The Texas Appraiser Licensing & Certification Board (TALCB) is receiving state tips from Fannie Mae on discriminatory language in appraisals. Both organizations are working to make appraisers aware of the issue.
Be Mindful of Your Practice
Appraisers should exercise care to avoid comments in a report that may be perceived as biased or illegally discriminatory.
The Uniform Standards of Professional Appraisal Practice (USPAP) Ethics Rule requires appraisers to perform assignments ethically, with impartiality, objectivity, and independence, and without unsupported conclusions relating to characteristics such as race, color, religion, national origin, and gender.
For example, describing a neighborhood as “poverty stricken with _% of Black; _% Hispanic; _% Asian" would be considered inappropriate. Other inappropriate language, as described by the Federal Housing Finance Agency (FHFA), includes statements like “predominately Hispanic", and "residents have assimilated their culture heritage into the neighborhood."
Addressing Appraisal Bias Complaints in Texas
In October, TALCB and the Texas Workforce Commission Civil Rights Division became partners in working towards making the appraisal industry bias-free. Both agencies hope to gain an understanding of the impact of bias in appraisals and commit to thorough and impartial investigations of these complaints.
License holders can earn continuing education credit for taking courses that include ethics, Fair Housing, bias, and discrimination. The Appraisal Foundation has an online list of approved courses.
Other Forms of Addressing Appraisal Bias
One year ago, the United States federal government launched the Interagency Task Force on Property Appraisal and Valuation Equity (PAVE), which is composed of 13 federal agencies including the U.S. Department of Housing and Urban Development (HUD), the Consumer Financial Protection Bureau (CFPB), and the Appraisal Subcommittee (ASC).
PAVE was discussed at a conference hosted by the City of Austin's Office of Civil Rights on April 26, in recognition of the 55th anniversary of the Fair Housing Act. The event’s keynote speaker was Candace Valenzuela, HUD’s southwest region administrator.
“There’s a difference in appraisals in the tens of thousands of dollars,” Valenzuela said during her speech.
Legal updates were also discussed at the conference, including HUD reinstating the Discriminatory Effects rule last month. This guidance was first implemented in 2013. According to HUD, it is used for addressing policies that unnecessarily cause systemic inequality in housing.
The Appraiser Qualifications Board is issuing a second exposure draft to the Appraiser Qualifications Criteria, which contemplates mandatory appraisal bias education. The first exposure draft and public comments can be found here.
The Appraisal Standards Board adopted the Fifth Exposure Draft on April 5, 2023. It changes the USPAP Ethics Rule by adding nondiscrimination provisions, along with other revisions that clarify an appraiser’s obligations related to nondiscrimination in appraisal practice.
Upcoming Meeting Information
TALCB meets May 19 at 9 a.m. at the Stephen F. Austin Building, Room 170 in Austin, Texas. The meeting agenda will be posted online.