Combatting appraisal bias continues to be a top priority for the Consumer Financial Protection Bureau (CFPB), as recently emphasized by Deputy Director Zixta Q. Martinez during her remarks at the National Fair Housing Alliance event previewing the documentary Our America: Lowballed. Martinez stated that the CFPB has been actively working with the White House Property Appraisal and Valuation Equity (PAVE) Interagency Task Force and the Federal Financial Institutions Examination Council’s (FFIEC) Appraisal Subcommittee to address the issue of appraisal bias and is currently working on developing quality control regulations for Automated Valuation Models to prevent algorithmic bias in home valuations. Deputy Director Martinez serves as the chair of the FFIEC Appraisal Subcommittee and noted in her remarks that the “challenge [of combatting appraisal bias] requires a whole-of-government response.”
In addition to outlining the CFPB’s efforts to remediate appraisal bias, Deputy Director Martinez highlighted the critical role lenders play in ensuring valuations are accurate. The CFPB has warned that lenders that fail to ensure borrowers can seek a reconsideration of their home valuation risk violating federal law. We discussed this issue and what lenders can do to avoid liability on a recent episode of our podcast available here.
Deputy Director Martinez also noted that on January 24, 2023, from 10:00 a.m. to 12:00 p.m. EST the CFPB is hosting the FFIEC’s Appraisal Subcommittee for a hearing on this issue. The hearing is open to the public and the CFPB and Appraisal Subcommittee are accepting written comments until February 8. Additional information about the hearing can be found here.