Over reliance on Automated Valuation Methodologies (AVMs) poses a significant risk for Canadian consumers, lenders and the financial system. The best option to minimize the lending risk for mortgage properties is to have an on-site appraisal conducted by a third-party appraiser to determine the occupancy, the condition of the property, the neighborhood characteristics, and ultimately, the existence of the property. AIC supports AVM regulation and the role of appraisers being recognized directly in federal legislation through the Bank Act. AIC is supporting OSFI Residential Mortgage Underwriting and Mortgage Insurance Practices and Procedures encouraging Federally Regulated Financial Institutions to employ sound valuation practices to determine the value of collateral used to secure and insure mortgages. Requiring FRFIs to apply proper due diligence by requiring valuation reports based on on-site, in-person inspections performed by qualified appraisers is a sound practice. It enables lenders to confirm the current valuation of the collateral when processing a mortgage loan application and provides the assurance that they are doing so with a valuation carried out in a fair and objective manner. In summary, we recommend that the Government of Canada continue to mandate, enhance, and enforce strong valuation fundamentals within FRFIs. AIC is advocating for OSFI to form a permanent, multi-sector, external stakeholder affairs advisory committee that would advise the regulator on emerging risks. With the government exploring EnerGuide Labeling of homes at the time of sale, the AIC recommends that this information, as well as other climate related risk information, be housed in a central, publicly accessible portal. As prospective homeowners and the mortgage lending industry rely, in part, on information gathered by appraisers to make their buying and lending decisions, accurate and publicly available information ensures that all parties are making informed real estate decisions. AIC Professional Appraisers adhere to strict educational and professional practice guidelines and can partner with appropriate governmental bodies and industry experts to help in the implementation process. The AIC believes a holistic approach to supply needs to be considered, where industry and municipal, provincial and federal governments all work together if there is any possibility for solving the lack of inventory and encouraging affordable housing prices. Some flood maps in Canada have not been updated for a number of years, in some cases for decades. The need for accurate flood information is essential to property purchasers, developers, lenders and to those engaged in municipal or land use planning. AIC is asking the Government of Canada to take on a coordinating role in this area. Downward pressure on appraisal fees and increasing demand for quicker turnaround times, combined with the restrictions on accessing good and reliable data, may ultimately drive professional appraisers away from completing mortgage finance work. This places a much higher risk for lenders and for Canadian consumers. Concerns over money laundering and the use of real estate assets to shield funds from scrutiny have become increasingly more strident in recent months. The AIC is asking the Government of Canada to assume a coordinating role in the development of beneficial ownership registries for real estate assets. Canadian consumers require additional education on the full range of fees associated with mortgage financing and refinancing as well as the role of various professionals involved in the transaction. A disclosure of all fees incurred as part of obtaining a loan should be a mandatory requirement for all lending institutions - federally and non-federally regulated – to ensure that Canadians understand the financial commitment involved in what is often the largest investments in their lifetime. This includes the appraisal management fee and the appraisal fee.
To address Canadas housing crisis, the federal government must work with provincial and municipal governments to implement policies that help to increase the supply of housing. As an example, the Government of Canada should require that infrastructure grants only go to areas that expedite development. Furthermore, the Housing Accelerator Fund as presented by the government should focus on supply initiatives. The mortgage "stress test" is applied to all Canadians seeking mortgage financing through a Federally Regulated Financial Institution (FRFI). AIC supports the removal of the stress test requirement for individuals seeking to renew their existing mortgage providing that the mortgage is in good standing and that all other terms / conditions remain static. AIC supports the notion that such borrowers should have access to the most competitive terms available. Some flood maps in Canada have not been updated for a number of years, in some cases for decades. The need for accurate flood information is essential to property purchasers, developers, lenders and to those engaged in municipal or land use planning. AIC is asking the Government of Canada to take on a coordinating role in this area. Over reliance on Automated Valuation Methodologies (AVMs) poses a significant risk for Canadian consumers, lenders and the financial system. The best option to minimize the lending risk for mortgage properties is to have an on-site appraisal conducted by a third-party appraiser to determine the occupancy, the condition of the property, the neighborhood characteristics, and ultimately, the existence of the property. Introduce a Home Renovation Tax Credit Program Downward pressure on appraisal fees and increasing demand for quicker turnaround times, combined with the restrictions on accessing good and reliable data, may ultimately drive professional appraisers away from completing mortgage finance work. This places a much higher risk for lenders and for Canadian consumers. Concerns over money laundering and the use of real estate assets to shield funds from scrutiny have become increasingly more strident in recent months. The AIC is asking the Government of Canada to assume a coordinating role in the development of beneficial ownership registries for real estate assets. Canadian consumers require additional education on the full range of fees associated with mortgage financing and refinancing as well as the role of various professionals involved in the transaction. A disclosure of all fees incurred as part of obtaining a loan should be a mandatory requirement for all lending institutions - federally and non-federally regulated – to ensure that Canadians understand the financial commitment involved in what is often the largest investments in their lifetime. This includes the appraisal management fee and the appraisal fee. AIC members must complete appraisal reports and other valuation assignments in accordance with the Canadian Uniform Standards of Professional Appraisal Practice (CUSPAP). Compliance with CUSPAP, in part, requires access to a full range of data on the subject property - including information on sales history. This data has traditionally been in the public domain but access has become limited. AIC is supporting OSFI Residential Mortgage Underwriting and Mortgage Insurance Practices and Procedures encouraging Federally Regulated Financial Institutions to employ sound valuation practices to determine the value of collateral used to secure and insure mortgages. AIC has recommended that these same guidelines extend to non-federally regulated institutions or organizations offering mortgage financing to Canadians.