Today, Congresswoman Maxine Waters (D-CA), Chairwoman of the House Financial Services Committee, sent a letter to Marcia Fudge, Secretary of the United States Department of Housing and Urban Development (HUD) as well as the Appraisal Subcommittee, the Appraisal Foundation, and the Appraisal Institute regarding ongoing appraisal bias and discrimination, calling on the federal regulators and the Appraisal Institute to investigate appraiser misconduct and potential illegal discrimination.
The letter highlights longstanding racial inequities plaguing America’s home valuation system, particularly in Black-majority communities and other communities of color. To illuminate the severity of this issue, Chairwoman Waters references an email recently sent by an appraiser who uses racial slurs to describe Black people and implies that appraisers and lenders will deny business to people of color the more discrimination is reported. In response to this email and ongoing reports of discrimination, Waters urges Secretary Fudge, the Appraisal Subcommittee and the appraisal industry to launch a full investigation and announces her plan to introduce legislation to address ongoing discrimination.
“Some may say that the words of one appraiser do not reflect or represent the profession. However, years of data, ongoing research, and numerous settled lawsuits provide ample evidence to the contrary. The email I reference shines a spotlight on the racist stereotypes and harmful lines of thinking prevalent in an industry which systematically devalues the homes of Black people and other people of color...” wrote Chairwoman Waters. “Given this email incident and ongoing reports of appraisal discrimination, I will be introducing legislation to address systemic appraisal discrimination.”
Read the full text of the letter below.
Honorable Marcia L. Fudge
Secretary
U.S. Department of Housing & Urban Development
451 7th Street SW
Washington, DC 20410
Timothy Segerson
Appraisal Subcommittee Board Chairman
Deputy Director, Office of Examination and Insurance
National Credit Union Administration
99 M Street SE, Suite 300
Washington, DC 20003
Jim Park
Executive Director
Appraisal Subcommittee
1325 G Street NW, Suite 500
Washington, D.C. 20005
David S. Bunton
President
The Appraisal Foundation
1155 15th Street, NW
Suite 1111
Washington, DC 20005
Pledger M. Bishop, III
President
Appraisal Institute
200 W. Madison, Suite 1500
Chicago, IL 60606
Secretary Fudge, Chairman Segerson, Mr. Park, Mr. Bunton, and Mr. Bishop:
During my time as Chairwoman, the House Committee on Financial Services has paid special attention to the racial inequities that continue to plague America’s home valuation system, including through home appraisals, despite the passage of anti-discrimination laws.[1] National quantitative analyses from Freddie Mac[2] and scholars such as Drs. Andre Perry,[3] Junia Howell, and Elizabeth Korver-Glenn[4] have shown the systemic devaluation of homes experienced in communities of color, especially in Black-majority communities. This has been supported by data presented in numerous recent news media reports and lawsuits.[5] Qualitative research from these scholars, as well as most recently from the National Fair Housing Alliance,[6] has also shed light on the ways in which individual appraisers and the appraisal profession help perpetuate systemic and overt racism, highlighting statements made by appraisers as well as policies and practices that continue to be upheld by an appraisal profession that is 97% White.[7]
As an example of these ongoing trends, I am forwarding to you an email recently sent by an appraiser to Dr. Elizabeth Korver-Glenn, one of our nation’s foremost experts on bias and discrimination in the housing appraisal industry. In his email, the appraiser characterizes “minority” children as “illigitimant” [sic] and “poorly educated” and refers to the names of Black people as “obserd” [sic]. He also states that “racism is not as prevalent as you might think,” while ironically describing his racially segregated White neighborhood and pointing out the lack of investment in Black neighborhoods. Such statements cannot and should not be dismissed as “unconscious bias.” They reveal and perpetuate the false stereotypes upon which racism was founded and continues to shape communities across our country today.
Moreover, the author of the email goes on to imply that appraisers and lenders will double-down on discriminatory practices against communities of color, by refusing to perform appraisals, the more that people continue to speak out about racism in the appraisal and housing industries – “Appraisers are being turned in nationally because of so called race. The trend of course will be to refuse the assignment. […]As the cry wolf extreme for lending and appraisals ramps up, appraisers and lendings will simply run from these loans not wanting any conflict,” a practice which is illegal under federal law.[8]
Some may say that the words of one appraiser do not reflect or represent the profession. However, years of data, ongoing research, and numerous settled lawsuits provide ample evidence to the contrary. The email I reference shines a spotlight on the racist stereotypes and harmful lines of thinking prevalent in an industry which systematically devalues the homes of Black people and other people of color. It does not reflect the ideals upon which our nation was founded nor the objectives of current statutory and regulatory standards. We can no longer turn a blind eye to the behaviors that make this inequity a reality.
Given this email incident and ongoing reports of appraisal discrimination, I will be introducing legislation to address systemic appraisal discrimination. Additionally, I ask that the Department of Housing and Urban Development investigate this matter and ask that you, Secretary Fudge, initiate a systemic fair housing investigation into housing valuation discrimination. I also call on the Appraisal Subcommittee, the Appraisal Foundation, and the Appraisal Institute to fully coordinate with State appraisal regulatory agencies and boards to conduct a full investigation into the incident described here, including whether any appraisals may have been improperly or incorrectly taken into consideration a prohibited basis, and to determine what actions should be taken.
In the coming months, my Committee will convene hearings, advance legislation, and continue working with stakeholders to end housing discrimination and hold the appraisal industry fully accountable. I look forward to your responses to this incident and this letter. Please contact Alia Fierro, Deputy Director of Housing, Community Development and Insurance, with any questions at alia.fierro@mail.house.gov.
Sincerely,
MAXINE WATERS
Chairwoman
cc: The Honorable Patrick McHenry, Ranking Member
Attachment: Email Sent to Dr. Korver-Glenn
Elizabeth,
Who the hell are you, to inject such racism. Your sociology background, well simply is flawed. You should get out of the office and work with an appraiser and see the impact of social groups, but more importantly, federal law, which makes poor minorities poorer. It's called lower-income housing or LIHTEC, and only the wealthy democrats own these. They are an annuity right from the the US Treasury into the Democrat pockets. Hence the millions of refugees in the system.
Appraisers are being turned in nationally because of so called race. The trend of course will be to refuse the assignment. While the document I read suggest racism was the underlying cause of the values being low in minority areas, I would suggest its factual data that reflects values are simply low, as investors are fewer. As the cry wolf extreme for lending and appraisals ramps up, appraisers and lendings will simply run from these loans not wanting any conflict. To suggest the loan is biased and the appraiser is racist to simple. But I have come to expect why someone with your credentials would dare to suggest they have a clue about what trained and educated people as my self actually do.
With your education, this is the best you could do. I would suggest you are a flunky and our country is racing to the bottom with people like yourself not capable of doing the work. Racism is not as prevalent as you might think. Im [age redacted] and I live in the house I grew up in. the stret has hardly changed even wen you get to the poor black neighborhoods. The point is, not much has changed, and these neighborhoods are socially adapted based on social behavior people are attracted to.
Come to [state redacted], I will pay for your ticket, and I will walk your through your sociology degree and then ask you what you see after spending a week with me in the heart of the deep south where minorities are paid to raise their poorly educated kids illigitamant kids. Lets not forget the parents gave the kids obserd names that most employers immediately refuse to call. !!
In June 2019, Chairwoman Waters convened a Subcommittee on Housing, Community Development, and Insurance hearing entitled, “What’s Your Home Worth? A Review of the Appraisal Industry.”
In September 2019, Chairwoman Waters and Chairman Brown called on the Appraisal Subcommittee to provide answers on the unprecedented appraisal waiver provided to State of North Dakota.
In December 2020, Chairwoman Waters sent a letter to then President-Elect Joe Biden with recommended actions to reverse from the previous administration, including the need to ensure robust appraisal and evaluation processes that protect homebuyers.
In February 2020, Chairwoman Waters requested a GAO study to review protections for homeowners from appraisal loopholes.
In April 2021, the Committee passed H.R. 2553, the “Real Estate Valuation Fairness and Improvement Act” by voice vote.
In June 2021, President Biden announced an interagency initiative, the PAVE Task Force, to address inequity in home appraisals, drawing on the goals of H.R. 2553. The PAVE Task Force is led by Department of Housing and Urban Development Secretary Marcia Fudge.
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[1] Home appraisal discrimination based on race, color, sex, religion, national origin, familial status, disability, and age is illegal in the U.S. under the Fair Housing Act of 1968, the Equal Credit Opportunity Act of 1974, the Civil Rights Act of 1866, and various state and local laws.
[2] Freddie Mac, Racial and Ethnic Valuation Gaps in Home Purchase Appraisals (Sep. 2021).
[3] The Brookings Institute, The Devaluation of Assets in Black Neighborhoods: The Case of Residential Property (Nov. 27, 2018).
[4] Junia Howell and Elizabeth Korver-Glenn, Neighborhoods, Race, and the Twenty-first-century Housing Appraisal Industry (2018); Junia Howell and Elizabeth Korver-Glenn, The Increasing Effect of Neighborhood Racial Composition on Housing Values, 1980–2015 (Sep. 4, 2020); Elizabeth Korver-Glenn, Race Brokers: Housing Markets and Segregation in 21st Century Urban America (2021).
[5] Debra Kamin, Black Homeowners Face Discrimination in Appraisals, New York Times (Aug. 25, 2020); Troy McMullen, For Black homeowners, a common conundrum with appraisals, The Washington Post (Jan. 21, 2021); Julian Glover, Bay Area Black, Latina real estate couple lowballed $250K in home appraisal, ABC 7 News (Feb. 23, 2021); NPR, More Black Americans Call Out Housing Appraisal Process As Discriminatory (May 19, 2021); The Real Deal, Cashed out: Nonwhite homeowners denied access to refi bonanza (Jan. 4, 2022); Tim Glaze, HUD settles with JPMorgan over appraisal bias case, HousingWire (Mar. 9, 2021).
[6] National Fair Housing Alliance, Identifying Bias and Barriers, Promoting Equity: An Analysis of the USPAP Standards and Appraiser Qualification Criteria (Jan. 2022).
[7] U.S. Bureau of Labor Statistics, Labor Force Statistics from the Current Population Survey (2021); Note that the Appraisal Institute used to provide annual “U.S. Valuation Profession Fact Sheets” that included the demographic breakdown of the appraisal profession. The Institute has not produced any further factsheets since the Committee held a hearing on appraisal bias in 2019. While data methodology may differ, compared to the Institute’s last fact sheet and the Bureau of Labor Statistics’ latest data, the appraisal profession has become Whiter between 2019 (85.4%) and 2021 (97.7%).
[8] Supra note 1
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