Brokers: Banks abusing Emili

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If Emili is the baby, rogue banks are the bathwater, say brokers pointing to ethical lapses by transitory mortgage specialists using the valuation system.

“I like CMHC’s Emili valuation system, but like anything else it is subject to abuse and in my experience, the bank branches are abusing it, not brokers.” Michael Mullis, president of Mortgage Teacher Inc., told MortgageBrokerNews.ca. “At the bank, because of the turnaround in branch employees, they seem to be a little loose and a mortgage specialist who uses Emili to get an inflated valuation may not be there when it comes time to face the consequences.”

The assessment jives with that of other brokers responding to the release of federal documents outlining industry concerns about overvaluation of property assessment through the automated program. CMHC is now defending the system as are a number of mortgage brokers, fearful the criticism will see the industry return to on-site appraisals, and “ultraconservative valuations.”

While the banks are among the biggest critics of Emili, Mullis suggests their own lack of accountability has jeopardized a significant number of broker clients.

"I had one lady who bought a house for $100,000 and then eight months later, with the branch getting approved on Emili, she did a refi for $180K," he said. "Now she owes $164, through a refi and line of credit on a house that’s really valued at $124,000."

It’s the kind of tinkering few brokers would attempt, he said, pointing to their licensing and the accountability that comes with it.

“We’re simply not going to jeopardize our business,” said Mullis. “We’re more accountable.”
 

  • Omer Quenneville on 2012-10-13 5:03:28 AM

    The bank is not your friend. The bank looks after the bank and no one else. AS they should, they are a corporation with shareholders to account to. It is the mortgage brokers that need a wakeup call and realize this before you place your mortgages based on rates and not terms and condtions.

  • Derek Rowley, RMA on 2012-10-13 8:45:19 AM

    I totally agree with Omer. This has nothing to do with Emili but a client just recently called me who had to go to a branch to sign and he was very upset. The manager tried to force him to take the creditor life insurance which he did not want and told him him to close his other bank accoount and to open up an account with them for the mortgage payments plus she gave him a form to take to his HR for payroll deductions to be direct deosited into their account.

    No bank has this right to try to impose these conditions. I have already told him that he does not have to comply. Clients are like shhep thrown to the wolves.

    Derek Rowley

  • Don Johnstone on 2012-10-13 9:18:09 AM

    We as brokers. or for that matter bank employees, have no influence on EMILI evaluations. I have had them swing both ways both over market and below market. In some cases I had to have appraisals completed to support the requested value. If a broker submits a deal and EMILI approves it the ultimate value used is not the brokers fault and I would suggest no liability exists either.

  • Marie on 2012-10-13 10:07:15 AM

    Don,I disagree with the statement "bank employees". we as agents/brokers cannot input information to sway the results either way BUT bank branch can. They are in control of inputting the data, garage or no garage, square footage, taxes etc, all these factors influence the value.

  • Mark Norman - AMP on 2012-10-13 9:41:44 PM

    Derek, I'd reccomend that the client file a complaint with FCAC and report that incident of coercive tied selling. I've heard of this happening at the branches quite a lot lately and I've advised the same thing. It's not likely to go very far but the regulators should be aware that this is often common practice, which I'm sure is due to pressure on bank employees to increase their number of products sold.

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