RBC Specialist Fires Low Blows & Goes

Courtesy of canadianmortgagetrends.com

Banks have extensive policies governing what their representatives can tell the public. The alleged actions of RBC mortgage rep Corinne Schindler demonstrate why.

Schindler has reportedly been circulating this flyer, which grossly mischaracterizes mortgage brokers in relation to bank specialists. It’s a document that demonstrates a stunning lack of knowledge, professionalism and discretion.

The piece, which displays RBC’s logo and web address, has gone viral and caused a PR embarrassment at the nation’s biggest bank. Incensed brokers from across the country have demanded that RBC retract the misstatements on the specialist’s behalf.

Here is a sample of the distortions attributed to Ms. Schindler (our perspectives follow each line):

1. Brokers charge “set-up fees" and "other hidden costs"

· Truth: Broker fees are exceedingly rare on prime residential mortgages. When fees or borrowing costs are warranted, provincial regulations require full disclosure.

2. “Ask a broker what their compensation will be for completing your mortgage.”

· Truth: Broker compensation is geared primarily to the term and secondarily to the rate. As with any incentive-based model, conflicts can exist, but no more so than with various bank rep models that pay more commission for selling a higher rate.

3. Brokers pick lenders "based on only the lowest rate, no other factors"

· Truth: Rates are commodities so successful brokers always prefer to leverage trusted advice and relationships. To build each, brokers become experts in their craft, which includes term selection, product comparison (from multiple lenders...key point) and strategic mortgage planning.

4. Brokers…"cannot fit your mortgage solution together with your overall financial plan."

· Truth: Needs assessments are a fundamental tool that brokers utilize. Brokers are trained to uncover future needs that financing might have to address.

5. "Brokers will not be there in a few months when you need to ask questions about your mortgage or change the terms of conditions"

· Truth: Referrals are a broker’s lifeblood and maintaining relationships is impossible without exceptional post-closing support.

6. “You have to be careful to deal with an institution that will give you a great rate term after term."

· Truth: Banks’ renewal models are designed to maximize profit. That’s done through selective pricing (i.e. not offering the best rate to everyone up front). It’s a fallacy that banks reward loyalty with great rates. (Here’s some relevant research).

********

After poking around at RBC, this piece appears to be Schindler’s own doing. This advertorial is definitely not in RBC’s marketing library we’re told. Moreover, RBC’s corporate materials are far more polished (i.e., generally no grammar or formatting issues, missing slogans, mistruths, etc.).

From what we hear, Schindler violated RBC compliance guidelines and sent it out without RBC’s or her manager’s consent.

In response to all this, RBC provided us with a comment:

“The opinions expressed in the document by the mortgage specialist do not reflect the positions, strategies or opinions of RBC. We are following up directly with this mortgage specialist to ensure future collateral accurately reflects the RBC brand.”

We have a better idea. How about no “future collateral” from this individual period?

Fiduciaries that mislead the public for personal gain are hazards and liabilities to their employers. Anyone who would author this sort of content should be sent packing because Lord only knows what she's telling clients in private.

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Incidentally: We’ve been holding this story since last Wednesday, awaiting comment from RBC and trying to get Schindler’s side of the story to give her the benefit of the doubt. On the two occasions we did reach her, she hurried off the line, promising to call back. Needless to say, after multiple contact attempts, we never heard back.

www.lawlessbrown.com

Building Your Brand with Social Media

Susan Gunelius

Tapping the vast audience of the social Web is a low-cost way to catapult a small-business brand onto the global arena. Building your brand using social media allows you to develop new (and strengthen existing) relationships, which often leads to everything from brand awareness, loyalty and word-of-mouth marketing.

While perhaps initially daunting, the trick is to break the process into manageable pieces. From creating your online destinations to connecting with influencers, following these five steps will get you on your way to building your brand and boosting your business.

1. Create branded online destinations.

This is the first step to raising brand awareness and loyalty. Companies with the most successful social media branding surround consumers with online experiences that allow them to select how they interact with the brand.

Consider using popular, free options like blogs, Twitter, Facebook, LinkedIn, YouTube, and so on. Of course, for small-business owners without the manpower to effectively manage too many destinations, you should consider testing each of these to determine which social media service you're most likely to stick with over the long haul. This will become your core destination. All your other online destinations should link back to the core.

2. Establish entry points.

One of the most important aspects to accomplishing this with your branded online destinations is to continually publish meaningful content that adds value to the reader's experience. The goal is to publish useful information that people will want to talk about -- and then share with their own audiences. This creates additional ways for people to find your branded destinations and it can lead to higher rankings from search engines like Google.

Here's one way to think about it: If you have a website with 10 pages of content, there are 10 ways for search engines to find your site. If you attach a blog to that website and write a new post every day for a year, you will have 365 more ways for Google to find your site, and your brand.

I call this the compounding effect of blogging. You cannot buy that kind of access to a global audience.

3. Locate your target audience and bring them back with you.

Where does your target audience already spend time? You need to spend time in those places, too, and engage in the conversations happening there. Get started by conducting a Google search for keywords that consumers would be likely to use when searching for a business or products like yours. Follow the paths that those consumers would follow and you're likely to find them.

Join relevant online forums and/or blogs, and write posts, publish comments and answer questions. Once that audience understands that you're there to genuinely offer useful information and not to self-promote, you can start leading them to your own branded destinations -- particularly your core branded online destination.

4. Connect with influencers.

As you search for your target audience, you should identify online influencers in those communities and get on their respective radars. To do so, leave comments on their blogs, follow them on Twitter and retweet their content. You can even email them to introduce yourself.

The key is to make sure they know your name and understand that you add value to the online conversation. This also exposes you to their audiences.

5. Give more than you receive.

Success in social media marketing depends on being useful and developing relationships. If you spend all of your time promoting then no one will want to listen to you. It's not a short-term tactic, rather a long-term strategy that can deliver sustainable, organic growth through ongoing, consistent participation.

A good rule of thumb is to apply the 80-20 rule to your social media marketing efforts. Spend no more than 20 percent of your time in self-promotional activities and conversations, and at least 80 percent on non-self-promotional activities. In time, you'll see your business grow from your efforts. And it starts with leveraging these fundamentals.

lawlessbrown.com

CIBC downgrades growth outlook

September 22, 2010 By CBC News The Canadian Imperial Bank of Commerce has downgraded its growth forecast for Canada and the United States next year, calling the recovery a "great disappointment." The Canadian Imperial Bank of Commerce has downgraded its growth forecast for Canada and the United States next year, calling the recovery a "great disappointment." The bank's top economist Avery Shenfeld slashed his prediction for GDP growth in 2011 to 1.9 per cent growth from 2.5 per cent for Canada. He also scaled back his target for the United States to 1.8 per cent from 1.9 percent.
"The Great Recession that shattered global growth in 2008-09 is now water under the bridge, but the great disappointment of a sub-par global recovery will be with us for a good while longer," he said. The global economic recovery has largely been based on government stimulus, the report says, and now that that's being unwound, the world's economy is likely to slow.
In the four years before the recession started, the world's economy grew by five per cent per year, the report notes. But the bank now expects that will slow to a 3.6 per cent pace in 2011. Europe is a particular area for concern, but the impact of a weak U.S. economy is going to be felt everywhere, Shenfeld said.
The slowing economy will be enough to compel the Bank of Canada to alter its current path and hold rates steady from now until next spring, the report says. "As a result, the Bank of Canada will wait until spring before renewing a very gradualist path to normalcy in interest ates," Shenfeld said. Last week, Toronto-Dominion bank also lowered its forecast for Canada's economy next year to two per cent growth, down from 2.5. Royal Bank did the same earlier this month, shaving 0.3 percentage points off its 2011 forecast, to 3.2.

The Bank of Canada is currently projecting 2.9 per cent GDP growth next year. Canadian Broadcasting

www.lawlessbrown.com

Home Sales Tumble!

Garry Marr, Financial Post · Monday, Aug. 16, 2010

Housing sales were down 30% in July from a year ago, and the Canadian Real Estate Association is blaming the drop on the new harmonized sales tax in Ontario and British Columbia.

The Ottawa-based group, which represents 100 real estate boards across the country, said July sales plunged 6.8% on a seasonally adjusted basis from the previous month, a decline “almost entirely the result of fewer sales in British Columbia and Ontario,” where the HST went into effect on July 1.

The slowdown had been expected as consumers rushed to buy homes ahead of the July 1 implementation in those provinces. The HST only applies to services used in purchasing and selling an existing home, such as real estate commission, and not the actual sale price.

Phil Soper, chief executive of Royal LePage Real Estate Services Ltd., said the HST, combined with tougher mortgage rules, expectations of higher interest rates and the bounce back from the recession, drove the market earlier this year. “You take those four things and add them together and you get a highly front-ended year, which we forecast,” he said.

The housing market did get some good news from Royal Bank of Canada, Bank of Nova Scotia, Canadian Imperial Bank of Commerce and Bank of Montreal, which all lowered interest rates Monday. The five-year, fixed-rate closed mortgage is down to 5.49%, which means that on a discounted basis, consumers can likely lock in a rate of less than 4% for five years.

But John Andrew, a professor of real estate at Queen’s University in Kingston, Ont., doubts the cut in bank rates will be enough to reverse a declining housing market.

“With homes sales down 30%, that’s surprising. I was expecting a drop, but nothing that big. I think prices are next [to decline] although they are holding their own now,” Prof. Andrew said.

“Thank goodness rates are as low as they are. If we were seeing significant increases in interest rates, it would disastrous for real estate prices,” Prof. Andrew said.

The average price of a home sold in July was $330,351, just a 1% increase from a year ago. However, the average price of a home sold in June was $342,662, so prices are off 3.6% from a month ago.

CREA said the lack of activity in British Columbia and Ontario — two of the country’s most expensive markets — likely skewed average prices down. In B.C., sales dropped 14.1% from a month ago on a seasonally adjusted annual basis. In Ontario, the decline was 8%.

The two provinces accounted for 85% of the change in national activity.

“The soft sales figures we’re seeing right now can be attributed in part to accelerated home purchases earlier in the year,” said Georges Pahud, CREA’s president.

He warned activity will be off for the rest of 2010.

“Activity may remain at lower levels for some time, but ultimately we expect a more stable market to emerge, with demand coming back into line with economic fundamentals,” Mr. Pahud said.

Prices are getting a boost from a drop in supply. The seasonally adjusted annual number of new residential listings fell 7.2% in July from the previous month, the third consecutive monthly decrease and the steepest drop in more than a decade.

However, the overall inventory rate, which reflects all housing on the market, is climbing. The number of months of inventory, which represents the number of months it would take to sell current inventories at the current rate of sales activity, was seven month in July. A year ago the number was 4.4 months.

Douglas Porter, deputy chief economist of BMO Capital Markets, said most consumers who were sitting on the sidelines already pushed their purchase ahead in the spring, so he’s also expecting a soft market for the next few months.

“Although with long-term mortgage rates dropping, employment improved and prices stabilized, the longer-term outlook is far from dire,” Mr. Porter said.

Financial Post

Read more: http://www.nationalpost.com/Home+sales+tumble/3405783/story.html#ixzz0wte1RWPV


Lawlessbrown.com

10 things to check before you buy a new home

The process of buying a new home—especially if it’s your first time—is incredibly intimidating. And while there are certain things you may know you’re going to want to change upon moving in (like paint colors or retiling), if you’ve never gone through this before you may not know what else to watch out for before you sign the dotted line (just because a home is gorgeous on the outside, it’s not impervious to having a bunch of costly-to-fix issues that go way beyond the surface—remember The Money Pit?). Here, via apartmenttherapy.com, a handy checklist of all kinds of things a potential buyer should be mindful of:

1. Check the drains to make sure they’re not backed-up. To test, do a load of laundry, fill up the tub and sinks, and try to drain them all at the same time.

2. Open all the windows all the way to make sure they’re able to open and shut completely—fixing them is not only a pain, but a financial drain.

3. Turn on all the faucets and make sure they’re in working order.

4. Light a fire in the fireplace. While cleaning them is pretty easy (just call a professional chimney sweeper), you should also make sure they draft correctly.

5. Taste the water. Even if the city you live in has great water, if you’ve got old pipes, they may send out debris into yours.

6. Flush the toilets. Make sure that the toilets are able to flush toilet paper.

7. Open the electrical panel. Watch out for loose wires or ones that simply don’t connect to anything, which could be a sign of live wires inside!

8. Turn on the heat/air. Not only do you want to ensure they turn out, but check to see if they heat/cool to their designated temperatures.

9. Pull the carpets back. Peel away a corner of the carpet to verify what’s underneath (often there’s hardwood under there) and to make sure it’s not mildewing.

10. Basement moisture. Check for signs of dampness, not just on the walls, but near things like dehumidifiers, which suck water out of the air.

http://ca.lifestyle.yahoo.com/home-garden/articles/archive/yahoolifestyle/yahoolifestyle-10_things_to_check_before_you_buy_a_new_home

lawlessbrown.com

Bank of Canada interest rate unlikely to top 1% this year

John Shmuel July 23, 2010 – 11:16 am

Slower than expected economic growth in the U.S. is set to hamper Canadian exports, meaning the Bank of Canada’s interest rate is unlikely to rise beyond 1% by the end of the year, says a research note from Lombard Street Research.

The bank raised interest rates by 25 basis points earlier this week to 0.75%, in a move that was widely expected. The note, authored by analyst Michael Taylor, points out that the bank adopted a very cautious stance in regard to the Canadian economy going forward.

But Lombard Street Research said it expects lower growth than even the Bank of Canada’s revised figures. That leads Taylor to suggest that interest rate hikes from the bank are likely going to be hold on for much of next year.

"We would agree with a domestic slowdown, due to the expiry of temporary policy measures as well as the effects of higher interest rates on a highly indebted household sector. But the Bank has a rather optimistic view on US real GDP growth, which is expected to be around 3% both this year and next. Healthy growth in the US, combined with the recent fall in the Canadian dollar, has resulted in an increase in projected export growth for 2010 and 2011. Our view is that US growth will be below-trend over the next 18 months or so, restricting the scope for Canadian exports to grow strongly (three quarters of which go to the US)."

That leads Taylor to conclude that although a rate rise is likely at the next bank of Canada monetary policy meeting in September, he expects rates to be on hold thereafter for quite some time.

Read more: http://business.financialpost.com/2010/07/23/bank-of-canada-interest-rate-unlikely-to-top-1-this-year-report/?utm_source=twitterfeed&utm_medium=twitter#ixzz0uWj05DPa


lawlessbrown.com

Pre approved or Pre qualified?

An explanation.

Both these terms are now used to describe the the action of seeking a mortgage approval before actually negotiating a property purchase. Unfortunately, in most cases, the borrower is not really fully approved for the mortgage and the lender does little or nothing to actually qualify the borrower.

What really happens is that the typical lender now provides an interest rate guarantee for a period of time, usually to a maximum of 120 days. The borrower is advised that they are pre approved and can begin shopping for a home.

At the pre approval stage, many lenders do not review credit or even determine if the client meets their guidelines for income and down payment. Lenders begin the actual qualification process when the file goes 'live' (meaning the Borrower now has an accepted Contract of Purchase). At this point the lender will begin a serious examination of the borrower's qualifications and may refuse to proceed with the pre approved mortgage for a wide variety of reasons. Because of this, it is very important for purchasers to keep their offer to purchase 'subject to mortgage approval'.

If rates have risen since the original pre approval and the lender now declines the mortgage, the client may no longer be able to get as good a rate elsewhere. Borrowers can reduce the chance of disappointment and get full approval faster by working with a professional Mortgage Broker early in the process. A broker will often recognize potential concerns and address them directly with lenders at the time the pre approval is requested. It may even be prudent to gather employment and income documentation at this stage, particularly for individuals who are self-employed or have had changes or inconsistencies in income or employment. Gathering documents early also helps reduce stress and waiting time after that hard search for the right property at the right price!

Your Mortgage Broker is an experienced professional and will assist in reviewing and advising you in the process. You will be doing yourself a favour by reviewing your situation with a Mortgage Broker before you write that offer!

lawlessbrown.com

Seeing through home sellers' camouflage

by Stephanie Farrington, Bankrate.com


Mortgage rates have started to climb again. While that's probably a good sign for the economy, it may also be a wake-up call for people who have been hitting the snooze button on the time in which they hoped to buy a house.

If you're one of the many Canadians just entering the buyer's market, it's easy to get caught up in the critical aspects of home buying and forget some of the details. The clock is ticking, rates are rising and what matters in a house is location, location, location, right?

Yes and no. Location matters, but if you're not careful and observant when making your choice, you could get a great location and still end up with a money pit.

In some cases, people anxious to sell their home have been known to make a few cosmetic adjustments to hide the areas where their house might need a little extra care or even some serious repairs. Here's what to watch out for.

A fresh coat of paint in the basement

Dean Langner, a Canadian Residential Appraiser, or CRA, with Kors & Associates, in Victoria, has worked for 15 years as an appraiser and home inspector. During that time, he's seen a lot.

"One thing I find suspicious is a recently painted concrete floor and two or three feet of foundation in an unfinished basement," he says. "A lot of times, basements will leak, and they'll get that mineral stain around the concrete. Before they sell, some owners will cover it up with a coat of paint."
Langner says if you suspect a problem, go back for a second visit. "The only way to tell is to wait for a good heavy rain and visit again to check for moisture. If you're still uncertain, you can hire a plumber with a camera, and they can look down the pipes."

Checking pipes like this is not done in the course of a usual inspection, but Langner says it's worth making it a condition of the sale if you're really worried, because drainage problems can be very difficult to fix.

New sewage or drainage pipes

Around the foundation of every house is a permanent, porous piping system, called weeping tile, that acts as a drain and keeps water from entering your basement. "Over time, this pipe can fail. It can fill with debris and mud and stuff, and it is not easily fixed," says Langner.

In older houses, weeping tile isn't even made of pipes -- it's a series of half-round, clay tiles placed next to each other. So, if the house or the land shifts, you could be in for trouble.

The money you spend to have a plumber look at your drains could end up saving you thousands of dollars, to say nothing of the time and inconvenience of digging a trench around the perimeter of your house to replace the draining system.

A recently pumped septic tank

Jeffrey D. Leiser, author of "The Home Buying Inspection Guide" and "You Can Sell Your House: For Sale By Owner," has his own cautionary tales about plumbing. "The worst is when a home owner is hiding problems with a septic or sewer system. Having the septic tank pumped out prior to an inspection can give the appearance of a well working system," he says. "A failed septic system can cost well over $20,000 in replacement costs."

He says sewer systems can also be bladed -- which involves using a long tube with a rotating blade at one end to clean pipes and cut out blockages -- so that they appear to be working without backups. But, again, this is a short-term solution to an expensive, long-term problem.

Unusual smells

Your senses are your first and one of your best methods of avoiding deception. Mould smells like mould. It's easy to hide the visual signs of mould with paint, but it's a hard smell to mask. Don't be afraid to sniff around any area that makes you feel uneasy.


Suspicious piles and large plants

If something looks out of place, ask about it. A pile of bricks stacked against the side of the house could just be a pile of bricks, but it could also be a way of hiding a cracked foundation.

That newly planted yet mature tree in the back yard, the one in front of the retaining wall? Look behind it. Just as people will paint over stains, they sometimes landscape over cracked retaining walls or other problem areas.

Protect yourself

Follow your gut. If you think someone is lying to you, ask more questions and use your written offer as a means to get the truth. Contracts are there to protect you, and conditions of sale are a good way to ensure you're covered. If you're unsure about how to do this, ask your real estate agent or your lawyer, but do not go in unprotected. It's usually easier to avoid buying a problem than it is to fix it.

If, in the end, you find yourself left holding the bag despite your best efforts, where can you turn?

Danny Berehula, director of the Saskatchewan branch of the Better Business Bureau, or BBB, says the BBB will try to help, but the help they can offer is limited because the transaction does not typically take place between a business and an individual but rather between two individuals.

"We're another resource for them, but most people, when this happens, would probably want to call their lawyer," he says. "There are laws in place, and if it's a serious matter, then it will become a legal matter. They can use us as a mediation service, but once it becomes a legal issue, we stand out of it."

So, take your time and think through your purchase carefully. All of the experts agree on one point -- sometimes you have to accept a few problems to get your dream house, but it's best to understand how much the trouble your home might cost you before you sign on the bottom line.

http://ca.finance.yahoo.com/personal-finance/article/bankratecanada/1597/seeing-through-home-sellers-camouflage

lawlessbrown.com

Variable or Fixed? What type of client are you?

Conservative, Balanced, or Risk Tolerant. Which type are do you fit into?

Conservative

• Prefer certainty on mortgage
• Meet new qualifying rules
• First Time Home Buyer
• Limited budget for payment increase
• Minimal equity in property
• Need to know exact monthly payment, interest rate & interest cost & principal balance outstanding at maturity
• Concerned with rate increase
• Will pay higher rate for long term mortgage stability
• No plans to sell in next 5 years

** a candidate for 4 - 7 years fixed rate

Balanced

• Prefer best of both worlds: variable and fixed rates
• Some equity in property
• Monthly budget not stressed
• Could tolerate fluctuation on some portion of mortgage: monthly payment, interest rate, & interest costs
• May sell within 3 years
• Short term plans with property

***Candidate for short term fixed rates, variable rate with fixed rate conversion option, Hybrid/split mortgage, Fixed rates of 1 - 3 years

Risk Tolerant

• Prefer lowest market rate
• Could tolerate interest rate fluctuation
• Monthly budget not stressed
• Prepared for potential monthly payment increase
• Understands long term savings with variable over fixed rate
• May sell within 1 year - Short term plans require mortgage flexibility
• Rate instability for potential higher interest cost savings

***Candidate for variable closed or open, could convert to fixed rate anytime
*** Variable rate mortgage or short term fixed rate 6 mos - 1 year

. Lawlessbrown.com