MReport April 2022

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60 | TH E M R EP O RT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST GOVERNMENT Biden Plan Seeks to Eliminate Bias in Home Lending and Appraisals The Biden administration has established the PAVE Task Force to tackle racial bias in the home lending and appraisal process. T he U.S. Department of Housing & Urban Development (HUD) has announced the delivery of the Interagency Task Force on Property Appraisal and Valuation Equity (PAVE) Action Plan to President Joe Biden, a measure geared toward the elimination of racial bias in the home lending and appraisal process and promoting genera- tional wealth creation through homeownership. When enacted, PAVE will represent the most wide-ranging set of reforms ever put forward to advance equity in the home appraisal process. Also established by the White House is the PAVE Task Force, co-chaired by HUD Secretary Marcia L. Fudge and White House Domestic Policy Advisor Susan Rice—an interagency initia- tive to address racial bias in home appraisals—comprised of senior leaders from 13 Cabinet and inde- pendent agencies, and additional components of the Executive Office of the President. "For generations, millions of Black and brown Americans have had their homes valued for less than their white counterparts sim- ply because of the color of their skin or the racial makeup of the neighborhood," Secretary Fudge said. "Black and brown home- owners in communities just like mine have not felt that they have had a voice or that the Federal government was doing enough to redress the issue of racial bias in the appraisal process. With the PAVE Task Force, the Biden- Harris administration is taking a whole-of-government approach to fixing this problem. We are proud of the work of this Task Force, and we are looking forward to continuing to work within the administration and with partners to do all we can to root out dis- crimination in the appraisal and homebuying process." President Biden first announced the creation of the PAVE Task Force on the June 1, 2021, marking the centennial of the Tulsa Race Massacre, where he charged fed- eral agencies with evaluating the causes, extent, and consequences of appraisal bias and establishing a transformative set of actions to root out inequity. A recent Freddie Mac report citing U.S. Census Bureau data found that 12.5% of appraisals for home purchases in majority- Black neighborhoods, and 15.4% in majority-Latino neighborhoods result in a value below the con- tract price (the amount a buyer is willing to pay for the property), compared to only 7.4% of ap- praisals in predominantly white neighborhoods. "Along with other federal financial regulators, we will be working to implement a dormant authority in federal law to ensure that algorithmic valuations are fair and accurate," Consumer Financial Protection Bureau Director Rohit Chopra said. "We have already begun to solicit input from small businesses in order to develop a proposed rule, and we are committed to addressing potential bias in these automated valuation models. We will also be taking additional steps through our research, through our super- visory examinations of financial institutions and their service pro- viders, and through law enforce- ment actions. We welcome input and engagement from the public, the professional appraiser com- munity, and across the residential real estate industry." The PAVE Task Force en- gaged more than 150 stakeholder groups—including appraisers, appraisal management companies, lenders, civil rights and advocacy groups, academic institutions, philanthropy organizations, and individuals—who have experi- enced instances of appraisal bias, to listen and learn diverse per- spectives on what is working and how the government can work to embed equity in the home valua- tion process.

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