Today, Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services, gave the following statement at a full Committee hybrid hearing entitled, “Devalued, Denied, and Disrespected: How Home Appraisal Bias and Discrimination Are Hurting Homeowners and Communities of Color.”
Today, we will take a closer look at discrimination of homeowners and communities of color in the appraisal process. Last Congress, I convened a hearing to examine the state of the appraisal industry, including the lack of diversity in the profession and the unequal valuation of homes in communities of color and those owned by people of color. Since then, I have engaged the appraisal industry and profession in critical conversations around the need to address these inequities as we’ve seen increasing reports of appraisal bias and alleged discrimination. However, there is still much to be done.
A home’s value is critical to closing the wealth gap and ensuring that communities of color build generational wealth. Both over and under-valuation of a home is harmful to buyers and homeowners by either saddling a buyer with a home worth less than the debt they take on or selling short homeowners of their nest egg. Bias and discrimination in appraisals can result in perpetuating historic disinvestment in communities of color, lowering home values for homeowners of color, locking people of color out of homeownership opportunities, and contributing to the widening of the racial and ethnic wealth and homeownership gaps.
We must not forget that home appraisal discrimination based on race, color, sex, religion, national origin, familial status, disability, and age is illegal.
However, recent news reports have shown the appraisal bias faced by homeowners of color is still a reality. We’ve all seen the articles: A Black family seeks to have their home appraised. When they are physically present or leave their family pictures within the home, they receive a low appraisal. When they whitewash their homes by removing their pictures and other indicators of “blackness” and insert those of fictitious White families, all of a sudden the appraisal jumps in value. These aren’t just anecdotes. Data bears out the disparate appraisal treatment of homes owned by Black and Latinx homeowners compared to homes owned by White homeowners. As a result, studies have found that a home in a White neighborhood is valued two times higher than comparable homes in Black and Latinx neighborhoods.
That is why I have drafted legislation, to be discussed at today’s hearing. My bill, the Fair Appraisal and Inequity Reform Act of 2022, addresses appraisal bias and discrimination by establishing a new Federal Valuation Agency—responding to a key recommendation made by President Biden’s Interagency Task Force on Property Appraisal and Valuation Equity. I thank the witnesses for appearing here today, and I yield back.