White House Taskforce Releases Action Plan to Address Racial and Ethnic Bias in Home Valuations
This week, the White House Interagency Task Force on Property Appraisal and Valuation Equity (PAVE) released an Action Plan to “root out racial and ethnic bias in home valuations”. According to a White House Factsheet, this Action Plan “ when enacted, represents the most wide-ranging set of reforms ever put forward to advance equity in the home appraisal process.” The Task Force is co-chaired by HUD Secretary Marcia L. Fudge and White House Domestic Policy Advisor Susan Rice includes the following Federal Officials: Attorney General of the United States, Secretary of Agriculture, Secretary of Labor, Secretary of Veterans Affairs, Comptroller of the Currency (OCC), Chairman of the Board of Governors of the Federal Reserve (FRB), Chairman of the Federal Deposit Insurance Corporation (FDIC), Chairman of the National Credit Union Administration (NCUA), Director of the Federal Housing Finance Agency (FHFA), Director of the Consumer Financial Protection Bureau (CFPB), and Executive Director of the Appraisal Subcommittee (ASC).
According to HUD’s press release, “the Action Plan details a set of commitments and actions, most of which can be taken using existing federal authorities, that will help every American to have a chance to build generational wealth through homeownership. Member agencies will take the following actions:
Make the appraisal industry more accountable. The Action Plan lays out steps to enhance oversight and accountability of the appraisal industry, which has long operated in a relatively closed and self-regulated framework and has not been effective at addressing deep-rooted inequities. Specifically, it commits federal agencies to create a legislative proposal to modernize the governance structure of the appraisal industry, and improves coordination and collaboration between federal enforcement agencies to better identify and redress discrimination in appraisals.
Empower consumers with information and assistance. The Action Plan includes concrete efforts to empower homeowners and homebuyers on effective steps they can take when they receive a valuation that is lower than expected. For example, federal agencies commit to issue guidance and implement new policies to improve the process by which a valuation may be reconsidered.
Prevent algorithmic bias in home valuation. Federal agencies that regulate mortgage financing commit to including a nondiscrimination quality control standard as part of a forthcoming proposed rule establishing quality control standards on AVMs (Automated Valuation Models). This will ensure AVMs do not rely upon biased data that could replicate past discrimination.
Cultivate an appraiser profession that is well-trained and looks like the communities it serves. According to the Department of Labor’s Bureau of Labor Statistics, the appraiser/assessor profession is roughly 97 percent white, making it one of the least diverse professions in the country. The Action Plan lays out a series of actions 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.
Leverage federal data and expertise to inform policy, practice, and research on appraisal bias. The Action Plan proposes the development of an aggregated database of federal appraisal data to better study, understand, and address appraisal bias, complemented by a working group composed of subject matter experts from stakeholder agencies to develop a research agenda on appraisal bias.”
This issue and the PAVE Action Plan were also discussed, during a Senate Committee on Banking, Housing and Urban Affairs hearing on Strengthening Oversight and Equity in the Appraisal Process. Witnesses testifying at this hearing, included Melody Taylor, Executive Director of HUD’s Property Appraisal and Valuation Equity (PAVE) Task Force, and James Park, Executive Director of the Appraisal Subcommittee of the Federal Financial Institutions Examination Council. In her prepared testimony, Taylor stated, “The product is a blueprint describing the history and impact of persistent mis-valuations, early progress that the Task Force has already made toward transforming the industry, 21 concrete actions, and future PAVE agency commitments to ensure equitable access to opportunity through homeownership.”
NAHMA Members can read the full PAVE Action Plan and follow the work of the PAVE Task Force at https://pave.hud.gov/ .