Bank of America Appraisals Reviewed in India

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Bank of America Appraisals Reviewed in India

Bank of America Reportedly Sending Property Reviews to India

Bank of America reportedly opened a unit in India to review valuation reports in an effort to boost its share of the U.S. mortgage market at a lower cost, Bloomberg reported June 28.

Workers in the new Bangalore office use checklists to decide if appraisals are complete, according to people who talked to Bloomberg on the condition of anonymity. Bank of America also eliminated positions at its Plano, Texas-based LandSafe appraisal division, which made $78.8 billion in loans in 2012.

“One of the biggest problems in the mortgage business is all the paperwork involved, and how do you engineer it to reduce the bottlenecks,” Bert Ely, an independent banking consultant in Alexandria, Va., told Bloomberg. “With offshoring, the potential for problems is always there, but it’s hard to be critical for trying to minimize costs.”

Like many lenders, Bank of America needs to increase revenue and cut spending in order to compensate for sub-par loan growth and new government regulations. The bank spent in excess of $45 billion to settle disputes related to faulty mortgages and foreclosures and is among the most aggressive cost-cutters with Chief Executive Officer Brian T. Moynihan looking to save $8 billion per year, Bloomberg reported.

The bank was the fourth largest mortgage lender in 2012 — claiming roughly 4 percent of the market; in 2008 it made $315 billion and accounted for more than 20 percent of the market, Bloomberg reported.

According to LandSafe’s website, the company employs more than 2,000 U.S.-based associates. Along with appraisals for new home loans, the unit also conducts valuations of the bank’s portfolio of delinquent loans — 667,000 as of March 31. The lender Appraisal Institute of LandSafe employees February 25, saying they weren’t needed because the number of delinquent loans had dropped.

Bank of America spokesman Terry Francisco told Bloomberg that the lender’s program prevents paperwork errors from delaying loan applications and that the overseas completeness checks don’t replace in-depth reviews done by licensed U.S. staff.

“The overall consideration isn’t necessarily cost, although cost can be an element,” Francisco told Bloomberg. “What we’re looking for is if there are patterns in certain areas where it looks like the reviews aren’t necessarily needed anymore.”

The U.S. based reviewers usually have at least five years of experience as appraisers and are required to verify accuracy by conducting independent reviews that align with industry standards, Bloomberg reported. The checklists in India cover a total of 17 items, including whether the appraiser signed the report and included photos.

Relying more heavily on checklists could increase the possibility that inaccurate reports will go unnoticed, according to Karen Mann, SRA, a Discovery Bay, Calif., appraiser who provided testimony in 2011 for the Financial Crisis Inquiry Commission’s report, which investigated the reasons behind the housing bubble and subsequent credit crunch.

“Experienced, licensed appraisers know the shortcuts people take, so those reviewers can be invaluable,” Mann testified, Bloomberg reported. “With the checkboxes, they’re looking for things that don’t really have anything to do with values.”

LandSafe workers complained last year about a reduction in review work and its impact on their compensation and job security, an individual with direct knowledge of the internal discussions told Bloomberg. At the time, LandSafe executive Tracy Sanderson said that management couldn’t expand the number of reviews due to cost; this time Sanderson didn’t return Bloomberg’s requests for comment.

Image credit flickr - Mike Mozart
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6 Responses

  1. Desiree Mehbod Desiree Mehbod says:

    Why am I not surprised?

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  2. Jeremy Hall Appraisals - Colorado Jeremy Hall Appraisals - Colorado says:

    Total BS, is right. Being that I immediately hang up on most foreign callers, I suppose I’ll never talk to these people. India real estate is nothing like the US, and they have inadequate reference to be effective reviewers. I’d rather have nothing to do, than have to deal with these people. Companies can not be effective in outsourcing goals, if the customers and vendors refuse to deal with outsourced representatives.

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  3. Retired Appraiser Retired Appraiser says:

    Are you shocked?

    An appraiser named Dustin Harris continues to make his rounds online advocating hiring typists in India to write your report for you.

    If we can find a way to outsource the inspections and analysis as well I do believe we can turn this into a minimum wage job again.

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  4. Kathy says:

    They were doing this in 1993-94. They would UPS the hard copies over there. Wells Fargo too. Whay are you surprised? Walmart decided not to open 3 new centers in DC today because they would have to pay amandatory $12.50 per hour to all their employees. Hello

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  5. Baggins - Questions on updated XML software Baggins - Questions on updated XML software says:

    Update: There is no more checklist. Now the XML reviewer scrapes a thousand point deal and these india reviewers are always over reaching and not following the FNMA CU guidance for underwriters, routinely noting every silly stipulation possible. On a brighter side, you know when you’re dealing with the overseas reviewers. They don’t have a clue how to deal with the XML auto results. I like to fill in every line with a reiteration statement. Like check box no for something, then free write nope, verified, or something pointed.  Funny story, that brings up a red flag if the reviewers have maximized their xml alert peramiters. I get these interesting stips where the reviewers notes state;  Too many warnings to count. They strike out in an alarmist fashion, just sure they’ve got a problematic report.  And they send the report on to the senior underwriter for verification and direction. Then not mysteriously, the actual correction requirements are limited to some silly one or two item revision, and nothing else. While the disregarded stips started with illogical items like please explain why you made the statement does not have this, and also checked the no check box. Such poorly positioned review services that they literally would get an F in 1st grade english. I can spot an overseas or outsourced underwriter a mile away. They are devoid of logic and place absolute trust in XML 1000 point review.

    There are several names for major XML review softwares and systems now, which are rarely discussed in the appraisal circuit. Thanks again to the major appraisal software companies for lining those systems up for us. With friends like this, who needs enemies? I’m getting more interested as to who owns, who sells, and who profits from the use of the varied XML review softwares. If anyone knows more about these systems, I’d like to learn more about them.  It seems obvious the xml review software is quite similar to EO review software integrated into major appraisal platforms. The smoke and mirrors effect is how the lenders and clients can turn up review criteria, but appraisers do not have those same user options for review criteria control. If these xml review softwares that underwriters use originate from major appraisal software companies, there is a conflict of interest here if the appraisal software companies are limiting the appraisers ability to alter review peramiters, but are then extending that ability to freely alter review peramiters to the underwriters and such. My name is Mr appraisal duck. You can find me at the carnival shooting range, floating left to right on the metal track. Good luck hitting this target, the vendor keeps the bb sights a millimeter off target. You have to wing it and be a little intuitive. If you do manage to hit me, I’ll spin around a few times, and land right back in the same place you found me.

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