Broker access to appraisal reports severed

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One Barrie broker found himself out of the loop on his appraisers’ reports, only to learn that his appraiser had been told only to deliver reports to the lenders.
 
“We received six or seven emails this week confirming that the appraisal has been sent to the lender, along with the value of the property – but we never got a report,” says Nick L’Ecuyer, principal broker at Verico The Mortgage Wellness Group in Barrie. “So we asked one of the appraisers for the report, and he said ‘I can’t.’”
 
The appraiser told L’Ecuyer that he had been sent a communication from the Appraisal Institute of Canada to “no longer send to brokers” any appraisal reports.
 
“Is it because the broker’s integrity is being question, or are they just removing brokers from the process?” asks L’Ecuyer.
 
“That is not the position at all,” says the Director of Professional Practice Nathalie Roy-Patenaude at AIC. “The Privacy Commissioner has ruled that appraisal reports contain personal information, and as such any personal information has to be redacted if made available to a third party.”
 
Roy-Patenaude explains that appraisal reports are created for two parties – identifying the client (prospective buyer or owner) and the intended user (the lender) as the only ones allowed access to the document. 
 
“If the broker wants a copy of the report, they must have written permission from the client and the intended user,” she says. “This has always been the case.”
 
L’Ecuyer has so far been able to gain access to the reports by contacting the lenders, who have been accommodating in sharing the information. For L’Ecuyer, it is frustrating for the brokerage as it looks to properly service clients without access to an appraiser’s report. Generally, the borrower hasn’t received copies of appraisal reports.
 
“If a lender comes back and says, ‘This won’t work’, how do we know why it won’t work? All we can do is go to the next lender, and then another appraisal is needed – and we won’t have access to that appraisal either,” he says.
 
Roy-Patenaude thinks that the difficulty L’Ecuyer is having may just be in how the request for appraisal is being presented.
 
“Maybe it is a case of something getting lost in translation. It is necessary for every broker to comply to our standards of practice,” she says. “If he has been told by different appraisers in just one week, I think this may be the case.” 
 
So far, it has only been small, individual appraisal companies that have not supplied a report, says L’Ecuyer.
 
“NAS (Nationwide Appraisal Services), Solidifi and BrokerWorx have so far been providing reports,” he tells MortgageBrokerNews.ca. ”But who knows for how long?”
 
The Appraisal Institute of Canada (AIC) was founded in 1938 and is the premier real property valuation association in Canada. With approximately 4,800 members across Canada and around the world, the AIC works collaboratively with 10 affiliated provincial organizations.
 
  • David Grossman on 2013-03-25 9:58:23 AM

    this is interesting and a potentially very serious issue. i have heard of borrowers not getting a copy of the report even though they have paid for it, but never the broker. there are a number of rules or ettiquetes around the issue of appraisals, what information can be released, how, and to whom. this matter warrants further attention. thank you for bringing this issue to light mortgagebrokernews.ca. sincerely http://www.alltalktv.com

  • Ad Lakhanpal, Broker,Mortgage Alliance on 2013-03-25 10:15:36 AM

    My understanding has been that the appraisal belongs to the person who ordered it, which in most cases is the broker. Many times I would order an appraisal, and based on that,decide on which lender to send the deal to. When the lender approves, I ask the appraiser to formally direct a copy to them. If a policy comes about where the broker does not get a copy,it will become a major hindrance to our business.

  • Joan E. on 2013-03-25 10:22:22 AM

    I do not think that this is as large an issue as people think... For years there have been issues with Brokers who order appraisals and "ask" for a certain value, and far too many appraisers are more than happy to oblige, since the broker is the one ordering the appraisal. An appraisal is supposed to be an impartial valuation of a property, and it is inappropriate for any broker to try to influence the outcome of the report. Some mortgage brokers profess to be experts at all aspects of the business, but in my decades I have talked to literally thousands of brokers who have barely basic understanding of the property valuation process – they only look at the bottom line dollar value, and what that means to their commission. In the end the property either fits the lenders guidelines or it doesn’t, sure lenders should tell a broker why it does not fit, but brokers need to accept the fact that mortgage companies are lending out their money, they decide who gets to borrow it. There are too many brokers in Canada that have this twisted thought process that they should get to decide, and with programs like the Street Capital house accounts, some of them do.

  • Derek Rowley on 2013-03-25 10:37:08 AM

    The only time I get an actual copy is if I order and pay for the appraisal. My main appraiser will email me a copy and the client gets a hard copy. It is difficult to access a report if the appraisal is ordered by the lender or the insurer at their expense. This is just another glitche that brokers will have to overcome.

  • Kent Farnsworth Owner Meridian Simply Mortgages on 2013-03-25 11:20:26 AM

    It's been my experience that if the lender requests the appraisal that the appraisal is the property of that lender. That being said, anytime that the appraisal is requested with exception of an insurer, that the broker gets to place the order. If the order for the report is placed by the broker than here is an easy way to get around this:
    Have the appraisal company make the appraisal out to the lender, but C/O your brokerage company. That way the appraisal is still the property of the lender, however it's is being ordered care of your company. Therefore, the appraiser can legally email you a copy of it without being concerned about any backlash from the lender. I've been doing this for years, and have never had a lender take issue with it. It is an easy workaround to the appraisal company being concerned about the legality of giving you, the broker a copy of it. If the appraisal is ordered by you, the broker through NAS or Solidifi, then it should be available through download on that site anyway. I hope this information helps anyone that might run across this issue in the future.

  • Patrick on 2013-03-25 11:46:18 AM

    In accordance with the AIC’s Standards of professional appraisal practice, an appraisal report is prepared for a specific client (i.e. Mortgage Broker), a specific intended user (i.e. Scotiabank) and for a specific purpose (i.e. 1st mortgage financing). An appraisal report can be provided to a third party with the original client’s consent and if the report is to be used by a user other than the original intended user, then a reliance letter can be obtained from the appraiser, again, with the original client’s consent. This is to ensure that privacy of the information contained in an appraisal report is maintained and shared with the consent of the client.

    Please refer to the Financial Consumer Agency of Canada (FCAC), a federal consumer agency for questions and answers on the same issue:
    http://www.fcac-acfc.gc.ca/eng/resources/faq/QAView-eng.asp?id=298

    QUESTION:
    Can my financial institution refuse to provide me with a copy of my mortgage appraisal, even though I've paid for it?
    ANSWER:
    Yes. The financial institution can refuse to provide you with a copy of your mortgage appraisal. The financial institution obtains the appraisal report for the purposes of underwriting the mortgage. It is meant for its own internal use.

  • Patrick on 2013-03-25 12:02:55 PM

    If a Mortgage Broker orders the appraisal for a Lender, the Mortgage Broker and the Lender are entitled to the report.
    It does not matter who pays for the appraisal. The applicant is not entitled to a copy of the report unless the Mortage Broker, Lender and Appraisal Company authorize this, which should be done in writing! This has been our policy for years which is supported by the post I made earlier from the Appraisal Institute of Canada!

  • LanceH on 2013-03-25 12:06:26 PM

    Forgive my cynicism but one wonders whom is telling the Appraisal Institute what to do - someone that doesn't like brokers I suspect. I mean, why all of a sudden?? And in fact the client's name is NEVER on an appraisal. Only the lenders'. I never provide the name of the borrower to the appraisal co, nor do they ask for it, so how can her assertion be true?!?! So I don't know who's yanking Patenaude's chain, but she'd better get off it!! And since when do we need the client's permission? It's always been that the client DOESN'T get a copy, as it's not addressed to them, not to mention, us Brokers, by law, must keep a copy of ALL docs in reference to a file for the duration of the term. So this is contrary to FSCO rules, and maybe the easiest thing is to sick FSCO on the Appraisal Institute!! This is pure politics!! SOMEBODY doesn't like brokers!!

  • Kent Farnsworth Owner Meridian Simply Mortgages on 2013-03-25 12:14:27 PM

    Lance... Really? Someone that's policing regulations in the mortgage industry that has issues with brokers? (insert sarcasm here)Come now, that's just absurd. Anyway.. I don't know about where all of you other brokers are from, but here in NB, the appraisal company absolutely will not share a copy of the appraisal with anyone but the company that has requested it. Hence my little workaround loophole. And there is certainly nothing ethically wrong with doing so. Also, yes it is true that we are supposed to have ALL FILES that pertained to any mortgage that we brokered, so there is certainly a discrepancy there for sure, and it should be addressed.

  • John Bargis on 2013-03-25 12:17:24 PM

    This problem can easily be solved to satisfy the Privacy Commissioner's office, either by the inclusion of a clause in the Filogix Consent Form allowing for the broker/Agent to have access to the borrower's appraisal, or by the creation of a form by a Broker authorizing the same.....This is something that certainly needs to be addressed and cleared up, particularly since we are required in many cases, (regulatory or otherwise), to possess a copy of an appraisal in our file.

  • JERRY J. ROSE on 2013-03-25 12:20:15 PM

    THIS A SERIOUS CONSUMER ISSUE THAT SHOULD BE DEALT WITH ETHICALLY BY ALL PARTIES.THE APPRAISER,THE LENDER AND THE BROKER.OBVIUOSLY THE CONSUMER SHOULD BE ENTITLED TO A COPY OF THE APPRAISAL IF HE PAID FOR THE REPORT.
    I DONT UNDERSTAND EXACTLY WHAT PERSONAL INFORMATION IN THE REPORT COULD CONSTITUTE A REASON FOR DENYING THE CONSUMER A COPY.ITS THE PROPERTY BEING APPRAISED NOT THE CONSUMER AND HIS FAMILY. THE FSCO SHOULD DEMAND THAT WHEN A CONSUMER PAYS FOR THE REPORT THAT CONSUMER IS ENTITLED TO A COPY OF THE REPORT ON REQUEST AND I WOULD NOT DEAL WITH A LENDER THAT DENIED ME A COPY AS THE ORIGINATING BROKER.WE SHOUDL GET IMBA INVOLVED IN THIS ISSUE.

  • Joan E. on 2013-03-25 1:56:59 PM

    Please, the only reason why brokers want a copy of the appraisal is so that they can argue the approval with the lender. If you want to know the value of the property and everything else that an appraisal contains, order it yourself and share it with your customer. The lender orders the appraisal and they get to say who they share it with, it is not a huge consumer issue. The appraisal is an evaluation of the property, it is not a personal assessment that the consumer is entitled too. With everything else going on in the broker industry, this is the least of your concerns.

  • Rick Lunny on 2013-03-25 2:28:49 PM

    appraisals are ordered by lenders for a specific transaction, hence the lender is the client ( despite who pays). Appraisals can differ if lenders have different underwriting practices e.g. One lender wants a price based on a 30 day forced sale scenario, the other 90. They are forwarded directly to the lender to eliminate any opportunity for fraud or friendly persuasion. In my experience the only reason lenders prefer not to share the appraisal with the mortgage client or broker is too avoid the endless arguments on value. (What about the new kitchen cupboards 15 years ago?). The value is the professional's opinion. If the client or broker don't like the value a 2nd appraisal can be ordered or another lender approached.

  • Kent Farnsworth Owner Meridian Simply Mortgages on 2013-03-25 3:02:18 PM

    I strongly disagree with you Joan E, and to be honest, I feel somewhat offended by your last comment. For starters there can be several reasons that a broker will want a copy of an appraisal. You are basically suggesting that appraisers and brokers alike are crooks. I don't know where you are conducting your business, but here I can assure you that here in NB, you would be very hard pressed to find an appraiser that would put a value on a property on the whim of a mortgage broker. I can't talk for every broker out there, but they would be wasting their time trying to convince a lender to increase the value of a property on their say so. Yes, second appraisals can be ordered if the broker disagrees. That is one of the reasons that a broker should be able to review them. Often times appraisals can come in significantly lower than they should, and it can work the other way too. I have refuted the value of only 2 separate appraisals in 10 years, but in both cases a different appraisal company went back in and the second appraisal was inline with what I thought the value should have been. One time it was almost 30k in the difference! Lenders themselves are even beginning to get frustrated with the low values that have been coming in on appraisals lately because in come cases they are really coming in way too low. Appraisers can have off days, and not get proper comparables, or don't necessarily like the location of the property and tend to be bias. You really seem to be putting a negative light on brokers. It's difficult to believe that you are a broker yourself.

  • Kiah Grant on 2013-03-26 7:47:42 AM

    Joan E. you are incorrect, in the case of mortgage (sub)brokers, we order the appraisal not the lender and yes we do argue with banks on behalf of clients that is our job and what clients want us to do. Although the AIC is stating a copy can be obtained with written permission from the client so what is the big deal here?

  • Joan E. on 2013-03-26 7:59:13 AM

    @Kent Who said I was a mortgage broker? I'm not.

  • Derek Rowley on 2013-03-26 11:10:55 AM

    OK folks

    Time for some inspiration and motivation to clean up all the cob webs.

    Whatever challenges you may face, whatever circumstances are weighing you down, you can chose your response. How you live your life today is totally up to you. It's not dependent upon your circumstances. It's dependent upon your choices. Remember, we can't control all our circumstances, but we can control our reactions.
    (Joel Osteen - Every Day a Friday)Some of you need to read his book.

    In closing, I offer this: No one stands taller on their climb for success than when he bends down to help someone else"

    Have a great day and make it your best.

    Derek Rowley

  • Derek Rowley on 2013-03-26 11:39:14 AM

    To Joan E

    Hi Joan,

    If I may ask, what is your title.

    Regards

    Derek

  • Derek Rowley on 2013-03-26 8:30:36 PM

    I guess Joan does not want to identify her title. Oh well, that is her right.

  • Derek Rowley on 2013-03-26 8:30:38 PM

    I guess Joan does not want to identify her title. Oh well, that is her right.

  • Marg Bumphrey on 2013-10-24 9:32:41 PM

    I think all of you are so caught up in defending your professions you're forgetting about the simple minded people who basically keep you employed!! I don't give a crap who orders the appraisal...the person who pays for the f'n document should be the first person to receive a copy...Done!

  • Liz on 2015-07-29 6:59:14 PM

    Two weeks ago I gave a broker permission to get an appraisal on my home. I paid $339.00.
    I have requested a copy of the Appraisal and it is not forthcoming. I indicated that I am entitled to a copy as it is my house being appraised and I paid for it. I also mentioned that I saw on the Internet that I am entitled. He was not happy and wanted the link. He was further not happy because I did not use his service. What steps can I take to get a copy of the Appraisal. You would think there is some dark secret info in this document.

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