On March 23, 2022, the Interagency Task Force on Property Appraisal and Valuation Equity (PAVE) released a report entitled “Action Plan to Advance Property Appraisal and Valuation Equity.” The 58-page report is available here, while an Executive Summary of the report is also available.
Pages 5 and 6 of the report set forth 21 recommendations, termed “Agency Actions to Advance Valuation Equity.” These recommendations include:
- Clarify the application of the Fair Housing Act and ECOA to the appraisal industry to ensure appraisers have clear guidance on antidiscrimination obligations under current federal laws.
- Address potential bias in the use of technology-based valuation tools through rulemaking related to Automated Valuation Models (AVMs).
- Update appraiser qualification criteria related to appraiser education, experience, and examination requirements to lower barriers to entry in the appraiser profession.
- Require appraisal anti-bias, fair housing, and fair lending training for all appraisers who conduct appraisals for federal programs and work with the appraisal industry to require such trainings for all appraisers.
- Inform Federal Housing Administration (FHA) borrowers about the process to request a reconsideration of a valuation when the initial valuation is lower than expected.
- Define metrics that can help to identify and measure patterns of mis-valuation in the property valuation process.
Perhaps the most far-reaching recommendation for action is number 1.6, which states, “Develop a legislative proposal that modernizes the governance structure of the appraisal industry to improve transparency and public participation in the establishment of appraisal standards and appraiser qualification criteria, and to advance diversity in the profession.” Translation: Amend FIRREA to remove references to The Appraisal Foundation and transfer the Foundation’s authority to write appraisal standards and qualifications to the Appraisal Subcommittee or another federal government entity.
The U.S. Senate Committee on Banking, Housing, and Urban Affairs has scheduled a hearing entitled “Strengthening Oversight and Equity in the Appraisal Process” to be held March 24th at 10:00 am.
Not to be outdone, the U.S. House Committee on Financial Services announced it will hold its own hearing on March 29th at 10:00 am. The title of the hearing is “Devalued, Denied, and Disrespected: How Home Appraisal Bias and Discrimination Are Hurting Homeowners and Communities of Color.”
As of this writing, no proposed legislation related to the PAVE recommendations has been introduced. Because committees in both the Senate and the House are holding hearings, a bill (or, more likely, bills) can be expected very soon. Stay tuned.