Ron swift wants to lead Canada’s burgeoning mortgage-brokerage business and its national association toward full legitimacy in the $660-billion mortgage market.

“It’s a passion,” says Swift, who in October began a one-year term as president of the Canadian Institute of Mortgage Brokers and Lenders. “This business has been my entire career. I truly believe in the benefits we offer consumers.”

Swift, also president and CEO of Toronto-based MCAP Mortgage Corp. , is seeking to curb the industry’s “not ready for prime time” image by working to raise and harmonize professional standards across the country.

At CIMBL’s annual conference, held in Toronto in early November, Swift outlined a plan to transform the group into a “fully accredited” association of mortgage professionals during his term. CIMBL has 7,800 members, two-thirds of whom are mortgage brokers; the rest are lenders, insurers and associate members.

The key to Swift’s plan is expanding the group’s accredited mortgage professional designation program, which was started in January 2004. Current courses toward earning an AMP concentrate on ethics, but CIMBL has plans to add components for best practices and continuing education. About 3,000 CIMBL members now have an AMP, and Swift is aiming to have 5,000 accredited members by the end of 2006.

He says two big banks — Bank of Nova Scotia and CIBC, the latter through its subsidiary, Home Loans Canada — are endorsing the designation for their sales forces.
At the conference, Swift urged members to help promote the designation by displaying certificates in their places of business, wearing AMP pins and including the designation on business cards.

“I’m confident that, in time, not only more brokers will endorse the AMP but also more lenders,” Swift says. “As we continue to promote it out there, consumers will ask, ‘Do you have your AMP designation?’”

Swift has his AMP, of course, and is the only Canadian to hold a top-level U.S.
designation, the certified mortgage banker. He began his career in the early 1980s and has worked on both the brokering and lending sides of the business. He joined CIMBL at its inception in 1994 and has always been active in industry issues. He now leads the national association at a critical time in the industry’s development.

In the midst of an extended housing boom, it’s estimated there are about 10,000 individuals engaged in mortgage brokering across Canada, with some, depending on the jurisdiction, having little or no training. Slightly more than 25% of Canadian homebuyers now use the services of a mortgage broker, up sharply from about 14% just five years ago. Total outstanding mortgage credit in Canada by the end of 2005 is expected to be $660 billion, with 10% growth expected in 2006.

“In some provinces, you have no standards. You just have to buy a business licence and you can go out to talk to consumers,” Swift explains. “We don’t think that’s right. So, that’s why we’re trying to set up a minimum standard — to start with.”

Governments have taken notice of the booming marketplace and the lack of adequate regulation. In Ontario, the Mortgage Brokers Act, now more than three decades old, is in the process of being revamped, with a first draft scheduled to be introduced to the provincial legislature in early 2006.

As it stands in Ontario, only full brokers need to be licensed, but the thousands of agents who work for them do not. In addition, registered real estate brokers in the province are automatically deemed to be mortgage brokers. Lawyers and accountants can register as mortgage brokers with no additional educational requirements.

“In Ontario, the [act] was conceived at a time when the banks were not major players in the mortgage market and a lot of the activity was with private lenders,” says Andrew Moor, vice chairman of CIMBL’s government relations committee and president and CEO of Invis Inc. , a large Toronto-based mortgage brokerage. “While the current act still works at a basic level, the increased sophistication of the market is not reflected in an archaic statute.”

CIMBL is working with governments, including Ontario’s, to help tailor new regulations. “We have a co-operative working relationship with governments,” Moor says. “They’ve told us we’ve been a role model for these types of [industry/government] relationships.
It’s been a transparent process.”

Moor says education standards, and possibly a requirement for continuing education, will probably be part of the new Ontario act.

@page_break@Also, as part of its conversations with government, CIMBL is looking at referral relationships between investment advisors and mortgage brokers, especially at which point each advisory role should begin and end. “We’re discussing where and when you draw the line [between the two roles],” Moor says.

CIMBL’s overall efforts to raise the bar on standards suggests the group is trying to stay a step ahead of the game — and of government. Its biggest fears are well-intentioned but misguided government regulations or, worse, a scandal hitting the industry before the organization gets a chance to weed out bad apples.

“The last thing we need is some poor individual on the front page of the newspaper saying, ‘I was dealing with this member of the association, and they gave me bad advice’,” Swift says. “We need to be strong enough, we need to be professional enough that governments will listen to us about the industry, because who’s better to tell them about how to improve it than those within it? Sometimes [governments have] the right idea but the wrong way to implement it, and it ends up costing an industry a whole bunch of pain, grief and cost.”

The group’s standing ethics committee is currently investigating 15 CIMBL members and will publish the results of the investigations in its magazine, Mortgage Journal. Swift says CIMBL has the right to sanction, fine or expel members, as well as publish the results of investigations.

Merlin Chouinard, owner of Saskatoon-based Sentinel Financial Group, which operates a mortgage-brokerage subsidiary, agrees the industry needs more regulation and protection from rogue participants.

“Like everywhere else in life, the overwhelming majority of people conduct themselves professionally,” he says. “It’s the rest who suffer because of the few who don’t.”

An irony not lost on Chouinard is that in his other role, as president of the Independent Financial Brokers of Canada, he often argues against what the IFB believes is the overregulation of the securities industry.

Like Swift, Chouinard strongly believes in the benefit of a good mortgage broker. “Consumers going into the banks without help from mortgage brokers aren’t being well served,” says Chouinard, adding that his company routinely obtains for consumers rates that are one- to one-and-a-half percentage points better than what those customers would have gotten on their own.

The CIMBL conference was also told the group intends to make changes to its executive structure by hiring a full-time salaried president next year. The position which Swift now occupies will then become chairman. Swift can’t stay on beyond his one-year term.

CIMBL is also looking for a new name, one that puts more emphasis on the concept of the mortgage professional rather than on “broker” or “lender.” The group is still researching a new moniker and consulting with lawyers. “Our vision is that it’s all about mortgage originators,” Swift says. “Whether you’re a lender at a branch dealing with a customer, a member of a lender’s sales force out on the road, a mortgage broker or anyone who negotiates or advises customers on their mortgages, that’s whom we want in our association.” IE