Growing up in Indiana, I often listened to the music of my fellow Hoosier, John Mellencamp. His classic 1980s ballad,
The song's first verse describes a Black man on his front porch in a Black neighborhood thinking "he's got it so good" with an interstate running through his front yard. The wiser, more experienced adult in me now more clearly understands how the song portrays the very different fortunes and expectations for communities of color — along with too many others left behind — in their pursuit of the American dream.
And, I clearly see that appraisal bias is a common injustice for many people of color who buy, sell, or refinance their homes. After all, achieving the American
dream and building intergenerational wealth through homeownership is only possible if property values are assessed fairly and accurately for all.
That's why last summer, the
This discriminatory practice has limited the ability of many families of color to benefit fully from the financial returns of homeownership. For example, a
Multiple media investigations have also shown blatant appraisal bias against people of color. In one
More than a decade ago, in the
However, as the Freddie Mac study, other reports, and recent news coverage demonstrate, we continue to see breakdowns in the appraisal system, particularly bias based on race. Technology offers us one solution to the problem of human prejudice. That's why the NCUA is working with other agencies on joint rules to establish quality control standards for automated valuation models. In doing so, we must ensure algorithms do not result in bias in their results and violate fair-lending laws.
Ultimately, systemic appraisal bias is perpetuated by several factors, so we must adopt a multipronged approach to fix the problem. In addition to the recently released recommendations in the
As our work continues, the NCUA will do its part to advance economic equity and justice, a goal that fully aligns with the credit union system's statutory mission of meeting the credit and savings needs of members, especially those consumers of modest means. And the NCUA will continue to study the causes of the disparities in appraisal and valuation services to inform our future policymaking.
Moreover, through the
To be clear, the work of the council and the PAVE Task Force will never make up for the years of discrimination. Nevertheless, it is a step in the right direction in holding the appraisal industry to higher standards that ensure all Americans have equal opportunity to build wealth through homeownership.
At the end of "Pink Houses" is the line, "there's winners and there's losers." Our job is to ensure that appraisal bias does not decide those winners and losers in homeownership, so that people of color are dealt a fair and equitable hand when it comes to home valuation. Only then can we finally begin to close the racial