The Property Assessment and Valuation Task Force (PAVE) recently released an action plan that outlines the historical role of racism in residential property valuation, examines forms of bias that can impact property assessment and outlines the positive steps federal agencies will take to advance fairness in the assessment process. In June 2021, President Biden announced the creation of the PAVE Task Force, an interagency task force comprised of thirteen federal agencies and offices tasked with “assessing the causes, extent, and consequences of valuation biases” and to create recommendations to fight against racial and ethnic discrimination. bias in home valuations.

The PAVE Action Plan provides historical context for existing issues associated with inequitable property assessments and describes how discriminatory government policies have contributed to an assessment gap between homes in communities of color and predominantly neighborhoods. white. The action plan details how undervalued appraisals hurt both buyer and seller, potentially preventing potential buyers from buying homes and leading to reduced financial gains for the seller, which in turn can affect their ability to buy their next home. Additionally, low appraisals can lead to persistent undervaluation in communities of color, as each lower purchase price becomes a potential comparable used by future appraisers.

The action plan then outlines a number of commitments that the working group agreed to, including but not limited to: (i) addressing potential biases in the use of tools technology-based assessments through rulemaking; (ii) expand the review procedures of mortgage lender regulators to include the identification of patterns of pricing bias; (iii) require anti-bias evaluation, fair housing, and fair lending training for all evaluators who conduct evaluations for federal programs; (iv) integrating information about valuation bias into training courses for first-time homebuyers; and (v) developing a data sharing agreement between all relevant government agencies and pursuing joint strategies to make valuation data more available and to better enable enforcement related to valuation bias.

CFPB Director Rohit Chopra issued a statement reaffirming the importance of the PAVE task force, stating “[d]Discriminatory home appraisals, whether calculated by an algorithm or performed in person, undermine the long-standing goals of fair housing and fair lending across our nation. Chopra further stated that the CFPB “will look closely at the work of The Appraisal Foundation, which wields enormous power to set standards and levy fees on the professional appraiser community,” and that the CFPB will work with federal financial regulators. to “implement a dormant authority in federal law to ensure that algorithmic ratings are fair and accurate.

The thirteen federal agencies and offices in the PAVE task force are: HUD; White House Domestic Policy Council; FFIEC evaluation sub-commission; Federal Reserve Board; CFPB; FDIC; FHFA; NCUA; OCC; Department of Agriculture; Department of Justice; Ministry of Labour; and the VA. WBK previously covered FHA updates to anti-discrimination rating requirements here.