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HUD Secretary To Address Bias In The Home Appraisal Process For People Seeking FHA Financing

HUD Secretary unveils a significant measure to tackle bias in the home appraisal process for individuals seeking FHA financing, signaling a crucial step towards fostering fairness and equality in housing.

July 24, 2023

Washington- HUD’s Secretary Marcia L. Fudge announced its plan to create a process where people seeking FHA financing can request the review of their appraisal if they think that the results are affected by racial bias. For instance, a homeowner looking to refinance their home with an FHA-insured mortgage can take the desired steps to figure out if their appraisal is fair or not.

If concerns arise around unlawful discrimination in residential valuations, the proposed change to FHA policy is the first step lenders should follow whenever a borrower requests a review. Doing so will enable the borrowers to have a plan of recourse if bias is the question.

HUD Secretary Marcia L. Fudge said, “HUD is committed to making the appraisal process fair nationwide. We must eliminate bias in home valuations so that everyone can equally reap the benefit of wealth – and intergenerational wealth – that comes along with homeownership. This announcement is an important step forward in rooting out appraisal bias in this country.”

The lenders will have clear guidance concerning how to review requests from borrowers for reconsideration of the appraisal in sync with their FHA-insured mortgage financing application whenever there is a reconsideration of the valuation proposal. The application also guides obtaining the second appraisal when material deficiencies are documented and the appraiser denies solving them. By material deficiencies, we mean violating the Fair Housing Act or identifying bias in a property valuation report.

The proposal is in sync with the Biden-Harris administration’s Pave Action Plan commitments and the work of the Interagency task force. The Action Plan introduces comprehensive equity reforms to the home appraisal process, marking a significant milestone in financial reform and enabling the integration of concrete strategies into the home buying process, fostering greater opportunities for all.

FHA is taking all the required steps to eliminate bias in residential valuations and enhance information, process, and documentation requirements concerning this issue. FHA is also identifying barriers through stakeholder feedback. Stakeholders can provide feedback on the draft via email.

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Department of Housing and Urban Development. “HUD Secretary Announces Step Towards Addressing Bias in the Home Appraisal Process for People Seeking FHA Financing”. HUD, January 12, 2023,
HUD Secretary Announces Step Towards Addressing Bias in the Home Appraisal Process for People Seeking FHA Financing | / U.S. Department of Housing and Urban Development (HUD)

Last Updated: September 20, 2021