White House outlines plan for equity in home appraisals

An interagency panel, the Property Appraisal and Valuation Equity task force, released a plan for addressing discrimination in the appraisal industry. The group first convened last summer.

Why should we care?
These new guidelines may have a significant effect on proptechs that hope to revolutionize the appraisal process. The task force calls for: (1) quality-control standards for automated valuations to prevent algorithmic bias; (2) greater diversity within the appraiser workforce; (3) fair lending; and (4) remediation processes for consumers if the appraisal is lower than expected. The task force’s conclusions match the conclusions reached by secondary mortgage-market investors Fannie Mae and Freddie Mac. The former concluded that Black borrowers faced undervalued refinance appraisals, while the latter found that homebuyer loans are more likely to fall below purchase-contract prices in majority-Black or -Latino neighborhoods. If they proceed thoughtfully and consider the potential biases within their attempts at automation, proptechs can play a massive role in shifting racial wealth disparities in the U.S. by making the financial experience of homeownership more equitable.