The Interagency Task Force on Property Appraisal and Valuation Equity (PAVE) [1], co-chaired by U.S. Department of Housing and Urban Development (HUD) Secretary Marcia L. Fudge [2] and White House Domestic Policy Advisor Neera Tanden [3], have announced a set of actions to deliver on the PAVE Action Plan, and ensure that every American who buys a home has the same opportunities to build generational wealth through homeownership.
Today’s actions are announced two years since President Biden announced the creation of PAVE–on the centennial of the Tulsa Race Massacre [4].
“Owning a home provides a path to the American dream. Yet, that dream has been deferred for Black and Brown people, as we have consistently had our homes under-valued,” said HUD Secretary Fudge. “Having your home undervalued is bigger than just a number on a page. It can be the difference between getting a loan and not–between having enough money for retirement or not. Through the President’s PAVE Task Force, the Biden-Harris Administration is taking bold action to address appraisal bias–and renewing our commitment to doing everything in our power to root it out, once and for all.”
Today’s actions by the Biden Administration include:
- Preventing algorithmic bias in home valuation: Six agencies are issuing a proposed rule [5] regarding automated valuation models (AVMs). The proposed rule [5], subject to a 60-day public comment period, would establish quality control standards to help ensure that AVMs are accurately and fairly assessing home values. Under the proposal, the agencies would require institutions that engage in covered transactions to adopt policies, practices, procedures, and control systems to ensure that AVMs adhere to quality control standards designed to ensure the credibility and integrity of valuations. The proposed standards are designed to ensure a high level of confidence in the estimates produced by AVMs; help protect against the manipulation of data; seek to avoid conflicts of interest; require random sample testing and reviews; and promote compliance with applicable nondiscrimination laws.
- Empowering consumers to take action against appraisal bias: Reconsiderations of value (ROV) provide an opportunity to challenge potentially inaccurate appraisal valuations when obtaining or refinancing a mortgage. Agencies are taking actions to promote industry-wide consistency for ROV processes and increase consumers’ knowledge about the option to pursue an ROV.
- Breaking down barriers to entry into the appraisal profession: The PAVE Task Force is publishing a dashboard that shows which states impose education, examination, and experience requirements to become an appraiser that are more stringent than the federal minimum requirements and is calling on states to make appropriate changes to reduce unnecessary barriers to entry to the appraiser profession. The Appraisal Subcommittee (ASC) will continue to provide ongoing assistance to states interested in reducing barriers to entry. Today’s announcement builds on ongoing efforts by the PAVE Task Force to create a more representative and well-trained appraiser workforce. Earlier this year, the PAVE Task Force issued a letter to the Appraisal Foundation (TAF) urging it to find meaningful solutions to the experience, education, and examination requirements that exceed most industry standards and are not linked to evidence showing how they produce better, more accurate appraisals.
Homeownership remains a driver of the nation’s wealth gap, with wide racial and ethnic disparities in homeownership rates and the financial return associated with owning a home. Today, the median white family holds eight times the wealth of the average Black family, and five times the wealth of the average Latino family.
The Task Force membership is comprised of the following federal agencies and officials:
- Secretary of Housing and Urban Development (co-chair)
- White House Domestic Policy Advisor (co-chair)
- Department of Justice Secretary of Agriculture
- Secretary of Labor
- Secretary of Veterans Affairs
- Comptroller of the Currency (OCC)
- Chairman of the Board of Governors of the Federal Reserve (FRB)
- Chairman of the Federal Deposit Insurance Corporation (FDIC)
- Chairman of the National Credit Union Administration (NCUA)
- Director of the Federal Housing Finance Agency (FHFA)
- Director of the Consumer Financial Protection Bureau (CFPB)
- Executive Director of the Appraisal Subcommittee (ASC)