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Housing and Urban Development (HUD) Secretary Marcia Fudge appeared on CNN’s Tonight show (08/22/22) to address recent media reports that show significant appraisal disparities between homes owned by people of color, as opposed to those owned by Whites. Secretary Fudge told CNN host Laura Coates that the appraisal problem, which was initially relegated to homes in redlined districts, is now “systemic, and intentional to some degree.”
The latest example which has stunned many, involves two Black Johns Hopkins University professors, Nathan Connolly and Shani Mott, who live in an affluent Maryland neighborhood. The Black couple’s home was initially appraised at $472,000, but after they “whitewashed” their home and let their White friend pose as the home owner, their house was appraised at a staggering $950,000, almost double the initial value.
Asked for her response to the outrageous Maryland incident, Secretary Fudge said(2:23): “I think professionally and personally, it is an absolute violation of the law. It is a violation of the fair housing law, it is a violation of the lending law, so what HUD is doing, and what we have done already is, we were tasked by the president to look at appraisal bias, because what we know is that it used to be that these things happened only in redlined communities, but now it is pervasive. It is happening everywhere, and we determined that part of the problem was how appraisers are trained, who is in the appraisal industry, and how they are governed, and so what we did in March was to present a report that showed how deeply this whole bias situation is across this country. It is systemic, and it is intentional to some degree…What we’ve already done is have the appraisal sub committee say to every single state in this country, the test that you use is no longer valid because it is a violation of the fair housing law.”
Secretary Fudge clarified her remarks regarding the test saying she was referring to the test to become an appraiser, adding(3:53), “What we have looked at is how data is collected. That’s part of the problem, it’s the data. So they collect data, and the data is not what it should be, they then use the data in a way that it should not be used, and so they come up with these biased appraisals. But as well, when you look at an industry that is more than 95% White, you find that people of color are treated differently because there is an inherent bias with a lot of them, and because they collect the data, the data is not good data.”
Secretary Fudge also made a startling acknowledgement regarding HUD, saying no previous administration has ever attempted to address the home appraisal bias problem, which is now evidently systemic. She said(5:05): “It has not happened before. This is the first of it’s kind report, this is the first if it’s kind subcommittee. It’s called Property Appraisal Valuation Equity. What the president has said is that we have to look at everything through a lens of equity. What we have realized is that people selling homes, just as the persons you were talking about, and even people buying homes, if their appraisal is not correct, what we find, especially as Black people and communities of color and underserved communities, is we lose great wealth just through the appraisal process. If those homes are appraised the way that they should be, then we look at being able to pass down significantly more resources and more wealth to generations that follow. But if we are constantly undervaluing communities of color, either because they are communities of color, or that the person themselves is in a community that they don’t think that we should be in, then we consistently lose wealth in our communities, and that’s why this is so important from an equity situation.”
Secretary Fudge concluded with her personal home appraisal story, telling host Coates that her house , which is in a Black community, is literally two doors away from an all-White community. She has a bigger lot size and house than the one two doors away from her, yet her house is valued at $25,000 less than that house in the White community.
Bottom line folks, the problem of biased home appraisals is a major one, and needs to be confronted head on. As Secretary Fudge correctly pointed out on CNN, “If those homes are appraised the way that they should be, then we look at being able to pass down significantly more resources and more wealth to generations that follow.” This issue is especially important to communities of color.
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