Appraisal Bias

[glenn walker]

Federal agencies propose guidance for residential real estate ROVs​

Following a statement from the White House last week, the proposed guidance would provide a path for ROVs from institutions and consumers.

 

[glenn walker]

It's about time. Good for VP Harris.

Yes AVM will provide Higher Values

 

[glenn walker]

Has Racial Discrimination Affected Home Appraisals?​

Yes. Numerous studies, including one done in 2020 that uses U.S. Census Bureau data from 1980-2015, have shown that homes in White neighborhoods are valued more than those in minority communities and that the problem is growing, not shrinking. Having acknowledged bias in the process, the Appraisal Institute has suggested a program for addressing discrimination, including unconscious racial bias training, updating professional ethics and guidelines, and offering scholarships to encourage more diversity in the appraisal industry.

 

[glenn walker]

Is There a Race Gap in Home Equity Loans?​

Access to home equity isn’t equal.

• In the context of the racial wealth gap—given that so much of the wealth in the United States is bound up in housing—imbalances in these loans remain a concern for inequality.
• Reviews of federal data released under the Home Mortgage Disclosure Act (HMDA) show a general racial disparity in the ability to extract rising housing equity, but the specific data on home equity loans makes it hard to pinpoint its exact impact.
• Erasing inequality from the home loan market could help communities of color build wealth.

Given this, racial dynamics of people’s ability to tap into home equity is connected to wealth equality in the country. Broad studies of people’s attempts to grab hold of their home equity—not focused solely on home equity loans—have noted racial disparities. This has led some scholars to suggest that even when there are favorable interest rates, not everyone has equal access to home equity extraction

 

[Fernando]

Is There a Race Gap in Home Equity Loans?​

Access to home equity isn’t equal.

• In the context of the racial wealth gap—given that so much of the wealth in the United States is bound up in housing—imbalances in these loans remain a concern for inequality.
• Reviews of federal data released under the Home Mortgage Disclosure Act (HMDA) show a general racial disparity in the ability to extract rising housing equity, but the specific data on home equity loans makes it hard to pinpoint its exact impact.
• Erasing inequality from the home loan market could help communities of color build wealth.

Given this, racial dynamics of people’s ability to tap into home equity is connected to wealth equality in the country. Broad studies of people’s attempts to grab hold of their home equity—not focused solely on home equity loans—have noted racial disparities. This has led some scholars to suggest that even when there are favorable interest rates, not everyone has equal access to home equity extraction

You seem to know a lot about equality matters.
Is today a national holiday. My wall street channel not showing business programs.
Are banks closed today. I was planning to go to bank now.

 

[Carnivore]

I am celebrating June 19th day It all started 1619...

Historical scholarship, like journalism, is often fraught with controversy, as people can disagree over the meaning of historical facts. In regards to The 1619 Project, the facts are cited within the project; what we have seen are disagreements with The 1619 Project’s conclusions regarding what the legacy of slavery means to American democracy and our national identity. Since we are a news organization led by veteran journalists, it is our policy to post a correction, editor’s note, or retraction if a story on our site is found to contain factual errors.

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Home. RESOURCE Teaching The 1619 Project Resources and teaching tips for educators who are #Teaching1619. Explore the Resources READ THE ORIGINAL ISSUE from The New York Times Magazine Download PDF VIEW ON...

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[glenn walker]

You seem to know a lot about equality matters.
Is today a national holiday. My wall street channel not showing business programs.
Are banks closed today. I was planning to go to bank now.

Banks Closed Juneteenth

 

[glenn walker]

Black couple settles bias suit over low-balled home appraisal​

Marin California Case : A white appraiser must compensate a Black couple, attend training and watch a documentary on preventing housing discrimination.

 

[glenn walker]

Can AI solve appraisal bias?​

Genius-price technology employs cutting edge techniques to help remove bias from valuation data.

The topic of appraisal and valuation bias has been in the news frequently over the last few years. Reports of minority homeowners being given insanely low appraisals for their homes have made headlines in mainstream media, and the Biden Administration has even formed a task force to combat valuation bias.

Traditionally, a property valuation is conducted by a certified appraiser—a practice that appraisal industry leaders acknowledge has contributed to bias and discrimination. However, computer-based automated valuation tools have also received criticism for perpetuating bias. Most recently, the Consumer Financial Protection Bureau (CFPB) announced it intends to issue a proposal to regulate the use of automated valuation models based on the concern that models may rely on biased data, resulting in inaccurate valuations.

You may be wondering: if we can’t trust either people or machines to be unbiased, how can we ever know the real value of a home?

For real estate agents who are devoted to the best interest of their clients, this is a troubling conundrum. But while computer generated valuations may not be perfect, they offer a better chance of removing bias from the equation. First, let us recognize that automated valuations are not natively biased. Predictive models themselves, unlike humans, lack emotion and therefore inherently lack the associated biases. Yet, it is important to understand that models are only as good as the data they ingest.

There is a long history of humans undervaluing homes in minority neighborhoods dating back to the 1930s when redlining became a standard practice. This has had a profound effect on housing values and data in certain neighborhoods even to this day. And so, even when using automated technology, biased data can impact values if not remediated.

 

[gregb]

Black couple settles bias suit over low-balled home appraisal​

Marin California Case : A white appraiser must compensate a Black couple, attend training and watch a documentary on preventing housing discrimination.

Black Marin County couple settle lawsuit alleging racism in home appraisal

Paul Austin and Tenisha Tate-Austin alleged that the defendants undervalued their house because they are Black.

www.mercurynews.com

A Marin City couple who sued a real estate appraiser over alleged racial discrimination has reached an out-of-court settlement.

Paul Austin and his wife Tenisha Tate-Austin sued appraiser Janette Miller and Miller and Perotti Real Estate Appraisals in San Rafael. They also sued AMC Links LLC, an appraisal management company in Utah. The suits were filed in 2021.

The Austins alleged that the defendants supplied them with an appraisal that undervalued their house because they are Black. Fair Housing Advocates of Northern California participated in the suit as a co-plaintiff.

Caroline Peattie, the executive director of Fair Housing, said the decision to settle was made because of the toll such a case takes on the people bringing it and the uncertainty of the outcome.

RELATED: Marin County home appraisal featured in racial bias documentary

“Obviously we felt we had a strong case or else we wouldn’t have pursued it in the first place,” Peattie said. “Filing a lawsuit on the strength of the evidence is one thing and how a judge will rule is a separate question. You’re never assured of a particular outcome. I think everybody involved with the case was ready to move on.”

In a statement, Paul Austin said, “We’re glad that we can put this lawsuit behind us. Having to experience everything that came with receiving the lowballed appraisal was overwhelming. Being able to tell our story and knowing we had legal recourse helped.”

Tenisha Tate-Austin said, “The ongoing undervaluation of homes in Black neighborhoods perpetuates the wealth gap between Black and white families. We hope by bringing attention to our case and this lawsuit settlement, we can help change the way the appraisal industry operates, and we can start to see a different trend.”

Neither Miller nor any other representatives of Miller and Perotti Real Estate Appraisals responded to requests for comment.

AMC Links hired Miller to appraise the Austins’ home in 2020 at the request of their mortgage broker. The Austins were seeking to refinance their mortgage to make renovations to their home.

Miller came back with a valuation of $995,000, which was $455,000 lower than an appraisal done for a previous mortgage refinance on the house in 2019. Dissatisfied with Miller’s appraisal, the Austins requested and received a second appraisal by another professional hired by AMC Links.

Suspicious that their race may have been a factor in Miller’s appraisal, this time the Austins removed any evidence of their racial identities inside their house during the inspection and made sure a White friend was the only person present at the time.

This time the house was valued at $1.48 million.

The Austins’ suit singled out five pieces of evidence to support its allegation of housing discrimination due to race.

First, the suit cited the “unreasonably and inexplicably low market value” arrived at by Miller. Second were adjustments to value based solely on the house’s location in Marin City.

Third was the “perceived race” of the homeowners. Fourth was a comment Miller made regarding the “distinct marketability” of Marin City. Fifth was Miller’s use of property sales located exclusively or primarily in Marin City as comparisons.

When doing her sales comparisons, Miller used three properties in Marin City, two in Mill Valley and one in Sausalito. The second appraiser used two properties in Marin City and six in Sausalito.

According to the suit, Miller’s decision to compare the Austins’ house to other homes sold in Marin City resulted in the valuation being dictated by past sale prices that were “the direct product of racial discrimination.”

In January 2022, Miller’s attorneys issued a 29-page rejoinder to the allegations made by the Austins.

“There is nothing inherently racist about choosing comparable properties that are located in the same city as the Subject Property,” the brief stated. “Without any direct (or indirect) evidence of actual racial discrimination Miller’s choice of comparable properties cannot support Plaintiff’s claim of discrimination.”

Regarding Miller’s comment about “distinct marketability,” the attorneys wrote, “It is self-evident that every geographical area would have some sort of distinct marketability. If the Plaintiffs’ argument is accepted, any appraiser who used the term ‘distinct marketability’ to describe a home in Marin City would be liable for racial discrimination.”

In August 2022, U.S. District Judge Maxine Chesney ruled that there were no grounds for one of the causes for action contained in the suit, a claim of “negligent misrepresentation.”

The suit alleged that the Austins had “reasonably relied on defendants’ representations and were harmed in doing so.”

The judge, however, wrote in her ruling that there was nothing to suggest “the Austins believed the representations in the Miller Defendants’ appraisal report were true.”

In their brief, Miller’s lawyers pointed out that the Austins’ mortgage broker relied on the second appraisal when extending a loan to them.

In her statement Monday, Tenisha Tate-Austin said, “We missed out on a better interest rate because of the unfair appraisal we received.”

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Miller’s attorneys, however, assert that interest rates actually went down between the time of the first audit in February 2020 and the second in March 2020.


The plaintiffs reached a confidential settlement with AMC Links, according to Fair Housing. No information was released about the terms of the settlement, but it specified that AMC Links “denied any wrongdoing.”

Regarding the suit against Miller, Fair Housing wrote in a statement that the agreement includes “an undisclosed monetary amount with additional terms.”

Julia Howard-Gibbon, Fair Housing’s supervising attorney, said in the agreement the defendants pledge they will not “engage in any form of unlawful discrimination in the appraisal of residential real estate” in the future, while not admitting they “engaged in any unlawful discrimination in the past.”