“Today, I’m proud to announce we are developing a rule that will require that financial institutions ensure that their appraisal algorithms are not biased, for example, that they do not produce lower valuations for homes owned by people of color,” Harris said on a call with reporters. “We are also releasing the guidance to make it easier for consumers to appeal what they suspect to be unbiased valuation.”
The move is part of an effort to ensure fair algorithms and increased transparency for home valuations, according to the White House.
Harris described homeownership as among the most powerful ways for American families to build wealth and said Black and Latino families’ homes are more likely to be undervalued than those of other homeowners, raising the cost of a mortgage.
“Millions rely on the equity in their homes to put their children through college, to fund a startup, to retire with dignity, to create intergenerational prosperity and wealth,” Harris said. “We also know for generations many people of color have been prevented from taking full advantage of the benefits of homeownership.”
Harris said only about 5% of home appraisers are people of color, a share the administration hopes to grow through training opportunities for groups underrepresented in the industry.
She said the goal is “to make sure that people who conduct home appraisals better reflect the communities they serve.”
Studies have found that white-owned homes are more likely than homes owned by Black people to be appraised at values that exceed algorithmic predictions, President Joe Biden’s domestic policy adviser, Neera Tanden, said on the call.
The administration will also make home valuation data for more than 600,000 properties public, growing a pool of data that includes 48 million homes, Harris said.
The announcement marks two years since Biden, on the centennial of the Tulsa Race Massacre, launched a sweeping effort to identify and eliminate bias in home appraisals and valuations, known as the Property Appraisal and Valuation Equity Task Force.
An action plan Harris released last year sought to uncover and end racial or ethnic bias in the home valuation process with new tools for consumers and data assessments to identify and stop biased assessors, as well as boost diversity in the appraiser profession.