AEI's Critique of Freddie Mac’s Research Note on “Racial and Ethnic Valuation Gaps in Home Purchase Appraisals"

[Mejappz]

This has nothing to with race. It forms fillers pumping out the garbage(just like the Lenders, AMC,s, and GSEs want). Then use the race ruse as cover. It's happening in other industries as well. It's all BS. Does anyone with a brain believe there's rampant systematic racism in the appraisal industry?

 

[TerryRohrer]

From Freddie's Press Release touting their findings:
"This is a persistent problem that disproportionately impacts hundreds of thousands of Black and Latino applicants,” said Michael Bradley, senior vice president of modeling, econometrics, data science and analytics in Freddie Mac's Single-Family division. “Our research marks the beginning of a comprehensive effort to better understand the key drivers contributing to the appraisal gap. Our goal is to develop solutions to this persistent problem, including appraisal best practices, uniform standards for automated valuation models, enhanced consumer disclosures, improved value processes, and revised fair lending exam procedures and risk assessments.”

The current spin about "we have just begun" begs the question if they are at the outset of their investigation, how have they concluded this is "a persistent problem" and why are they already setting in motion development of solutions to "this persistent problem"? Frankly, I will be surprised if there are any further pronouncements from Freddie on this matter (the search for knowledge and understanding) and expect only to see "solutions" being forced upon us. At least the AEI is engaged and brings competent resources to bear on the issue.

 

[TerryRohrer]

And Scott Rueter's interview with Appraisal Buzz, in which he suggested that appraisers keep in mind that a contract is an opinion of two people and should be weighted, and "wink, wink" if you hit the contract price, there will be no appraisal gap! Magic, problem solved, right from the top!

 

[Sadie]

I watched a podcast with one of the data crunchers from Freddie and one or two others. The Freddie rep said there could be several completely valid reasons for the results that have nothing to do with racism, but won't know more until they do a deeper dive into the data. Why did they prematurely release this study? The fake results support some sort of narrative they want to promote is my guess.

 

[Mejappz]

And Scott Rueter's interview with Appraisal Buzz, in which he suggested that appraisers keep in mind that a contract is an opinion of two people and should be weighted, and "wink, wink" if you hit the contract price, there will be no appraisal gap! Magic, problem solved, right from the top!

Yes, that's the dog whistle.

 

[George Hatch]

As I read it the conclusion of their analysis was that there is a gap. The analysis did not attempt to attribute the causes of that gap except to account for some of the variables that might have been of effect on their comparisons.

Now we can split hairs as to the question of whether or not the existence of a gap actually does amount to a problem but public opinion will obviously consider the existence of a gap to be a problem and that perception is going to be a problem all by itself even if it turns out to be in error later on.

There is nothing inherently wrong or unethical with performing and publishing an analysis which concludes "there is a gap and we need to study the problem further".

 

[Mejappz]

When can we expect the study from the GSEs on this to come out?

Is there racial bias baked into GSE underwriting?

David Stevens highlights why he believes there is a level of racial bias and discrimination in the way the GSEs price and underwrite mortgages.

www.housingwire.com

 

[George Hatch]

So the question arises about how they got Freddie's data, if that's what they used; and if they didn't use Freddie's data then what data did they use?

 

[CGinMN]

Now we can split hairs as to the question of whether or not the existence of a gap actually does amount to a problem but public opinion will obviously consider the existence of a gap to be a problem and that perception is going to be a problem all by itself even if it turns out to be in error later on.

To be clear: There isn’t a gap once you account for the obvious, which they didn’t make any attempt to do, knowing that public opinion would consider the existence of a gap to be a problem, especially when it’s framed by Freddie as an problem.

 

[George Hatch]

"which they didn't make any attempt to do"​

I'ma ask for a citation for that one. I mean, other than the allegations being made in this other study. Freddie spent months on their analysis, sufficient to find 1000 appraisers who had submitted enough of each type of appraisal in such areas. That level of time/effort doesn't line up with the idea that they didn't give any consideration at all to sales concessions or other factors of effect on these transactions. And for sure, Freddie employs enough quants to have the capacity to do these sorts of analyses.

My guess is that Freddie's disclosures don't include everything they've found so far. They're probably still holding some inconclusive and incomplete analyses.

And like I said before, where did this study get their data? Are we even sure they're using Freddie's datasets? Do they have access to the actual reports, and if so how did that happen? How much time did they spend with those reports? I don't ask any of those questions to cast aspersions on the results, I just want to understand the context of their analyses so I can include that consideration in forming my opinion of its credibility.