The Week Ahead: Zeroing in on the Roots of Appraisal Bias

On Wednesday, November 1 at 9:00 a.m. Central, the Federal Financial Institutions Examination Council’s Appraisal Subcommittee (ASC) will hold its third public hearing on appraisal bias to discuss how a residential appraisal is developed and reviewed, the process for reconsiderations of value for residential real estate valuations, and the development of rural appraisals.

The event will be presented virtually, in addition to the live portion, which will be held at will be held in person at the U.S. Department of Housing and Urban Development headquarters, located at 451 7th St. SW, Washington, DC, 20410. Members of the public can also submit written comments on the topics of the hearing to [email protected] until November 15.

To help prevent discrimination in the home appraisal process, the CFPB has joined other federal agency regulators as members of the Appraisal Subcommittee, which oversees the real estate appraisal regulatory framework for federally related transactions, including monitoring and reviewing of The Appraisal Foundation. Throughout 2023, the Appraisal Subcommittee has conducted a series of public hearings to better understand the challenges and potential solutions related to appraisal bias.

The first-ever public hearing of Appraisal Subcommittee, which took place in January, focused on understanding the home appraisal system and the root causes of appraisal bias. The session was led by CFPB Deputy Director Zixta Martinez, and featured CFPB Director Rohit Chopra, as well as HUD Secretary Marcia L. Fudge and Federal Housing Finance Agency (FHFA) Director Sandra Thompson. Witness testimony included homeowners with first-hand experience in receiving an undervaluation of their home, as well as academic research on the causes of appraisal bias. The purpose of the hearing was to keep the spotlight on the issue of appraisal bias, provide information on the role of the Appraisal Subcommittee in the appraisal regulatory system, and receive feedback from key stakeholders and the public.

The second hearing, held in May, focused on appraisal standards, appraiser qualification criteria, barriers to entry into the profession, and appraisal practices. Witnesses included the chairs of The Appraisal Foundation’s Appraiser Qualifications Board and Appraisal Standards Board, as well as representatives from the California Bureau of Real Estate Appraisers and the National Fair Housing Alliance, and an appraiser. Among the topics discussed, witnesses addressed fees associated with obtaining and maintaining appraiser credentials, and The Appraisal Foundation’s overall lack of transparency and regulatory guardrails.

The following witnesses are scheduled to share testimony during the upcoming November 1 hearing:

• Robbie Wilson, Chief Appraiser, RSDS LLC, and President, National Society of Real Estate Appraisers
• Dean Kelker, Board of Directors, Real Estate Valuation Advocacy Association
• Danny Wiley, Senior Director of Single-Family Valuation, Freddie Mac
• Lyle E. Radke, Senior Director, Single-Family Collateral Risk, Fannie Mae
• Sharon Whitaker, Vice President, CRE & Mortgage Finance, American Bankers Association

Wilson, a graduate of the University of Texas in Real Estate, earned an MBA in Business Finance, and has built a life around real estate. His experience encompasses building his own real estate company, working as a Consultant for Freddie Mac and Fannie Mae, and now he is the appraisal compliance and risk management leader for RSDS Appraisal Diversity. Wilson is recognized in the appraisal industry as a subject matter expert on Appraisal Standards and Ethics, FIRREA, the Dodd-Frank Act, Government Regulations and Laws, and GSEs mortgage loan underwriting guidelines. Robbie is an Appraisal Qualification Board (AQB) Certified USPAP Instructor and has taught and continues to teach AQB pre-licensing and continuing education.

Kelker is SVP and Chief Risk Officer at SingleSource, with responsibility for managing regulatory, compliance, and financial risks for more than 10 years. Prior to joining the company, Dean has had diverse executive experience over the past 30 years in a wide range of real estate finance areas including managing collateral, credit and compliance risks for lenders, credit risks for a mortgage insurer, and mortgage default investigations for a due diligence firm. Currently, Dean serves on the Board of Directors of the Real Estate Valuation Advocacy Association (REVAA) and was the 2020 REVAA President. He has also worked as a volunteer and board member of Habitat for Humanity of Greater Pittsburgh.

Wiley is Freddie Mac's Senior Director of Valuation for Single-Family Credit Risk Management, responsible for the GSE’s collateral risk management and its valuation team. He is also responsible for innovation in collateral risk analysis.

As Senior Director of Collateral Policy at Fannie Mae, Radke’s team establishes and maintains policy standards for property eligibility, appraisals, and condo project standards. He has worked in the appraisal and risk management industry for nearly 30 years. Since joining Fannie Mae in 2013, Lyle has worked on a large number of collateral policy initiatives as well as our web-based application for lenders, Collateral Underwriter (CU).

Click here for more information or to register for this event.

Here's what else is happening in The Week Ahead:

• Fannie Mae's Refinance Application-Level Index (RALI) (Tuesday)
• National Housing Conference Building Livable Communities for All Generations (Tuesday)
• MBA Weekly Applications Survey (Wednesday)
• Realtor.com Weekly Housing Market Recap (Wednesday)
• Senate Banking Committee Hearing: Ensuring Financial Protection for Servicemembers, Veterans, and Their Families (Thursday)
• Freddie Mac Primary Mortgage Market Survey (Thursday)
• U.S. Department of Labor's Unemployment Insurance Weekly Claims Report (Thursday)