HUD Secretary’s Comments Evoke Folly of 1919 Sex Scandal

Jeremy Bagott
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HUD Secretary's Comments Evoke Folly of 1919 Sex Scandal. 

Secretary Fudge launched into what sounded remarkably like discriminatory rhetoric: “The problem is who is in the appraisal industry. When you look at an industry that is 95% white … Because [the white appraisers] collect the data, the data is not good data.”

Sometimes when government investigates a perceived problem, it creates a genuine one.

Assistant Secretary of the Navy (and future president) Franklin D. Roosevelt sent two investigators in 1919 to Naval Station Newport in Rhode Island to look into reports of immoral behavior – code at the time for “homosexual activity.” Their report found no such activity. But in the course of conducting the investigation, the two investigators deputized a handful of sailors, training them in techniques for luring personnel into liaisons at a YMCA just outside the base.

Predictably, the subsequent undercover activity by the newly minted “entrapment specialists” resulted in a wave of sightings and new complaints. As it happened, these new detectives seemed to relish their undercover roles a bit too much.

Ultimately, the episode lapsed into self-parody, but not before it had triggered a local prosecution and a congressional investigation, which concluded with Secretary of the Navy Josephus Daniels and Roosevelt receiving formal rebukes by Congress.

Fast-forward to August 2022. Televised comments by Secretary of the U.S. Department of Housing and Urban Development Marcia Fudge lapsed into similar self-parody. The cabinet secretary was addressing a handful of cases around the country in which borrowers were dissatisfied with appraised values and claimed racial discrimination.

In explaining her department’s findings, Secretary Fudge launched into what sounded remarkably like discriminatory rhetoric. She made comments that linked skin color to personality traits. She said to a CNN reporter: “The problem is who is in the appraisal industry. When you look at an industry that is 95% white… Because [the white appraisers] collect the data, the data is not good data.”

Her meaning was clear: Real estate appraisers, depending on skin color, can be dishonest or incompetent by nature. You can view the cabinet secretary’s remarks here. There’s little indication Secretary Fudge is bothered by hypocrisy or double-standards. She appears irony-proof.

 
It’s a shame. In her heyday, she was admired by appraisers. As U.S. Congresswoman for the 11th District of Ohio, then-Representative Fudge entered national prominence when she introduced House Bill 2108, the Predatory Mortgage Lending Practices Reduction Act of 2009. She was a Congressional firebrand who took up predatory lending in the smoldering wreckage of the 2007-2008 financial crisis.

She was viewed as a voice for those who had been victimized by affinity scams. Appraisers, whose fees in the otherwise dog-eat-dog mortgage origination game are not commission-based, have aligned interests with such reformers. Appraisers saw her as a fellow adult in the room. Those days are gone.

She has since allowed fashionable scapegoating – and possibly her own deep-seated biases – to define her. She now seems to be on a quest to dismantle objectivity, her only justification being the pigmentation of the observers.

But even as a vocal critic of predatory lending, she still gave most mortgage brokers and loan officers the benefit of the doubt.

“There are honest, decent mortgage brokers and agents in the industry,” she said in 2009. “Then there are a relatively few unscrupulous individuals who earn their commission through deception.”

Her magnanimity has apparently disappeared with the years. Her opinion of all appraisers is based, in her own words, on race and that alone.

But there is a dimension to her corrosive comments the secretary has perhaps not considered. In her televised interview, she told every employee at her agency what she thinks of them based on skin color. Some of the Department of Housing and Urban Development’s 9,600 employees of all backgrounds will begin questioning their career paths under her. Who could blame them? Have their careers been hindered or helped because Secretary Fudge openly equates competency or honesty to skin color?

The U.S. Equal Employment Opportunity Commission maintains a web page with a sampling of discrimination cases – both from the private and public sectors – from 2003 to present. They detail common scenarios in workplace race discrimination. Secretary Fudge’s comments on CNN could be lifted from the web page.

That a person’s skin color would determine his or her level of honesty or competency is a repulsive remark for anyone to make, let alone a U.S. cabinet secretary. The public needs to call her out on it.

“He who fights with monsters should be careful lest he thereby become a monster,” wrote the philosopher Friedrich Nietzsche. Secretary Fudge should take heed of these wise words.

Image credit flickr - U.S. Dept. of Housing and Urban Development (HUD)
Jeremy Bagott

Jeremy Bagott

Jeremy Bagott is a real estate appraiser and former newspaperman. His most recent book, “The Ichthyologist’s Guide to the Subprime Meltdown,” is a concise almanac that distills the cataclysmic financial crisis of 2007-2008 to its essence. This pithy guide to the upheaval includes essays, chronologies, roundups and key lists, weaving together the stories of the politics-infused Freddie and Fannie; the doomed Wall Street investment banks Lehman and Bear Stearns; the dereliction of duty by the Big Three credit-rating services; the mayhem caused by the shadowy nonbank lenders; and the massive government bailouts. It provides a rapid-fire succession of “ah-hah” moments as it lays out the meltdown, convulsion by convulsion.

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16 Responses

  1. Avatar CJK says:

    So, basically if I am a white appraiser, I must be a racist? Also, the data is not good if it is not what someone wants to hear? Are appraisers of color also using the bad data or is it only the old white appraisers? If the appraisal comes in “low” for a white borrower is the appraiser still a racist? If the appraisal comes in “high” for a person of color, am I still a racist?

    Did the property two doors away have a finished basement, was it totally updated, did it have a swimming pool, solar, HOA fees with amenities? Was it a totally different style property (two-story vs ranch). Tell us the entire story not just what you want people to hear to support the bogus racist narrative. Also, what was the time frame on the two appraisals?

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  2. Avatar Bruce W Lennick says:

    in the eyes of most black people, a white person is a racist.

    2
  3. HUD Sec Fudge is simply following the mandate of her Boss, considering Candidate Biden’s statements about appraiser regulation needed, during the Presidential campaign. This is now one more reason to stop doing mortgage assignments. FNMA is on board too with HUD and in many ways is even worse, using AVM to file complaints anonymously (unsigned) with state licensing agencies.

    By the way, it was HUD that promulgated Redlining.

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  4. Avatar PJTMC says:

    The woman is out of touch with reality and just another “woke” pot stirrer jumping on the band wagon of opportunity. We all make choices in life’ you can go up the street this way or up the street that way. The choice is yours. I chose in 1985 to pursue a career in real estate appraisal. I always was interested in real estate and, after a year as a realtor, decided that was not for me. Appraiser appealed to me because I was working in the real estate marketplace with businesspeople and not the general public while providing a valuable protection service to the financial industry. To suggest I somehow decided on this career path to keep minority groups in check is preposterous. Appraisal has provided me with great satisfaction and a comfortable life. I have never regretted my decision and take offense to the fact a government official believes she knows how I think and behave. She certainly has shown her true racist beliefs (that she is apparently allowed to get away with). That statement alone puts her in a league of true, open racism. And that’s not “reverse racism” as any of this type of behavior is just pure, unadulterated racism. Her statements are so moronic they would be laughable except for the fact out Government and our own appraisal organizations all do the “knee jerk” thing and run for cover. Her remarks are blasphemous and slanderous to the degree a lawsuit should be filed. I am just so tired of this unsupported conjecture and finger pointing for something I am not guilty of. There are “bad actors” in any profession i.e., politics, lawyers, doctors, accountants etc. yet EVERY white appraiser is a threat to minorities. I just wrote that and can’t wrap my head around what I am being accused of. Some public figures, both white and minority, are finally seeing this for what it is. Are my comments racist? Not in the least, they have nothing to do with racism unlike Ms. Fudge. I am under attack and simply defending my legacy and choices I’ve made in life against a relentless attack of uninvited, unfounded and unprovoked attacks on my integrity and person.

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    • Avatar rs says:

      Fudge is being paid off as many of them are to start division among individuals & the govt to take over many industries slowly but surely. This is how these democrat marxist socialist communist work by lying the majority of the time. She is a fool and only cares about the money she is being paid to spread this bs. She and the rest of the individuals who think like she does need to get out of this country. She is a racist and a traitor. Until we start fighting back these traitors of our country, this will only get worse. This appraisers blog may not like the truth which is what I have typed in this post. You are part of the problem in our country and industry, if you can’t see what is going on. Do not stop others from telling the truth. WAKE UP!

      0
    • Baggins Baggins says:

      PJTMC, you got me thinking, is the appraisal profession the only one supposedly not fairly represented by race?

      Lets examine the legal community.
      ‘In 2020, 86% of all lawyers were non-Hispanic whites, a decline from 89% a decade ago. By comparison’ /

      What’s more likely to affect an individuals ability to acquire as they put it; generational wealth, a criminal record or bad credit?
      https://www.americanbar.org/groups/young_lawyers/projects/men-of-color/lawyer-demographics/

      1
  5. Avatar Jesse L says:

    The HUD Secretary’s comments are reprehensible in part, but we can not as a professionals sink to those levels.

    IF every report developed by an appraiser supported in detail (as per FNMA guidance) the adjustments made for location, I feel this would steal the ammunition we are currently being shot with. Vague language like “more desirable” will not cut it, and should never have been acceptable. In every report that I make a location adjustment, I include a graph that shows the 3 year sales price trend for all areas being compared (this takes 30 seconds of extra work with basic templates, plus the time of analysis). The difference between (or lack thereof) is right there in print. If Market A has a historic 5% higher price (per sf, median, average) than Market B, then I have good support to exclude sales from there, or make an adjustment if a sale there is needed for the analysis. If a ROV comes across, I provide the same graph to defend why the marketability of the other area excludes the properties they’ve asked to be included. No comments on why… just cold hard facts. Sadly there are still appraisers who want to hang their hat on “experience” knowing the difference in markets – and while they might be right – that experience is easy to interpret as racial bias when parties are looking for a reason to shred the report.

    We have to produce results that are credible and understandable to our intended users, and HUD by proxy is combing these report. 250 years of government sanctioned racism got us here, and as always, the government will look for the most defenseless party to pin the blame on (hence why continued racism in lending and NAR will get swept under the rug).

    Bullet proof your report, because they’re gunning for us.

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    • Baggins Baggins says:

      Just out of general interest, what does ‘bullet proofing a report’ mean for you?

      For me it’s just not getting cornered in with prewritten and such. It’s one of those easy lessons from liability ce classes, if you say you’ve used said method, you’d better have used it. Leaving methodology statements open ended and generalized, simply admitting these are best of ability estimates, etc, seems to have worked for me. My general take on it is when appraisers over achieve, try to be too specific, that’s when they’re backed into a corner. So I definitely lean more to the art argument side, and am not afraid to use off the cuff estimates. I get better cost adjustment accuracy observing material and labor costs in the real world than I ever could reading data and graphs at the desk, engaging in pointless efforts to pair up sales or whatever. Like some guy once told me, if you want to be a great appraiser, spend more time at the hardware store.

      Because comparative valuation is relative, any extrapolated market reaction figure can be countered with something else, so why bother extrapolating at all is my take. I review high /low, floor ceiling, general margins of difference, and then when narrowing down the segment, the adjustment pie is quite small with good matching comps somehow aligned, and voila, slap a few estimated adjusts and a fixed land and ppsf, generally in the fifth to quarter proportion range, condition and material relative difference estimates, all tied up. I like to call it nickle and dime adjustments. Metric, relative, disclosed as a reasonable market reaction estimate. Then I post all my mls research right there in the report. If anyone wants to make amazing graphs or dig into unnecessary micro or macro research, they can have at it. This works for me, it’s a reliable and on point approach which really truly follows the local market. Spend more time on initial research, less time in the grid. What are you guys doing?

      It’s entertaining to hear these politicians and pundits try to explain exactly why appraisers are doing something wrong. When they don’t even understand what we’re doing in the first place. Like literally all they have is mass data extrapolation, and nothing individual or direct. We’re guilty of inferred racism via meaningless data extrapolation from excessive sized already poorly managed data systems. This lady said appraisers are using “Bad Data.” LOL, I’ve got a meme for that from a few years ago, rofl. I’m still hanging on the edge of my seat to learn how the data became bad in the first place. Popcorn moment, oh schnap, she actually said it! Among the other trife in that utterly pointless interview. It’s a; I may have lost intelligence even trying to watch that moment. But RACE! O.k., feeling better again, more balanced. You were born, just in time, to fight race war. Oh shucks, it’s ‘big data’ not bad data. Well, post it anyways why not, same thing in the end.

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  6. Avatar CJK says:

    I was approved by FHA in 1986 after a 3-year apprenticeship. Was I always a racist or did I somehow just become one within the last 2 years, I am so confused now. I am so happy my mentor retired years ago so he does not need to deal with all of this BS. Also, now that the rates are going up, concessions are coming back, and lenders are taking about buydowns again, who will FNMA go after for the appraisal waiver loans that go into default. One of my friends told me that much of his current work is now pre foreclosure appraisals.

    3
  7. Baggins Baggins says:

    Where did I stash that secret bag of harmful data? Let’s play another round of the federal reserve quiz show.

    How are prices set in an open market with a willing buyer and a willing seller? /
    How does printing money, backed by nothing, affect the potential for generational wealth for all Americans? /
    Whom is the primary beneficiary regarding ‘first receivers of money’? aka banks and other corporations, the welfare warfare state. /

    Appraisers are not responsible for ‘the data’ which ‘the market’ presents to us. Is it possible to move only two doors over and suddenly flip from a black to a white community? Who’s buying that logical fallacy? Does she live near a Berlin wall sort of situation? Is there a natural obstruction like being on the other side of a river or highway? Sometimes I’m not sure these race focused people understand what they themselves are saying.

    3
  8. Richard Hahn on Facebook Richard Hahn on Facebook says:

    She should be fired. But she takes the lead from Harris.

    3
  9. Avatar Bruce W Lennick says:

    I say that we should be able to file a class action lawsuit against the Sec of HUD for slander and discrimination for this.

    2
  10. Avatar PJTMC says:

    If this blog is being monitored by Government officials (I have no doubt it is) you might want to read the recently released NAR industry survey. 2% racism reported. Hmmm seems that does not fit your biased narrative. What are you people up to is the question?

    0

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HUD Secretary’s Comments Evoke Folly of 1919 Sex Scandal

by Jeremy Bagott time to read: 3 min
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