Banks & Realtors Urge US Agencies to Change Home Appraisal Process

Regulators Seek Standardized Home Appraisal Revaluations as Part of Push to Eliminate Appraisal Bias

Banks and realtors have just urged federal regulators to limit the number of times a potential homebuyer or seller can challenge an appraisal of the property’s value. Mortgage lenders ask independent appraisal firms to reevaluate a home value when a consumer complains that the value is too high or low.

 In June, 2023, Five agencies - the Consumer Financial Protection Bureau, the Federal Reserve, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency, and the National Credit Union Administration - proposed regulations to make it easier for consumers to ask for "reconsiderations of value (ROV)," especially if they suspect racial biases negatively influenced the value first placed on a home.

In response, the National Association of Realtors (NAR) and the Independent Community Bankers of America (ICBA) wrote that permitting consumers to have an unlimited number of new appraisals could muck up the homebuying process. ICBA said that there are more effective ways to reduce bias. NAR urged the agencies to use a program ("the Tidewater process") established by the Veterans Affairs Department (VA) as a way to limit ROV requests by allowing three reconsideration requests on homes purchased with a VA-backed loan.

Consumer advocates - National Consumer Law Center, the National Community Reinvestment Coalition, the Consumer Federation of America, the National Fair Housing Alliance, the National Urban League, and others - mostly supported the proposal, but suggested that regulators should more clearly state that the guidance applies to both under-valuations and over-valuations. The Housing Policy Council, an industry group, said asking the same appraisal company to re-do ignores possible causes of alleged discrimination. Instead of using the original appraiser, regulators should tell banks to use other tools to reevaluate when disputes happen.

Both consumer and industry advocates urged the regulators to consult with the other mortgage agencies and entities that run government-backed housing programs - the Federal Housing Finance Agency, Fannie Mae, Freddie Mac, the VA, and the Department of Agriculture - regarding changes to the appraisal system.

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Read the September 22, 2023 Bloomberg Law News article.

 Maryland Hate Bias Reporting Forum on May 11th

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The Maryland Commission on Civil Rights, Maryland Office of the Attorney General & Maryland Commission on Civil Rights' Western Maryland Advisory Council will host a Hate Bias Reporting Forum. The Hate Bias Reporting Forum will provide community leaders and members of law enforcement with important information in response to the 2021 Hate Bias Report for the State of Maryland. The forum will engage local law enforcement, elected officials, and community leaders in discussions and information sharing on methods to facilitate more effective reporting as well as responding to bias incidents and hate crimes. For more information, visit our website.  To register, visit the registration page. REGISTRATION IS REQUIRED TO ATTEND!

Victim of Discrimination? Training & Partnerships

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 Hate Bias Forum on May 11th

The Maryland Commission on Civil Rights, Maryland Office of the Attorney General & Maryland Commission on Civil Rights' Western Maryland Advisory Council will host a Hate Bias Reporting Forum. The Hate Bias Reporting Forum will provide community leaders and members of law enforcement with important information in response to the 2021 Hate Bias Report for the State of Maryland. The forum will engage local law enforcement, elected officials, and community leaders in discussions and information sharing on methods to facilitate more effective reporting as well as responding to bias incidents and hate crimes. For more information, visit our website.  To register, visit the registration page. REGISTRATION IS REQUIRED TO ATTEND!   Victim of Discrimination? Training & Partnerships HOME      ABOUT MCCR      SERVICES      PUBLICATIONS      EVENTS      PRESS      CONTACT US

Stay Connected with the Maryland Commission on Civil Rights

Free Zoom Event 

"Recognizing and Responding to Everyday Antisemitism and Islamophobia" 

with ICJS Scholars

Speaking: Ben Sax and Matthew D. Taylor and visiting scholar Halla Attallah

Date: February 16, 2023

Time: 7 p.m. to 8:30 p.m.

Location: Zoom

Free - Register Now

In this Institute for Islamic, Christian, and Jewish Studies (ICJS) online event, scholars Benjamin Sax and Matthew Taylor, and visiting scholar Halla Attallah, will discuss how we face instances of religious bias and bigotry in our everyday lives that are sometimes subtle and go unnoticed or unconfronted. This session will include case studies with small group discussion and role play that will help participants to recognize and respond to these microaggressions.

The Speakers:

Halla Attallah - is a doctoral candidate at Georgetown University’s theological and religious studies department. Her research focuses on the Qur’an, its narrative content, and the early history of Islam. Attallah served as the Visiting Muslim Scholar at ICJS from 2019-2020. 

Ben Sax - is the Jewish Scholar at ICJS. He is an experienced professor, university administrator, scholar, award-winning teacher, public speaker, and practitioner and facilitator of interreligious dialogue. 

Matthew D. Taylor, Ph.D. - is the Protestant Scholar at ICJS, where he specializes in Muslim-Christian dialogue, Evangelical and Pentecostal movements, religious politics in the U.S., and American Islam. 

Institute for Islamic, Christian, and Jewish Studies

956 Dulaney Valley Rd

Baltimore, Maryland 21204

410.494.7161 | www.icjs.org

info@icjs.org

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Source: ICJS email, February 8, 2023

 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/.

 National Study Finds Persistent Bias Against Non-White Renters

It also showed that landlords are less likely to reply to applicants with Black and Latino names. 

A recent National Bureau of Economic Research (NBER) study found that landlords are less likely to respond to applicants with African American and Latino sounding names when renting properties. This contributes to rising residential segregation. In the largest study of rental discrimination, fictitious renters with names associated with White, African American, or Hispanic identities, were used. The research tracked over 25,000 interactions between those people and 8,476 property managers in 50 of the largest U.S. cities. Renters with White-sounding name received a 60% response rate, compared to a 54% and 57% response rate for those with African American and Hispanic identities. Other research have documented similar trends in the buyer’s market. 

Research has found that appraisers consistently undervalue homes in Black and Latino neighborhoods. In the NBER analysis, it was found that a lack of a response to a renter of color decreased the likelihood that someone of that ethnic group would live in a property by around 17%. The most discrimination for Black renters was identified in Chicago, Los Angeles, and Louisville. Latinos in Louisville, Houston, and Providence, Rhode Island, faced the strongest constraints, according to a recent analysis by the Federal Reserve Bank of Cleveland. 

Read the research report Racial Discrimination and Housing Outcomes in the United States Rental Market. 

Article source: Read the Bloomberg article