Much has happened since the
"They've made a lot of progress in a number of areas," said Pete Mills, senior vice president of residential policy for the Mortgage Bankers Association. "Some of that progress will take time to actually see, but they've worked on strengthening the anti-discrimination provisions in [appraisal standards] and getting more training in that space."
Recent developments suggest the task force is entering the closing phase of its coordinated activities. Last month, the Federal Reserve, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the National Credit Union Administration
A week before that,
In April, the White House declared victory in its effort to tamp down on racial bias in appraisals. Citing data collected through the Federal Housing Finance Agency's PAVE-inspired Uniform Appraisal Dataset, the Biden administration said the so-called appraisal gap between white and Black homes had closed by 40% since the task force launched.
"The data also show that some states have eliminated the gap entirely. In these states, families in communities of color are no more likely to have their home valued at less than the agreed contract price than are families in white communities," the White House statement said. "This means that more Black Americans and people of color are able to build greater wealth from owning a home."
But fair housing advocates and others in and around the appraisal space say the initiatives borne out of PAVE are too new to have had a meaningful impact. Jesse Van Tol, president and CEO of the National Community Reinvestment Coalition, said it could be years before the task force's efforts bear fruit.
"There is much more work to be done," Van Tol said. "If the PAVE task force has accomplished something, it has clearly established that there is a problem, but I don't think the PAVE task force has solved the problem as of yet."
Appraisers play a critical role for banks and other mortgage lenders by assessing the collateral value of homes. In doing so,
Mills said certain developments that have emerged from PAVE, including a more formalized ROV process — whereby lenders can request new appraisals in cases of bias or other malpractice — were long overdue. He said it remains to be seen whether this particular change ends up being more helpful or harmful, but noted that it's good to have an established starting point.
"There's lots of opportunities to fine tune this as it goes," he said.
Among working appraisers, views on the sum total of the task forces output are similarly mixed. Lorie Noble, a West Virginia appraiser who says the profession's regulatory environment and hostility toward newcomers stifled her career at times, said PAVE's impact has been positive but not transformative.
"PAVE was really meaningful in exposing a lot of the fair housing issues that need to be addressed," said Noble, who now works for the Appraisal Regulatory Compliance Council. "It gets us closer to having an environment where everyone can be successful, but we're not there yet. It got us a step closer, but we're not near there yet."
Others feel the focus on racial discrimination was misguided. Many appraisers say their process leaves little room for personal biases to creep into valuations and that it is not their job to correct for historic inequities.
Jeremy Bagott, a California-based appraiser and author, said the reform effort should have been focused on untangling and streamlining the "Gordian knot" of regulation applied to the profession rather than subjecting appraisers to even more scrutiny.
"I don't think it will really have any effect. It may make some people feel better and it may also be a conduit for some reverse discrimination, but I don't think it's going to help," Bagott said of PAVE. "It's not going to deal with the underlying problem, which is all these special interests that have each gotten their own pound of flesh in this, and this incredibly complex and costly regulatory scheme that has led to the aging out of a lot of appraisers."
PAVE was launched in the wake of
On its face, the home valuation profession has changed little during the past three years. It is still predominantly male, overwhelmingly white and aging rapidly. And while high-profile allegations of racial discrimination have tapered off, such a decline was to be expected given the precipitous drop in mortgage refinancing.
One of the key factors driving the homogeneity in the profession is its apprenticeship model. Newcomers must be taken on by established appraisers who must assume the cost of training someone who will likely become their competitor. Because of this, entry into the space tends to be hereditary, passed from fathers to sons.
To address this, regulators have called on the Appraisal Foundation and state licensing boards to create alternative paths to entering the industry, including virtual training modules. The foundation has had one such program in the works, known as the Practical Application of Real Estate Appraisal, or PAREA, for years. As part of its settlement with HUD, the organization agreed to create a $1.22 million scholarship fund to cover the cost of aspiring appraisers to enroll in the program. It costs about $4,000 for a person to go through the PAREA program.
HUD called the settlement "groundbreaking," but Appraisal Foundation President Kelly Davids said the only result of the arrangement was getting the federal government off her organization's back. She said the foundation had already committed to fund the scholarship before the probe got underway.
"We were going to do this scholarship program, and now, instead of paying attorneys, we can get it rolling," Davids said. "So, I'm excited about where we ended up. I'm excited that we're able to continue our focus on doing the right things. And I'll leave the media spin to somebody else."
The Appraisal Foundation has emerged as a singular figure in the federal government's critique of the valuation profession. Consumer Financial Protection Bureau Director Rohit Chopra has called the organization "byzantine" in public remarks,
The organization was created by the Financial Institutions Recovery, Reform and Enforcement Act, or FIRREA, in 1989 as part of the federal government's response to the savings and loan crisis of the 1980s. The body was given the exclusive right to draft the standards for becoming an appraiser and conducting valuation reports. Those rules are then passed along to state and territorial licensing agencies throughout the country for implementation.
Chopra, in a written report, called on the Appraisal Foundation to make changes to its rulemaking practices as well as its personnel. Specifically, he urged the group to open its presidential search to outside candidates. Instead,
But Davids said the organization has not turned a deaf ear to PAVE. Instead, she said, it has made significant changes, including codifying long-running rulemaking practices to ensure transparency and accountability. The foundation also reviewed its standards to ensure they lived up to Fair Housing Act and the Equal Credit and Opportunity Act, and hired the civil rights law firm Relman Colfax to create a new non-discrimination rule for its code of ethics.
Davids also said that her organization has spent much of the past three years educating federal agencies about itself and what it does. She said it would have been more productive if the foundation had been made part of the task force rather than a target of it.
"The legacy of PAVE is really illuminating a problem that many people felt, and how do we best address that? And how do we best make certain that valuation in appraisal services are truly independent, objective, fair and balanced?" Davids said. "The improvements that are being made now will be long lasting, and it was a good exercise for the PAVE task force to be [established]."
"If they looked back, maybe having us at the table, talking with them and developing solutions could have helped them achieve their goals sooner, but we're still in this and we're still working on it," she said.
If this is the end of PAVE's actions, some in the profession will be disappointed to see that their chief rule-writing entity has emerged from the process virtually unchanged.
"We're left with a not-for-profit founded by Congress that has zero accountability in their structure," said Jonathan Miller, a New York-based appraiser. "They're the ones left in charge of tackling their own lack of diversity."
