In question is the CMHC’s use of Emili, a database of properties that interprets a number of factors in analyzing a home’s actual worth. Emili will use past sales of homes in a similar neighbourhood or postal code to suggest a property in question could go for the same amount. The problem is without an appraiser actually inspecting that specific property, Emili may be overvaluing its worth raising not only the price but the amount a Canadian must borrow to pay for it. As a result it not only affects the home prices but may be part of the reason why Canadians are so swamped in debt.
The CMHC has defended its use of Emili saying the database is updated regularly with the latest information that is reviewed for accuracy.
“This system is one tool used by CMHC underwriters located across the country to assess the homebuyer's application for mortgage loan insurance,” the agency said in a statement.
But Canadians have a right to remain skeptical. Analysts and even insiders associated with the CMHC say the agency is using Emili as a fast-track for home appraisal and as a means to cut out the cost of appraisers more commonly than it should. The CMHC says it is thorough in determining a specific property’s actual value instead of relying on averages of previous sales; however, the very use of Emili points to the contrary.
Cutting costs is a key for any business’ growth and prosperity, Canadians will understand that. But when those cut costs for a company end up costing the average Canadian perhaps thousands of dollars more than they should be borrowing, the ethics and even legality of Emili and tools like it should be called into question. The debt levels in Canada are regularly warned as being too high and if the CMHC’s appraisal policies have contributed to that, they have a lot to answer for.