Building a better lender

Ask any Roman architect, building a masterpiece takes time, and as Don Horne reports, building a mortgage lender is no different


If Rome wasn’t built in a day, neither was your typical residential mortgage lender. Assembling an entire operation from scratch usually takes 18 months, which makes it all the more impressive that  CMLS  Financial could do it in seven.

“It has been a monumental effort, starting from mid-July,”  say Putnam, senior vice president of business development for residential mortgages. “We have 800 mortgage brokers who have signed up, and expect over 1,000 when we go live in a couple of weeks.”

As one of the largest independently owned commercial lenders in the Canadian market with approximately 8 per cent share, CMLS is ready to leverage that power for brokers in the residential market.

“A question we get asked all the time from brokers – what is your lender’s ability to fund mortgages?” says Putnam. “In addition to long-term relationships with several institutional investors, securitization programs and managed funds, CMLS Financial is one of only three non-bank lenders working in the mortgage brokerage space with approved lender status to issue and sell mortgages into the NHA MBS and Canadian Mortgage Bond (CMB) programs.  

“This gives us the kind of cost and liquidity advantages associated with direct access to these programs, and also it is important to remember we have over 35 years of lending experience, and we are familiar with the mortgage investing and lending space.”

The landscape for brokers continues to change, with Putnam citing ING Direct’s departure and the affect it has had on brokers – many now scrambling to find new partners in a slow market.

“We’ve lost significant broker-friendly lenders in recent years, and that’s why it is important for brokers to support the non-bank lenders,” says Putnam. “Choice is important, and it is good for the well-being of the industry to spread out the business.

“One left last year (FLM), and brokers were left scrambling to find new lenders for their mortgages. Some very good lessons were learned from that.”

Dan Putnam’s pedigree includes being president of the retired MortgageBrokers.com brand, having worked in the Canadian residential mortgage space for over 25 years. He has owned and operated a large regional mortgage brokerage, served as president of two national mortgage brokerage operations and was president of originations for a national residential mortgage lender.

An Ontario board member for the Canadian Association of Accredited Mortgage Professionals (CAAMP), he also sits as chair of its government relations committee. It’s a commitment above and beyond the foundation laying he did for CMLS.

“I’m honoured and delighted to have such a first-class team in place for this exciting initiative,” said CMLS Financial President Chris Brossard has told MortgageBrokersNews.ca. “We intend to build this business on the same foundation of exceptional service, broad array of products and services, best-of-class technology, and competitive pricing that has resulted in the outstanding growth of our commercial mortgage business.”

 CMLS wants to control as much of the customer experience as possible, says the exec, which is why it decided to manage all mortgage funding processes and post-funding services in-house.

“We are here to stay and we look forward to growing our business with our broker partners,” says Putnam,

A major component of the residential division is the underwriting service, led by industry veteran Jill Porter.

Putnam’s crediting her for putting in place an end-to-end underwriting process and making it more broker-friendly.

“We’ve developed an SLA for application turnaround time of four hours,” he says. “That is impressive, and that is what brokers want.”

Porter’s credentials include over 25 years in various senior credit-oriented roles with two of the largest residential lenders in Canada, and having worked in the prime and near prime mortgage markets. Jill also sits on CAAMP’s Professional Standards Committee.

The compensation program for brokers can be broken down into two basic programs: an Upfront compensation program, and a Renewal compensation program.

“The Upfront program is exactly that, paying brokers once at funding,” says Putnam. “The Renewal program pays upfront as well, but also pays the broker again at every CMLS renewal. Brokers choosing the renewal compensation option will have their name and contact details on customer communications sent from our servicing department so the broker relationship is maintained.”

He’s also proud that the lender will allow brokers to select their compensation on a per deal basis, allowing them to manage their cash flow more effectively. That’s good news for brokers who are tired of commissions and rates being linked to portfolio volumes – at CMLS there aren’t any.

“Our interest rate strategy is to offer everyday competitive pricing to our approved broker affiliates,” says Putnam. “As such, we have no complicated clubs or tiers.” It’s a promise other new entrants to the residential end of the channel have made and brokers say they’ll be checking to see if CMLS keeps that egalitarian model beyond its first year.

Yet another welcome addition to the residential division is the selection of Delta 360, Canada’s newest mortgage servicing platform provider, to support its CMLS’ entry into the residential mortgage market.

“We chose the Delta 360 platform for its many new features and how quickly the solution could be brought to market,” says Chris Brossard, CMLS Financial CEO. “We also were impressed by the technological advances the platform provides and how easily we could integrate it into our existing systems.”

Rounding out the team are Kevin Fettig, senior vice president of Risk, and Cheryl Preston, vice president of servicing residential mortgages.

Prior to joining the residential mortgages division in 2012, Preston held senior management positions with two of the largest non-bank mortgage originators/servicers in the country, as well as other senior posts, rounding out her 22 years of experience in the residential, commercial and residential construction mortgage sector.

Fettig has held senior executive positions with a number of mortgage insurance companies, with more than two decades of experience in the mortgage and capital markets.

“We are starting our launch in three provinces (B.C., Alberta and Ontario) with plans to expand to other provinces in the near-term,” says Putnam, still catching his breath from seven hectic months of preparation. ““On day one, we will be offering a full product suite, with 1-, 2-, 3-, 4-, 5-, 7- and 10-year fixed-rate mortgages and two ARM products – 3- and 5-year terms. All come with 20/20 prepayment options.

“We will be well-positioned to compete in the market.”