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8Twelve Mortgage CEO & Broker, Gary Fooks told CMP more about the company’s plans for 2022.
Fergal McAlinden of Canadian Mortgage Professional spoke with Gary Fooks of 8Twelve Mortgage Corporation to find out more about the company’s plans this year.
In a mortgage market whose pace has barely relented over the past two years, a common problem faced by brokers and agents alike has been the lack of time available to focus on what matters to them – whether that be a better work-life balance or a greater focus on growing their business.
It was a pitfall to the profession that Gary Fooks (pictured above) recognized upon becoming licensed in 2014, but one that he felt his extensive experience in sales and management left him qualified to address.
Fooks had already cut his teeth building and operating sales and service organizations, including over 250 global contact centres, as well as managing large-scale campaigns for global companies.
After enjoying near-immediate early success as an agent, funding just shy of $100 million in mortgages by his third year, he recognized an opportunity to replicate his own process and empower agents at 8Twelve Mortgage Corporation, the company he founded alongside President and Principal Broker, Akber Abbas.
The company developed its own proprietary technology, featuring everything built into one platform: mortgage application process, client lifecycle management, telephony, secure document management, eDocs signature system, and marketing and text messaging platforms.
“If you’re a large enterprise partner, and you want to trust someone with your clients, it’s very hard to refer them to random mortgage brokers and hope that they do the job right,” Fooks explained.
The name of 8Twelve Mortgage’s end-to-end FinTech platform, INFIN8, was chosen for a very specific reason: to represent the infinite possibilities available to the clients, agents, and lenders using it. According to Akber Abbas, the company’s Co-Founder and President, the platform was developed with the aim of furthering one of 8Twelve’s core goals: to advance the digital revolution in the broker channel with the technologies and processes at its disposal.
The company itself is made up of three distinct business units: 8Twelve Financial Technologies, the parent company, which develops financial services software such as the INFIN8 platform, 8Twelve Mortgage Corp, a national brokerage with access to all major lenders, and 8Twelve Capital, an administration company that funds private mortgages.
Its forward-thinking, future-focused approach is one of the most striking aspects of 8Twelve Mortgage. Abbas says its founders’ innovation-heavy backgrounds (he worked for various Silicon Valley and technology companies; CEO and broker Gary Fooks has expertise in customer experience) played a key role in ensuring its continued success throughout the challenges of the COVID-19 pandemic.
“Even in 2015, 2016, it was still manila folders and yellow notepads and a lot of paper going back and forth,” Abbas says. “The reason why 8Twelve Mortgage has been growing year-over-year, month-over-month, is because we were pandemic-proof or pandemic-ready. We were ready by being future-forward. We already had the technology to be paperless; we were already working on managing Zoom meetings; we were already working on a remote environment, and we were doing that in 2017, 2018, and 2019.”
That technology-centered approach meant that far from flatlining, 8Twelve’s operations actually flourished during the pandemic, helping it attract new talent and ensuring steady growth while many other organizations were facing upheaval during those uncertain early days of the outbreak in 2020. Central to its success among brokers is that intuitive, seamless system that has allowed the company to onboard talent and help new agents hit the ground running, irrespective of their level of experience.
“The system will take your hand and walk you through the steps of the mortgage; that’s why we’re seeing consistent five-star reviews,” Abbas says. “We have teams in-house that take care of, for example, back-office administration, funding administration, and so on. That’s really where our specialty is and why we’re growing really well. We’re taking a different approach on the mortgage brokerage business and how we’re onboarding and treating our staff as well.”
That ability to walk employees through the process, and take care of time-consuming administrative tasks for them, allows mortgage professionals to focus on the areas of their business that really matter to them, whether that’s developing new relationships or cultivating referrals. While mortgage agents have traditionally been required to find and manage business, working on new leads to the detriment of their productivity, Abbas says 8Twelve’s system lets agents focus on the side of the business that reflects their strengths.
The company has also fully embraced integrations, viewing them as central to the future of the mortgage industry, and it’s always open to new partnerships and enhancements. Its current partners include Filogix, Newton, Zoom, Hellosign, and Docusign; standard email platforms are also built into the company’s technology.
“We’ve created a platform that’s open to connecting to partners today and in the future,” Abbas says. “Our philosophy has always been that great new technologies are being developed out there.”
The company has also built an impeccable reputation with lenders, which Abbas attributes to its team of diligent underwriters, who work with agents to package deals and information correctly.
“Time and again, I hear from our lender partners that when they see an 8Twelve file, they’re bringing it to the top,” he says. “They know it’s consistent [and that] all the checks and balances are done. That increases our ability to collect fees and deliver value for our clients, but it’s also reducing the operating costs for our lenders, which they love. We’re building those deep relationships, time and time again.”
As mortgage products have become more complex the need for independent advice and access to a variety of mortgage products has become a necessity. As a result, digital mortgage brokers have been slowly capturing more and more market share from banks and brick and mortar mortgage originators for the past decade. For Canadian mortgage brokers, the gradual increase in market share from 21% to 47% represents not only more flexible homebuyer attitudes but also is a sign of their growing influence, enhanced services, and increased value of the personal services being offered to first home buyers by digital mortgage originators.
The first time homebuyers’ market includes young (e.g., Millennials, Generation Z) homebuyers, immigrant homebuyers, and those who prefer to shop online for better rates and engage in the personal services of the digital brokers for their wealth-building advice, guidance, and support during the ever-increasingly complex mortgage application process.
Currently, 55% of first-time homebuyers use digital broker channels. 44% of repeat home buyers use digital broker channels. They often select their brokers based on word of mouth from acquaintances, colleagues, and family members. Others select their digital mortgage brokers based on the professional recommendations of other professionals. Notably, first-time home buyers can be divided into three groups. Each group has different levels of familiarity and comfort with digital mortgage brokers. So, digital mortgage brokers must engage these markets using different strategies.
Figure 2: Existing Relationships Appear Highly Important for Direct Bank Mortgage Borrowers While Word of Mouth Is Relatively More of a Deciding Factor in the Broker Channel
Young Home Buyers: Millennials and Generation Z
Young homebuyers represent a huge market segment for mortgage brokers. They are familiar with IT, working with online professionals, shopping for and comparing services online, and establishing relationships in a non-traditional way. Research shows that although 62% of them are comfortable not having a face-to-face relationship with their mortgage broker they still value human interaction and personalized services. Moreover, this demographic prefers to reach out to mortgage brokers after they have done their own online research. Furthermore, as mortgages increase in complexity, first-time home buyers need professional assistance and emotional support during the application process. Since this trend will continue into the foreseeable future, the role of digital mortgage brokers is expected to continue to grow until it reaches at least 60% market share.
Immigrants are one of the fastest-growing demographics in Canada. In fact, in 2022 and 2023, Canada is expected to increase its immigrant population by 411,000 and 421,000 people, respectively. This is 37% higher than the historic annual average of 303,000 people from 2015 to 2019. Immigrants tend to buy homes two to three years after they have been living in Canada. As the immigrant population grows, it will play a key role in the future mortgage lending market.
Valuing Advice (Increasing Regulations Contribute to Increasing Mortgage Complexity)
There has been a change in how people perceive their primary relationship with their banks and mortgage brokers. In the past, most retail customers would have referred to their bank as the place where they got their mortgage or have their checking and savings accounts. Now, retail customers expect their banks to provide them with valuable financial advice, assistance with increasingly complex financial products, and personalized service and support.
Figure 3: Non-Branch Channels Increasingly Adopted by Canadians for Seeking Financial Advice
There has been a steady decline of people seeking in-branch financial advice from traditional banks, from 54% in 2018 to 43% in 2021. During that same time period, there was an increase in the percentage of people seeking financial advice via phone and online websites which were hosted by traditional financial institutions. This trend will continue to accelerate with further branch closures and a growing number of consumers seeking digital solutions.
As has been the case with other financial services (trading, investing, insurance, etc), consumers are driving innovation in the mortgage broker channel by demanding digital solutions. The industry has responded with a number of large scale, digital platforms that are creating benefits for the customer, lender, and agent alike.
Digital mortgage brokers are able to offer valuable financial advice and a wide selection of products as they are not beholden to one product as would be the case of dealing directly with one financial institution. Furthermore, given the shifting demographics and tightening credit requirement of traditional banks, the “plain vanilla” conventional prime mortgage is in decline and more complex mortgages are becoming the norm in Canada.
Digital mortgage brokers are the future of the mortgage originations in Canada. The use of the digital broker channel is growing, and is the leading way for first-time homebuyers to complete their increasingly complex mortgage applications. Furthermore, the young generation, immigrants, and those valuing financial advice and personalized services are being engaged in a way that meets their needs rather than the traditional “one size fits all” approach. As the adoption of technology continues and people show significantly less preference for face-to-face interactions and relationships, there will be ongoing gradual growth of the sector.
Source: BMO Capital Markets, CREA, Statistics Canada, CMHC, Bank of Canada, OSFI, Company Reports
8Twelve Mortgage Corp
(ON License #13072)
45 Sheppard Ave East, Suite 211,
Toronto, Ontario, Canada
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