As part of a move to shed 900 employees, Washington Mutual Inc. is all but eliminating its in-house residential appraisal department.
Layoffs announced Thursday include 350 employees in the home loans group, of which 320 are members of the residential home appraisal team, said Washington Mutual spokeswoman Olivia Riley. Riley said the bank will consolidate appraisal work formerly performed in-house and by hundreds of outside vendors with two national appraisal management companies.
Washington Mutual had already outsourced “a large percentage of our appraisal work,” and contracting with just two outside companies instead of hundreds allows the bank to save money by achieving better economy of scale, Riley said.
Jonathan J. Miller, whose appraisal firm has been a longtime Washington Mutual contractor, identified the two companies taking over the bank’s residential appraisals as First American Corp. and Lender’s Service Inc. Riley would not confirm or deny the report, saying Washington Mutual has yet to officially announce the two vendors.
Washington Mutual’s appraisal department “had been one of the few remaining of the national lenders that actually looks at the reports that come in, to assess the collateral for their loans,” Miller wrote on his blog, Soapbox.
Miller questioned whether Washington Mutual will be able to rely on outside companies to produce reliable appraisals. Riley said bank employees will continue to oversee the appraisals, making sure that it meets Washington Mutual’s standards.
The move does not represent a major shift in approach for Washington Mutual, Riley said, but is the continuation of a long-term strategy to increase the company’s efficiency by outsourcing jobs in several departments and eliminating others “to meet current and anticipated market conditions.”
“We had been working with hundreds of vendors so you can imagine, it’s a pretty big percentage (of appraisals) that were already outsourced,” Riley said.
Washington Mutual cut 1,400 jobs in May, just three months after announcing the closure of 10 of its 26 home-loan processing centers, eliminating 2,500 jobs.
Riley said Washington Mutual is hoping the two vendors who will handle residential appraisals will hire many of the bank appraisers who are being laid off. She said the vendors may also hire other firms to do a portion of the bank’s appraisals.
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