AEI Response to ASC

[TerryRohrer]

Edit: Old news. Thought this was the current comment period.

https://www.aei.org/wp-content/uploads/2021/03/FHFA-Request-for-Input-RFI-on-Appraisal-Related-Policies-Practices-and-Processes-FINAL-v2.pdf?x85095&fbclid=IwY2xjawIMtx5leHRuA2FlbQIxMAABHbAS2BC1Jmz4cHVapdHUCocKZi9yQOuwha5sfwKgmBpIW-syRy4IFcuSgw_aem_RdlqaOOnvMxY2o-aIqg3ZQ

 

[Mejappz]

GSEs claim their appraisal waivers are race-neutral, but the reality tells a different story. The issue isn’t just about individual appraiser bias—it’s about how the entire system is designed to favor those who already have financial advantages while shutting out those who don’t. Waiver eligibility is heavily tied to lower loan-to-value (LTV) ratios, which disproportionately benefit homeowners with more equity—a group that is overwhelmingly White due to longstanding systemic disparities.o yes, GSE waivers are biased—not through explicit racial discrimination, but through a structural design that systematically excludes minority homeowners from their benefits. The industry needs to stop pretending waivers are a fix for appraisal bias and instead do away with them entirely. If fairness is truly the goal, every borrower should go through the same standardized valuation process—no shortcuts for some, no extra hurdles for others. So who's the real racist? I win again.

 

[Mejappz]

 

[Mejappz]

I see a big juicy class action lawsuit in the future.

 

[George Hatch]

I sympathize with the general theme, but AFAICT they're doing the same think Brookings and the cat ladies did - starting with the outcomes and working their way backwards into their conclusions instead of direct comparison of the individual's work on different assignments.

If I always appraise low regardess of where I am but I'm doing more work in the poor areas than in the rich areas that's going to show up in their outcomes. But it doesn't mean I am treating anyone differently. And an allegation of appraiser bias goes to the individual, not the group. If 50% of appraisers are doing right and 50% are doing wrong it's still unfair to say the profession is good. Or bad.

 

[Mejappz]

It gets even better.

 

[George Hatch]

Average Credit Scores by Race

A breakdown of the average credit score for major U.S. racial groups, with explanations of why some groups may be disadvantaged in current scoring models.

www.investopedia.com

 

[Elliott]

My takeaway:

"This result further supports our conclusion that intentional and unintentional racial
bias by appraisers on refinance loans is uncommon and not systemic."

"Based on the results from our revised Perry et al. approach, we conclude that
homebuyers are sorting along socio-economic status (SES). The differences in
SES explain about 75% of the gap Perry et al. attributed to race."

The Biden administration and the GSEs accused appraisers and other groups of systemic racism. It was their 'Go To' policy.

There is a older mortgage banker study (I wished I could find it) that shows chart after chart that correlates foreclosures with low credit score. And avoiding mortgage foreclosures is what protects lenders.

 

[Mejappz]

In conclusion, no systematic bias exists in evidence appraisal, and the GSE waiver program exhibits anchor bias and evidence of gaming the system. I love it.

 

[George Hatch]

They might be 110% right, but the the burden of proof it would take to stuff our critics into a corner are significant. Everyone wants the EASY Button but don't think there is one for this situation. I don't see any shortcuts to looking at the individuals' work over time, rinse and repeat until the pattern emerges.