My notes of the meeting are below.
"The ASC Fall Roundtable will closely examine issues of bias and inequities facing the appraisal industry and how to chart a path forward.
About this event
On September 22, 2021, the Appraisal Subcommittee (ASC) will convene the ASC Fall 2021 Roundtable: Building a More Equitable Appraisal System, to address historical and contemporary factors that have contributed to the inequities challenging the appraisal system today. We urge you to join us for this groundbreaking event, which will convene leaders in government, finance, real-estate, non-profits, and communities impacted by the appraisal system. The full lineup of speakers will be announced in the coming week.
The ASC Fall 2021 Roundtable will take place virtually on September 22 from 11:00 a.m. to 1:30 p.m. ET (8:00 a.m. to 10:30 a.m. PT) and will include featured speakers, audience question and answer sessions, theme-based concurrent breakouts, and closing comments outlining next steps.
Confirmed speakers include:
Secretary Marcia L. Fudge is the 18th Secretary of the U.S. Department of Housing and Urban Development. Throughout her career, Secretary Fudge has worked to help low-income families, seniors, and communities across the country.
Marc H. Morial is the President and CEO of the National Urban League. Over the last 15 years, Mr. Morial has expanded the reach of National Urban League services by empowering the League’s affiliate movement and creating a framework to create policies that serve communities of color.
Rodman Schley, MAI, SRA is National President of the Appraisal Institute, the nation’s largest professional association of real estate appraisers. Mr. Schley serves as Senior Managing Director for BBG, leading teams of managing directors and appraisers throughout the western United States.
Timothy Segerson is Chairman of the Appraisal Subcommittee and Deputy Director of the Office of Examination and Insurance with the National Credit Union Administration. Mr. Segerson is responsible for implementation of national policy relating to examination, supervision, insurance and guaranty fund risk management.
Jillian White, SRA is Head of Collateral at Better.com. A 17-year veteran of the appraisal industry, Ms. White providers critical leadership for Better, a direct lender dedicated to providing a fast, transparent digital mortgage experience backed by superior customer support.
Johnnie White is CEO and Executive Vice President at the American Society of Appraisers. Mr. White brings a distinguished career as an association professional serving in a variety of management and leadership roles, and as an adjunct faculty member at Georgetown University.
The goals of the roundtable are to: 1) engage audiences around the challenges and opportunities of building a more equitable appraisal system; 2) educate stakeholders on issues of bias and inequity in the appraisal process; and 3) collaborate with ASC’s partners on potential strategies for achieving a more equitable appraisal system. The key outcome of this interactive event will be a set of potential actions for implementing change, both near- and long-term, at local and systemic levels across the industry.
We will share the link to the livestream in the week leading up to September 22.
This event is free and open to the public, and media are welcome to attend. Please note that video and audio of this virtual event will be recorded."
Tough taking stills live. I'll take better ones when the video comes out. UPDATE: Video was supposed to have been out within a week and still no video. UPDATE: Video was just uploaded here.
The link to the meeting wasn't working so I had to email the coordinator to get the Zoom link. This caused me to miss first 15 minutes. I'll post link to video and transcript when it's up. These are my notes. What's in ( ) is my comment.
A brief summary. There was a lot of talk about "acknowledging" racism and bias in appraising. They all said we must "get to the bottom of it" and "do something about it." Everyone kept saying they aren't bashing, blaming appraisers or calling them racists. They actually have been doing that without any evidence or data to support these claims including in the meeting. They stated this is a "systemic problem" "baked into" the "location, location, location" or sales comparison approach to value. Many said we need to get rid of the sales comparison approach and use a different value method such as income or replacement methods. Those people know nothing about appraising because those approaches consider land and income which are based on location. Another main topic was the appraisal trainee program needed to become a licensed appraiser. I agree the program needs to be changed.
Jillian White, BetterMortgage: (Jillian was giving her same speech about her parents' home being appraised) "I was told by the agent I had to "erase" my parents' living and "dead relatives" from their home besides collectibles and books in order to sell the house." (ALL agents tell ALL clients to remove any and all personal photos, memorabilia, collectibles, clutter and small items. Buyers want to see themselves in the home and not the owner, whoever they are. This is not for the appraiser but the buyers. Is Jillian saying all home buyers are racists, everyone is racist? Here is one article about preparing your home for sale by removing personal items, photos, awards, taste specific art... This preparation is called staging. It has nothing to do with racism. It's a shame that Jillian is intentionally and falsely promoting racism and racist ideas. She's a real estate agent and knows what she is saying is false. I'm Latino and would never falsely tell the world that everyone is racist against Latinos and that's the reason why you should take down photos of your abuelita, primos and pics of Jesus Cristo y Dios). Below is a still from her presentation pointing at the items she was allegedly told to remove.
Jillian said her parents were okay with the appraisal value but Jillian was not so she sent in a rebuttal. The alleged rebuttal allegedly changed the price by $100,000.
Most appraisers are 55 years plus, 70% are male and 96% white. (Wrong. While most are over 50 and male they are not 96% white. The AI data showed 85%. The AI data includes ASC approved certified appraisers and appraisers at an AI event only so the results are skewed. Actual % is lower. The US population is 76% white. Most real estate agents are about equally white at 75% and people don't complain). It's not a formula for success when white people represent the industry. Because of the trainee program one must know an appraiser to become appraiser (so they are white).
UPDATE: BetterMortgage is Jillian White's boss. The CEO of BetterMortgage is Vishal Garg who is a known investment scammer in the finance industry according to this Forbes article. They posted that most appraisers are basically white racists who are biased and intentionally come in lower than contract with black people and Latinos. That is a misinterpretation of the actual research which is here. They cited the same 96% white statistic with a link to the CPS Labor stats. The labor stats are based on only in person or telephone polls! We all know telephone polls aren't reliable. Neither are in person polls. Regular people don't pick up the phone with unknown numbers or answer the door to strangers. They only asked one person in the household to answer for everyone. BetterMortgage is cherry picking misleading numbers based on bad statistics. BetterMortgage stated that Jillian said appraising is a “mix of science and artistry, and the artistry is where the unconscious bias comes in.” Appraising is a science and a math formula. If it weren't, AVMs could not exist. Everything appraisers do is based on data, facts, math and science. There is no artistry. If Jillian believes artistry is involved, she should hang up her appraisal license right now. BetterMortgage is sadly using Jillian White though she is going along with it eyes wide open for a paycheck.
B Doyle Mitchell: (He's chairman of minority bank association.) Industrial bank was established in 1934. We support black wealth via home ownership. Conscious racism. Unconscious bias. We've seen disparity in values based on who the appraiser is. The majority of our appraisers are African American. Sometimes we use others (whites) and we see the bias in our own appraisers. A $100,000 price change is unseen. Maybe $10K, $20K but not $100. (It depends on price range of homes. $100,000 is not much when you're talking multi million dollar homes. The $100,000 is only what Jillian said. We don't know the real appraisal or alleged change in value)
Many whites who aren't consciously biased are unconsciously biased. It could be the case in the industry. If you don't understand our struggle, our lack of capital...you don't understand. We proposed to regulate the minimum requirements (to pass appraisal exam) because of disparity in exam results. We lost. We need more examiners (appraisers).
Bad economies are worse for African Americans. When the economy catches a cold, blacks get pneumonia. (This happens with all poor people)
Michael Akin of Link Strategic Partners introduced Rodman Schley, President of Appraisal Institute AI.
Schley: We're trying to bring about positive change, diversity. We're working with Fannie, Freddie, Urban League. We got $3M from Chase to work on individual initiatives. We have scholarships for minority women.
Redlining, segregation, these challenges led to inequities. 44% of blacks own home, 75% of whites. They say there is no evidence of systemic bias in appraisal research. (Then he cites Andre Perry's misleading paper which has many major statistical errors). There are media stories where they feel race played a role. We get upset when we hear these stories. (He read his presentation) We appraisers only mirror what market tells us. We are trying to find where this bias stems from and what to do about it. No profession is immune from unconscious bias. We need to educate about how to interrupt this bias. The new task force should consider appeals, reconsideration of values. We must hire competent appraisers. It's the priority of AI. We're recruiting more women and people of color. (When it costs $15,000 to become a MAI I find that hard to believe). Appraisals are just one piece of the issue.
Marc Morial: I'm president of the Urban League UL. I was the Mayor of New Orleans. I was a Louisiana state Senator. The national UL is involved in the housing arena. We give 50K African Americans home counseling services or home buyer education. Buyer education lowers the foreclosure rate.We develop affordable home ownership. We're building a center with 170 affordable rental housing units and new headquarters. It will include NY's fist civil rights museum.
The government initiated appraising. They said we will insure loans if it's appraised. That requires a look back at previous valuations of homes owned by white people. That stays with us today. Looking at comparable homes nearby means it's baked into the value disproportionately. A home in a white neighborhood which is the same as one in a black neighborhood is worth less in the black neighborhood (which he feels is wrong).(Me: It's the difference in land value). The disparity in wealth is baked into the housing industry. The science of location location location, the cardinal rule, has to be challenged. A $200,000 home in a white neighborhood verses a $96,000 home in a black neighborhood. They would cost same to rebuild if demolished yet the bank is more inclined to finance the home in the white neighborhood (because loan to value ratio would be less which means less risk to the bank). This is the inherent unfairness in real estate valuation. The racial dynamic is based on location because the neighborhood maybe used to be segregated. It's steering which still occurs today.
When I went to sell my home in New Jersey I was told to remove my personal photos and African art. (Again, all agents tell ALL their clients to remove personal photos, items just so the home will sell for more and faster)
This devaluation of black homes impacts everyone. It devalues the overall value of all homes. It reduces all property taxes. The lost wealth is in limbo in a zombie world where real valuations would show greater wealth in the community. OUR research found black homes lost $48,000 on average or $156 billion cumulative losses (That would be Andre Perry's false, misleading and statistically flawed paper). Cy Richardson is our expert. This is unfair, black verses white home ownership. (The differences in black and white home ownership has to do with the fact that black people, POC make less money and have less money than whites. Women also make and have less). It's better to own than rent. Home ownership is foundational to the American Dream.
Timothy Segersen: National Credit Union. ASC initiatives are a review of appraiser criteria and USPAP. Do they promote fairness, diversity? We're doing a survey of appraisal industry and a series of roundtables. We need a better understanding of the challenges. We need to create dialogue for a path forward. Appraisals are just one part of a larger ecosystem.
Q & A
Q: Why aren't there real estate appraisers and the appraisal industry on the new Biden task force?
A: There will be. They won't be left out. (Me: The task force will be over in a few months. There isn't any time to add appraisers now. Appraisers have offered to be on the task force and were denied)
Jillian: The Freddie mac report data is recent research. It's five years of data. The study found after you adjust for everything, the borrower, the chance of not hitting the contract price is higher for blacks, black areas, after you adjust for everything (Wrong. They didn't adjust for property value. You're more likely to miss contract price in lower priced areas. Research has shown blacks, POC have less money, buy homes in less expensive areas). It was the most robust report.
Schley: We want them to focus on appraiser data and not AVM data. We want to know where the problems are so they can be part of solutions. (Agreed. Andre Perry's misleading statistically flawed paper was based on AVM data and not appraisers).
Morial: Saying the appraisal is biased doesn't mean the appraiser is cloaked in racial discrimination. It's just the system of how we appraise property which uses three comps in same neighborhood. It's baked into the legacy of segregation. Two areas, black area is undervalued because no capital is coming in. Why is one location more valuable than another? Because of redlining. Commercial property uses income approach. Unique properties don't use comparative method. We might want to use replacement value instead. (You'd still need land value which is based on location). We could think of different methods which have less opportunity for "bias." Is there a better way? Use a different method. (The income approach is still based on location). We need to look at the system. We aren't excoriating the industry. The method is baked in practices from 80 years ago. It's methods, systems and not appraisers. Maybe the system as designed, has bias built into it. (Jillian nods)
There are 300 people here today.
Mitchell: We hit a nerve here, clearly. Realtors, banks could have own bias but we're here to discuss appraisals which has impact on value of property and deals. The appraisal is supposed to be objective value of what the home is worth. I know lenders and appraisers do have conversations. I work at a bank. I know relationships affect those conversations. (Is he saying he influences appraisers at his bank?)
Jillian: How do we address the gate keeping challenge? We must ask the appraiser board to revisit how unintended consequence enters the supervisory model. The length of time it takes for a trainee. It's expensive. It slows you down. You're training your competition. It's a barrier for POC (everyone, actually. White people complain to me about it). We must move away from the model.
Schley: How do we bring more people into the pipeline. These discussions help. Minority and women's scholarships at AI. They go unused.
James Park: ASC. Trainee program is a barrier to look at doing away with it. ASC is concerned about the lack of diversity and lack of new entrants. We're working on a census of appraisal industry to understand demographics.
We will take further questions under advisement.
Akin: POC can't borrow to fix their homes.
Schley: There is no real good solution for the systemic problems right now. The cost approach? It includes the valuation of the land and depreciation. The income approach is not applicable as much. We appraisers reflect the market. We don't make the market. If I told you, you can't use comp across street because of system racism, if I go outside the market, how will I reflect that market? It's not just the appraiser. It's the entire system.
(Second part of event is breakout meetings with just a few people and Q & A. One speaker didn't realize he was live and said these people (appraisers) are "feisty." The moderator told him he was live and he stopped. The speakers could see the questions being asked.)
Group 1. Michael Akin, Mark Abbott, Cy Richardson.
Cy Richardson: It's a systems question. Do we move away from the measurable and discernible. I worked at the national Urban League the oldest African American organization to help African Americans. We are at the bottom of Mt Everest at this challenge. I'm interested in wealth building of people of color. I worked in government as an urban planner. Home ownership is success, wealth... Maybe loans should be based on income only. (They are) Don't personalize the issue (appraisers). It's institutional issues.
VA program, Tidewater process use alternative non traditional indicators of credit. If you pay rent you build credit. If someone sends monthly remittance back home, build credit.
Akin: You were in urban planning. You led us to where we are today (joking).
Cy: Pale, male and stale. That's what appraisers are. (The general consensus is that "pale, male and stale" is racism, sexism and ageism wrapped in a pithy phrase. Cy Richardson has said this previously. He recently stated that CFP's are "pale, male, and stale." Why is it okay for him to make this racist, sexist, ageist statement? Isn't he against racism, sexism and ageism or only when it's directed against himself?)
Akin: We (two older white guys on panel) won't take offense to pale and male but we take offense to stale (uncomfortable joking).
Abbott: There should be feedback system for appraisers.
Akin: Introduces Cate Agnew, head valuation expert at Natixis, NY, counselors of real estate.
Agnew: I've spent 25 years in the appraisal industry as appraiser. Now I do review appraisals for lenders. Profession takes a lot of heat. I know appraisers are feeling targeted. We need to revamp the mentor program. Two years of apprenticeship turns some people out of college off.
Q: ROV process. With loan denial based on a credit report you get copy of the report with explanation but you don't with denial of loan based on appraisal.
A: Lender shouldn't just say original lending report stands. Lazy response. We don't want flood of unsupported complaints (to hotlines, government). Statistical modeling may be useful. (Actually the appraiser is instructed to answer the ROV in the report and resubmit it for the borrower to view)
Abbott: Appraisal not owned by borrower or owner of property.
Agnew: Copy of which is provided to borrower. Maybe too late by that time to file a complaint with the government. Borrower should be the co client. Should get time to reply to the report. (Borrowers get the report within a day of submitting. They send in ROV within 1-2 days. Appraiser has 1-2 days to respond. It's not weeks).
Agnew: What should appraisers do now. Don't pull comps before the inspection.
Abbott: PAREA. We should adopt other program for trainees.
Johnnie White: (75 people in the room.) CEO of American Society of Appraisers. Adjunct faculty member at Georgetown University. ASA. We have been focusing on diversity at ASA. Changed board documents about diversity, discrimination. We focus on education of unconscious bias.
Q: What do appraisers do now while wait for changes in the profession?
A: Appraiser is just one component in process. Must look at all. Must be open to change.
Q: Why is it the appraiser's issue? Real estate agents also use market data to price home.
A: Should we be asking appraisers questions now? If you feel something is wrong, go with that gut feeling. Be open to rebuttals.
Abbott: Policy makers need to listen to appraisers.
Akin: Criteria for licensing should be federal and over rule states who have right to make them more strict.
Abbott: Agree but Congress cares about states rights.
Introduces Jillian White as head of collateral at BetterMortgage.
Jillian: I've been an appraiser for 18 years. I've been working at a lender for five years. I speak because there are so few of us (POC). Need to change how new appraisers are made.
Akin: How appraisers are blamed for everything but can't solve anything.
Q: Appraisers taught not to consider factors that contribute to bias. Now we should recognize and address them when we were told not to even consider them per law?
Jillian: Difference between consideration and acknowledging. The new data based on appraisers and race. The cause is unknown now. (Freddie Mac data)
Q: "The AQB has approved the PAREA process which eliminates the need for folks to find a mentor. This program has the ability to make a monumental shift in the number of minority appraisers. However, individual states can opt to not approve the PAREA process which inhibits the ability for folks to enter the profession. We need help at the federal level to require states to accept the PAREA process in order to make are profession look more like the social fabric of America."
Akin: Can borrowers appeal an appraisal in your company?
Jillian: At Better we set up new process for claims of racial bias. People are naturally upset when appraisal doesn't meet contract. People are naturally upset about discrimination. At Better we are tracking this. We look at the appraisal report. Values have been changing.
Q: Trainees can't do inspections by themselves.
Jillian: BetterMortgage sells all their loans. We can't sell loans with trainee inspections. It's not up to us.
Q: Only 12 states allow PIREA.
Abbott: Is it bias or lack of competence?
Jillian: Can't answer. Hopefully Freddie Mac can answer with their data.
Q: Should we remove location, location, location as a factor in appraisals?
Jillian: Location is the crux of sales comparison approach. If we start tinkering with that it could unravel everything. We would be further into level of just an opinion. If select comps from all over, the ability to standardize, for fair treatment, becomes more difficult. I don't see that as a solution to move away from location.
Back to main meeting.
White: We have a system that's not the best. It needs changes. It won't happen tomorrow.
Akin: Wrapping up. Was this an appraiser bashing session? Now we're all in this together.
James Park: Most missed first 15 minutes. Meeting is recorded. Thanks, everyone.
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.
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