On March 23, the Biden Administration launched a task force to eliminate racial discrimination in the home lending and appraisal process. In addition to ending discriminatory practices, this initiative will also support the opportunity to build generational wealth through homeownership.
Known as the Interagency Task Force on Property Appraisal and Valuation Equity Action Plan, the program represents reforms to improve equity in the home appraisal and home-buying process. Co-chaired by HUD secretary Marcia L. Fudge and White House Domestic Policy advisor Susan Rise, it is the first interagency initiative addressing racial discriminatory practices in the homeownership industry.
“For generations, millions of Black and brown Americans have had their homes valued for less than their white counterparts simply because of the color of their skin or the racial makeup of the neighborhood,” HUD Secretary Marcia L. Fudge said in a press release. “Black and brown homeowners in communities just like mine have not felt that they have had a voice or that the Federal government was doing enough to redress the issue of racial bias in the appraisal process. With the PAVE Task Force, the Biden-Harris Administration is taking a whole-of-government approach to fixing this problem.”
Continued Discriminatory Practices Make PAVE Action Plan A Much-Needed Initiative
Eliminating racial discrimination in the home lending and appraisal process has been an ongoing challenge for federal and state government officials. Although The Fair Housing Act of 1968 prohibits discrimination based on race, sex, religion, disability or family status in the home-buying process, systemic racism still exists in the real estate industry.
Discriminatory appraisals have been happening for decades, but may have come to light as of late.
In December 2021, San Francisco Bay Area homeowners Paul and Tenisha Tate-Austin filed a fair housing lawsuit in a federal district court against an appraiser whose valuation of their property was almost $500,000 less than its actual value.
And in October 2021, a federal lawsuit was filed against the Indiana-based Old National Bank by the Fair Housing Center of Central Indiana, with claims of discriminatory residential mortgage lending practices against Black customers.
And that’s not all; according to the Brookings Institution, owner-occupied homes in predominantly Black neighborhoods are often undervalued by at least $48,000 per home. The undervaluation of homes is at an estimated $156 billion in losses, making it difficult for Black homeowners to truly build generational wealth for their families.
The PAVE Action Plan addresses discriminatory practices with the intention of supporting homeownership — one of the greatest factors of the wealth gap in the United States. At present, an estimated 73 percent of white Americans are homeowners compared to 45 percent of Black Americans. The Task Force will address the need for federal agencies to hold the appraisal industry accountable for its practices while also encouraging homeowners and homebuyers to practice self-advocacy when they receive low valuations.
“We have a long way to go, but the steps laid out in this Action Plan will help our country reduce bias in home valuations, narrow the racial wealth gap, and deliver a stronger and more equitable future for all Americans,” Rice said in a statement.