Veteran: Some brokers will benefit from Firstline sale

by |

You may not have thought about it, but the managing partner for one of the country’s largest teams has, pointing to the “strategic advantage” a FirstLine sale would give some mortgage professionals over others.

“It’s an unfortunate truth,” said Mike Hapke of MCC Mortgage Brokers Ottawa -- a member of The Mortgage Centre family. “But, definitely, I think when CIBC sells FirstLine that will give MCC brokers a big strategic advantage, in that they won’t have to drop CIBC from their repertoire of lenders.”

That wouldn’t be the case for the more than 13,000 mortgage professionals operating outside the CIBC-owned broker network. For them, they’ll likely lose the influence the Canadian Imperial name has on clients both in and, especially, outside of the country’s large urban centres.

While those brokers have always been restricted to “FirstLine” branded mortgages, most have used the CIBC name to help sell that product, argued Hapke, one of CMP's Top 50. That selling power may effectively be lost with the sale of FirstLine to any buyer outside the Big Six.

The analysis speaks to the challenge brokers still face in selling mono-line product, even as more and more Canadians educate themselves on their mortgage options.

“The fact is that a lot of clients don’t know who FirstLine is,” said Hapke, “but telling them that it’s owned by CIBC, they understand that.”

That hasn’t been lost on most industry leaders quick to respond to news last month that CIBC was preparing to sell the mortgage lender.

That hasn’t been lost on most industry leaders quick to respond to new last month that CIBC was preparing to sell the mortgage lender.

“Unless a deposit-taking entity with a great rating or big balance sheet buys FirstLine, it will be a massive loss,” said Alex Haditaghi, founder of Pacific Mortgage, last month. “It’s not good for our industry to lose a funding source like CIBC, with its access to deposits, covered bonds, MBS, CMB giving it the ability to fund $15 billion per year.”

Last week, the bank confirmed reports it was looking for a buyer, although would retain the massive FirstLine book. It also aims to retain as much of that renewal and refi business as possible.

“We do not expect this process will be a lengthy one,” says David Williamson, CIBC’s senior executive VP of retail banking, speaking to the “potential sale” of the broker channel lender. “Once this process is complete, we plan to increase renewals into our CIBC brand from the FirstLine platform over time. Benefits of this will include higher NIMs and deeper relationships as these clients enter into CIBC branded channels.”

That last statement may be a call to action for broker-partners of FirstLine, encouraging them to reach out to clients they've placed with the lender to ensure they retain them after any sale. That notwithstanding, FirstLine will continue to originate mortgages until such time as a sale.

  • James on 2012-03-13 4:13:16 AM

    The loss of a lender is a big thing for out industry, but I think he places more value on the CIBC name then it deserves. I have a number of clients that have had issues with CIBC and have no desire to deal with them on for a mortgage application. It can be a detriment or an asset depending on the customer.

  • I doubt it. on 2012-03-13 5:19:41 AM

    You're an idiot if you send the majority of your business to a bank-owned brand or a bank in the first place. You're an even bigger idiot if you think you won't be affected at MCC or HLC by the sale of FirstLine, and the "ability" to continue to deliver the CIBC brand. Most brokers and agents worth their salt build relationships with clients that have precious little to do with the brand of the mortgage. If we finally started working, as an industry, to put the customer first more than the banks do (which most of us already do), then we win. I'm not saying the sale won't impact our industry - it will - but the strong and talented will always survive.

  • Paul Therien on 2012-03-14 6:14:04 AM

    Brokers need to be able to rely on more than the brand of a competitor to drive their business forward. Those consumers that deal with brokers do so because they are looking for an alternative to the banks. Does MCC have the advantage of offering CIBC products, one could argue they do... but one could also argue that they run the risk of becoming to strongly aligned to a bank brand, thus losing their value proposition to some consumers.

  • Len Lane on 2012-03-14 5:49:09 AM

    So if you are a Mortgage Centre associate won't it look more like you now work for CIBC?? And aren't we brokers cause we don't want to work for the bank?

Broker news forum is the place for positive industry interaction and welcomes your professional and informed opinion.

Name (required)
Comment (required)
By submitting, I agree to the Terms & Conditions