OTTAWA, Oct. 15, 2018 (GLOBE NEWSWIRE) -- The Appraisal Institute of Canada (AIC) welcomes the Office of the Superintendent of Financial Institutions’ (OSFI) plan to reduce mortgage finance underwriting that over-relies on the equity of a property, without due consideration to the borrower’s capacity to pay. In its most recent newsletter, OSFI reported that B-20 guidelines have yielded positive results, including lower average loan-to-value ratios for mortgages, and fewer mortgages being approved for over-leveraged individuals. However, the newsletter goes on to point out that: “although reduced, there continues to be evidence of mortgage approvals that over rely on the equity in the property (at the expense of assessing the borrower’s ability to repay the loan). OSFI will be taking steps to ensure this sort of equity lending ceases.”
OSFI’s B-20 guidelines require a balanced approach to mortgage underwriting and have served Canadians and the housing market very well by enhancing market stability and supporting efforts to mitigate consumer indebtedness.
Prudent mortgage underwriting requires appropriate valuation of the subject property; appraisals conducted by AIC designated appraisers provide lenders and borrowers with unbiased, independent opinions of market value.
“Our Members’ work helps support a stable and healthy market. The B-20 guidelines require lenders to utilize appropriate numbers of on-site inspections and third-party professional appraisals to verify the value of collateral. On site appraisals help to mitigate risk for both the lender and borrower in cases when there is a high loan-to-value ratio, when markets are in flux, or when the creditworthiness of the borrower may be lacking,” said Peter McLean, AACI, P. App, AIC’s president.
“The regulatory oversight provided by OSFI has allowed Canadians to benefit from stable markets; we have not seen some of the fluctuations and volatility that have plagued other countries. Our organization strongly supports B 20 and has called on governments across the country to mandate their application to all residential mortgage lending,” said Keith Lancastle, AACI (Hon.), AIC’s chief executive officer.
ABOUT AIC
The Appraisal Institute of Canada (AIC) is a leading real property valuation association with over 5,440 members across Canada. Established in 1938, the AIC works collaboratively with its 10 provincial affiliated associations to grant the distinguished Accredited Appraiser Canadian Institute (AACI™) and Canadian Residential Appraiser (CRA™) designations. AIC Designated Members are highly qualified, respected professionals who undertake comprehensive curriculum, experience and examination requirements. Our members provide unbiased appraisal, appraisal review, consulting, reserve fund study and machinery and equipment appraisal services within their areas of competence. AIC Members are guided by a Code of Conduct and Canadian Uniform Standards of Professional Appraisal Practice (CUSPAP) to ensure the highest level of professionalism and integrity. For more information, go to the AIC Website and follow AIC on LinkedIn, Twitter, Facebook and the AIC Exchange.
MEDIA CONTACT
Paul Hébert, Director, Communications
Appraisal Institute of Canada
Phone: 613-292-2876
E-mail: paulh@aicanada.ca