Reality of Today’s Appraisal Environment

Reality of Today's Appraisal Environment; Discriminatory Falsehood

Proving discriminatory activity is hard, which is probably one reason HUD is dragging their collective feet in resolving the filed complaints. 

The real scourge of what’s been happening to appraisers for the past 5 years (yes, it started prior to the last election) has been revealed by Mr. Isaac Peck, in this article. You really need to read it, perhaps again, if you saw it come through your email on Wednesday October 25. Isaac has allowed me to “re-broadcast” his article. Yes, it’s a ‘sales promotion’ but it contains critical information appraisers need to know about.

The first paragraph, contained within the two lines, is something I’ve been questioning for many years. “Who is DEFENDING appraisers?” I can categorically tell you it’s not the various appraiser organizations, of which I belong to two national ones, and one state one. I’ve never seen any of them actually communicate cohesively, collectively (or even singly) to CONSUMERS and other political people directly about what the appraisal process is, how appraisers do their work, and what we cannot do in the process of doing appraisal reports. It’s like they are afraid to tell the truth. Instead, they sit on their thumbs and do nothing publicly.

As a result, ‘we’ as a fragmented, unorganized and disjointed group, have become easy targets as the scapegoats for “bad values” being promoted as discriminatory and racist by certain people who believe they are victims. That mantra has been adopted by various people, from President Biden (as Isaac correctly identifies), down to and including the very agency who promoted racial discrimination and bias for DECADES,that being the Federal Government’s Department of Housing and Urban Development (HUD).

Meanwhile, the two GSE’s and various other individuals, who themselves are biased, are promoting the point that appraisers are discriminatory based on reported personal CENSUS demographic and racial details which appraisers are forbidden to consider when doing their work.

What’s conveniently overlooked is the fact that a multiplicity of factors go into property values, which result in the sales prices we see across various properties in our markets. Appraisers don’t control the sales prices. All we do is gather facts and report what is found. Yet the false narrative is being promoted that ‘we’ do influence property sales prices which result in the values we report.

Adverse news reports have resulted in state and local laws that denigrate appraisers by suggesting that primarily due to value disagreements between the appraiser and borrower/seller, ‘we’ are biased and discriminatory if we dare to report a market value different from the “assumed” value of a particular property. California has such a law. Proposed legislation in Prince George’s County, Maryland (immediately adjacent to Washington DC) will be designed to: prohibit real estate appraisers from considering race, ethnicity, color, religion, sex, gender identity, age, disability, familial status or national origin in their real estate appraisal analysis. These legislative agendas have been allowed into law because many appraisers and the various organizations fail to communicate with the people making the rules that we are already required, by laws, USPAP and policies, to not consider any of the alleged activity when we do our reports.

The one positive aspect of this load of bovine substance is Discrimination and Racial Bias in appraisals is extremely difficult to prove definitively, especially if the appraiser concentrates on CHARACTERISTICS and FEATURES of the property, as compared to other properties nearby. So far, despite what you’ve heard about “settlement” actions and the attached gag orders, there has been none proven in a court. Proving discriminatory activity is hard, which is probably one reason HUD is dragging their collective feet in resolving the filed complaints. What has been done by HUD is extraction of settlement amounts from appraisers who don’t have financial resources to continue fighting the allegations. That amounts to tyrannical action by a government agency.

Protect yourself, if you continue to do mortgage lending work, by concentrating on the property features and characteristics, not on who lives there. Keep good records of research regarding properties in your workfile. Write reports with specific details and eliminate any subjective terms (appraisers are having real struggles with this!). And if your reported value is lower than the sale contract price, make sure you include details of why you made that decision. Do the same with any refi assignments, and unfortunately it might be appropriate due to the current environment, to casually inquire about the ‘expected’ value so that you can have a good basis to defend your market value decision.

HUD Discrimination Complaints Skyrocket


OREP and Working RE estimate that over 300 complaints alleging appraisal discrimination have been filed against appraisers with HUD—just in the last three years.

The vast majority of complaints (but not all) stem from an appraisal that comes in below the contract price or the targeted refinance “number” where the homeowner, or even the buyer, identifies as part of a minority racial or ethnic group. Unlike state boards, generally HUD is not pre-screening the complaints for validity before opening a file, starting an investigation, and sending an appraiser a letter demanding a response within ten days.

This issue isn’t new. Since Joe Biden issued a Housing Plan that took aim at “racial bias” in appraisals in early 2020—it’s been a whirlwind. Discrimination-based lawsuits, HUD complaints, and even complaints with the Consumer Financial Protection Bureau (CFPB) against both lenders and appraisers have skyrocketed.

Dave Towne
Latest posts by Dave Towne (see all)
Dave Towne

Dave Towne

AGA, MNAA, Accredited Green Appraiser - Licensed in WA State since 2003. Dave Towne on

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10 Responses

  1. Avatar Guaranteed Value Everytime says:

    This is an easy fix. Just make certain, if you’re a white appraiser and the borrower is any other color than yourself, that you make or exceed the value they want….no matter what that amount is. Done. Isn’t that….what they want?

    • Avatar PD says:

      Absolutely,. That and “show me the money” regardless if the real estate, with the “desired” over-valuation, can’t support the target amount wanted. Sure, how can appraisers not get this through their thick skulls. Makes perfect sense if you live on Krypton. Isn’t this the exact scenario why licensing came to be?

  2. Avatar Loidene says:

    I hope the new FNMA forms don’t include the Census Track information. Let’s take that one out of the narrative!!!

    I think FNMA should make a booklet to give to all borrowers, Agents/Brokers, and Lenders on the process the appraiser works through to derive their OPINION of Value, with excerpts from FNMA’s Required Forms, and the State Rules which already prohibit discrimination. I can’t imagine any appraiser risking their License / Certification to knowingly discriminate for what $350-$1000. Really, Educate the ones using the OPINION of Value, dictating and perpetuating discrimination, and we might stop some of this insanity.

    • Avatar Spencer Paul says:

      I believe the new forms will not have the census track in the report itself. The GSE can track that information without it being in the actual report. What I’m hoping for is no ENV format with the new forms, but I doubt that will take place.

      • Avatar Dave Towne says:

        Actually, it WILL be included, based on my observation of a draft document of the upcoming ‘dynamic’ forms.

        This data point is used by lenders and the regulatory agencies to track lending activity everywhere in the US. It’s been on GSE forms (and even on some of the non-lending GP forms) since the GSE’s took over the “forms design” process starting in the early 1980’s.

        From my discussions with appraisers, the Census Tract number is NOT RESEARCHED by appraisers when they are selecting comparables if they are doing their work per laws and guidelines. Census Tract numbers have PERSONAL DEMOGRAPHIC info which we cannot use to consider which homes to use for comps.

        However, the people who are trying to discredit appraisers as a profession ALWAYS use personal demographic Census data to justify why they think appraisers are biased and discriminatory.

        Many mortgage lending appraisers are now including statements in reports saying that they did not consider any Census demographic data in their research and analysis for CYA purposes, in case their reports get reviewed or complaints are filed against them.

        • Avatar Spencer Paul says:

          That is disappointing. I’m one of those appraisers that include such comments in my reports. Just one of the many comments in my reports with CYA intentions…making my reports another two pages longer.

  3. Avatar PD says:

    Let me say and I believe I speak for most, the only color I see when I appraise is the color of the house. I digress to something I’ve brought up in the past. If appraisers are considered racist, why then are the Realtors, Assessors and valuation companies not included in that group. After all, a Realtor is not going to over price a property as they are not in the business simply marketing with no reward. The Assessors are typically at the low end as they lag behind the market place. That said, none of these people complaining are questioning their assessments. Why,? Taxes. The same with the valuation companies. Bottom line it is only appraisers being unjustifiably bullied for simply being the messenger. We are fact finders, not enablers. It amazes me how many intelligent people turn to mush, throwing all reason aside and not educating themselves simply to feel good about themselves. It is all self-serving with no rhyme or reason. WAKE UP public servants and take time to educate yourselves before you become judge, jury and exacutioner. From my perspective, and the peers I know, we simply perform our job, as intended with no agenda or bias. But that of course is totally untrue to some as we are evil, despicable individuals out to get people of ethic groups other than white. Appraisers can especially see through the absurdity of the accusation since they’ve completed their due deligence. I can’t fathom the fact people are actually saying this (then again, I can) but why not? Scream racism and everone does the knee jerk think and politicians run for cover without a clue about the appraisal process. Proof of this is addional laws against bias that are already part of appraiser licensing. It is redundant and rediculous suggesting no politician has a clue what they are talking about. Did any of them take the time to consult with their own licensing board? Probably not. Call it what it is, a money grab in most cases, especially refinances as there are not as many complaints when it comes to sales. The favored vehicle to accomplish this is one word, racism. I hate to be brutally honest but if the shoe fits, wear it. I’ve never heard of anyone complain if they believe their appraised value to too high (with the exception of the assessed value of course). It boils down to common sense so everyone needs to step back, ignore the smoke and mirrors and get on with the business of business. So you know, I’m not synical. I am writing for the majority and not the minority. Of course, in any profession, there are the good and the bad with some complaints having merit but the blanket of “guilty as charged” should not be thrown over an entire industry.

  4. Avatar Charles Baker says:

    There are about 70,000 licensed appraisers and about ten million appraisals were performed in 2020-2021 in the U.S. The fact that “dozens” of cases of bias (per the New York Times) have been alleged, let alone proven, is remarkable. While a single case of bias is lamentable, the fact that less than 0.0004% (four ten-thousandth of a percent) of cases are alleged to have been biased is clearly indicative of how unbiased our profession is. It is a testament of how critically important our work is against the backdrop of pressure from all sides, coupled with our meager compensation. A SIX SIGMA result should be celebrated and held up as a de facto standard for all professional practice groups.

    The typical residential real estate appraisal is about 30 pages long. Let’s assume there have been six dozen cases of alleged bias (“dozens”, per the New York Times). The stack of allegedly biased appraisals would stand about 9 inches tall. If all ten million appraisals were stacked on top of each other it would stand almost 19 miles high.

  5. Baggins Baggins says:

    Related. Foreclosure stats. If prices come down, and inflation comes under control, we could see a wave of foreclosures hard to imagine. How about nearly a million people on the precipice right now, under current economic conditions, just for starters. Remember when I was talking about researching treasurer public default notices? The trend continues.

    Can you observe the correlation of needing to shift blame? This trend of settlement will eventually end, because they’ll run out of money to do so. Eighty thousand appraisers insurance policies up against a never ending ngo and 501c group grants hand out from gse’s, to incentivize complaints against appraisers. The bright side is this issue of frenzied race based arguments is seeing increasing push back from many different industries and groups of persons just about everywhere this effects peoples lives. Even at the lowest possible levels, the local school boards, the primary talking point has shifted to we’ve had enough of the race and equity based narratives. Being a national trend, it appears the support for race based narratives is crumbling from the ground up. That’s real democracy in action.


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Reality of Today’s Appraisal Environment

by Dave Towne time to read: 4 min