Appraisal Discrimination

HUD Actions Confront Bias in the Home Appraisal Process for People Seeking FHA Financing

HUD is creating a process that people seeking FHA financing can use to request a review of their appraisal if they believe the results may have been skewed by racial bias. For example, a homeowner who is in the process of refinancing their home with an FHA-insured mortgage can take steps to ensure that their appraisal is fair.

The proposed change indicates what lenders must follow when a borrower requests a Reconsideration of Value (ROV) review if concerns arise around unlawful discrimination in residential property valuations. Under the Reconsideration of Valuation proposal, lenders are given guidance regarding how to review requests from borrowers for a reconsider of value for the appraisal conducted in conjunction with their application for FHA-insured mortgage financing. It also provides guidance for obtaining a second appraisal when material deficiencies are documented, and the appraiser is unwilling to resolve them. Material deficiencies include when a Fair Housing violation has occurred, or bias has been identified on a property valuation report.

FHA is committed to eliminating bias in residential valuations and is taking multiple actions to enhance information, process, and documentation requirements related to this important issue. FHA is asking for stakeholder feedback to identify barriers and impediments that the draft ROV process may impose on the lending process. Any interested party is welcome to provide input. Stakeholders are encouraged to provide feedback on the Draft ML by emailing the Feedback Response Worksheet located in the Drafting Table to the FHA at sffeedback@hud.gov. The feedback period is open from January 3, 2023, to February 2, 2023.

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Source: Read the January 12, 2023 HUD release.

A federally-commissioned report from the National Fair Housing Alliance identifies recommendations to address racial discrimination in home appraisals.

Educational Webinar

HUD Appraisal Bias Webinar Series for Housing Counselors

HUD is developing a process for borrowers seeking Federal Housing Administration (FHA) financing to request an appraisal review when they suspect racial bias. The National Fair Housing Training Academy has an upcoming three-part series titled Combating Appraisal Bias Series: Identify, Empower, and Collaborate.

HUD’s Office of Housing Counseling (OHC) and the Office of Fair Housing and Equal Opportunity (FHEO) are working together to combat appraisal bias. The work of the Property Appraisal and Valuation Equity (PAVE) task force includes developing strategies and action plan steps that housing counselors can adopt to best serve their clients. The PAVE Task Force was directed to evaluate the causes, extent, and consequences of appraisal bias and to recommend actions to reduce racial and ethnic bias in home valuations.

There will be three educational webinar sessions. The first session will feature an engaging roundtable format where consumers and HCAs share their experiences from two different markets in the country. The second and third sessions will discuss the work of the PAVE Task Force, the PAVE Action Plan, and highlight tools, strategies, and next steps for HCAs.

HCA participants will learn: (1) How to raise awareness of appraisal bias and how appraisal bias can be identified; (2) How appraisal bias impacts consumers; (3) How to assist consumers who may have been subjected to biased appraisals; (4) What commitments federal agencies have made to root out appraisal bias; and (5) How to share strategies and available resources which can support housing counselors and empower their clients.

Appraisal Bias and the Generational Wealth Gap Roundtable - Racial bias in the home appraisal process, what consumers need to know, and solutions to combat it. January 31, 2023 1:00 - 2:30 PM. Register Now.

What Housing Counselors Need to Know - Strategies in the PAVE Action Plan to combat bias and current available resources to support impacted individuals. February 22, 2023 2:00 - 3:30 PM . Register Now.

Housing Counseling and FHEO Agencies Combining Forces to Combat Appraisal Bias - Practical steps housing counseling agencies, FHIPs, and FHAPs can take to combat appraisal bias and protections under the Fair Housing and the Equal Credit Opportunity Act. March 15, 2023 2:00 - 4:00 PM .

Consumer Story: Black Family Sees Home Value Increase $500K After Erasing Themselves from Appraisal.

Consumer Story: Couple's Home Value Rose nearly $300K After it was Shown by White Colleague.

A federally-commissioned report from the National Fair Housing Alliance identifies recommendations to address racial discrimination in home appraisals.

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Sources

https://www.hudexchange.info/news/combating-appraisal-bias-series-identify-empower-and-collaborate/?utm_source=HUD+Exchange+Mailing+List&utm_campaign=1d598484f8-NFHTA-PAVE+1%2F31%2F23+Webinar&utm_medium=email&utm_term=0_f32b935a5f-1d598484f8-19808276.

https://pave.hud.gov/actionplan.

https://www.housingwire.com/category/valuations/.