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Appraisal bias: Education is the first step

CoreLogic is committed to raising the bar for valuation professionals

Understanding the market value of collateral is a key fundamental component of safe and sound lending. This is accomplished through obtaining an appraisal. 

The Uniform Standards of Professional Appraisal Practice (USPAP) and numerous laws protect the public trust by mandating the opinions of value provided by appraisers be “impartial, and unbiased professional analyses” and have “no bias with respect to the property that is the subject of this report or to the parties involved with this assignment.”

As recent news stories surfaced, they have triggered discussions and calls for research and actions at all levels of government as citizens and industry express concerns about bias, discrimination and unfairness.  President Joe Biden recently addressed the appraisal bias topic in comments made as part of the centennial commemoration of events in Tulsa, Oklahoma, asking for an “interagency effort to address inequity in home appraisals.”  Never before has a president of the United States spoken on this topic.

Even prior to President Biden’s historic comments on appraisal practices, local city councils, state legislatures, and congress have held hearings and advanced legislation to address these concerns and prevent potential future unfairness.  Notably, here in Washington, D.C., the House Financial Services Committee passed the Real Estate Valuation and Fairness Act. If signed in to law, it provides for a study of the bias issue, underwriting guidelines, the current regulatory components and funding to attract new entrants to the appraising profession.  

Several states are considering, or have passed, legislation requiring appraisers to take several hours of bias and fair lending training for each license renewal cycle.

A city in Illinois is providing reparation funding to homeowners, which can be used for downpayments or to improve and update homes in areas impacted by the government’s polices from decades past. 

Bias has no place in an appraisal, and the industry is focused on engaging and acting. Educating mortgage industry stakeholders and participants regarding the valuation process including what bias is, why it is unacceptable in the valuation process, and ensuring a significant understanding of fair lending laws is a key component of any effort to affect real change. Without education, most will not have the awareness nor the tools to change behaviors, ideas, beliefs or perceptions that may need to be changed. 

Educating all those who participate in collateral valuation and underwriting is at the core of what the CoreLogic Columbia Institute does.  In response to the increased awareness and focus on bias and fair lending, the Institute, in consultation with several national lenders, has created a course to provide bias training for valuation professionals.  This Bias in Real Estate and Fair Housing course is already approved in dozens of states for appraiser continuing education. Eliminating biases, unintentional or otherwise, is at the core of this course. 

CoreLogic is committed to raising the bar for valuation professionals by ensuring that all CoreLogic Staff Appraisers have completed this course by September 30, 2021.  It is available now to all appraisers and lenders who wish to educate themselves and their staff on this important issue.  This is part of CoreLogic’s mission to help everyone find, buy and protect the homes they love.

Learn more at columbiainstitute.net.

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