The CMHC is once again defending Emili from a media report suggesting the system may have put the country at risk for a U.S.-style mortgage crash.
“Emili does not contribute to higher home valuations,” said Pierre Serre, chief risk officer for CMHC, in a statement late last week. “This implies that the system relies primarily on information provided by home sellers and accepts information without verification. This is not the case.”
Last week, newswire agency Reuters reported that “some industry players are worried about the database.” By relying on data about surrounding properties, the report said, Emili is prone to overlook past specifics that could affect the value of a property.
The Crown corporation rejects that claim and is also seeking to clarify how, in fact, Emili is used, calling it a risk management tool for mortgage loan insurance applications.
That system takes into account information about the borrower, the specific property, the housing market where the property is located and the application as a whole.
Its main function is to assess overall application risk.
“Emili is one tool used by CMHC underwriters to assess the homebuyer’s application for mortgage loan insurance,” said the CMHC in statement.
Underwriters do not rely solely on data providers by sellers, but use a combination of four tools that look into:
• The physical characteristics of the property (like square footage, lot size, age, style of the home, etc.)
• The municipal property tax assessment
• Historical and current sales activity within the local housing market
• Prior sales activity of the property being assessed