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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowVice President Kamala Harris will announce an action plan to stop racial discrimination in the appraisal of home values, according to senior Biden administration officials.
The plan contains 21 steps to improve oversight and accountability, including a legislative proposal to modernize the governance structure of the appraisal industry. Appraisers help to determine the value of a home so that buyers can receive a mortgage.
The Biden administration officials insisted on anonymity to discuss the administration’s action plan ahead of Wednesday’s announcement.
Multiple reports, including a September analysis by mortgage buyer Freddie Mac, show that appraisers are more likely to undervalue homes in Black and Hispanic neighborhoods. This form of discrimination widens the racial wealth gap and makes it harder for many Americans from disadvantaged backgrounds to move up the economic ladder.
One Black homeowner in Indianapolis found the appraised value of her home rose from $125,000 to $259,000 after she declined to state her race in her application and removed all family photos and African American art in the home.
As part of the action plan, the government will expand the complaint hotline for the Department of Housing and Urban Development and the Consumer Financial Protection Bureau. There also will be appraisal bias training in homebuyer education classes and efforts to ensure that the computer systems used to value homes do not perpetuate racial biases.
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I’m not discounting the practice is happening because some people really suck. Generally speaking nobody benefits from lower appraisals. Market value is market value. Banks are not taking risks with real estate considering what we learned from 2008, but they will take your money. The story linked in this article had serious flaws and the 3rd appraiser went unnamed… seems suspect to me. That value jump makes no sense. I’ve had numerous appraisals completed and none were unreasonable. They all came back $12-15K below true market value. I’m glad the government is taking this serious but I think the news is hyping up the issue.
If the one story they cited was the only one then I might agree with your comments, but documented instances happen what to often to be a fluke.
I do not know why a lender even needs to know the race of an applicant. SO, who is to blame, if there is indeed a problem, the appraiser or the lender? I am in the industry and have not seen any evidence of this practice but can see how it could happen, but this story might be an exaggeration. Supply and demand are the key elements of a free market and that is the most important factor in this process. I see many poor appraisals all of the time but do not see a racial component to this.
Do folks like you feel that your experience is relevant to this story simply because you “work” in the industry or because you haven’t seen evidence of this practice? The “if I’ve never seen it, it must be exaggerated” mentality is truly comical. personal anecdotes are and will always be meaningless.