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77 77 INVESTMENT GOVERNMENT PROPERTY PRESERVATION Journal Follow Us At: @DSNewsDaily FREDDIE MAC EXAMINES MINORITY 'APPRAISAL GAP' Following-up on anecdotes and stories on racial bias submitted to Freddie Mac, the government-sponsored enterprise (GSE) conducted research on whether minorities are more likely to receive an appraisal value on a single-family home that is lower than the contract price, resulting in an appraisal gap which may exclude them from certain wealth- building benefits. is appraisal gap may also impact the potential buyer's ability to obtain financing on their home. is study, "Racial and Ethnic Valuation Gaps In Home Purchase Appraisals," focuses on two minority groups, Black and Latino, with the white non-Latino group as the reference in the top-30 housing markets in the country. First, Freddie Mac asked the question, "Is there an appraisal gap for minority applicants?" to which the answer is "yes" based on the available data they collected from 2016-2020. e data found that 9.5% of Latino applicants received an "appraisal value lower than the contract price" when compared to whites resulting in an appraisal gap of 2.9%. e data for Black applicants followed a similar trend with 8.6% receiving a lower appraisal value resulting in a 2.1% gap. For the dataset, 21,095 appraisers submitted reports for Black and white buyers—of them 934 appraisers submitted enough appraisals for each group to be deemed statistically significant. Of the 934 appraisers, about 6% had appraisal reports that showed a Black versus white gap of 10%. is differs in the case of unbiased appraisals, where about half of the appraisers would show negative estimated gaps. e data is similar for the Latino versus white demographic with 18,905 appraisers submitting reports for both groups and 1,560 submitted enough data to be deemed significant. While the GSE's findings are preliminary, and only focus on a few datasets, it also found that buyers in minority neighborhoods were just as likely to receive a lower appraisal. e report stated that in order to remedy this, it is committed to devoting further research on the topic and is a part of the Appraisal Institute's Appraiser Diversity Initiative and the Office of the Comptroller of the Currency's Project REACH initiative which is dedicated to financial inclusion through enhanced access to capital. e data for this report focused on 12 million appraisals submitted to Freddie Mac from January 1, 2015, to December 31, 2020, through the Uniform Collateral Data Portal (UCDP).

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