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Home appraisal’s ugly history and uncertain future

This is Part I of a deep dive into the home appraisal industry. Today we explore the origins of the appraisal industry and its current lack of diversity.

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Real EstateBlack HomeownershipPolitics & Money

Fudge says HUD will focus on housing discrimination

Fudge spoke of the “basic bargain” of homeownership and need to address racial gap

As lawmakers take up housing-related bills in Congress, Housing and Urban Development (HUD) Secretary Marcia Fudge laid out her priorities during an address at the Mortgage Bankers Association’s spring virtual conference.

Fudge hailed the passage of the American Rescue Plan as a “landmark law,” and highlighted its $10 billion in mortgage assistance and another $4.5 billion to help households pay utility bills. Fudge also emphasized the strong position of the Mutual Mortgage Insurance Fund. The fund, she said, is “well-positioned to continue to provide for those who have fallen behind on mortgage payments.”

Fudge also drew attention to the homeownership gap between white and Black households, which she said is “wider today than it was in 1968, when banks could still legally discriminate against borrowers based on the color of their skin.”

“What binds us all together is the belief in the power of homeownership, an aspiration that speaks to a basic bargain that lies at the heart of the American dream,” said Fudge. “If you work hard and play by the rules, you deserve a place to call your own.”

The former congresswoman from Cleveland said that fair housing enforcement would be a “central priority.” HUD, at President Joe Biden’s behest, is exploring options to further that mission — such as having an effective disparate impact rule.

In 2013, HUD issued a disparate impact rule that made clear that there would be liability for housing discrimination regardless of intent. But the Trump administration moved to gut that rule in 2019, and then-HUD Secretary Ben Carson issued updated guidelines requiring regulators to prove intentional discrimination on the lender’s behalf.

While Fudge tackles housing discrimination at HUD, lawmakers on the Financial Services Committee are mulling measures to revise a debt collection rule and increase diversity in the housing industry.

One of the bills in Congress would potentially hobble a 2019 Supreme Court decision, in which the justices ruled that a business engaged in non-judicial foreclosure proceedings is not a “debt collector” under the Fair Debt Collection Practices Act.

The MBA, in a statement, said it supported the court’s unanimous ruling and would oppose any legislation to overturn it.

Lawmakers will also hash out a measure to analyze federal underwriting standards and guidance, and promote diversity in the appraisal profession. The MBA noted, in its support for the initiative, the shortage of appraisers in rural, lower income, and predominantly minority areas.

Another bill would establish an advisory group to increase the diversity of boards for publicly traded companies, which the trade association supports.

And although the MBA supports another measure to create a more diverse and inclusive workforce in the financial services sector, it cautioned lawmakers against “imposing additional punitive regulatory burdens.”

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