Computers to blame for Yarmouth foreclosures (in part)

For those of you interested in housing or the issues surrounding the mortgage credit system in Canada I have included this link to a CBC podcast dealing with the foreclosure of over 100 apartment units in Yarmouth, NS:

http://www.cbc.ca/podcasting/pastpodcasts.html?69#ref69

According to the story, potential mortgage fraud is being investigated in the western Nova Scotia town.  Apparently 2 apartment building owners have had 120 apartment units foreclosed upon, leaving many residents homeless after being evicted.

The podcast has an interview that questions the use of automated valuation systems in assigning value to the properties for financing.  The interviewee suggested that had lenders used a professional real estate appraiser, that potential mortgage fraud and inflated purchase prices could have been detected earlier. 

The automated valuation systems are cheaper for lenders in the short run, but the podcast leaves me thinking that having a set of human eyes inspect the properties and investigate the values could have saved lenders some problems and money in this case.