Thursday, March 23 marks the one-year anniversary since the Interagency Task Force on Property Appraisal and Valuation Equity (PAVE) released its action plan to curb instances of bias in the housing appraisal process.
Led by U.S. Department of Housing and Urban Development (HUD) Secretary Marcia Fudge and White House Domestic Policy Advisor Ambassador Susan Rice, the PAVE task force revealed its action plan one year ago and claims that its efforts have amounted to “critical progress” in its efforts to make the homebuying process more equitable for people of color.
“In just 12 months, the PAVE Task Force has made critical progress towards fully implementing the Action Plan, including by empowering consumers with new tools and greater awareness of appraisal bias; leveraging data to identify trends and crack down on offenders of appraisal bias; and supporting a well-trained and dynamic appraiser profession,” the White House said in a statement shared with HousingWire.
Over the past 12 months, the White House says it has helped “empower consumers” to take action against instances of appraisal bias including the drafting of a process for borrowers seeking Federal Housing Administration (FHA) financing to request a reconsideration of value (ROV) if they suspect a lower-than-expected appraisal may have resulted from bias. HUD also announced this week that it had awarded $54 million in grants across 42 states designed to curb appraisal bias.
The Federal Financial Institutions Examination Council’s Appraisal Subcommittee (ASC) held a hearing in January regarding appraisal bias, bringing members of the public and private sectors together to “define the problem and discuss potential solutions,” the White House said.
In October, the Federal Housing Finance Agency (FHFA) published the first publicly available datasets of aggregate statistics on appraisal records, which provided the public with access to data and trends found in appraisal reports.
“Using these new data, academic researchers have already published new analyses illustrating stark differences in home valuations across racial and ethnic groups,” the White House said. “FHFA, along with HUD, [the U.S. Department of Agriculture (USDA) and the U.S. Department of Veterans Affairs (VA)], are working to build a Federal database to share appraisal data across the Federal government [which] could allow agencies to share enhanced oversight and enforcement actions, and could facilitate new research related to property valuation.”
The White House also says that it is aiming to change the nature of the appraisal profession itself, “taking steps to remove unnecessary educational and experience requirements that make it difficult for underrepresented groups to access the profession and to strengthen anti-bias, fair housing, and fair lending training of existing appraisers.”
In January, the VA released new guidance for its own appraiser workforce which “enhances oversight procedures to detect potential discriminatory bias in appraisal reports filed by VA fee panel appraisers, and calls upon all VA fee panel appraisers and lender-approved staff to participate in appraisal bias, fair housing, and fair lending training,” the White House said.
In 2022, the federal Appraisal Subcommittee awarded a grant to the state of Mississippi to facilitate a path toward obtaining an appraiser license from underrepresented groups, since the state has a shortage of appraisers in certain underserved communities.
“Mississippi’s success has inspired several other states to express interest in replicating the program,” the White House said.
HUD publicizing the one-year anniversary of its PAVE initiative follows several major federal actions on appraisal bias in the month of March.
Earlier this month, the Department of Justice and the Consumer Financial Protection Bureau filed a statement of interest in a lawsuit against loanDepot and 20/20 Valuations that alleges racial bias resulted in a lower valuation for a Maryland couple. In filing the statement of interest, the agencies are effectively saying lenders will be held liable if appraisal discrimination occurs.
And in perhaps the biggest shakeup to hit the appraisal and valuation space in decades, Fannie Mae recently announced that traditional appraisals would no longer be the default standard. The GSE updated its Selling Guide to include more options for property valuations, which include value acceptance – formerly known as appraisal waivers– as well as “value acceptance plus property data and hybrid appraisals.”