Biden administration to tackle racial bias in U.S. real estate appraisals
Mortgage finance agency Freddie Mac found in 2021 that blacks and Latinos were more likely to have their homes appraised below the agreed-upon selling price than white sellers.
Such an appraisal can limit the amount of a mortgage that can be taken out on a property, forcing owners to sell at a lower price or cancel a sale altogether. It can also reduce the amount available during a refinance.
“Bias in home valuations limits the ability of black and brown families to enjoy the financial returns associated with homeownership, contributing to the already sprawling racial wealth gap,” the White House said in a statement accompanying its new plan.
Senior administration officials said the goal is to strengthen rating standards, increase the diversity of the workforce responsible for creating these ratings, and make it easier to report discrimination that violates the federal law.
Federal Housing Finance Agency Acting Director Sandra Thompson praised the roadmap, saying her organization ‘does not condone discrimination in housing’ and would remain focused on securing lending practices fair.
“Because their homes are undervalued, Blacks and Latinos often have to pay more on their mortgage, receive less when they sell their home, and are less able to access home equity lines of credit,” said said Vice President Kamala Harris at the White House. event to unveil the effort.
Federal officials say lower assessments have contributed to wide wealth gaps between black and Latino Americans and their white peers. White applicants received ratings below their contractual selling price 6.5% of the time, compared to 9.5% for Latino applicants and 8.6% for black applicants, Freddie Mac found.
Last June, Joe Biden became the first sitting US president to visit the site of Tulsa, Oklahoma, where hundreds of black Americans were massacred by a white mob in 1921, vowing in his speech to fight racial discrimination in housing and to combat biased home valuations.
(Reporting by Trevor Hunnicutt; Additional reporting by Susan Heavey; Editing by Heather Timmons, Karishma Singh and Jonathan Oatis)
By Trevor Hunnicutt