The U.S. Department of Housing and Urban Development’s Interagency Task Force on Property Appraisal and Valuation Equity (PAVE) completed its action plan this week, which looks to dismantle racial bias in the home lending and appraisal process.
The plan was delivered to President Joe Biden, who created the task force on June 1, 2021, to evaluate the causes, extent, and consequences of appraisal bias and establish a set of actions to root out inequity.
The PAVE Task Force — co-chaired by HUD Secretary Marcia Fudge and White House Domestic Policy Advisor Susan Rice — engaged more than 150 stakeholder groups, including appraisers, appraisal management companies, lenders, civil rights and advocacy groups, academic institutions, philanthropy organizations, and individuals who have experienced appraisal bias to gain insight.
The plan outlines actions to reduce racial bias in-home appraisals, including steps federal agencies will take to enhance oversight and accountability of the appraisal industry. It also empowers homeowners and homebuyers to take action when they receive a valuation that is lower than expected.
“For generations, millions of Black and brown Americans have had their homes valued for less than their white counterparts simply because of the color of their skin or the racial makeup of the neighborhood. Black and brown homeowners in communities just like mine have not felt that they have had a voice or that the Federal government was doing enough to redress the issue of racial bias in the appraisal process. With the PAVE Task Force, the Biden-Harris Administration is taking a whole-of-government approach to fixing this problem,” Fudge said.
Homeownership remains the biggest driver of the wealth gap, with wide racial and ethnic disparities in homeownership rates. The median white family holds eight times the wealth of the average Black family and five times the wealth of the average Latino family.
“Since his very first day in office, President Biden has made advancing equity and racial justice a top priority across the entire federal government,” Rice said. “This PAVE Task Force took that responsibility seriously. We have a long way to go, but the steps laid out in this Action Plan will help our country reduce bias in home valuations, narrow the racial wealth gap, and deliver a stronger and more equitable future for all Americans.”
The Mortgage Bankers Association offered its support for the initiative.
“MBA and its members have made improving the appraisal process a top policy issue and have prioritized it both as part of our CONVERGENCE initiative to promote more sustainable, affordable housing for minority and low- to moderate-income families and communities, and as part of our Building Generational Wealth Through Homeownership campaign,” MBA President and CEO Bob Broeksmit said. “We appreciate the work that the PAVE task force has undertaken to document the historical foundations of inequitable property valuations and to identify ways to address problems in modern appraisal processes. Many of the initiatives announced today can be an important step in the fight toward eliminating biases, improving appraisal accuracy, and opening access to more affordable, sustainable homeownership opportunities for minority borrowers.”