Removing Barriers Blog

CFPB Virtual Event on Appraiser Racial Bias Announces Regulator Plans to Address the Issue
Posted June 16, 2021 by CUNA Advocacy

On Tuesday, the Bureau held a Virtual Event on Home Appraisal Bias in response to several recent reports of egregious examples of racial bias by home appraisals. During the session, HUD reported a ten-fold increase in the receipt of complaints regarding discrimination in appraisers since 2019. The FFIEC’s Appraisal Subcommittee is responding to these reports by conducting a review of the professional standards and appraiser qualification criteria and conducting roundtables on diversity, equity and inclusion issues and solutions in the appraisal industry, which is aging and 89% white.  It is also updating the Appraisal Complaint National Hotline to ensure it is a helpful resource for holding appraisers accountable. President Biden has directed HUD to establish a task-force to assess the extent, causes and affects of discrimination in appraisals and recommend solutions. 

Multiple speakers spoke about the promise of automated valuation models (AVMs) in turning appraisal from an “art” to a “science.” However, research was shared indicating findings that AVMs are inaccurate and those inaccuracies can represent a higher proportion of the home value in majority-Black neighborhoods than in majority-white neighborhoods, exacerbating the wealth gap. NCUA Chairman and FFIEC Chair Todd Harper delivered remarks identifying appraisal bias as one source of the racial homeownership gap and expressing his intention to move the quality control standards for automated valuation models (AVMs) forward. Chairman Harper also raised the possibility of re-decreasing the threshold for the appraisal requirements as many Black Americans’ buy less expensive homes. Others suggested that Interagency guidance on how to respond to requests for appraisal review should be considered.