White House releases plan for combating inequities in home appraisals
An interagency task force released a plan for combating discrimination in the appraisal industry in conjunction with the White House on Wednesday, fulfilling a promise made when it first convened last summer.
The Property Appraisal and Valuation Equity task force’s plan commits federal agencies to proposing legislative change as a means of modernizing the governance of valuations, according to a White House press release. The task force is co-chaired by Marcia Fudge, secretary of the Department of Housing and Urban Development, and Domestic Policy Advisor Susan Rice.
The plan also calls for federal agencies to provide consumers with steps they can take if an appraisal is lower than expected and demands the establishment of quality-control standards for automated valuation models to prevent algorithmic bias. The plan additionally aims to improve the diversity of the appraiser workforce by lowering unnecessary barriers to entry related to education and experience. In addition, it sets out to strengthen fair lending and anti-bias training, and calls upon federal agencies to further aggregate appraisal data for further study.
Government-related secondary mortgage-market investors Fannie Mae and Freddie Mac have already done some preliminary research on appraisal bias since the task force was formed. Fannie found refinance appraisals tend to be undervalued for Black borrowers and frequently overvalued for white ones based on comparisons to automated valuation models. Freddie found appraisals for homebuyer loans are more prone to fall short of purchase-contract prices in Black- or Latino-majority census tracts than areas that are primarily white.
Fannie and Freddie maintain a large database of valuation information and recently announced that they are working on developing a new uniform residential appraisal report.