Action Plan comes nine months after creation of Interagency Task Force on Property Appraisal and Valuation Equity (PAVE)
The Biden Administration’s Interagency Task Force on Property Appraisal and Valuation Equity (PAVE) has released the PAVE Action Plan – a set of proposed reforms aimed at advancing equity in the home appraisal process. Bias in home valuations limits the ability of BIPOC households to benefit from the wealth-building characteristics of owning a home. The issue has received high-profile media attention over the last few years via multiple documented instances of appraisals done on homes owned by black families generating vastly different valuations before and after removing family photos.
The PAVE Action Plan has five components:
- Make the appraisal industry more accountable by committing federal agencies to create a legislative proposal to modernize the industry’s governance structure and improve coordination and collaboration between federal enforcement agencies to better identify and address discrimination in appraisals.
- Empower consumers with information and assistance on effective steps they can take when they receive a valuation that is lower than expected, and improve the process by which a valuation may be considered.
- Prevent algorithmic bias in home valuation by including a nondiscrimination quality control standard as part of a forthcoming proposed rule establishing quality control standards on automated valuation models.
- Cultivate an appraiser profession that is well-trained and looks like the communities it serves. The appraisal industry is one of the least-diverse professions in the country, at roughly 97 percent white. This component of the Action Plan lays out actions to remove unnecessary education and experience requirements that make it difficult for underrepresented groups to access the profession. Anti-bias, fair housing and fair lending training for existing appraisers would be strengthened as well.
- Leverage federal data and expertise to inform policy, practice and research on appraisal bias. This plan component would see developed an aggregate database of federal appraisal data to better study, understand and address appraisal bias.
Release of the plan included several additional initiatives identified for further exploration:
- Expanded use of alternatives to traditional appraisals as a means of reducing the prevalence and impact of bias.
- Use of value estimate ranges instead of exact amounts as a means of reducing the impact of racial or ethnic bias.
- Potential use of alternatives and modifications to the sales comparison approach that may yield more accurate and equitable valuation.
- Public sharing of aggregated historical appraisal data to foster development of unbiased valuation methods.
The full PAVE Action Plan is available here.