Posted on: 22-09-08 17:58:32
Quote:
Originally posted by Pramod Chopra
The appraisal for the house is only required when some one is putting more than 20% in down payment. If the borrower is paying CMHC insurance, the the appraisal is NOT REQUIRED as the insurer makes sure of the cost of the house is in line with the sale purchase agreement and the bank is then not concerned about the same.
Hmmm...you said based on the 'sale purchase agreement', which essentially is the amount the house is assumed to be sold at..irrespective of the market value...So as long as you pay the insurance premium, you can quote any price on the sale purchase agreement... .baat kuch hajam nahin hui...but not your fault Pramodji, if thats the rule...
Quote:
However, If you are putting more than 20% down payment then in order to find out the latest and correct value of the house, the bank would ask you to get an appraisal done on the property from an appraiser who holds the designation of either AACI or CRA and he/she & the firm is on the APPROVED LIST of the Bank.
I would expect just the opposite...
Quote:
.. were committed by the appraisers, loan officers and mortgage brokers in US, the effect of which is being faced by every one. However, these people are now going to be facing legal actions and some are already in BIG HOUSE.
I am still waiting to see any concrete news on this one. On the contrary, I have a feeling that the new $700B bailout is actually to mask all these faults and make a new clean beginning...I hope I am proven wrong.
Thanks again Pramodji, appreciate your responses.
Hiren
Quote:
Originally posted by hchheda
Quote:
Originally posted by Pramod Chopra
The appraisal for the house is only required when some one is putting more than 20% in down payment. If the borrower is paying CMHC insurance, the the appraisal is NOT REQUIRED as the insurer makes sure of the cost of the house is in line with the sale purchase agreement and the bank is then not concerned about the same.
Hmmm...you said based on the 'sale purchase agreement', which essentially is the amount the house is assumed to be sold at..irrespective of the market value...So as long as you pay the insurance premium, you can quote any price on the sale purchase agreement... .baat kuch hajam nahin hui...but not your fault Pramodji, if thats the rule...
Quote:
However, If you are putting more than 20% down payment then in order to find out the latest and correct value of the house, the bank would ask you to get an appraisal done on the property from an appraiser who holds the designation of either AACI or CRA and he/she & the firm is on the APPROVED LIST of the Bank.
I would expect just the opposite...
Quote:
.. were committed by the appraisers, loan officers and mortgage brokers in US, the effect of which is being faced by every one. However, these people are now going to be facing legal actions and some are already in BIG HOUSE.
I am still waiting to see any concrete news on this one. On the contrary, I have a feeling that the new $700B bailout is actually to mask all these faults and make a new clean beginning...I hope I am proven wrong.
Thanks again Pramodji, appreciate your responses.
Hiren
I would like to elaborate on my earlier post.
CMHC and other insurers have access to the House Value Assessment data by MPAC (Municipal Property Assessment Corporation). Please see their website at http://www.mpac.ca" rel="nofollow">LINK to find out how they do the assessment and derive the value of any property in Ontario. It is the same company which does the assessment of all the houses in Ontario and sends the property assessment notice to all home owners and all the home owners pay taxes based on that assessment.
Now, every body knows that the market prices of the house is generally higher than the amount shown by the MPAC assessment and when some property is sold and the purchaser is putting less than 20% down payment, the lender would send the deal to the insurer such as CMHC. Since, CMHC has access to the assessment data by MPAC, they would see if the sale price is in agreement (or a little higher) and they will approve the deal automatically. However, in cases, where they have some doubts about the cost of the house, CMHC would use their own staff to do an inspection/appraisal of the property to verify the fair market value and would insure the property only if the value is in line with their observations. Hence, ITS NOT that so long you are paying insurance premium, CMHC would insure the property.
If the purchaser is putting more than 20% down payment, then CMHC does not come in to question but the bank insists an appraisal done by a professional, who is approved by the bank and holds the designation of either CRA or AACI. This appraiser would not only determine the value of this house, but would also compare it with at least 3 other similar house sold in the area with in the last 6 months. He/she would compare the quality of construction between the subject property and other comparable property, number of rooms, finished or unfinished basement, covered area, total area etc. and would come to a comparable value of the subject property. This way of finding the fair market value would be called 'comparison approach.
Moreover, he/she would also find out the value of the house by 'cost approach' wherein he/she would see the cost of the total land, then the present cost of similar construction less depreciation because of the age of the property etc. to find out a value by cost approach and then based on both approaches he/she would determine the 'fair market value' of the house at that point of time. May be if you talk to an appraiser, he/she would be in a position to shed more light on it as it is NOT my area of specialization.
As far as bringing all those 'culprits' to the book, its some thing on which neither you nor I have any control but I have read in papers some time that the investigation would be launched and some(??) heads would roll.
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Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
Thanks Pramodji for the valuable info. I will actively looking for any indications if anyone from US sub-prime scam is actually brought to justice...
The latest I heard on the radio was the $700 Billion package will be used to re-negotiate the "bad" mortgages and foreclosures and bailout the banks.
There is still no word about catching the real scamsters since most of them in Washington and a few already on the US congress or dear friends of the Congressmen...
Hiren
