Mary Beth Caudill is a Senior Manager in Treliant’s Corporate and Regulatory Compliance service area, where she specializes in consumer protection compliance. Mary Beth has more than 15 years’ experience in fair and responsible banking, including compliance with laws and regulations pertaining to fair lending, fair housing, and unfair, deceptive,…
Treliant knows fair housing. If your financial services institution needs assistance with assessing your fair lending and fair housing risks embedded in your appraisal processes, we can help.
On April 15, 2021 the Real Estate Valuation Fairness Improvement Act of 2021 (Act) (H.R.2553) was introduced by U.S. Representatives Emanuel Cleaver II (D-MO) and Ritchie Torres (D-NY) to combat disparities in America’s residential and commercial real estate appraisal industry. This Act would establish an interagency task force to review and remove barriers to fair and equitable real estate valuation standards and to facilitate diversity and inclusion in the profession by provide federal grant funding.
The interagency task force would include members from the FHFA, FHA, Fannie Mae, Freddie Mac, Ginnie Mae, FHLB, HUD, Rural Development, VA, CFPB, Comptroller of the Currency, FDIC, NCUA, and the State Liaison Committee. An Advisory Committee would include civil rights advocates, consumer advocates, real estate appraisers, small lender representatives, private investor representatives, representatives from appraisal management companies or associated trade groups, industry experts on alternative valuation models, and representatives from the organization that adopts the appraisal standards and appraiser qualification criteria under title XI of FIRREA.
Representative Torres stated that “Passing the Real Estate Valuation Fairness and Improvement Act will directly combat disparities in America’s residential and commercial real estate appraisal industry. This type of systemic discrimination must be addressed through legislation in order to ensure a path for Black and Brown Americans to build intergenerational wealth”.
Specific tasks outlined in the proposed Act include the following:
- Harmonization of the various collateral underwriting standards and guidance of the agencies and entities represented on the Task Force governing residential and commercial real estate valuations, including standards and guidance with respect to appraisals, non-traditional and alternative methods of providing real estate property evaluations such as automated valuation models, processes and procedures for managing reconsiderations of value by consumers, and standards and guidance with respect to common collateral underwriting challenges, such as energy efficient housing and limited or inactive markets.
- Establishment of specific definitions for limited or inactive housing markets where comparable sales are limited or unavailable over a certain period of time, and establish greater flexibilities and guidance for appraisals and underwriting processes associated with appraisals conducted in such markets.
- Each agency and entity represented on the Task Force will share data necessary for the Task Force to carry out the duties of the Task Force, including conducting a study to determine whether there are racial disparities at both the borrower and community level in the valuation and price of the residential real estate used as collateral for mortgage applications processed.
- Identification of specific causes of any racial disparities detected in the aforementioned study
- Adopt changes to address such causes;
- If the Task Force determines that additional statutory authority is needed to adopt such changes, issue a report to Congress describing the needed statutory authority.
- Evaluation of barriers to entry into the appraisal profession that are disproportionately preventing minorities from entering, such as current minimum requirements established by the Appraiser Qualifications Board, the cost and availability of education, the content of the State appraiser exam questions, or the time it takes to finish training.