Thursday, March 23, marks one year since the Interagency Working Group on Property Appraisal and Valuation (PAVE) published its action plan to curb cases of bias in housing evaluation process.
Directed by US Department of Housing and Urban Development (HUD) Secretary Marcia Fudge and White House National Policy Advisor Ambassador Susan Rice, the PAVE task force revealed their action plan a year ago and says their efforts have marked “critical progress” in their efforts to make the homebuying process more equitable for people of color.
“In just 12 months, the PAVE Task Force has made critical progress toward full implementation of the Action Plan, including empowering consumers with new tools and increased awareness of assessment bias; Leverage data to identify trends and crack down on violators of assessment bias; and support a dynamic and well-trained 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 cases of appraisal bias, including writing a process for borrowers seeking Federal Housing Administration (FHA) to request a Reconsideration of Value (ROV) if they suspect that a lower than expected appraisal may have resulted from bias. HUD too Announced this week that it had awarded $54 million in grants in 42 states designed to curb evaluation bias.
The Evaluation Subcommittee of the Federal Council of Financial Institutions (ASC) held a audience in January regarding assessment bias, bringing together members of the public and private sectors to “define the problem and discuss possible solutions,” the White House said.
In October, the Federal Housing Finance Agency (FHFA) published the first publicly available data sets of aggregate statistics on appraisal records, which provided the public with access to data and trends found in appraisal reports.
“Using this new data, academic researchers have already published new analyzes illustrating stark differences in home valuations between 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 monitoring and enforcement actions, and could facilitate new investigations related to property valuation.”
The White House also says its goal is to change the nature of the appraisal profession itself, “by taking steps to eliminate unnecessary educational and experience requirements that make it difficult for underrepresented groups to enter the profession and to strengthen fairness, fair housing, and fair loan training for existing appraisers.”
In January, the VA released new guidance for its own appraiser workforce that “enhances screening procedures for potential discriminatory bias in appraisal reports submitted by VA fee panel appraisers, and asks all appraisers to VA fee panel and lender-approved personnel involved in the appraisal. bias, fair housing and fair lending training,” the White House said.
In 2022, the federal Subcommittee on Appraisals awarded a grant to the state of Mississippi to facilitate a pathway to an appraiser license for underrepresented groups, as 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’s one-year anniversary publication of its PAVE initiative follows several major federal actions on appraisal bias in March.
Earlier this month, the Justice Department and the Consumer Financial Protection Bureau filed a declaration of interest in a lawsuit against LoanDepot and 20/20 Valuations alleging that racial bias resulted in a lower valuation for a Maryland couple. By filing the declaration of interest, the agencies are effectively saying that the lenders Will be responsible if pricing discrimination occurs.
And in perhaps the biggest shakeup in the appraisal and valuation space in decades, fanny mae recently announced that traditional appraisals would no longer be the default standard. The GSE updated its sales guide to include more options for property appraisals, including value acceptance, formerly known as appraisal waivers, as well as “value acceptance plus property data and hybrid appraisals.”
