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Vice President Kamala Harris on Wednesday unveiled an action plan to stop racial bias in the appraisal of home values.
The 21-step plan seeks to improve oversight and accountability in the home appraisal business. It includes a legislative proposal to modernize the governance structure of the appraisal industry.
Harris asserted that there is “a real consequence” to lower home evaluations for people of color.
“Because their homes are undervalued, 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. “Systemic bias in home evaluations widens the racial wealth gap and deepens the longstanding financial inequities that divide our communities.”
On June 1, 2021 — the centennial of the Tulsa Race Massacre — President Joe Biden announced the creation of the Interagency Task Force on Property Appraisal and Valuation Equity (PAVE) to develop a transformative set of actions to root out racial and ethnic bias in home valuations. The task force has now released the PAVE Action Plan.
The White House said when the plan is enacted, it will represent the most wide-ranging set of reforms ever put forward to advance equity in the home appraisal process. U.S. Department of Housing and Urban Development Secretary Marcia L. Fudge and Domestic Policy Adviser Susan Rice co-chairs the task force.
“The Biden-Harris administration understands homeownership provides people of color a pathway to build a source of wealth they can pass down to their children and grandchildren,” Secretary Fudge said during a panel on racially biased home appraisals at the White House on Wednesday. “That is why we are working with intentionality to break down the barriers that have prevented generations of people of color from buying or refinancing their home.”
“A home appraisal is a critical element of the home buying and lending process, intended to provide an independent, fair, and objective estimate of the market value of a property so that lenders can accurately evaluate risk,” the administration said in a fact sheet.
“Homeownership is the primary contributor to wealth building for Black and brown households and continues to hold promise for building multigenerational wealth and housing stability for households of color. But, bias in home valuations limits the ability of Black and brown families to enjoy the financial returns associated with homeownership, thereby contributing to the already sprawling racial wealth gap.”
Under the plan, the administration will commit federal agencies to enhance oversight of the appraisal industry and improve coordination and collaboration with federal enforcement agencies “to better identify and redress discrimination in appraisals.”
It will also seek to diversify the appraiser/assessor profession, which is currently 97% White — making it among the least diverse in the country — by removing “unnecessary educational and experience requirements” and requiring anti-bias, fair housing, and fair lending training of current appraisers.
“Part of the solution is to provide funding and technical assistance to states to make pathways into the profession more accessible for underrepresented groups,” Harris said.
The administration also plans to have federal agencies that regulate mortgage financing commit to including non-discrimination quality control standards for valuation algorithms to combat bias within the programs.
