The Brookings Institute recently hosted Housing and Urban Development(HUD) Secretary Marcia L. Fudge where she announced, that through the Federal Housing Administration (FHA), she is creating a process that people seeking FHA financing can use to request a review of their appraisal if they believe the results may have been influenced by racial bias.
This process, called a “Reconsideration of Value” or ROV, solidifies the processes that lenders must follow when a borrower applies for the program should they believe their residential property valuation was influenced by unlawful discrimination.
“HUD is committed to making the appraisal process fair nationwide. We must eliminate bias in home valuations so that everyone can equally reap the benefit of wealth—and intergenerational wealth—that come along with homeownership,” said HUD Secretary Marcia L. Fudge. “This announcement is an important step forward in rooting out appraisal bias in this country.”
Under the Reconsideration of Valuation proposal, lenders will have clear guidance and it also provides guidance for obtaining a second appraisal when material deficiencies are documented, and the appraiser is unwilling to resolve them. Material deficiencies include when a Fair Housing violation has occurred, or a bias has been identified on a property valuation report.
This draft proposal supports the Biden-Harris administration’s PAVE Action Plan commitments and the continued work of the Interagency Task Force. The Action Plan represents the most wide-ranging set of equity reforms to the home appraisal process since landmark financial reform thus creating greater opportunities to embed concrete strategies such as this into the homebuying process.