Biden administration releases plan to stop bias in home appraisals
Vice President Kamala Harris announced a plan Wednesday intended to end racial and ethnic discrimination in the appraisal of home values, part of a broader federal effort to address a wealth gap that systemic inequality has perpetuated.
The plan contains 21 steps to improve oversight and accountability, including a legislative proposal to modernize the governance structure of the appraisal industry. Appraisers help to determine the value of a home so that buyers can receive a mortgage.
“Black and Latino people often have to pay more for their mortgage, receive less when they sell the home and are less able to access home equity lines of credit,” Harris said at the White House. "Our administration will continue to fight to ensure that all homeowners and homebuyers in our nation are treated fairly."
Multiple reports, including a September analysis by mortgage buyer Freddie Mac, show that appraisers are more likely to undervalue homes in Black and Hispanic neighborhoods. This form of discrimination widens the racial wealth gap and makes it harder for many Americans from disadvantaged backgrounds to move up the economic ladder.
A Black couple in Marin County are the subjects of a federal lawsuit filed in December. They allege that a second appraisal of their home came in at $1.48 million — up from an earlier $995,000 valuation — after they re-staged the home to delete any evidence of their African American culture, such as pictures and art, and brought in a white friend to greet the appraiser.
Attorneys representing the appraiser and her firm, AMC Links, claim there’s no basis or grounds for the complaint.
And in another case, a Black homeowner in Indianapolis found the appraised value of her home went from $125,000 to $259,000 after she declined to state her race in her application and removed all family photos and African American art in the home.
Freddie Mac and Fannie Mae on Saturday made permanent a pandemic-era allowance for remote desktop appraisals. Originally intended to help speed up real estate transactions in a hot market amid COVID-19 protocols, the measure is also seen by some as a way to help prevent valuation bias.
As part of the action plan, the government will expand the complaint hotline for the Department of Housing and Urban Development and the Consumer Financial Protection Bureau. There also will be appraisal bias training in homebuyer education classes and efforts to ensure that the computer systems used to value homes do not perpetuate racial biases.
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North Bay Business Journal contributed to this report. The first three paragraphs were updated after Associated Press reported the release of the the plan.
