Racial Bias Narrative to Remove Appraisers

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Racial Bias Narrative to Remove Appraisers From the Lending Equation

…the racial bias narrative will be what is utilized to remove appraisers from the lending equation… Removing us will finally put the FOX completely in charge of the HEN HOUSE…this entire narrative could very well end up costing us all, our way to make a living…

Unfortunately, Professional Appraisers have no organized voice and I don’t see that we ever will. There is no one to defend us. And that has been used against us for years.

After all that Appraisers have been through over the last 15 years, the racial bias narrative and the allegations of racial discrimination in the appraisal profession will be what is utilized to remove us from the lending equation, just as the GSE’s and especially AMCs have wanted for YEARS now. We have never been more than a hindrance that is in the way of their predatory lending practices.

Removing us will finally put the FOX completely in charge of the HEN HOUSE.

While we can certainly improve our Profession and our Appraisal Process, what’s being proposed will not accomplish what they are “saying” they want.

As Appraisers, WE have failed miserably in educating the public about the appraisal process and exactly what we do. They are not aware that WE are the only party in a lending transaction that is TRAINED to be neutral, unbiased, and not an advocate for ANY party.

Basically…WE are in place to keep everyone else honest.

For those that sincerely believe that the Appraiser is the one that is your “enemy”…be careful what you wish for. Without US, borrowers will be completely at the mercy of lenders, and guess what? They are only trying to make money off of you, and will NOT present you with neutral, unbiased information on which you can make your borrowing decision.

Let’s all repeat together: ”Unintended Consequences”. That’s what’s ahead for all of us, not just appraisers, but the borrowing public and real estate brokers. Realtors have been attacking Appraisers as well, because they also see us as a speed-bump to get over.

NAR has a “Valuation Section” and has published an official policy that states;

The National Association of REALTORS® represents approximately 25,000 state-licensed and certified appraisers throughout the country. NAR’s Responsible Valuation Policy states that “persons who perform appraisals of real property shall be licensed or certified by their respective state regulatory agency and the appraisal shall be conducted in accordance with standards established in the Uniform Standards of Professional Appraisal Practice (USPAP).

An appraisal is an important part of the home buying process because it assures the lender the property has adequate collateral to make the loan. NAR closely monitors federal legislative and regulatory issues related to appraisals. NAR has long advocated for an independent appraisal process and enhanced education requirements that allow appraisers to produce the most credible appraisal reports possible.

Yet has anyone seen any “article” from NAR’s Valuation Section defending their “25,000 appraiser members”??

NAR is a powerful lobbying organization and if these accusations were being levied against Realtors, NAR would have responded by now.

We all should understand that this narrative has been formed at least since June 20, 2019 when Maxine Waters / US House Committee on Financial Services, held the hearing titled;

What’s Your Home Worth? A Review of the Appraisal Industry – June 20, 2019

Watch it HERE.

 

If you haven’t watched the entire thing, you need to. NOTE: At the end there was a plan proposed to put together another hearing in order to form a “committee” that would include Professional Appraisers to check into the information they were given by Andre Perry and the Brookings Institute. You can see the documents here. Keep in mind that Mr Perry is NOT a Professional Appraiser and the data utilized in the Brookings Institute Report was put together using data from Zillow. However…THE PROPOSED HEARING WITH APPRAISERS HAS NEVER HAPPENED THAT I AM AWARE OF. If I am wrong, then please send me a link to the info.

In addition, various “powers that be” are jumping on board to help spread the “racial bias” narrative and prove that they are good guys and are joining the effort to prevent it. So we as Appraisers, WILL be subject to new requirements and regulations…they are coming. Be prepared. Since no one has actively sought input from Appraisers up until now, I have no expectation that we will be consulted going forward.

If the public AND these Legislators really understood USPAP, they would all be aware that we are ALREADY under Standards of Professional Practice and Ethics that are more stringent than what LEGISLATORS must follow.

Additional information we ALL need to be aware of;
The US Congress is currently considering this legislation; Read H.R. 2553 – Real Estate Valuation Fairness and Improvement Act

I encourage ALL of us to contact our Legislators, State and Federal, in order to let our voices be heard. PLEASE don’t send a ranting letter filled with profanity and complaints against a specific political party. This issue is way BEYOND that. If you are not able to write a professionally put together letter, then don’t do it at all.

We need to be able to be proud of our Profession, not be embarrassed by letters that may end up being online somewhere. Write your letters as if the world will read them, because they may.

Note that financial companies are coming out with their own commentary; JP Morgan Chase is calling for reforms to stop racial bias in housing.

And if you missed it, NOTE; the Consumer Financial Protection Bureau / CFPB also held a “hearing” just 3 days ago; Virtual Hearing on Home Appraisal Bias / Consumer Financial Protection Bureau.

 
Although this entire narrative could very well end up costing us all, our way to make a living, THAT is not the worst part of it to me.

To me, this feels like a PERSONAL ATTACK on ME and the way I do my job, not to mention the kind of person I am and the way I’ve always lived my life and treated people.

That’s why I’m ANGRY, and why I can’t just be silent. I understand that there are those that are leery to get involved in this issue and voice their concerns. They are leery that they may be labeled as “racist” and that it may just cost them clients. I honestly don’t know how this will all end up. But if I must go down as an Appraiser, and no longer be able to do my job in a neutral, honest way, then I don’t want to go down silent, never having defended myself and those in my Profession.

I’ll go down fighting for the TRUTH.

By LadyT. The author is a Certified Residential Appraiser.

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10 Responses

  1. Heidi Ford on Facebook Heidi Ford on Facebook says:

    I notice JP Morgan Chase has been quoted in the several articles about how appraisers are biased. Color me cynical.

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  2. Kathy Morton Bunting Hoey on Facebook Kathy Morton Bunting Hoey on Facebook says:

    The AVM industry started and has promoted this false narrative over the past two years in an effort to discredit Appraisers and promote their products. As a profession we have no real voice. If we as members of NAR do not push them to stand up for us, we will continue to get beat up and pushed aside. Reach out to your local groups and demand they take a stand.

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  3. Baggins Baggins says:

    Traditional safeguards, checks and balances, under attack in many industries in America right now. / Denver 2021. And this is just the entry area, I dared not risk taking a photo of the people, and the things they were doing in the more dense tent city areas. But I drove through to see it for myself, I had to know. Think an appraiser can cause that?

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  4. Baggins Baggins says:

    https://prospect.org/power/big-banks-cashing-food-stamps/
    Same emerging activity, different industry.
    https://www.brookings.edu/research/what-will-it-cost-to-save-washington-d-c-s-renters-from-covid-19-eviction/
    The money is allotted by the cities, but the distribution methods are being reconsidered, as big corps and think tanks shuffle to win the distribution contracts. That’s just one of many local stories but it’s a national conversation. They continue to pretend that prosperity can be improved with more taxes, and more spending. Affordable housing can also be answered with upscaling zoning limitations, but nobody would profit from subsidy funds distribution.
    https://advocacy.caionline.org/upzoning/

    https://homeownershipcouncil.org/the-untapped-potential
    “The fact is that most underserved borrowers can be served by loan products that already exist in the market, and it is the delivery system that is failing to reach them.”
    People whom don’t understand lending are likely unaware that the governments own ATR and QM rules are substantial hurdles. Lenders have grading and performance requirements too. Again, those are concerns for economic development and employment, lending and insurability rule making, the valuation department merely measures the results.

    Those reviewing these systems may feel like it’s all crashing down on them, perhaps being a part of the effected populace or at least empathetic. They need someone to blame because they don’t understand the lending system. The call to action is feverish. There is always the option to wind down the GSE’s and get the government out of the business of lending and insuring… The mantra of the day, government must always grow and never shrink. They will not reduce the taxation willingly. The end result is poisonous protectionism as the cure creates more harm in a recurring cycle that continues as long as the size of government increases. The narrative has legs and is walking on it’s own now. There is no stopping it.

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  5. Collateral Valuations for approximately 50% of GSE mortgage originations (Fannie Mae and Freddie Mac) are presently done with AVMs.

    This is up from 45% just 3 months ago and up from 5% in 2017.

    These AVMs do not have to be as accurate as a boots on the ground appraisal. They just have to be ‘good enough’ based on total risk-analysis / underwriting of borrower and property together.

    100% non-appraiser (AVM) will never be achievable by any stretch of the imagination. And, not for most FHA assignments either due to high-risk and heavy reliance on accurate collateral value in the event of default.

    60% is doable as Artificial Intelligence gets better. Maybe even 80% in certain locales.

    The use of AVMs on mortgage lending is also based on Credit Score of borrower and Risk Analysis.

    The low risk properties with robust data, closest to the 50th percentile price ranking, are pretty much gone forever for boots-on-the-ground appraisers and won’t be back, along with rate and term no cash out refinancing.

    Appraisers won’t be replaced on high-risk loans and the outliers, where the AVM returns a low and unacceptable Confidence Score, or, can’t even identify the property electronically.

    And, appraisers will still be needed for Commercial, Apartments, Special Purpose, Proposed Construction and so on. I foresee Collateral Valuations however for certain categories of commercial properties being automated too. This is fairly simple.

    The attacks on appraisers over racism has unfortunately become hyper-political.

    President Biden has placed a mandate on HUD Secretary Marcia Fudge to take action against appraisers for what’s mistakenly determined to be systemic racism by appraisers, with no science or evidence to back up the claims. I do not believe that these claims are coming from AVM proponents and developers, but from other parties seeking equity and political power.

    The main impact on most appraisers will be to take additional continuing education. Realtors too (I’ve been a R.E. Broker since ’84 and a Certified General Appraiser since ’75).

    Unfortunately, some appraisers, who did nothing wrong, will forced to pay the price as sacrificial lambs, with legal charges of racism levied against them by HUD, and, referrals to their State licensing agency too, to teach the rest of us a lesson of what might happen to us if we don’t follow the party line.

    AMCs will of course be marginalized through this process. Some will wither away and others gobbled up, until only a few big ones remain.

    Eventually, most residential mortgage appraisers will be employees of the AMCs, not independents. This process will begin as many are already hiring and training Trainees. Those trainees will remain as employees for much of their careers.

    Fortunately, there’s plenty of work out there, beyond mortgage origination. One just has to make the decision to do so, then, make the leap. I left the Banking business in 1984, after serving stints as Chief Appraiser at 3 Financial Institutions, due to extensive internal fraud by the BOD, and never looked back. In 2000, when I saw where AVMs were eventually headed, I also decided to get away from mortgage origination.

    I’m not sure if letters to Congressmen or any Agencies will be fruitful. The Appraisal institute, TAF, ASA and NAR have already capitulated to avoid Political fallout by doing as told, as will licensed appraisers and Realtors, through what some might call re-education camps /CE.

    http://www.CraigGilbert.Net

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  6. This article sounds very familiar as I seem to remember it comming up in a comment over at appraisalforum.com.

    We need to move on from this topic as it has been beaten to death. We have no evident in support of the allegations, no reports have been submitted for peer review and I am not aware of any reports which have been submitted to a state board. Its short, its a witxh hint with no standing at this time. Until we have evidence these baseless postes have no merit. Show me evidence or stop posting multiple back to back articles that cannot be resolved. What do we really expect to gain from baseless articles with no way of determining if racism was actually a factor. Let’s more on until we have.substance to actually analyze.

    1

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Racial Bias Narrative to Remove Appraisers

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