Marcia Fudge, the Secretary of the U.S. Department of Housing and Urban Development (HUD), appeared this week on ‘CNN Tonight’ to discuss the issue of appraisal bias with anchor Lauren Coates.
When asked about the efforts of her department in addressing the issue that she characterized as “an absolute violation of the law,” Fudge described the task placed before HUD by President Biden and an observation that the issue exists beyond redlined communities.
“[W]hat we know is that it used to be that these things happened only in redlined communities, but now it is pervasive,” Fudge said. “It is happening everywhere. And we determined that part of the problem was how appraisers are trained, who is in the appraisal industry, and how they are governed. And so, what we did in March was to present a report that showed how deeply this whole bias situation is across this country. It is systemic, and it is intentional to some degree.”
Fudge described how HUD has told each state that the test appraisers use “is no longer valid because it is a violation of the Fair Housing [Act],” actions taken in late 2021. Last November, the Federal Housing Administration (FHA) announced new guidance for FHA mortgage appraisals aimed at both the forward and reverse mortgage programs and designed to limit instances of racial bias in the valuation of homes seeking FHA mortgage financing.
In compiling the guidance, Secretary Fudge explained that a review of the data used by appraisers required revisions, she said. She also made references to the efforts of the Interagency Task Force on Property Appraisal and Valuation Equity (PAVE).
“This is the first-of-its-kind subcommittee,” she said of PAVE. “What the president has said is that we have to look at everything through a lens of equity. So, what we have realized is that people selling homes […] and even people buying homes, their appraisal is not correct. What we find, especially as Black people in communities of color and underserved communities, is that we lose great wealth just through the appraisal process. If those homes were appraised the way that they should be, Laura, then we look at being able to pass down significantly more resources and more wealth to generations that follow.”
Secretary Fudge previously addressed the efforts of PAVE in an appearance on Yahoo Finance last month, and described the necessity for PAVE in similar terms when appearing on CNN this week.
“[I]f we are constantly undervaluing communities of color, either because they are communities of color or that the person themselves is in a community that [appraisers] don’t think that we should be in, then we consistently lose wealth in our communities,” she said. “And that’s why this is some important from an equity situation.”
Watch the segment at CNN.