Practical Politics
One of the major components of historical and modern racial bias in the U.S. is in home appraisals and sales. Most current reparations analyses and attempts to remedy the identified harms associated with reparations, will include the factors of housing loss and property discrimination. The issue was the major thrust of the famous Atlantic article by Ta-Nehisi Coates in 2014. Coates said the issue was really about the theft of property and other things from Black people.
Currently, the Biden-Harris administration has put a marker down to deal with that issue (and it is also a major topic in the reports of the California Reparations Commission and will be a part of its final report). To the Biden administration, homeownership is still a central part of the American dream and is and will be the primary contributor to the building of generational wealth in Black communities and housing stability for millions of Black families. Overt and covert bias in home valuations, according to Biden and Harris, has long limited the ability of Black and brown families in America to enjoy the financial returns associated with homeownership, and thus continue to contribute to the already sprawling racial wealth gap.
In 2021, during the centennial of the Tulsa Race Massacre, Mr. Biden created the Interagency Task Force on Property Appraisal and Valuation Equity ( known as PAVE): a new kind of intensive interagency effort to root out bias in the home appraisal process in the U.S. As the first order of its business, the Task Force developed and released the most important set of housing actions ever announced to achieve home equity results and to seek out and destroy racial and ethnic bias in home valuations. It’s called the PAVE Action Plan. In 2023, the POTUS and VPOTUS have again taken a strong stand on the issue with Vice President Harris seemingly taking the lead on it. In fact, though the student loan debt issue has been more sexy, the Biden-Harris Administration has made more critical progress in fully implementing the PAVE Action Plan, including by empowering consumers with new tools to address appraisal bias; leveraging data to identify trends and crack down on offenders of appraisal bias; and supporting a well-trained and more representative appraiser profession. Vice President Harris has taken it on as a signature issue in this year’s beginning presidential campaign.
This week, on the anniversary of the creation of the PAVE Task Force and the start of National Homeownership Month, the Biden-Harris Administration has announced a set of meaningful actions to deliver on the PAVE Action Plan and, according to them, to ensure that every American (especially Black and Brown Americans) who buys a home now will get the same opportunities previously utilized almost exclusively by mainly white homeowners to build generational wealth through their homeownership:
The PAVE Action Plan calls for:
(1) The Prevention of algorithmic bias in home valuation. That is, at least six new agencies are issuing a proposed rule change regarding Automated Valuation Models (AVMs), the algorithmic and computational models used to assess the value of homes. Recently, the use of these AVMs have spread across the housing finance marketplace, but they initially weren’t helpful in increasing Black home ownership. The new proposed rule, subject to a 60-day public comment period, would establish quality control standards to help ensure AVMs are accurately and fairly used to assess home values. These standards would require financial institutions, mortgage originators, and secondary market issuers to adopt and maintain policies and other safeguards to ensure greater confidence in valuation estimates, protect against data manipulation, avoid conflicts of interest, and conduct random sample testing and reviews to insure that racial bias was not a factor in home evaluations.
(2) A new emphasis and empowerment of consumers to take action against suspected appraisal bias. When consumers encounter suspected inaccurate or biased appraisals, reconsiderations of value (ROV) are advocated to provide an opportunity to challenge potentially inaccurate appraisal valuations when obtaining or refinancing a mortgage.
Professor David L. Horne is founder and executive director of PAPPEI, the Pan African Public Policy and Ethical Institute, which is a new 501(c)(3) pending community-based organization or non-governmental organization (NGO). It is the stepparent organization for the California Black Think Tank which still operates and which meets every fourth Friday.
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