InfoBytes Blog
HUD discusses steps to address appraisal bias
On January 12, HUD Secretary Marcia L. Fudge announced at a Brookings Institute event that HUD is creating a process that people seeking FHA financing can use to request a review of their appraisal if they believe the results may have been affected by racial bias. According to the announcement, under the reconsideration of value (ROV) proposal, lenders will have clear guidance on how to review requests from borrowers for an ROV for the appraisal conducted in conjunction with their application for FHA-insured mortgage financing. The proposal also provides guidance for obtaining a second appraisal when material deficiencies are documented, and the appraiser is unwilling to resolve them. Fudge noted that the proposal “represents the first step to solidify the processes that lenders must follow when a borrower requests a [ROV] review if concerns arise around unlawful discrimination in residential property valuations.” Fudge also noted that the proposal supports the Biden-Harris administration’s PAVE Action Plan commitments and the continued work of the Interagency Task Force. As previously covered by InfoBytes, in March 2022, HUD delivered the Interagency Task Force on Property Appraisal and Valuation Equity (PAVE) Action Plan to President Biden. PAVE focuses primarily on actions to substantially reduce racial bias in home appraisals, as well as steps federal agencies can “take using their existing authorities to enhance oversight and accountability of the appraisal industry and empower homeowners and homebuyers to take action when they receive a valuation that is lower than expected.”