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72 72 72 INVESTMENT GOVERNMENT PROPERTY PRESERVATION Journal APPRAISAL SUBCOMMITTEE MEETS TO ADDRESS VALUATION BIAS e Appraisal Subcommittee (ASC) recent- ly held its first-ever public hearing on appraisal bias, bringing together federal agencies, experts from across the mortgage lending and appraisal industries, researchers, and consumers to work toward the fair and accurate valuation of homes for all Americans. "As the Federal agency charged with over- sight of the appraisal regulatory system, we have grown increasingly concerned about the stories of bias that have circulated in the national media in the past several years, as well as recent studies on the topic," said ASC's Executive Director Jim Park said at the Hearing. "e ASC is also very concerned about the lack of diversity among appraisers and the excessive barriers to entry that likely deter entry into the profession, particularly for people of color." Established by Title XI of the Financial In- stitutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), the ASC oversees the real estate appraisal regulatory framework for federally related transactions. e ASC is a sub- committee of the Federal Financial Institutions Examination Council (FFIEC). e mission of the ASC is to provide federal oversight of state appraiser and appraisal management company (AMC) regulatory programs, and a monitoring framework for the Appraisal Foundation and the Federal Financial Institutions Regulatory Agen- cies in their roles to protect federal financial and public policy interests in real estate appraisals utilized in federally related transactions. e Hearing featured witness testimony from Dr. Junia Howell of the University of Illi- nois Chicago; homeowners Tenisha Tate-Austin and Paul Austin; Michael Fratantoni, Chief Economist, SVP of Research and Industry Technology of the Mortgage Bankers Asso- ciation (MBA); and Craig Steinley, President of the Appraisal Institute. Witnesses reflected on their professional and personal experiences with appraisal bias and provided suggestions to the assembled panel on how to best address this complex and multifaceted issue. U.S. Department of Housing & Urban De- velopment (HUD) Secretary Marcia L. Fudge delivered opening remarks. Secretary Fudge noted that the overarching goal of the continued work on appraisal bias remains to establish the kind of change that can help "all families, in all neighborhoods, have a better chance at building generational wealth." Representatives from all seven agencies comprising the ASC Board asked questions of the witnesses with a focus on the consumer experience, the barriers to entry in the appraisal profession, and the impact on the market. "It won't be easy—and nothing worthwhile ever is—but by working together, I'm hopeful we'll find solutions to these longstanding prob- lems," Park said. "No one should have to hide who they are to obtain a credible appraisal that is independent, non-biased, and performed in a competent manner." On behalf of the Appraisal Institute, Stein- ley offered three suggestions in his testimony to combat appraisal bias: • Reconsideration of value/reconsideration of appraisal results • Automated valuation models (AVMs) • A focus on competency "Bias in real estate appraisal can be unin- tentional. To mitigate bias, appraisers should be aware of the potential for bias and base opinions on rigorous analysis and research," said Steinley in his testimony. "Best practice relies on multiple data sources and techniques to enhance credibility of the opinion of value. As we look for solutions, education and awareness on valuation bias and fair housing by appraisers, appraisal reviewers, and those interacting with appraisals is universal- ly accepted as the most direct way to confront and address the challenges of valuation bias." Fratantoni added, "MBA supports increas- ing appraiser accountability while maintaining appraiser independence. MBA would support having state regulators strengthen their over- sight roles by holding appraisers accountable for the quality of the property valuations and any findings of bias. Moreover, MBA would support efforts to bring more independent oversight for appraisers. Finally, MBA supports the objectives of VA's recent efforts to augment their oversight of appraisers, and we look forward to work- ing with VA to improve and implement these changes." "No one should have to hide who they are to obtain a credible appraisal that is independent, non-biased, and performed in a competent manner." — Jim Park, Executive Director, ASC