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June 2023 » thefivestar.com 53 June 2023 F E A T U R E Q: In the past year since the plan was announced, what has Clear Capital changed to reduce appraisal bias? They just recently celebrated the one- year anniversary of the action plan. The announcement of the task force was in June 2021, and then they produced the action plan last year. Clear Capital has been very much engaged with the PAVE taskforce since it was formed; we've been involved with sitting in on listening sessions and working with agen- cies directly. We've been a member of certain trade organizations that have also been very active, such as Real Estate Valuation Advo- cacy Association (RIVA). We've been partner- ing with Fannie Mae and Freddie Mac for over four years now, leading the charge to modernize the appraisal process. We've been participating in numerous test-and-learns to demonstrate that it's possible to use technol- ogy to have a more standardized way of ap- proaching gathering data at the property and digitizing the process so that so there's greater transparency, visibility, and objectivity and the way that that every home is valued, and the way that every home is assessed in terms of its characteristics, using more science than art when it comes to understanding the gross living area of a home. We have developed technology in partnership with the GSEs that allows anyone to walk your home with their mobile phone, scan the property, and generate an ANSI-compliant floor plan and measurement of what the square footage is of that home. Prior to that, it could differ by area of the country or how individual appraisers are applying their practice; some round to the nearest inch and some round to the nearest half foot. There are a number of different ways that that's been done, so we found that starting with the basics and adding consis- tency to the process makes it harder for bias to remain a part of the equation. Q: What approaches can appraisers take to eliminate bias? First of all, we certainly believe that the vast majority of appraisers take their profession very seriously, and they take the goal of being unbiased very seriously. The work we're doing with appraisal modern- ization is about bringing practices into the modern era using the tools that we have at our disposal now to create more standards in the process to create better guardrails and tools. We're trying to ensure that every home is approached the same way and with the advancement of mobile technology and standardized datasets. The Uniform Appraisal Dataset rede- signed by Fannie and Freddie is one more way to reduce the amount of commentary that's within the form and increase the num- ber of objective data points that are used to support the value. This is about using what's at our disposal right now to take the appraisal profession forward and provide better tools, better guardrails, and better transparency: to move technology and appraisals forward. Q: What else can be done to eliminate appraisal bias that is not already being done? On May 15, Fannie Mae's Value Ac- ceptance + Property Data Program became available to all of their lenders. Freddie Mac, with their Ace + PDR program, is also mov- ing in the same direction, which is to have a standard way that, when someone visits the property and they're collecting data to be considered in the appraisal process of the valuation process, that it's done the same way every time, in every house, regardless of the occupants and regardless of the community that that property is in. Q: Has technology helped speed along these processes overall? Absolutely. During the pandemic, we did see an acceleration of the use of technology because we couldn't send people into homes for safety's sake and for social distanc- ing. Capture technology helps anyone use technology to digitize the home and then bring that to someone at their desk instead of someone having to physically enter the house. We saw more use of virtual tours and 3D scans, even in the real estate listing pro- cess. It caused more data to now be available online in a standardized way, which is only a good thing for all the other stakeholders involved, including the homebuyer. I think mobile technology has over- whelmingly helped reduce the risk of bias for two reasons. One is thinking about what this is replac- ing. Mobile technology is replacing what today is the use of either a clipboard or some other manual process that relies on humans to be consistent all over the country. Since humans are trained locally, it's very difficult to ensure that humans are applying their principles the same way all across the coun- try, because they are all independent. Mobile technology lets you roll out a nationwide standard that can be available to everyone; regardless of who's holding the mobile tech- nology, it can guide them through different things the same way. That's huge. Number two, most people have mobile technology in their pocket every day, which means that we've democratized access to the tools available to consumers and homeown- ers. If you choose to scan your home, you know what the gross living area is, you know exactly what's considered above-ground or below-ground, as well as whether it's going to factor into the valuation or not. That's powerful information that same way as giving consumers access to their credit scores. Having access to your credit score gives you power and understanding of how you should approach any sort of financial decision. Having access to your home data in a digitized format gives you the ability to approach the process a bit differently and be empowered. "Most people have mobile technology in their pocket every day, which means that we've democratized access to the tools available to consumers and homeowners."