More than 30 Democratic lawmakers are asking an interagency panel of financial regulators to take action against racial discrimination in house appraisals.
In a letter released Friday, Sen. Amy Klobuchar (D-Minn.), Sen. Raphael Warnock (D-Ga.), Rep. Emanuel Cleaver (D-Mo.) and several dozen Democratic colleagues asked the Federal Financial Institutions Examination Council (FFIEC) to work with the housing appraisal industry to reduce disparities in home valuations for communities of color.
“Given the critical connection between homeownership and wealth, as well as the longstanding structural barriers to homeownership for families of color, it is crucial that appraisers accurately and impartially assess the values of Americans’ homes,” the lawmakers wrote to acting Consumer Financial Protection Bureau Director David Uejio, who is also the acting leader of FFIEC.
“Therefore, we encourage FFIEC to work with appraisers to reduce the racial appraisal gap and to address the long-term undervaluation of neighborhoods of color.”
Racial discrimination has suppressed Black and Hispanic homeownership levels for decades and severely limited the ability of families of color to accumulate wealth through property. Over the past few years, there has been growing attention on the role housing appraisals play in reducing values for properties owned by minorities.
The lawmakers cited a 2018 report from the Brookings Institution that found that homes of similar quality in similar neighborhoods are valued 23 percent less in majority Black neighborhoods than they would be in areas with few Black residents.
The Appraisal Institute, a trade group representing the home appraisal industry, also acknowledged this year that racial bias can potentially impact the valuation of homes and would take steps to address it within their ranks.
The Democratic lawmakers asked FFIEC to work with appraisers and “consider near- and long-term structural reforms to address and meaningfully reduce racial bias and improve impartiality in home valuations for communities of color.”
Along with the CFPB, FFIEC includes the Federal Reserve Board, Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency and the National Credit Union Administration.
Updated on May 14 at 1:03 p.m.