Mortgage Broker is the magazine of the Canadian Mortgage Brokers Association and showcases the multi-billion dollar mortgage-broking industry to all levels of government, associated organizations and other interested individuals.
Issue link: http://digital.canadawide.com/i/981086
CmB magazIne cmba-achc.ca spring 2018 | 41 appraisaloverhaul n Market Rental Report without inspection (no appraisal completed); n Market Rental Estimate via Schedule "A" as an additional service while completing an existing full appraisal report; n Market Rental Estimate via Schedule "A" stand- alone (now must have all the same information including comparables as a value report); and n Market Rental Estimate stated within an assignment as an additional service while completing an existing full appraisal report. One broker said in a recent news article that appraisers "have to do almost a full appraisal with comparables and a range of rents, and that is affecting the qualification of investment properties." at quote is true, but it's also a necessary evil in terms of risk, which is weighed carefully by the appraiser. As an appraiser working in the Greater Vancouver market and a director of the Appraisal Institute of Canada, I would like to shed some light on the changes, as seen from an appraiser's perspective. Over the past year, we have seen many significant changes to the scope of analysis and terms of reference for appraisers with many new AIC Professional Standard rules. e changes are to standards, regulations and professional standard requirements that appraisers must adhere to as of January 1, 2018, per Appraisal Institute of Canada directives, some of which are a result of B20. e most immediate and pressing change for appraisers was the AIC Requirement– Mandatory conversion to the new 2018 Full Residential Appraisal Form, which for the first time became mandatory for AIC appraisers all across Canada. Also of note was the AIC position on rental estimates stated within an appraisal report, stand-alone rental estimates and stand-alone rentals with a site visit. e AIC (Professional Standards Committee and Insurer) is taking the position that the rental estimates must be treated as an appraisal. Rental estimates have to be supported and concluded in the same way that a value estimate is. As such, the appraiser must match CUSPAP (the appraisers' professional standards) in every aspect of the report, to the same level as a full and complete appraisal report, including the addition of three comparable rentals. Communiqués to member appraisers across Canada informing them of the reasons and logistical turns which end up increasing our scope of work and analysis to the next level have been delivered multiple times during 2016 through to 2018 in preparation for the new changes. Note the following communiqué from AIC: n As of January 1, 2018, AIC members can no longer use the 0912 or the 0404 forms, or any previous version of an AIC form, as these are not in compliance with CUSPAP 2018. n Failure to utilize the most current version of the AIC form may be considered wilful non-compliance with AIC policies and, by extension, coverage under the AIC Insurance Program may be denied. Unfortunately, most of the changes (which are out of an appraiser's hands) now are causing appraisers to take much more time to ensure quality control to deliver the same products and services provided to clients and stakeholders prior to January 1, 2018. Appraisers are doing their best to balance service to clients and at the same time adhere to new standards and procedures demanded by OSFI B20, AIC and Trisura Professional Liability Insurers. Wilful non-compliance (by the appraiser) to the new changes may trigger non-coverage from the liability insurer, which in all cases involving financing is a requirement of banks, credit unions and all monoline lenders utilized by the brokerage community. In the end, all appraisers work with realtors, brokers and the lending community toward the goal of providing funding to qualified borrowers, but with a view toward mitigating risk and using best practices to protect not only consumers and professionals within these industries, but the general public as well. Appraisers are doing their best to balance service to clients and at the same time adhere to new standards and procedures.