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Update from Shane Lanham

Why Mortgage Lenders Are Ignoring Trump’s Rollback on Home Appraisal Reviews​

At one midsized US mortgage lender, almost a quarter of customers who dispute property appraisals find that the value of their home had been miscalculated.

It’s an industrywide issue that has historically penalized minority groups, and now President Donald Trump has offered lenders the chance to ignore his predecessor’s attempts to make it easier for homeowners to question the valuations assigned by property appraisers. Trump has scrapped some of the guidelines, part of his team’s vow to stamp out what it sees as initiatives that support diversity, equity and inclusion.

Many financial professionals agree that home appraisals can be unreliable, and that Black homeowners and other minorities are often put at a significant disadvantage. This can be especially damaging given that home ownership is the top wealth-creation tool in the US — and an appraisal is a key determinant of how much, if anything, someone can borrow.

With their decision to end some of the requirements related to home valuations, however, Trump and his cabinet members may have little impact on lenders’ practices. That’s because there’s fresh evidence that the changes the Biden administration put in place are supported by the industry.

Some of the country’s biggest lenders, including JPMorgan Chase & Co., Bank of America Corp. and U.S. Bancorp, said they would make no policy changes as a result of the rollback.

Black homeowners have long reported having their homes valued more highly after taking down all evidence of their race. Research from the Brookings Institution and the federally controlled housing finance agencies, Fannie Mae and Freddie Mac, has shown that home appraisals can be affected by racial bias, which in turn affects the value of homes in entire neighborhoods.

Brookings found, for example, that homes in neighborhoods where the majority of residents are Black are valued between 21% and 23% lower than comparable homes in white neighborhoods, with appraisal bias as one of several contributing factors. Economists at Freddie Mac reported in 2021 that greater percentages of homes in majority Black and Latino census tracts were undervalued compared with those in white census tracts, leading them to conclude that there was a “valuation gap” between homes in different neighborhoods.

PAVE recommended more training for home appraisers and higher standards for appraisers seeking to qualify for professional licenses. Those changes were handled by the Appraisal Foundation, a nonprofit organization that serves as the regulator for home appraisers.

A spokeswoman for the foundation declined to comment on the Trump administration’s recent changes, but said that new education and licensing standards put in place last year are still in effect.

PAVE also called for an industrywide requirement for mortgage lenders to let borrowers request “a reconsideration of value” (ROV) if they disagreed with an appraiser’s determination. Last year, regulators began requiring mortgage lenders to decide how they would standardize their procedures and to explain them clearly to their customers. In a rare win for the government, the policy received support from the Mortgage Bankers Association.

Federal housing regulation includes a web of rules issued by different agencies, including HUD and also Fannie and Freddie. The new home-appraisal guidance went into effect for all of the housing agencies. But so far, the Trump administration has only rolled back the policy for mortgages insured by the Federal Housing Administration, which help low- to moderate-income families attain home ownership.

On July 17, Senator Raphael Warnock, a Democrat from Georgia, proposed a bill that would make mortgage lenders’ ROV policies required by law. It also would expand public access to data on mortgage appraisals by forcing a federal housing regulator to more regularly share details.
 
Fernando said:

Why Mortgage Lenders Are Ignoring Trump’s Rollback on Home Appraisal Reviews​

At one midsized US mortgage lender, almost a quarter of customers who dispute property appraisals find that the value of their home had been miscalculated.

It’s an industrywide issue that has historically penalized minority groups, and now President Donald Trump has offered lenders the chance to ignore his predecessor’s attempts to make it easier for homeowners to question the valuations assigned by property appraisers. Trump has scrapped some of the guidelines, part of his team’s vow to stamp out what it sees as initiatives that support diversity, equity and inclusion.

Many financial professionals agree that home appraisals can be unreliable, and that Black homeowners and other minorities are often put at a significant disadvantage. This can be especially damaging given that home ownership is the top wealth-creation tool in the US — and an appraisal is a key determinant of how much, if anything, someone can borrow.

With their decision to end some of the requirements related to home valuations, however, Trump and his cabinet members may have little impact on lenders’ practices. That’s because there’s fresh evidence that the changes the Biden administration put in place are supported by the industry.

Some of the country’s biggest lenders, including JPMorgan Chase & Co., Bank of America Corp. and U.S. Bancorp, said they would make no policy changes as a result of the rollback.

Black homeowners have long reported having their homes valued more highly after taking down all evidence of their race. Research from the Brookings Institution and the federally controlled housing finance agencies, Fannie Mae and Freddie Mac, has shown that home appraisals can be affected by racial bias, which in turn affects the value of homes in entire neighborhoods.

Brookings found, for example, that homes in neighborhoods where the majority of residents are Black are valued between 21% and 23% lower than comparable homes in white neighborhoods, with appraisal bias as one of several contributing factors. Economists at Freddie Mac reported in 2021 that greater percentages of homes in majority Black and Latino census tracts were undervalued compared with those in white census tracts, leading them to conclude that there was a “valuation gap” between homes in different neighborhoods.

PAVE recommended more training for home appraisers and higher standards for appraisers seeking to qualify for professional licenses. Those changes were handled by the Appraisal Foundation, a nonprofit organization that serves as the regulator for home appraisers.

A spokeswoman for the foundation declined to comment on the Trump administration’s recent changes, but said that new education and licensing standards put in place last year are still in effect.

PAVE also called for an industrywide requirement for mortgage lenders to let borrowers request “a reconsideration of value” (ROV) if they disagreed with an appraiser’s determination. Last year, regulators began requiring mortgage lenders to decide how they would standardize their procedures and to explain them clearly to their customers. In a rare win for the government, the policy received support from the Mortgage Bankers Association.

Federal housing regulation includes a web of rules issued by different agencies, including HUD and also Fannie and Freddie. The new home-appraisal guidance went into effect for all of the housing agencies. But so far, the Trump administration has only rolled back the policy for mortgages insured by the Federal Housing Administration, which help low- to moderate-income families attain home ownership.

On July 17, Senator Raphael Warnock, a Democrat from Georgia, proposed a bill that would make mortgage lenders’ ROV policies required by law. It also would expand public access to data on mortgage appraisals by forcing a federal housing regulator to more regularly share details.
Click to expand...
You will believe anything that has to do with race. It is obvious you have no critical thinking skills when it come to real estate and appraisals. There is no proof that appraisers consider race in their appraisals. Not that it can't happen, but what reason would any appraiser have to do so. 99% of the arguments fail to consider location, location, location. You take an identical house and place it in different neighborhoods regardless of the racial composition of the neighborhood, the values will be different. You could put that house in different predominantly white neighborhoods and the value would be different. Because the underlying site values will all be different
 
Fernando said:
Brookings found, for example, that homes in neighborhoods where the majority of residents are Black are valued between 21% and 23% lower than comparable homes in white neighborhoods, with appraisal bias as one of several contributing factors. Economists at Freddie Mac reported in 2021 that greater percentages of homes in majority Black and Latino census tracts were undervalued compared with those in white census tracts, leading them to conclude that there was a “valuation gap” between homes in different neighborhoods.
Click to expand...

Why are census tracts broken out by race? Where are the mixed race neighborhood census tracts?????????????????????????


:ROFLMAO: Drink the kool aid.
 
Demographics: population, housing, and socioeconomic characteristics. When first
establishing census tracts, the Census Bureau recommends that the average population for all
tracts in a county be about 4,000 people, which is about 1,500 housing units. The population for
any individual tract should be between 2,500 and 8,000 people, which is about 1,000 - 3,000
housing units. Also, the Census Bureau recommends each tract to be homogenous with respect
to housing and socioeconomic characteristics. Over time, these characteristics will change and
a given tract will become less homogenous, however, in the beginning similarity in housing and
socioeconomic characteristics is standard. (p. 10-6)


Pretty funny that census tracts are delineated by socioeconomic characteristics, but then it's the appraiser's fault when more expensive homes are located in different census tracts than less expensive homes, when that was the entire point of creating census tracts in the first place.

:ROFLMAO: Drink the kool aid. :ROFLMAO::ROFLMAO::ROFLMAO::ROFLMAO:
 
Actually it is kinda funny that you report the census number of the subject, so that the lender knows what kinda neighborhood their money is going to, before they decide to make that mortgage loan.

Does anyone else see the irony in the government delineating neighborhoods based on the "wealth" of the typical residents per neighborhood, but then address the "public" with those neighborhoods being delineated by race???? Yet blaming appraisers for being racists????

:ROFLMAO: :ROFLMAO: Ya all need lawyers. :ROFLMAO:

After all, if all homes in all census tracts were worth the same, there would be no need for census tracts.

:ROFLMAO: :ROFLMAO: :ROFLMAO: :ROFLMAO: :ROFLMAO: :ROFLMAO:
 
1754349621067.png

Low-Income Housing Tax Credit Qualified Census Tracts must have 50 percent of households with incomes below 60 percent of the Area Median Gross Income (AMGI) or have a poverty rate of 25 percent or more. Difficult Development Areas (DDA) are areas with high land, construction and utility costs relative to the area median income. Maps of Qualified Census Tracts and Difficult Development Areas are available at: huduser.gov/sadda/sadda_qct.html.




:shrug: No black or white census tracts, only census tracts that are based on economics. Oh, ghee, economics impacts property values too.


:rof::rof::rof:
 
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