Appraisals and ValuationsGovernment Lending

Senators grill HUD official over absent GSE appraisal data

Senators pushed for data transparency in a committee hearing on appraisal bias

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The U.S. Capitol building in Washington, D.C.

The lack of appraisal data from the government sponsored enterprises took center stage at a Senate Banking Committee hearing Thursday on appraisal bias.

Pennsylvania Sen. Patrick Toomey, the ranking Republican on the committee, said the recently released appraisal bias task force report did not settle the question of whether or not the problem is systemic. Two of the studies the report based its conclusions on used proprietary data from Fannie Mae and Freddie Mac, Toomey pointed out. But members of the public, including researchers, do not have access to that data.

“The report recommends an action plan to address this alleged systemic racism before the government has sufficiently established that a systemic problem exists in the first place,” Toomey said.

If the government has not fully measured and studied the scope of the problem, Toomey said, it should not be suggesting remedies that have the potential to make appraisals more expensive.

“The data that the GSEs relied on for their studies,” Toomey asked, “Is that publicly available data? Who could release that data?”

Other senators, including Montana’s Sen. Jon Tester and Minnesota’s Sen. Tina Smith, both Democrats, also piled on to support making appraisal data public.

“The information that determines whether or not there is systemic racism or not, I think having access to that information would very much help us to be able to make some determinations,” said Tester.

“I too, would like to come down on the side of data transparency,” Smith said.

Fannie Mae and Freddie Mac referred requests to comment to the Federal Housing Finance Agency.

An FHFA spokesperson said that the agency has received numerous requests from the public to release the GSE appraisal data, but it is still weighing whether and how to release it. FHFA would continue working to “closely examine the considerations that need to be addressed to work toward” public sharing of some of the data, an FHFA spokesperson said.

“Federal researchers, appraisers, academics, tax assessors, and private sector actors could all use these data in ways that inform better-understood valuations and mitigate racial and ethnic bias in valuations,” an FHFA spokesperson said. “At the same time, if this data were to be publicly available lacking appropriate privacy protections, its availability could risk aggravating discriminatory practices.”

Melody Taylor, the Department of Housing and Urban Development official who directed the appraisal bias task force and testified before the committee, agreed with Toomey’s call for more data.

“We recognize and acknowledge that data needs to be available and accessible. We agree. In the PAVE plan we note we want to get data to researchers, the industry and others, akin to the HMDA data, which has been extremely impactful.”

Taylor sharply disagreed, however, with the idea that due to the lack of publicly available data, there is insufficient evidence to conclude that appraisal bias is systemic. One challenge of assessing whether or not discrimination occurs is that consumers may not be aware if they are discriminated against.

Those who believe they are discriminated against may not know where to seek remedy. Others may be reluctant to risk delaying or spoiling a time-sensitive real estate transaction with a fair housing complaint. Most complaints of undervaluation currently occur through the reconsideration of value process with lenders. There is no centralized national repository for complaints of appraisal bias, although the Consumer Financial Protection Bureau has received a handful in recent years.

Taylor said that expanding public awareness is one goal of the task force’s action plan. To that end, on Wednesday, HUD launched a website where borrowers can learn about the appraisal process and file a discrimination complaint.

“Although the numbers may suggest that discrimination is not on the rise, what we see with our partners with the National Fair Housing Alliance and in our fair housing Initiatives program is that they receive over 28,000 calls a year, or more, where people believe that they’ve been discriminated against,” said Taylor. “Awareness is critical to helping individuals understand their rights, and ensuring that the appraisal industry understands its obligations under the Fair Housing Act, the Equal Credit Opportunity Act, I believe, will bring about transformative change.”

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