The U.S. Department of Housing and Urban Development (HUD) announced today a historic Conciliation Agreement with The Appraisal Foundation (TAF). TAF is responsible for setting standards and qualifications for real estate appraisers and providing voluntary guidance for industry valuation professionals. This agreement resolves a Secretary-initiated complaint against TAF, alleging discriminatory barriers preventing qualified Black individuals and other persons of color from entering the appraisal profession on the basis of race, in violation of the Fair Housing Act.
According to the Bureau of Labor Statistics’ 2023 data, the property appraisers and assessors' occupation was 94.7% White and 0.6% Black, ranking as the least racially diverse among 800 occupations surveyed. The Interagency Task Force on Property Appraisal and Valuation Equity (PAVE) stated, “The lack of diversity within the appraiser workforce can contribute to patterns of mis-valuation in communities of color.” Research by Fannie Mae in 2021 found that 12.5 percent of appraisals for home purchases in majority-Black neighborhoods and 15.4 percent in majority-Latino neighborhoods resulted in values below the contract price, compared to only 7.4 percent in predominantly white neighborhoods.
The complaint attributes part of this lack of diversity to TAF’s experience requirement, which allegedly forces aspiring appraisers to rely heavily on identifying a friend or family member who is already a licensed appraiser willing to supervise their on-the-job experience hours for licensure. PAVE identified this requirement as a significant barrier to entry for underrepresented groups, including Black people and other people of color.
“To help eliminate racial and ethnic bias from home appraisals, we must ensure that the industry looks like America,” said HUD Acting Secretary Adrianne Todman. “Today’s historic agreement will help build a class of appraisers based on what they know instead of who they know.”
“HUD’s agreement requires policy changes that expand pathways to becoming an appraiser,” said Diane M. Shelley, HUD’s Principal Deputy Assistant Secretary for Fair Housing and Equal Opportunity.
Melody C. Taylor, Executive Director of PAVE, added: “This Agreement reflects a major step forward in cultivating an appraiser profession that supports equal opportunity for all.”
Under the terms of the Agreement, TAF is required to establish a $1.22 million scholarship fund to cover costs for aspiring appraisers attending Practical Applications of Real Estate Appraisal (PAREA) programs. These scholarships aim to encourage entry into the profession by providing an alternative pathway to fulfill experience requirements needed for state licensure.
Although HUD did not issue findings prior to entering into the Agreement, it remains enforceable and intended to resolve issues raised in the Secretary-initiated complaint.
Individuals believing they are victims of housing discrimination should contact HUD at (800) 9669-9777 or (800) 927-9275(TTY). Additional information is available at https://www.hud.gov/fairhousing.
For more information on PAVE’s efforts against bias in home valuation or to read their full Action Plan, visit https://pave.hud.gov/.
