Adrianne Todman, Deputy Secretary | https://www.hud.gov/leadership#sec
The U.S. Department of Housing and Urban Development (HUD) has taken a significant step towards protecting borrowers from racial or ethnic bias in home appraisals. The Federal Housing Administration (FHA) announced a new Reconsideration of Value policy, requiring lenders to offer borrowers a pathway to request reviews of home appraisal valuations if they believe bias or inaccuracies are present.
HUD Acting Secretary Adrianne Todman emphasized the importance of addressing biased home appraisals, stating, "We know that biased home appraisals not only disproportionately harm homeowners of color, but stunt economic opportunity for the communities we serve."
Federal Housing Commissioner Julia Gordon echoed this sentiment, highlighting how appraisal bias can have a lasting impact on homeowners of color and entire neighborhoods, stating, "Appraisal bias harms homeowners of color at every stage of homeownership, and it can lock in inappropriately lower values for entire neighborhoods."
This new policy, developed in collaboration with the Federal Housing Finance Agency, aims to provide borrowers with a clear process to address biased or inaccurate appraisals. Effective September 2, 2024, lenders participating in the FHA Single Family program will be required to disclose to borrowers the option to request a reconsideration of value. The updated policy includes guidelines for lenders to identify and remedy appraisal deficiencies, communicate the status of reconsideration requests, and maintain quality control of appraisal reviews.
The announcement fulfills a commitment of the Interagency Task Force on Property Appraisal and Valuation Equity (PAVE), demonstrating a collective effort among federal agencies to combat racial and ethnic bias in home valuations. This initiative seeks to empower homeowners, lenders, and FHA with the tools needed to address appraisal bias and promote equity in the housing market.
