CAAMP recently announced that effective July 1st,
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.
Monday 25 August 2014
Monday 18 August 2014
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.
Wednesday 13 August 2014
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!
Monday 11 August 2014
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 3rd
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.
Tuesday 5 August 2014
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.
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