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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 52 June 2023 E X P E R T I N S I G H T S : W ith more than 25 years of product development and technology experience under his belt, Kenon Chen is an industry-recognized leader in real estate and fintech. Chen's creativity and passion for people-focused solutions allow him to work towards a simple goal: making real estate better for homeowners, homebuyers, and industry professionals alike. Chen's start in technology-enabled solu- tions began in 1997, when he honed his skills in several technology firms across San Fran- cisco. After his foray into the mortgage space, Chen discovered his passion for creating progressive technology solutions that exceed industry needs and allow for simpler, fairer, more efficient real estate transactions. As EVP of Strategy and Growth, Chen sits at the intersection of Clear Capital's execu- tive, product, marketing, and sales teams— guiding growth and ensuring consistent, long-term value for customers and partners. Since joining Clear Capital in 2003, he has been instrumental to the company's product strategy and vision, and has developed and brought to market some of the company's solutions such as ClearProp and ClearCol- lateral Review. Chen recently spoke with MortgagePoint to discuss the PAVE Action Plan, appraisals, and eliminating appraisal bias. Q: For those who may not be familiar with the PAVE (Property Appraisal and Valuation Equity) Action Plan, can you give us a quick rundown of the intent of the program? So, the Pave Task Force was formed by the White House. It is an interagency task force on property appraisal and evaluation equity. It's composed of 13 different federal agencies and offices that are working together to ad- vance appraisal, equity, and valuation equity. The PAVE action plan really came out of this collaboration between these 13 agencies. The goal is to make specific commit- ments and setup a roadmap of actions that they believe would advance the cause of equity, reduce bias in the process, create more diversity within the appraiser work- force, empower consumers that might have experienced discrimination, and set up better solutions and better data to make appraisal and evaluation processes more effective. Q: What are the most common forms of appraisal bias? How does this affect people of color? I tend to put these into three different, larger categories. Unconscious bias, which is a person that might have preconceived bias—unconscious bias, by the very defini- tion, is unaware of how their biases might be impacting the way that they approach a particular situation. Most commonly, those are things where someone who works in a profession like appraisal goes through train- ing and gains expertise on how to be aware of their own unconscious biases and how to approach something in an unbiased manner. Appraisers, by their standards, have been set up to take an unbiased approach when it comes to creating an opinion of value on a property. Then there's more explicit bias, which is when someone knowingly allows their biases to influence how they approach a particu- lar situation. Those bad actors are working Kenon Chen, EVP, Strategy and Growth, Clear Capital Expert Insights against what their profession demands of them and what they know they're being asked to do. The third category is systemic bias—the results of larger-scale bias decisions that per- haps were made historically. This includes things like historic redlining, government policies, and local policies that were put in place with specific biases built into them, such as racial bias built into the covenants of certain neighborhoods, built into the plan- ning process. Q: Can bias sway appraisal values higher and lower, or is it just typically seen that an appraisal will be lowered? When we talk about appraisal and evaluation, what we want is accuracy—a value that's consistent, one that's fair. So, it shouldn't be biased either direction—overin- flated or overvalued—and it shouldn't be un- dervalued. Both can have negative impacts on the homebuyer or the homeowner. And both of those situations can reduce the amount of sustainability in homeownership, because we all want to see homeownership as a gateway to wealth-building and generational posi- tive impact. As such, overvaluing can cause damage as well. If someone is in a position where their home is not actually worth what they thought, they could end up in a situation where they can't use that home as collateral.