Mary Cummins, Real Estate Appraiser, Real Estate Appraisal, Los Angeles, California, Mary Cummins.

Mary Cummins is a real estate appraiser in Los Angeles, California with 38+ years of experience. Cummins provides real estate appraisals for banks, lenders, mortgage brokers, Appraisal Management Companies (AMCs), lawyers, Courts, factors and private parties for lending, lawsuits, probate, estate planning, divorce and all types of litigation. Cummins provides 1004, 1073, 1025 and other form reports, narrative reports and historical appraisals besides real estate research and appraisal advice.

Showing posts with label asc. Show all posts

Wednesday, February 8, 2023

Mary Cummins Comment to ASC Bias Committee February 8, 2023, Real Estate Appraiser

Mary Cummins, ASC, appraisal subcommittee, appraisal bias hearing, @asc.gov, real estate appraiser,real estate appraisal, los angeles, california, hud, marcia fudge, appraisal institute, aei, american enterprise institute, bias, discrimination, junia howell, paul austin, tenisha tate austin, craig steinley, Michael Fratantoni, Mortgage Bankers Association

02/26/2024 I never got a reply about my comment. It is not public anywhere except here. I doubt anyone read my comment letter. They definitely didn't respond to any issue. If you send in a comment, post it publicly on your own. Otherwise it just ends up in a black hole. They tell you to send comments just to make it appear they are listening to you. They are not listening to appraisers. They are only listening to what fits their agenda which is the promotion of the false narrative of the old male male racist appraiser. Research by AEI has shown there is no racism in appraisals, see below.

ORIGINAL: Below is the comment letter I sent to the Appraisal Subcommittee in regard to the January 24, 2023 Appraisal Bias Hearing. It was confirmed as received. "Appraisal Bias Hearing via appsubcomm.onmicrosoft.com 2:07 PM (1 hour ago) We are in receipt of your message. Thank you for contacting the Appraisal Subcommittee." While they probably won't read it, it's now part of the Federal record for ASC and HUD.

Mary Cummins

February 7, 2023

Appraisal Subcommittee

Appraisal Bias Hearing Comment Letter

AppraisalBiasHearing@asc.gov

I watched the January 24, 2023 ASC Appraisal Bias hearing. Comments were requested after the hearing. This letter is my comment.

I've been a real estate appraiser in Los Angeles, California for 40 years. I've been a licensed California Certified Residential Appraiser since licenses were first offered in 1993/1994. I'm a Latino woman who speaks English and Spanish. I appraise property in the diverse county of Los Angeles and state of California.

There is no denying that racism exists in our country. We must do all we can to stop racism, sexism, ageism and all the other isms. As an appraiser I support fair, unbiased appraisal practices and valuations. I support using the scientific method and facts in order to identify the real problem in order to solve it.

I witnessed a lot of misinformation and disinformation during the hearing. Marcia Fudge the head of HUD and some of the specifically chosen speakers made racist and other statements which are not supported by facts and evidence. While there is an income, wealth and home value gap among whites, blacks and Latinos it's not caused by real estate appraisers. It's caused by the income gap. That is the real problem which must be solved. Blaming appraisers for the income gap will never solve the real underlying problem.

Government research has shown that there is an income gap between whites, blacks and Latinos ( AEI Housing Center Response to Perry and Rothwell, 2021, https://www.aei.org/research-products/report/aei-housing-center-response-to-perry-and-rothwell-2021/ ). Whites make and have more money than blacks and Latinos. Men make more than women. Married couples make more than singles. The income gap is the cause of the wealth gap including the generational wealth gap. It's the cause of the difference in value among white and black, Latino owned homes.

Research has shown that people who make more money have more money and buy more expensive homes (see link above). People buy homes they can afford in areas they can afford. People who make more money also buy more expensive cars. The difference in value of the cars is also not caused by real estate appraisers.

If the race and color of the homeowners were the cause of the differences in home valuations, why do identical white owned homes in the same areas of black, Latino owned homes have the same value as black, Latino owned homes? The value has nothing to do with race or skin color but location. Everyone knows the three main indicators of value are LOCATION, LOCATION, LOCATION. A home in a small town in Ohio with few amenities is generally worth less than a home of the same size in prime Beverly Hills, California. The value is mainly in the dirt.

Fudge and some of the others spent their time attacking and blaming "old white male" real estate appraisers for the home value gap. Appraisers report market value based on the sound economic theory of matched pairs analysis. This same theory has been used since the beginning of time to value all assets. This is set by the concepts of the free market and willing and able buyers and sellers. Fudge's promotion of the false narrative of the "racist appraiser" will never solve the real problem which is the income gap.

I will now reply to the individual instances of misinformation by the speakers in order starting with Marcia Fudge.

I. Marcia Fudge, HUD

Marcia Fudge is one of the heads of the PAVE Task Force. American Enterprise Institute (AEI) provided research, data and information to the Task Force ( AEI Comments on PAVE, March 2022 https://www.aei.org/research-products/report/comments-on-the-pave-report/ ) which proved the real cause of the home value gap is the income gap. Fudge knows this yet instead irresponsibly promotes the false narrative of the "racist appraiser" as the cause of the home value gap. Fudge promotes Andre Perry's false, misleading and debunked "paper" instead of independent verifiable research and facts. Perry's paper was based on robot valuations and not appraisers.

While Fudge states she hates and fights racism Fudge's multiple comments against white people reflect her own racism. It appears that Fudge prefers to falsely state that the problem is (white) real estate appraisers because her department HUD oversees those issues. HUD has received extra funding for this issue even though the real cause of the problem is not within control of her department. Government funding should be provided to the Departments that can actually solve the income gap problem. This is why we must first determine and state the problem which is the income gap.

Fudge stated that property tax paying for police, fire and schools was unconstitutional. It's inconceivable that the head of a major US government department would make this statement which is a violation of her oath. When Fudge became the head of HUD she took an oath March 2021 stating "I will support and defend the Constitution of the United States (snip), that I will bear true faith and allegiance to the same; I will well and faithfully discharge the duties of the office on which I am about to enter. So help me God."

Fudge inferred that she wanted property tax assessment values to rise so people would pay more property tax so they could get more police, fire protection and money for local schools. She doesn't realize that most older retired disabled people can't afford to pay more taxes and keep their homes. They'd be forced to sell with higher taxes. Appraisers don't even make property value assessments. Those are made by Tax Assessors.

Fudge stated that black people remove personal photos, items to increase home value. That is false. All real estate agents tell all home owners of every color to remove personal articles such as photos, collectibles from their home. It shows the home bigger and better. Buyers don't want to see any other person reflected in the home. They want to envision themselves in a blank slate of a home. It's not about race.

Fudge stated she started the appraisal appeal process for racial bias. Appraisal appeal, Reconsideration of Value (ROV) have ALWAYS been available to borrowers of all types. They can appeal based on any reason. A difference in appraised value and contract price is not about bias. It happens more in black, Latino areas based on the home values and not the race. Research by AEI based on government loan documents proved there is no effect of race on home value ( AEI, How Common is Appraiser Racial Bias https://www.aei.org/how-common-is-appraiser-racial-bias/ ). AEI presented this to the government in the meeting about the PAVE task force yet Fudge keeps denying these facts.

Fudge brought up her home value previously. She said her older home is worth less (than a white person's home up the street) BECAUSE SHE IS BLACK. I included a valuation of her home and of the NEW, LUXURY homes up, across the street from her in a past article. It's a private development of new luxury homes tucked away off the main street. I have no idea if the home owners are all white. I doubt Fudge does either. 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 highway... Not all homes of the same size in the same county are worth the same. An old run down home in South Los Angeles is worth less than a new one of the same size in Beverly Hills. If Fudge doesn't know this basic appraisal theory, she should resign because she's clearly unqualified to run the Department of Housing and Urban Development.

II. Dr. Junia Howell

Howell prefaced her research by basically stating without any proof that appraisers are racist and appraise homes in black, Latino areas for less than areas with more white owned homes. Howell promotes the false narrative of the racist appraiser. Howell states she did research on property values in white, black and Latino areas in Texas. Howell supports this with a chart showing the difference in home values of predominantly white vs black, Latino owned homes. We're back to the income gap. Blacks, Latinos make less money than whites. For this reason they buy less expensive homes in less expensive areas. I can only assume they promote this falsity for their personal agenda of wanting more funding to pay them for more research.

Howell doesn't understand basic real estate cycles, i.e. Growth, Stability, Decline, Revitalization. Howell stated areas which were redlined but are now mainly white owned increased in value. Areas which were not redlined but are now mainly black, Latino have decreased in value. Howell states this proves it's based on race when it actually proves it's based on real estate cycles and income. When values go up in an area, people with more money buy and own those homes. When values go down, blacks, Latinos are more likely to buy and own the homes because they make less money. When people get pushed out of more expensive areas, they buy homes in lower priced surrounding areas. Those lower priced areas are generally more black, Latino. Some call this "gentrification" but it's just a real estate cycle called "revitalization." It's all because of the income, wealth gap.

Howell misstates "redlining" as a "map based on race of inhabitants." There were many, many factors involved in the original Federal Housing Administration (FHA) lending policies. They were based on income on inhabitants, age of buildings, condition of buildings, beds/baths, location... to determine loan risks. We still use all of those factors today EXCEPT race. It's racist and against the law to use race, religions or any other similar factor.

Howell stated that whites in the US government used these risk maps to intentionally value white owned property higher than black, POC owned property. Howell is so uneducated in this matter that she doesn't even realize that back in the 1930's most areas which were mainly inhabited by POC were actually owned by whites. The risk maps prevented white property owners from receiving lower cost Federal guaranteed loans. Howell stated "White, affluent areas were appraised as most valuable." The key here is "affluent areas." It's the income wealth gap. Correlation does not equal causation.

There are poor white areas in the US. How does Howell explain the difference in property values between wealthy and less wealthy white owned properties? She doesn't. It's not the color of their skin but the income gap. Howell made many more false and uneducated statements before stating that more research should be done. Howell wants more money to do more uneducated flawed research to promote the false narrative of the "racist appraiser."

III. Paul Austin and Tenisha Tate-Austin

I have covered this case in great detail because I'm an appraiser in California where the Tate's home is located. While the Austins may feel the difference in two home appraisals was due to racial discrimination the facts show it was not. Based on my research and experience the first appraiser used the best local comparables in Marin City and came in at market value. The second higher appraisal used dissimilar comparables in a very different more affluent area in Mill Valley much farther away from the subject. That is why it came in over market value. Marin City was built on swamp land as a Federal low income poor quality housing project built by the lowest bidder. The Tate's home was built cheaply using telephone poles on very steep previously unbuildable land. Mill Valley is an upscale community with high quality larger homes and some of the best schools and amenities in the state.

The Tates stated in their testimony and lawsuit that Marin City is basically populated by African Americans while Mill Valley is white. The Tates wanted the appraiser to only use high valued comps from Mill Valley and not lower valued comps from Marin City right next to their home. That would violate Federal appraising regulations besides being bank fraud.

The Tates believe their whitewashing of their home increased the second appraisal value. It didn't. What increased the value was another appraiser with lower ethics who was most likely pressured by maybe the AMC, Lender to come in higher. The second appraiser is the reason why the first appraiser was falsely sued for coming in "low." The second appraiser should be sued for bank fraud, appraisal violations and lose their license.

IV. Michael Fratantoni, Mortgage Bankers Association

Frantantoni basically promoted the MBA. Frantantoni suggested Automated Valuation Methods (AVMs) could reduce bias in appraisals. AVMs don't reduce but increase bias. AVMs are robots that don't actually see or inspect the home. They base their value on recently sold allegedly similar homes based on home/lot size, bed/bath count and age. They don't know if the home actually exists, its condition, upgrades, view, lot type, specific location in a neighborhood, actual size, true bed/bath count, permitted/unpermitted additions... AVMs value average homes in poor condition over market value and improved homes with views under market value. Marcia Fudge stated she also supports AVMs. Zillow's AVM actually produced the false and misleading data used in Andre Perry's "paper."

V. Craig Steinley, President, the Appraisal Institute, AI

The AI is a non-government non-profit organization. It costs about $15,000 to become an MAI AI designated appraiser. For this reason AI mainly represents wealthy older white male appraisers. It does not represent the average appraiser or most appraisers in the US.

AI wants to maintain its working relationship with the government. For that reason they support many though not all falsehoods stated by Fudge, HUD and other some government agencies. In their letter they promote their own actions as supporting the government.

That said AI makes some important points about AVMs and the Sales Comparison Approach.

AVMs are not reliable. "One thing to be noted is that a good portion of the research that has been conducted on valuation bias has evaluated automated valuation model data – not appraisal data, including the contrasting research from the Brookings Institution and the American Enterprise Institute. We cannot overlook the Zillow CEO’s statement in the 4th quarter of 2021 concerning the “difficulty of accurately estimating market value” as a concern for AVM reliability."

Sales Comparison Approach is reliable. Some have called for the "elimination of the sales comparison approach in appraisal. The BRSPT suggests those recommendations be ignored, and we will go on record as being outright opposed to such efforts. The sales comparison approach is grounded in economic theory, and it is universally accepted throughout the world." Some in government have suggested getting rid of the sales comparison approach which would destroy our economy. No bank would give a loan and no investor would buy a loan that is not based on an appraisal using the sales comparison approach.

In conclusion the cause of the difference in home valuations between whites and blacks, Latinos is the direct result of the income gap. The government needs to recognize and state the real problem so it can be solved. Blaming real estate appraisers will never solve the income gap or the home value gap. Blaming appraisers for the income gap is as ridiculous as blaming appraisers for gun violence and gas prices.

Please, rely on qualified independent scientific research and facts. Promoting the false narrative and attacking appraisers instead of trying to solve the real issue hurts everyone. Throwing money at HUD won't fix the income gap. Please, fix the income gap and all its causes so we all may experience the American Dream of owning a valuable home.

Mary Cummins

California Certified Residential Appraiser

License # AR010207

Los Angeles, California

http://www.MaryCummins.com

https://www.facebook.com/CumminsRealEstateServices

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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Mary Cummins

Mary Cummins of Cummins Real Estate Services has been in real estate since 1983, over 35 years. She is licensed by the Bureau of Real Estate Appraisers. Mary Cummins was an agent and broker licensed with the California Department of Real Estate selling residential income, commercial buildings, raw land and homes for Merrill Lynch Realty in Beverly Hills and Westside Properties in Los Angeles before concentrating on appraisals. Mary Cummins currently provides real estate appraisals, expert witness testimony, historical research, legal real estate research for mortgage brokers, banks, lawyers, factors, insurance companies, financial consultants and private individuals. Mary Cummins was born and raised in Southern California. Cummins attended Beverly Hills Good Shepherd Catholic School and Beverly Hills High School. Besides being on the Dean's list, Mary Cummins was a top ten national swimmer and competed on the men's water polo team. Mary Cummins began college at the age of 15 attending the University of Southern California on scholarship, majoring in Psychology/Sociology. http://www.animaladvocates.us http://www.facebook.com/AnimalAdvocatesUSA

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

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

Monday, March 28, 2022

Significance of Maxine Waters' Bill Fair Appraisal Act 2022 by Mary Cummins Real Estate Appraiser

Maxine Water's bill is about more than discrimination. It's also about the complaint process and changing the appraisal regulatory system. The Bill would remove states as the investigatory authority and turns it over to the federal government. If a complaint is filed, the federal government can ask for 24 months of all the appraiser's appraisals. Even HUD complaints only ask for 12 months. This is clearly huge pressure to meet contract price for the borrower even though we appraisers work for the lender.

ASC stated that TAF isn't accountable to the public. All proposed changes to Standards and Qualifications are public and open for comment. TAF answers questions from appraisers and others for clarification. They are transparent and available.

Based on the Bill ASC will be given new powers and responsibilities when they have a limited track record. For the past six years ASC was supposed to make a national list of all appraisers giving them a unique number. They have received millions of dollars to help accomplish this task yet have never done it. Some appraisers have licenses in more than one state so you can't just add up all of the state licensees. AMCs pay a fee to ASC for each appraiser on their roster. Some appraisers are on more than one roster. ASC has received millions yet has not compiled the list. It makes no sense to give them even more power and responsibility.

It's important to know how many appraisers there are because of the current arguments stating there are not enough appraisers. Most feel the shortage of appraisers is actually just a shortage of appraisers who are licensed and willing to do appraisals for lending purposes. Many don't do lender work anymore because of all the new legislation and layers of extra work.

ASC has also failed to track the national complaint hotline. Now Waters wants the ASC to be in charge of investigating 24 months of appraisals in complaints. If ASC can't do the former, they clearly can't do the later. The Dodd Frank Act put ASC in charge of developing AVM standards yet ASC has not done this within the last 12 years. There is no reason to give ASC more responsibilities when they can't even handle their current responsibilities.

Jim Park of ASC stated in congressional testimony last Thursday in front of the US Senate that Appraisers had “…driven up service times and appraisal fees to unacceptable levels….” top of page 3 https://www.banking.senate.gov/imo/media/doc/Park%20Testimony%203-24-22.pdf

This is false. As an appraiser I received $300 for an appraisal in 1984. 1990 it was $350. It's still just about the same amount over 30 years later. Because of the Dodd Frank Act AMCs were mandated to be the middle man between lenders and appraisers. They raised the fees and now take a huge chunk. The AMC receives about $650-$1,800 and pays the appraiser about $350. The AMCs charge whatever they like then make appraisers bid for the assignment. They take the lowest bid and pocket the rest as profit. Dodd Frank mandated AMCs is the reason why fees are higher today. The fees paid to the appraiser have not kept up with inflation even though the amount of work required today is at least twice as much.

Mr. Park made a discriminatory, ageist statement when stating old appraisers are hard to teach new information. I'm 55 and I always instantly embrace all new technology. I used one of the first laser measuring devices in the 1980's. I use LiDAR today. I ditched the typewriter and paper forms for computer software before any other appraiser I know. I had one of the first real estate websites on the internet in 1997. I had one of the first digital cameras. I use mobile appraisal software. I've tested the new 3D home interior scanners. I made my own computer program to pull MLS data in 1004 format in the '90's. Appraisers love new technology because it can make our job faster and better. We teach ourselves new tricks.

HUD themselves are responsible for a shortage in the number of appraisers who can complete mortgage lending appraisals. After passage of the Housing and Economic Recovery Act of 2008 (HERA), the Dept of Housing and Urban Development no longer permitted the “Licensed” category of real estate appraisers to conduct appraisals, instead only the “Certified” category of real estate appraisers could complete appraisals for the FHA Insurance program. Before HERA passed, there were 30,286 Licensed Appraisers. Today, there are only 7,321 Licensed Appraisers, because the majority of lenders moved away from hiring Licensed Appraisers after HERA was passed.

HUD has never released documentation showing the number of alleged discrimination complaints against appraisers. Why is the cause of the lack of transparency? They claim to record every complaint they receive. They even release annual reports. Those annual reports have not noted instances of discriminatory appraisals. Why are they not disclosing discrimination complaints? It is likely because, up until last year, the number of complaints has been too few and likely dismissed. It is reported they have roughly 100 allegations currently, none of which have been resolved in the mandatory 100 days. Why are they holding on to the cases?

I was forced to send in multiple FOIA requests to get the results of investigations which I'm following here on my blog, i.e Austin v Miller in Marin, California; Carlette Duffy in Indianapolis, Indiana, Sanders Horton in Jacksonville, Florida and Cora Robinson in Oakland, California. This is the standard reply to my requests. They state I must get the complainant to sign a notarized statement with their name, date of birth, nation of origin, home address ... stating they agree to the release of the documents and information. Of course they will say no. I've been making FOIA requests for over 25 years and have never had a reply like this ever. Some appraisers and I are now contemplating fundraising to hire an attorney to sue HUD to get the results of the legitimate FOIA requests. In the meantime I appealed the FOIA denials. HUD also is the first agency to ever force me to make multiple initial FOIA requests for the same information. This is unprecedented lack of transparency and a violation of the FOIA.

The ASC study was actually made by the advocacy group the National Fair Housing Alliance NFHA. They are a private non-profit organization. They were given $250,000 to study the Standards and Qualifications for appraisers. Instead their report is on the appraisal regulatory structure and TAF's authority. The ASC is responsible for monitoring the states and their enforcement procedures. TAF sets the standards and qualifications. Blaming TAF for ASC's failure of enforcement mechanisms makes absolutely no sense.

No member of the ASB or the AQB was contacted or interviewed for the new Bill. There are errors in the report that Jim Park (ASC) would know are obviously incorrect, yet he let the study be published to support his narrative. The NFHA Advocates who authored the study indicated they had insufficient time to complete extensive research for this study, yet were able to draw conclusions, nonetheless.

All major legislation passed that affects appraisers has had a significant negative consequence to appraisers and the appraiser’s business. The appraiser community has not had a voice at the table to provide expertise about the valuation profession. I contacted every member of the PAVE Task Force asking to be involved, to attend meetings, to receive documents and communications as a Latino woman appraiser with over 35 year of experience. I didn't even get a reply. I was blocked from even being informed about what was happening. I'm now forced to send in another FOIA request just to get public information which should have been released.

While Jim Park was an appraiser he's not actively appraising today. He has no idea what appraisers deal with on a daily basis. Prior to the Dodd Frank legislation, there were appraisers willing to function as supervisors and the trainee/supervisor model was functioning, After Dodd Frank, most appraisers had to shut down their small businesses and become individual single-owner shops. Lenders, after Dodd Frank, largely stopped allowing trainee appraisers to inspect the property without the supervisor present, yet lenders will gladly hire third-party non-appraisers to collect data on the property. The lenders do not allow the trainee model to add value to an appraisers’ work. You cannot blame the appraisers for a system that does not allow a new generation of appraisers to be trained.

Mary Cummins

Wednesday, January 19, 2022

Identifying Bias and Barriers, Promoting Equity: An Analysis of the USPAP Standards and Appraiser Qualifications Criteria.

Identifying Bias and Barriers, Promoting Equity: An Analysis of the USPAP Standards and Appraiser Qualifications Criteria. Jim Park, James Park, ASC, Mary Cummins, real estate appraiser, real estate appraisal, los angeles, california, license, certified, residential, pave task force, trainee, requirements

UPDATE: The Fair Housing Alliance just stated they prepared the report with their partners. "The federally-funded report produced by the National Fair Housing Alliance and its partners raises serious concerns about the standards and criteria related to the appraisal of residential real estate, which often represents a family’s largest asset." IWoodruff@nationalfairhousing.org

How does one go about getting a federal government grant to write an "independent study" which uses false and misleading data to promote their organization's agenda? Must be nice.

https://nationalfairhousing.org/groundbreaking-report-identifies-bias-and-systemic-barriers-in-real-estate-appraisals

ORIGINAL: Jim Park of the Appraisal Subcommittee (ASC) just released a press release which states,"Findings Released in Independent Study on Real Estate Appraisal Standards and Appraiser Qualifications Funded Through a Cooperative Agreement Between the Appraisal Subcommittee (ASC) and the Council on Licensure, Enforcement and Regulation (CLEAR) report titled "Identifying Bias and Barriers, Promoting Equity: An Analysis of the USPAP Standards and Appraiser Qualifications Criteria."

It's an 84 page pdf. I assume this will be part of the PAVE Task Force report due February 2022? Send comments to jim@asc.gov

https://www.asc.gov/Documents/OtherCorrespondence/2022-01-14%20NFHA%20et%20al_Analysis.pdf

The National Fair Housing Association, Fair Housing Advocates of Northern California, Fair Housing Center of Central Indiana, Andre Perry contributed to this report. They promoted the false narrative of alleged appraisal bias in the case of Paul Austin, Tenisha Tate in Marin, California besides a few others. Andre Perry has been peddling his non-peer reviewed, non-published false research to sell his books. I'm glad that Christensen Law and Peter Christensen also contributed to this report. Christensen understands real estate appraisal, regulations and the law. It doesn't look like he was allowed to contribute much at all.

I won't go over the entire report in great detail though I will note a few things.

Pg 5, paragraph 2, "Until recently, however, the appraisal industry seems to have escaped the type of regulation and scrutiny faced by other participants in the mortgage market. Our analysis finds that the appraisal industry has operated in a relatively closed, self-regulated framework."

Real estate appraisers are extremely regulated. We are more regulated than loan agents, real estate agents/brokers and others in the mortgage market. Real estate appraisers (brea.ca.gov) need a college degree, 200 hours of college level classes, 1,500 hours of experience with licensed experienced mentor, must pass exam and background check. Loan agents (nmls.org) only need a 20 hour course, must pass exam and background check. Real estate agents (dre.ca.gov) only need three college level courses, must pass exam and background check. These people act like Appraisers are the ones who made it so difficult to become an Appraiser to keep others out. It was the government who mandated this after falsely blaming Appraisers for the Savings and Loan Crisis, Great Recession and other real estate busts caused by other players in the market including the government.

We are regulated by the federal and state governments and are not "self-regulated." People are under the misconception that the private non-profit the Appraisal Institute (AI) who is supposed to represent Appraisers actually regulates Appraisers. They don't. We're regulated by multiple federal and state government agencies, see this article. Appraisers have to pay to join the AI. If you want to be an AI MAI Appraiser, it will cost you about $15,000 and take a couple of years. Only wealthy appraisers with $15,000 laying around and lots of extra time can afford to join. I'm not a member.

"Recent news stories have presented the shortcomings of the appraisal industry in stark relief, where individual homeowners and researchers have demonstrated that discriminatory bias continues to plague the appraisal industry, undermining value and breaking a key rung on the ladder to the middle class for families of color."

The recent news stories have proven to be false. The real reason people of color own homes which are worth less than the homes of white people is income. POC make less money. Women also make less money as do other groups. Of course they will buy and own homes that cost less. I've written about some of the major cases in the media, see below.

Cora Robinson, Oakland, California. HUD complaint most likely already dismissed.

Paul Austin, Tenisha Tate, Marin, California No HUD complaint, lawsuit will most likely be dismissed.

Carlette Duffy, Indianapolis, Indiana HUD complaint most likely already dismissed

Abena Sanders Horton, Alex Horton, Jacksonville, Florida New FOIA request. No info yet.

I did FOIA requests for all of the above cases. Only three actually filed complaints. I believe two complaints have already been dismissed. I'm just trying to get a hold of the final report which they will not release unless I get a signed and notarized form signed by the complainant which states their full name, date of birth, country of origin, nationality, home address ... stating they agree to the report being released. I'm obviously appealing the FOIA case because that is ridiculous. I think they are withholding the reports because of the PAVE report coming out. These people publicly posted their complaints with their information online and in national press releases. The cases appear to be over per FOIA. If they won, they would have released another national press release and more media articles. This is why HUD doesn't release cases where no discrimination was found. They try to blame it on FOIA regulations which is false. Asking for the "country of origin" of the complainant seems discriminatory. I don't need or want to know that. It has nothing to do with the complaint.

From the Outline.

The report suggests Appraisers need more training on Fair Housing. We already have lots of repetitive training on Fair Housing to get your license and renew it every two years. That is not an issue.

Duty of Care, pg 11. They suggest adding the borrower as an "intended user" of the lenders appraisal report to increase accountability to the borrower. No much for appraisal independence and undue influence. Then the lender who ordered the appraisal will also be liable to the borrower. I see great push back on this issue. The purpose of the appraisal is to secure the loan for the bank and anyone who buys the loan or mortgage backed securities based on the loan. The borrower doesn't have to get a loan. A private loan is not a right but a privilege. The borrower can hire their own appraiser to do their own appraisal. Then they can be the intended user of that report.

"To increase the accountability of appraisers to borrowers who have been injured by appraisal negligence, the Appraisal Standards Board should consider amending the USPAP Standards to require appraisers to identify mortgage borrowers as “intended users” of appraisals prepared in relation to residential mortgage transactions."

Part I, Background, A, Bias in the Industry, "Redlining."

Adding race, nation of origin to the map data was dead wrong. Most of the other loan risk factors in the maps were based on many other factors besides race and nation of origin. The main factors were income and wealth of inhabitants. If you removed race and nation or origin from the data which they did, the risk stayed the same. These are the same risk factors we use today for credit scores. There is/was a correlation between POC and income. People with less income, less money live in areas with lower priced housing because that is what they can afford. These properties are more likely to be older, less well maintained, near industrial property and other less desirable features. That's why they were cheaper. When people have very little money, it's easy for them to not be able to make loan payments if they suffer one emergency. The solution to this problem is the same, increase the income of POC and others. More income, less risk.

"Discrimination in Appraisals Continues on an Individual and Systemic Basis," pg 17.

They mention some of the alleged discrimination cases in the media. They don't bother to do any investigation into the cases to determine if there was indeed any discrimination. They don't post the results of the HUD complaints two of which were most likely already dismissed. Instead they link to press releases and false and misleading news articles. I will check out the Colorado and Connecticut cases.

"Discrimination in Appraisals Exists on a Systemic Basis," pg 18.

They mention the Freddie Mac research on Appraisal Gap. I wrote an article here which explains Appraisal Gap. You are more likely to have appraisal gap in areas which are revitalizing and quickly appreciating due to the historical nature of appraisal reports. Areas which are revitalizing are more likely to have POC. That is the correlation. At least they do note that the effect was shown across the nation and across appraisers. This shows it was not individual appraiser bias.

They mention FHFA report on keywords found in appraisal reports, pg 19.

FHFA stated they searched millions of reports for what they feel are discriminatory words and found thousands had words which could be considered discriminatory. Just to get a ballpark figure here, 1,000/1,000,000 = .001 or .1% of reports. They did not review the reports and find the values were low or not market value.

I agree that no one should have discriminatory language in the report. I disagree with the word "gentrification." I don't use it because it's not accurate.The proper term is revitalization. Still, it has nothing to do with race but money. Socioeconomic classes aren't protected. Lenders can discriminate based on money. FHFA itself uses the word all of the time as do other government agencies. Is it only discriminatory if an appraiser uses it?

Andre Perry's misleading report, pg 19. This report has been debunked here. It's not peer reviewed or published research. If you read Andre Perry's book, he is biased against certain people. He admits it. He also has an agenda to sell books.

Pg 19, "Howell/Korver-Glenn. A 2020 study of American Community Survey homeowners’ estimates from 1980 to 2015 found that neighborhood racial composition was an even stronger determinant of a home’s value in 2015 than it was in 1980."

That's because there is still a strong correlation between income and POC. The government and others haven't done anything about this. POC make less money. For this reason they buy and own homes in less expensive areas. They also own less expensive cars. Is that also the fault of real estate appraisers? FTR all the values came from inaccurate Zillow. Zillow has stated their values are not appraisals or accurate. Appraisers did not contribute the values in Andre Perry's paper or the other research so you can't blame appraisers.

Pg 22, They basically state the Sales Comparison Approach is biased because it's based on the sale prices of similar homes in the same area. Everyone knows the main three factors of home valuation are location, location, location. Should we use comps in Beverly Hills to appraise a home in South Los Angeles? No. Even if an Appraiser appraises a $100,000 home for $200,000, it doesn't affect the market value. The home is not worth $200,000.

Pg 22, This is utter nonsense to cite in a government report! In the book "Race Brokers, Dr. Korver-Glenn details the results of interviews with appraisers, including appraisers of color, regarding the steps they use to value a home based on their interpretation of the sales comparison approach.27 Many of the appraisers in the study “assumed that White buyers were the standard for determining an area’s desirability, with White areas meeting this standard and receiving the highest values and non-White areas falling below the standard.“

Who the hell did this person interview?! Did they not interview appraisers in low income white areas like Florida, Virginia, California...every state in the nation? The sales comparison approach will show you the area's desirability based on money. It has nothing to do with color but income. AVMs, Appraisers don't see the occupants. We don't know the races of the people. There is no race reference in the data we research.

Pg 24, "Appraisal Discrimination Is One of the Key Drivers of Today’s Wealth Gap." No, income gap is the main driver of the wealth gap! If you make less money, you have less money, buy and own a less expensive home. This discriminatory language should have never been allowed in a government report. People who complain about discrimination discriminating against others again. If the tables were turned, these people would be screaming bloody murder.

Pg 24, "Appraisals Can Also Raise the Unique Challenge of Overvaluation." After the great recession everyone lost home equity. It affected poor people with subprime loans even more because the loose lending regulations by the government caused these people to have mortgages they could not afford. They lost their homes. If they met proper income, savings requirements, they would have been able to afford to pay their mortgage even though they were upside down like everyone else. If they weren't less wealthy, they would have had money to weather an emergency.

Pg 26, "The Appraiser Workforce Suffers from a Lack of Diversity." Appraisers are just about as diverse as real estate agents, loan agents yet no one complains about them. They don't complain because agents can't kill deals with low appraisals but appraisers can. Here is an article I wrote about race and appraisers. That said I'd love to see race of appraisers match the nation. We need more diverse appraisers. The race of appraisers won't affect values because it's based on math and numbers.

Part II.

C. Governance of Appraisal Industry.

They bring up the fact that the Appraisal Institute is a private organization not part of the government, and doesn't legally have to abide by all government regulations. They suggest investigating the relationship between AI and the government. In the meantime they suggest AI add more diverse board members including consumers and civil rights people. In light of who actually made the report they basically want their own people on the board to control the AI. They said nothing about race, gender ... diversity. Here is their white board. Leadership is also 100% white. Six of 29 board members are women. I think they're all Appraisers. They should have others on the board. The government should keep in mind that the AI must follow their non-profit mission statement. Their mission is not to promote the government but appraisers and the industry. I didn't realize that people have to pay to appoint a trustee. That's ridiculous. AI should offer USPAP to anyone for free. Most of the other recommendations are already being done.

D. Gaps in Fair Housing Requirements and Training

"As described above, the evidence clearly shows that the current appraisal system can result in biased valuations, both at the individual and neighborhood level. The causes of such bias are varied and complex."

I disagree that evidence has shown bias in the current system. The Market Comparison Approach to value shows the market value. It's based on willing sellers and buyers. If someone wants to pay $200,000 for a $100,000 home in South Los Angeles, they can do that with a huge down payment but they won't because it doesn't make sense. The property won't be worth $200,000 except for property tax purposes. They can only sell it for $100,000. They lost $100,000.

I also doubt that appraisers are not getting enough training in fair housing and discrimination. We take many classes to get our license and more classes every two years to keep our licenses. I don't know any appraiser who does not realize it's not legal to discriminate. If they want to add "shall" and "must" to USPAP, fine by me. I'm also fine with education changes as long as there aren't more hours and are just more hours on fair housing.

E. Barriers to Entry into the Appraisal Profession

I agree with some of these issues and suggestions though not all. They suggest reviewing any possible barriers to entry. Let's just make sure the bar is not so low that anyone can become an appraiser. You need to be a math, numbers person who can physically measure a building, climb a ladder, get into a crawl space, visually see construction material, hear a fan... They need some hands-on training. You wouldn't want a medical surgeon to just pass a written test then start cracking people open with a bone saw.

They suggest reducing license types to certified and general only getting rid of trainee.They suggest getting rid of college education requirement and possibly reducing the number of education hours needed. They suggest having an application based class so they can learn how to do an appraisal and getting rid of experience hours. If they do that, lenders will just make sure they only request appraisals from appraisers with so many years of experience. Those new people won't get work. They suggest reviewing the tests to make sure they are fair. I passed the appraisal exam for certified residential first time within an hour after a major car accident (uninsured motorist totaled my car) where I broke both wrists and got a concussion. I didn't go to the hospital until later because I was not going to lose my $750 test fee. I agree that some questions were worded poorly but just choose the best answer. The test was easier than high school exams. I would hope at least a GED or High School diploma would be needed. Don't set people up for failure. Make sure they can do the job or they won't get work.

They suggest AI and others try to recruit more women and people of color. I'm a Latino female. I contacted AI about supposed scholarships they offer. They said I have to pay to join AI just to apply for the scholarship! They dangle a scholarship to get money from new memberships. No thanks.

One worry here is that the big rush of appraisals is over. We don't need new appraisers right now. I fear people will pay to become appraisers and lenders will not use newbie appraisers. That would be cruel to do to people.

F. Compliance and Enforcement p. 71

They talk about using data to determine if there is discrimination in appraisals. They talk about releasing report results. They won't release negative results of HUD complaints because complainant of course won't agree. You will only hear about cases where there was discrimination or someone agreed to a non-guilty statement just to end the case due to legal costs. They need to release ALL of the HUD complaints and investigation results.This is why the false narrative has continued. HUD did state most cases are dismissed but that's it. HUD also said most discrimination complaints based on disability and not color or race.

They talked about maybe using another method of determine value. Lenders won't agree to cost or income approach as they don't reflect market value. Lender needs to know what they can sell the property before if the borrower doesn't make the payments. They talk about getting rid of the free form text parts of the appraisal. Okay! Less work for appraisers though they may no longer comply with USPAP without text explanations.

Pg 77, Reconsideration of Value

There should be standards in the ROV process. I believe there already are but I'm fine with it being more defined. Maybe there should be a fee paid by the lender. Sometimes an appraiser can be given seven new comps to consider. If you have to drive and see them all then put them all in the grid and then explain why they can or cannot be used, that's a complete new appraisal if not more work.

Conclusion

Overall I disagree with the message and tone of the report. The report is discriminatory, biased and defamatory against appraisers as a whole and as an industry. There is no independent research which shows appraisal bias and discrimination. They mention anecdotal media cases about alleged bias and discrimination as if they were facts. HUD won't release the final investigation reports of two cases which I believe have been dismissed because the complainants don't want them released. They refer to Andre Perry's paper as if it were peer review published research when it's just the false basis of his misleading book which he's selling. I'm okay with the basic recommendations which are to take a closer look at some issues. I agree with some of the suggestions to make becoming an appraiser easier.

Below is the Table of Contents with page numbers.

Table of Contents

Acknowledgments 3

Executive Summary 5

Part I: Background 13

A. The Problem of Bias in the Appraisal Industry 13

• The Appraisal System Historically Undervalued Homes in Communities of

Color

• Appraisal Policies Perpetuated an Unfounded Association Between Race and

Risk

• Discrimination in Appraisals Continues on an Individual and Systemic Basis 17

• Appraisal Discrimination Is One of the Key Drivers of Today’s Wealth Gap 24

• Appraisals Can Also Raise the Unique Challenge of Overvaluation 25

• The Appraiser Workforce Suffers from a Lack of Diversity 26

B. Civil Rights Laws and Regulations Applicable to the Appraisal

Industry

• The Fair Housing Act and the HUD Regulation 27

• The Equal Credit Opportunity Act and the CFPB’s Regulation B 28

• The Civil Rights Act of 1866 29

• State Laws and Prohibited Bases 29

• Theories of Proof 30

• Increase in Appraisal Discrimination Enforcement 33

Part II: Analysis and Recommendations 34

C. Questions about the Governance of the Appraisal Industry 34

• Overview of the Appraisal Regulatory Structure 34

• The Appraisal Foundation’s Legal Authority is Not Clear 35

• The Appointments and Elections Processes Would Benefit from Inclusion of

Viewpoints that Represent Consumers, Including Consumers of Color

• The Rules of Procedures and Exposure Draft Process Would Benefit from

Greater Transparency and Inclusion of Viewpoints that Represent Consumers,

Including Consumers of Color

D. Gaps in Fair Housing Requirements and Training 48

• Lack of a Clear Prohibition of Discriminatory Conduct 48

• Lack of Guidance on the Use of Discretion 52

• Lack of Clear Fair Housing Training Requirements 56

• Lack of Effective Fair Housing Training 58

E. Barriers to Entry into the Appraisal Profession 64

• Multiple Levels of Licensing and Certification 64

• College Degree Requirements 66

• Appraisal Education Hours 66

• Experience Hours 66

• Standardized Tests 68

• Concern: Pipeline of Trainees and the Future of the Profession 69

F. Compliance and Enforcement 71

• Need for Data 71

• Development of Robust Compliance Management Systems 72

• Duty of Care: Appraiser Accountability 75

• Reconsideration of Value Process 77

G. Conclusion 80

H. Glossary of Acronyms 81

I. Appendix I – Authors’ Summary Biographies 82

Mary Cummins

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

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.

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Mary Cummins

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

Wednesday, February 8, 2023

Mary Cummins Comment to ASC Bias Committee February 8, 2023, Real Estate Appraiser

Wednesday, January 25, 2023

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

Monday, March 28, 2022

Significance of Maxine Waters' Bill Fair Appraisal Act 2022 by Mary Cummins Real Estate Appraiser

Wednesday, January 19, 2022

Identifying Bias and Barriers, Promoting Equity: An Analysis of the USPAP Standards and Appraiser Qualifications Criteria.

Friday, August 6, 2021

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