National Urban League Supports the Biden Administration's Action Plan to Combat Bias in Home Appraisal Process

WASHINGTON, D.C. (March 26, 2022) — Today, National Urban League President and CEO Marc H. Morial issued a statement commending the Biden Administration’s release of a comprehensive action plan to address bias in  residential property appraisal valuations:

“The Action Plan was put forward by President Biden’s Property Appraisal and Valuation Equity (PAVE) Task Force, which is co-led by White House Domestic Policy Council (DPC) and the Department of Housing and Urban Development (HUD) and includes 13 federal agencies and offices to combat bias in residential property valuations. The Task Force was conceived of at an event last summer marking the centennial of the Tulsa, Oklahoma Race Massacre. The taskforce is charged with evaluating the causes, extent, and consequences of appraisal bias and establishing a transformative set of recommendations to root out racial and ethnic bias in home valuations.

“The National Urban League has long recognized racial bias in home and property appraisals as a barrier to Black homeownership and generational wealth building,” said Marc H. Morial, President & CEO of the National Urban League. “Through our work as one of the nation’s largest providers of housing counseling assistance to communities of color, we know all too well that this type of discrimination has gone on for too long and in plain sight. We support the Biden Administration’s efforts to put the full weight of government behind rooting out bias at all stages of the appraisal and refinancing process, and we encourage all stakeholders in this process to join the President in addressing this as a fair housing issue.

“Homeownership remains the primary way for American families to build lasting wealth that they can pass on to future generations. The appraisal valuation process plays a determinative role in whether American families can refinance their home to access the equity they need to send their children to college, to start a business, make home improvements, or transition out of an Adjustable-Rate Mortgage. Longstanding patterns of racial bias have been allowed to take root in the appraisal industry, exacerbating our nation’s already staggering levels of inequality, and further widening the wealth gap between white and black communities.  

“Part of what animates the National Urban League's economic empowerment agenda is the stark realization that fewer than half of Black households are homeowners. For those who are homeowners, Black homeowners typically accumulate less housing wealth relative to their white counterparts – directly contributing to the broader racial wealth gap. Appraiser bias has demonstrably played a role in these homeownership and housing wealth outcomes. A 2021 study by Freddie Mac found that appraisals for home purchases in majority-Black and Latino neighborhoods were roughly twice as likely to result in a value below the actual contract price compared to appraisals in predominantly white neighborhoods. Moreover, data on refinancing transactions have found that overvaluations of white-owned homes were more likely to occur in majority-Black neighborhoods.

“The PAVE Action Plan calls for the following:

• Strengthening guardrails against unlawful discrimination at all stages of residential valuation, including the federal financial regulatory agencies with supervisory authority in this space. 
• Clarifying the application of the anti-discrimination obligations of the Fair Housing Act and Equal Credit Opportunity Act applications to the appraisal industry. 
• Updating agency and GSEs appraisal-specific policies guidance to reflect how anti-discrimination requirements apply to appraisers.
• Requiring FHA lenders to track appraisal process use and outcomes.
• Issuing guidance and implementing new policies to improve the process by which valuations may be reconsidered if the initial value is lower than expected.
• Ensuring enforcement agencies have better data to study and monitor valuation bias.
• Empowering consumers to take action by updating and clarifying government resources for consumers who believe they have experienced appraisal bias through the training housing counselors, incorporation of appraisal bias information into first-time homebuyer education courses and raising public awareness through a coordinated campaign in an effort to better inform consumers of their rights. 

 

“The National Urban League also strongly believes that increasing diversity in the field can diminish this bias in the long term. Moreover, we believe that policymakers and lenders have the capacity to address undervaluation in the short-term while working to eliminate broader housing access barriers in their efforts to bring about more equitable homeownership outcomes. We look forward to working with Secretary Fudge, Ambassador Rice, and the entire administration in addressing these issues for the communities we serve.”

 

The National Urban League is a historic civil rights organization dedicated to economic empowerment in order to elevate the standard of living in historically underserved urban communities. The National Urban League spearheads the efforts of its 91 local affiliates through the development of programs, public policy research and advocacy, providing direct services that impact and improve the lives of more than 2 million people annually nationwide. Visit www.nul.org and follow us on Twitter and Instagram: @NatUrbanLeague.