Any move away from automated valuation – and toward appraisers – could hurt clients, say brokers, anticipating fallout from a media report suggesting CMHC’s system inflates home prices.
“To put the market back in the hands of appraisers could make a complete mess of things for clients,” said Cameron Mackie, an agent with Dominion Lending Centres Your Mortgage Partner. “It would return us to a system of very conservative valuations and cost borrowers more on top of that.”
The comments follow the release of documents obtained by access to information requests and detailing bank and default insurer concerns about CMHC’s automated system Emili, specifically that the data it relies on is flawed and routinely overvalues properties.
Mortgage brokers were among those consulted for the report, although lenders appear to have registered the moiety of concerns.
While Mackie and others concede automated systems are subject to abuse, they’re concerned the report might undermine the use of those electronic databases and see default insurers and lenders turn exclusively to on-site appraisals.
Broker complaints about ultra-conservative appraisals – especially around non-CMHC refis -- did, in fact, increase as mortgage rules tightened and OSFI shored up its lending guidelines.
“The major issues with appraisals are with clients that are refinancing and repositioning debt to consolidate,” Andre Semeniuk, a mortgage planner with Mortgage Architects, said in July. “Appraisers understand that because there’s no one waiting to sell the house there won’t be the same aggravation of coming in low on an appraisal on a refinance that there is on a purchase.”