Brokers have lost another lender, with Macquarie Financial announcing it will outsource servicing of its $8 billion mortgage portfolio to Paradigm Quest, although Canadiana Financial will continue to draw on Macquarie funding for its own mortgage originations.
“The Canadian mortgage landscape has been one of, if not, the most challenging environment,” Matt Rady, head of Macquarie Banking and Financial Services Group, North America, told MortgageBrokerNews.ca. “What we’ve seen is a narrowing of margins that have made it a challenging business to operate on a medium-term basis. While it's profitable for us, it's difficult to see what opportunities there will be. The treatment of broker commissions, coupled with those tighter margins, have put a strain on returns on regulatory capital.”
Canadiana will originate mortgages under its brand through the broker channel. Those mortgages will be originated funded, in part by Macquarie, one of several contributors to the Canadiana kitty..
The move will leave in place and unchanged existing compensation agreements with Canadian brokers at the same time the deal with Paradigm will ensure their clients continue to access the same service levels they now enjoy. The terms of those loans will not be affected by the change.
“We’re very pleased to expand our strong relationship with Paradigm to include our full mortgage portfolio,” said Rady. “This partnership enables us to more efficiently run our retail financial services division, while ensuring our mortgage borrowers continue to receive excellent customer service.”
The net change for brokers may also be positive as executives from Macquarie prepare to transfer their skills and connections to Canadiana. Internal originations through Macquarie Private Wealth and Rugby Canada will be the responsibility of Paradigm. Canadiana will, however, seek to grow its own share of broker channel business, hoping to build on relationships brokers now have with Macquarie.
“What we’re pleased to say is that we have found a partner that will continue to originate mortgages through the broker channel,” said Rady, reiterating the potential management and originations know-how about to be transferred to Canadiana.
Grant MacKenzie, who is currently CEO of Macquarie Financial, will join Canadiana Financial to head up the company on July 1, 2011; and as a result of the expanded partnership agreement Pam Mulek, COO of Canadiana, will assume the role of president and COO.
“Canadiana values your business and we will continue to deliver the same high level of expertise and service you are accustom to” said Mulek, in a statement to brokers.
Canadiana is, in fact, pledging to actively win over those brokers with existing relationships with Macquarie.
“Joining Canadiana provides an exciting opportunity for me to add to the high standards of a well-recognized mortgage provider and continue a culture of industry innovation,” said MacKenzie. “In addition to fostering new mortgage-broker relationships, there will be additional scope to expand Canadiana’s partnership with Macquarie. I look forward to my new role as we focus on providing even better service to a larger group of brokers.”
The move also ups the profile of Paradigm, which currently manages about $1.5 billion in mortgages for Macquarie.
“Paradigm has had a strong relationship with Macquarie for years,” said Kathy Gregory, CEO of Paradigm. “It is a testament to our good working history and Paradigm’s award-winning capabilities that we were able to expand our servicing mandate to include Macquarie’s complete mortgage portfolio.”
As part of the transition to the new partnership agreements, certain employees, aside from Macquarie will transfer to Paradigm and Canadiana to continue in new roles. Terms of the arrangements have not yet been disclosed.