CMHC offers valiant defense of Emili

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CMHC is now defending its Emili against an onslaught of criticism the system’s database routinely overvalues properties by as much as 5 per cent to 15 per cent.

We have “the most comprehensive database in Canada, including property information on approximately eight million properties," writes the Crown Corp in a statement issued Thursday. "CMHC looks at the specific characteristics of the property in question.

"This includes the physical characteristics of the property, the municipal property tax assessment, historical and current sales activity, and prior sales activity of the property being assessed, when available.”

The defensive move comes on the heels of the release of documents obtained by access to information requests and detailing bank and default insurer concerns about CMHC’s automated system Emili. The charge is it relies on flawed data and routinely overvalues properties.

Mortgage brokers were among those consulted for the report, although lenders appear to have registered the moiety of concerns.

Still, brokers commenting on a MortgageBrokerNews.ca story Thursday shared their own misgivings about the system and its effects on clients.

Automated valuations “are awful,” writes one broker. “Anyone who received their MPAC assessment recently can attest to that.

“Appraisals, though more costly, are far more accurate – they take into account more relevant details that can only be observed by a human being in person.”

That notwithstanding, many mortgage professionals are concerned the pendulum may now swing back to an era when borrowers were often entirely dependent on the “drive-by valuations” of some appraisers.

“My biggest concern is when an insurer orders the appraisal and in too many instances, instead of it going to a local appraiser who knows the market in their area, it is assigned to an out-of-town appraiser,” offers another MortgageBrokerNews.ca reader. “In many instances this has caused the appraisal to come in low and this really applies to the drive-by appraisals.”
 

  • Paolo Di Petta | dipettamortgage.com on 2012-10-13 4:39:29 AM

    Appreciate the quote guys, would also appreciate a linkback, though.

    -P

  • MP on 2012-10-13 4:46:47 AM

    Appraisers aren't perfect either. You could order three appraisals on the same house and get three different values. There is no exact science to valuing a property--it is merely one person's opinion.

  • Paolo Di Petta | dipettamortgage.com on 2012-10-13 8:01:58 AM

    @MP - Appraisers aren't perfect, agreed, but at least they can back up their evaluation with facts. Infact, they need to be licenced and there's a burden of proof on them to validate their valuation upon request.

    AVMs spit out a number with little explanation and often lack the human element - common sense.

    Again, I'm going to point to MPAC's awful AVM system - despite recent sales of similar properties in my area, MPAC has insisted on using less similar properties and less recent sales that are far above the current value of my home. Judging by the numbers, their assessment is approx 50-80k ABOVE market value. Most other AVM's are equally flawed.

  • novascotiaappraiser on 2012-10-13 11:39:17 PM

    Appraisers are industry stakeholders in the wider real estate market. We are sensitive to the consequences of our values and the impact on users of our services. That being said we view the property and analyze it with careful consideration of comparable sales. The sale prices of comparable properties are the basis of our value estimate. We start with comparable sale prices to estimate the sale price ( market value)of the subject which is the true indicator of value. It is not our intention to produce conservative or aggressive values but to be accurate so as to provide information for clients make sound decisions.

Broker news forum is the place for positive industry interaction and welcomes your professional and informed opinion.

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