HUD and The Appraisal Foundation forge historic deal to tackle racial inequity in real estate appraisal
15th July 2024 · 0 Comments
By Stacy M. Brown
Contributing Writer
(NNPA Newswire) — To address systemic racial disparities in the real estate appraisal profession, the U.S. Department of Housing and Urban Development (HUD) announced today a historic Conciliation Agreement with The Appraisal Foundation (TAF).
TAF, the organization responsible for setting standards and qualifications for real estate appraisers, faced allegations of creating discriminatory barriers that prevent Black individuals and other persons of color from entering the profession, violating the Fair Housing Act.
Recent data from the Bureau of Labor Statistics highlights the stark lack of diversity in the appraisal industry, with 94.7 percent of property appraisers and assessors being white and a mere 0.6 percent being Black, making it the least racially diverse among 800 surveyed occupations. The Interagency Task Force on Property Appraisal and Valuation Equity (PAVE) warns that this homogeneity contributes to the persistent undervaluation of properties in communities of color, further entrenching the racial wealth gap.
Fannie Mae’s 2021 research underscores this issue, revealing that 12.5 percent of appraisals in majority-Black neighborhoods and 15.4 percent in majority-Latino neighborhoods were valued below the contract price, compared to just 7.4 percent in predominantly white neighborhoods.
The HUD complaint against TAF identified the experience requirement for appraisers as a significant barrier to entry for people of color. This requirement often forces aspiring appraisers to secure supervision from a licensed appraiser, typically someone they know personally, thereby perpetuating a cycle of exclusion. The new agreement aims to dismantle these barriers by providing increased funding for alternative pathways to meet experience requirements, making the profession more accessible and inclusive.
HUD Acting Secretary Adrianne Todman hailed the agreement as a significant victory in the fight against racial bias in home appraisals. “To eliminate racial and ethnic bias from home appraisals, we must ensure that the industry reflects the diversity of America,” Todman stated. “This historic agreement will help build a class of appraisers based on merit rather than connections, bringing us closer to eradicating housing discrimination and opening doors of opportunity for all.”
Diane M. Shelley, HUD’s principal deputy assistant secretary for Fair Housing and Equal Opportunity, emphasized the agreement’s significance in promoting inclusivity. She thanked Demetria McCain, who initiated the investigation and secured the conciliation. “HUD’s agreement requires policy changes that expand pathways to becoming an appraiser, promoting greater inclusion of Black people and other persons of color,” Shelley said. “This groundbreaking agreement addresses systemic issues that have perpetuated unacceptable inequities in the appraisal industry.”
Melody C. Taylor, executive director of PAVE, highlighted the crucial role of homeownership in addressing the racial wealth gap. “Homeownership remains a primary driver of wealth disparity, with wide racial and ethnic gaps in homeownership rates and financial returns from owning a home,” Taylor noted. “This Agreement is a significant step forward in cultivating a diverse and well-trained appraiser profession that upholds equal opportunity for all.”
Under the terms of the Agreement, TAF will establish a $1.22 million scholarship fund to cover costs for aspiring appraisers attending the Practical Applications of Real Estate Appraisal (PAREA) programs. These programs provide an alternative pathway to meet state licensure experience requirements. The agreement also includes:
• Provisions for marketing the PAREA program and scholarship fund to diverse communities.
• Evaluating the effectiveness of this marketing.
• Collaborating with state and territory appraiser regulatory agencies for the program’s adoption.
Although HUD did not issue findings before the agreement and the deal does not constitute admissions by TAF of any violations, it represents an enforceable resolution to dismantle long-standing barriers and foster greater diversity and equity within the appraisal industry.
Individuals who believe they are victims of housing discrimination can contact HUD at (800) 966-9777 (voice) or (800) 927-9275 (TTY). Additional information is available at HUD’s fair housing website.
This article originally published in the July 15, 2024 print edition of The Louisiana Weekly newspaper.
