The morgage insurers (CMHC and Genworth) are wary of the housing trends in the booming Calgary market. I see of lot of homeowners are trying to capitalize on the 30%+ increase in values in less than a year while none of the original equity is retained. This presents a risk to the lender and the insurer in the event that there is even a small market downturn coupled with rising interest rates.
If the mortgage is conventional, IE 25% down, an full appraisal is done on the property anyway. CMHC's automatic underwriting system uses property sales of comparable homes in the neighbourhood in the last 6 months to validate market value, but this system can be fooled and is not fraud proof. CMHC however rarely does actual appraisals in today's market. Genworth's property database is much smaller than CMHC's and therefore much more driveby and or full appraisals are requested.
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