Joe Rosati was recently appointed the head of the industry’s newest broker network – and since that time, his company has already made some big moves
Joe Rosati, the new CEO of Broker Financial Group, got his start in the industry in 1982, when trust companies were the leaders in providing mortgages for Canadians.
“I was with Guaranty Trust until the early 1990s,” he says. “I went to work for Montreal Trust in 1991, and that was also during the real estate bust. In 1993 – late ’93, early ’94 – Scotiabank bought Montreal Trust. At the time, Scotiabank did not source any business through the mortgage broker channel. I was responsible for introducing it to them and showing them there was value in originating mortgages through the channel.”
Rosati left Scotia in 2008 and took a chance on the broker channel, holding a number of different leadership roles. And he hasn’t left since – unless you count a brief sabbatical.
“I left Scotia to go to MCAP and was the regional vice president until 2011, at which time I went to the Independent Mortgage Brokers Association as their executive director. I was the very first executive director for them,” he says. “From there, I took a sabbatical for a year to travel with my wife. We went mostly to Europe and the Caribbean. We also threw in Disney World and Universal. It was a great year.”
Indeed – but now he’s back. After a short stint with Home Trust, Rosati was appointed CEO of Broker Financial Group in May, less than a year after the fledgling network was established.
“I’m excited about the future of BFG,” he says. “We have developed a proprietary technology called Scarlett, which really gives our brokers the tools for everything from an online application to a CRM to a deal management system and task management system – really the nuts and bolts brokers need from end-to-end. Technology is going to be the future of our industry, and those are the tools we need to give our brokers the ability to compete in the marketplace.”
And it appears the rest of the industry agrees. Shortly after Rosati spoke with CMP, Broker Financial Group entered into a partnership with Real Mortgage Associates [RMA], an established broker network with a strong presence in Ontario. BFG’s focus on technology – and its proprietary system – was a big motivating factor for RMA, according to the network’s executives.
And BFG may not be done there. “We’re also looking at partnerships and acquisitions,” Rosati says.
Future trends
Rosati stresses that new technological capabilities must extend to consumers as well. “People are finding their mortgages online, and you need to have the capability to get to them and allow them to find you,” he says. Along with this increased dependence on technology, Rosati also believes regulation will be front and centre for brokers going forward. However, he posits that it may not be a bad thing, as it may lead to growth in different sectors.
“With the tightening of the regulations that has been happening over the last couple years with OSFI and the mortgage insurers … the A space continues to shrink,” Rosati says. “It’s moving clients to B and sub-prime. I think it’s a growing trend; I think [the B space is] about 20% of the market, and I could see it getting to 30% of the market.”
The broker channel has dealt with its fair share of challenges over the years, and yet it’s done nothing but thrive. Perhaps one reason for that is that brokers have been able to identify and prepare for those challenges. The future will be no different, Rosati predicts – and one challenge brokers should get ready for is an increase in competition.
“I think competition is strong not only with the banks, but there are other sources that are going to come into this industry – disruptors,” he says. “There was a media article the other day about robo-mortgages. I think we’re really just talking about the A space. It’s going to be a challenge in the A space as the mortgages become more and more cookie-cutter transactions that can be done over the internet.”
Fighting fraud
Last year was a tough one for brokers, and the industry’s image took a beating, Rosati acknowledges. There was an increasing focus on fraud in the industry and, perhaps unfairly, the mortgage broker channel bore the brunt of the criticism, coming under fire for everything from falsified documents to (erroneous) knocks against non-bank lenders.
“It really put a bad light on mortgage brokers, I think unfairly in some cases,” Rosati says. “[Fraud] can occur in any channel, and brokers seem to have taken the brunt of it.”
As a result, he believes it’s important for the industry to do what it can to rehabilitate its image.
“I think that all brokers – from executives all the way on down to individual mortgage brokers and agents – really need to speak out against fraud,” he says. “If we know that it’s happening around us, I think we need to call it out.”
The Ontario Securities Commission recently launched a whistleblower campaign to compensate individuals who step forward and identify fraudsters – and Rosati believes that’s something that could potentially help the mortgage industry as well.
“I think the regulators need to step up to the plate and snuff it out,” he says. “I’m not sure they always do everything they can. I understand there are legal issues, and they
have to be careful because these are people’s careers, but I think we let some get away with it, and it hurts the industry as well. We definitely need to be more vigilant and really show to the industry at large that we take this seriously.”
“I was with Guaranty Trust until the early 1990s,” he says. “I went to work for Montreal Trust in 1991, and that was also during the real estate bust. In 1993 – late ’93, early ’94 – Scotiabank bought Montreal Trust. At the time, Scotiabank did not source any business through the mortgage broker channel. I was responsible for introducing it to them and showing them there was value in originating mortgages through the channel.”
Rosati left Scotia in 2008 and took a chance on the broker channel, holding a number of different leadership roles. And he hasn’t left since – unless you count a brief sabbatical.
“I left Scotia to go to MCAP and was the regional vice president until 2011, at which time I went to the Independent Mortgage Brokers Association as their executive director. I was the very first executive director for them,” he says. “From there, I took a sabbatical for a year to travel with my wife. We went mostly to Europe and the Caribbean. We also threw in Disney World and Universal. It was a great year.”
Indeed – but now he’s back. After a short stint with Home Trust, Rosati was appointed CEO of Broker Financial Group in May, less than a year after the fledgling network was established.
“I’m excited about the future of BFG,” he says. “We have developed a proprietary technology called Scarlett, which really gives our brokers the tools for everything from an online application to a CRM to a deal management system and task management system – really the nuts and bolts brokers need from end-to-end. Technology is going to be the future of our industry, and those are the tools we need to give our brokers the ability to compete in the marketplace.”
And it appears the rest of the industry agrees. Shortly after Rosati spoke with CMP, Broker Financial Group entered into a partnership with Real Mortgage Associates [RMA], an established broker network with a strong presence in Ontario. BFG’s focus on technology – and its proprietary system – was a big motivating factor for RMA, according to the network’s executives.
And BFG may not be done there. “We’re also looking at partnerships and acquisitions,” Rosati says.
Future trends
Rosati stresses that new technological capabilities must extend to consumers as well. “People are finding their mortgages online, and you need to have the capability to get to them and allow them to find you,” he says. Along with this increased dependence on technology, Rosati also believes regulation will be front and centre for brokers going forward. However, he posits that it may not be a bad thing, as it may lead to growth in different sectors.
“With the tightening of the regulations that has been happening over the last couple years with OSFI and the mortgage insurers … the A space continues to shrink,” Rosati says. “It’s moving clients to B and sub-prime. I think it’s a growing trend; I think [the B space is] about 20% of the market, and I could see it getting to 30% of the market.”
The broker channel has dealt with its fair share of challenges over the years, and yet it’s done nothing but thrive. Perhaps one reason for that is that brokers have been able to identify and prepare for those challenges. The future will be no different, Rosati predicts – and one challenge brokers should get ready for is an increase in competition.
“I think competition is strong not only with the banks, but there are other sources that are going to come into this industry – disruptors,” he says. “There was a media article the other day about robo-mortgages. I think we’re really just talking about the A space. It’s going to be a challenge in the A space as the mortgages become more and more cookie-cutter transactions that can be done over the internet.”
Fighting fraud
Last year was a tough one for brokers, and the industry’s image took a beating, Rosati acknowledges. There was an increasing focus on fraud in the industry and, perhaps unfairly, the mortgage broker channel bore the brunt of the criticism, coming under fire for everything from falsified documents to (erroneous) knocks against non-bank lenders.
“It really put a bad light on mortgage brokers, I think unfairly in some cases,” Rosati says. “[Fraud] can occur in any channel, and brokers seem to have taken the brunt of it.”
As a result, he believes it’s important for the industry to do what it can to rehabilitate its image.
“I think that all brokers – from executives all the way on down to individual mortgage brokers and agents – really need to speak out against fraud,” he says. “If we know that it’s happening around us, I think we need to call it out.”
The Ontario Securities Commission recently launched a whistleblower campaign to compensate individuals who step forward and identify fraudsters – and Rosati believes that’s something that could potentially help the mortgage industry as well.
“I think the regulators need to step up to the plate and snuff it out,” he says. “I’m not sure they always do everything they can. I understand there are legal issues, and they
have to be careful because these are people’s careers, but I think we let some get away with it, and it hurts the industry as well. We definitely need to be more vigilant and really show to the industry at large that we take this seriously.”
