How Can a U.S. Property's Value Be Determined by Someone in India?

Bloomberg News posted an article the other day that really struck a chord with me. First off no one ever likes to here that jobs for potential American workers are being moved to another country, but I also thought about the absurdity of the change referenced in the article.

 

The article states that 4 Bank of America insiders have reported that appraisal review will now be completed by a review center in Bangalore, India. Yes, INDIA. We all know that many call centers have been outsourced to India, but this change of venue really floored me. The premise, of course, is to lower Bank of America’s costs throughout the mortgage process.

 

That is all fine and well if the savings are passed along to borrowers, but will they be? Plus, and here is my #1 problem with this, how can people who are unfamiliar with U.S. homes and the housing market here correctly assess the accuracy of these appraisals? Unless you are familiar with the market in a particular area and understand the appraisal process, you can not be expected to accurately assess the validity of the comparable sales chosen by the appraiser to use or whether or not the property is located in an upward-swinging market. There are so many factors that have to be taken into account, and not they are proposing that the reviewers merely assess these appraisals with a checklist form. With prices in many areas on the rise and comparable sales sometimes hard to find, I think this policy change could throw a monkey wrench in Bank of America’s plan to rebuild its share of the U.S. mortgage market. For every loan that gets denied due to appraisal review, Bank of America loses thousands of dollars in paid wages for man hours spent working on that file, and of course that also means no revenue from the interest of that loan.

 

It looks like I will be continuing my practice of referring clients to mortgage brokers instead of large faceless lenders.