Archive for July, 2012

Precedent Setting Ruling in Blackhat SEO Case

Tuesday, July 31st, 2012

Last March I wrote a post about the fact that two of our competitors were utilizing what are know as Black Hat (unethical) Search Engine Marketing (SEO/SEM)techniques.  (Click here to read our original article)

Late last week we received a summary of CAAMP’s (Canadian Association of Accredited Mortgage Professionals) proposed settlement, and today the findings were reported in Canada’s Mortgage Broker News.

The decision is believed to be the first case involving the use of questionable search engine optimization practices, or so-called “Black Hat SEO,” by a mortgage broker brought before CAAMP. It would see the violator fined $500, handed a written reprimand to remain on his file for five years among other things.

There is more to the CAAMP`s proposed censure. The committee would also publish a summary of the case and its findings as well as require the broker to complete an online course on the Canadian Code of Advertising Standards.


The Black Hat SEO tactics utilized by the offending broker basically   “hijacked”  our names and reputation. Anyone doing a Google search for my name, Justin Blacklock or Averbach Mortgages would  see our  competitor’s site appearing in the search results.  This was a clear violation of the ethical standards and guidelines established by our professional association.  Though I am disappointed by the low fine, I am happy that CAAMP’s Ethics Investigator took our complaint seriously.

This is good news for Canadian consumers because it shows that our professional association is maintaining its’ high standards and that membership in CAAMP has meaning.

Mike Averbach


How Ethics Plays a Role in Engaging a Mortgage Broker

Tuesday, July 24th, 2012

The other day Justin and I ran into a situation that was very frustrating and disappointing to us.

A new client was referred to us by a friend.  We bend over backwards to help all our clients, so this one was no different.  He had already approached his bank and got their standard offer.

Justin put in hours and HOURS of work finding a mortgage deal that beats the banks offer … not only on the rate but on numerous other clauses.   He was thrilled to get this deal and to lock it in place for our “new client.”

The problem came when the new client went back to his bank and used all of our information to negotiate a better deal there.

Needless to say, we were upset and disappointed.  The person we were dealing with considers himself to be honest and ethical. What was even more bewildering is he is self-employed and works in a similar type of consulting business, but a different field.

I won’t belabor the point … but we felt “used.”   When we work with a client, there is absolutely no contract or obligation to “buy” with us.  However most people understand that we put in a LOT of work on their behalf and that we get them great deals so they are happy to do business with us.

After thinking about the situation for a while, I came to the conclusion that most people do not really understand how a mortgage broker makes their money.

What’s the difference between a Bank Representative/Mortgage Specialist and a Mortgage Broker?

A Bank Rep or Specialist works for a Bank or Lending Company.  They typically get a salary plus commission for the sales they make.  They don’t have much room to negotiate and since their commission is based on the “sale” there is no incentive to give the bank customer a great deal.

Typically a Bank Rep or Specialist comes and goes and you probably won’t deal with the same person when you have to make renewal decisions.  In most instances there is no relationship building as the Bank Reps or Specialists are basically interchangeable parts.

Mortgage Brokers are independent agents.  Our entire livelihood is based on relationship building.  We do not work for a one lender … we negotiate the best deal for our clients with dozens of different lenders.

Our clients come back to us again and again because we give them excellent service.  We care about our clients and we work long and HARD hours getting them the best lending package we can.

How Do Mortgage Brokers Get Paid?

We only get paid once your mortgage goes through.  We get a percentage of the total mortgage and are paid by the lending institution (not you).

We do not get any compensation for all our hours of work unless YOU get your mortgage.

As independent agents, we are responsible for all our own expenses:

  • our offices
  • phone system
  • computer systems
  • stationary and marketing materials
  • having websites designed, written, developed and maintained
  • Broker fees
  • Association fees
  • writing our own Blog posts and  newsletters

All of those expenses and more have to be paid for with our commissions … no big cushy banks taking care of us.

When a client starts working with us, we invest our time in finding the ideal mortgage for them, and we invest in developing a long-term relationship with them.  Though they are not legally required to follow through with the deals we negotiate, we think they should at least consider the ethics.  Think about how YOU would feel if someone used you!

We’d love to hear your comments.

New Mortgage Rules May Make Refinancing or Switching Mortgages Harder

Tuesday, July 17th, 2012

Ottawa keeps on harping on the fact that Canadians are burdened by record breaking debt levels.  The major concern is that the inevitable increase in interest rates could cripple hundreds of thousands of individuals and families who are currently living on the edge.  The rate of debt to disposable income in Canada is at 152 per cent, which means many Canadians would have to declare bankruptcy when interest rates increase.

The new mortgage rules which went into effect at the beginning of July have reduced the maximum amortization for a government-insured mortgage from 30 years to 25 years.

In this CTV video,   Brad Lamb of Lamb Development Corp. explains how changes to mortgage rules might affect buyers and existing home owners.




New Mortgage Rules Now In Effect

Monday, July 9th, 2012

Over the past four years the Department of Finance has steadily been clamping down, and establishing stricter rules governing mortgage lending.

Finance Minister, Jim Flaherty recently announced additional mortgage lending restrictions that will go into effect today …  July 9, 2012.


Who will be affected?

If you have less than 20% equity, you will no longer be able to get a prime mortgage with a 30 year amortization.  The maximum is now 25 years.

The maximum for refinancing goes down from 85% to 80%. The rational for this is:

“Limiting the amount of refinancing will promote saving through home ownership and limit the shifting of consumer debt into mortgages guaranteed by taxpayers.”

Additionally the government is limiting Gross Debt Service (GDS) to 39%.  Total Debt Service (TDS) is now limited to 44%.

The GDS ratio is the share of the borrower’s gross household income that is needed to pay for home-related expenses, such as mortgage payments, property taxes and heating expenses. The TDS ratio is the share of the borrower’s gross income that is needed to pay for home-related expenses and all other debt obligations, such as credit cards and car loans.

Homes priced at or above $1 million will no longer be eligible for government-backed high ratio insurance.

Flaherty considers Canada’s biggest economic risk to be over extended household debt. These rules are designed to lower the risk for taxpayers and to decrease household debt.

“Investing in a home is a great way to save,” said Minister Flaherty. “That is the dream that mortgage insurance was intended to support. The measures we are taking today maintain that intended purpose.”


For more information:

Government of Canada Press Release:

Impending Rules FAQ:

If you want to discuss how the new rules apply to you, feel free to give me a call.
No question is too big or too small. My mission is to help you get the best mortgage and to make the process as easy as possible!

Justin Blacklock   604-736-1855


Here’s an interesting CTV video that shows the difference in payments between a 30 and 25 year amortization.  This difference in monthly mortgage payments could be a make or break decision for many home buyers.