Minority home owners are losing wealth because of an appraisal process that doesn’t provide them with the true value of their homes and properties, Housing and Urban Development (HUD) Secretary Marcia Fudge says in a new interview.
She said HUD had been tasked by President Biden to look into appraisal bias during an appearance on “CNN Tonight,” telling host Laura Coates that it is a violation of the Fair Housing Act and lending law for appraisers to discriminate against minority homebuyers.
“And so, what HUD is doing, and what we have done already, is we were tasked by the president to look at appraisal bias. Because what we know is that it used to be that these things happen only in redlined communities,” Fudge told Coates. “But now it is pervasive, it is happening everywhere.”
Fudge said the problems are systemic and pervasive and that minorities lose out because of how appraisers are trained and governed.
“And so, what we did, in March, was to present a report that showed how deeply this whole bias situation is [engrained] across this country,” Fudge said. “It is systemic, and it is intentional to some degree.”
Fudge said minority homebuyers suffer the most during the appraisal process, telling Coates that if “homes are appraised the way that they should be,” many minority homeowners will be able to pass down more resources and wealth to their children.
“What the president has said is that we have to look at everything through a lens of equity. And so, what we have realized is that people selling homes, just as the persons you were talking about, and even people buying homes, if their appraisal is not correct, what we find, especially as Black people, in communities of color, and underserved communities, is we lose great wealth, just through the appraisal process,” Fudge told Coates.
“But if we are constantly undervaluing communities of color, either because they are communities of color, or that the person themselves is in a community that they don’t think that we should be in, then we consistently lose wealth in our communities,” Fudge added. “And that’s why this is so important, from an equity situation.”
Fudge’s remarks come after President Biden announced the launch of the Property Appraisal Valuation Equity (PAVE) initiative last year. PAVE is a task force made up of 13 federal agencies, co-chaired by Fudge and Susan Rice, the chair of the Domestic Policy Council.