Link to Recording
Overview of Schedule
| Time | Event | Speaker(s) |
| 1:00-1:06 | Welcome, Federal Agency Panel and Acting Director Introductions | Alicia Criado Hampshire, Public Engagement |
| 1:07-1:10 | Opening Remarks | Acting Director Uejio |
| 1:11-1:12 | Research Presenter Introductions | Alicia Criado Hampshire |
| 1:13-1:23 | Presentation on the Urban Institute’s research on Automated Valuation models (AVMs) | Michael Neal, Senior Research Associate, Housing finance policy center, urban Institute |
| 1:24-1:34 | Overview of ASC’s role in appraisals and D&I efforts | Jim Park Executive Director Appraisal Subcommittee Feral Financial Institutions Examinations Council |
| 1:35-2:05 | Federal Agency Panel Discussion | |
| 2:06-2:09 | Close Federal Agency Panel; Transition to Civil Rights Roundtable participant Introductions | Acting Director Uejio; Alicia Craido Hampshire |
| 2:10-2:55 | Policy Discussion with Civil Rights and Consumer Advocates/Experts | Facilitated by Uejio and Patrice Ficklin, Fair Lending |
| 2:56-3:00 | Closing Remarks | Uejio; Todd M. harper, Chairman, National Credit union Administration and Chairman of the Federal Financial Institutions Examination Council |
Overview of Speakers
- Running the Event
- Dave Uejio
- Acting Director of CFPB
- Has been with bureau since 2012
- Named acting director on Jan 20, 2021
- Alicia Craido Hampshire
- Acting Staff Director for the Section for Public Engagement at CFPB
- Patrice Ficklin
- Assistant director of Office of Fair Lending & Equal Opportunity at DFPB
- Dave Uejio
- Presentation 1: Urban Institute’s research on AVMs
- Michael Neal
- Senior research associate at Urban Institute
- Fannie Mae economic and strategic research division
- Michael Neal
- Presentation 2: Overview of ASC’s role in appraisals and D&I efforts
- Jim Park
- Executive director of subcommittee since 2009
- Senior staff person responsible for day-to-day ASC operations
- Appraisal Subcommittee of the Federal Financial institution’s Examination Council
- Jim Park
- Panel 1: Federal Agency Representatives
- Michael Hsu
- Acting Comptroller of the Currency
- Todd Harper
- Chairman of the National Credit Union Association (NCUA)
- Chairman of Federal Financial Institutions Examination Council (FFIEC)
- Alanna McCargo
- Senior advisor of housing finance of the department of housing
- Michael Hsu
- Panel 2: Civil Rights Organization Representatives
- Nikitra Bailey
- Executive Vice President at Center for Responsible Lending
- Strategic direction on consumer protection
- Meghan Haberle
- Senior Policy Counsel at NAACP Legal Defense and Educational Fund
- Lautaro “Lot” Díaz
- VP Housing and Financial Empowerment Unidos US
- Wil Jordan
- Executive Director Metropolitan St. Louis Equal housing & Opportunity Council (EHOOC)
- Amy Nelson
- Executive Director Fair Housing Center of Central Indiana
- Caroline Peattie
- Fair Housing Advocates of Northern California
- Andrew Pizor
- Staff attorney at national consumer law center
- Lisa Rice
- CEO national fair Housing Alliance
- Cy Richardson
- Senior Vice President for Economics and Housing Programs at National Urban League
- Nikitra Bailey
Presentation 1: How AVMs Disproportionately Affect Majority-Black Neighborhoods
Speaker: Michael Neal
- Background
- AVMs have gained greater interest as substitute for in-person appraisals
- In-person appraisals have contributed to housing bust in great recession and include biases that perpetuate inequality
- Public policy has encouraged appraisal waving during pandemic
- Methodology
- 3 measurements of AVM inaccuracy
- Direction of inaccuracy
- Magnitude of inaccuracy
- Percentage magnitude of inaccuracy
- Regression analysis
- 2018 data alone
- Regions of focus
- Atlanta and Memphis
- (Data for Washington, DC on website)
- Atlanta and Memphis
- 3 measurements of AVM inaccuracy
- Direction of Inaccuracy
- Research indicates that there is little racial bias in direction from AVMs
- In both cities, majority black and majority white neighborhoods have similar directions of bias
- Magnitude of inaccuracy
- Magnitude of inaccuracy is greater in majority white neighborhoods relative to black neighborhoods
- The research indicates systematic racial bias in the magnitude of inaccuracy
- Percent magnitude of inaccuracy
- Scaled by underlying home price
- Take into account that white neighborhoods have higher home values
- Percent magnitude of inaccuracy is greater in black neighborhoods
- Scaled by underlying home price
- Conditions and dynamics that lead to the undervaluing of homes are exaggerating the magnitude of error that comes from AVMs
- Explaining Percent Error through Regression Analysis
- Property differences (year of home and home value distribution)
- Neighborhood conditions
- Turnover rate
- Greater in black neighborhoods than white
- Greater turnover increases AVM accuracy
- This was more than offset by the other factors
- Majority-race of neighborhood
- Research showed to be statistically significant despite the AVMs supposed lack of bias
- Policy recommendations
- Encourage direct investment in black communities
- Through black banks and other CDFIS
- Support households seeking to purchase distressed sales for use as a primary residence
- Encourage modelers to continue identifying other variables that could be included in their AVMs to help reduce the magnitude of bias in Black neighborhoods
- Encourage direct investment in black communities
- Potential areas for future research
- Refine regions model by controlling for property conditions
- Examine the impact of specifically too low AVM estimate on homebuying and its implications for racial homeownership rate gap
- Contact info
- cyoung@urban.org
- Contact to subscribe to newsletter
- cyoung@urban.org
Presentation 2: Overview of ASC’s role in appraisals and D&I efforts
Speaker: Jim Park
- Appraisal regulatory system overview
- 3 main components: States private sector and fed gov
- States – administration of credentials (including discipline)
- 2 independent congressionally authorized boards (ASB and AQB)
- Set standards and minimum education and examination requirements
- ASC State compliance review process
- Enforce standards
- Federal grant funds
- ASC member agencies (7)
- Independent executive branch federal government agency
- DEI Initiatives
- Review of appraiser qualification criteria
- Remove those that systematize or encourage bias
- Roundtables on bias and discrimination
- Bring together those in and around appraisal profession
- Explore alternative approaches that might correct biases
- Review of appraiser qualification criteria
- Appraiser Shortages
- Profession aging and few new entrants have led to declining numbers
- 20-25% decline despite increasing demand
- one reason is the supervisor trainee model
- apprenticeship model has likely contributed to family trainings and lack of diversity
- working on an alternative model
- Census/survey to better understand appraiser demographic trends and needs in profession
- Profession aging and few new entrants have led to declining numbers
- Welcome HR2553 interagency task force
- Federal collateral underwriting standards and guidance
- Scholarships and funding to historically black colleges
Federal Agency Panel
- Opening Remarks from Panelists
- Todd Harper
- 3 ways to build wealth and close the wealth gap
- IDA
- Start a small business
- Buy a home
- Several Acts have been passed to help secure appraisal independence and prevent appraisal inflation. We need to use the provisions in these acts to regulate.
- Dodd Frank
- Fair Housing Act
- Equal Opportunity Act
- Title 11
- Quality control standards on AVMs needed
- Appraisal portability needed
- Currently lender who underwrites loan owns the appraisal even when the consumer pays for it
- Combat loan discrimination by allowing consumers to shop around for mortgage rates and appraisers
- 3 ways to build wealth and close the wealth gap
- Michael Hsu
- Biased appraisals effect pricing of loans and trap neighborhoods in poverty
- Good loans to credit worthy customers
- Bad business, unfair, blocks consumers from becoming homeowners
- $156 billion loss of value in black neighborhoods
- Connection with banking
- Appraisals required on some loans
- Holding banks accountable is necessary but not sufficient
- Collective effort by all stake holders is needed
- Alanna McCargo
- The number of bias reports of appraisals has increased by 10x since 2019
- Undervaluation of properties
- Leads to inequities in wealth building through home ownerships
- Sources of the problem:
- Specific appraiser practices
- Lending requirements
- Employment practices and requirements
- Less than 2% appraisers identify as black
- Biden’s speech at the anniversary of the Tulsa massacre
- Charged Secretary Fudge to address appraisal bias
- A task force of multiple government agencies with a focus on bias in property appraisals has been created
- The task force is meant to explore the extent of the causes and effects of property misevaluation
- The task force will consider the perspectives of
- Civil rights community
- State and local officials
- Industry participants
- Todd Harper
- Panel session
- Question 1: What are your thoughts on the media focus on wealth gap and the stories that have surfaced regarding individuals, particularly African American and black individuals, who have had to redo their homes in order to get a fair appraisal?
- Alanna McCargo
- Very real disparities in real-estate market that have persisted and has led to a racial wealth and home ownership gap
- A number of practices need to be reviewed in this systemic issue, home appraisal being just one part of a larger whole
- Intergovernmental groups at the federal and local levels, civil rights workers, and real-estate professionals all working together with multiple perspectives is the basis of the efforts needed to foster change
- Todd Harper
- Appraisal bias is one aspect of a much broader issues overall
- Not a new issue; it has been going on for years
- Credit Union’s moto is to meet people’s needs
- This includes people of color
- Need to help people of color access and build credit and wealth
- Appraisal valuation models
- Jim Park
- Whitewash their homes for the appraisers and these tactics work
- Heart of appraisal process is objectivity and independence
- Should have nothing to do with the appraisal’s valuation
- Encourage those who feel they have experienced discrimination should turn the appraiser into the state regulatory appraiser program and should be disciplined
- Hotline à can refer the consumer to the appropriate authority who can help them and discipline the appraiser
- Michael Hsu
- Not a new problem
- 2 things are new
- More awareness
- More understanding of connectivity
- Puts an urgency around issue
- Working Together
- Speaking with one voice gives power to the ideas for change
- 2 things are new
- Not a new problem
- Alanna McCargo
- Housing panning policies and state laws; contributing to problems; next level beyond the individual at the state law and housing planning policy level
- Alanna McCargo
- Real estate is local
- Recommended solutions will require a tremendous amount of local cooperation
- Whether the certification or apprenticeship requirements
- However diverse you can get your community is all locally driven
- Jim
- The states have authority to exceed the requirements on the federal level
- Makes it difficult for appraisers and consumers
- More diversity on state appraisal boards
- Alabama only one that requires minority participation
- How appraisals are completed
- One point value
- Not representative of how market works
- Appraisers allowed to provide a range of values
- More data
- Data and info are power
- Made available to appraisers and consumers
- Act as a check and balance so that it would be more difficult to allow intentional or unintentional bias to creep into the appraised value
- Alanna McCargo
- What should the bureau be doing? What tools should we develop?
- Alanna McCargo
- Awareness has gone a long way
- The housing complaint increase
- Tools and resources that they could amass that would allow people to identify appraisal bias
- On the website
- Point people in direction of where to file complaints and tell what counts as bias
- Collection of research
- Pull together key stats and information
- Data collection that could identify gaps and constraints
- Make the data more visible through tools and resources HUMDA
- Awareness has gone a long way
- Andrew
- AVMs are using historic data
- A lot of unresolved issues
- Promoting research on them
- How to determine if AVM is producing a biased result
- Score for risk of bias
- Certification process
- Test that new AVM need to pass to be used
- Research on the best way to do that
- Todd Harper
- Finish work on AVMs
- Consumer education
- Federal appraisal law and oversight
- Nexus
- Where is there opportunity related to private transitions
- Pull together state laws and ideas
- Getting together with states who are working on appraisal bias
- $400,000 threshold
- Is this threshold too high?
- Appraiser would be independent referee between buyer and seller
- If these thresholds get too high, they decrease protections
- Michael Hsu
- Backing up anecdotal info with data shows where we need to push
- Interagency dialogue
- Cascading these down to the staff level
- Alanna McCargo
- Question 1: What are your thoughts on the media focus on wealth gap and the stories that have surfaced regarding individuals, particularly African American and black individuals, who have had to redo their homes in order to get a fair appraisal?
Consumer Advocates, Researchers, and Civil Rights Workers Panel
- Potential drivers of racial disparities (also Latinx and Hispanic consumers); role that research might play in identifying solutions
- Amy Nelson
- Redlined neighborhoods
- Sweat equity programs
- Racial covenants
- Appraisal industry’s role
- Lack of understanding and knowledge around policies and their impact in these neighborhoods
- Education campaign of how we got here
- History of redlining
- History of race-based discrimination
- Lautaro “Lot” Díaz
- Comparables have discretion
- When doing a valuation, they point to the worse homes in the neighborhood because it is based on their discretion
- Diversifying the industry and better standards on valuation
- Comparables have discretion
- Caroline Peattie
- Individual bias from appraisers
- Why white washing works
- Systemic bias
- Racism segregation
- Redlining à using lower comps in neighborhoods
- Continuation of systemic racism and segregation issues
- Using more thoughtful process with more diverse sense of comps
- Individual bias from appraisers
- Nikitra Bailey
- Over valuation is also a problem
- Communities lost $1 trillion wealth
- Choice
- Black and brown people historically have never had a choice in where they live
- Over valuation is also a problem
- Andrew Pizor
- Lower valued houses
- Mortgage companies don’t want to lend to these mortgages
- Some houses are priced too low to get a mortgage
- What have been key remedies and solutions or potential solutions? Feel free to frame your response around in-person appraisals and/or AVMs.
- Cy Richardson
- Atlanta market in 2000-2001 – disruptive policies
- Post-George Floyd era
- False choice between appraisal industry reflecting the market or setting the market
- DE&I activities
- Stipends and buddy systems (set up in an interracial way) for people of color who want to become appraisers
- State level activities
- Lisa Rice
- Fair Housing Act
- What constitutes an appraisal is extremely broad
- Real estate’s opinion on value of home counts
- It’s much broader than strictly just appraisers
- What constitutes an appraisal is extremely broad
- Training
- Real estate professionals and appraisers need anti-discrimination training
- Adequate resources and provisions for investigating cases of bias
- Investigating the cases take a large amount of resources
- Need to supply organizations with these resources
- Investigating the cases take a large amount of resources
- Educate consumers
- On how to identify bias
- Most consumers don’t even see their appraisals
- Housing planning processes
- Take more aggressive steps that would remove subjectivity from the process
- Fair Housing Act
- Will Jordan
- Real estate agents are frustrated because of appraisal gap issues
- Missouri
- Conservative state
- No incentive to self-regulate
- Federal enforcement has to be the driving factor
- Publicly display complaints on specific appraisers and in specific areas
- Caroline Peattie
- Clients who know to complain are the ones who are educated on the issues
- New standard for judging evidence in cases of racial bias in appraisals
- Whitewashing shouldn’t be necessary to prove bias
- Amy Nelson
- The decision should not be in the hands of one person
- Public information and data so these organizations can do their job
- Reconstruction valuing in areas that have historically been redlined
- More formalized appraisal process (90% of appraisal review requests are denied)
- Not taking a credit hit when going through appraisals
- Meghan Haberle
- Enforcement
- Unintentional biases
- Structural racism
- Take a lot of resources to overcome
- Emotional burden is currently on plaintiffs and homeowners to come forward
- Organizations would hold burden to recognize what’s going on not the individual households
- Can’t solely focus on comparable houses. Need to push the appraisal industry further to explore the ways racial biases have affected neighborhoods where comparable houses will not reveal racial biases (black neighborhoods)
- Looking at school diversity and is that an asset or just viewing schools by a score based on test scores
- Enforcement
- Cy Richardson
- Where would you recommend the bureau to start? (Keeping in mind Bureau has no fair housing act authority but credit authority)
- Nikitra Bailey
- Cumulative impact of all the things together
- The anti-black bias deserves emphasis
- Amplifying the experience of black consumers and consumers of color
- Laying out what steps to justice look like
- Will Jordan
- People that he refers they enjoy having the record shown and heard
- They feel heard
- Not just be educated by a website but to be able to interface and to whistle blow
- CFPB as a referee that can know that they aren’t the only one
- Amy Nelson
- SPCPs could be highlighted and used
- Adjusting values without causing displacement
- Property tax relief
- Homeowner repair programs
- Low dollar mortgage product for $50,000 and under home
- Anything to incentivize this so more people can buy a home
- Issues around housing reparations
- Lautaro “Lot” Díaz
- Creating more distance between lender and appraiser
- Opening appraisers beyond the state list
- Buyer and realtor representative recommend appraisers
- Value transaction can be more democratic
- Creating more distance between lender and appraiser
- Cy Richardson
- Consumer based campaign to educate and uplift communities
- Hotline
- Local outreach and economic reconciliation with nonprofit partners
- Data to consumers
- Lisa Rice
- More training and educational events for appraisers and lenders and stakeholders
- Over 90% of appraisal reviews are denied
- More guidance to lenders of what to do when a consumer registers a complaint of bias
- De-bias valuation models
- Broaden its oversight when conducting fair lending valuations
- Caroline Peattie
- Provide clarity about bureau’s process when complaints come in
- Potential remedies
- Bringing together different groups and coordination between different groups
- Meghan Haberle
- These efforts reach a diversity of communities not just urban communities
- Disinvestment aspects
- Need for a government wide effort to bring resources into those neighborhoods
- Ensuring that you don’t amplify the already concentrated poverty
- Bring in non-housing resources
- Need for a government wide effort to bring resources into those neighborhoods
- Andrew Pizor
- Work with other agencies to convene mortgage lenders
- Gain an understanding of why certain loans aren’t being made
- Find ways to incentivize these loans and remove barriers
- Ask lenders what they need in order to help them better help consumers
- Nikitra Bailey
- Amy Nelson