Mortgage Broker

28 | spring 2016 cmba-achc.ca CMB MAGAZINE confidentialreport what market value is and how it's determined, you know what the term "comparable" means, etc. A homeowner does not necessarily under- stand these concepts and the appraiser oen has to provide them with a mini Appraisal 101 course to assist them. is takes extra time and therefore the fee is higher for a non-broker or non-lender. In some cases, the time involved in explaining the appraisal to a homeowner is considerably longer than the time it took to complete the actual appraisal. I'm always happy to discuss an appraisal report with a client, as I believe it to be good customer service, but when the client is a broker or lender it is oen quite a simpler discussion than if the client is the homeowner. Whether or not an appraiser authorizes the release of an appraisal to a homeowner is ultimately a business decision of the appraiser; however, most professional appraisal firms have similar policies in place on this issue. So why would a broker not want to release a copy to their client? Full liability An appraiser cannot be held liable for an ap- praisal report that was relied upon without the consent of the appraiser. If a broker releases a copy of an appraisal report to a homeowner without the written authorization of the apprais- er, the broker can be held liable for anything the homeowner may use the report for. e liability the broker takes on is quite significant too. For example: An appraisal completed for a broker was released to a homeowner who in turn used the appraisal for house insurance purposes. Years later, the home was destroyed by fire and during the investigation completed by the insurance company, it was discovered that the appraisal contained an error in the square footage calculation of the home, result- ing in the property being underinsured. e appraiser was not held accountable because the appraisal was completed for mortgage purpos- es and was not authorized to be used for any other purpose; however, the broker was held partially responsible for the loss because of the unauthorized release of the appraisal report that the insurance company relied upon. Time management Top brokers acutely understand the value of their time. You should ask yourself how much time you want to spend discussing appraisals with your clients. If time is money, how much of your time/money do you want to spend de- bating the condition of your client's home, artic- ulating remaining economic life, discussing the cost approach, demonstrating how depreciation is calculated, siing through active listings and dated sales or explaining why the neighbouring house that sold a year ago wasn't used in the appraisal. Providing copies of appraisal reports to your clients (with or without the appraiser's authorization) can oen eat up your resources without being productive to your business. To take a lesson from the Canadian big banks: they have all learned that keeping ap- praisals as internal documents is the best way to manage their lending staff 's resources. PiPeda implications e Privacy Commissioner has determined that appraisal reports contain many types of private information, including MLS data, subject pho- tos, photos of comparables, property descrip- tions, comments, etc. So, if a broker releases an appraisal to a homeowner without the written consent of the appraiser, there could be Privacy Act implications. The takeaway Lenders may not want the homeowner to have a copy of the appraisal either. Time manage- ment of their staff is one reason but another reason is that the lender wants a completely unbiased report of the subject property; this is especially true for private lenders. An appraiser may use a slightly different lan- guage to describe a negative aspect of a property if he or she knows the owner will be reading the report, whereas the lender wants an untem- pered and completely unrestrained description of the property, positive or negative. As with the appraiser, it also ultimately comes down to a business decision of the broker or lender as to whether they wish to release copies of appraisals to their clients. If, as part of your business model, you want to provide a copy to your client, be fully aware of the possible ramifications; if you wish to simplify your processes and maximize effi- ciencies, advise your clients in advance that the appraisal fee is for a service required by the lender as part of their lending process rather than a product they get to keep. Releasing a copy of an appraisal report to a homeowner without the written authorization of the appraiser can leave a broker exposed to significant liability.

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