Representatives from eight federal agencies and departments, including the Department of Justice (DOJ), last week told The Appraisal Foundation that its ethics rule and Advisory Opinion 16 fall short in describing what constitutes federally prohibited discrimination by real estate appraisers.
The letter, responding to the foundation’s proposed changes for its 2023 edition of the Uniform Standards of Professional Appraisal Practice (USPAP), notes that the identified provisions state that an appraiser “may not rely on ‘unsupported conclusions relating to characteristics such as race, color, religion, national origin, sex, sexual orientation, gender, marital status, familial status, age, receipt of public assistance income, disability, or an unsupported conclusion that homogeneity of such characteristics is necessary to maximize value.’” It states, however, that the provisions “do not prohibit an appraiser from relying on ‘supported conclusions’ based on such characteristics and, therefore, suggest that such reliance may be permissible.”
The agencies, responsible for enforcing nondiscrimination standards under the Fair Housing Act (FHAct) and the Equal Credit Opportunity Act (ECOA), pointed out that the federal ban on discrimination under both statutes is not limited only to unsupported conclusions.
“Any discussion of prohibited appraisal bias should call attention to, and maintain consistency with, all applicable nondiscrimination standards provided in federal law, including the FHAct and ECOA,” the agencies wrote. “Other federal, state, and local laws may also apply.”
The letter was submitted by representatives of the Consumer Financial Protection Bureau (CFPB), Federal Reserve Board, Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corp. (FDIC), National Credit Union Administration (NCUA), Department of Housing and Urban Development (HUD), Federal Housing Finance Agency (FHFA), and DOJ.
The CFPB, in a related blog post Friday, noted concern that some appraisers “may be unaware of these federal discrimination bans” and urged that the foundation provide clear guidance. It pointed, for example, to discriminatory statements recently identified by the FHFA in some home appraisals; and appraisal disparities for communities and borrowers of color recently found in studies by the government-sponsored enterprises Freddie Mac and Fannie Mae.
CFPB blog post: Appraisal discrimination is illegal under federal law