The mortgage-focused lender Flagstar Bank has donated $1 million to help fix a staggering lack of diversity in the appraisal industry — a commitment that backers of those efforts hope other banks will follow.
More than 90% of property appraisers are white, according to the Bureau of Labor Statistics. Critics say
Fully addressing the issue "requires a moonshot of an effort," said Cy Richardson, senior vice president for programs at the National Urban League. But he said the Flagstar donation will boost efforts to overhaul entry requirements for the industry, along with rethinking recruitment and training initiatives.
"It's excellent news," Richardson said. "We hope that news is spread far and wide, because we'd like other evangelists to come in and be a supporter of this."
The donation by Flagstar, which
The Appraiser Diversity Initiative will use the funds to support the recruitment and credentialing of diverse trainees, as well as to sponsor workshops in certain markets. The group will also explore different ways to improve the licensing process, including through simulating appraisals for trainees, rather than the usual process of getting training under an appraiser.
The donation is a way to help address the "damaging effects of appraisal bias," said Lee Smith, Flagstar's president of mortgage. He noted that minority homeowners can get significantly less money for their home when an appraisal is done wrong.
"We want to be part of the solution here," Smith said in an interview. "We're not just going to sit on the sidelines and watch this happen."
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In two examples, the white spouses received valuations at least $40,000 higher than their Black partners did.
Black homeowners also saw instances of unprofessional treatment, including one homeowner whose appraisal took 11 weeks to be finished. The longest any white homeowner waited was 22 days. The study was conducted by the National Community Reinvestment Coalition.
The Biden administration has
In addition, the agency that oversees state regulation of appraisers held a hearing in January with the heads of the Consumer Financial Protection Bureau, the Department of Housing and Urban Development and the Federal Housing Finance Agency.
The status quo is "unconscionable," said Jonathan Miller, a New York City appraiser who's CEO of the appraisal firm Miller Samuel. Flagstar's move is "very encouraging" in that it may signal the banking industry is getting more involved in addressing the problem, he added.
Wells Fargo has also taken aim at fixing appraiser diversity,
The Appraisal Foundation, a nonprofit industry group that writes rules on appraisal licensing, praised Flagstar for the donation. In a statement, the group's president, Dave Bunton, said the donation is "welcome news, and we hope many more groups will take steps to support this important initiative."