Leading property valuer Herron Todd White has called for an immediate ban on valuation firms using unqualified university students to inspect residential properties without supervision, amid claims these practices are deceptive and misleading.
It is alleged some valuation firms in Australia, particularly in Western Australia and Victoria, are using inexperienced students to inspect and report on properties before having a Certified Practising Valuer sign those reports for mortgage lending clients.
The professional indemnity of valuation firms is written on a 'claims made' basis, so the policy enforced is the one in place at the time a claim is made, rather than at the time of any incident. This means all valuations made by students or uncertified valuers could be excluded.
Any Australian bank or non-bank lender who has been intentionally or otherwise implicated in this practice could be uninsured on every property valuation file that has been created by a student.
If this proven to be true, Australia's mortgage lending industry could be facing massive financial exposure on defaulted loans through possible 'deceptive and misleading' practices within the property valuation industry, with these valuation firms' professional indemnity insurance potentially null and void in the event of a claim.
Brendon Hulcombe, CEO of Herron Todd White, slammed the practice, claiming it disgraced reputable valuation firms who are operating ethically, and said it must be stopped immediately. He said that the timing was critical when considering the recent local interest rate hikes and the sub-prime mortgage meltdown in the United States.
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