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Federal housing regulators announced an agreement Thursday with the organization that’s responsible for setting standards and qualifications for real estate appraisers that’s aimed at opening up the field to more Black people and other people of color.
Officials with the Department of Housing and Urban Development (HUD) are calling the agreement with The Appraisal Foundation “groundbreaking” and “historic.”
But The Appraisal Foundation emphasized that it had already undertaken more than a dozen steps outlined in the agreement, including some measures implemented before HUD initiated “a rare secretary-initiated complaint” in 2021 that resulted in no findings of fault.
The agreement requires The Appraisal Foundation to establish a $1.22 million scholarship fund that will help aspiring appraisers navigate “an alternative, more inclusive path” for fulfilling experience requirements that are said to have contributed to the lack of diversity in the appraisal field.
According to the Bureau of Labor Statistics, last year fewer than 1 percent of property appraisers and assessors were Black, and 94.7 percent were white — making the field the least racially diverse of 800 occupations surveyed, HUD said in announcing the settlement.
The Appraisal Foundation’s experience requirements have allegedly caused aspiring appraisers “to rely heavily on identifying a friend or family member who is already a licensed appraiser and willing to supervise on-the-job experience hours for licensure, thus perpetuating the homogeneity of the profession,” HUD said.
A big part of the solution that HUD and The Appraisal Foundation have agreed to implement is called the “Practical Applications of Real Estate Appraisal program,” or PAREA.
Provided by the Appraisal Institute, PAREA is an online program that provides simulations showing aspiring appraisers how to apply theory and methodology to real-world examples.
PAREA program also provides “mentoring and guidance from appraisers who hold the most recognized designations in the profession and have a combined 150 years of experience,” the Appraisal Institute says of the program.
Adrianne Todman
“Today’s historic agreement will help build a class of appraisers based on what they know instead of who they know,” acting HUD Secretary Adrianne Todman said, in a statement. “This settlement will help bring us one step closer to rooting out discrimination in housing and opening doors to opportunity for all.”
Although HUD acknowledged that it issued no findings and did not determine that The Appraisal Foundation violated the Fair Housing Act, it said the agreement is enforceable and is “intended to resolve the issues” raised in its 2021 complaint.
The Appraisal Foundation issued a statement saying it was pleased to have reached the conciliation agreement with HUD, and listed more than a dozen initiatives included in the agreement that it’s already undertaken, including funding the development of a PAREA module.
Kelly Davids
“We appreciate HUD’s recognition of our proactive efforts to lead the appraisal profession to welcome a new, diverse generation of appraisers and their support of our forthcoming scholarship program to aid new entrants to the field,” Foundation President Kelly Davids said in a statement.
The scholarship program is a continuation of the Foundation’s Pathway to Success initiative, and “will support aspiring appraisers who are completing their experience requirements” by completing PAREA modules, the group said. “More details, including eligibility and how to apply, will be shared when the program is formally announced.”
The Appraisal Institute, a professional association of real estate appraisers, is participating in an Appraiser Diversity Initiative with Fannie Mae, Freddie Mac, and the National Urban League, and offers scholarships, workshops and other resources to those interested in becoming appraisers.
Increasing diversity in the appraisal profession is one of many goals the Biden administration outlined in launching an initiative to combat appraisal bias in 2022.
The initiative followed media reports of Black families receiving higher appraisal values after removing indications of their race, and evidence of a wealth gap created in part by a history of bias in home appraisals.
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