When I bought my house in 2002, I only had a minimal amount to put towards a down payment. As such, I was obliged to get CMHC Mortgage Loan Insurance for the mortgage in order to protect the original lender against default. No appraisal, inspection or site visit were required. Just a credit check and a recent pay stub were sufficient to get the mortgage in less than two days. Three years later in 2005, after being offered a less-than-favourable mortgage renewal rate – I moved the mortgage to a different lender. At that time, a “drive-by” assessment was done (never setting foot in the house), which was paid for by the new mortgage lender. Another credit check and a recent pay stub were sufficient to transfer the mortgage, with no fees.
It was a completely different experience when last month – with less than two months of mortgage payments remaining – I applied for a $50K HELOC in order to finance replacement of the roof and other upgrades. With the same lender, I had to pay for a full site inspection from an appraiser, lawyer fees, legals fees, etc. – at total of $1200. Pays stubs were a start, but multiple letters from supervisors assuring past and future employment were required. Verification of house insurance, current liabilities, my credit history, and verification of assets (investments) was an arduous task. After two weeks, the HELOC loan was finally approved.
It seems like when the lenders have a little “skin in the game” – as with a HELOC, they practice due diligence. When CHMC is underwriting the loan, it is a completely different story.