The Property Appraisal and Valuation Equity (PAVE) Task Force recently released an Action Plan that outlines the historical role of racism in the valuation of residential property, examines the forms of bias that can impact property valuation, and describes affirmative steps federal agencies will take to advance equity in the appraisal process. In June 2021, President Biden announced the creation of the PAVE Task Force, an interagency task force comprised of thirteen federal agencies and offices tasked to “evaluate the causes, extent, and consequences of appraisal bias,” and create recommendations to tackle racial and ethnic bias in home valuations.
The PAVE Action Plan provides historical context for existing problems associated with inequitable property valuation and describes how discriminatory governmental policies have contributed to a gap in valuation between homes in communities of color and predominately white neighborhoods. The Action Plan details how undervalued appraisals harm both buyer and seller, potentially preventing prospective buyers from purchasing homes and resulting in a reduction of seller’s financial gains, which may in turn impact their ability to purchase their next home. Further, low appraisals can lead to persistent undervaluation in communities of color, as each lower purchase price becomes a potential comparable used by future appraisers.
The Action Plan goes on to outline a number of commitments the Task Force has agreed upon, including but not limited to: (i) addressing potential bias in the use of technology-based valuation tools through rulemaking; (ii) expanding regulatory agency examination procedures of mortgage lenders to include identification of patterns of appraisal bias; (iii) requiring appraisal anti-bias, fair housing, and fair lending training for all appraisers who conduct appraisals for federal programs; (iv) incorporating appraisal bias information into first-time homebuyer education courses; and (v) developing a data-sharing arrangement among all relevant government agencies and pursing joint strategies to make appraisal data more available and to better enable enforcement related to appraisal bias.
CFPB Director Rohit Chopra issued a statement reaffirming the importance of the PAVE Task Force, stating “[d]iscriminatory home valuations, whether computed by an algorithm or conducted in-person, undermine longstanding goals for fair housing and fair lending across our country.” Chopra further expressed that the CFPB will be “closely scrutinizing the work of The Appraisal Foundation, which wields enormous power to set standards and levy fees on the professional appraiser community,” and that the CFPB will be working with federal financial regulators to “implement a dormant authority in federal law to ensure algorithmic valuations are fair and accurate.”
The thirteen federal agencies and offices of the PAVE Task Force include the following: HUD; White House Domestic Policy Council; FFIEC Appraisal Subcommittee; Federal Reserve Board; CFPB; FDIC; FHFA; NCUA; OCC; Department of Agriculture; Department of Justice; Department of Labor; and the VA. WBK previously covered FHA updates to appraisal requirements to address discrimination here.