the last 18 years. So that’s not a bad thing. But yeah, definitely, a big part of our philosophy is to teach people that, you know, clients aren’t transactional. They shouldn’t be, at least, right? And I love getting calls from people who said, Who was your mortgage broker before? And they usually say, I had no idea, right? So did the deal, took the cash, and gone, right? So…

Chris 20:59
It’s crazy when you think of, you know, everybody’s always looking for that new origination. They want that new client. But then, if you’ve done it for a few years, you’ve got this database of folks that you’ve really, truly helped out, done great work with, got them into their home, or got them out of a jam when it came to debt, those are the low-hanging fruit to me, that just takes a simple email. It just takes a simple phone call. And kind of circling back with the AI-type component there, I’ve talked to different brokers who have started to utilize and they will search a specific lender in their CRM, put a, you know, today’s posted rates book, kind of will spit out who they should be connecting with, because it makes financial sense for them to pick up the phone and say, Hey, Mr. And Mrs. Smith, I’d just like to talk to you about the fact that, you know, now’s the time to refinance or change your mortgage, because of the fact that you know the break rate is pretty good, your penalties are going to be minimal. But at the end of the day, it’s cool to see the folks that are working their database, but also incorporating that AI component to be able to help, which is amazing. And you know, I’ve always wondered through conversation, like you’ve got this database of so many folks you helped out, but at the same time, you’re just not calling them because you’re hoping they come back. And I wouldn’t know what the retention rate would be for somebody that doesn’t reach out, but I’m assuming it’s less than 25%.

Len 22:15
I would think so, too. It’s… I don’t chase any business. I don’t work with any realtors, other than a couple that I had for the last 15 years. Because they just won’t go away. But it’s, but it’s funny because, yeah, all of my business is referral, and it’s all because of the CRM programs that we have. And this one actually, we’re part… all in Velocity, of course. And then the CRM within Velocity actually AI mines for the other properties that they own that maybe you didn’t do the mortgage for, and looks for their closing dates and things like that as well. So give you little extra material coming through every now and then on some different, different properties that get a shot at it. Yeah. So, yeah.

Chris 23:01
And at the end of the day, it’s always nice to pick up the phone and have that warm lead as opposed to that cold one. So that info, that’s great.

Len 23:07
Yeah, I give… I get calls sometimes, but those ones, if I don’t know them, I just.. Leslie gets them. My assistant gets them. Anyways, we kind of got over here a little bit, lots of great topics. I’m excited to see you guys grow and get your foot in the door just about everywhere, the team’s getting their head wrapped around it. For them, it’s like letting them know as often as you want, what rates look like and things like that. That keeps them interested. And Tyrek is great to work with, right? He likes to call me, but I haven’t had the heart to tell him that I may not be faster, but…

Chris 23:52
We do like to talk to our brokers, that’s for sure. We do like declines, if there is one we want to talk about, what else is on folks’ desks, and at the end of the day. To your point, Tyrek is great, and that’s something that we do pride ourselves on. Obviously, we don’t have the same volume today that some of the bigger shops have, so we do have those times to make those personal connections. And you know, we’re continuing to expand our team and our roster, and that methodology is not going to change. It’s going to be we have to make these phone calls, and we have to do it every single transaction for sure.

Len 24:25
Yeah, excellent. Well, I’m gonna let you get back to work, Chris. So thank you for your time, and we’re, like I said, looking forward to watching Highclere grow.

Chris 24:33
We appreciate the opportunity to talk today, Len and we’re looking forward to growing with you. And we’re looking forward to growing as Highclere, so thank you very much.

Len 24:42
Thanks for listening today. I hope you found the information that we provided to be useful in your mortgage journey, and remember you can always find our associates at www.brokersforlife.ca/associates. Have a great day.