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WASHINGTON – The Appraisal Foundation settled with the U.S. Department of Housing and Development over allegations the nonprofit violated the Fair Housing Act by preventing qualified people of color from entering the appraisal profession.
HUD said the Washington, D.C.-based foundation, which sets standards and qualifications for appraisers and provides guidance for valuation professionals, perpetuated a lack of diversity in the profession by requiring appraisers to depend on licensed friends or family for supervision, “thus perpetuating the homogeneity of the profession.” The foundation denied the allegations but agreed to enter into a conciliation agreement to conclude the investigation.
“We are pleased to have reached this conciliation agreement,” said Foundation President Kelly Davids. “We appreciate HUD’s recognition of our proactive efforts to lead the appraisal profession to welcome a new, diverse generation of appraisers and their support of our forthcoming scholarship program to aid new entrants to the field.”
HUD launched an investigation in December 2021 to determine if the foundation’s appraiser qualification criteria established by its appraiser qualification board resulted in a disparate racial impact on entry into the profession.
HUD said 2023 Bureau of Labor Statistics data shows the property appraisers and assessors occupation was 94.7% white and 0.6% black, ranking as the least racially diverse of 800 occupations surveyed. A lack of diversity in the appraisal workforce can contribute to inaccurate valuations in communities of color, HUD said.
Under the settlement terms, the foundation is required to establish a $1.22 million scholarship fund to cover the cost of aspiring appraisers to attend Practical Applications of Real Estate Appraisal (PAREA) programs.
For its part, the foundation said it began implementing changes to promote diversity, equity and inclusion in the appraisal profession in 2020, a year before the HUD investigation started. Some of the changes it made include:
Creating a diversity, equity and inclusion (DEI) special committee to promote more diversity in the valuation profession.
Hosting a national symposium on fair and affordable housing and appraisal bias.
Implementing the outside DEI consultant’s recommendations to promote diversity on The Appraisal Foundation boards.
Pursuing initiatives with historically black colleges and universities (HBCU), Hispanic-serving Institutions (HSI) and educational institutions that attract veterans to create educational programs for aspiring appraisers.
Sponsoring the Appraiser Diversity Initiative, which supports outreach efforts of the Urban League, Fannie Mae, Freddie Mac, and the Appraisal Institute to attract new entrants to the residential appraisal field, foster diversity and assist with education, training and experience.
Creating a pathway to become an appraiser and reach the certified appraiser level of credential that does not require a college degree.
“To help eliminate racial and ethnic bias from home appraisals, we must ensure that the industry looks like America,” said HUD Acting Secretary Adrianne Todman. “Today’s historic agreement will help build a class of appraisers based on what they know instead of who they know. This settlement will help bring us one step closer to rooting out discrimination in housing and opening doors to opportunity for all.”
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