The U.S. Department of Housing & Urban Development (HUD) has announced the delivery of the Interagency Task Force on Property Appraisal and Valuation Equity (PAVE) Action Plan to President Joe Biden, a measure geared toward the elimination of racial bias in the home lending and appraisal process and promoting generational wealth creation through homeownership.
When enacted, PAVE will represent the most wide-ranging set of reforms ever put forward to advance equity in the home appraisal process.
Also established today by the White House is the PAVE Task Force, co-chaired by HUD Secretary Marcia L. Fudge and White House Domestic Policy Advisor Susan Rice—an interagency initiative to address racial bias in home appraisals—comprised of senior leaders from 13 Cabinet and independent agencies, and additional components of the Executive Office of the President.
“For generations, millions of Black and brown Americans have had their homes valued for less than their white counterparts simply because of the color of their skin or the racial makeup of the neighborhood,” said Secretary Fudge. “Black and brown homeowners in communities just like mine have not felt that they have had a voice or that the Federal government was doing enough to redress the issue of racial bias in the appraisal process. With the PAVE Task Force, the Biden-Harris Administration is taking a whole-of-government approach to fixing this problem. We are proud of the work of this Task Force, and we are looking forward to continuing to work within the Administration and with partners to do all we can to root out discrimination in the appraisal and homebuying process.”
President Biden first announced the creation of the PAVE Task Force on the June 1, 2021, marking the centennial of the Tulsa Race Massacre, where he charged federal agencies with evaluating the causes, extent, and consequences of appraisal bias and establishing a transformative set of actions to root out inequity.
A recent Freddie Mac report citing U.S. Census Bureau data found that 12.5% of appraisals for home purchases in majority-Black neighborhoods, and 15.4% in majority-Latino neighbor-hoods result in a value below the contract price (the amount a buyer is willing to pay for the property), compared to only 7.4% of appraisals in predominantly white neighborhoods.
"Along with other federal financial regulators, we will be working to implement a dormant authority in federal law to ensure that algorithmic valuations are fair and accurate," said Consumer Financial Protection Bureau Director Rohit Chopra. "We have already begun to solicit input from small businesses in order to develop a proposed rule, and we are committed to addressing potential bias in these automated valuation models. We will also be taking additional steps through our research, through our supervisory examinations of financial institutions and their service providers, and through law enforcement actions. We welcome input and engagement from the public, the professional appraiser community, and across the residential real estate industry.”
The PAVE Task Force engaged more than 150 stakeholder groups—including appraisers, appraisal management companies, lenders, civil rights and advocacy groups, academic institutions, philanthropy organizations, and individuals—who have experienced instances of appraisal bias, to listen and learn diverse perspectives on what is working and how the government can work to embed equity in the home valuation process.
“Since his very first day in office, President Biden has made advancing equity and racial justice a top priority across the entire federal government,” said Rice. “This PAVE Task Force took that responsibility seriously. We have a long way to go, but the steps laid out in this Action Plan will help our country reduce bias in home valuations, narrow the racial wealth gap, and deliver a stronger and more equitable future for all Americans.”
The PAVE Task Force membership is comprised of the following officials:
- Secretary of Housing and Urban Development (Co-Chair) Marcia L. Fudge
- Assistant to the President for Domestic Policy; Director of the Domestic Policy Council (Co-Chair) Susan Rice
- Associate Attorney General, U.S. Department of Justice Vanita Gupta
- Secretary of Agriculture Tom Vilsack
- Secretary of Labor Martin J. Walsh
- Secretary of Veterans Affairs Denis McDonough
- Comptroller of the Currency (OCC) Michael Hsu
- Chairman of the Board of Governors of the Federal Reserve (FRB) Michelle W. Bowman
- Chairman of the Federal Deposit Insurance Corporation (FDIC) Jelena McWilliams
- Chairman of the National Credit Union Administration (NCUA) Todd Harper
- Acting Director of the Federal Housing Finance Agency (FHFA) Sandra L. Thompson
- Director of the Consumer Financial Protection Bureau (CFPB) Rohit Chopra
- Executive Director of the Appraisal Subcommittee (ASC) Jim Park
- Executive Director of the PAVE Task Force Melody Taylor
“I applaud HUD Secretary Marcia Fudge and Domestic Policy Council Director Susan Rice for their leadership of the PAVE Task Force and the development of this final report,” said FHFA Acting Director Sandra L. Thompson. “Today's report affirms the persistence of bias in the housing finance system and provides a roadmap for the federal government to work across agencies, and with Congress, the civil rights community, and industry stakeholders to take meaningful steps against factors that contribute to the misvaluation and devaluation in property appraisals experienced by borrowers and communities of color.”