Attn. Lenders: Lenders Will No Longer Have the CAAMP AMP Designation.

CAAMP recently announced that effective July 1^st, 2014, only mortgage brokers will be designated as AMPs in the future. If you are a lender who has staff members who are not brokers and are designated as AMPs, this change will impact you. While the AMP designation under the new criteria will only apply to mortgage brokers, CAAMP will be releasing new designations for lenders. In a recent PDF released by CAAMP it was indicated that there will be more news to come as it relates to the changes this. For complete and accurate information about CAAMP’s changes as it relates to the new AMP designation please review this PDF that was released by CAAMP this past spring: http://caamp.org/meloncms/media/AMP%20New%20Requirements_2.pdf. 

How an AVM is Different From a Property Appraisal

A large part of properly underwriting and administering mortgages is evaluating risk – not just as it relates to the borrower but also as it relates to the property. AVMs (Automated Valuation Models) have become a common and integral part of workflow in various departments within lending institutions. AVMs are often used when validating property information both on their own and also in conjunction with an appraisal. So if an AVM can be used on its own then does it replace an appraisal? The two are really apples and oranges. 

AVMs provide an estimate on a property’s value using mathematical modeling. They produce a statistically derived estimate of value based on an analysis of public record data, property location, market conditions and real estate characteristics at a specific point in time.  An AVM typically compares the subject property to the property attributes and sales data within the database to produce an estimate of value. 

Most AVMs calculate a property’s value at a specific point in time by analyzing values of comparable properties. Some can also take into account previous appraisals, historical house price movements and user inputs (i.e. number of bedrooms, property improvements, etc.).  The results of each are weighted, analyzed and then reported as a final estimate of value.

AVMs are different from appraisals because they do not consider factors like specific improvements that have been made to a property that may increase the value, or problems with the property that may decrease the value. This is why some lenders and insurers will consider both the data retrieved in the AVM and also have a full appraisal performed of a particular property.  

An AVM is unbiased, versus the human bias which can occur with an appraisal – an AVM cannot commit fraud or make mistakes with calculations.  Depending on the situation, an AVM can be used to replace, supplement and/or audit the traditional appraisal process. 

You can use AVMs at many different stages in the process of underwriting, funding and facilitating a mortgage. 

·        When pre-approving a mortgage you can save an incredible amount of time. You know as well as we do that sometimes homeowners can be way off on what their home is worth. An AVM can flag this before considerable time is spent underwriting a deal only to find out later that the value is just not there.

·        While some private lenders don’t realize that they have access to the same tools as the banks and rely heavily on appraisals, they too can leverage AVMs. When working on an equity deal with a low LTV an AVM can be used to estimate the validity of your equity position.

·        During the collateral adjudication stage, AVMs can be used to assess collateral risk related to a mortgage.

·        AVMs can also be used to assess the value of your overall lending portfolio.

·        Upsell – over time property values change. AVMs can be used, much like a soft hit on a credit report, to assess further lending opportunities like the ability to offer a client a home equity line of credit for example.

For more information about how you can integrate the use of AVMs into your lending institution please www.purview.ca/lenders or call 1.855.787.8439.

The Purview Team is excited to be attending the IMBA SummerFest 2014 in Niagara Falls today and tomorrow. Will you be there??

IMBA SummerFest 2014 is taking place today and tomorrow, and the Purview Team will be in Niagara Falls to take it all in. Tonight’s networking event starts at 8pm, followed by a full day tomorrow of fun in the sun with some industry leaders. Tomorrow afternoon’s BBQ, golf tournament and wine tour are followed by a reception – make sure that you don’t miss out!

Who Owns the Client Relationship – Broker or Lender?

In the mortgage industry it is a common and contentious issue as far as who owns the client relationship. Brokers work very hard to generate business, absorbing the cost of acquisition and such, but once the deal is done, who owns that client relationship? While some lenders have checks and balances in place to cultivate broker relationships and support their ownership of the client, others don’t and see the client as fair game after the initial deal is funded. Is there a definitive answer to this question? We put that to you. 

In the absence of a broker and lender coming to an agreement regarding who owns the client, the best way for you ensure that your client remains your client after the initial deal is to invest in that relationship. Here is a short list of things that you can do to increase the likelihood that you will retain your client as a lifelong relationship. 

1.      Seek client feedback. After completing a deal with a client consider asking them for feedback on their experience with you. Online tools like Survey Monkey make this far easier and more comfortable for the client. An important question to always ask clients is, on a scale of 1-10, how likely would they be to recommend you to a friend or family member? 1-6 being unlikely, 7 and 8 somewhat likely, 9 and 10 extremely likely. The more 9s and 10s you have, the more likely your client is to not just be a customer but to actually be a promoter of your service. Also, if a client provides negative feedback, ask them what you could have done differently to learn what may have worked better for them.

2.      Listen to your client. When we say listen to your client, really listen to them – not just their words but also their tone and manner. This is huge. When listening to them, repeat back to them what they asked you as part of your answer to ensure that you really understand what they are asking you.

3.      Action feedback. You may not be able to action all feedback, since, as a broker, you are largely dependent on 3^rd parties and the levels of service they provide (like lawyers, appraisers and lenders), but actioning the feedback that you are able to action goes a really long way and shows your customers that you care what they think.

4.      Leverage new ways to communicate and stay connected. While it is a long standing tool to remember things like your clients’ birthdays and anniversaries – the old snail mail isn’t really as effective in today’s fast moving world of technology. Leveraging social sites like Facebook is a great way to be connected to your client and have a constant portal to reach out to them.

5.      Be consistent. The only way to establish recognition is consistency. Come up with something that you can release consistently: a monthly newsletter, monthly tips or even ramp up the frequency to weekly if you have the resources to do so. This will ensure that your client always remembers you are there.

6.      Give and take. Relationships are a two-way street. Do not use the privilege of being connected to them to spam them with sales materials and current rates. Remember that you want to be viewed as a trusted advisor, not a rate shopper. This means striking the balance between being a solutionist and providing content that solves problems and also promoting new products and services. 

Owning the customer relationship means building loyalty and trust. Once loyalty is established ownership becomes much less of an issue because your clients will prefer you as opposed to being forced to deal with you.

For more information about how you can build loyalty and trust to effectively obtain ownership of your clients please visit www.purview.ca/brokers or call 1-855-787-8439.

Online Property Valuation – Automated Property Valuation (AVM) vs. Emili

There are so many tools available to lenders, underwriters and insurers these days, and it often seems as though they all do the same thing, especially when it comes to validating property value. There are so many different ways that property value can be verified: through a drive-by appraisal, through a full appraisal, through an AVM (automated property valuation) and more.

Some lenders rely primarily on whether or not their insurer concurs with the value of the property. This is because, in the case of CMHC, they have a proprietary approval system, Emili.

Emili is used to validate homeowner information, pre-qualify a borrower for the purchase or refinance of a property and evaluate risk. Emili evaluates both the borrower’s and the property’s information. Emili will agree or disagree with the value of a property stated on a mortgage application. The issue with this is that relying on the insurer running the property through their property valuation tool only tells you if they agree or disagree with the value.

Lenders often confuse this and think that Emili is simply CMHC’s way to appraise the value of a property, when really it is their entire approval system, and concurring with property value is merely one component.

An automated valuation model AVM is a computer program that provides a real estate market analysis and estimate of a property’s value. When you generate your own automated property valuation the value is based on, among other things, comparable sales in a given neighbourhood. It also provides an actual value.

Using automated property valuation, you are empowered because you can quickly identify deals where the value is less than stated and not waste your time or the time of your partners. On the flipside, you may identify properties where there is significantly more equity and package the deal for the insurer with an upsell such as a home equity line of credit. The more you know about the applications that are being underwritten by your organization, the more opportunity you have to ensure that good deals get funded, bad deals do not, and deals that can be saved get saved.

If you would like more information about how to obtain automated property valuations please visit www.purview.ca/lenders. If you are a Purview For Lenders client and would like more information about how to generate property valuations please click here to watch a brief video.

What to Look for in a Property Valuation Software

It is a known fact that the better you underwrite your deals the less likely it is that problems will arise in the future. Deals go bad for so many reasons: the financial situation of the client changes and the client defaults, the client was a high risk deal to begin with, mortgage fraud and more…this can cost you big.

In this day and age technology has brought us so many resources that make knowing more about applicants easier. When underwriting a deal your underwriters likely review the applicant’s credit, validate their documentation and may even ‘Google’ applicants and check them out on social media - all in an effort to execute a good lending decision.

One tool that every lender’s underwriters should have in their toolkit is a property valuation solution. Sure, when a deal is submitted through CMHC or Genworth or Canada Guarantee, these organizations will utilize the application and determine if they will grant the high ratio default insurance. However, there are many benefits to learning as much as you can about a property before you even submit the deal to an insurer.

You may have already started investigating property valuation solutions for the reasons we are about to list below. Maximum benefits will depend on the property valuation solution you choose. Here is our short list of things that you should look for when evaluating a vendor for property valuation solutions.

Your property ownership solution should provide the ability for you to:

1.      Validate property ownership – By the time a deal gets to the point of closing your underwriter has already spent considerable time both underwriting and dealing with the client and broker. Once a deal is instructed, likely an insurer and a real estate lawyer have invested time in the deal as well. Having the ability to validate property ownership information will enable your underwriter to ensure that there are no surprises on closing.

2.      View the property being financed – Viewing the property that is being financed enables you to uncover issues that could change your lending decision, for example, rental properties, properties under construction, etc. 

3.      Validate property value – Validating property value in advance using your property valuation solution reduces the time your underwriters spend working on deals where the value is not there. The number of applications that go to insurers like CMHC and are inevitably declined because of value will be reduced, increasing closure rates with the insurers.

4.      Identify fraudulent deals – Your property valuation solution should provide tools that help you identify fraudulent deals.

5.      Generate reports that you can share internally and with broker partners and clients.

The more capabilities you provide to your underwriting team, the lower the cost per deal. Your team will be able to process more deals, faster, and your partners will appreciate that you have the ability to better filter your deals and make sure that you are only financing deals that represent reasonable risk to you. This is why it is vital when choosing property valuation solution to do your homework and ensure that you choose an application that provides you with maximum capabilities.

For more information about property valuation solution options please visit www.purview.ca/lenders or call 1-855-787-3439. Interested in knowing more about Purview For Lenders, click here to watch a brief overview video about our application that includesautomated property valuation.