Appraisal Bias Is The Fair Housing Issue Of The Day
Ira Goldstein, Gregory Squires and Anthony Phillips
Last spring, under the leadership of former city councilmember Cherelle Parker, the Philadelphia Home Appraisal Bias Task Force released a report documenting racial bias in home appraisal practices nationwide and in Philadelphia.
Among the recommendations in the Philadelphia report was a call for greater disclosure of appraisal practices and greater transparency in the industry. Outside of a few lawsuits and national analyses by Fannie Mae and Freddie Mac – government-sponsored mortgage finance firms (GSEs) that enhance the supply of home loans – systematically quantifying the extent of bias in Philadelphia neighborhoods represented a major challenge.
Freddie Mac’s analysis of unreleased data revealed that, nationwide, homes in majority Black neighborhoods were appraised below the contract sale price in 12.5% of cases compared to 15.4% in Latino neighborhoods and 7.4% in white neighborhoods. Among individual buyers, 8.6% of Blacks, 9.5% of Latinos, but just 6.5% of whites received appraisals below the contract sale price.
But late last year, the Federal Housing Finance Agency, which regulates the GSEs, released aggregated information from tens of millions of appraisals for single family homes conducted in major cities for the period 2013 through 2021.
