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NCUA, CFPB, HUD, FHFA, more call out TAF appraisal bias standards
The NCUA, CFPB, and several other agencies including the Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), Department of Housing and Urban Development (HUD), Federal Housing Finance Agency (FHFA), and Federal Reserve Board (FRB) Friday wrote to The Appraisal Foundation (TAF), a private non-governmental entity with the sole power to set professional standards for appraisers, regarding appraisal discrimination. The agencies called out TAF for failing to “include clear warnings about the requirements of federal law in the standards it sets, and in the training it provides for appraisers.”
The agencies provided specific feedback on TAF’s proposed changes for the 2023 Edition of the Uniform Standards of Professional Appraisal Practice (USPAP). The agencies commented on a provision under the USPAP which states that an “appraiser may not rely on unsupported conclusions relating to characteristics such as race, color, religion, national origin, sex, sexual orientation, gender, marital status, familiar status, age, receipt of public assistance income, disability or an unsupported conclusion that homogeneity of such characteristics is necessary to maximize value.”
The joint agencies, also part of the interagency task force on Property Appraisal and Valuation Equity (PAVE), cited that the provisions do not prohibit appraisers from relying on “supported conclusions” based on such characteristics, suggesting that such “reliance may be permissible.”
This has been a key issue for the administration as President Joe Biden tasked HUD with identifying solutions to appraisal bias. NAFCU spoke with HUD Deputy Secretary Adrianne Todman at last year’s Congressional Caucus on this topic, where Todman discussed the unfairness of nationwide appraisal discrimination. Fannie Mae and Freddie Mac have also committed to fighting racial inequity in housing and have issued analyses on trends regarding appraisal bias and valuation gaps as can be seen in this report by Freddie Mac.
Also related to appraisals, NAFCU is monitoring for an interagency rulemaking on automated valuation models (AVMs) which would implement Dodd-Frank’s four quality control standards for the use of AVMs by mortgage originators and secondary market issuers as part of the process of determining the collateral worth of a mortgage secured by a principal dwelling. The NCUA , CFPB and FHFA have included this as a focus in their Fall 2021 rulemaking agenda.
NAFCU remains engaged with NCUA, CFPB, HUD, and other agencies to provide input on creating sound solutions against appraisal bias as well as ways to modernize the appraisal process.