Business Lessons I Learned as a Hockey Coach

By Mark Kerzner, President, TMG The Mortgage Group Inc.

In the past I have written a lot about lenders in the mortgage channel, interest rate forecasts, mortgage guideline changes and the impact of those changes in the industry. With this post, I'm taking a completely different approach. Today, I want to share with you a recent personal experience coaching my son's hockey team and the lessons he taught me about business.

My seven-year-old son loves hockey and I am at least partially to blame. Truthfully, I couldn't be happier. He teases me with his love of the Vancouver Canucks and Pittsburg Penguins but I believe deep down he is a die-hard Toronto Maple Leafs fan, just like his dad.

Last year was his first in organized hockey. It was a traumatic experience for both parent and child. Evan was not the best player in the league. In fact he was close to being the worst (only a parent can say that). During opening weekend he didn't even want to go onto the ice because "my equipment is hurting me." So without even his first fall on the ice he was already in pain. Yikes!

When he finally did get on the ice it was mostly down and up… okay, it was really only down -- he had a really hard time getting up. Even getting to practice was a chore. It wasn't a lot of fun.

For a hockey-mad parent, dreams of future NHL stardom quickly evaporated. Then the trauma started. My son was traded. Not only did he have to change teams but was traded for a really great player. While his previous team graciously welcomed their new goal-scoring sensation, Evan was left to fill the proverbial skates of one of the best players on his new team. He even had to don his jersey and adopt his number.

While he took it in stride and was happy to move instantly up the standings with his new team, I on the other had didn't. I couldn't understand how you trade one of the worst for one of the best. I couldn't understand why I wasn't consulted. Did I mention though that he totally took it in stride? He also improved. He finished year one at 0 goals and 3 assists.

This year I vowed things would be different and I took matters into my own hand - literally. I decided that I would coach my son's hockey team so that a trade was out of the question. I was paired with two other amazing coaches and then the seeds of change were planted.

Our team started off weak but we encouraged the kids to do their best while instilling some basic fundamental skills - shoot the puck up the boards!  We won only four games in our first four months. Then the magic happened.

The kids were having fun and so were the coaches. They started to play like a team. They started to support one another. And more than anything else, they started to commit. They were working hard during games and in practices. This was rubbing off on my son as well.

Evan scored his first ever goal while I was away on business. I was devastated - I wasn't sure when the next one would come, but then they did. By the end of the year, Evan was fifth in team scoring with 10 goals and 17 points (he had 1 goal and 2 assists mid-way through the year).  His coaches and his dad were really proud. More importantly, so was he.

But more than that, his team, which finished the year as the 7th overall seed and went 6-1-1 down the stretch, got to play in the Championship Game.This was an incredible experience for me. I was so proud of the team. I was so proud of my son.

The odd thing with this experience is that, as coaches, we are supposed to teach our players. The parents reinforced that with end of year support for our efforts. However, it was really the team who taught the coaches a whole lot more.

 
Lessons I Learned:

Be Positive and good things will happen.
We never got down in the dumps with our slow start.  We knew we would get better and we did.

Always keep (your feet) moving.
In hockey when you are stationary it is easy for someone to skate around you. In life that is true as well. Stay in motion and make things happen.

Working together as a team is far more effective than relying on a few star individuals to carry you to the end.       
That is as true in life as it is in sports.

Hard work pays off.
Our team committed themselves both in games and in practices as well. With sports, as with work, nothing is automatic. Becoming a success means dedicating yourself to constantly becoming better, to understand the market, the guidelines and the opportunities so that you can best serve your clients unique needs.

Protect the ones you love.
OK, I know the right answer is to give the ones you love support and slack to find their way. Give them encouragement, put them in an environment where they can and will thrive ..but truthfully, I do think that it’s okay for a parent to want to protect a child, especially if it is in light of wanting to provide them with an environment where they can thrive. Sometimes a parent really does know best.

I also think it is okay from a business perspective as well. You do this for your customers on a regular basis -- you assess their needs and make recommendations that are supportive and realistic. At the end of the day you are the expert and the voice of reason. 

By the way, we lost the Championship game in a very hard fought battle.

Employer of Choice for TMG The Mortgage Group Canada Inc.

(Toronto) TMG The Mortgage Group Canada Inc., took home The Employer of Choice Award at the Canadian Mortgage Awards on Friday, May 10, held at the Liberty Grand in Toronto. TMG is the first brokerage in the past five years to win this award.

It has been an exciting year for the 23-year-old company. In November of 2012, TMG was named the Best Companies to Work for in B.C. at an Awards Gala the Fairmont Hotel in Vancouver. Also in November 2012, TMG was honoured with The Canadian Association of Accredited Mortgage Professional’s Partner in Excellence Award at its annual conference.

 “It was truly an amazing moment when TMG The Mortgage Group was announced as the winner,” said Mark Kerzner, President of TMG. “This reward recognizes the "family values" culture that founders Debbie and Grant Thomas have fostered.”

TMG is recognized as a caring, innovative, company that strives for mutual success.  “We continuously value the tremendous brokers, agents and associates who are part of the TMG family but at the end of the day this award is a reflection of the commitment, passion and dedication of our best –in-class employees. ”

Consider a mortgage broker first

By Mark Kerzner, President TMG The Mortgage Group Inc.

So what comes first - the chicken or the egg? In the real estate industry that question gets turned into the following -- if I am going to buy a house do I speak with my mortgage broker or Realtor first?

First of all, kudos if you knew that it’s vital to speak with both a mortgage broker and a Realtor when you’re thinking about buying a home. Some will choose the simpler and often more ineffective path of trying to sell a house privately. Some will blindly walk into a bank branch to apply for a mortgage from a financial generalist.

TMG The Mortgage Group strongly encourages our clients to use a licensed Realtor for buying and selling real estate. They are experienced professionals who know your local market and can guide you through the processes of purchase agreements, deposits and conditions. TMG brokers work with many Realtors and will often refer clients to those who have proven to be exceptional and professional service providers.

As well, mortgage brokers often receive referrals from qualified and valued real estate agents and we are grateful for those relationships that we have developed. Those Realtors know that mortgage brokers are professionals, just like they are, and who are experts in their fields. Furthermore, they know that successfully removing financing conditions on agreements of purchase and sale are vital to completing the real estate transaction.

Consider your own experience with the professionals in your life and those you turn to for advice. In my own experience, I think the following:

• I trust my accountant implicitly. He understands my financial health and goals. From time to time I ask him if he knows a good life insurance broker, financial advisor, etc.
• I trust my circle of friends. Many of us went to school together, hang out, do business together, have fun, etc.. Some are lawyers, accountants, entrepreneurs, Realtors, teachers, and I refer people to my circle of friends whenever I can.
• I trust my referral sources and lender partners. They understand that our purpose is to provide access to choice and unbiased advice, leading to the most appropriate mortgage financing solutions for your unique situation.

What is still a little unclear to me though is why more home purchasers and sellers do not go to their mortgage broker before doing anything else. Just as Realtors are uniquely equipped to refer clients to mortgage brokers, so too are mortgage brokers with respect to Realtors.

 On HGTV’s Property Virgins, the host begins by confirming that the house hunters on the show have been pre-qualified for a mortgage so they can determine the price range of the houses worth looking at.  At that point they can start their housing search.

Even if you’re selling, consider speaking with your mortgage broker first. Here’s why it makes sense. If you’re selling you may be buying as well. If you’re “moving up” to a larger, more expensive home, then you will need to know what you qualify for. If you have a mortgage and wish to pay it off you will want to understand penalty and breakage costs. Alternatively, you may wish to port (transfer your mortgage) with an increase or decrease to the mortgage balance. A mortgage broker can assist in all of these scenarios. 

Know where you stand. Know what you can afford.  Start your next real estate transaction with a conversation with a mortgage broker first.

Buying a house doesn’t have to be stressful

Buying a house should be an exciting time but it can get pretty stressful, according to the Bank of Montreal’s Psychology of House Hunting report released on Thursday, May 2. The biggest worry is finding problems after moving in. The next worry is that prices will drop and the house won’t be worth the original purchase price.

The house buying process can be overwhelming for first time home buyers but also for move-up buyers as well. It doesn’t have to be if you put together a team of experts who will guide you through the entire process.

It starts with a mortgage professional who will take a look at your finances, including your credit score, to qualify you for a mortgage. A lot of information about you and your credit management abilities come up during this process. Having derogatory items on your credit report doesn’t mean you can’t qualify for a mortgage. Everyone’s situation is different and a mortgage broker is familiar with most situations and can offer options.

Once armed with a pre-approval, you can confidently work with a Realtor to find the right house for you. According to the report, on average, home buyer spend five months house-hunting and visit 10 locations before deciding to buy. It’s certainly a good idea to take your time to make sure to get the house that’s right for you. Interestingly, the report found that 33% of home buyers felt rushed into making a purchase and increased to 39% for first timers. Sixty-eight per cent were prepared to settle for a home that was less than perfect. Four-fifths of prospective buyers said they know a home is right for them as soon as they step inside.

Once the Offer to Purchase is made, working with a trusted lawyer is the best way to make sure there are no surprises at closing. The bottom line is to take your time, work with professionals and do some research.

Here are the top five mistakes new homebuyers make:

1. Not getting pre-approved. Without a pre-approval you’re actually going in to the home-buying process blind. You won’t know what you can afford or if you even qualify for a mortgage. 
2. No Home Inspection. This is a must, especially in older homes.
3. Not budgeting for the increased costs. Home ownership comes with additional costs that you don’t have when renting. In addition to mortgage payments, you will have property taxes, higher utility bills, home insurance and extra costs for maintenance and repairs.
4.  Not knowing the closing costs. A lot of buyers forget about the closing costs, which includes land transfer tax, title fees, the lawyer’s fee, etc. Don’t get caught short.
5. Forgetting about future needs. If the home you’re purchasing is a starter, then perhaps a two-bedroom will work for you. However, if you plan to start a family, you might want to look at a three bedroom. Or if you there any other possible living arrangement changes, make sure to factor those in.

When will the housing market rebound?

This has been a week of reports – all confirming a cooler housing market. On Tuesday April 9, the Canada Mortgage and Housing Corporation (CMHC) reported housing starts were weaker than expected, although edging higher in March. A Statistics Canada report showed the value of Canadian building permits rose a weaker-than-expected 1.7% in February.

BMO Capital Markets senior economist Robert Kavcic sees the housing starts report as a “soft landing” he said in a Globe and Mail interview, noting that, “starts have receded to just above levels seen two years ago.”

In a Royal Bank poll, 15% of those surveyed say they’re likely to buy in the next two years, a drop from 27% from the previous year. Analysts suggest the reason for the delay is that Canadians are paying down other non-mortgage debts. This was proven correct in yet another report, this time from CIBC, that found homeowners are tackling other debts and don’t think they’ll be mortgage-free until they’re 57, which is two years longer than what they expected last year.

A year ago Canada was in the midst of a hot real estate market. Now the Canadian Real Estate Association (CREA) is reporting that actual activity has declined as much as 15.8% below last year’s levels.
We’re also seeing a wide variation in housing prices across Canada. A report by Royal LePage found that prices were up year-over-year nationally, with the exception of Vancouver, Victoria and Saint John, N.B., which had year-over-year price declines.

The once booming real estate sector has turned into a deep housing slump. Even the Spring market has not rebounded as expected. The International Monetary Fund still believes the market is somewhat overvalued, as do many economists. The new mortgage-insurance rules have indeed impacted the market, especially for the first time home buyers. Many analysts suggest the market was correcting itself,that the government’s rule changes were perhaps unnecessary, and may have been the tipping point.

There is no arguing that the market has cooled down. Any hopes of a big rebound this year seems unlikely. So the big question is how long this slowdown will last. For that answer we need to look at both the Canadian and U.S. economies.

Both countries are showing signs of weakness in job creation. Consumer confidence is down; manufacturing is weak. Both economies are expected to grow a sluggish pace of under 2% this year. The Canadian government and the Bank of Canada have consistently lowered their growth prediction as reports are released. The trade gap in Canada has widened and will likely get worse, given the weaker U.S economy – Canada’s major trading partner. There is, however, a bright light –new home construction in the U.S.is increasing -- which is good for our exports.

According to Benjamin Tal, Deputy Chief Economist with CIBC in a weekly Market Insight Report, the economy will remain sluggish until the end of 2013. Given that, like a big ship trying to turn in the middle of the ocean, we think it’s safe to say that it will take until well into 2014 for the economy and the housing market to come alive again.

Should we privatize CMHC?

Canada Mortgage and Housing Corporation (CMHC) is in the news again after Minister of Finance Jim Flaherty released the 2013 budget on Thursday March 21. New changes are coming that will, once again, limit the use of portfolio insurance by mortgage lenders.

Portfolio insurance, also known as bulk insurance, is a product which caused CMHC to eat up most of its $600-billion limit on the mortgages it insures. Anyone with less than a 20% down payment and borrowing from a financial institution regulated by the Bank Act, must purchase mortgage default insurance. Those with more than 20% do not have to buy that insurance but lenders have been purchasing it on behalf of these clients because the loans were more easily securitized with federal government backing.

CMHC, which controls about three quarters of the mortgage insurance market, is 100% backed by the federal government. The two private insurers, Canada Guaranty and Genworth Financial, control the rest of the market and are 90% backed by Ottawa. Their limit is $350-billion each.

The new rules introduced by Flaherty will gradually limit the sale of insurance on a conventional mortgage -- those with more than a 20% down payment -- which may cause lenders to, once again, tighten-up their mortgage approvals.

Perhaps it’s time to revisit the role of CMHC and consider privatizing the crown corporation.

For years, lenders have known that Canada Mortgage and Housing Corporation (CMHC) has had an advantage over private mortgage insurers since its policies are backed 100% by the feds, unlike the 90% guarantee given to private insurers.

In a report written in 2011 by  Jane Londerville , Associate professor and Interim Chair of the Department of Marketing and Consumer Studies at the University of Guelph, who also teaches real estate finance and appraisal, has recommended privatizing  the CMHC to level the playing the playing field.

“I’m not saying it’s the right answer,” Londerville said in an interview. “But if we want mortgage insurance that benefits the consumer, then we have to look at ways to make the insurance market more competitive. This would likely lead to lower mortgage insurance fees.”

Lawrence Smith, Professor Emeritus at the University of Toronto co-authored a Federal Task Force  Report in 1979 that discussed the role of CMHC and if there was a case for privatizing it then.  At the time, it was a radical idea, but an idea whose day may be finally coming.

“We clearly needed CMHC 60 years ago,” he said. “However, times have changed and the reasons it was created in the first place no longer exist.”

CMHC was created in 1946, and then known  as Central Mortgage and Housing Corp.  The mandate of CMHC was to administer the National Housing Act and the Home Improvement Loans Guarantee Act.  Essentially it was created to help soldiers returning home from the war access affordable mortgages.

By the 1950s, CMHC was in the affordable public housing business. The agency’s social policy portfolio expanded, with assisted housing and assisted home-ownership programs, on-reserve housing, and green energy and conservation programs. CMHC also grew its mortgage loan insurance program by requiring those with low down payments to purchase mortgage insurance.

Finn Poschmann, vice-president of Research at the C.D. Howe Institute wrote in the Globe and Mail recently that CMHC may be doing too much – that’s its role has expanded into territories where it may not belong. He asks these questions:  Why does the Crown Corporation do all of the things it does? Why aren’t social housing and related social programs part of a division of Human Resources and Skills Development Canada, where similar social programs reside? Why aren’t housing market data functions handled and financed by Statistics Canada? Why aren’t green energy programs parts of Natural Resources Canada?
With regard to mortgage insurance, Poschmann wrote, “This usually is a profitable business – people must buy the product, and to do so at the price CMHC sets. But why does the federal government hustle mortgage insurance, and not auto insurance?

Taxpayers have often raised concerns that backing mortgage insurers is risky business and can end up costing them as it did in 1979 when CMHC didn’t have enough in reserve to cover claims and needed government assistance. Since then, CMHC increased premiums and have been more cautious about maintaining its reserves.

“Having a competitive market for mortgage insurance greatly benefits homebuyers and would likely lower insurance fees,” said Londerville.

To foster a more competitive environment she recommends that CMHC be repositioned as an affiliated non-Crown public entity and ensure the government backing for this new company is equal to those terms available to private insurers. She also recommends the federal government set lending criteria.
Londerville, Smith and Poschmann all agree that CMHC should not be wound down but its role should change.

Statscan could take took over housing market data, and energy-conservation programs can migrate to other federal departments said Poschmann. CMHC’s financial market functions are already overseen by Finance and the Office of the Superintendent of Financial Institutions, which also inspects private insurers.
The mortgage insurance program, meanwhile, would be an attractive investment for a well-capitalized domestic financial institution, such as a pension fund -- the Ontario Teachers’ Pension Plan already owns half of one of the private insurers, Poschammn added.

Smith said the government should consider establishing CMHC as a reinsurer rather than a primary insurer as it is now. Reinsurance is the most common risk-transfer tool used by insurers to manage risk. Private mortgage insurers use it, as does Export Development Canada, a federal Crown corporation with a significant export credit insurance business.

Reinsurance is risk-sharing between the direct insurer and the reinsurer who agree to fulfill certain obligations under certain conditions, like any legal contract. In the case of mortgage insurance, it could be agreed that if there is default up to a certain amount the reinsurer will pay the difference, thereby sharing the risk.

“There are still many questions to answer about CMHC,” said Smith. “We may not need it as it exists today -- its role must be redefined.”

Many Canadians think getting a mortgage is complicated

A new survey commissioned by ING DIRECT found that 67% of Canadians who have had or currently have a mortgage felt the process was either complicated, confusing , or hard to figure out. Thirty-eight per cent of current or former mortgage holders say getting a mortgage is time consuming while one in five describes the process as annoying.

By comparison, a mere 7% of respondents feel the process is stress-free. 

The most stressful aspects of the mortgage process was negotiating for a rate, deciding on the right term and payment schedule and getting customer service help from the lender. Haggling for a rate was one of the more stressful parts of the process. Interestingly, over half of the respondents agreed that researching and comparing offers made the process more difficult.

There is no question the mortgage process can be complex and daunting but is doesn’t need to be stressful.  A mortgage broker can help by researching and filtering through numerous loans and a variety of products with a number of mortgage lenders. Brokers will review the best options with you, assist you with key decisions, answer all your questions at your convenience and in the comfort of your own home, if you prefer, and support you through the application and closing process.

According to the survey 20% of mortgage consumers feel the ability to get a mortgage from home would make the process easier. Mortgage brokers like to make it as easy as possible for you.
Here are some other findings of the study:

* Simplified language in mortgage contracts would make the process easier
* 16% of respondents felt that  getting a mortgage would be easier if they had access to more education about mortgages

Let a mortgage broker sweat the details for you so that all you  have to worry about is moving in.