Mary Cummins, Real Estate Appraiser, Animal Advocates, Los Angeles, California

Mary Cummins, Real Estate Appraiser, Animal Advocates, Los Angeles, California
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Showing posts with label valuation. Show all posts
Showing posts with label valuation. Show all posts

Monday, April 10, 2023

HUD only cares about appraisals UNDER contract price which is dangerous by Mary Cummins

appraisal value over under contract sales price, mary cummins, real estate appraiser, real estate appraisal, fannie mae, percent sales price, contract price, appraisal, value
appraisal value over under contract sales price, mary cummins, real estate appraiser, real estate appraisal, fannie mae, percent sales price, contract price, appraisal, value

Dave Towne sent out this linked article about bias and appraisal gap.

"The article below was in the Inside Mortgage Finance Publications e-newsletter on 4/06/23:

"FHFA Data Fueling Looks into Appraisal Bias

dhollier@imfpubs.com

The Federal Housing Finance Agency is a is a critical provider of the data necessary for oversight, enforcement and research, FHFA Director Sandra Thompson noted during a discussion in late March.

According to aggregate statistics from the Uniform Appraisal Dataset released by the FHFA, roughly 57% of appraisals were above the contract price in 2021. Just 15.2% were below the eventual sale price, but these are the under-valuations that could possibly reflect bias.

And the important datum here is that this percentage is growing. In 2013, only 8.4% of appraisals came in under the contract price.

In addition to providing data, Thompson noted that FHFA has coordinated with the Department of Housing and Urban Development, the Consumer Financial Protection Bureau and the Department of Justice “to provide additional information for fair lending enforcement and oversight.”

If this actually reflects the true thinking of Ms. Thompson, she has aligned with so many others who believe SALE PRICE is immutable, and is the ultimate indicator of Value, and apparently, of bias, when not accepted as gospel by the appraiser.  My gosh, what a misguided opinion!

Apparently Ms. Thompson didn’t see, experience or understand what happened during the ‘pandemic era’ in mid-2020-early ‘22, when overly emotional, and irrationally exuberant buyers paid astronomical prices for homes way above what their actual value was.  The same thing happened in 2006-2008.....but it wasn’t considered ‘bias’ then due to the different political climate and attitude at that time.

Conversely, how can it be said that valuing a property lower than its eventual sale price based on current market evidence is tantamount to BIAS?  And, if 57% of the appraised values were ABOVE the sales price, couldn’t that also reflect BIAS?  Seems to me that if one comparison in one direction is considered bias, the other in the opposite direction can be equally judged the same.

To better understand this concept, look up the definition of bias.

The political drumbeat of appraisal bias just because an appraisal Value doesn’t reflect Sales Price is blatantly wrong-headed.  In fact, it reflects internal personal bias at worst, and exhibits a definite lack of understanding of the appraisal process, by the person promoting such falsehoods.

More appraisers should stand up and challenge Ms. Thompson’s assertions."

I agree that we should be looking at the over valuations. That is probably where most of any alleged "bias" would be. In the major media cases of alleged bias the first lower appraisal is considered the wrong one when it was actually the higher second appraisal that was wrong and above market value. 

The second higher appraisals were influenced, biased by the AMC, Lender and borrowers who stated the first appraisal was too low. The second appraiser knew there'd be a complaint or lawsuit if they didn't come in high. Clearly the second appraiser was influenced to come in over market value. In the appraiser's eyes he has much to lose coming in at market and much to gain by coming in above market. That's all fine until the borrower goes under and the gov reviews the appraisal in default which they stated they will do. This is a concern because the current economy and real estate market is going down. People are losing jobs as interest rates rise. More homeowners could end up under water and in default. 

Things are a little similar to the beginning of the Great Recession. We all know what happened after the Great Recession. The gov pushed appraisers to come in high to meet higher values. After values dropped the government blamed appraisers! We report values. We don't set them. The gov caused the huge run up with reduced financial regulations and programs which helped lower income people take on loans they couldn't easily afford. The gov caused great financial damage to the people they said they were helping.

Image above came from this article
https://www.fanniemae.com/research-and-insights/perspectives/opportunities-improve-value-appraisals

Nice quote from the above linked article, "Reforms following the 2008 housing crisis attempted to improve the independence and accuracy of appraisals, and some early research indicated these reforms were marginally successful, with the percent of transactions confirmed falling from a high of 98 percent in 2007 to 94 percent in 2009. Confirmation rates, however, have since drifted back up as we have moved further away from the financial crisis."

So was it the financial crisis or reforms which caused change in % of appraisals meeting contract price?

What's interesting is there were appraisals done pre and post contract. When the appraiser knew the contract price, the value was more likely to meet or exceed that contract price. Maybe appraisers shouldn't know the contract price because it clearly influences them. Fannie Mae even makes that suggestion in their article.

Fannie Mae knows the industry and what's really happening. They can't speak freely because they are dependent upon HUD and the government no matter how "independent" they claim to be. For this reason they kiss HUD's ass and support all this false alleged appraisal bias. AEI's research has shown there is no appraisal bias based on race in the government's own data. HUD still falsely insists there is for political reasons. 2024 elections are coming. I bet Dem candidates will still be hawking racial appraisal bias in their campaigns to get the black, brown vote. They will claim they already solved most of the alleged bias but will continue to do more.


Mary Cummins of Cummins Real Estate is a certified residential licensed appraiser in Los Angeles, California. Mary Cummins is licensed by the California Bureau of Real Estate appraisers and has over 35 years of experience.


Mary Cummins, Mary K. Cummins, Mary Katherine Cummins, Mary, Cummins, #marycummins #animaladvocates #losangeles #california #wildlife #wildliferehabilitation #wildliferehabilitator #realestate #realestateappraiser #realestateappraisal #lawsuit real estate, appraiser, appraisal, instructor, teacher, Los Angeles, Santa Monica, Beverly Hills, Pasadena, Brentwood, Bel Air, California, licensed, permitted, certified, single family, condo, condominium, pud, hud, fannie mae, freddie mac, fha, uspap, certified, residential, certified resident, apartment building, multi-family, commercial, industrial, expert witness, civil, criminal, orea, dre, brea insurance, bonded, experienced, bilingual, spanish, english, form, 1004, 2055, 1073, land, raw, acreage, vacant, insurance, cost, income approach, market analysis, comparative, theory, appraisal theory, cost approach, sales, matched pairs, plot, plat, map, diagram, photo, photographs, photography, rear, front, street, subject, comparable, sold, listed, active, pending, expired, cancelled, listing, mls, multiple listing service, claw, themls, historical appraisal, facebook, linkedin DISCLAIMER: https://mary--cummins.blogspot.com/p/disclaimer-privacy-policy-for-blogs-by.html

Wednesday, January 25, 2023

Appraisal Subcommittee Hearing on Appraisal Bias January 24, 2023, notes by Mary Cummins

Appraisal Subcommittee Public Hearing on Appraisal Bias, January 24, 2023, marcia fudge, mary cummins, asc, hud, real estate appraiser, pave taskforce, cfwb, jim park, race, racial bias, discrimination, black, brown, white, value, neighborhood, appraisal, valuation
Appraisal Subcommittee Public Hearing on Appraisal Bias, January 24, 2023, marcia fudge, mary cummins, asc, hud, real estate appraiser, pave taskforce, cfwb, jim park, race, racial bias, discrimination, black, brown, white, value, neighborhood, appraisal, valuation

https://www.consumerfinance.gov/about-us/events/appraisal-subcommittee-hearing-on-appraisal-bias/

https://www.youtube.com/watch?v=QW8ADw9vOSc

Appraisal Subcommittee Hearing Meeting about Appraisal Bias in Residential Real Estate Market ASC notes, comments by Mary Cummins. Part of the meeting was on C-SPAN 2.

Time: 2:10:35

“Streamed live on Jan 24, 2023. Join the Federal Financial Institutions Examination Council’s Appraisal Subcommittee (ASC) for a hearing about appraisal bias. Invited witnesses representing key stakeholder groups will share their views with the ASC during the hearing.”

Official information and files.

The Federal Financial Institutions Examination Council’s Appraisal Subcommittee (ASC) held a hearing about appraisal bias.

"This first-ever ASC hearing was led by Deputy Director Martinez and ASC Executive Director Jim Park. HUD Secretary Marcia L. Fudge, CFPB Director Rohit Chopra, and FHFA Director Sandra Thompson also participated in the hearing. Panel witnesses included:

Dr. Junia Howell, Visiting Assistant Professor of Sociology at the University of Illinois Chicago; Witness Testimony. It'd be better to read her testimony because she was extremely nervous, waving her arms around wildly, misspeaking and acting agitated. Most upsetting and more importantly she stated some totally false and ignorant things. She said the sales comparison approach was developed in the 1930s by whites in the US government to intentionally value white owned property higher than POC owned property. She doesn't even realize that most living in areas which were, are primarily POC especially back then were, are renters and not owners. There are also poor white areas in the US. How does she explain that? The sales comparison approach to value is the main method used to value all assets all over the world since the beginning of time. She said the government should basically give more money to her to do more deeply flawed "research." It appears that all speakers had to swear to the host of the meeting that they will only agree with the government's incorrect and preconceived ideas on the issue of the alleged "appraisal" and wealth gap. She's so ignorant she doesn't realize it's caused by the income gap and not appraisals. Lots of independent research out there to prove this. People buy homes they can afford. People who make less money but less expensive homes.

https://files.consumerfinance.gov/f/documents/cfpb_appraisal-hearing_junia-howell-testimony_2023-01-24.pdf

Paul Austin and Tenisha Tate-Austin, homeowners from Marin, California; Witness Testimony 

https://files.consumerfinance.gov/f/documents/cfpb_appraisal-hearing_paul-austin-and-tenisha-tate-austin-testimony_2023-01-24.pdf

Michael Fratantoni, Senior Vice President of Research and Technology and Chief Economist, the Mortgage Bankers Association; Witness Testimony 

https://files.consumerfinance.gov/f/documents/cfpb_appraisal-hearing_michael-fratantoni-testimony_2023-01-24_Tw7XwtE.pdf

Craig Steinley, President, the Appraisal Institute; Witness Testimony 

https://files.consumerfinance.gov/f/documents/cfpb_appraisal-hearing_craig-steinley-testimony_2023-01-24.pdf

More information about the Appraisal Subcommittee can be found here" 

MEETING START

Time: 6:29 Introduction by Zixta Martinez Chair of Board of ASC and CFPB. Jim Park will talk about ASC. We’ll hear from a panel of witnesses, a home owner, lender, appraiser and academic. She introduced Marcia Fudge head of HUD.

Time: 9:28 Honorable Marcia L Fudge of HUD and PAVE. I'm only going almost word for word what Fudge said because it's so important. Fudge makes her own personal bias very clear in what she said and the falsehoods she stated.

Fudge said “good morning” and got a mild response. She basically responded she didn’t like the mild response and again said “GOOD MORNING!” and everyone then responded with “GOOD MORNING!” It set the tone.

Since day one the Biden Harris administration has worked to root out bias in the appraisal system. The work is critical to advance racial equity. It’s important to me as secretary of HUD and as a black woman. I know first hand what it’s like to be told that your home is worth less than the house down the street because of the color of your skin. It’s heartbreaking to hear the stories of black and brown families who feel forced to remove family mementos and photos in hopes of receiving a fair and accurate valuation. I do not intend to do that!

Fair Housing Act of 1968 was to end housing segregation. Owning a home should provide a path to the American dream. Instead this country does not see us as equitable. June 1, 2021 100 years after Tulsa Race massacre Biden and Harris established PAVE task force a first of its kind initiative to root out racial discrimination in the home buying process so families of all backgrounds and neighborhoods can have a better chance at building generational wealth. Less than a year after PAVE was established we delivered an action plan which constitutes set of reforms to advance racial equity in the home appraisal process. We want to cultivate a well trained and diverse work force, to make sure technology doesn’t perpetuate bias. HUD made $28M available to fund testing, education, and outreach to communities on appraisal bias. Next week we will start a three part webinar on training for appraisers and housing professionals on how to identify bias and protect homes. We, (pointing to herself), know how to identify it as we see it every day. We are giving an avenue for FHA loan seekers, if they believe their appraisal was skewed by racial bias. You can make comments on our drafting table platform. Please, make comments. 

I’m going to say things not in my script because I live this every day. I live in a black community by choice, BY CHOICE! I want kids in my neighborhood to get same schools as properties next to me. You do that by property tax even though I think it’s unconstitutional, that we fund schools by property tax. I want same police, fire protection but you can’t do it if my house is valued at $50,000 less than the house next to me. Two doors from me there is a neighborhood that is all white. My house is bigger, my lot is bigger, my house is nicer (laughter). That (other) house is valued more than mine. This is not the America that we should be living in, in the year 2023. It is a travesty, outrageous and we must change it. I’m hopeful the ASC will do what is right for the American people.15:44.

Mary Cummins comments. Homes are not valued differently because of the color of the skin of the owner, borrower or occupants. It's a mathematical formula based on most recent similar sales in the same neighborhood. Appraisers don't know the color of skin of homeowners, borrowers, tenants, buyers, sellers. We don't see the borrower, buyer and definitely don't know who owns properties in the area we use as comparable sales. We don't look at census tracts. We don't know race or color. It's possible all the owners of the homes we used as comp sales for a property owned by a black person were white. That would mean Fudge's false narrative holds no water. 

Fudge states she wants home values and their property taxes to increase. Many poor people would be forced to sell their property and move if property taxes were increased to the level of newer more luxury expensive neighboring properties.They wouldn't even be able to sell their property for the higher non market value. That would be beyond unfair and cruel.

All real estate agents tell all home owners of every color to remove personal articles such as photos, collectibles and other items from their home.It shows the home bigger and better. Buyers don't want to see any homeowner in the home. They want to envision themselves in a blank slate of a home. It's not about race.

HUDs PAVE report was late. It was due in six months. Fudge acts like she finished it early in less than a year. Nope. Late. 

Appraisal appeal, reconsideration of values have ALWAYS been available to borrowers forever. They can appeal based on any reason. They have done this. This is not about bias. Research by AEI based on government loan documents proved there is no effect of race on home value. They used the government's own data to show this. AEI presented this to the government in the meeting about the PAVE task force. 

AVMs Automatic Valuation Methods do not consider race or color of homeowner or borrower. It's a math formula, technology computed by robots. No human is involved. The math formula is not based on race or color. It's based on location, size, age. It does not know condition, view, upgrades, amenities, true size, additions, lot type, location in neighborhood... AVMs value homes in poor condition higher than market. It values upgraded homes with views lower than market. AVMs aren't accurate. They are BIASED against everyone.

Fudge brought up her home value previously. She said her home is worth less BECAUSE SHE IS BLACK. I included it in a past article with address and attributes. I included a valuation of her home and of the NEW, LUXURY homes up, across the street from her. It's a private development of new luxury homes tucked away off the main street. I have no idea if the homeowners are all white. I doubt Fudge does either. Has she visited all of them personally? They're new so they're not in the census report. There is a reason why those homes are worth more. They're new, luxury, in a new development, with a clubhouse, off the main street... Not all homes of the same size in the same county are worth the same. An old run down home in South LA is worth less than a new one of the same size in Beverly Hills. If Fudge doesn't know this, she must resign because she's unqualified. I know she knows this and is just lying for effect. She's a politician working for politicians selling lies for votes, money and promotions.

The real reason why homes owned by whites are worth more than homes owned by black, brown people is the income gap. People who make more money have more money, more generational wealth and can buy and own more expensive homes. THIS IS THE REAL ISSUE! The government needs to fix the income gap then the wealth gap would solve itself. Men also make more than women. Blaming appraisers will never fix the real issue. The government can't fix the problem (if there even is one) until they admit the real cause of the problem. The first step Scientific Method to solving problems is to determine the actual problem.They clearly don't want to fix the real problem. That means the government doesn't really care about POC or the poor. They need to stop pretending like they do care when they clearly don't. You can yell at appraisers all the live long day and that won't solve the problem. 

I'll post notes from rest of the meeting letter. I will also be sending in a comment. I see some of the speakers are the Austins from California. I have covered their case since the beginning. In their linked statement they said they wanted the appraiser to use comps from the "white area" instead of their immediate neighborhood which they said is a "black area." Who are the racists here? 

There were five witnesses who basically read word for word their submitted statements linked above except AI Craig Steinley. He omitted a large portion of his written statement. I think he omitted it because he didn't want questions and to get under five minutes. While other speakers said we need to get rid of the "racist" government mandated sales comparison approach AI's statement said they are adamantly opposed to that. Their statement says the approach is based on valid and accurate economic principles which it is. That is how all assets in the world have been valued forever because it is based on supply and demand between buyer and seller. I'll do a short summary in a few minutes anyway. 

After that ASC members were allowed to ask ten minutes worth of questions each.

Email after the meeting

“Yesterday the Appraisal Subcommittee held its first ever Hearing on Appraisal Bias, hosted at Consumer Financial Protection Bureau headquarters in Washington D.C. 

The event opened with remarks by U.S. Department of Housing and Urban Development Secretary Marcia L. Fudge. ASC’s Executive Director James Park spoke on the agency’s role in the appraisal regulatory landscape. 

Attendees, both in person and on the livestream, heard testimony from Dr. Junia Howell, University of Illinois-Chicago, homeowners Paul Austin and Tenisha-Tate Austin, Michael Fratantoni, Chief Economist, Senior Vice President, Research and Industry Technology, Mortgage Bankers Association, and Craig Steinley, President of the Appraisal Institute.

Now ASC wants to hear from you! You are encouraged to provide a comment on your perspective on or experience with appraisal bias; comments can be submitted to AppraisalBiasHearing@asc.gov until February 8, 2023.”

Four of the five witness speakers, Appraisal Subcommittee Public Hearing on Appraisal Bias, January 24, 2023, marcia fudge, mary cummins, asc, hud, real estate appraiser, pave taskforce, cfwb, jim park, race, racial bias, discrimination, black, brown, white, value, neighborhood, appraisal, valuation

Witness Dr Junia Howell, Appraisal Subcommittee Public Hearing on Appraisal Bias, January 24, 2023, marcia fudge, mary cummins, asc, hud, real estate appraiser, pave taskforce, cfwb, jim park, race, racial bias, discrimination, black, brown, white, value, neighborhood, appraisal, valuation

Tenisha Tate Austin, Paul Austin, Appraisal Subcommittee Public Hearing on Appraisal Bias, January 24, 2023, marcia fudge, mary cummins, asc, hud, real estate appraiser, pave taskforce, cfwb, jim park, race, racial bias, discrimination, black, brown, white, value, neighborhood, appraisal, valuation

ASC members, Appraisal Subcommittee Public Hearing on Appraisal Bias, January 24, 2023, marcia fudge, mary cummins, asc, hud, real estate appraiser, pave taskforce, cfwb, jim park, race, racial bias, discrimination, black, brown, white, value, neighborhood, appraisal, valuation



Mary Cummins of Cummins Real Estate is a certified residential licensed appraiser in Los Angeles, California. Mary Cummins is licensed by the California Bureau of Real Estate appraisers and has over 35 years of experience.


Mary Cummins, Mary K. Cummins, Mary Katherine Cummins, Mary, Cummins, #marycummins #animaladvocates #losangeles #california #wildlife #wildliferehabilitation #wildliferehabilitator #realestate #realestateappraiser #realestateappraisal #lawsuit real estate, appraiser, appraisal, instructor, teacher, Los Angeles, Santa Monica, Beverly Hills, Pasadena, Brentwood, Bel Air, California, licensed, permitted, certified, single family, condo, condominium, pud, hud, fannie mae, freddie mac, fha, uspap, certified, residential, certified resident, apartment building, multi-family, commercial, industrial, expert witness, civil, criminal, orea, dre, brea insurance, bonded, experienced, bilingual, spanish, english, form, 1004, 2055, 1073, land, raw, acreage, vacant, insurance, cost, income approach, market analysis, comparative, theory, appraisal theory, cost approach, sales, matched pairs, plot, plat, map, diagram, photo, photographs, photography, rear, front, street, subject, comparable, sold, listed, active, pending, expired, cancelled, listing, mls, multiple listing service, claw, themls, historical appraisal, facebook, linkedin DISCLAIMER: https://mary--cummins.blogspot.com/p/disclaimer-privacy-policy-for-blogs-by.html

Sunday, March 27, 2022

AEI reply to Freddie Mac's misleading study, American Enterprise Institute, by Mary Cummins



More great research from AEI. This is analysis of Freddie Mac's misleading and basically defamatory paper on Appraisal Gap. When government related entities release misleading information like this they are attacking and defaming real estate appraisers. The hate real estate appraisers have received because of this paper and Andre Perry's paper is relentless. 

Another problem with releasing misleading data and conclusions is that it actually hurts the people they are trying to help. Facts show that the real cause of the wealth gap between blacks, whites and Latinos is the income gap. It has nothing to do with appraisals or appraisal gaps. The government needs to help blacks, Latinos make more money. Offering help with down payments and reduced fee loans will not help these people long term. They end up in risky financial situations where they are more likely to lose their home. This causes more damage than not helping them at all. The government is setting these people up for failure which is a travesty. As noted in the report below "These polices are a violation of the FHFA’s (and HUD’s and the CFPB’s) obligation to Affirmatively Further the Goal of Fair Housing."

The government has done the same thing with student loans. The federal government gives more loans to blacks than whites based on % population. Blacks end up saddled with more debt. The government tells them to get an education and they can make more money. Instead they don't make enough income to pay off the student loan debts. This makes it difficult to pay rent and sometimes impossible to buy a home. If they do buy a home, they have huge levels of debt which can cause them to lose that home in an emergency. Helping or hurting? https://educationdata.org/student-loan-debt-by-race

Full report linked below.

"AEI Housing Center Critique of Freddie Mac’s Note on “Racial and Ethnic Valuation Gaps in Home Purchase Appraisals” November 15, 2021

Executive Summary:

While we applaud Freddie Mac for having undertaken an effort to assemble relevant data to investigate the topic of appraisal discrimination, it was premature to publish a note based only on “exploratory research” limited to a single race-based correlation, with no attempt to present a rigorous analysis regarding other potential explanations.  Merely stating that low appraisals resulted in “substantial appraisal valuations gaps” for minority versus White tracts provides an ominous sounding headline, but sheds little light on whether the gaps support a claim of systemic racism. Even worse, Freddie Mac’s research note was quickly seized by policymakers and the media as evidence of systemic racism.[1]

Rather than being due to racial discrimination by appraisers, we found Freddie’s claim of an “appraisal gap” is much more likely the result of would-be first-time buyer inexperience, socio-economic status (SES), or government actions (in particular a concentration of FHA lending in certain census tracts) with a disparate impact on protected classes.

Our analysis, which goes well beyond Freddie Mac’s “exploratory research”, can explain around 85% for Black tracts and 29% for Latino tracts of the gap through differences in socio-economic status (SES), leverage, and borrower characteristics. With the full set of controls, the Black gap disappears entirely, while the Latino gap falls by almost half.

In a robustness test, we found a sizeable FHA effect for majority White or White-only tracts. Thus, FHA lending, but also Equifax Risk Factor (ERS) and the one adult borrower share, is not simply substituting for minority borrowers.

Finally, research ignored by Freddie Mac has found a substantial consumer benefit to low appraisals:

Low appraisals provide enormous leverage to renegotiate the contract to a lower price. When buyers do renegotiate, subsequent to a low appraisal, they usually lower price by a significant share of the difference between contract price and appraised value. The new lower price reduces credit risk, costs to the borrower, and ultimately results in greater wealth for the buyer.[2]

If the differences found by Freddie Mac are in fact, as our research indicates, largely due to factors such as differing rates of FHA financing and SES in the grouped census tracts, then addressing wealth inequities through the use of easier lending criteria and accommodative monetary policy create a systemic barrier to sustainable homeownership and wealth creation by subjecting protected class households to risky lending, unsustainable price boosts, speculation in land, and home price volatility as other AEI Housing Center research has shown.[3] These polices are a violation of the FHFA’s (and HUD’s and the CFPB’s) obligation to Affirmatively Further the Goal of Fair Housing. Thus, instead of Freddie Mac’s correlation being the result of systemic appraiser racism, it may well have been the result of government policies and actions which have a disparate impact on protected classes. We respectfully submit the following comments in an effort to highlight the above deficiencies and report on our research into other explanatory factors. We believe that our research could be quickly confirmed. We trust that this critique will help inform Freddie Mac, FHFA, policy makers and the public on this important topic.[4]"

https://www.aei.org/research-products/report/aei-housing-center-critique-of-freddie-macs-note-on-racial-and-ethnic-valuation-gaps-in-home-purchase-appraisals/

Mary Cummins of Cummins Real Estate is a certified residential licensed appraiser in Los Angeles, California. Mary Cummins is licensed by the California Bureau of Real Estate appraisers and has over 35 years of experience.


Mary Cummins, Mary K. Cummins, Mary Katherine Cummins, Mary, Cummins, #marycummins #animaladvocates #losangeles #california #wildlife #wildliferehabilitation #wildliferehabilitator #realestate #realestateappraiser #realestateappraisal #lawsuit real estate, appraiser, appraisal, instructor, teacher, Los Angeles, Santa Monica, Beverly Hills, Pasadena, Brentwood, Bel Air, California, licensed, permitted, certified, single family, condo, condominium, pud, hud, fannie mae, freddie mac, fha, uspap, certified, residential, certified resident, apartment building, multi-family, commercial, industrial, expert witness, civil, criminal, orea, dre, brea insurance, bonded, experienced, bilingual, spanish, english, form, 1004, 2055, 1073, land, raw, acreage, vacant, insurance, cost, income approach, market analysis, comparative, theory, appraisal theory, cost approach, sales, matched pairs, plot, plat, map, diagram, photo, photographs, photography, rear, front, street, subject, comparable, sold, listed, active, pending, expired, cancelled, listing, mls, multiple listing service, claw, themls, historical appraisal, facebook, linkedin DISCLAIMER: https://mary--cummins.blogspot.com/p/disclaimer-privacy-policy-for-blogs-by.html

Friday, August 6, 2021

First Interagency Task Force Meeting on Property Appraisal and Valuation Equity (PAVE) - PROBLEMS, by Mary Cummins

pave task force, hud, mary cummins, real estate appraisal, bias, discrimination, value, valuation, loans, fha, joe biden, white house, marsha fudge, meeting
pave task force, hud, mary cummins, real estate appraisal, bias, discrimination, value, valuation, loans, fha, joe biden, white house, marsha fudge, meeting

The first White House Interagency Task Force Meeting on Property Appraisal and Valuation Equity (PAVE) was August 5, 2021. "Task Force members discussed how current appraisal practices are a significant contributor to the disparity in housing values. The practice of comparing properties within similar neighborhoods can be a proxy for racial demographics, which leads to the perpetuation and exacerbation of the legacy of segregation and redlining."

Racism exists. We should do everything we can to fight it. I fully support helping people of color  buy and maintain homes. I've studied segregation, redlining and their effects on community. That said doing away with the main valuation method of assets used around the world would be ridiculous and destroy the economy and our government.

Matched pairs analysis is how ALL assets in the world have been valued since the beginning of civilization. It's how all real and personal property are valued, traded, insured, assessed for taxation purposes, bought, sold, used for loan collateral, used as a basis to settle court disputes... The government is the one who mandated that real estate appraisers compare like to most similar like. It's also called the sales comparison approach. 

The purpose of the sales comparison approach using matched pairs analysis is to provide the "most accurate scientific measure of value." "The major supposition of the sales comparison approach is that market value of the subject is related to comparable property values within the same market area." This is how real estate agents and sellers determine a list price for a property. It's also how agents and buyers determine an offer price for the property. This is how the tax assessor assesses your property for taxation purposes. The sales comparison approach is the most accurate method to value homes for many purposes.

Based on what has been said by the Task Force members so far I am betting that they want appraisers to use only HIGHER sold comparables from areas with more valuable homes to appraise lower valued homes in areas with a higher percentage of POC. I am assuming this will only be for government and government insured appraisals, loans for POC but am not certain if it will be for everyone in certain areas of lower valued homes. Private banks and lenders would never go for this. Everyone knows the value of property is based on three main things, location, location, location. There are clearly major problems with this approach.

The actual value of property. "The fair market value is the price a home would sell for on the open market under normal conditions." Even if the government forces appraisers to use sold comparables from homes in Beverly Hills to appraise homes in East Los Angeles that will never fool home buyers or sellers. If you want to buy, can afford to buy a $100,000 home, you will look at homes for sale around that price range in an area you like. You buy the home with $10,000 down. It appraises at $100,000 which is market value determined by an appraiser. You get sick, lose your job, sell your home or lose it in foreclosure. It sells for $100,000 and the $90,000 loan is paid off. 

Let's say instead you offered $100,000 on a home with $10,000 down payment but the appraiser said it was actually worth only $50,000. If you buy it for $50,000, you're okay. Instead you demand another appraisal using sold comps in a more valuable area maybe a beach front property to appraise a tear down shack in Pacoima. The next appraisal is $100,000. You again get sick...You couldn't sell it for more than $50,000 or were foreclosed upon. The bank just lost $40,000 which you now owe to the bank even though you have no home. Many of these loans are backed by the government. The government aka the taxpayer loses that money. The banks and government are in trouble when this happens to many people like it did during the Great Recession of 2008. We are at a home price peak so this is a major concern.

I bring up this example because this would be mortgage fraud. The appraiser and lender would be complicit. This actually happened and people were criminally convicted of fraud. One such case was Victor Noval who defrauded the US Government HUD of $60,000,000 in this scheme. They used HUD money to buy property whose value was inflated by a con artist appraiser using higher sold comparables in other superior areas and other tricks. HUD Secretary Andrew Cuomo stated in response to this crime in 1997 per the Los Angeles Times "Any con artist who tries to rip off HUD and the American taxpayer will be caught and prosecuted to the full extent of the law." The taxpayer ends up paying for any loss in government backed loans. Any program to artificially inflate the value of homes to secure government insured funding would be bank fraud and fraud against the government.  For the government itself to suggest these federal crimes is ludicrous! 

Another thing to consider is that lenders make the loans then sell them so they can use that money to make more loans. No one would buy the loans if there is no market value appraisal. No one would know what they are worth except less than the loan amount. They'd sell at a huge discount if they could be sold at all. Investors also bundle these bank and government insured loans as mortgage backed securities and sell them in the secondary market to pension funds, investment funds... Again, what are they worth? We have no idea because there is no appraisal of its real market value. Generally investors look at market value of the property, loan to value ratios, loan balances, rates, equity, payment history, loan delinquency rate ... to determine value of the investment. No one would invest in these loans if they have no idea what they are worth. That's money lost for new home loans. Now new home buyers can't buy homes. You just shot yourself in the foot.

Let's say investors invest in these loans anyway and the economy flounders. People are foreclosed upon and lose their homes which sell for less than the loan balances. The banks and government lose money on the loans. Homeowners still owe the balance of the unpaid loans. The mortgage backed securities also sell on the stock market causing the stock market to dump. This happened in the Great Recession when all those loans went south. The banks and Wall Street had to be bailed out. Government then had to develop new regulations to make sure this wouldn't happen again. Here's an idea. How about not starting new programs which set homeowners, banks, investors, taxpayers and the government up for failure from the start. 

What if POC in areas with mainly POC get a higher appraisal and then a larger loan using this new appraisal method? Do you raise their tax assessment value and taxes? That would raise the property taxes of neighbors pushing out poor and elderly people. Because home value correlates with home rent it would also raise corresponding rent of non owners who would have to move. Can wealthy people use this same new appraisal method to lower the value of their property to pay less property tax, give their spouse less in a divorce settlement or give the government less in capital gains taxes? What happens when POC get a bigger loan because of the higher appraisal but they can't afford to make the payments and lose their home? That happened during the Great Recession when home values appreciated quickly for real. While members of the Task Force stated POC would take that new make believe home equity money and invest in college educations, new businesses, health care, home improvement or retirement accounts to improve their financial situation and the community they invested in personal items instead. Our nation is still recovering from the Great Recession. This new appraisal method would open up an economic Pandora's Box while home prices and real home equity are already increasing rapidly. 

The Task Force has 180 days to come up with a real plan. I hope someone who knows something about real estate appraisal, investments, loans and the economy speaks up before then. If not, it's the home buyers, home owners, banks, government and taxpayers who will be hurt by this mess of an idea. 

#pavetaskforce #hud #realestateappraisal #bias #discrimination #value #valuation #homeloans #loans #fha #joebiden #whitehouse #marciafudge #meeting #August52021   #PropertyAppraisalandValuationEquity #PAVE #segregation #redlining #racial #occ #ftc #fdic #cfpb #fhfa #asc #susanrice 

The rest of the press release is below. It's also linked.

"The group identified near- and long-term opportunities to advance equity in home appraisals that will help narrow the racial wealth gap and reinvest in communities that have been historically left behind. The Task Force Members will work together and consult with civil rights organizations, advocacy groups, industry, and philanthropic entities to drive change.

Additionally, Task Force members agreed that the scope of the Task Force will be to:

Ensure that government oversight and industry practice further valuation equity;

Combat valuation bias through educating the consumer and training the practitioner;

Ensure equity in valuation by making available high-quality data;

Create a comprehensive approach to combating valuation bias through enforcement and other efforts.

The Task Force is chaired by Secretary Fudge and Ambassador Rice, and includes cabinet-level leaders from executive departments and additional members from independent agencies. The Task Force will deliver a final action report within 180 days.

The Task Force membership is comprised of the following officials: (I added their names)

Secretary of Housing and Urban Development (co-chair) Marcia Fudge

Assistant to the President for Domestic Policy (co-chair) Susan Rice

Director of the National Economic Council Brian Deese

Attorney General of the United States Merrick Garland

Secretary of Agriculture Tom Vilsack

Secretary of Labor Marty Walsh

Secretary of Education Miguel Cardona

Secretary of Veterans Affairs Denis McDonough

Comptroller of the Currency (OCC) Michael Hsu

Chairman of the Board of Governors of the Federal Reserve Jerome Powell

Chairman of the Federal Trade Commission (FTC) Lina Khan

Chairman of the Federal Deposit Insurance Corporation (FDIC) Jelena McWilliams

Chairman of the National Credit Union Administration and the Federal Financial Institutions Examination Council Todd M Harper

Director of the Consumer Financial Protection Bureau (CFPB) Dave Uejio

Director of the Federal Housing Finance Agency (FHFA) Sandra L Thompson

Appraisal Subcommittee (ASC) James Park

https://www.whitehouse.gov/briefing-room/statements-releases/2021/08/05/readout-of-the-first-interagency-task-force-meeting-on-property-appraisal-and-valuation-equity-pave

Mary Cummins of Animal Advocates is a wildlife rehabilitator licensed by the California Department of Fish and Game and the USDA. Mary Cummins is also a licensed real estate appraiser in Los Angeles, California.


Google+ Mary Cummins, Mary K. Cummins, Mary Katherine Cummins, Mary Cummins-Cobb, Mary, Cummins, Cobb, wildlife, wild, animal, rescue, wildlife rehabilitation, wildlife rehabilitator, fish, game, los angeles, california, united states, squirrel, raccoon, fox, skunk, opossum, coyote, bobcat, manual, instructor, speaker, humane, nuisance, control, pest, trap, exclude, deter, green, non-profit, nonprofit, non, profit, ill, injured, orphaned, exhibit, exhibitor, usda, united states department of agriculture, hsus, humane society, peta, ndart, humane academy, humane officer, animal legal defense fund, animal cruelty, investigation, peace officer, animal, cruelty, abuse, neglect #marycummins #animaladvocates #losangeles #california #wildlife #wildliferehabilitation #wildliferehabilitator #realestate #realestateappraiser #realestateappraisal #lawsuit

Thursday, July 15, 2021

Property Valuation, Appraisal Bias, & Black Homeownership - notes by Mary Cummins, real estate appraiser

Mary Cummins, Andre Perry, Pam Perry, Christy Bunce, Jefferson Sherman, Property Valuation, Appraisal Bias, & Black Homeownership, Appraisal Institute, real estate appraiser, appraisal, real estate
Mary Cummins, Andre Perry, Pam Perry, Christy Bunce, Jefferson Sherman, Property Valuation, Appraisal Bias, & Black Homeownership, Appraisal Institute, real estate appraiser, appraisal, real estate


July 15, 2021 11:00 a.m. PST Over 500 people attended. 

Topic: Property Valuation, Appraisal Bias, & Black Homeownership - Zoom meeting.

Description: The New American Dream & Freddie Mac webinar series continues to discuss the challenges to increase Black Homeownership and potential solutions.

What will you get out of this by attending? We will look at appraisals and property valuation and how to overcome potential bias in this arena. We have a powerful group of expert panelists to share insights and their organizations efforts to bridge the gap in Black Homeownership.

Moderator: Christy Bunce, Chief Operating Officer of New American Dream Funding (Bunce)

Panelist: Dr. Andre Perry, Brookings Institution (A Perry)

Panelist: Jefferson Sherman, MAI, AI-GRS Appraisal Institute (Sherman)

Panelist: Pamela Perry, Vice President, Single Family Equitable Housing, Freddie Mac (P Perry)

My comments in ( ). Here is the video. 

-------------------

Zoom meeting notes by Mary Cummins, Los Angeles, California real estate appraiser.

Bunce:  Our company supports lending for minorities and black people.

Sherman: Bias is human. No profession is immune.

A Perry: My research used the Zillow list price of homes and census data. I controlled for crime, education, walkability and there was still a difference in value (between primarily black verses white neighborhoods). The black owned homes were under priced by 23%. This loss of value is not about only appraisers but also lenders and agents. Appraisers have something to do with the loss of 23% (of value of black owned homes). There are biased appraisers media articles show. Structural bias is in the system even though most say there is no racism in appraising. (This article shows that Andre Perry's research is fatally statistically flawed as he committed every grave statistical error.

P Perry: There are 3.4 million black Americans that qualify for a mortgage but have no mortgage. We must eradicate barriers to tens of millions of black people. We have a housing shortage. Black people live on land in areas which will be uninhabitable due to climate change. Fannie Mac recognizes there is an issue based on data from our appraisals. 

Bunce: What research is Freddie Mac doing on valuation? 

P Perry: A lot. There are appraisal gaps. We have a treasure trove of data on appraisal gaps. We did research sales price verses valuation. 2015 to 2020 data showed appraised value lower than contract price for minorities. (2015 to 2020 prices increased. Makes sense past sales would be lower than current contract prices) The appraisers opinion of value more likely to fall below contract price in black and hispanic areas. ("Hispanic" is a racist term. Most prefer Latino including myself) Black and hispanics receive lower values than whites regardless of where home is located. The findings are troubling. The gap is large but we are uncertain of the root cause. The average distance of the comp from the subject is shorter in hispanic, black areas than white areas. (Because less expensive homes are generally in more dense areas. The homes are generally smaller on smaller lots. I see this appraising homes in these areas. I don't have to search as wide to find enough comps)

A Perry: Value verses price. Value is socially constructed, a social construct. Humans determine value. Price is the contract price, what it sold for, a fact.

P Perry: "A few white folk move in (to a black area) and suddenly value spikes." (People are being priced out of more expensive areas and going to less expensive areas which tend to have more people of color. It's the revitalization stage of the real estate cycle which some call "gentrification." It's just affordability economics. This causes prices to increase in less expensive areas.)

Bunce: We as lenders see many appraisals and need to understand this. 

Sherman: Value and price are different. Value is an economic concept, an opinion, subjective, not a science, not a fact. Price is fact, list price, contract price. There will be a difference in opinion of value among appraisers. Competent appraisers should reach about same conclusions.

A Perry: There is an intrinsic value of whiteness which we see when a white person stands in for black owner (in the appraisal inspection). This shows that appraiser sees higher home value if the home has a white owner. HUD, government should do tests for this effect.

Sherman: Let me explain the appraisal process and appraisers. Appraisers are asked to appraise for market value based on specific requirements. How do we improve black areas. Maybe there are other types of values that should be measured. A value that excludes the location could be applied to certain lending situations for disadvantaged neighborhoods. We (appraisers) do use value, investment value, terms you, Andre Perry, are not familiar with. If the government, legislation determines there are different types of value to measure, we'll do it. We are flexible. We appraisers are willing to participate in other value methods.

Bunce: Appraisals, appraising is not a science. If it were more science and less opinion, we can use data and science to remove bias.

A Perry: I met Sherman talking about AVMs on Capitol Hill. Software developers may also have bias besides lenders, appraisers. Credit score, education, crime matter but there is additional penalties to black areas. Black people have lower credit scores because they have less access to wealth. We were denied access to wealth. We have no (savings) so must take on debt. This leads to a lower credit score. (Credit scores are based on math. The lower the score, the less likely someone is able to pay back a loan. The less savings you have, the more likely you are to default on a loan. The credit score is to help the lender determine risk. Defaulting on a loan hurts the lender and the homeowner) My aim is to improve the community, not blame this or that group. (He has specifically blamed appraisers)

Bunce: There is no blame. We just must make all aware of the issues. Does the sales comparison approach carry forward past effects of historical redlining?

Sherman: The sales comparison approach is the most applicable to value. Buyers have choices. They compare one property to another to choose what to buy. Appraisers do the same. Recent sales transactions represent the best way to appraise property. Banning it would have negative dramatic effect on home values. It would fuel an asset bubble. Maybe one can add a value besides appraisal value for future value in revitalizing areas.

Other approaches of value. The cost approach. I'm an instructor. The cost to build a new house minus depreciation plus the value of land is the cost market value. We consider three types of depreciation, (1) physical. (2) Functional depreciation. An old style floor plan with one bedroom through another doesn't work today. (3) External depreciation, influences. Is the subject near a noxious use industrial area? The cost approach isn't the answer to your question. (Besides the fact that land value is based on location and sales market approach. It's generally determined by extraction method). The answer is markets have to change. How can we change the nature of neighborhoods. We need public and private partnerships and legislation.  If we (as real estate appraisers) don't do our jobs correctly, people will get hurt. (Lenders and homeowners could lose money in foreclosures causing negative ripple effect on overall market, real estate market of the neighborhood and negative financial effect on minority families. 2008 bubble anyone?). Over all (improper home values) put family wealth at risk. There will be more foreclosures. The appraisal must be accurate for all to prosper. (The appraisal protects the lender and homeowner from loss)

Bunce: Freddie Mac has millions of appraisals. Freddie can investigate the appraisal gaps. What are you doing? (to P Perry)

P Perry: I agree. The appraised value is an opinion. The appraiser has discretion. How does this impact minority communities? We want more consistent valuations. Maybe we'll use some AVMs. We won't just tech our way out of it. Intrinsic racism is causing valuation issues. 

Bunce: AVMs, automated valuation models. Hybrids can eliminate bias and discrimination? Thoughts?

Sherman: I echo Dr Perry. AVM is multiple regression model, algorithm analysis of sales. The software writer can be biased. We don't eliminate bias that way. Our appraiser members (of the Appraisal Institute) are the gold standard in the industry. Our members may use AVM as an additional tool. The real gold standard is a live appraiser who physically examines the property and subject market.

A Perry: We will call for the hybrid approach. If a property falls below market rate (contract price?) it should trigger another appraisal, an AVM. We must hold appraisers accountable. Appraisers must explain the lower rate. Appeals are hard to come by. 90% of appeals are denied. We need a backup when something goes wrong. If someone feels low-balled, get a white person to stand in for them. Is it individual bias or just a bad appraiser. Is it individual bias or a structural problem. It's a structural problem if you use the price comparison approach. It can be mitigated by using data. 

Bunce: This is what New American Dream funding does (company plug). Other lenders should do the same. When we have appraisals that don't look right, the value is not coming in, it's way lower than sales price, we run an AVM to have that data to compare. That helps us talk to the appraiser. That is the fair and right thing to do. (It's also could be perceived as undo influence on an appraiser which could cause the lender to lose their license. The Dodd Frank Act was to help prevent undo influence over appraisers and the value)

P Perry: We test if hybrids offer more subjective value. AVMs are part of the solution to eliminate bias in appraisals. Appraisals should be more uniform. There should also be standardize testing of AVMs. (AVMs vary widely. Even the range price of each AVM value varies widely by over 25%. AVMs include MLS GLA which is generally larger than actual GLA)

Sherman: Diversity in appraisers and appraisals. We are supporting various minority programs to increase minorities in appraisers such as the minority in women scholarships program. We are trying to improve our diversity and understanding of the community. (Whites make up 85.4% of Appraisal Institute members. Males make up 75% of members even though the US is 50% males).

A Perry: We are doing an ashoka partnership. It's a housing development challenge with $1M prize for a valuable solution.

Bunce: There is no time for an extensive Q & A. New American Dream lending has recorded the meeting which will be available to view later.  Over 500 people attended. This is an important issue we are focused on. 

Bunce's screen then flashes to a photo of the black Florida couple, woman who stated they were racially discriminated against in a media article. After that a promotional video for the company played with only black people. It appears the company may be using this issue to sell mortgages. Many have been doing the same. 

Mary Cummins: I wrote these notes to the best of my ability. I'll post the link to the one hour video Zoom meeting when it's available. 

Below is a copy of the chat.

From Tiarra Hill to Everyone:  11:03 AM

Hello Everyone!  We are excited to have your attention regarding these hot topics. My name is Tiarra Hill a native North Carolinian, mother of twin teenage boys, a Sr. Loan Consultant and a member of the New American Dream Initiative.  I have been in banking and finance for almost 20 years and my passion is helping clients with their goal of homeownership.  


Today our panel will discuss Black Homeownership and how it is impacted by Property Valuation and Appraisal Bias.  We are taking questions during the last 10 minutes of the program, but feel free to interact in the chat with myself, Elexia Bostic or LaMonica McDuffie, Loan Originators at New American.

From Pastor Letty Butler to Everyone:  11:04 AM

Hello Everyone!

From Tiarra Hill to Everyone:  11:04 AM

Andre M. Perry is a Senior Fellow with the Brookings Metropolitan Policy Program, a scholar-in-residence at American University, and a columnist for the Hechinger Report. Perry is the author of the new book “Know Your Price: Valuing Black Lives and Property in America’s Black Cities,” which is currently available wherever books are sold. A nationally known and respected commentator on race, structural inequality, and education, Perry is a regular contributor to MSNBC and has been published by The New York Times, The Nation, The Washington Post, TheRoot.com and CNN.com. Perry has also made appearances on CNN, PBS, National Public Radio, NBC, and ABC. Perry’s research focuses on race and structural inequality, education, and economic inclusion. Perry’s recent scholarship at Brookings has analyzed Black-majority cities and institutions in America, focusing on valuable assets worthy of increased investment.

From LaMonica McDuffie to Everyone:  11:04 AM

Greetings!  My name is LaMonica McDuffie.  I am a Loan Consultant, a member of the New American Dream Initiative and I consistently provide a 5-star experience for all of my homebuyers.  Over the last year I helped 72 families achieve their dream of homeownership. 


Our discussion today will cover Property Valuation and Appraisal Bias as it pertains to Black Homeownership.  We are taking questions during the last 10 minutes of the program, but feel free to interact in the chat with myself, Tiarra Hill, or Elexia Bostic.

From Me to All Panelists:  11:05 AM

Hello from Mary Cummins real estate appraiser in Los Angeles, California.

From Elexia Bostic to Everyone:  11:06 AM

Jefferson L. Sherman, MAI, AI-GRS, of Highland Heights, Ohio, is the 2021 immediate past president of the Appraisal Institute. He also will continue to serve in 2021 on the Appraisal Institute’s Executive Committee and on its policy-setting Board of Directors, in addition to serving as National Nominating Committee chair. He served as the organization’s vice president in 2018 and as president-elect in 2019.

Sherman has served nationally on the Board of Directors, Finance Committee, Nominating Committee, Education Committee, International Relations Committee and Strategic Planning Committee (2017). He has served nearly continuously on the Region V committee since 1993, including many years as its parliamentarian. He also has served in chapter roles, including twice as an Appraisal Institute chapter president in Ohio, and has worked on two successful chapter merger teams. Sherman is principal of Sherman Valuation & Review, LLC, in Willoughby Hills, Ohio. He has taught courses for the Appraisal Institute since 1992 in 10 states and in Saudi Arabia. He also has served on two course development teams and was chief reviewer for the apartment appraisal course.

From Elexia Bostic to Everyone:  11:06 AM

Sherman has been a real estate professional for 45 years, including as a broker in Colorado and then in Michigan. His practice concentrates on the eminent domain field with emphasis on litigation review. He opened his original appraisal business, Johnson and Sherman, Inc., in Willoughby, Ohio, in 1990. The firm changed to Sherman-Andrzejczyk Group, Inc. in 2000 transitioning to Sherman Valuation & Review in 2019. During his years as a Realtor, he twice served as president of the Battle Creek (Michigan) Board of Realtors and was named Realtor of the Year in 1982.

From Tiarra Hill to Everyone:  11:09 AM

Andre M. Perry is a Senior Fellow with the Brookings Metropolitan Policy Program, a scholar-in-residence at American University, and a columnist for the Hechinger Report. Perry is the author of the new book “Know Your Price: Valuing Black Lives and Property in America’s Black Cities,” which is currently available wherever books are sold. A nationally known and respected commentator on race, structural inequality, and education, Perry is a regular contributor to MSNBC and has been published by The New York Times, The Nation, The Washington Post, TheRoot.com and CNN.com. Perry has also made appearances on CNN, PBS, National Public Radio, NBC, and ABC. Perry’s research focuses on race and structural inequality, education, and economic inclusion. Perry’s recent scholarship at Brookings has analyzed Black-majority cities and institutions in America, focusing on valuable assets worthy of increased investment.

Since the COVID-19 pandemic began, Perry has documented the underlying causes for the outsized number of coronavirus-related deaths in Black communities. Perry’s Brookings research has illuminated how certain forms of social distancing historically accelerated economic and social disparities between Black people and the rest of the country. Perry also mapped racial inequities in housing, income, and health to underscore how policy discrimination makes Black Americans more vulnerable to COVID-19.

From Tiarra Hill to Everyone:  11:09 AM

A native of Pittsburgh, Pa., Perry earned his Ph.D. in education policy and leadership from the University of Maryland College Park.

From LaMonica McDuffie to Everyone:  11:12 AM

Hello Sonia! Great question we will get an answer for you!

From LaMonica McDuffie to Everyone:  11:18 AM

Pamela Perry is vice president of equitable housing in the Single-Family Client and Community Engagement division. She focuses on increasing Freddie Mac’s thought leadership and impact to eradicate disparities in homeownership and expand wealth for Black American families, while creating solutions for communities of color more broadly. She also oversees Single-Family’s strategic innovation to support the organization’s mission to break through historical barriers to realizing a more equitable housing system for Black Americans.


Prior to this role, Ms. Perry was a senior associate general counsel in Freddie Mac’s Legal division. For nine years, she partnered with colleagues across Freddie Mac, regulators and housing advocates in promoting fair lending and access to credit for minority borrowers. 


Before Freddie Mac, she advised on solutions for complex transactions with firms such as J.P. Morgan Chase & Co. and the government of District of Columbia, where she served as deputy attorney general overseeing cou

From Nora Guerra to Everyone:  11:20 AM

Dr. Andre Perry's work is published in his book: Know Your Price: Valuing Black Lives and Property in America's Black Cities. 

From LaMonica McDuffie to Everyone:  11:21 AM

The devaluation of assets in Black neighborhoods

The case of residential property https://www.brookings.edu/research/devaluation-of-assets-in-black-neighborhoods/

From Tony Panciera to Everyone:  11:22 AM

^Also, strong recommendation of Dr. Perry's Book: Know Your Price https://www.brookings.edu/book/know-your-price/

From LaMonica McDuffie to Everyone:  11:23 AM

Know Your Price: Valuing Black Lives and Property in America’s Black Cities https://www.brookings.edu/book/know-your-price/

From Caitlin Green to Everyone:  11:24 AM

^I second or third that. A 2021 favorite read of mine.

From Craig Gilbert to Everyone:  11:24 AM

For Dr. Perry: 1. What is the difference between Value and Price?; 2.  Why don't buyers pay more in minority neighborhoods if 23% under priced? 3. Can appraisers require buyers to pay higher prices in minority neighborhoods? 4. What are your thoughts on Gentrification, where minorities complain that outsiders are running up prices in their neighborhoods and they can no longer afford to buy? 5. If appraisers over-value properties, and borrowers receive loans that exceed values, thereby reducing equity, is this a good thing for creating wealth?

From Susan Allen to Everyone:  11:30 AM

Can you please post or distribute a link to the Freddie research study Pam referenced? Thank you!

From roderick smith to Everyone:  11:31 AM

Will a copy of this recording be emailed out to attendees?

From Nora Guerra to Everyone:  11:33 AM

The Freddie Mac study that Pam just referenced is not yet published since we are finalizing our research. Once it is published it will be available on our website at Freddiemac.com 

From Elexia Bostic to Everyone:  11:35 AM

1. How did you hear about this event?

From LaMonica McDuffie to Everyone:  11:36 AM

What other topics would you like to discuss pertaining to increasing Black Homeownership?

From Tiarra Hill to Everyone:  11:37 AM

Did you think the information shared today was useful?

From Astrid Taylor to Everyone:  11:39 AM

I would like to see how the credit scoring models may be biased and how mortgage lending can use alternative credit for qualification instead of relying solely on credit scores from the 3 credit bureaus.

From Patricia Benavides to Everyone:  11:40 AM

As a new  Trainee,  I am interested in concepts or traits  that  can increase the trust or relationship of homeowners, in particular,  black homeowners and appraisers.   In other words, where can a Trainee begin? 

From Craig Gilbert to Everyone:  11:41 AM

Can the inclusion of Census Tract Numbers in appraisal reports work against borrowers in minority neighborhoods?

From Elexia Bostic to Everyone:  11:41 AM

Have you had an adverse experience with an appraisal?  If so, please tell us about it.

From Rachel Meadows to Everyone:  11:42 AM

I work for Councilwoman Cherelle Parker in Philadelphia. In April, she held a hearing to examine the race gap in home appraisals and its impact on homeownership and wealth accumulation in Philadelphia. After the hearing, she has now created a local Task Force to further look at this issue. The Task Force will 1) gather data at the local level, and 2) make recommendations for the local, state, and federal levels. Are any of the panelists aware of other cities that are also looking at this issue? It would be great to connect with another city/other cities to share information/best practices.

From Patricia Benavides to Everyone:  11:48 AM

@Rachel Mead- would you be able to post  a link to read more about Councilwoman Cherelle Parker's

 initiative?

From angela holman to Everyone:  11:48 AM

Homes are currently overpriced despite the CMA's supporting these overpriced homes.  We have a bubble.  

From Craig Gilbert to Everyone:  11:48 AM

Please ask Dr. Perry to answer the questions posed to him

From Rachel Meadows to Everyone:  11:49 AM

@LaMonica - Re. this question: What other topics would you like to discuss pertaining to increasing Black Homeownership? Here are some answers: Addressing aging housing stock or housing stock that needs modernization (aka housing preservation), access to loans via private banks (Philly had to create a government program to address this issue), ensuring that heirs view the home as an asset and not a liability, tangled titles (aka estate planning), predatory lending, reverse mortgages, foreclosures, ensuring a healthy balance in neighborhoods between homeowners and renters, staving off an influx of investor-owned rental properties, assisting new homeowners with purchasing homes, and for some neighborhoods, the need for neighborhood-wide succession planning (some neighborhoods in Philly consist of primarily older homeowners who won’t be around in 10-15 years)

From Dean Zantow to Everyone:  11:49 AM

The appraisal body of knowledge addresses the social construct, as Jeff said, through the concept of Public Interest Value. Generally, the analysis of public interest value tends to be driven by social,  political, and public policy goals rather than economic principles. From the 15th Edition of the Appraisal of Real Estate. 

From Rachel Meadows to Everyone:  11:52 AM

@Charles Lowery - my email address is rachel.meadows@phila.gov

@Patricia Benavides - Here are some article’s re. Councilwoman Parker’s work:

https://whyy.org/articles/home-appraisals-drive-americas-racial-wealth-gap-95-of-phillys-appraisers-are-white/

From Tiarra Hill to Everyone:  11:52 AM

Did you think the information shared today was useful?

From Rachel Meadows to Everyone:  11:53 AM

https://whyy.org/articles/philly-council-moves-to-hold-hearings-on-race-gap-in-philadelphia-appraisals/

https://philly.metro.us/council-considers-racial-bias-in-home-appraisals/

From Me (Mary Cummins) to All Panelists:  11:56 AM (I also sent in the question ahead of time)

Question to Andre Perry: The data in your "Devaluation of Assets in Black Neighborhoods" report was derived from the median Zillow listing price per square foot and the American Community Survey ACS data. Both of those values come from the owner, seller of the property and not real estate appraisers. They're also not the sales price or "valuation" of the property.


At the June 20, 2019 House Finance Committee a Committee member asked the panel of  real estate appraisal experts and also you if they thought real estate appraisers whom you state are mainly white discriminate against black homeowners when appraising their homes. You were the only person who raised your hand stating that appraisers discriminate against black homeowners.


What evidence do you have which supports your claim that white real estate appraisers discriminated against black homeowners and devalued their homes in your report?

From Patricia Benavides to Everyone:  11:56 AM

@ Rachel Meadows-  THANK YOU  for the articles!!

From LaMonica McDuffie to Everyone:  11:57 AM

We have 75 questions posed to you all from attendees and we are trying to answer the trends but will get responses to everyone.

From Andre Perry  to Everyone:  11:57 AM

LaMonica McDuffie to Panelists and Attendees (2:57 PM)

We have 75 questions posed to you

From LaMonica McDuffie to Everyone:  11:57 AM

So if you don't see your answer immediately don't be alarmed!

From Nora Guerra to Everyone:  11:57 AM

Brookings-Ashoka Challenge: https://challenge.economicarchitectureproject.org

From Kermiath McClendon to Everyone:  11:58 AM

^DOPE!

From Archie Emerson to Everyone:  11:59 AM

Great Job Everyone

From Elexia Bostic to Everyone:  11:59 AM

Thank you all for attending.  You can watch the replay on FB at https://www.facebook.com/newamericandreamteam

From Patricia Benavides to Everyone:  11:59 AM

Thank you for the conference- very informative!

From Andre Perry  to Everyone:  11:59 AM

Thank you everyone: Stay in touch @andreperryedu

Mary Cummins of Animal Advocates is a wildlife rehabilitator licensed by the California Department of Fish and Game and the USDA. Mary Cummins is also a licensed real estate appraiser in Los Angeles, California.


Google+ Mary Cummins, Mary K. Cummins, Mary Katherine Cummins, Mary Cummins-Cobb, Mary, Cummins, Cobb, wildlife, wild, animal, rescue, wildlife rehabilitation, wildlife rehabilitator, fish, game, los angeles, california, united states, squirrel, raccoon, fox, skunk, opossum, coyote, bobcat, manual, instructor, speaker, humane, nuisance, control, pest, trap, exclude, deter, green, non-profit, nonprofit, non, profit, ill, injured, orphaned, exhibit, exhibitor, usda, united states department of agriculture, hsus, humane society, peta, ndart, humane academy, humane officer, animal legal defense fund, animal cruelty, investigation, peace officer, animal, cruelty, abuse, neglect #marycummins #animaladvocates #losangeles #california #wildlife #wildliferehabilitation #wildliferehabilitator #realestate #realestateappraiser #realestateappraisal #lawsuit

Friday, June 18, 2021

False statement by President Joe Biden on home valuation and race - by Mary Cummins

Home Valuation is not related to race, President Joe Biden


SUMMARY: Joe Biden, HUD, Marcia Fudge repeatedly cite Andre Perry's paper on race and home values. Perry's paper is not published or peer reviewed researched. It's deeply flawed in its execution and analysis. Race is not related to home valuation. Socio-economic status is related to income which is related to race which is related to the value of a home bought by a POC. Blacks, POC make less money than whites. People buy the home they can afford. The value of those homes are not being reduced by appraisers, appraisals or AVMs. 

UPDATE: 03/26/2021 Here is a very well researched and written reply to Andre Perry's misleading paper. Perry conflates race with socio-economic status. SES is income, marital status, % single mothers with children under 18...) If you adjust for SES, the differences disappear. If you compare whites with low and high SES, the gap appears. This proves it's not a race issue. It's vitally important to know the real cause of the wealth gap between black and white so a proper solution can be applied. I've been stating that we need to fix the income gap to fix the wealth gap. Helping people with lower SES pay for a down payment won't help them down the line if they don't have enough income to easily make the mortgage payments. You just set them up for failure and bigger financial losses. This research is from Edward Pinto and Tobias Peter of from American Enterprise Institute (AEI).



This research brings up more flaws in Andre Perry's paper than I stated. Most importantly Perry intentionally did not include income stating it wouldn't affect the results. When income is included the value gap shrinks by half. Perry didn't include other important SES factors such as % single mother with children under 18. Everyone knows how expensive and difficult it is to work and raise young children as a single mother of any color. Perry also didn't include lot size, condition of neighborhood, condition of home, location next to natural amenities... I would bet Perry did this intentionally in order to show the results he desired. This is why his research was not published or peer reviewed. Thankfully AEI took it upon themselves to independently review the research. 

Interesting findings from their report.

"We find that with higher incomes, Black borrowers increasingly chose neighborhoods, in which the Black share of residents is lower." "If Black and White neighborhoods are identical in every aspect except for price and their racial makeup (as Perry et al. claim), then why are Black buyers not taking advantage of lower priced homes in Black neighborhoods? It must be that Black buyers understand that White neighborhoods do have more amenities and those who can do so are willing to forego the “cheaper” homes in Black neighborhoods in order to get those amenities."

"The Black homeownership (HO) rate is much lower than the White HO rate, but the difference
gets smaller as income grows. The HO rate for White or Black married households (HH) is
much higher than for unmarried White or Black HH."

"There is a big disparity by marital status between Blacks and Whites. Unmarried Black HH
comprise 70% of Black HH, and the vast majority are below area median income." Their research has also shown more integration, increased income among blacks.

"Diagnosing the causes of the home value gap, along with a recognition of
decreasing racial and ethnic segregation and increasing Socio-Economic Status
(SES) stratification, helps in the consideration of appropriate policy solutions that
will increase financial security and shrink the SES gap."

They offer some sound solutions at the end of the report.This is the type of real scientific fact based data that Joe Biden and HUD needs to see and use. Using Perry's report harms POC and will not help them. Perry is harming black people with his dishonest paper. 

11/08/2021 Farther below in this article it's proven that Andre Perry's "paper" about the value of white and black owned homes is based on major statistical errors. Perry compared the values of a very small sample of two intentionally extreme groups which Perry himself chose. Perry also did not control for the other variables especially location which we all know is the main contributor of value. There is no way to control for location. Perry also used Zillow data. Zillow stated they had a median error rate of 6.9% today and previously it was over 14%. Within the last week it was shown that Zillow's data is totally unreliable today. Zillow used their own data to buy and sell homes for profit or at least that was the plan. They ended up selling them for less than what they bought them. This proves Zillow's data which Andre Perry relied upon is deeply flawed. That makes his paper even more meaningless and worthless.

ORIGINAL: I'm glad that on June 17, 2021 President Joe Biden made Juneteenth a Federal holiday. It's been a holiday in most states including California for years. Unfortunately during that presentation President Joe Biden made a totally false statement about home valuation and race when he stated the following (sic),

"...it belongs to an aggressive effort to combat racial discrimination in housing. Finally address the cruel fact home owned to this day by a black American family is usually appraised at a low rate for a similar home owned by a white family in a similar area."


Someone repeated a misleading statement related to the misleading Brookings report to Joe Biden. A paper was written by Andre Perry who is promoting and selling a book on the subject. It's not peer reviewed research or a legitimate paper released by a University. The "report" misstates an alleged relationship between home valuation and race. The report only showed that all people of color including Latinos, Native Americans, Alaskans ... tend to buy and own less expensive homes in less expensive areas. The home values were determined from Zillow listing price robots who didn't see the homeowners or the homes. The values were list prices which are agreed upon by the homeowners and their own real estate agent and the homeowners estimate of value of their own homes. Real estate appraisers had nothing to do with the values. Race and color were not a factor in the calculation of home values. Perry doesn't say if these are active or off market listing prices. There is error in both prices but off market list prices has a much, much larger error making them meaningless. And again Zillow even states their Zestimates should never be considered an "appraisal" and are "no substitute for an appraisal." Perry also doesn't bother to mention that anyone can edit Zillow's data. I could go in there and say a home actually has ten bedrooms and not two. 

This article shows that Perry conflates race for socio-economic status. When adjusted for SES, the gap disappears. https://www.aei.org/research-products/report/comments-on-the-pave-report/ 

UPDATE: Yesterday July 15, 2021 Andre Perry stated that "media articles" appear to indicate that real estate appraisers low ball the value of homes owned by black people. He didn't say his research proved this. He inferred that "white staging" homes for real estate inspections seemed to show this. 

The mathematical formula used to determine value is the most common asset valuation formula used worldwide for thousands of years. That formula compares one item to another similar item. It's also called matched pairs analysis. Homes of the same size, bed/bath count, condition, amenities were compared to other similar homes which recently sold in the SAME EXACT AREA. Homes in certain geographical areas are worth less than others in more desirable geographical areas with different characteristics. The mathematical calculation has absolutely nothing to do with race or color. In this instance they used Zillow listing prices per square foot. All appraisers know the "a" in "Zillow" stands for "accuracy." Zillow "zestimates" are not accurate at all. They also used ACS data which is the value the actual homeowner thinks their own home is worth. 

A home in South Los Angeles is worth less than a home of the same size, condition and features in Beverly Hills. The main difference is the value of the land and not the house. Here in California the land makes up over 70% of the total value. A vacant lot in South Los Angeles is worth less than a vacant lot of the same size in Beverly Hills. Everyone knows home value is based on three main factors, i.e. location, location, location.

There is a correlation between all people of color, new immigrants, people who don't speak English, people with less education... and level of income and net financial worth. ALL OF THESE PEOPLE tend to have less income and a resulting lower net worth. Because they have less income and less financial worth they tend to buy less expensive homes which they can afford in less expensive areas. Andre Perry committed the main fatal statistical sin confusing correlation with causation. That makes his "report" totally meaningless and useless. There are even more grave errors in his analysis which will be examined below. 

In Andre Perry's paper he used the separate inaccurate Zillow home valuation listing prices per square foot and self reported home values from the American Community Survey. The ACS is sent to a sample of 3.5 million people in the nation in the mail. A response to their written questionnaire is mandatory but most people throw it away assuming it's junk or scam mail. All of the information is self reported including when the home was built, number of bedrooms, rooms... Here's a sample form. Based on my experience most homeowners don't know all of this information off the top of their head. They generally don't know what their home is worth today. I would not trust the results of the ACS to be accurate about real estate values or home characteristics. Perry refers to the ACS results as the Census results. The ACS is not part of the Census. 

Perry compared those values to the racial makeup of the areas at large. Again, Zillow valuations are not accurate and listing prices don't equal home valuations. Homes don't always sell for listing price. Perry used price only per square foot which is never used in appraising because it's not accurate for home valuation. We weight comparable home sales based on similarities. Self reported home values are also very inaccurate. 

UPDATE: 07/30/2021 July 29, 2021 Andre Perry was on a panel talking about this issue. He stated, 

"Appraisers have the freedom to discriminate. In the price comparison approach they compare homes in area to another in the same area. If you only compare homes in a discriminated area to the same area, discrimination continues. There are multiple ways to arrive at value. We look across metropolitan areas instead of just the same neighborhood to get our values."

This proves that Perry knowingly compared different areas to each other. Perry only looked at 113/384 metropolitan areas which he chose based on his % black limit. Of course different areas would have different values. Everyone knows the main factor in value is location, location, location. Perry didn't control for location because it's impossible. If all the areas were truly similar, they would have had the same values. Perry basically admitted his research was flawed. UPDATE

Perry allegedly compared the values of alleged "similar" homes in "primarily black" areas to the same in "primarily white" areas. He claims the homes and neighborhoods had the exact same characteristics except for color of homeowner. Perry alone made that determination based on no real science. He ended up comparing 10% of all homes which he stated are in "primarily black" areas to an even smaller percentage of homes which he stated are in "primarily white" areas. The "primarily white" areas have 0-1% black people. He doesn't even bother to state the racial makeup of the 99-100%. Are they white Latinos, Asians, light Native Americans...? We don't know. Perry then took that data and extrapolated, stated it represented the entire USA. Let's look closer at the groups he compared. 

Perry stated an area was "primarily black" if 50% or more of the population identify as "black." He compared that to an area with less than 1% black residents. Perry actually stated zero black residents in the report. How many places have zero black people? I find it hard to believe they are any unless they are very tiny towns in the middle of nowhere. Perry clearly intentionally chose two very extreme comparison groups in order to create the most extreme statistics possible to fit his preconceived "results." That would be like comparing only very tall people to very short people to see if there's a difference in their lives. Of course there will be a difference. This is clearly an example of "garbage in, garbage out" i.e. GIGO statistics. Perry actually stated the areas that are "primarily black" are "more segregated." If you are looking at an area that is 50% plus black of course it's more segregated. 

Below is Table 2 from the report for comment. It shows the 10 metropolitan areas with the largest and smallest differences in the value of homes. Notice how widely the home "values" range in only the 99%+ white areas. What is causing the wide range of values in the white only area? It's not black people. The values range from $61,000 to $783,000. The same is evidence in the mainly black areas with a range $59,000 to $403,000. Perry stated he controlled for all factors except black or white skin color yet the "same homes with same amenities" are worth very different values in different areas. Could it be that there are other factors involved besides skin color? Maybe it's the location.  


Here is Table 6, the 10 metropolitan areas with the most and least devaluation of homes. The ones with the most alleged devaluation due to black skin color are depressed areas. Some neighborhoods in Detroit, Michigan? The city is auctioning off vacant homes for $1,000 just so they don't have to demolish them. I would bet that people who could afford to leave those specific neighborhoods left. Those that couldn't are still there. 

Per the chart, "Devaluation measure estimates median list price per sq foot after adjusting for home and neighborhood quality." We still don't know exactly how the home and neighborhood qualities were derived. Perry doesn't show the math. 
Perry has now added an "anti black sentiment index" from Stephens-Davidowitz. The "paper" is a New York Times op-ed opinion piece (pay wall). It's not peer reviewed research. Anyone can write an op-ed piece. The paper is based on "the percent of Google search queries that include racially charged language." The author Seth Stephens-Davidowitz then compared the search results to Obama's votes. His conclusion was anti black sentiment cost Obama 4% in votes in 2008 and 2012. Obama won. Did Obama win in spite of this or maybe he won because people wanted a black President and he was extremely well qualified? Perry is not only cherry picking his groups for comparisons but also his reference material. 

How much of the US fell into only those two very specific small categories of 50%+ black verses 0-1% white? Perry states that 10% of the US falls into the category of "primarily black." An analysis of only 10% of the country does not represent the entire country, see Perry's map below. Per the map this 10% appears to only be in the East and a little in the South. This is still only the percentage of the population living in the specific area and not the percentage of all black homeowners in that area or the entire country. Most homes in less wealthy areas which tend to have more people of color are actually owned by white investors or large public and private corporations. Perry then compared those values to areas with only 1% black people. Again, that would be a very small group for comparison. Of course it will show differences when you intentionally choose two very small and  extremely different groups for comparison. This is very misleading statistical analysis. It's as bad as any Fox News "statistics" or poll.


 

What about the white, red, yellow person who lives next door to the black person in an identical home in the "primarily black" area? What about the other <50% in the area who are not black? From Perry's report "Though most residents are Black (because he chose 51%+ black areas)(14.4 million non-Hispanic Blacks) by definition, approximately 5 million non-Black Americans live in majority Black neighborhoods." The 5 million non-Black person's home is worth exactly the same as the black person's if it's the same size and condition. The white person's home value is not "caused" by being black because they're not black. They're white or other. The home was not "devalued" or valued by black skin color of the homeowner.

If you actually read the 28 page report, Perry out of one side of his mouth admits "Majority
black neighborhoods do exhibit features associated with lower property values, including higher crime rates, longer commute times, and less access to high-scoring schools and well-rated restaurants." He then states that only explains half of the alleged devaluation of homes. Those are just the characteristics of poorer areas in general. I live in a high crime area in Los Angeles, California with poor schools. It's 80% Latino. The homes are valued less here but it's not because of black homeowners. 

Perry goes on to say there is a "significant correlation between the devaluation of homes in black neighborhoods and upward mobility of black children in metropolitan areas with majority black neighborhoods." The real correlation is any and all children living in poorer areas will find upward mobility very difficult. It has to do with more than just the value of the homes in the area. It has to do with the people being poorer. Homes in poor areas are just worth less. One should also note that most people living in poorer areas don't even own a home. They're renters in poor areas. That's the main reason it's difficult to move up the ladder. 

Here is another example of poor data used. Perry used the EPA walkability index to determine if an area had amenities such as "access to shopping, jobs and schools." This is how he compared areas with the "same amenities." The EPA index only shows the "suitability for walking as a means of travel." It doesn't show if there are lots of great local shops, cafes, great high paying jobs or great schools. It just shows if you can walk to the bus stop to take the bus to your job, school or store. Two homes with the same walk score can be worth very different amounts. Walk score does not equal value. In poor areas there are few grocery stores, retail chain stores or shopping malls. The reason is high crime, theft, higher insurance rates, higher expenses and less projected net profits which keep major chain stores away. Most people in poorer areas don't have cars. They can't just drive to the next city to go shopping or escape from hurricane Katrina. More info on the walkability analysis here

I remember the Los Angeles Rodney King riots. There were a few chain stores there like Payless Shoes. They were looted along with many other stores then burned to the ground. They didn't reopen. The area is still a grocery store desert. There are only liquor stores and a few non-chain fast food restaurants in the better pockets of the area near the freeway on ramps. I appraise in these areas. This is a huge issue in Los Angeles. 

Here is yet another example of Perry selectively using statistics. He states there is a correlation between a high number of violent crimes, black areas and reduced valuations. He also stated there is a correlation between high number of property crimes in high valuation non black areas. For that reason he only included violent crimes in his analysis of black areas. Then he didn't really include "crime" in his analysis. His "conclusion" is crime doesn't explain the devaluation of homes in primarily black areas. That's actually the opposite of what he said in another section of his report. A high violent crime area does explain a lower home valuation area. That's why all the home sites include the crime statistics. I would not live in a high crime area if I could afford to live elsewhere. 

On top of the useless statistics Perry then used the results of his limited analysis to extrapolate devaluation to 113 other metropolitan areas if they had at least one majority black area. He took very bad math from a few small extreme areas to state that many other areas he did not analyze have his same preconceived results. Andre Perry's entire paper should be dismissed because of the intentionally misleading statistics used to fit Perry's personal agenda to sell his book.

One more ridiculous comparison. Someone with less money will buy a less expensive car which they can afford. People of color tend to have less money as do some others who are not of color. Kelly Blue Book uses a computer program to calculate the value of your car. You type in make, model, year, mileage, condition and it tells you what it's worth. They will tell you the value of a Rolls Royce or a Ford Escort. They don't know the color of the person typing in the information. Is Kelly Blue Book "intentionally devaluing" cars owned by black people when they tell the owner of a 1990 Ford Escort that their car is worth less than a 2020 Rolls Royce? No. Real estate robot appraisals are the same. Actual appraisers follow the same mathematical formula as the robot appraisals. Land in Beverly Hills is the Rolls Royce of land and worth more than land in South Los Angeles. It's perceivable that all homes in less desirable areas could be worth $48,000 less than homes in more desirable areas per Perry's report.

A last thing to consider is that people who own homes in less expensive areas paid less for the homes originally compared to homes in more expensive areas. They bought a home they could afford. When they go to sell that home they will sell it for the same price as a similar home in the area which is market value. If they bought a home in South LA, it will sell for less than a home in Beverly Hills. Did someone "devalue" or "steal" the difference in price between their home and a home in Beverly Hills? No homes were "devalued" by $48,000 by robot appraisals, appraisers or anyone. 

Andre Perry has done very poor biased research. The report is therefore meaningless. Perry is guilty of using misleading statistics and data to prove his preconceived bias that black homes are devalued compared to white homes only because they are owned by black people. Perry used small extremely biased sample sizes. He organized the data to omit any findings that contradict the result he tried to prove. He manipulated the results to influence perception through misleading graphs and visuals. He used faulty correlations and causations to create false statistics. He committed every single statistical sin in the book. The Brookings Institute should retract his report. 

At the June 20, 2019 House Finance Committee meeting Andre Perry spoke about the alleged devaluation of black owned homes. There were real estate appraisal industry experts at the meeting. I watched the meeting and took notes, see above link. When the speakers were asked by a Committee member if they thought appraisers discriminate against black people in arriving at their home's value Perry was the only person who raised his hand in a room of real estate valuation experts. Perry was the only non expert in the room. 

Perry clearly does not understand real estate valuation. He is trying to use his report full of bad statistics to state that racist appraisers intentionally devalue the homes of black people by $48,000. He stated that in the Committee meeting. He stated the purpose of the report was to give "Black homeowners and policymakers a target price for redress." Oddly enough in the meeting Congresswoman Rashida Tlaib stated that the government should just add $48,000 to the value of all black people's homes. One doesn't have to be a real estate appraiser to realize how ridiculous that would be. What about the white person who has an identical home next door that's worth the same? Does he also get $48,000?

If Joe Biden or anyone wants to tackle the real issue of the correlation between people of color and income, net worth, they need to deal with those issues.The issue is most people with less income and money are people of color including many other colors and races other than black. Those issues have nothing to do with robot home appraisal analysis or home appraisers. They would need to make sure everyone makes the same amount of money regardless of any other factor. Until that happens all people with less money will buy and own less expensive homes in less expensive areas. People with no money won't buy or own any home at all. Most people in the US don't even own a home. Some don't even rent a house but maybe rent a tiny apartment or else they're homeless. Don't forget about those people.

The point of this article was to analyze the Brookings report and prove Joe Biden's statement incorrect. No one should ever rely on this misleading report. The media and others today have been stating that white real estate appraisers are intentionally appraising homes owned by black people lower than market value because all appraisers are white racists. No appraiser appraised any home in the report. The alleged valuations came from misleading computer analyzed Zillow listing prices per square foot and the ACS which uses self reported home values from the homeowner. Any low balling would therefore be caused by Zillow or the homeowner. 

These attacks on appraisers must stop. While racism certainly exists and there are racist appraisers not all appraisers are racists who devalue homes owned by black people. Most of us are hard working appraisers who always provide the best appraisal possible which complies with all the laws for everyone and anyone. 

* I'm a Democrat and voted for Joe Biden. I just disagree with Biden on this specific issue. I believe he was given an incorrect talking point. I'm also a Latino real estate appraiser. I appraise in primarily lower income areas which are mainly POC. I live in a lower income, high crime, very mixed area in South Los Angeles. 

** I went to the University of Southern California. I took statistics and a graduate class in research as an undergraduate. My research was selected by two Psychology faculty members to present at the Western Psychology Conference for Undergraduate Research at the University of Santa Clara in 1984.  The subject of my research was Classical Conditioning as a Factor in Response Bias. I used chi-square tests on my data. My Faculty Sponsor was Herm Turk. I do know a thing or two about statistics and research. 

___________________

References



Perry, Andre M. (2020). Know Your Price: Valuing Black Lives and Property in America’s Black
Cities. Washington, D.C.: Brookings Institution Press


Sweeney, Maureen (2019). Is Race Baked into Big Data?  My Letter to Housing SubCommittee.


Mary Cummins of Animal Advocates is a wildlife rehabilitator licensed by the California Department of Fish and Game and the USDA. Mary Cummins is also a licensed real estate appraiser in Los Angeles, California.


Google+ Mary Cummins, Mary K. Cummins, Mary Katherine Cummins, Mary Cummins-Cobb, Mary, Cummins, Cobb, wildlife, wild, animal, rescue, wildlife rehabilitation, wildlife rehabilitator, fish, game, los angeles, california, united states, squirrel, raccoon, fox, skunk, opossum, coyote, bobcat, manual, instructor, speaker, humane, nuisance, control, pest, trap, exclude, deter, green, non-profit, nonprofit, non, profit, ill, injured, orphaned, exhibit, exhibitor, usda, united states department of agriculture, hsus, humane society, peta, ndart, humane academy, humane officer, animal legal defense fund, animal cruelty, investigation, peace officer, animal, cruelty, abuse, neglect #marycummins #animaladvocates #losangeles #california #wildlife #wildliferehabilitation #wildliferehabilitator #realestate #realestateappraiser #realestateappraisal #lawsuit