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![handle is hein.amenin/aeiaelz0001 and id is 1 raw text is: AE Housing Center
Edward Pinto Director, AEI Housing Center (; _m)
Tobias Peter - Assistant Director, AEI Housing Center (
November 20221
Summary:
Accusations of systemic racial bias against appraisers continue to appear in the media with regular
frequency.2 Given the seriousness of these accusations, we suggested almost two years ago that Fannie
Mae, Freddie Mac, or FHFA immediately undertake a comprehensive statistical evaluation of the work of
individual appraisers for bias and inaccuracy using existing and readily accessible data.
In the midst of increased attention and political pressure to act on these reported instances of bias in
appraisals, the Interagency Task Force on Property Appraisal and Valuation Equity (PAVE) concluded in
its report- without any credible evidence- that [h]omeownership is often hindered by inequities
within current home lending and appraisal processes, which research shows disproportionately impact
people in communities of color.3
One of PAVE's main recommendations was to collect better data to study and monitor valuation bias.
As we pointed out in 2020, federal agencies already have the capacity and data needed to uncover
potential bias among appraisers, yet they still have to conduct a rigorous study that would confirm
whether patterns of bias exist, and if they do, how widespread they might be. Such a study is a
precursor to any policy discussion regarding valuation and appraisal practices.
To directly address these claims of systemic bias head on, we outline a robust statistical evaluation
method that agencies might use to conduct a mass screening of individual appraisers. This evaluation
will investigate the patterns of appraiser mis-valuations to look for:
Racial bias: The appraiser either explicitly or implicitly under-values homes of Black borrowers
relative to homes of White borrowers.
Inaccuracy: The appraiser carelessly mis-values homes in either direction or deliberately mis-
values homes in only one direction (generally over).
A comprehensive statistical evaluation can rank appraisers based on their performance in each category.
The worst performing appraisers would then be subject to a desk review by a panel of expert appraisers,
1 The views expressed are those of the authors alone and do not necessarily represent those of the American
Enterprise Institute or of any individual who provided comments. The authors would like to thank Steve Oliner and
Bill King for helpful comments.
2 See for example: , Nr
3 For the PAVE action plan, see ;t: _i gf 2: For our rebuttal of it, see
https://ww.'N , iresac-,rodu..ctsr. r; c m et-n h-:verp r/
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