Shawn: Hello everybody. My guest today is Lauren Knight, who is an award-winning mortgage broker with TMG, the Mortgage Group Inc. here in Victoria, BC. Lauren has over 13 years of experience and a reputation for exceptional client care, known for her empathy and professionalism. She helps clients feel heard, supported, and confident throughout the mortgage process. Outside of her mortgage business, she enjoys fitness, fashion, and spending time with her son. Welcome, Lauren. So please tell me, what does a mortgage broker do?

Lauren: Hi, Shawn. Thank you so much for having me. Yes, so a mortgage broker is someone who will help you obtain financing if you want to get a home or if you have an existing mortgage. We work very similar to a regular financial institution. We meet with our clients, take full applications, and then the point of my job is to find the best mortgage product for my client, shop around their application, and see if I can ideally get them the best rate, the best product, and get them into their home or fund them the new mortgage that they want.

Shawn: How do your services differ from using a bank? Why shouldn't I just go to my bank for a mortgage?

Lauren: That's a great question. It differs in that if you go see someone at your bank, they are limited to that particular institution's policies. So it's one set of policy that they must follow and there's one product available. Within each bank, there might be different types of mortgages, different rates, and terms. Ultimately, they are restricted to only what they offer. While that can work for some people, it doesn't work for every client situation. With a broker, we have access to not only the banks, but also what's called a monoline lender. That is an institution that only deals in mortgages. For example, they wouldn't have checking accounts or RRSPs; they only offer mortgages, and those are only obtainable through a mortgage broker. We can also access the credit unions as well. I'm not restricted to just one lender or one set of policies, and because every client has their own unique situation, I might need to go to an institution that has more flexible calculation of rental income or would potentially look at self-employed income differently than somewhere else. With these many options, I can provide more solutions to the client and get them the financing they might need where they might get declined at their bank.

Shawn: Do you gather this information about people and then bring it to the different lenders to see what they can do?

Lauren: Yes, with that initial meeting and the initial application, I have a complete picture of the client situation. Part of my job is I don't need to take it to different lenders. I've already spent many years learning these different lender policies, and with the information I have about each lender and policy that I've retained, I can then think, okay, this client would go really well with this lender or this situation would really work at this monoline lender. I'm not taking a client application and farming it out to every single lender that I have access to. I'm taking that application and knowing by looking at it what is going to be the best option for this client, and then I approach the lender that way.

Shawn: Which means you might only be approaching one lender.

Lauren: Absolutely, because if there's something very particular about a file, there might only be, out of, say, 20 lenders, one lender that will handle that particular situation the way I need it to, to the client's benefit. Because I know this, I'm only going to be approaching that lender. There also might be three different options, then I would sort of narrow it down. Who out of those three has, for example, the lowest rate? Or if we have a very tight timeline, who do I know of those three lenders that has really quick service in their turnaround times? Once I narrow down the lenders, I think, what is still going to be the best choice for the client and narrow it down further that way.

Shawn: From the lender's perspective, when they get a call from a mortgage broker, if they're happy with it, is it pretty much a done deal? It's not like they're competing with other lenders?

Lauren: They in general know they're competing because every time a broker brings a file to them, they do want that mortgage. There are times where I might phone a lender and say, here's a situation, how would you treat this income? They might say, we'll treat it this way. I'm competing with the client's existing bank. Can you make an exception to this? That's how it works. It's not necessarily a done deal with that lender, but I'm working with them to make it work so they do get the mortgage. It's frowned upon to just farm out a file to multiple lenders and submit to every single lender that you know, because they're investing their staff and time and resources into reviewing a file, reviewing an application, setting aside money for this client. If I'm sending it to multiple lenders, it's frowned upon. I do try to really make sure if I'm taking a file to a lender, I'm going to ideally stick with that lender. However, if something happens where they maybe don't, perhaps they'll say that, yes, we'll make this exception, and they don't, then I may have to move the file. Ultimately, I'm doing what's best for the client, but I still want to maintain that relationship with the lender, be known as someone who follows through and doesn't shop a deal out consistently and do a bunch of cancellations, if that makes sense.

Shawn: Are these lenders nameless, faceless in the background?

Lauren: The big ones, like with banks, I can mention TD or Scotia and everybody knows who that is. If someone's never worked with a mortgage broker before, they may not know when I mention First National Financial or RMG Mortgages. But these are huge financial institutions that have a long history of mortgage lending within Canada. People may not be aware of them, but they're massive institutions that have been around for a long time. For example, First National Financial, one of their main investors is TD Bank. People might not have ever heard of them, but they're still highly reputable places to get a mortgage from. Once you've worked with a broker, you start to hear these lender names more and more and become more familiar with them.

Shawn: From what I understand, when a bank is struggling, they may start to call in mortgages, which can affect people who've gotten their mortgage. Is that less likely if they're using a lender compared to a bank?

Lauren: In my time in this industry, I have never encountered this situation where a bank or a lender is struggling. If you look at quarterly reports of banks, these are billion-dollar profits that these corporations are making. There's no struggle for them. For example, let's say a monoline lender. What happens is they are just sold and another lender or bank will buy them. That is what has happened and what can be common. There's really no, I've never seen there be a risk to a client or have heard in the press or the media, any of these lenders calling back their mortgages. It is highly regulated, and it's not something that happens here. The sales of these lenders happen fairly commonly, but it's of no disruption to the client. We often get a press release just saying, here's the existing client, this is the information they'll receive, it's business as usual.

Shawn: That's a great lead into the regulations because I know mortgage brokers have been regulated since, at least in BC, since 1972 under the Mortgage Brokers Act. Since November 2019, they've been regulated by the BC Financial Services Authority. You were in business when that happened. Did you notice much change when BCFSA started regulating?

Lauren: No, I was trying to rack my brain if I could even remember noticing any change at all, which I don't. To me, it feels like it's always been BCFSA at this point, and I don't feel anything changed of note.

Shawn: Just very smooth.

Lauren: Yes.

Shawn: The letterhead maybe.

Lauren: Exactly.

Shawn: I was checking when FINTRAC began regulating, because I knew it was last year. FINTRAC, the Financial Transactions and Reports Analysis Centre of Canada, is a topic that comes up quite a bit on this podcast, and they deal with anti-money laundering and anti-terrorist financing obligations under the Proceeds of Crime and Terrorist Financing Act. They began regulating mortgage brokers on October 11th, which is actually nine months today as of this recording. It's exactly nine months since FINTRAC started regulating mortgage brokers. Is that a happy anniversary or a commemoration? Has anything changed? Has it been good or bad for your business?

Lauren: Yes, so things did change, and I would say in a good way. At the time when these notices of the new regulations came into effect, it felt very overwhelming because it's a lot of verbiage that just to the regular person, including a broker, is confusing and doesn't make sense. It is a change, and change in general for people is not always ideal. But I do think it's been really great. Of course, I agree with anti-money laundering and anti-terrorist financing, but what I've found is it's been a fairly smooth transition. We did training. I'm very fortunate with the Mortgage Group that they provide all the brokers within the brokerage very in-depth training on this. For the client, they don't notice much. There are additional compliance forms that they have to sign, and there are additional compliance forms that I have to fill out. What it's really done is I need these forms signed by the client before I provide them with any actual information that's tailored to them personally. I find that's an extra step where I can tell if a client is serious and really does want to start the process or if they're just gathering information and maybe not interested in working with me personally. It's just nice to know that there's that little extra step. If they're willing to do it, great. If they're not, then I'll just wait until they do want to move forward and are serious about doing so.

Shawn: That's a good point. So it almost weeds them out, or maybe self-selects. They realize, I'm signing this, this is serious. Do I really want to go ahead with this?

Lauren: Yes, and it's just an investment. I spend a lot of time providing scenarios for my clients and that's fine, that is what I do. But if someone's not even willing to take literally one minute to sign a compliance form, perhaps we're not the best fit, and that's helped show that. With these forms, especially now in this digital day and age, when I get an inquiry just really out of the blue, say from Google or whatnot, I have no idea who that person is and I need to be careful. I don't want to get into a situation where I'm helping the wrong person. These are just those extra steps that help prevent that from happening.

Shawn: Are there any common compliance challenges that you face? How do you make your clients feel more comfortable?

Lauren: I think what's really important as a broker and what I like to explain to clients is that these forms are standardized. Sometimes people feel like they're being personally focused on, and it's not the case. Everyone has to sign the same forms. It has nothing to do with them personally. Sometimes when I say, can you sign this form saying that you are or are not a politically exposed person, they feel like they've somehow been singled out and they have not been. I just try to make it very clear, this is very standard, this is very common, there's nothing wrong, this is just standard procedure. Once you've signed that, we can move forward.

Shawn: This is probably the first time they've heard the concept of politically exposed person.

Lauren: Or when I even, for example, request bank statements for a down payment, they may not understand why I need full bank statements and three months. When I explain, well, it's anti-money laundering, some people can get offended by that, and I just have to go that extra step and preemptively, ideally, explain. This is standard for every single client, for every single file. You're not being singled out. This three months is just to prove a savings history and there's no money laundering happening.

Shawn: I could see people being bothered by it.

Lauren: Yes. Even people who, for example, have not done financing in a long time, many years, the rules have changed quite drastically. It feels to them, well, I didn't have to do that last time, what's going on? Or it feels like it's overkill. Again, I just have to remind them, this is very standard now, this is nothing to do with your file individually. These are the rules, the policies we have to follow, and we need them to move forward.

Shawn: I'm on a mailing list for FINTRAC and every week and sometimes multiple times there are updates that they send about cases that they've been involved in, which means this is not just a bureaucracy and rules for the sake of rules. They're actually quite active in what they're doing and enforcing.

Lauren: I feel like it's going to depend a little bit more on where you live. I feel like this would be more of an issue perhaps in a larger urban center back east. Depending on the type of clientele you might have, or if you're dealing with really large sums of money, it would be more of an issue or I would have issues come up more in those situations.

Shawn: And FINTRAC, as they identify a potential issue like terrorism financing or money laundering, will start to identify an issue in an industry, then they will make steps to regulate that industry.

Lauren: Yes.

Shawn: I think around 16 different industries, which is interesting to watch. It's like they're not one step ahead, they're one step behind. Now, mortgage brokers and armored cars were also regulated last year. They've identified an issue and now they're taking steps to control it. Those who were committing these offenses will now need to find another industry. There's always this lag, which is an interesting evolution.

Lauren: That's a good point because I feel like the opportunity for money laundering and whatnot has become a little bit less opportunistic. We're so regulated now and there have been so many rules that have come in, even having foreign buyers, they can't buy here anymore right now. I feel like you're right about the lag.

Shawn: We'll see how that progresses. That compliance discussion is always fascinating for me. Are all mortgage brokers the same? Do they have the same licensing or how do they differ and how does somebody select one over another?

Lauren: That's a great question. I can answer that two ways, yes and no. We do have all the same licensing and certifications, that's correct. In general, we have access to all the same lenders and products. There are a few exceptions to that, but are we all the same? No, in that our experience will be very different and our personalities will be very different. If you're a client looking for a broker, I would take the aspect of, we have access to all the same rates. That's what people are really motivated and driven by. If you remove that, then it comes down to the experience and the personality. In my case, I've been doing this for a really long time. I've worked with hundreds of clients. I've worked on every different type of financing situation that you can think of, which really lends to me being able to solve a problem for a client and ultimately get them approval, which is the goal. It also comes down to service. We make our own hours, but we decide, do you want a broker who's going to answer the phone every time you call, who replies to your emails in a timely fashion? When you speak to them, do they explain what's going on? Do they explain the process clearly in a way that makes sense? It really comes down to your comfort level with that person. That's something that does set me apart, not only experience, but I try to provide really amazing service. At the end of the file or at the end of our working relationship, this person feels like they have a really good understanding of what has happened and feels like they've had a friendly person in their corner who's been helping them with this process. Financing can be so stressful and overwhelming for people, and I think you need someone in your corner who's going to take that away and make it as smooth and seamless and as comfortable as they possibly can.

Shawn: Are you able to put across those differences in your marketing and promoting of yourself?

Lauren: In a way, I don't do a ton of traditional marketing, but I find that in my process of working with a client, by the end of it, I really do get a lot of positive feedback on how they've enjoyed the process or thanking me for making it easy for them or that they've really appreciated everything I've done for them. In that sense, I know that they do refer me to their friends and family. That is the marketing right there for me. It's that word of mouth referral of saying, we worked with Lauren, she was amazing, you should talk to her. In that regard, that's how it's working for my marketing. If you look at my Google reviews or my Instagram, some of my reviews, I would say that the general theme or phrasing is very similar in that I've made it a good experience for people.

Shawn: From something that could be very stressful.

Lauren: Yes, and it can be, and I really try to reduce that for my clients.

Shawn: As it ties in with the stress of buying a house.

Lauren: Yes.

Shawn: Stressful.

Lauren: Absolutely, very stressful time for people.

Shawn: Good, and you're able to keep people calm.

Lauren: I do get that feedback that I have a calming presence for people, and I think that is another thing that differentiates brokers from one another. There is a lot going on behind the scenes that can be not smooth, that can be very challenging and very stressful. For me, the client does not need to know that ever. I work really hard to make sure that the realtors I'm working with, the lawyers that I'm working with, understand that if some sort of issue comes up with financing or with the property when we're almost at funding, that they reach out to me and never the client. If I can deal with the problem without the client ever knowing, then that is what I would like. The client does not need to take that on. It's not their job, that's my job. I don't want them being upset or worried or concerned for any reason if it's not necessary.

Shawn: Do you have emergencies in your business?

Lauren: I do. There can be emergencies and I don't want the client to know about them. They don't need to. It's twofold. There can either be an emergency before we remove financing conditions on a purchase. The other thing that's common is there can be an emergency right before funding through the lawyer. In both situations, what makes an emergency is usually timing. There is a time crunch and a timeline, and that's what makes it the emergency. It's up to me to resolve that issue with either the lender or the lawyer or both. I'm trying to think of an example that would illustrate that. I've had a recent one where at the lawyer, the lawyer's phoning me because I'm representing the buyer and the seller might not have enough proceeds to clear their title, and therefore the transaction can't go through and my client does not have their house at the end of the day on their completion date or funding date. There are things like that. I've had it where right before trying to remove a financing condition, perhaps an appraisal has come in on the final day of our financing and there might be an issue with the property, and so I have to get that resolved as quickly as possible. There are lots of things behind the scenes that the client may never be aware of that I am dealing with. That's what keeps my job interesting, I guess you could say.

Shawn: What made you get into this? What do you love about it?

Lauren: I got into it by accident. It was not intentional. I was in a completely different field of work. I was a makeup artist, and when I got into the job, I was an administrator to a mortgage broker, and I had absolutely no idea what was going on. I didn't know what amortization was, I didn't know what a mortgage term was, I didn't know anything. To be honest, I did not find it interesting. I wanted a nine to five job because before that I was a makeup artist working variable hours every weekend, every holiday. As I learned more and my responsibilities increased, I found I really love this job. What I love about it is it really comes down to problem solving. Every single file and every single client is different, and it really is about solving problems and getting the best situation for a client. It's always challenging, it's always interesting. The job itself, the point of the job might be the same, getting a mortgage for someone, but getting to that end goal of the mortgage is different all the time. The problem solving is great because it's a numbers game. Math is math and the numbers work or they don't, but there are still different ways to make those numbers work. Ultimately, you bring in that human component. These are people and this is a huge financial transaction for them. It's their livelihood, it's this big event in their lives, and I love being part of that. I love helping people get to that end goal, especially someone who's faced a lot of hurdles in getting financing. For example, I've had clients who've faced bankruptcy or who've gone through a separation, and getting that financing feels like such a lofty goal that they're never going to obtain. Finding a way to make it work for those people is very rewarding.

Shawn: Is there a fee for using your services?

Lauren: Almost always, no, there is not. There are some situations where that might be the case, but for traditional mortgage financing, no, there is no fee. The client does not pay me. The lender pays me if the mortgage funds with them and only when it funds. An instance where there would be a fee for my services is when we need to use private financing. That is something I know very quickly in a conversation with a client and that is communicated very clearly to them before they move forward. Even if there is a fee, it's only ever payable if the mortgage funds. They're never walking away without their financing and still having to pay me. That even goes with the lender fee as well, because that sometimes can happen in the event of private financing and it's payable at the lawyer signing. Those numbers are very clearly communicated right out of the gate to the client. No surprises.

Shawn: If somebody's renting now and wants to buy, who should they see first? Or what should they do? Should they go find a piece of property? Should they talk to a mortgage broker?

Lauren: What typically happens is people will reach out to a realtor first, and then the realtor will send them to me. I feel like it seems like it would make more sense to reach out to a broker first, but often it is the other way around and that's okay. They come to me and then at that point I can take their application and give them some guidelines. I can pre-approve them or pre-qualify them and say, here's your information, here's your maximum purchase price, and now you can tell this to your realtor, and now you can comfortably go shopping and feel comfortable that you can write an offer on a property if you find one. Otherwise, if they do it the other way around, they may be looking at things that are really out of their reach in terms of price range, and there can be disappointment there. Or they can afford more than they think and then they can start expanding their search.

Shawn: So if people were to use your services, what information do you need to know about them?

Lauren: I need to know quite a bit about a client. I need all their personal details in terms of who they are, date of birth, where they live. I need a three-year address history. I need a three-year employment history, and I do have to pull credit. We need a full list of assets, and the credit is a big one. The living history and the job history are necessary, and within those components, I can take an application, you give me your information, but then what has to happen is it all has to be verified. If you're self-employed, I'm going to need two years of your tax returns and notice of assessments. If you're a salaried employee, I'm going to need a job letter, a pay stub, and likely one annual income document such as a T4 slip. If there's a purchase involved, I'm going to need your down payment history, so I mentioned previously three months of bank statements. With your credit, that's something that we pull. We pull a credit report, there's the history there. I don't need any documentation other than your permission for that. If you own multiple properties, I need a mortgage statement, property tax bill, and confirmation of strata fees if applicable for each property. It can be quite document heavy when you need to get financing, but again, this is standard for every file. You're not going to be asked for things that your bank wouldn't ask you for or that another broker wouldn't ask you for. It's all standardized and it's all necessary. One thing I do like to highlight for people, especially with down payments, is they get a little uncomfortable that we're going to review their bank statements and maybe there's things they don't want us to see, but in my case, I've been doing this so long and even when I was new at this, we're not looking, we're not scrutinizing, we're not criticizing, we're not looking at your daily spending habits. I'm truly scanning your bank statements for large deposits that might not make sense for who you are. If there's $10,000 going in your account every two weeks and you only make $40,000 a year, that's something I'm going to look into further. I'm not looking or judging, and neither is the lender. If you go to Subway every single day for lunch, those are things we just don't look at. For example, I was working with a client recently, and she said, what's my credit score? I don't remember, I'm not in front of my desk. I know it was really good. These are the details about people, although you're providing very sensitive personal information, it's strictly reviewing it for policy and is it going to work with the lender. I really don't retain it. It's all confidential information anyway. I just think people feel a little bit sensitive that I might know this, but really it's not being scrutinized in any way against someone personally. It's just policy.

Shawn: What does it mean to pull credit?

Lauren: Pulling credit is, we typically, and by we I mean brokers and lenders, will be working with Equifax and we're going to look at your credit score. That will be a report that shows a history of who you are financially. It's going to list any credit cards or any sort of liability that you have, a line of credit, if you have a car loan, a car lease, student loans. Mortgages are sometimes on there, even your cell phone bill. It goes back as far as it's available. What we're looking for is your repayment history. The term credit worthiness might come up and it's just to show the lender, hey, this person has three credit cards and they've had these three credit cards for six years and they've never missed a payment. It's really just proving to the lender you'll repay your mortgage. If they're going to lend you several hundred thousand dollars, they want to know that you have good credit.

Shawn: That's great. Thank you. This has been very informative. How can people reach you, Lauren?

Lauren: They can reach me either directly through email. All my contact information is on my website, which is knightmortgages.com and that's Knight with a K, or directly through my phone line 250-507-5947.

Shawn: And can I put all that into the show notes?

Lauren: Absolutely.

Shawn: Great. Thank you for—

Lauren: Thank you so much.

Shawn: And that's a wrap.

Links

Lauren Knight: KnightMortgages.com
Phone: 250-507-5947