 |
Home | En Español | Contact Us | A to Z |
 |
 |
ACTION PLAN | GET HELP | GET INVOLVED | GET INFORMED | ABOUT PAVE |
 |
||||||||||||||||||||
|
EXECUTIVE SUMMARYAction Plan to Advance Property Appraisal and Valuation EquityThis is the Executive Summary of the Action Plan.
| |||||||||||||||||||
Action Plan Summary
 |
Just imagine if instead of denying millions of Americans the ability to own their own home and build generational wealth, we made it possible for them to buy a home and build equity into that [...] home and provide for their families.PRESIDENT JOSEPH R. BIDEN |
Introduction
For many Americans, the dream of homeownership and the long-term financial security this investment represents is a dream deferred or unrealized. Homeownership is often hindered by inequities within the current home lending and appraisal processes, which research shows disproportionately impact people in communities of color. Though this broken system was created decades ago, perhaps the biggest drivers of the racial and ethnic wealth gap today are the racial and ethnic disparities in rates of homeownership and in the financial returns associated with owning a home. Today, the median white family holds eight times the wealth of the typical Black family and five times the wealth of the typical Latino family. |
 |
Today, the median white family holds eight times the wealth of the typical Black family and five times the wealth of the typical Latino family.
On June 1, 2021-the centennial of the Tulsa Race Massacre-President Biden announced the creation of an interagency initiative, the PAVE Task Force ("the Task Force"). Co-chaired by U.S. Department of Housing and Urban Development Secretary Marcia Fudge and Domestic Policy Advisor Ambassador Susan Rice, the Task Force was directed to evaluate the causes, extent, and consequences of appraisal bias and to establish a transformative set of recommendations to root out racial and ethnic bias in home valuations.
The 13 member agencies of the Task Force engaged philanthropic organizations, academics, civil rights leaders, housing industry stakeholders, and everyday Americans who currently own, or aspire to own, a home. The Task Force heard their stories, perspectives, and ideas. As a result of this engagement, the member agencies of the Task Force committed to a set of actions to help ensure that every American has a chance to build generational wealth through homeownership.
The Impact of Inequitable Property ValuationThroughout the 20th century, people of color were denied equitable access to housing as federal, state, and local governments systematically implemented discriminatory policies that led to housing segregation. These policies contributed to a gap between the values of homes in communities of color and predominantly white neighborhoods. Despite the passage of civil rights laws, most notably the Fair Housing Act, that were designed to ensure equal opportunity for homeownership, market value disparities persist and are a significant factor in today's sprawling racial wealth gap (https://prrac.org/newsletters/pr-summer-preview-2021.pdf). The Purpose and Importance of AppraisalsAn appraisal is a critical element of homebuying and lending processes as it establishes the value of the property as the collateral for a home loan. The difference between a property's value and the homeowner's loan amount generally represents the homeowner's home equity. One of the core benefits of homeownership is that a homeowner can build wealth by leveraging and growing that home equity. Greater home equity makes it less likely that homeowners will fail to repay a mortgage if they experience financial hardship. Therefore, the property valuation is a critical input to the risk evaluations that surround the lending process. Home loan lenders hire appraisers specifically to provide independent, fair, and objective estimates of the market value of a property so that lenders can accurately evaluate risk. Most commonly, appraisers estimate the value of a home by comparing it to similar, recently sold properties in comparable neighborhoods. An appraiser's opinion of value is very dependent on that appraiser's selection of comparable properties and the adjustments and weighting the appraiser applies to those selections. This decision has subjective elements that depend on the expertise of the appraiser and the appraiser's familiarity with the neighborhood, resulting in a natural imprecision of the appraiser's estimate of the home's value. |
 |
 |
New Studies Validate Appraisal Bias in the U.S. Housing MarketResearchers have observed a market value gap between majority-Black and majority-white neighborhoods for decades. On average, homes in majority-Black neighborhoods are valued at less than half of those in neighborhoods with few or no Black residents. Statistical analyses (www.brookings.edu/research/devaluation-of-assets-in-black-neighborhoods/) show that accounting for neighborhood and property characteristics and amenities-such as the age of the property or its proximity to public transportation-does not explain the entire disparity. Recent research has identified appraisals as one of the drivers of the gap. New research from Freddie Mac (2021) (www.freddiemac.com/fmac-resources/research/pdf/202109-Note-Appraisal-Gap.pdf) using census data finds 12.5 percent of appraisals for home purchases in majority-Black neighborhoods and 15.4 percent in majority-Latino neighbor-hoods result in a value below the contract price (the amount a buyer is willing to pay for the property), compared to only 7.4 percent of appraisals in predominantly white neighborhoods. This research corroborates prior observations that a neighborhood's average appraised property value tends to decrease as the share of historically marginalized populations increases (https://academic.oup.com/socpro/article-abstract/68/4/1051/5900507?redirectedFrom=fulltext). Very recently, a study of appraisal commentary (www.fhfa.gov/Media/Blog/Pages/Reducing-Valuation-Bias-by-Addressing-Appraiser-and-Property-Valuation-Commentary.aspx) (the free-form narrative section of an appraisal report, reflecting the appraiser's reasoning for the property valuation opinion) revealed that appraisers sometimes make racial and ethnic references. For example, the study found that one appraiser wrote that a majority-white area was "not especially diverse ethnically," and another appraiser noted that residents of a "predominantly Hispanic" neighborhood have "assimilated their cultural heritage" into the neighborhood. |
On average, homes in majority-Black neighborhoods are valued at less than half of those in neighborhoods with few or no Black residents.
The Impact of Undervaluation for Homebuyers, Sellers, and Communities
An appraisal that is below the contract price in a home sale can sometimes result in a higher required down payment for a home buyer. This unexpected, out-of-pocket increase can often cause a sale to fall through (www.fanniemae.com/research-and-insights/publications/housing-market-effects-appraising-below-contract), potentially preventing a prospective buyer from purchasing a home. It can also result in a downward price renegotiation, helping the buyer, but reducing the sellers' financial gains, which may in turn hinder that family in purchasing their next home.
A low valuation in a refinance transaction can be similarly damaging to a homeowner, reducing the cash-out available and in some cases affecting the refinance interest rate and mortgage insurance premiums the homeowner pays, which can result in substantial costs over time.
A widespread pattern of undervaluation in communities of color can impact an entire neighborhood. Each instance of a lower purchase price becomes a candidate for the next appraiser to choose as a comparable sale for the next appraisal in the community, carrying the impact of the lower value forward.
Over time, even a slight imbalance of undervaluation can have a significant effect on the property values in a community, and hence on the accumulated wealth of homeowners in that community. This effect can hinder families in that community from leveraging equity to pay for college, pay for repairs, or use as a buffer during a financial hardship. Reduced property values can also diminish the property tax revenue that funds the maintenance and improvement of community schools and amenities.
Which Laws Enforce Appraisal Equity?
Home appraisals, a critical component of the homebuying and lending processes, fall within the scope of fair housing and fair lending laws.
Congress enacted the landmark Fair Housing Act in 1968 to lift barriers that created separate and unequal neighborhoods on the basis of race, color, religion, and national origin. Subsequent amendments to the Fair Housing Act also prohibit discrimination on the basis of sex, disability, and familial status.
Similarly, the Equal Credit Opportunity Act (ECOA) prohibits discrimination by creditors on the basis of race, color, religion, national origin, sex (which includes sexual orientation and gender identity), marital status, age, or whether all or part of the applicant's income derives from any public assistance program, or because the applicant has in good faith exercised any right under the Consumer Credit Protection Act, including ECOA.
Despite the enactment of these laws, longstanding structural barriers have continued to serve as an impediment to homeownership. More than 50 years since the Fair Housing Act's passage, the racial homeownership gap is wider than ever (www.census.gov/housing/hvs/files/currenthvspress.pdf): in 2021, the Black homeownership rate reached only 44 percent, while the white homeownership rate reached 74 percent.
According to recent studies, eliminating racial disparities in rates of homeownership would shrink the wealth gap between Black and white households by 31 percent and between Latino and white households by 28 percent. Eliminating racial disparities in the amount of wealth families gain from owning a home would narrow the wealth gap by an additional 16 percent between Black and white households and by an additional 41 percent between Latino and white households (http://racialwealthaudit.org/downloads/RacialWealthGap.pdf).
More than 50 years since the Fair Housing Act's passage, the racial wealth gap is wider than ever: in 2021, the Black homeownership rate reached only 44 percent, while the white homeownership rate reached 74 percent.
Agency Commitments and Recommendations to Address Valuation Equity
Homeownership means more than shelter for many Americans; it is often their most important investment. Part of the dream of owning a home is that it presents an opportunity to not just "get by," but to one day achieve a return on investment.
The President's formation of the Task Force was inspired by the moral imperative to fix inequitable policies and practices and, above all, by his commitment to provide every American with a fair shot at wealth and prosperity.
This document is intended as an action plan, not a report of high-level recommendations. The Task Force focused on identifying concrete actions that agencies have committed to take to eliminate bias and advance equity in home appraisals.
Task Force Commitments
CATEGORY 1
Strengthening Guardrails Against Unlawful Discrimination in All Stages Of Residentials Valuation
Task Force Commitments
1.1
Clarify the application of the Fair Housing Act and ECOA to the appraisal industry to ensure apprais-ers have clear guidance on antidiscrimination obligations under current federal laws.
SPECIFIC agency actions
ACTION 1.1.1
CFPB, DOJ, VA, and HUD will issue guidance on the Fair Housing Act's and ECOA's application to the appraisal industry.
1.2
Update agencies' and Enterprises' appraisal-specific policies and guidance to reflect how nondiscrimination requirements apply to appraisers within these agencies' and Enterprises' programs.
SPECIFIC agency actions
ACTION 1.2.1
NCUA, FRB, FDIC, OCC, HUD, USDA, VA, and FHFA will ensure that appraisers or regulated insti-tutions' use of appraisals are directly included in supervisory Fair Housing Act and ECOA compli-ance requirements, and are considered in every review of relevant existing and future policies and guidance.
1.3
Issue guidance and implement new policies to improve the processes by which a valuation may be reconsidered if the initial valuation is lower than expected.
SPECIFIC agency actions
ACTION 1.3.1
HUD will require FHA lenders to track usage and outcomes of ROVs and to report this data to FHA via FHA systems, leveraging insight from VA's existing ROV process where helpful, so that HUD can better identify patterns of ROV usage and evaluate the impact ROVs might have on possible discrimination.
ACTION 1.3.2
NCUA, FDIC, OCC, and FRB will issue guidance regarding ROVs. Issues that the agencies will consider addressing in the guidance would include examples of effective practices in using ROVs, and whether there are any measures that lenders can take to encourage greater, use of ROVs. Prudential regulators will also review authorities and determine the potential for rulemaking related to ROV processes, as rulemaking would drive additional accountability be-yond that of guidance.
1.4
Strengthen the standard appraisal dataset and data collection forms to reduce opportunities for ap-praisers to apply subjective criteria.
SPECIFIC agency actions
ACTION 1.4.1
FHFA will ensure the redesigned UAD and URAR capture more objective data points and less-en reliance on free-form commentary, to reduce opportunities for subjective commentary by appraisers.
ACTION 1.4.2
FHFA will direct the Enterprises to update the URAR to increase the prominence of the nondis-crimination certification.
ACTION 1.4.3
FHFA will direct the Enterprises to update the URAR Form to strengthen the language of the form's Appraiser's Certification line item #17, in which the appraiser certifies that his or her opinion was not based on discrimination.
ACTION 1.4.4
The Task Force will examine additional elements in the URAR that may have a connection to discrimination in appraisals and will make recommendations to FHFA for potential modification:
-
Designation of Declining Market Areas: An appraiser's designation of a market's property valuation trends as "declining" on the URAR can potentially result in dis-parities in appraisals and valuations. The Task Force will evaluate how appraisers designate markets as declining, in both urban and rural settings, to ensure that the designation is used in unbiased and nondiscriminatory ways.
-
Designation of Uniform Neighborhood Boundaries: Currently appraisers have a lot of discretion in determining neighborhood boundaries, which can impact the com-parable sales that an appraiser uses. The Task Force will further explore whether designating uniform neighborhood boundaries could minimize discretion and ambi-guity in the appraisal process and potentially reduce opportunities for bias without impeding an appraiser's ability to accurately capture all the factors that inform the opinion of value. The Task Force recognizes that neighborhood boundaries are not necessarily equally clear in rural versus urban and suburban areas, and therefore any resulting guidelines will have to avoid being overly deterministic.
ACTION 1.4.5
If there are research questions that are not fully answerable with the data currently available and some gaps can be filled through changes to the data collected on each appraisal, Task Force Agencies will provide a list of data elements for FHFA to consider incorporating into its URAR and UAD redesign efforts to address discrimination.
1.5
Address potential bias in the use of technology-based valuation tools through rulemaking related to Automated Valuation Models (AVMs).
SPECIFIC agency actions
ACTION 1.5.1
Agencies participating in AVM rulemaking intend to address potential bias by including a non-discrimination quality control standard in the proposed rule.
1.6
Develop a legislative proposal that modernizes the governance structure of the appraisal industry to improve transparency and public participation in the establishment of appraisal standards and ap-praiser qualification criteria, and to advance diversity in the profession.
SPECIFIC agency actions
ACTION 1.6.1
In consultation with Congress, Task Force agencies will pursue legislation to modernize the governance structure charged with setting and enforcing the standards and qualifications cri-teria. The Task Force believes the existing governance structure needs to be fundamentally reassessed to meaningfully advance equity in the industry. This may include, at minimum: in-troducing new mechanisms for review that would screen for equity impacts in proposed resi-dential appraisal standards, appraiser qualification criteria; and proposing process changes pursuant to APA rulemaking procedures, allowing more diverse groups beyond the appraisal industry to comment and influence the final form of the criteria.
CATEGORY 2
Enhancing Fair Housing/Fair Lending enforcement and driving accountability in the industry
Task Force Commitments
2.1
Strengthen coordination among supervisory and enforcement agencies to identify discrimination in appraisals and other valuation processes.
SPECIFIC agency actions
ACTION 2.1.1
Task Force agencies will collaborate to align investigative protocols with respect to allegations of racial and ethnic bias in the valuation process. This includes identifying gaps in current methods, practices, data, and standards used by enforcement agencies when investigating complaints of alleged racial and ethnic bias in valuation processes.
ACTION 2.1.2
Task Force agencies responsible for enforcement of anti-discrimination laws in mortgage transactions will collaborate to: a) develop approaches to data analysis that identify discrimination, and b) identify case studies illustrating facts that agencies have found to support taking action on valuation discrimination.
2.2
Revise existing agreements between agencies involved in the enforcement of and compliance with fair lending and fair housing laws, as necessary, to increase collaboration among the agencies regarding appraisal discrimination.
SPECIFIC agency actions
ACTION 2.2.1
The federal banking supervisory agencies, CFPB, DOJ, HUD, VA, NCUA, and FHFA will determine whether modifications to existing MOUs or development of new MOUs are needed to improve information sharing to address appraisal discrimination.
2.3
Expand regulatory agency examination procedures of mortgage lenders to include identification of patterns of appraisal bias.
SPECIFIC agency actions
ACTION 2.3.1
NCUA, OCC, FDIC, FRB, and CFPB will, as needed, devise and implement changes to how examinations of mortgage lenders under their purview are conducted, develop examination aides and appropriate examination manual changes, and train staff on enhanced examination and data collection procedures. For example, examinations can look for evidence that a mortgage lender's compliance management programs are considering appraisal bias as a risk, can collect additional information on appraisal attributes, and can tailor exam aids to evaluate irregularities in appraisals documented in a loan file.
ACTION 2.3.2
NCUA, OCC, FDIC, FRB, and CFPB will conduct annual data analysis and reviews of their examinations, as needed, to improve their examinations' effectiveness in identifying patterns of bias in valuations.
CATEGORY 3
Building a well-trained, accessible, and diverse appraiser workforce
Task Force Commitments
3.1
Update appraiser qualification criteria related to appraiser education, experience, and examination requirements to lower barriers to entry in the appraiser profession.
SPECIFIC agency actions
ACTION 3.1.1
Task Force agencies will send a joint letter to TAF's AQB and release a joint statement, requesting consideration of the following changes to appraiser qualification criteria:
-
Reduce or eliminate AQB experience requirements. Lowering the minimum requirements set by the AQB could remove unnecessary barriers to entry that add considerable time and expense to the process of becoming an appraiser, particularly for women and people of color.
-
Provide additional justification for the college degree requirement for the Certified Residential Appraiser and Certified General Appraiser classifications or eliminate it entirely. There is little existing support that a college degree makes appraisers more ethical, accurate, or credible. Alternatively, if evidence is developed supporting a college degree requirement, automatically qualifying relevant real estate programs from accredited Institutions of Higher Education as fulfilling the credentialing requirements to sit for an exam, will expand access and pathways to the profession. Currently, no degree programs fully satisfy the AQB's education requirements for certification-even post-secondary degrees.
-
Develop a comprehensive exam as an alternative path to credentialing. Once passed, it would earn the individual a credential, which states would have the opportunity, at their discretion, to accept in lieu of some or all additional requirements. This model has had success in other professions (e.g., accountants).
3.2
Increase engagement with states' appraisal regulatory agencies to help remove barriers to entry and advance diversity in the appraiser workforce.
SPECIFIC agency actions
ACTION 3.2.1
The PAVE Task Force website will publish or link to requirements for all state-level appraiser certifications, including from states with requirements above those put forward by the AQB - thereby increasing transparency and driving state action, as appropriate.
ACTION 3.2.2
ASC staff will engage with each State Appraiser Regulatory Program in an annual session focused on advancing equity in their respective Program. Topics may include reviewing state appraiser qualifications to identify and eliminate burdensome requirements; creating employment opportunities within State Boards and personnel for people of color, women, veterans, persons with disabilities, and other underrepresented populations; and developing innovative alternatives to the trainee/supervisory appraiser model.
ACTION 3.2.3
The ASC will make available $3.3 million in grants to states annually in fiscal years 2022 and 2023 to support innovative approaches at the state level to advance more equitable state appraiser certification and licensing systems. This may include alternatives to the trainee/supervisor model, improving the trainee/supervisor process by introducing incentives or alternate ways for appraisers to become supervisors, new training that improves the effectiveness of supervisors, and education modules that shorten the timeline for becoming a licensed or certified appraiser.
ACTION 3.2.4
The ASC will conduct a technical assistance initiative to help states understand the flexibilities they possess and work with them to establish alternative pathways.
-
This could include reminding states there is flexibility with AQB experience requirements and that states have the authority to recognize college degrees and workforce training programs as fully satisfying the educational requirements in their state.
-
ASC staff will engage, and will encourage state agencies to engage Tribes, Tribal Colleges, Veterans groups, Historically Black Colleges and Universities (HBCUs), Minority-Serving Institutions (MSIs), and community colleges on developing the next generation of appraisers.
ACTION 3.2.5
The Task Force will seek to expand the use of paid trainee models, such as the DOI example mentioned above, to help remove barriers to entry and advance equity in the appraiser workforce.
ACTION 3.2.6
As another example of paid trainee models, DOL and the ASC will seek to develop Registered Apprenticeship programs as an alternative pathway to an appraiser credential. They will also seek to establish a Registered Apprenticeship for federally-employed appraisers, like those employed by DOI, to allow agencies to provide paid on-the-job training while the apprentices attend courses.
3.3
Require appraisal anti-bias, fair housing, and fair lending training for all appraisers who conduct appraisals for federal programs and work with the appraisal industry to require such trainings for all appraisers.
SPECIFIC agency actions
ACTION 3.3.1
HUD, USDA, and VA will propose rules to develop and require appraisal bias, fair housing, and fair lending training for the current appraiser workforce supporting their agencies' programs and appraisers applying to support their agency's programs.
ACTION 3.3.2
The Task Force recommends that TAF update AQB criteria to include appraisal bias and fair housing training in the Real Property Appraiser Qualification Criteria as a requirement for all aspiring and licensed/certified appraisers, as well as during the recertification process.
CATEGORY 4
Empowering consumers to take action
Task Force Commitments
4.1
Update and clarify government resources for consumers who believe they may have experienced appraisal bias.
SPECIFIC agency actions
ACTION 4.1.1
The ASC will develop a strategy to expand the hotline to provide a referral for potential victims of appraisal discrimination to include HUD's Office of Fair Housing and Equal Opportunity (FHEO) and CFPB for individual complainants; the Civil Rights Division of DOJ and HUD-FHEO for pattern or practice complaints; and appropriate state agencies for individual or pattern/practice complaints. The ASC will share hotline data with these agencies, as appropriate, and will update the hotline website to include information pertaining to fair housing and lending laws and how they pertain to appraisals and appraisers.
ACTION 4.1.2
CFPB will encourage lenders to provide borrowers with information on the available means to reconsider valuations (e.g., appraisals, AVMs) that borrowers believe to be inaccurate. For example, such information might potentially be included together with copies of valuations provided to borrowers as required by the ECOA valuation rule.
ACTION 4.1.3
OCC and FDIC will update frequently asked questions on their websites (e.g., OCC's Helpwith-mybank.gov) to address additional appraisal-related issues so that consumers can learn more about appraisals, recourse options, and available resources.
4.2
Incorporate appraisal bias information into first-time homebuyer education courses.
SPECIFIC agency actions
ACTION 4.2.1
The Task Force recommends that the National Industry Standards for Homeownership Education and Counseling update its Pre-Purchase Education Standard Homeownership Education Content to include information pertaining to appraisal bias and consumers' rights to dispute a potentially biased appraisal.
ACTION 4.2.2
HUD's Office of Housing Counseling (OHC), in conjunction with HUD-FHEO, will draft an appraisal bias training module for first-time homebuyer education providers to use during the course of first-time homebuyer education classes.
ACTION 4.2.3
HUD-FHEO will create educational materials explaining appraisal bias and advising consumers of their rights to dispute biased appraisals through the ROV process and file administrative complaints to be distributed to attendees of first-time homebuyer education courses; this information will also be posted on HUD's website.
4.3
Train housing counselors to empower them to assist potential victims of appraisal bias as part of pre- and post-purchase homeownership counseling.
SPECIFIC agency actions
ACTION 4.3.1
HUD-OHC and HUD-FHEO will create a training rubric for OHC and its grantees to train counselors on appraisal-related concerns, including appraisal bias, ROV, and how to identify comparable sales. Additionally, HUD-OHC will incorporate questions pertaining to appraisal discrimination and its remedies into its pool of questions for the Housing Counseling Certification Examination.
ACTION 4.3.2
HUD-OHC, in conjunction with its Housing Counseling Training grantees and the sponsors of the National Industry Standards for Homeownership Education and Counseling, will establish best practices and update the guidelines for quality homeownership and counseling services to incorporate emerging best practices and guidance related to appraisal equity.
4.4
Provide funding opportunities for testing, education, and outreach pertaining to appraisal bias and discrimination.
SPECIFIC agency actions
ACTION 4.4.1
HUD-FHEO will update the HUD FHIP Notice of Funding Opportunity Application and Award Policies and Procedures Guide and issue other guidance to clarify that FHIP EOI grants may be used to increase knowledge and awareness of appraisal bias and discrimination, and that Private Enforcement Initiative (PEI) grants can be used to conduct testing related to appraisal bias and discrimination. It will also engage with existing FHIP grantees to encourage outreach to targeted communities, lenders, and industry partners around remedies for appraisal bias.
4.5
Execute a coordinated public awareness campaign to inform consumers of their rights, as well as to disseminate the new resources that will be available to them.
SPECIFIC agency actions
ACTION 4.5.1
HUD, in partnership with the other Task Force member agencies, will continue to develop PAVE.hud.gov to serve as a central source of information for general audiences and interested stakeholders who want to learn more about appraisal and valuation equity, including their rights under the Fair Housing Act.
ACTION 4.5.2
The Task Force agencies will produce easy-to-understand, accessible information materials, in multiple languages as needed, for consumers who want to understand their rights and how to navigate relevant changes to the appraisal industry.
4.6
Inform FHA borrowers about the process to request a reconsideration of a valuation when the initial valuation is lower than expected.
SPECIFIC agency actions
ACTION 4.6.1
HUD will update FHA policy to notify borrowers, before loan closing, of their ability to speak with their lender to request an ROV. FHA has a specific opportunity to provide borrowers more information about the ROV process in a way that may help borrowers of color who believe their appraisal may have been influenced by racial or ethnic bias. Policy within the FHA's single-family mortgage insurance program has an outsized impact on borrowers of color. In FY2021, people of color comprised more than 40 percent of all FHA-insured mortgages. More specifically, FHA served double the percentage of Black and Latino borrowers when compared to those served through other mortgage originations.
CATEGORY 5
Giving researchers and enforcement agencies better data to study and monitor valuation bias
Task Force Commitments
5.1
Develop data-sharing arrangements among all relevant government agencies and pursue joint strategies to make appraisal-related data more widely available, foster federal research, and better enable enforcement related to appraisal bias.
SPECIFIC agency actions
ACTION 5.1.1
Agencies that possess specific data relevant to research and enforcement related to appraisal bias will take action, consistent with law, to make their data available to other federal agencies with interest in the topic, including the following specific agency actions:
-
The ASC will develop a strategy to collect and share its data with other agencies in furtherance of the goals of the Task Force.
-
FHFA has begun sharing historical appraisal data with federal agencies to further appraisal bias research and enforcement.
-
To the extent permitted by law, HUD, VA, and USDA will share a meaningful subset of their respective historical appraisal databases of UAD data, which they have collected into the FHA, VA Loan Guaranty, and Rural Development programs, respectively, subject to applicable privacy, security, and other statutory or regulatory considerations, with other federal agencies (e.g., FHFA, DOJ, OCC, CFPB, FRB, FDIC).
-
FHFA has begun sharing historical appraisal data with federal agencies to further appraisal bias research and enforcement.
-
VA, HUD, and USDA will agree upon a common dataset that can be used to track appraiser performance. Agencies will use this data to track appraiser performance over time, hold appraisers accountable, and understand if issues of bias may be taking place across federal home loans. Agencies will also make select performance data available to appraisers, so that they can improve their performance and approach to appraising properties without bias.
ACTION 5.1.2
Task Force agencies will pursue development of a shared federal database of historical appraisal data to foster federal research and enforcement related to appraisal bias:
-
Agencies possessing candidate data for inclusion in a shared federal database (ASC, CFPB, FHFA, HUD, VA, and USDA representatives) will examine the legal and operational feasibility of sharing the data into such a database. This examination will include evaluating the operational considerations of such a database (e.g., budget, legal, security, governance requirements, etc.) critical to standing up a working and accessible database.
-
Regulatory agencies (OCC, FDIC, FRB, NCUA, CFPB), that possess extensive experience safeguarding financially sensitive federal data, will share with the PAVE Task Force best practices and lessons learned for handling data of this nature, to help inform the Task Force's recommended operational solution.
5.2
Launch a standing interagency effort to identify and fill gaps in the current state of research and help inform future policy and enforcement priorities.
SPECIFIC agency actions
ACTION 5.2.1
The PAVE Task Force will launch the PAVE Research Working Group, a standing interagency effort to identify and fill gaps in the current state of research and help inform future policy, enforcement, and compliance priorities. The Working Group, comprised of OCC, HUD, FRB, FDIC, CFPB, DOJ, FHFA, ASC, NCUA, VA, and USDA representatives, will engage with stakeholders both within and outside government to develop a research agenda that could supplement work already being undertaken by the agencies, including assessing possible bias in AVMs, considering limitations in the ability to detect bias in rural areas, evaluating possible bias in the valuation of manufactured homes, and assessing how bias affects neighborhood-level valuations versus how bias affects valuations of individual homes.
ACTION 5.2.2
The Working Group will compile research questions that are not fully answerable with the data currently available. If some gaps can be filled through changes to the data collected on each appraisal, to address discrimination these agencies will provide a list of data elements for FHFA to consider incorporating into its URAR and UAD redesign efforts.
5.3
Define metrics that can help to identify and measure patterns of mis-valuation in the property valuation process.
SPECIFIC agency actions
ACTION 5.3.1
The member agencies of the PAVE Research Working Group will pursue defining new metrics that can be used to identify and measure patterns of mis-valuation.
Assessing Additional Policy and Research Efforts to Ensure More Equitable Valuation
The Task Force identified several additional policy initiatives that may have the potential to make a significant difference in ensuring fair and accurate home valuations for all communities. These policy ideas require in-depth evaluation and research, greater input from stakeholders, and further exploration. The Task Force is committed to doing this work.
In the coming months the Task Force will assess:
- Expanded use of alternatives to traditional appraisals as a means of reducing the prevalence and impact of appraisal bias.
- Use of value estimate ranges instead of exact amount as a means of reducing the impact of racial or ethnic bias in appraisals.
- The potential use of alternatives and modifications to the sales comparison approach that may yield more accurate and equitable home valuation.
- Public sharing of aggregated historical appraisal data to foster development of unbiased valuation methods.
"I live in an all-Black community, my lot and house are bigger, yet my home is valued at $25,000 less than the house two doors down from me which is an all-white community. The Biden-Harris Administration acknowledges that communities of color like mine have lost billions of dollars solely through the appraisal process. We're committed to taking meaningful action to increase homeownership and generational wealth for all."
HUD SECRETARY MARCIA FUDGE
Given the historical and continued impact of federal policies that enabled the persistent mis-valuation of properties in communities of color, the Task Force has carefully crafted a set of commitments that will further valuation equity within the housing market. This commitment is ongoing.
The Task Force is indebted to the countless stakeholders who shared their stories and ideas. Additional policy and research efforts will continue to benefit from a diversity of voices working together towards the common goal of ensuring that the American Dream of homeownership is attainable for all.
 |
|  |
||||||||||||
|
||||||||||||||
![[logo: Fair Housing and Equal Opportunity]](/images/fheo50.gif){kind=small}