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, everybody. My guest today has a long time history with the mortgage industry in Alberta. To say he would be a legend, he would disagree with me, but he is Gary Siegle, recently retired from the Real Estate Council of Alberta, but long time in the mortgage industry in a variety of positions, and we’re going to talk about that today. So welcome Gary.

Gary 00:41
Thanks, Len. Appreciate the opportunity. Hopefully your listeners will find it interesting.

Len 00:45
Yeah, actually, I think, I have a new thought for my fourth season. This is the start of season four, where we’re going to go and track down some of the other legends of the industry and see if we can get them to do the same thing. So it should be an interesting couple of months. Let’s start talking about your start in the industry. I didn’t realize that it had been with CMHC.

Gary 01:06
Yeah, it was kind of interesting. I went to university at the University of Saskatchewan in Saskatoon, and got a commerce degree, and had a number of interviews, as most grads do, and I ended up choosing to work for CMHC. It was, of the interviews I had, it seemed the most interesting. And they had a program back then, they called their management training program. They hired University grads and put us through kind of a variety of different parts to get familiar with the whole industry. And it was their approach to try to generate future managers. So I liked that whole concept, and I started with CMHC, spent a few months in Kelowna in a small office, and then got transferred to Regina and had a variety of positions there.

Len 01:51
Got more of the underwriting side of it. It was more of the actual day to day management of CMHC. Is that kind of what they did?

Gary 01:58
They sort of taught us everything. Len, I mean, like back in those days, CMHC did some direct lending, and when they insured deals, they did appraisal. So we had an appraisal department. We had an inspection department for new construction and property management, because we actually had a lot of direct loans from historic and when they came back, they had to be looked after. So there was the whole, issuing insurance policies to lenders. But on top of that, there was a lot of that. And actually one of my first big jobs was, was one of the same HC direct lending programs. We had this, this program called AHOP, which stands for assisted home ownership program, and CMHC was a direct lender. There was an income test that people had to meet, in other words, below a certain level, and the houses had to be built below a certain price point. Essentially, this would sound too good to be true, but CMHC actually gave grants for the down payment, insured loans up to 95% or in some cases, in the early, early days of the program, they were actually the direct lender up to 95% and then there was a subsidy based on the income that was also possibly available, so that a monthly supplement to help them with monthly payments. And so one of the big jobs I had to start with was interviewing people to see if they qualified for that program.

Len 03:24
Yeah, and you know, they’re still lending money with the multifamily projects right now that they were doing that directly, but now it sounds like they’ve handed that off to the smaller lenders themselves. Interesting that they would have their own appraisal and inspectors and things like that. I guess the size wasn’t what it is today, and because they definitely have handed that off to someone else, and I can see that being something that they would have to do. So how long did you actually end up staying with CMHC?

Gary 03:54
Well, I was there a total of seven years, and I ended up having various responsibilities. My first job was an assistant in social housing. And again, we were direct lenders, and there was tri-party arrangements between municipalities and province and the federal and CMHC on behalf of the federal government to build typically low income housing, a lot of it directed at seniors in communities all across Canada. I was in Saskatchewan at the time, and we used to joke I’d be traveling along with the Saskatchewan Housing Corporation people, because they were the one of the partners. We drive into a town and we look at the number of grain elevators and multiply it by two, and that’s the number of units qualified for but yeah, so I did that, and then I became the manager of that department, and then ultimately the manager of the lending program, the insurance lending program, and that’s where, again, CMHC got really involved in trying to promote the creation of new housing starts. And the AHOP program was now being insured. There was still some grants and some subsidies that were involved to help people get into houses. The same sort of thing, income tested and found houses priced below that. But on the other side of the coin, you mentioned multifamily, there was a program called ARP, which was a standard for assisted rental program, and there was a federal tax credit as well. So there were some subsidies to builders to build apartments in all kinds of communities, large and small and there was also some CRA involvement, and that was called a multiple unit residential building, or MERV, for short. They were a tax break, and a lot of high income people were buying shares in these apartment projects, and then they were getting tax write offs. The challenge with that program was, ultimately, there was a disposition tax when they decided to sell their shares, and once people started to get down the road away, they realized that it was good while they owned it, but when they wanted to sell it, there was not and the program lost its popularity. But that’s sort of a summary of my history at CMHC. So the last job I had there was the manager of the insured lending side of things.

Len 06:10
And that’s funny, because the first time homebuyers incentive program is now people are selling those properties and not realizing that CMHC owns part of the profit. A few of those in the last few months. So is that where you transitioned to the mortgage industry at that point? Or was there something in between?

Gary 06:32
No, there’s actually several stops in between. So the next stop, there was a company that formed. So this ties back to the CMHC appraisal inspection process and the new construction business. So when a builder wanted to build a house and have it insured—an insured mortgage, and quite often, back in those days, it was progress draws, insured progress draws, a builder would submit its plan specifications and its proposed selling prices, and the inspectors would look at the plans to make sure they met the code. Then they would go out and do a site inspection to make sure the site and the building and so on, fit. And then it would go into the appraisal department, and they would decide if the value was appropriate. Then it would come back into my administration staff. They would issue the undertaking to ensure the CMHC 530 it was called at the time. That was the form number, and it was an undertaking to ensure. And then, when the house started, there were four different stages, when the builder had to call for an inspection, and they’d mail in this little green card, and then the inspectors would go out and inspect, and so on so forth. So having said all of that, that was a very cumbersome, slow process, and builders were looking for an alternative, and they got some various other organizations together, who decided that maybe there was room for an alternative mortgage insurer, and MICC, which is Mortgage Insurance Company of Canada, was formed, and that was sort of the primary initial market. And they just did the inspections at random. Some of the processes were similar, but they did the inspections at random, and builders were able to, sort of, they had to stop construction while waiting for those inspections. So this appealed to the builders a lot, and that was kind of the niche that NYCC started out in. And they offered me the job as their manager for their Saskatchewan operations at the time. I was 29 at that point in time. And so I took over that job for a few years. And so remember the time frame starting at ‘ ‘72, so we’re going further forward. And so we had CMHC as a mortgage insurer. Then MICC formed, and then another one formed, called Insmore, and then a third one called Stauber. Then over the next few years, they realized the market maybe wasn’t big enough for four insurers, and Sovereign and Insmore merged, and then later Insmore and MICC merged, and that all started coming together right around the time, we’re now hitting the late 70s and early 80s. In the early 80s, we had this national energy program that the federal government introduced, and it created a huge, huge recession, and interest rates started to soar. I can remember my first mortgage when I bought my house in Regina in 1973 was around 8% and then the next renewal was in twelves, or somewhere in there, and then in and then right in around 1980 I had a renewal that came up at 19 and rates actually didn’t stop till they hit 21 for a five year fixed mortgage. So there was all that going on. And in the interim, one of the other things that had happened is that whole subsidy thing on the assisted program went away. It was replaced by something called a graduated payment mortgage. Have you ever heard of a graduated payment mortgage?

Len 09:42
No.

Len 09:44
I haven’t. I lived in Calgary, and I moved to Calgary in ‘78 or ‘79. I guess we almost bought a house in ‘81 because everybody was turning in their keys. But the problem with that being that, yeah, interest rate keeps, and houses weren’t cheap in Calgary in 1981 Yeah, and by comparison to today, they are a yes, but, you know, but the rates kept going up. So we waited it out for a while.

Gary 10:08
Yeah, well, that’s probably, I mean, there was lots of bargains to be had after that. So what happened in, that interim, this graduated payment mortgage, instead of subsidies, it was just simply they found several lenders who were prepared to write these rather creative mortgages where your payment started below the amortized payment level and it stepped up. So it would also be known as a step mortgage. And so every year, for the first several years, I think 10, maybe even 15 years, your payment was guaranteed to go up by a certain amount every year, and, of course, there’s still a renewal, that could happen in there as well, until it hit its normal amortization. So that was the way of, you know, getting people into affordability situation with buying a house without subsidies, because the government was starting to run out of money, I guess so, MICC being kind of like favoured by the builders, ensured a lack of those. And in particular here in Alberta, there was a big builder in Alberta called New West. You may have heard of them when you lived here. Yeah, and Nu-West, that’s the the Scurfield family. Ralph Scurfield was the head of Nu-West. He was also on the MICC board, so there’s a close relationship. And they developed some even more aggressive versions of that GPM program, and we insured them at MICC for them with newest guarantee that if there was the difference between what we would normally insure and what we insured for them to help them move more houses, they would guarantee to pay that difference if they ever went default. Well, as you know, Nu-West went down.

Len 11:45
Here as well.

Gary 11:49
…and others, and the market crashed, and MICC didn’t have the cash reserves to pay 100% of all the lenders claims. So they had this thing called option B, and they paid 20%. The lender would calculate their total cost of recovery, reclaiming a house, and MICC would use the option being paid their 20% and that’s how MICC was able to survive. But the lenders really disliked that. So for many years after that recession ended, the only insurer that was being used in Alberta went back to being CMHC, so you went one to four to one.

Len 12:29
Interesting, yeah, your insurer only wants to pay 20 cents on the dollar. It’s probably not a exciting thing for anybody really.

Gary 12:39
Not keep the house. The insurer did not take the house. The deal was, but the lenders didn’t want to be involved in the disposition. There might still be losses, because property values had really cratered since you were here in that time frame. You probably recognize that.

Len 12:57
Nu-West. I have a book called “$100,000 an Acre.” That talks about the industry in Alberta, that there’s two volumes of it. One’s called “$200,000 an Acre,” only a million an acre, now, right? Nu-West adventure was a big part of it. I actually knew some people that actually worked for them here in Edmonton, when that all happened? Yeah, several of them started their own home building companies because they worked for Nu-West.

Gary 13:23
Yes, I think many of them have retired as well. But there were a number of people who got involved in other homebuilding either started their own or ended up working for other builders or land developers and so on, because Nu-West was a land developer, a builder. And then one of the other things they did back in those days, because they were so tied up in the housing industry and land development, they decided to move into the oil and gas industry. And they started, I think it was Voyager petroleum. And of course, the cause of the recession, major cause, the National Energy Program. So while it was brilliant to think about diversification, it was the wrong level of diversification.

Len 14:00
Yeah, and the wrong time, $9 oil was not good for anybody, as we’ve seen more than once, unfortunately. So, okay, so then did that take you to Marcus Broker?

Gary 14:11
No, actually, yes and no. I actually moved from there to MICC, was also insuring commercial mortgages back in time. So I got some experience underwriting commercial deals. And there was a company, one arm of it still existed, Morguard Trust. The company that I worked for was Morguard trust, and we were a commercial mortgage broker. So yes, I went into mortgage broker, but not residential at the time. It was commercial. And I was still in Regina for a couple of years, and then I got asked to move here to Calgary in ‘88 just before the Olympics. So I think it’s late ‘87 I was VP for Southern Alberta and Saskatchewan, and we were a year or so into my move here, we were acquired by Metropolitan Life, and they transformed the company, and that was the first time in my career I got a package. In hindsight, it was a really good financial move, but it was devastating. It was like I had a pretty successful career, at least. I felt I was enjoying some success and getting offered these new jobs and new positions, and then a new owner comes in and says, we don’t want you anymore. We have too many VPs, and the other guys got more experience, so he’s staying, you’re going and so I ended up doing commercial mortgage brokerage for another company called Midland Doherty, which was basically a financial planning firm that got ultimately bought by Scotia Bank. And while I was just sort of getting that set up here in Calgary, MICC contacted me and asked me if I would like to come back to Regina, because they’d had some changes in management, and they would like me to come back and take over Saskatchewan and Manitoba. They did even have one person here in Alberta that did the odd deal here and there. So I guess I was prairie at the time for MICC. I did take that job. There was a lot of transition in the mortgage industry back at that point in time, and you might recall having been around during that time, there were companies like Pioneer Trust out of Regina. And I’m trying to remember the one that was here in Alberta,and so anyways, a lot of those companies ended up merging. And one of them was called, there was Guaranteed Trust and Central and Eastern Trust, and Central and Eastern Trust and Guaranteed Trust merged, and they also ended up owning MICC. During that period of time, the Trust Company, the owners of MICC, ended up declaring CCAA creditor protection. And while that was going on, MICC was still one of their most valuable, viable businesses. But because we had insured commercial there happened to be a claim, which is a fairly large claim that we paid, and that got the superintendent of financial institutions interested in looking at our books, and Central Guaranteed Trust had the reserve money that that MICC has put aside to pay claims, had a lot of Central Guaranteed Trust assets in it, and the Superintendent of Financial Institutions wasn’t really happy with the quality of the reserves, and said, MICC, you have to cease doing business. And so anybody who’s familiar with the insurance business will know that you take your income into your take your revenue into income over a period of time. So while we couldn’t write new business, we were still a profitable company. We ended up, of course, anytime there’s a company that stops getting new revenue, we had to cut back on our sales staff. Couldn’t write new business, so why would you have sales staff? But we kept the doors open, looking for new capital, and you know, there was the odd claim here and there, they had to be managed, and so we kept the staff around for that, and that’s when GE Capital came to Canada and bought MICC.

Len 18:12
What year was that?

Gary 18:15
‘95 I believe. 1995 so we’ve gone from ‘72 to ‘95 now, and I’ve described quite a number of changes that have happened in the industry.

Len 18:24
That’s cool, though, right? It’s funny how somebody asked me the story about how I got to mortgages, and it’s a long road that started with truck driving and owning trucks and softwood tariff and all of this, and changing the concrete, and concrete to housing and housing to mortgages. But one door closes, another one opens, right? So.

Gary 18:43
Yeah, exactly. So what ended up happening then, is when GE Capital bought the company, they decided that they weren’t satisfied being, not a national company, and as they were trying to obviously get market share back since you’ve been out of business for two years. Emily came along at CMHC as well, you know, which is the automated underwriting and GE had an automated underwriting system in the States, and they thought they could apply it here in Canada, but it’s going to take a fair amount of time. So we were running around trying to get lenders to send us business, and we’re competing with an automated underwriting process. And we were underwriting deals up front. That was one of the keys. Is that the way CMHC operated back in those days, they would basically issue an undertaking to ensure and if they didn’t like what the deal looked like when there was a claim, they may or may not pay the claim. Now that didn’t happen often, but that was sort of the niche that GE was trying to fill was, look, we underwrite up front, take a little bit longer, but we guarantee that there’ll be a claim paid if everything you submitted to us was on the up and up. So we started to run some business, and then GE said, you know, we don’t want to be a local mortgage insurer, and we want to reopen Alberta. And they said, we think that our regional director or whatever we’d like you to be in Alberta. So here I am now with MICC. I’ve gone back to Regina, then they moved me to Winnipeg. And now I’m moving from Winnipeg back to Calgary in 1997 to reopen the private mortgage business in Alberta, and so there was me and one other person to start. And as you know today, it’s quite a bit different. And you know, things have changed, and GE Capital decided to do some changes in their organizational structure and went public with some shares and became Genworth. I wasn’t there anymore. I had moved on from being the head of their operations for origination of mortgage insurance to their national training manager, and that was still GE at that point in time. You know, rebuilding that business in Alberta was extremely challenging, competing with the fast pace of CMHC insurance and the negative connotations of the private insurers and do you recall the recourse on covenant issue from back then when?

Len 21:08
Maybe not in those terms?

Gary 21:11
Okay, so lenders could ensure when they insured CMHC deals, and if there was a deficiency after a claim was paid on NHA insured loans because it was under federal legislation, the province’s legislation that prohibited lenders from suing if there was a deficiency after foreclosure. That prohibition didn’t apply to NHA insured loans because it was a federal insurance program. And so some lenders started to do business with GE because we didn’t have that ability. But of course, as an insurer, we kind of wanted that ability. And over time, the legislation was changed to believe it was in the early 2000s to include all high ratio insured loans having recourse on covenant because people were taking advantage of… there was fraud being created as a result of that. And fraud is only obtaining a house and then knowing that could go into foreclosure and you had no obligation after it went into foreclosure, right?

Len 22:05
And I think that was part of the jingle mail, as they called it, in the early 80s. I’m sure that was part of it as well, where people would just drop off their keys and say, good luck with the house.

Gary 22:18
There was a lot of stuff that went on in the early 80s, and this stuff was happening in the late 90s. Now we’re talking about having that history to deal with option B, and the only thing we had was that we guaranteed that we’d pay the claim, and that we didn’t have recourse on covenant, which really we didn’t want to use as a selling point, because we were trying to get it, and ultimately did get it, but it was many years later that the legislation was changed in over and recognize that. So there was a lot of transformation in terms of what’s going on in the background at that time, and it was really hard to get traction. And so ultimately, GE brought in a new manager. Second package for my career. This one was actually because it was really frustrating Len, it was so difficult to build that business, and I don’t know what we all of the different things that we tried, the different types of sales staff we hired, we just could not seem to penetrate the market, and so they went through two or three other managers. And eventually, over time, systems changed and the marketplace warmed up, and now the private mortgage insurers, there’s three of them today, and they’re doing good business, and just lenders like to have choice, and there’s different reasons you will do business with one versus the other.

But what ended up happening back then, as I became the national training manager for GE, helping them, I built a whole bunch of different training modes of how to read financial statements, how to read credit reports. One of the lenders, for example, wanted us to train their people on how to use their system to send a deal to us. And so I got screenshots, and they put a PowerPoint together and helped our sales staff help the banks. And that was kind of one of the things that we thought we could use, and actually was fairly successful in terms of gaining business by helping the banks understand more about us and more about the mortgage business, training their new lenders. And if you remember, that was a little bit before there were a lot of mortgage specialists, and so if you worked in a bank, you might one day do an RRSP, and the next day open a bank account for somebody, and the next day do a mortgage. So training was really important, and we were offering that training, and it was my job to create those training modules for them for that year.

Finally, to answer your question in terms of how I got into mortgage brokering. This is now in the early 2000s. We’re talking about the emergence of super brokers. Okay, like we started off there was, I believe the first one might have been Mortgage Intelligence, and lenders were now starting to do more business with mortgage brokers, and in order to encourage that business, this concept of volume bonus was originated, so the more business you did with a lender, the more money you got paid. And so creative mortgage brokers across the country decided that they could build volume by amalgamating, and so the lenders volume bonus incentive program played a large role in creating the first super broker, which I believe was Mortgage Intelligence, and then later Mortgage Alliance and Invis. And I don’t remember which order that was, but that started, degraded around 2000, I’m still at GE at the time, but I found that I was getting kind of bored with doing the training thing, and this new super broker thing was intriguing, and Invis had an opening and offered me a job, and I wasn’t to be a broker. I thought for a while, that’s what I wanted to do, to simplify my life, I’m just going to be a mortgage broker. So I went to talk to them, and they ended up offering a job as their regional manager for, at that point, just Calgary. And eventually, over time, it grew and I ended up being their VP for all of Western Canada at one point in time. Somewhere in that time frame, my former employer, GE had gone from becoming Genworth to to later on, Sagen. And so Sagen and is, is, is really the current iteration of MICC, GE Capital, Genworth, and Sagen. And so I was there for the MICC the GE timeframe.

Len 26:40
Talking about the super brokers, I got a license, I’ve been licensed 19 years in September and 2006 pretty much about the time that it was all starting to become some that were big in those days. I don’t even compare at this point in time, right? The size of what the DLC obviously, has become a DLCG even, even bigger, you know, it’s but it, but it made such a difference, I think. And yes, I loved volume bonus. The first time I actually got it, i’m going like this is great. I get an extra check every month, right? Yeah. And it’s funny how even that has changed. Where it was, it was a secret, almost, to begin with, right? You know, a lots of brokers didn’t know about it for quite some time, and then it would be, I think might have even been ResMor, who did it first, where they put it all together and just came out as it’s,110 right? We’re not playing this game. Or maybe even, it was Moncana.

Gary 27:37
Oh, that’s a name I hadn’t I forgot about

Len 27:41
James and Jerry did that right where they just said, Okay, it’s 110 we’re not playing with this. We’re gonna write one check. We’re not writing two which, which makes sense, I guess, business wise, right? So the industry has changed a lot over the years. What do you think some of the biggest changes that you saw that made a difference? Obviously, volume bonus would be one of them?

Gary 28:01
Yeah, yeah. Well, there’s quite a few things that happened during my stance, because I spent 15 years at Invis, and so first thing you mentioned you didn’t even know volume bonus existed. We did. I think it was something like, some strange split, like 82/18 and we kept the volume bonus at this okay, and that was common in the industry. So the the 82/18 for your listeners, 82% went to the originating, licensed person, the the actual mortgage broker, and the 18 went to Invis, plus all of the volume bonus, which was, what would it be when 10 or 20 basis points, I can’t remember now, was an extra 20, wasn’t it?

Len 28:45
It was, yeah, and, well, and ranges right now from 15 to 30, so, yeah, okay, yeah.

Gary 28:51
And that was the model. And so the mortgage brokerages were, you know, providing a lot of training, and there weren’t a lot of desk fees or anything like that, because there was a lot of that, a lot of the commission income that lenders were paying was going to the brokerage itself, right? And so that changed, as you’ve mentioned over time. Now I haven’t been in the mortgage broker origination side as you, as you know, my career ended up with the regulator, but my understanding is that there are people getting split at 97/3 of everything nowadays. And so you’ve gone from keeping 18 plus an additional 20 to keeping 3% and so the way brokerages operate today is quite different than they were in 2000 and 2002 when I started.

So that’s sort of one significant change, is that you know what comes out of that is, if the brokerage is going to survive, it has to have other sources of income. So there’s desk fees and other sorts of… At Invis, for example, we decided to start getting into selling creditor insurance, which, over time, built up to the point. It was a regular cash flow for the company, and there’s, there’s all sorts of different ways that brokerages have found ways to survive and thrive, but the commission splits would be one of the biggest differences that I saw change in terms of how mortgage brokerages operate. Now you mentioned DLC and DLC group, and that’s another big change, is that what happened in my career and Innovus is that there was a change in ownership.

I was there for about three or four different changes in ownership, but there was a change in ownership, which usually means a change in management, and one of our senior people who was one of the founders, and a name that you’ll recognize, Colin Dreyer. Colin ended up not being within us anymore, so he decided to start Verico. Shortly after that, Gary Morris and his crew decided to start Dominion Lending, and the model of both of those people ended up following was to start offering higher splits in order to attract talent that was already experienced and not build from the ground up, in other words, taking new licenses and training them and so that, to me, was from my observation the beginning of where the split arrangements started to change. It was based on the competition and the growth in the industry. Now those two companies are large, substantially successful organizations today. And you know, Mortgage Alliance, and Invis were a consolidation of purchase by something called the M3 group. So that’s the other side of the business, M3 owns Mortgage Intelligence, Mortgage Alliance, and Verico, if I remember correctly, and your group is DLC Mortgage Center and Mortgage Architects?

Len 31:44
They just bought a smaller group in Ontario as well. That was about 3 or 4 billion. But yeah, so Chris Turcotte is running that now. So strangely enough, we started at TMG, and I was just over three years when we became brokers, we was Margie and myself first. Different models Verico was just a flat fee, so we paid X number dollars a month. Obviously not as successful as a franchise that actually takes 5% off the top of majority of us. I’m sure there’s some that don’t pay anything, but just because of the size of their individual brokerages, so, yeah, it was probably was the biggest change when I entered the industry, when I was at TMG, I had good fortune. I did and made a million dollars in commissions in the first 30 months. But volume bonus came very quickly to me, 95/5 and volume bonus came within about six months of starting where I’m sure there were lots of people in earlier days that never saw a volume bonus ever, if you weren’t contributing to the volume, right? But definitely changes that happened there. Obviously, technology has made some big changes in the industry as well. When did you start with RECA? 2017? Yeah, so before the pandemic, right? You know, we’re going to be like the Irish. They date everything by the famine. We’re going to start to date everything by the pandemic. But it’s, you know, the technology that changed and got accepted, like big banks accepting DocuSign and things like that is something that was a huge change over the years and stuff like that. So you’re kind of in the government side of it to begin with, and so now you’re here at 2017, you’re back to being part of the government again.

Gary 33:39
Well, yes, and no. Let me backpedal just a little bit terms of some other other changes that happened, because the volume bonus was the most significant change. But you might recall that the markets were really, really taking off in the mid 2000s. We had that financial crisis. Up until that point in time, there was a whole bunch of mortgage insurers thinking about entering the industry in Canada. And so we ended up having one other finally survive, which is today Canada Guarantee, and it’s Canadian owned. But it came up as I don’t know, it was part of a, one of the American insurance industries, and there was a few others that were knocking on the door, but, but because we had the financial crunch, what year was outlined? The financial crisis was that 2008? The market was… I can remember having lenders coming into our office at Invis and doing their presentations. We now do 100% and we now have no income qualifiers. So I started in this business in 1972. GDSs and TDSs were 32 and 40, and that was it. That was the qualification. And now we’re throwing all that out the window. We get, you know, 40 some percent TDS and no GDS requirement, 100% loan to value, no income qualifier. It seemed crazy, and it turns out some of it was and the financial crisis proved that you can’t throw all of the standard rules out the window and expect success.

So we ended up with a fairly, I think, stable market today, with three mortgage insurers, some more creative things that came out of that. We saw the evolution from all kinds of new government rules that came in as you have to live with every day, and they continue to evolve. What happened with the evolution of government rules? So we ended up with some alternative lenders that were established, and many of the lenders who do prime deals today also do alternative lenders, and they have a different name, or whatever. And in 2008 that was just kind of coming of age. And then it all ceased after the financial crisis, and eventually it evolved again. And what also changed, which impacted my time at RECA, so it’s all connected, was that the emergence of private lending went from here and there type of deals to a relatively significant portion of the Canadian mortgage market. So government legislation changed because of the financial crash, which basically added to the creativity of the people who are behind the money and all these new products. I mean, what do you have to offer today Len as a mortgage broker for almost any customer, you’ve got private deals, you’ve got alternate deals, you’ve got prime deals, you’ve got variable rate mortgages, you’ve got fixed rate mortgages, right?

Len 36:33
It’s not as varied as it was in 2007 right? Cuz I always joke, because Accredited had a program called slap shot, and slap shot was, you had 15% down payment, you had a job letter. Didn’t have to have income on it, they would give you a mortgage, right? So, yes. So some things had to change, and unfortunately, 2008 took out, I don’t know how many lenders did we lose? Probably 20, 30, lenders out of Canada that were out of the States and stuff like that, right?

So not a bad thing, maybe in the bigger picture of things, but yeah, so today, pretty much every lender has a B side of some kind, or they’re a home trust and that’s all they do. Equitable, probably more popular. I don’t think they had much success on their A side. They actually closed it down again and stuck with doing what they did best, which was B right? Bridgewater Bank for many years, too. Same thing, right? They haven’t dabbled in A but, you know, in all honesty, their basis of success was, was always in the B side market. So it’s still there. It’s a little more regulated than it was, which is probably not a bad thing. Private lending, pretty reasonable rates, by comparison today more than what we’ve seen in the past, right? private lender under 10% tells you that there’s a lot of money sitting around that people want to get out and get into borrowers hands, right? So we cut back the private individual lending a couple of years ago. You probably heard me say that before, but just because of the insurance cost, we’re starting to climb, and still are probably because it was the lender, individual lender, who was complaining to the insurance, and not the actual borrower, who didn’t care he got his money. Well, those, those changes, I guess, were all part of that coming out of 2008/9, where I had the good fortune I was in Fort McMurray still, and literally, the blip up there was like maybe 90 days, and we were right back to the board, because oil was still up there, pretty good and stuff like that.

Gary 38:45
Oh, what happened as a result of that, too, was, so GMAC came into Canada, and they were doing some of the high risk deals, being like a finance company, and they bought Mortgage Intelligence as a distribution network for their private stuff, their high rate, high risk stuff. And HSBC bought, I think it was AVCO, one of the finance companies, and they bought Invis in order to be a distribution network for that. And of course, 2008 came along, and both of those two organizations decided that was not a viable business anymore, and so we ended up as a bunch of employees putting together some money and buying Invis from HSBC. And later on, we put together a little bit more money and we bought MI from GMAC, and it was, you know, they just were out of the business, and they had no use for a mortgage brokerage in Canada anymore. So the latter part of my mortgage brokerage career, I was the broker of record for Invis here in Alberta, as well as in Saskatchewan. And I was also management for Mortgage Intelligence. So I was actually managing two brands for a while in the latter stages.

So then what happened after that was this consolidation that we referred to a little earlier. M3 came along and they bought the company in late 2016 I guess it was. I was a shareholder. I was one of the people that put some money up, and so I had my money out and thinking maybe it was time to retire. And then so to answer the question, I had been appointed by the Alberta mortgage under the old legislation, the Alberta Mortgage Broker Association got to appoint one person to their council, and they appointed me. So I did, you can do two, three year terms. I did six years in total, and then Pat Kelly, who had been president of AMBA around the same time, he was president, then I was president, then I became past president. He became president again. Then I got appointed to council. After my six years, Pat got appointed to council, and he decided to become a politician, and had to resign, and I filled in his last year. During that last year, the RECA admin said, Well, you know, several years ago, we created this compliance advisor position for the real estate, and it’s been wildly successful. So we’re thinking about doing the same thing for mortgages. And so rather than retire from the industry, I decided to throw my hat in the ring for that job, and was successful. So that’s how I merged into the regulator. Now you said government, RECA is a non government organization might be thought of because it’s a regulator, but it is an NGO, so I’m not working for government, but a lot of people think of it that way, because it’s a regulator, right?

Len 41:47
Yeah, and owned and run by service, right? So, but yeah, so that not quite the same appeal as working for something like the CMHC, I’m sure. So as part of that, you’re very involved with the MBRCC, yes, Mortgage Brokers, Regulators, Council of Canada. Is that correct? I got the letters right, another acronym. Well, how did that come about? I think I know pretty much well. But and what effect do you think it’s having on the industry?

Gary 42:19
Well, that’s actually an interesting topic. So as a council member, I used to go and participate in NBRCC meetings. So it was a sort of an unofficial gathering every couple times a year. I think it was called the Canadian Mortgage Regulators Group or something at that time. And then it became a little bit more official. And when I say that, it was more organized in in 2012 I attended the whole time I was on council, and then as as a resource once I joined RECA in 2017 and the intention was to try to figure out ways to harmonize mortgage broker regulation across the country, to share experiences, to understand the industry better and try to be more consistent. It doesn’t have any official power though. I mean, you remember, so it’s a bunch of different regulators from across the country getting together, really now four times a year, to talk about how we can do things more in concert with each other. The problem with having real success with that is that a lot of the changes that we’d like to see are embedded in legislation. And, you know, we’re doing a rules review. So RECA is doing a rules review now, and it’s, I think, two years in. And you know all the consultations that have to happen and all the, you know, the different meetings that have to be held to consider what changes should be, takes a really long time. And so progress is being made, but it’s extremely slow. And there’s just some things that you know, just they get, they get flagged for, if you are a mortgage broker regulator in Canada, and you have an opportunity to have a review of the titles that you require, for example, is one of the things, or you have a chance to review your legislation around private lending these so we’ve gathered data, and we’ve tried, we tried to show the differences between different jurisdictions on a variety of issues, errors and omissions. Insurance, you mentioned earlier how it’s getting more expensive, and it’s actually, it’s not a very big market, so we’ve been studying that to try to make sure that we understand how that is operating in the mortgage space, and what a change in our regulation might do to that business and so on. So it’s not ever going to have a I don’t think it has enough. It just simply just doesn’t have the power constitutionally, Mortgage Broker Regulation is provincial jurisdiction, so it really is just a coordination of effort to try to harmonize as much as possible.

There are some things going on right now in education where I think you might start to see some recognition of… you said you’re licensed in five provinces. Six? Okay, so if you, you know, like they’re trying to, they’re working on, trying to put together a program where, if you take Ontario’s requirement, you won’t have to take Alberta’s, etc, etc. So, you know what, I think we’ll see some of some of those types of impacts. And you know, the spirit is there. The mechanism to make it happen is political and you know what that looks like, so, but I think that there’s, I think the organization does a lot of good work, and there’s a lot of people within the organizations across the country that are well intentioned. The thing that I guess I probably had to offer was a bazillion years in the mortgage space, which most of them haven’t had. And so they’re very reasonable, intelligent, well informed people, but I was able, during my time there, to offer some additional on the ground experience on the mortgage space. So I think that the organization has evolved, working on a number of interesting projects to try to get that harmonization in place, which, which will be an ongoing project, given the constitution to Canada?

Len 46:13
Yeah, I could ask and why we can’t all be called mortgage mortgage brokers a long time ago, because it is. You can see it in every legislation. Manitoba, I’m a salesperson, some mortgage broker in BC… and Saskatchewan are kind of the same. And of course, I really was in favor of the tiered levels in Ontario, where the level one, you just deal with residential. Level two before you can do anything with private lending, you know. And then that next level, if you’re going to run a team, you need to be that associate broker, and then principal broker, which is what I hold, right? So it’s always interesting to see it unfolding. I’m not opposed to the course. I’m a little confused about the course we’re doing in Alberta. At the moment, there’s looks like there’s four different options. I’m just going to do them all, just to see what they all look like. So when my team asked me, right? Yeah, no, that’s the same four different options. Yeah, it looks like there was four levels for that course, or something like that. But anyway, oh, there’s four modules.

Gary 47:11
Four modules, right? Yeah, but it’s all one course.

Len 47:18
There’s a lot of stuff there. Then they’re catching up for not having done that course ever.

Gary 47:22
Well, there’s a couple of things, so that was part of my work at RECA before I left. Myself and Jared Morrison from Alta West, we looked at courses that had been offered in Ontario. For example, there have been competencies that were to be included in the Alberta course, there were back in 2020 I think, I think or 2022 I guess when AMBA started offering. They wrote a course, they included some additional stuff on private lending, but not as comprehensive as what was we felt was going to be required given the emergence of private lending and the complaints that you talked about from the private, individual private lenders in particular, and the impact that had on areas of the mission. So there’s a domino effect that was happening. And so the Industry Council here decided that, you know, disclosure forms are in existence in all these other provinces, and they’re not really reducing the number of claims. So, maybe better education. So we looked at the competencies that were established for the Ontario course and others that had been around for a while, modified them to fit Alberta, added some things because, you know, a license in Ontario doesn’t allow you to administer mortgages, but some people who are involved in private lending do administer mortgages, and in Alberta, you can do both under your mortgage broker license. You can originate mortgage and you can administer. So we added section on the mortgage administration and so on. So ultimately, that’s how that course came about. Now, now mortgage brokers in Alberta have not had to take a continuing education course since 2015

Len 48:55
Has it been that long?

Gary 48:57
Yeah, it has. Yeah, there was a broker who had to take a course just a few years ago. So you would have recalled taking one, but not all of your associates.

Len 49:07
I take so many of them, Gary, that I just didn’t even pay attention. Margie just tells me what I need to do for the year. Take the course. I’m taking so many courses from what is it, MBCAC, or something like that. But I ran out. I’ve taken all their courses, so now after 19 years, they’ve got to come up with something new for me, right? Yeah, exactly. But I didn’t realize that was 10 years since we’d had to do anything. But, yeah, I’m not opposed to the continuing education, because things change all the time, of course, right? And we’re always seeing new things in the market, which is kind of what keeps me here, because there’s never a dull day in mortgages around here. There’s always some new question. I probably had two last week. I’m going like something on a title that I’d never seen. Somebody had registered something, and it wasn’t in place yet, but it was, it was noted that it was there, and I’m going like, Oh, I’ve never seen that before. So it’s that kind of industry that’s always evolving and the more education for the agents, the better, because when people come out of the course and we hire and train a lot of new people, the question I asked them is, what did you get out of the course? And the answer has been the same for 15 years. I got 70 so I could get out and get my license. So that’s a big part of it.

Gary 50:32
One of the other things that has changed in that time frame too, Len is that in 2017 when I joined RECA and left Invis, we had basically one major platform for submitting deals, which was Filogix, right? And shortly after that, your group had been working on Velocity. At the same time, Mortgage Alliance was working on BOSS. And now I think there’s six or seven different platforms out there. I’ve heard Scarlett, Finmo and so on and so forth, and so, you know, we see technology evolving, and then you have the FINTRAC implications as of last October, and you see that the technology has evolved to do a part of the thin track job, the whole ID verification thing and so on. So yes, it’s a very interesting industry. There’s, it’s always evolving, it seems. And there’s a lot of creative people, because it is an industry of self employed people. And in order to survive as self-employed people, you generally have to be ambitious and creative. So I think that’s one of the things that kept me so involved in the mortgage broker industry. You know, as I described my career to you, and just giving you the highlights, most of my jobs were three to seven years. Some I left by choice, and some I was given an opportunity to change. You know, I have no regrets looking back on how my career has evolved. I’ve enjoyed I wouldn’t say every one minute of it, but I certainly enjoyed it a lot and so my last seven years at RECA turned out like, I just decided to do something for three years and ended up being there seven, actually eight, because this is 2025, right? Yeah. So that’s my second longest career.

Len 52:25
That’s pretty good. So what does retirement hold for you?

Gary 52:29
You know I have only been in the retirement mode since the first of July, and as you know, it’s stampede time. And I’ve been invited fortunately to a few events to get to sort of see people, maybe, maybe some for the last time. And I’ve got a couple of young grandkids here in the city that are going to spend some time with them this summer, and looking forward to hunting season in the fall. You know, all of the things that I’ve done in the past, just more of it. I don’t think that for some reason, I don’t think that I’m not going to be one of those retirees that travels the globe. So that’s not in the forecast, but lots of things that I do, like, you know, I’m still skiing, hopefully this winter, I got my season pass again, and instead of getting out six times and go get out twelve. That’s kind of what it looks like for me. I have, and I know I hear this a lot about retired people, is that they think they have a list of projects that’s going to keep them going for a dozen years, and after two years, they’re all done their projects. But right now, my list is pretty long of various little things that I haven’t done before because it’s going to take a fair amount of time, and I’ve only had a few hours here and a few hours there, so I expected to get caught up on some of those projects, and then we’ll see where life takes me after that.

Len 54:00
Well, we thank you very much for your dedication to the industry, that is a long span of almost over 50 years, right? 53 years. Yeah, that’s amazing to see the growth and the change in the country and in the mortgages themselves. So again. So thanks for your time today. Hopefully you get out on your bike some more as well.

Gary 54:24
So that, yeah, that’s definitely in the plan. Yeah, thanks.

Len 54:24
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.