Media Release - Appraisal Institute of Canada

FOR IMMEDIATE RELEASEAIC Responds to OSFI’s Proposed Mortgage GuidelinesOTTAWA, May 3, 2012 --- The Appraisal Institute of Canada (AIC) recognizes the Office ofthe Superintendent of Financial Institutions Canada (OSFI) for taking steps to further strengthenthe mortgage underwriting process, and for giving organizations like AIC the opportunity tocomment on the Draft Guideline B-20 (Guideline).The AIC is the premier real property valuation association in Canada. As a self-regulatingprofessional organization with over 4700 members, the AIC grants the distinguished AccreditedAppraiser Canadian Institute (AACI) and Canadian Residential Appraiser (CRA) designations toindividuals across Canada and around the world. These designations recognize highly qualifiedappraisers who have completed the AIC's rigorous curriculum, experience and examinationrequirements.In its review of the proposed OSFI Guideline, the AIC has considered the implications of currentand proposed business practices related to the appraisal and collateral components of themortgage process.According to AIC President, Michael Mendela, “The proposed measures announced by OSFI areprudent and aimed at ensuring the continuing soundness of the real estate market, which is acornerstone of the Canadian economy. This is a good example of how Canada’s bankingregulations and AIC’s standards for evaluation can do much to protect not only consumers, butalso the lending institutions.”“Bidding wars for homes are happening in certain markets like parts of Toronto,“ says AIC’sCEO Keith Lancastle, “Anytime you get into a seller’s market where you are looking at multipleoffers, the market in that place and time increases the value of the property. What somebody paystoday might not be a lasting value”, he says, “and a professional appraisal provides a realitycheck.”The AIC’s comments to OSFI are intended to ensure that:• the Canadian public is protected and that there is full disclosure of the Federally-Regulated Financial Institutions’ (FRFIs) Residential Mortgage Underwriting Practicesand Procedures (RMUPP) and the appraisal process and fee charged to the consumer;

• Canadian household indebtedness is maintained at levels where Canadian borrowers canmeet their financial obligations;• should Canadian borrowers’ financial situation change to a less favourable position, thattools are available to assist them in the event or prevention of default;• the market value of the collateral required to support a mortgage application is providedby independent designated or licensed appraisal experts, who are impartial to the process,and can provide a fair market value assessment for mortgage lending or mortgageinsurance purposes; and• FRFIs disclose their enterprise risk levels and risk mitigating strategies relating to thecollateral.The AIC strongly supports this Guideline, which sets out OSFI’s current expectations for prudentresidential mortgage underwriting for all FRFIs. The AIC also strongly recommends that thesame expectations apply to non-FRFIs, who represent a growing segment of the lending industry,and any organization that provides mortgage financing to Canadian borrowers.ABOUT AICFounded in 1938, the Appraisal Institute of Canada is the premier real property valuationassociation in Canada. The Institute establishes appraisal practice standards and confers thedesignations Accredited Appraiser Canadian Institute (AACI) and Canadian ResidentialAppraiser (CRA) to members who fulfill its professional requirements.Appraisal Institute of Canada (AIC) designated appraisers, AACIs and CRAs, are highly qualifiedreal property experts who provide reliable estimates of value. They also provide a wide range ofvaluation and advisory services to corporate Canada, including the lending community. Asleading professionals in their field, AIC members play an essential role in helping lenders managerisk and they help protect borrowers by providing reliable opinions of value and comprehensiveanalysis for real estate transactions.To schedule a TV, radio or newspaper interview or for further information about the AppraisalInstitute of Canada please contact: Scott Patterson, Director, Marketing & Communications, Tel.(613) 234-6533 ext. 224, scottp@aicanada.ca. Website: www.aicanada.ca