2024 USPAP updates improve clarity surrounding nondiscrimination

Changes to the 2024 USPAP Improve Clarity Surrounding Nondiscrimination

 

The Uniform Standards of Professional Appraisal Practice (USPAP) sets forth the ethical and performance standards for appraisers throughout the United States. During the last several years, concerns about alleged discriminatory practices occurring within the profession, coupled with unclear language that outsiders thought permitted these practices, prompted the ASB to revise the language in the ETHICS RULE regarding discrimination. We’re providing a closer look at the new Nondiscrimination section of the ETHICS RULE and how these changes will affect how you perform appraisals.

The Appraisal Foundation’s official on-demand version of the 2024-2025 USPAP 7-Hour National Update Course is now available in many states!

The ETHICS RULE prior to the 2024 USPAP changes

There have been several well-publicized allegations of discrimination against appraisers during the last several years, in communities all over the country.  Regardless of whether these allegations have merit individually, in the aggregate, they have damaged public trust in the profession.  As the entity that is responsible for promoting and maintaining public trust in the appraisal profession, the Appraisal Standards Board (ASB) of The Appraisal Foundation took action.

Previous editions of USPAP contained language in the ETHICS RULE that prohibited an appraiser from using or relying on “unsupported conclusions” about protected characteristics. This led to the misconception that appraisers were permitted to use or rely on protected characteristics as long as they could support their conclusions, even though this wasn’t actually the case.

Revising the ETHICS RULE with a Nondiscrimination section

To provide clarity and eliminate concerns, the ASB removed the previous ETHICS RULE language regarding supported and unsupported conclusions, and crafted a new Nondiscrimination section which clearly indicates to appraisers and stakeholders that discrimination is prohibited.

Specifically, the Nondiscrimination section states that appraisers must not act “in a manner that violates or contributes to a violation of federal, state, or local antidiscrimination laws or regulations,” and it references three federal laws that are relevant to appraisal practice and focused on antidiscrimination – the Fair Housing Act (FHAct), the Equal Credit Opportunity Act (ECOA) and the Civil Rights Act of 1866. The Nondiscrimination section also introduces the concepts of disparate treatment and disparate impact which are fundamental to understanding fair housing, fair lending, and applicable regulations.

Advisory Opinions

For 2024, the ASB has retired Advisory Opinion 16 (AO-16) and replaced it with two new Advisory Opinions, AO-39 and AO-40. Advisory Opinions do not establish new standards and are not intended to be enforceable, but they do provide guidance and illustrate applicability. AO-39 contains three illustrations of how to apply antidiscrimination laws to appraisal assignments. AO-40 contains four illustrations of language in appraisal reports that could be considered discriminatory, and it also addresses pretext and code words.

How do the USPAP revisions to the Nondiscrimination section affect appraisers?

If you’re concerned about how this change will affect how you complete appraisals, the good news is there are no new obligations for appraisers in this new section of the ETHICS RULE. Appraisers were always required to be aware of, and comply with, laws and regulations that applied to the appraiser or the assignment.  Appraisers were also always prohibited from performing assignments with bias.  These requirements are carried forward in the 2024 edition of USPAP.  The primary difference is that the new USPAP contains clear and concise language regarding an appraiser’s ethical obligation not to engage in discrimination.

Enroll in the 2024-2025 7-Hour USPAP Update Course

McKissock Learning has been the exclusive provider of The Appraisal Foundation’s official on-demand 7-hour National USPAP Update Course since 2012 and continues to provide the same level of excellence with the 2024-2025 USPAP update. We are dedicated to providing the convenience and flexibility you need.  This mandatory course is available through live, in-person classes, livestream webcasts, and an on-demand, self-guided online course. Enroll today and stay up-to-date with your continuing education!