“My current lender of 10 years could not match Jessi’s rate. Don’t be fooled by Jessi’s unusual promotional ways. He runs a good company with competent staff.”

Trevor Scott

CMP magazine interview Vancouver Mortgage Broker Jessi Johnson

A Brave New World: How technology is changing the industry

Many mortgage brokers seemingly try to keep on top of a million things at once. Whether it’s answering their BlackBerry, visiting clients, checking emails, processing applications or setting up new marketing campaigns, brokers always have to be ready to attend to whatever may come their way in order to keep up with all the demands of the industry. However, as brokerages continue to take on more business and competition in the industry grows even fiercer, many are beginning to find the profession that much more challenging, especially those neglecting technology.

Those who use technology at their brokerages, however, generally have been able to cope with the current demands, and actually exceed them. While paper piles up in the offices of brokers who are unable or unwilling to take advantage of current innovations, mortgage agents who are well-versed in today’s technology have been able to free up more time, make their businesses run more efficiently and, most importantly, they’ve been able to attract and retain a large clientele base. As more brokers catch on to this trend, the industry as a whole continues to move closer to becoming almost completely electronic, leaving the old days of paper applications and fax machines to fade into oblivion.

Ten years ago, mortgage brokers could still get away with overlooking technological advancements and doing business the old way, says Jim Black, mortgage expert and owner of Dominion Lending Centres Mortgage Excellence in Lethbridge, Alta. But in an industry in which nearly all mortgage applications are submitted online by using web-based mortgage-origination software platforms, Black says individual brokers are finding that they need to catch up to today’s innovations. “If you’re missing the computer or technology train, you’re missing out,” he says. “But if you get up to speed on some of the basic technologies … it’s proven it’s only going to help you.”

Having a company with an effective website and database, or a Customer Relationship Management (CRM) tool, integrated with either Filogix Expert or Marlborough Stirling Canada’s MorWEB, is just the standard for any new brokerage to get started nowadays, he says. All of these tools free up time in a variety of different ways. For example, when consumers fill out applications directly on Black’s website, which is integrated with Expert, he’ll automatically receive an e-mail on his BlackBerry alerting him that an application has been started. He then reviews the forms and if all the information needed is included, he e-mails his client a PDF file to get their signature for the application, which they can then print out, sign, scan and e-mail back to him. Finally, he can go to his Expert account, where the application created on his website was automatically sent, approve it and send it directly to a lender. Before Expert was around and he had a website, he said he would have had to do that whole process by fax, which more than doubles the time.

Jessi Johnson, chief executive officer and president of Jessi Johnson Mortgage Team based in Langley B.C., says when he started his company a year ago, he was intent on using technology in a way that would maximize his business. Today, 95 per cent of all of his clients’ mortgage applications are filled out online and nearly all of his files are stored electronically. “I can probably do two to three times the volume than someone using paper applications and standard fax machines,” he explains. “This isn’t bragging, but simple numbers. It takes our office zero seconds to collect an application and only a few minutes to have it ready for submission. You can’t beat that,” Johnson adds.

Mortgage-origination software
Mortgage-origination software is another area where Johnson has seen a big development. After using Filogix Expert for more than three years, Johnson says he switched to MorWEB, because it is a client-based system, whereas Expert is a deal-based system. Brokers using Expert must resubmit their clients’ information if they need a new mortgage, since the application does not keep client records. To manage that data, brokers should find a CRM that can be integrated with Expert, such as inContact’s CRM NEXA.

Johnson says this area of technology in the industry is one that needs more competition in order to spur further innovations and developments to make doing business even more convenient for brokers. “The Filogix versus MorWEB situation reminds me of Microsoft versus Mac. If Morweb keeps its head up, it will be very interesting to see how much market share they will have in five years.”

But there is another player emerging in the market for mortgage-origination software: Axcess Canada. Malcolm Collett, director of marketing at The Mortgage Group Canada Inc. in B.C., says Axcess Canada could really end up giving the other companies in this sector “a run for their money.”

The two-year-old company, partnered with Axcess Consulting Pty Ltd. in Australia, and Axcess Americas in the U.S., offers a web-based CRM called the Axcess Relationship Manager (ARM) that takes care of mortgages from origination through to completion, says Tim Shkolnik, vice-president of solutions and development at Axcess Canada Inc. Ontario. “We don’t hand off the mortgage after it’s been originated. We’re managing arrears, collection, monthly interest accrual, payment management, collection and servicing – everything right through to discharge,” Shkolnik adds.

What makes Axcess Canada stand out from the competition, he says, is the amount of control brokers have to customize their ARM account. “We do business in the way the company wants to, rather than telling them here’s how you’re going to work ,and here’s the screen you’re going to use, and here’s the process you’re going to follow. We go the opposite way by asking the company how they want to do things.”

Do you need a CRM
While using one of these service providers to connect to lenders is pretty much a necessity in today’s industry, brokers that use Expert and MorWEB still have the option of choosing to use a CRM. Some brokers, however, just prefer to make their own database. Black, for instance, made his by using Microsoft Access. To those who may think that creating database would be extremely taxing, Black says that’s not the case. “It’s simple enough for people to go to Chapters and buy Access for Dummies and they could do a really basic database on their own … I’ll never say it’s simple, but anyone could do it, given a little time and effort.” To do his mail-outs, he then imports his client lists from his database into Sendoutcards.com to forward thank-you cards, birthday cards and other notifications to clients.

For those who don’t necessarily want to create their own database, there are a number of different companies that offer CRMs. Software Developer Shane Lemon, owner of Shane Lemon Software Consulting Inc., for instance provides a CRM called Coconut that allows brokers to track their brokerage’s and their own commissions, as well as client information, whether it’s by deal and contact details. The system can be integrated with Filogix Expert and when users send a newsletter through Coconut, the system can distinguish between referral sources and clients, sending different messages to different groups.

Lemon says he got into the business because he wanted to give brokers a better way to manage their clients’ information and track their commissions, rather than relying on a simple spreadsheet. “I realize it’s hard to change something that you think is working, but Coconut is a much more effective tool then stand-alone spreadsheets and whiteboards. Coconut replaces your whiteboard with an online dashboard, complete with all your current clients and automated reminders based on your current and past deal life cycle and spreadsheets are replaced by easy-to-use forms and comprehensive reporting.”

While CRMs are great for brokerages that are just starting out, they’re not necessarily the best bet for companies that have the capital to create their own, says Albert Collu, CEO and president of Argentum Mortgage and Finance Group, and vice-president of the Independent Mortgage Brokers Association of Ontario. “In my opinion, I think we have far too much technology out there,” he says. “I think all these pieces of technology and software platforms do a good job in themselves, but they’re all over the map. The irony is they were supposed to create efficiencies and help you with your business, but many of them have become so bloody cumbersome that no one actually uses them anymore.”

When he started his company a year ago he knew right from the start that he would need a CRM that could be used as a central point to store and manage data. So he produced his own software application called The Stream. “I knew if we opened the doors and created an organization that was just like every other brokerage we would have been dead in the water before we even started,” adds Collu, who’s been a mortgage broker for more than 10 years.

Argentum uses The Stream to create mortgage applications, interact with clients and manage documents for compliance and record-keeping. The CRM is fully integrated with his website, document management systems and is connected to an online mortgage-origination software platform for application submission. “You’re just taking the data and dropping it in a central portal and pushing it out to all the relevant areas. It puts everything on autopilot so to speak.”

The Stream has given his agents a greater ability to understand the company database, develop relationships with clients and find new business. But most importantly, it’s allowed Argentum to gain more business. “Most agents spend almost half their time on administrative functions rather than developing their business, whereas our system has diminished that to maybe five or 10 per cent.”

Jessi Johnson is another broker who hasn’t found a CRM he’s totally comfortable with. Until he finds something that can work for his business, he’ll continue using Microsoft Excel to manage his client data. “Don’t get me wrong, I am sure they work for a basic broker, but unfortunately I have a very complicated setup.”

Online marketing
Johnson’s focus, however, is less on what application he uses for client-data management and more on how he markets his company. Johnson, who teaches marketing at seminars hosted by the Mortgage Brokers Association of British Columbia, built his business by using technology. His colleague Mike Averbach, president of TMG Averbach Mortgages Ltd., says he can remember when other people in the industry would say that “mortgage brokers shouldn’t try re-inventing the wheel without learning the fundamentals first, but Jessi came in and re-invented the wheel.”

Johnson admits when he first started out he was only focused on clients who understood current technology. After a short while of working with that in mind, he realized he could build a successful business targeting only those consumers. “I don’t really want a client who doesn’t use e-mail or the Internet. Those files take 10 times as long to complete and those clients are literally a dying breed. We prefer to focus on the younger clientele and teach them cool new tricks to be more financially savvy.”

He says he’s used social media websites not to sell his products but to educate people with quality information. By doing that he was able to increase his business’s exposure and give consumers an incentive to call him when they need a mortgage. By using Twitter.com, he says he’s been able to give his business a “personal touch,” which seems to be harder to establish these days, since brokers have less face-to-face interaction with their clients.” Johnson currently has more than 10,000 followers on his twitter account, giving him a reach into a market that others cannot access.

However, before brokers even worry themselves with social media, they need to develop and maintain a decent website, Collu says. “There is going to be more and more demand for brokers to have robust websites that have ample information that capture audiences or visitors and entice further interaction,”

And even though there’s a growing demand for well-developed websites, he’s seen a lot of reluctance among brokers to fill what he calls “a very big void” in the industry. “It doesn’t matter what you want as a broker or agent, the only thing that matters is what the consumer demands. Over 80 per cent of consumers right now will visit the Internet for mortgage and home advice before even contacting a human being. If that’s not a kick in the rear-end to change habits, I don’t what is!”

Even though having a superior website with great information and tools is crucial for success, it’s all for nothing if no one sees it, says Averbach. So the next step brokers should take, if they have the budget for it, is to hire a search-engine-optimization specialist to make their websites rank higher on search engines. Averbach says this is particularly important because most people looking for a mortgage, between the ages of 25 and 45, start by using search engines, and they usually end up selecting with what’s closest to the top.

CLICK HERE for the interview posted on CMP magazine

Current interest rates, where are they going?

Here in British Columbia specifically; we just had one heck of a storm. Inaccurate fears of HST caused a huge rush of people trying to purchase homes before the introduction HST on July 1st, 2010. What many didn’t realize was that HST doesn’t affect existing homes; it’s only on new construction. June was one of our, if not the busiest months ever on record. So then what happened? HST slapped us across the face and the real estate market slammed its breaks. June’s shockingly cold weather changed almost immediately in July and blessed us with weather one would expect in Hawaii. Summer is already historically slow in real estate but this year something happened that I have not seen in a long time. A tumble weed rolled through my office, true story. One mortgage application came in within a two week time span. My record is eight in one day and we get one in two weeks? Anytime you transition from a Buyer’s to a Seller’s market, you get a dead-zone but with the disastrous parallel timing of HST among other things caused the perfect storm.

So now what? We expect prices to continue to decline for another three to six months before the Spring time. Yes, this is certainly a Buyer’s market now. Things are already starting to pick up nicely and we are getting a health number of people starting to shop again. The difference between now and the recent Spring, you will get a better deal on property.

Where are the mortgage interest rates going? The Bond Yield dictates the fixed rates and it has declined hard. I mean really hard. The current five year fixed should probably be about twenty basis points lower than where it is now. The Bank of Canada’s overnight lending rate dictates Prime. Prime dictates where the variable rate will go. As expect, this recently went up but only a small amount. How much higher will it go? The economy can’t hand a significant increase right now, mortgage interest rates need to raise slowly in order to avoid foreclosures and utter chaos. Likely you will see an interest rate increase of about two percent over the next two or three years. We can thank the current feeble European and American economies for keeping our floating interest rates low at present. Who knows how long their economies will stay weak?

There is a very good chance nothing will happen when the Bank of Canada meet in September to discuss a raise in the overnight lending rate. With interest rates this low and home prices dropping, it’s an excellent recipe for a good deal on property. The most important thing in Real Estate and Stock trading is to have good timing. Is there any way that you can capitalize on the current times? I am not saying you go out a buy a home but perhaps refinancing into a lower rate is a good option for you? Consolidating debt into lower interest rates and preparing yourself for a potential double dip recession isn’t a bad idea. I certainly doubt we will have a double dip recession but you never know. Refinancing your existing home to pull out down payment on a revenue property may or may not be a good idea for you. The interest portion on that top up is tax deductible by the way. If you ask me, things are looking up.

Feel free to comment below and let me know your thoughts. Please call my office if you ever have a questions at 604 628 5040.

Best regards,

Jessi Johnson