Webinar
Collateral Damage: The Consequences of Racial Bias in the Residential Appraisal Process
May 19, 2021 | 2:30 PM - 4:30 PM EDT
Online
Description
"There's been a reckoning of sorts in terms of looking at how property is valued in the intrinsic value of whiteness and blackness in these processes."
Dr. Andre Perry, Senior Fellow of the Metropolitan Policy Program at the Brookings Institute
Stories of bias in the appraisal process have raised the question about how far the United States has yet to go to ensure that everyone can access housing and lending markets free from discrimination. Respectively, the average Black and Latino family has just one-tenth and one-eighth of the wealth of the average White family, much of which is related to home equity. According to researchers and anecdotal evidence, there are stark differences in how properties owned by people of color are valued compared to those owned by Whites. If appraisal bias goes unaddressed, households of color will never be able to reach economic parity with White households.
The National Fair Housing Alliance (NFHA) partnered with the National Fair Housing Training Academy (NFHTA) to host a public forum that explored how fair housing laws can be used to challenge discriminatory appraisals and help build wealth in communities of color. Nearly 600 fair housing partners joined us in this critical conversation.
Overview
- Welcome from Cashauna Hill, Executive Director of the Louisiana Fair Housing Action Center, and introduction of panelists:
- Peter Christensen, General Counsel, LIA Administrators & Insurance Services
- Andre Perry, Senior Fellow, Metropolitan Policy Program, Brookings Institute
- Lisa Rice, President and CEO, NFHA
- Jillian White, Head of Collateral, Better.com
- Presentation and discussion by panelists on:
- Appraiser-specific standards and laws regarding discrimination
- Historical effects of racism on the devaluation of real property in Black communities
- Methods used to artificially deflate or inflate appraisals and the consequences for Black families
- Implicit and explicit bias evidenced in some appraisals
- Question and answer session co-moderated by Ms. Hill and Robert Doles, Director of the Office of Systemic Investigation at the Office of Fair Housing and Equal Opportunity
A video of the forum has been posted on this page, along with a transcript of the conversation and a robust resources list for your continued reference.
Learning Objectives
- Understand the history of appraisal valuations in communities of color and its impact on those residents and communities.
- Understand the Fair Housing Act's provisions for non-discriminatory appraisals of dwellings.
- Identify how discrimination may occur in the appraisal valuation process.
- Explain the impact of discriminatory appraisals on generational wealth.
- Identify the methods by which a discriminatory appraisal may be challenged.
Audience
Forums target Fair Housing Initiatives Program (FHIP) organizations, Fair Housing Assistance Program (FHAP) agencies, and are open to all other partners interested fair housing.
Materials
Job Aid: Flowchart of the Real Estate Appraisal Process
Date Published: May 2021
This job aid provides information for FHIP and FHAP practitioners on the home appraisal process. It includes a flowchart of a typical home appraisal and introduction of the different parties involved in the appraisal process. Intake and investigative staff can reference this job aid while interacting with potential aggrieved parties and it serves as a tool for effective investigative planning to address allegations of home appraisal bias.
Sample Form 1004 - Uniform Residential Appraisal Report
Date Published: March 2005
This is a sample template for appraisal reports with the purpose of providing a lender/client with an accurate and informed opinion of the market value of a subject property.
Mapping the Black Homeownership Gap
Date Published: February 26, 2018
Urban Institute researchers found large disparities between the homeownership rates of Black families and White families in all 100 of the cities with the largest black populations, the largest disparities in a half century.
The Devaluation of Assets in Black Neighborhoods
Date Published: November 27, 2018
This article, co-authored by Mr. Perry, provides data regarding the state of Black homeownership, further examination of devaluation, and an interactive map and dashboard of devaluation of Black homes in communities across the nation.
Date Published: November 27, 2018
This infographic, created by the Brookings Institution, highlights racial disparities in homeownership.
The 'Heartbreaking' Decrease in Black Homeownership
Date Published: February 28, 2019
This Washington Post article summarizes data and research into record lows of Black homeownership rates.
Know Your Price: Valuing Black Lives and Property in America's Black Cities
Date Published: May 19, 2020
Additional information regarding Mr. Perry's book examining the history of appraisal bias and its economic and social consequences for Black families and neighborhoods.
Black Homeowners Face Discrimination in Appraisals
Date Published: August 25, 2020
This New York Times article highlights the story of Abena and Alex Horton, a mixed-race couple, who experienced 40 percent increase in their home's appraised value after they "removed all signs of Blackness."
From the Outside In: What Do Home Appraisers Look For In a House?
Date Published: November 25, 2020
The article includes a brief narrative of various data points that appraisers leverage when determining a market value of a home.
For Black Homeowners, a Common Conundrum with Appraisals
Date Published: January 21, 2021
This recent article spotlights the experiences of Gwen and Lorenzo Mitchell, who experienced discrimination in the appraisal process.
Racial and Ethnic Bias in the Appraisal Process
Date Published: February 3, 2021
This webpage includes a recent conversation with Ms. White regarding the impact of bias in appraisals.
HUD Concilation Agreement with JPMorgan Chase on alleged discriminatory appraisal
Date Published: March 8, 2021
This document details the terms and conditions of a conciliation agreement involving an October 2020 fair housing complaint filed with HUD by a Complainant in Illinois. The agreement includes monetary relief for the Complainant and robust public interest relief - including training for all of the Respondent's lender advisors and client care specialists; HUD review of policies; review of how the Respondent addresses customer complaints; and guidance for customers to escalate concerns of appraisal bias.
Council Considers Racial Bias in Home Appraisals
Date Published: April 26, 2021
This recent article details the steps taken by the Philadelphia City Council to examine racial disparities in residential appraisals and its impact on Black homeownership.
Date Published: April 27, 2021
This recent article released by the Appraisal Institute discusses the types of bias in real estate and steps taken by the appraisal industry to undercover and address bias.
Why Black Neighborhoods Continue to Struggle
Date Published: April 29, 2021
This recent article, published by Governing, examines the systemic issues impacting Black neighborhoods in major cities, including wealth disparities, homeownership, and access to employment.
The ASC provides federal oversight of state appraiser and appraisal management company (AMC) regulatory programs and a monitoring framework for the Appraisal Foundation and the Federal Financial Institutions Regulatory Agencies in their roles to protect federal financial and public policy interests in real estate appraisals utilized in federally related transactions.
The Appraisal Foundation is the nation's foremost authority on the valuation profession. The organization sets the Congressionally authorized standards and qualifications for real estate appraisers as well as qualifications for personal property appraisers and provides voluntary guidance on recognized valuation methods and techniques for all valuation professionals.
U.S. v. Am. Inst. of Real Estate Appraisers, 590 F.2d 242 (7th Cir. 1978)
Date Published: December 1978
DOJ alleged that Defendants had engaged in unlawful discriminatory practices by promoting standards wherein appraisers and lenders used race and national origin as negative factors in determining the value of dwellings. The parties eventually entered into a settlement agreement.
Swanson v. Citi, No. 09 C 2344 (N.D. Ill. Dec. 22, 2009)
Date Published: December 2009
Plaintiff filed a case against a bank and appraisers for violations of the Fair Housing Act, alleging that the appraisers deliberately appraised Plaintiff’s home far below its actual value so that the bank would have an excuse to deny Plaintiff’s application for a home equity loan. Plaintiff believed that defendants discriminated against her due her race.
Appraisal Institute: Standards of Professional Practice
Date Published: 2018
This resource includes the various standards of professional practices for appraisers, along with additional information about the Uniform Standards of Professional Appraisal Practice (USPAP), as referenced by Mr. Christensen during the forum.
Five-star review, one-star profits: The devaluation of business in Black communities
Date Published: February 2020
In this report authored and referenced by Dr. Perry, it was found that businesses in Black-majority neighborhoods experience annual losses in business revenue between $1.3 billion and $3.9 billion. This report is a continuation of Dr. Perry’s research to understand how assets are valued (and undervalued) in America’s Black neighborhoods.
Date Published: December 2020
This proposed bill provides protections against discriminatory appraisals of residential property in New Jersey, on basis of race or national origin.
California Assembly Bill 948: Fair Appraisal Act
Date Published: February 2021
This proposed bill would require that every contract for the sale of real property in California contain a notice stating that the buyer is entitled to an unbiased appraisal of the property and requires the appraisal to be objective and not influenced by improper or illegal considerations.
Date Published: March 2021
In this letter, NFHA President and CEO Lisa Rice advocates for additional reforms to the appraisal policies and recommends process improvements to ensure real estate appraisals are free from bias.
H.R.2553 - Real Estate Valuation Fairness and Improvement Act of 2021
Date Published: April 2021
Proposed federal legislation would create an interagency task force to study factors that lead to disparities in property valuations and lay out specific steps to combat them.
Date Published: April 2021
This proposed legislation provides that a real estate broker or managing broker in Illinois may not engage in discrimination when preparing a broker price opinion or comparative market analysis for residential real estate.
Moderator and Panelist Bios
About the Forums
Forums are online conversations designed to allow multi-directional interactions between HUD and its FHIP and FHAP partners around emerging fair housing issues regarding processing complaints, conducting investigations, and managing agencies. Topics will evolve based on partner needs and interests.
Disclaimer: The National Fair Housing Forum webinar series provides training by and to HUD partners, including entities and persons participating in HUD's FHAP Program and FHIP Program. The series offers multidirectional idea sharing in real-time. The views offered by speakers and participants do not necessarily reflect HUD's views. Similarly, unless otherwise noted, documents provided as part of the webinar were created and maintained by other public and private organizations and may not reflect HUD's official position. HUD-produced guidance documents, except when based on statutory or regulatory authority or law, do not have the force and effect of law and are not meant to bind the public in any way. Such guidance documents are intended only to provide clarity to the public regarding existing requirements under the law or HUD policies. The information is not intended to provide legal advice to any individual or entity. Please refer to relevant laws and regulations and/or your own legal advisor before taking any action based on information appearing on this site or any site to which it may be linked. Some materials have been translated into languages other than English; slight variations may have resulted from the translation.
Tags: Fair Housing NFHTA