HUD to ‘punish’ appraisers and lenders who discriminate

One month after the Biden administration announced its $86 million five-point plan to combat racial discrimination in the lending and appraisal industries, the Department of Housing and Urban Development has released its own equity action plan that outlines how the department will enforce Biden’s agenda.

“It’s just important that the public understands that people of color, especially Black people, lose billions of dollars annually because their property is undervalued,” HUD Secretary Fudge told theGrio on Thursday. “If we could just make the market fair, Black people would accumulate so much more equity in their homes that they would really have a big nest egg to leave.”

Secretary Marcia Fudge | Credit: LinkedIn

“So what we have done is decided that it is important for us to expose the bias in the market and to make recommendations as to how we change it,” she added.

The 18-page plan focuses on addressing disparities in fair housing and civil rights resources, homeownership and homelessness through more funding for state, local and private fair housing organizations, improving the Federal Housing Administration’s efficiency, supporting and increasing access to non-traditional lending options, and crafting specific solutions for various homeless populations in cities, suburbs, rural areas and tribal lands.

The equity action plan also highlighted racial discrimination in the appraisal process, which has become a headline-making issue throughout the pandemic as minority homesellers — especially Black homesellers — highlighted rampant under appraisals.

Marin County homeowners Tenisha Tate-Austin and Paul Austin’s December 2021 case against their real estate appraiser captured the most attention after the appraiser undervalued the couple’s home by more than $500,000. The couple realized the disparity after they removed any indication of their race and had a white friend pose as the owner of the house during a subsequent valuation.

The appraiser attempted to have the fair housing lawsuit thrown out; however, the United States Department of Justice blocked their attempt.

“Combatting housing discrimination, including bias in appraisals, is a high priority across the federal government,” the DOJ’s attorneys wrote in a February filing, according to a previous Inman article. “Last year, the President ordered agencies to take ‘a comprehensive approach to advancing equity for all, including people of color and others who have been historically underserved, marginalized, and adversely affected by persistent poverty and inequality.’”

HUD’s plan doesn’t explain the specific actions they’ll take to reduce bias in home appraisals, but Vice President Kamala Harris said the White House is looking to create an anti-discrimination training mandate for appraisers to tackle the issue.

Adjoa B. Asamoah | Credit: LinkedIn

“There are stories like this in many places in our country, and a lot of it has to do with, of course, racial bias and systemic bias in a system such as home appraisals. So we’re dealing with that by requiring training for the appraisers,” Harris said at a March press conference.

Fudge will work alongside Adjoa B. Asamoah to flesh out the finer details of the plan. Asamoah, who earned her Ph.D. from George Washington University and helped craft the recently passed CROWN (Create a Respectful and Open World for Natural Hair) Act, will be responsible for “examining HUD’s policies and practices and conducting the critically important historical analysis needed to govern in a way that prioritizes and advances racial equity,” theGrio said.

The HUD Secretary said the department has already begun building its appraiser training program and is dedicated to making sure appraisers and lenders face “punishment” for failing to uphold fair housing requirements.

“So we have the appraisals and the groups responding to our report, trying to make the effort to at least start the process of training people properly and not discriminating against people because they live in Black or Brown communities…” Fudge told theGrio. “We just want the market to be fair so that people who choose to live in communities of color will still get the value that they are due for their homes.”

“Yes, at some point, there is going to be a punishment that will go along with it,” she added. “You can go back to your lender and request another appraisal and you have a right to get one or you give them the steps by which they can bring actions against these appraisers and these lenders. So absolutely, you’re going to start to see that they are going to be held accountable and responsible for what they do.”

Email Marian McPherson