Once the borrower has executed the term sheet and returned it, along with the valuation fee and application fee, the next step is to order the valuation report.
The valuation report can be addressed to the private mortgage lender or, more often, it is addressed to one or more banks. This is because there are very few valuers who will address a valuation report to a private mortgage lender. This is because their professional indemnity insurance does not cover valuations addressed to private mortgage lenders.
The reason why professional indemnity insurers do not like valuers preparing valuation reports for private mortgage lenders is that private mortgage lenders, historically, have a greater propensity to suffer a mortgage shortfall and sue valuers.
The private mortgage lender, not being the party to whom the valuation report is addressed, can never sue the valuer for negligence because the valuer owes them no duty of care. This makes it extremely important for the private mortgage lender to perform additional due diligence on the value of the