The Department of Housing and Urban Development (HUD), in partnership with the Office of Management and Budget, announced the Biden-era Property Appraisal and Valuation Equity (PAVE) task force that was created to eliminate bias in home appraisals.
In a statement announcing the task force’s demise, HUD said this endeavor “exemplified government overreach by increasing bureaucracy using various tools aimed at addressing so-called systemic biases in the home appraisal process.” The agencies questioned the task force’s concerns regarding the systematic undervaluation of properties in nonwhite communities, citing American Enterprise Institute data that determined similar disparities occurred in white communities that shared a similar socioeconomic status.
HUD added that current laws that address housing discrimination, including The Fair Housing Act and Equal Credit Opportunity Act, will continue to be enforced.
“By tearing down these onerous hurdles, we’re freeing professionals from a tangle of red tape that drove up costs, inhibited access to homeownership, and discouraged market participation,” said HUD Secretary Scott Turner. “Under President Trump’s leadership, the Biden-era’s obsession with DEI and overregulation is over. At HUD, we’re restoring common sense and putting the American Dream of homeownership back within reach.”
Does anyone know if this will remove the “disparate impact” foolishness?
I am in the process right now in getting the DOJ and the Civil Rights Department at the DOJ involved in the PAVE initiative and what they have done, stay tuned. Good news is on the horizon. The DOJ opened a case on my evidence.
The Trump administration has terminated DOJ pursuit of disparate impact claims. I’m not sure how this squares with the SCOTUS findings when it was originally found by them to be constitutional in a case involving a dental lawsuit.
It should never have been applied to real estate to begin with. Respect to SCOTUS, the two cases are not remotely similar.
This task force was established to make sure lower income communities received fair appraisals, protecting both the buyer and the seller. Why would they get rid of that safeguard?
Racism! Redlining had nothing to do with appraisal practices. It had to do with lender practices. This commission was initiated to stop appraisers from performing “bad” appraisals. If you need further information google “blacks doing an appraisal white out”. Also, I am sorry to say that if anybody in this industry doesn’t belive “redlining” doesn’t exist you would be mistaken. Navy Federal Credit Union (NFCU) got caught last year. (https://www.yahoo.com/news/navy-federal-credit-union-named-221812871.html)
Jeff, ACCUSATIONS mean nothing. As a Member of NFCU for over 50 years, and a former employee (1974-1980) in both their loan processing and credit and collections divisions (former Budgetary Counselor); I can attest first hand NFCU would never tolerate bias behavious in treatment of its members OR in decisions to approve or not approve a members loan request.
While most of my former associates there have long since retired, I know that the underlying belief in serving members has never diminished or been compromised.
SOMETIMES a member is overextended. This can range from a modest income E2 to retired Admirals. They may well have had a good credit history. That doesn’t mean they can afford the request they may be making for a home loan.
NFCU is charged by both the NCUA, as well as GSEs they may sell a loan to, or HUD or VA, who may insure or guarantee a loan, to not knowingly facilitate overextending any member, regardless of race, creed or color. The individual loan officers I knew personally NEVER allowed race, creed, gender, orientation or any other prohibited characteristic to influence loan decisions.
IF white borrowers were declined at a lower percentage than were Latino or Black borrowers it MAY just be that for whatever other reasons, DISPARATE BORROWING ABILITY (credit profile, debt coverage ratios, income, child support obligations, etc.) existed when measured against GSE and NCUA loan underwriting guidelines.
The Navy Federal Credit Union Board of DIrectors; Operating Manager, Entire Credit Committee, and staff would NEVER tolerate bias in their hiring or lending. I know that first-hand. I maintained contact with many of my old friends until THEIR retirements. That includes the former Head of the Mortgage Division (Mrs. Chrys Stanley).
Mike, that task force was a ploy to leverage more monies out of the mortgage industry via the appraisal process. It was like when Fannie Mae (FNMA) under Franklin Raines targeted low income areas with these no documentation variable interest rate loans in order to get more of their loans. That policy blew up in their faces leading to FNMA’s receivership with the federal government. As a 37 year appraiser I can guaranty you that appraiser try like the dickens to find as much fair market value that they can for every appraisal they conduct. That said you must understand that it is the particular appraiser’s professional opinion. Get 5 appraisers and you’ll get a relatively tight range of overall value but many will not be the final fair market price. Also, the federal government thru Fannie Mae, Ginnie Mae, Freddie Mac, FHA, VA & Rural loan administration all have computer appraisal systems. So do all AMC’s (appraisal management companys). If an appraisal appears outside their own computer data analysis it is red flagged and the appraiser is required to address the issues and even before that the AMC’s have live either certified review appraisers or appraisal technicians to review the appraisal submitted for a loan. That all said when price are changing very quickly either during a downturn (2008-2011) or upturn (2019-2023) final appraisal values can be a little above or a little below current market prices. That opens the door for extensive internal oversight which more times than not will verify the correct fair market value for that particular property at that particular time. To say that there is a conspiracy to under value lower income areas or target particular groups of people is absurd with the safe guards that are in place. The appraiser is licensed or certified by state and federal authorities. The appraiser signs an oath to be color blind and to follow all state and federal anti-discrimination laws. And it is something that is constantly be applied in every appraisal. The appraisal business for the federal lending agencies is highly regulated with the chances of any systematic illegal valuations (too low or too high) being nearly impossible to commit.
Thank you Greg S for explaining this from your perspective. I agree that the DEI and the overreach was extraordinary and the statement of implicit bias by Realtors is one that I have objected to since it’s inception. As a Realtor for over 40 yrs. Fair housing laws have been in place for my entire career! I don’t know anything else. So the bias isn’t mine and I shouldn’t have to take a class that presumes or is predicated upon this false statement.
Hopefully the tide has turned. Mostly thanks GREG S. I really appreciated how you explained it from your perspective. It was insightful.
Well stated Greg. Concur 100%
Because it was NEVER created for the purpose you state. It was created to (1) create NGO slush funds that could be funneled to democrat DEI supporters willing to give kickbacks to the DNC via ActBlue. (2) it relied on a flawed legal concept, Disparate Impact. (3) Dishonorable actors posing as ‘victims’ engaged in phony “whitewashing” scenarios supported by bogus secondary appraisals from biased and corrupt appraisers to file claims for imaginary losses and punitive damages.
Appraisers don’t engage in biased or racist activity. Not ever. Not in 40 years I’ve been doing this. Occasionally, one may make a mistake, or even be incompetent, but that is NOT BIAS, and there has always been recourse in such instances.
Mike Ford
Chairman, National Appraiser
Peer Review Committee,
American Guild of Appraisers
#44, OPEIU, AFL-CIO
The administration is correct. These additional measures are duplicating already established laws like redlining. No additional protections are provided just additional bureaucratic junk to deal with.
Mike Ford’s comment that:
Appraisers don’t engage in biased or racist activity. Not ever.
Not in 40 years I’ve been doing this…
Well, that is a ridiculous claim.
You do NOT know ALL appraisers nor their individual biases (and actions), just as Realtors did NOT know the individual biases (and actions) of ALL Realtors.
The claim that appraisals that are outside the expected price valuation range are then flagged and auto-reviewed must be a new policy because I was a listing agent for a property a few years ago, and an appraiser severely under-valued it, and the buyers were not able to get the loan.
I questioned the appraiser about why he had AVOIDED using the many, many similar comps and, instead, used far lesser comps (without making reasonable adjustments) for those significantly inferior homes. The appraiser made several comments that were telling about his attitudes towards the changing demographics in our state (people with more pigment). He showed a strong tendency of bias and said he was so disgusted that he was moving out of state.
I tried to get a review of the appraisal (the buyers were good, solid buyers), but I could not get anywhere, and I was told that it was very difficult to challenge an appraisal.
The loan type meant that the ultra low appraisal stuck with the property for 6 months, so any future buyers trying to use that same loan type were shut out, as the seller and I knew that the property was worth a lot more, and prices were rising higher.
The home ended up selling for nearly 28% higher than that ultra low appraisal, but the delay meant a several month setback, as a failed escrow does tend to result in lower offers afterwards because people often assume there was some kind of problem, and their was, an appraiser who was biased.
What I want to see in the appraisal laws are that the buyer’s names are removed and replaced with a unique number, and, in that way, an appraiser would NOT know (or guess at) who the buyer might be and would not know their race, nationality, sex, ethnicity, etc. etc. There seems to be NO reason to avoid this simple change in appraisal rules. It would be a big step in eliminating bias (of any type), and even if most appraisers are honest and NOT bias, there are still some people (even appraisers) who are bias.
I personally have witnessed racism in the Realtor industry. While agents make a promise to NOT discriminate, some still do put up blocks based on their own bigotries.
Bull. I’ve reviewed thousands (literally) of appraisals in over 40 years. I was also an agent before that (1984-1988; active til only 1986 as an agent; before that in 1971 to 1975 selling residential resales in Los Angeles County, and later tract sales in Las Vegas.
If your story took place before February 2015 automation had not been fully implemented. If it took place after that, and it was a conventional loan it was reviewed by FNMAs Collateral Underwriter. If VA you had other options (Such as Tidewater). For both FNMA or FHLMC you had established Reconsideration of Value procedures for submitting what you believe to have been ‘better’ comparables (as in more relevant-not simply higher priced.
The ever-present lament of listing agents that overprice property is that the appraiser didn’t use comps that would support the value. THAT isn’t our job. We have to work two to three times harder every single time we do not appraise a property at contract. The lender; the loan officer, the borrower, the seller, and agents on both sides will all have opinions to express regarding what we SHOULD have done. As opposed to what FIRREA; Dodd Frank, USPAP, State Law and Lender Policies REQUIRE us to do.
You conclude, “There was an appraiser who was biased.” Like most biased parties with a vested interest in closing a sale, you are fully ignorant of the process. So you fall back on Bias (inferring race)?
The only bias evident in your story is from yourself. Completely ignorant of what an appraisal is and is not; OR the process for appealing it, you fall back on the old sour grapes excuse for not having done YOUR job properly! Support your own listing! You have an obligation to both the buyer and seller to support the price you tell them to list at, or to make an offer at.
We are paid to protect the banks interests (actual lender and subsequent secondary market investors). There are rules we have to follow.
Why didn’t YOU meet the appraiser at the property and hand him or her a verified list of what you believed to be the most similar sales available for comparison? While some appraisers will decline such lists due to lack of experience, prudent appraisers will consider anything you think is relevant. We may disagree with it, but we will consider it.
I’ve changed my mind when data warranted it. Though in my experience MOST times there isn’t data to dictate (not merely support) a higher price.
A correction in spelling in m prior post. “there” not “their”.
Bigotries exist, whether people want to admit it or not.
There is bias and bigotry in the Real Estate industry too, though, in general, I think it is pretty rare in my work region, at least in my experience. Most agents with whom I have worked have not displayed bigotries, though one did and was not shy about it in my conversations with her, but those conversations were not in the direct context of real estate transactions.
But, I did hear of bigotry through a realtor friend of mine who complained to her broker of a listing agent (a very profitable one) who had stated to my friend that she would never allow any black person to buy one of her listings (in a retirement community). My friend represented a black buyer whose offer (she said) was not submitted to the seller for those reasons.
She said that the buyer was highly qualified, and, while he was offended by the situation, decided not to pursue any complaint against that listing agent because he felt that other agents would hear about his complaint and might avoid accepting his offer on other properties out of fears of lawsuits.
My friend complained to her broker, but she said that her broker did nothing at all, ZIP, ZERO, NADA to the listing agent, despite repeated complaints from my friend. She said that the broker did have a meeting with that listing agent, but nothing came of it, no discipline at all.
I could do nothing in this situation because this bias did not happen to me or to my own client, and the story I am telling is considered hearsay (a story relayed from a friend), and hearsay is NOT admissable in our state courts.
If that situation had happened to me and my client, I would have pursued a case against that listing agent, and I would have worked to have her license revoked. I also would have gone higher to complain about a broker who refused to discipline such an agent.
But it was not me who was involved in this, so the event went unresolved.
I believe my friend, as she had no reason to fake a story like this. There had been no prior issues with that agent of any other agent in that office. She was angry and frustrated for a long time during and after this event and, eventually, she left that company. She felt that certain agents indiscretions, no matter if against the laws, would always be passed over if those agents were high earners. She was a part time agent and feared retribution from her own company if she pursued further complaints.
That said, I think that most agents (in my experience) are not bigoted, at least not in such an open and notorious way.
However, our industry continues to support politicians and parties who are bigoted.
We are forced to pay a portion of our annual dues into the political fund (including the general political fund), and it is difficult to find out exactly where that money goes. I tried to track it down in our state, and I was blocked each time I tried to get info.
NAR and state associations are the 2nd largest political donation group in the country.
They donate to candidates who the industry feels will support NAR policy goals, despite the paying membership not necessarily agreeing with all those goals.
Real Estate is a huge topic impacting nearly everything, so NAR can use that as an excuse to donate to wide ranging issues that seem only remotely tied to NAR’s core issues.
Strangely, the GOP is against unions donating to political causes, but the GOP eagerly awaits money from the union dues of Realtors.
So Julie, what is your bigotry? Apparently, we all have them.
There are bigotries that are not as obvious, and they exist in the real estate world too.
What we do NOT discuss and examine is often far more impactive than what we do discuss.
Lies by omission are insidious and do the most damage because they remain under the curtain, and many people never realize there are hidden facts, and so they do NOT ask about those topics, and they cannot piece together why things are the way they are.
Critical information to understand events (past and present) remain hidden for many people, often due to lies by omission.
Example:
The course materials that are permitted in our state to renew a real estate license continue to ignore, almost totally, the hundreds of years of abuses and genocides of Native Americans and the endless list of broken treaties that the U.S. has signed with many Native Americans.
My prior course material actually stated on the first page that Native American topics were NOT going to be covered in the course material, not anywhere, and not even in the Fair Housing section.
That blew my mind. The First Nation Peoples were being rubbed out on page 1.
People who had lived in the Americas for over 10,000 years were omitted, entirely.
Wow! I was furious about that.
But the history of Native peoples is all about real estate too.
Vast regions of lands were stolen (most of the U.S.), food and water supplies were intentionally destroyed and stolen, long marches to reservation lands killed many Native people, and reservation lands were often located in harsh and unfamiliar environments far from ancestral lands, families and tribes were separated, retraining schools forbid traditional dress and customs, and religious beliefs and speaking of Native languages was forbidden, and many were beaten and killed, including children. Graves of those killed are still being discovered, and in many areas (often near extractive industry areas), Native Americans continue to be killed and disappeared, with little to no investigations as to who is doing the killing.
The U.S. has attempted, many times, to coerce Native Americans to buy land, rather than allowing them to live in traditional communal settings with rights to use all the lands and waters in common. Owning plots of land was not in the wheel house of Native Americans, and attempts at it often resulted in failure, and those plots of land then being sold off to Euro-Americans, exactly as intended by the U.S. government. Break tribal attachments, break family attachments, and you can break entire peoples.
After all those abuses, reservation lands continue to suffer broken promises and intrusions that impact reservation lands, including loss of water rights, fishing and hunting rights, pollution impacts that come from adjacent land uses, and including uranium mining impacts on the health of many Native American communities.
By avoiding any discussion of the historical facts of how Euro-Americans have treated Native Americans (including into the present era), then the entire lands and waters (i.e. real estate) of the U.S. (that was once inhabited only by Native peoples) can be ignored with respect to the endless abuses against Native Americans and how their lands and waters have been stolen.
It is absolutely amazing that real estate course materials lack a deep dive into Native American history but those materials are considered acceptable as teaching material, and I have been to many, many classes for nearly 20 years now, and Native Americans are NOT discussed, at all, and for this reason.
The Euro-American economic belief systems and practices are nearly 100% in opposition to the economic belief systems and practices of traditional Native Americans.
Native Americans tended to be (and still are) awesome Stewards of lands and waters. They were (and are) not 100% perfect, but they were (and are) far better at sustainable and restorative land and water management than Euro-Americans ever were.
Yes, many people now understand the concept of Stewardship of the earth and its millions of species, but, in practice, most of the world does not achieve those goals, and that failure is rooted in belief systems that go unquestioned and uncompared to other belief systems that value Stewardship as a core principle.
I have always valued Stewardship, even as a very young child. I always felt a kinship with nature and with those who shared my love and respect of nature and of other species.
I never understood my own culture (Euro-American) nor the religion in which I was raised, which spoke nothing of nature, but did speak of many abuses against nature and trees and animals, ritual slaughters, burning of trees, salting the earth, endless wars and killings of people, a vicious and jealous God taunting even the most faithful, and wanton destruction. I hated those teachings and later dumped those indoctrinations.
But I had not heard of a critical part of that story, the early part.
I took religious studies in college, and one big surprise was revealed. The Abrahamic faiths (Jewish, Christian, and Islam) all trace their stories back to Genesis. The original Genesis Story told that God created the Earth and all life on it, and after making that creation, Adam and Eve were created.
But what is key is that the ORGINAL Genesis story then told of God’s first commandment, which was that God told Adam & Eve (and future people) to be ULTIMATE STEWARDS over all that God had created, all of it, lands, waters, other species, etc. The Stewardship commandment meant that people would be willing to lay down their lives to protect all of God’s creations. I talked with 3 Rabbis to confirm this, which they did.
This critical (original) part of Genesis has been severely altered, and many people know this part as being when God told man to “dominate and subdue the earth”, but that was NOT the original commandment. That was a huge surprise to me, as I was raised on the altered version. But it was fantastic to realize that this story spoke of a God that was an extreme environmentalist, and that spoke to me, and I was happy to learn that.
The altered version of Genesis (dominate and subdue the earth) has also led to beliefs that harm the earth and other species (and harms humans too). The Euro-American economic model was heavily influenced by this altered Genesis story, which, in my view, is a huge reason why our economic system is based on endless exploitation of lands, waters, resources, and even people, including exploiting other Euro-Americans when necessary to preserve the class divisions and power structure of our society.
Our Realtor Associations ignore Native American history and the damaging interactions with the Euro-American system because looking at this history in detail exposes the on-going discriminations perpetuated by a mindset, a deeply held belief, even a religious calling, of pillaging natural resources, removing wild habitats and species, and denying Native peoples the essential environmental components to continue to practice their full range of traditions, which were mostly about stewardship of lands and waters. But, in fact, the Euro-American system also denies every person the right to be good Stewards of the Earth, including denying those stewardship concepts to many who are part of the Abrahamic religions but who do not know (or do not practice) the original story of Stewardship (though some do).
Capitalism (and many other types of economies) do not value wild nature, but, instead, exploit it aggressively. Communism in Russia and China have had similar severe impacts on the environment and on nature-oriented indigenous peoples. Many types of societies have had economies and beliefs that led to slow or fast destruction of wild habitats, often leading to resource shortages, conflicts, wars, and mass human migrations.
I encourage Realtors to listen to Indigenous podcasts and read some books about how they view Stewardship of the earth and its millions of species. I’m not saying that Indigenous people are the only ones who have those values, but long histories of many indigenous people speak to value systems that offer better models for sustainable and even restorative land and water management.
One of my favorite learning moments was of a North American tribe that used small dead trees to “seed” lakes and ocean inlets with nesting places for fish to lay eggs. The result was a far higher output of fish, which led to bigger catches for the native people and bigger food supplies for wild animals too.
Another example was a test of Native American fishing hooks that are designed to target certain species of certain sizes (not too small and not too big either). The Native American hooks had an 80% success rate of catching their targeted fish, while the commercial hooks had a majority of bycatch (not the targeted fish).
We can learn from Indigenous people, as they were here in the Americas for over 10,000 years, and when Europeans arrived, the lands and waters appeared nearly in virgin condition. Not perfect, but pretty darn excellent.
Our omissions of Native peoples (the details matter) are harming us.
It is a form of quiet but very impactive bigotry, lies by omission.
Julie, the article was about purportedly biased appraisers. NOT biased agents. There has been a lot of historic prejudice (racial and otherwise) by agents and brokers. Most frequently shortly after the Civil Rights Act and Fair Housing Act were passed (late ’69, 71 era. I’ve forgotten the exact years).
It took time for the boards, brokers, and agents to educate themselves. For what it’s worth, the FHA Lending Handbook in 1934 directly told agents, lenders, and sellers that racial homogeneity was a necessary element for sustaining property values. It took time to overcome decades of government-sanctioned and directed bias.
Its been a long time since I saw racism in real estate by licensed participants.
Again, where I haven’t seen prohibited bias is among appraisers. The last phony whitewashing set-up cases in the Baltimore area accused my own union’s Maryland State Representative of racial bias…he’s Black.
The Brookings Institute; Dr. Andre Perry and the racist former secretary of HUD Marcia Fudge (documented racism in her own written strategic plan for HUD before she resigned to go work for one of the ambulance chasers SHE helped get grants for!)