The CFPB’s Fair Lending Director, together with senior officials from other federal agencies, have sent a letter to The Appraisal Foundation (TAF) commenting on proposed changes to the Uniform Standards of Professional Appraisal Practice (USPAP). (TAF is a private, non-governmental organization that sets professional standards for appraisers.) The other agencies joining in the letter are the Federal Reserve Board, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, National Credit Union Administration, Department of Housing and Urban Development, Federal Housing Finance Agency, and Department of Justice.
In a blog post about the letter, the CFPB states that it has seen TAF “fail to include clear warnings about the requirements of federal law in the standards it sets, and in the training it provides for appraisers.” According to the CFPB, “TAF has yet to highlight these important laws even though it frequently revises its standards.” The CFPB expresses concern “that some appraisers may be unaware of these federal discrimination bans” and urges TAF “to provide clear guidance on the existing legal standards as they relate to appraisal bias.” The CFPB also states that it is “deeply troubled by the discriminatory statements the Federal Housing Finance Agency recently identified in some home appraisals, and the appraisal disparities for communities and borrowers of color recently found in both Freddie Mac and Fannie Mae studies.”
In the letter, the agencies urge TAF to provide a “full presentation” of the anti-discrimination prohibitions in the Fair Housing Act and the Equal Credit Opportunity Act as they relate to appraisal bias. The agencies claim that while the Appraisal Standards Board Ethics Rule and Advisory Opinion 16 state that an appraiser cannot rely on “unsupported conclusions relating to [protected characteristics],” these items “do not prohibit an appraiser from relying on “supported conclusions” based on such characteristics “and, therefore, suggest that such reliance may be permissible.” As an example of how prohibited discrimination can occur in the appraisal context, the agencies indicate that “an appraiser’s use of or reliance on conclusions based on protected characteristics, regardless of whether the appraiser believes the conclusions are supportable, constitutes illegal discrimination.”
The CFPB notes in its blog post that it is reviewing the findings of a report funded by the Federal Financial Institutions Examination Council’s Appraisal Subcommittee titled “Identifying Bias and Barriers, Promoting Equity: An Analysis of the USPAP Standards and Appraiser Qualifications Criteria.” According to the CFPB, the report “raises serious concerns regarding existing appraisal standards and provides recommendations with respect to fairness, equity, objectivity, and diversity in appraisals and the training and credentialing of appraisers.”
The CFPB also notes its continuing participation in the Interagency Task Force on Property Appraisal and Valuation Equity, which was created by the Biden Administration.