Leading Economic Justice Advocates Welcome PAVE Task Force Work To Address Racial Bias in Home Valuations
In response to Vice President Kamala Harris’s unveiling of the administration’s Property Appraisal and Valuation Equity (PAVE) task force’s new actions to identify and address discrimination in home appraisals, the National Community Reinvestment Coalition (NCRC) released the following statement:
“The PAVE task force’s push to detect and cure discrimination in a business that is vital to family wealth-building is welcome news – including its proposed rule to ensure the credibility and integrity of Automated Valuation Models (AVMs) used by appraisers,” NCRC President and CEO Jesse Van Tol said. “As the financial industry experiments with powerful tools at the bleeding edge of technology’s new reach, our government has a duty to ensure that these tools serve the public. Evolving such sensible safeguards is especially urgent in the appraisal space, which has famously been an opaque, underregulated business policed only by its own participants.”
The multi-agency effort to promulgate rules on algorithmic tools in appraisals also echoes a newsmaking remark from a regulator at NCRC’s 2023 Just Economy Conference. Institutions using advanced computing tools to guide their lending and underwriting will be expected to continuously evaluate their models for discriminatory outcomes and to make rapid and proactive changes in order to comply with federal anti-discrimination statutes and regulations, that official said in March.
The proposed rule on algorithms is part of a series of actions announced yesterday. Other steps include stronger guidance and support for homeowners seeking to challenge undervaluations by appraisers, and enhanced public data on appraisal outcomes around the country.
The task force also announced new efforts to bring more women and people of color into the appraisal business through adjustments to the credentialing requirements now common in the industry. Fewer than one in 30 appraisers nationwide are people of color at present. The high and biased barriers to entry that the PAVE announcement seeks to address are doubtless contributing to some of the poor outcomes that non-White homeowners have experienced over the years.
“The Vice President’s announcement of broader steps to improve the diversity of the appraisal industry, and to scrutinize credentialing requirements to enter that industry in various states across the country, should help to cure one of the core issues in appraisals: the fact that the industry is 97 percent White and male,” said Van Tol. “From what everyone now knows about the nature of implicit bias across all areas of life, it’s obvious that the uniformity of the population conducting property appraisals is likely generating unjust and discriminatory outcomes – whether intentionally or unintentionally.”