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Treliant Takeaway:

Treliant knows fairness, credit risk, and consumer protection.  If your financial services company needs assistance with evaluating your appraisal, valuation, and valuation review practices, we can help.

Action Plan Highlights:

On March 23, 2022, the Biden Administration’s Interagency Task Force on Property Appraisal and Valuation Equity (PAVE)[1] released “Action Plan to Advance Property Appraisal and Valuation Equity: Closing the Racial Wealth Gap by Addressing Mis-valuations for Families and Communities of Color” (Action Plan).

The Action Plan is based on PAVE’s research and consultation with subject matter experts and leaders in industry, academia, trade groups, civil rights groups, and government. It considers stakeholder suggestions regarding root causes and possible solutions to bias and disparities in valuations of residential real estate. Action Plan items include:

  • The CFPB, DOJ, VA, and HUD will issue guidance to clarify the applicability of FHA and ECOA to the appraisal industry.
  • NCUA, FRB, FDIC, OCC, HUD, USDA, VA, and FHFA will ensure that appraisers or regulated institutions’ use of appraisals are directly included in supervisory Fair Housing Act and ECOA compliance requirements, and are considered in every review of relevant existing and future policies and guidance.
  • HUD will require FHA lenders to track usage and outcomes of requests for Reconsideration of Value (ROVs) and report this data to HUD.
  • FDIC, FRB, OCC, and NCUA will issue guidance regarding ROVs to encourage effective and nondiscriminatory use of ROVs. These agencies will also consider whether formal rulemaking is needed.
  • FHFA will ensure the redesigned Uniform Appraisal Dataset (UAD) and the related Uniform Residential Appraisal Report (URAR) form capture more objective data points and reduce reliance on free-form commentary. In addition, FHFA will direct the GSEs to update the URAR to strengthen the language and increase the prominence of the appraiser’s nondiscrimination certification.
  • PAVE will evaluate URAR elements that may be connected to appraisal discrimination, such as designation of declining market areas and uniform neighborhood boundaries.
  • PAVE agencies will identify additional data elements for FHFA to consider incorporating into the URAR and UAD.
  • PAVE agencies participating in rulemaking related to Automated Valuation Models (AVMs) commit to including a nondiscrimination quality control standard in the proposed rule.
  • PAVE agencies will pursue legislation to modernize the governance structure charged with setting and enforcing appraisal standards and appraiser qualification.
  • PAVE agencies will strengthen coordination among supervisory and enforcement agencies to identify discrimination in appraisal and valuation processes by aligning investigative protocols, developing data analysis approaches, and identifying illustrative case studies. If needed, the federal banking supervisory agencies will modify or develop new interagency MOUs to facilitate information sharing.
  • The federal banking agencies will enhance examination procedures to include identification of appraisal bias in examinations of mortgage lenders. Including annual data analyses and reviews of examinations to improve effectiveness in identifying patterns of valuation bias.
  • PAVE agencies will provide The Appraisal Foundation’s Appraiser Qualifications Board (AQB) and state appraisal regulatory agencies with suggestions to increase diversity in the appraisal industry and reduce barriers to entry and to incorporate appraisal bias and fair housing training as a requirement for appraiser licensing, certification, and recertification.
  • HUD, USDA, and VA will propose rules to require appraisal bias, fair lending, and fair housing training for appraisers supporting their agencies’ programs.
  • PAVE agencies will provide additional resources to educate consumers on appraisal bias and ROVs and to assist consumers concerned that appraisal bias has affected their loan applications.
  • PAVE agencies will develop consumer awareness materials related to appraisal bias, ROVs, and consumer rights. In addition, HUD will create housing counselor educational materials related to appraisal bias.
  • HUD will update its Fair Housing Initiatives Program to include grants for testing of appraisal bias.
  • PAVE members will enhance data sharing and foster additional research into appraisal discrimination, including research into alternatives to traditional appraisals.

In addition to the steps in the Action Plan, PAVE members have taken additional actions to advance valuation equity:

  • HUD issued Mortgagee Letter 21-27 to clarify existing non-discrimination requirements and the applicability of the Fair Housing Act to appraisers on the FHA Appraiser Roster.
  • The Appraisal Subcommittee released an independent review of the Uniform Standards of Professional Appraisal Practice (USPAP) and the Real Property Appraiser Qualification Criteria.
  • The OCC launched Project Roundtable for Economic Access and Change (REACh) to facilitate cooperation between bankers and civil rights organizations to promote improvements in valuation processes and address the racial gap in home ownership.
  • HUD and the Federal Housing Finance Agency (FHFA) have entered into a Memorandum of Understanding to enhance enforcement of the Fair Housing Act and oversight of Fannie Mae, Freddie Mac, and the Federal Home Loan Banks.
  • FHFA released information regarding appraisals submitted to Fannie and Freddie whose descriptions of neighborhood characteristics included inappropriate references to the racial and ethnic composition, immigrant status of residents, languages spoken in an area, amenities geared to a specific race, religion, or culture, white flight, sundown towns, races of local government members, overcrowding, and diversity of school systems.
  • FHFA incorporated taking steps to reduce appraisal bias into the 2022 scorecard used to evaluate performance of Fannie Mae and Freddie Mac executives.
  • FHFA released Advisory Bulletin 2021-04 to reinforce supervisory expectations that the GSEs not rely on discriminatory appraisals.
  • FHFA permitted the GSEs to incorporate desktop appraisals into their selling guides for many new purchase loans beginning in March 2022.
  • Entities regulated by the FHFA have partnered with the National Urban League and the Appraisal Institute to offer workshops and scholarships to expand appraiser diversity.
  • The CFPB, FRB, FDIC, NCUA, OCC, HUD, FHFA, and DOJ provided comments to The Appraisal Foundation on the need to enhance antidiscrimination standards in USPAP.
  • DOJ filed a statement of interest in a private lawsuit alleging appraisal discrimination.

Based on the Action Plan and separate actions taken by PAVE members, it is clear that appraisal discrimination remains a “hot topic” for federal regulators and enforcement agencies.


[1] PAVE is co-led by Housing and Urban Development (HUD) Secretary Fudge and White House Domestic Policy Advisor Susan Rice. It is composed of 13 federal agencies and offices, including HUD, the White House Domestic Policy Council, the Federal Reserve Board, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the National Credit Union Administration, the Comptroller of the Currency, the Department of Agriculture, the Department of Justice, the Department of Labor, the Department of Veterans Affairs, and the Appraisal Subcommittee of the Federal Financial Institutions Examination Council.