Remarks by Vice President Harris on Addressing Bias in Home Valuations

South Court Auditorium
Eisenhower Executive Office Building

11:15 A.M. EDT

THE VICE PRESIDENT:  Hello, everyone.  Hello.  (Applause.)  Hello.  Good morning.  Please have a seat.  Please have a seat.

Tenisha, thank you for that kind introduction.  She and her family, her husband have been so courageous in telling their story and really speaking up and speaking out to help fix a terribly broken system.  Tenisha, I’m talking about you.  (Laughter.)

But really, because your story is the story of so many families and individuals.  And the more that we are able to really highlight this issue, to educate the public in general about what is happening, the more we will be able to be successful in fixing the problem. 

So, thank you for that introduction.  Thank you.

So, today, we are joined by the Secretary of Housing and Urban Development, the great Marcia Fudge.  I — I’m going to go off script and say that this — this is a real national leader.  In her years in the United States Congress, she was always fighting for families, for working families, and for homeowners.  As the Secretary of HUD, she has been — this has been personal to her, to push through the bureaucracy, to make this a priority, and it will benefit so many people who deserve to be seen.  So, thank you, Secretary Fudge, for all that you do.  Thank you.  Thank you.  (Applause.)

We are also joined by the Director of our Domestic Policy Council, Ambassador Susan Rice — thank you for your leadership; and a group of homeowners who have been leaders in speaking against the injustice of appraisal bias.  So, thank you all for being here.

So, imagine a young couple that saves enough money to put a down payment on a home.  The day they pick up the keys is a day of excitement and pride.  That day, they own a piece of America.  That home, they know, will be the foundation on which that family builds their future.  As that home increases in value, that couple can count on that equity to help put a child through college, or afford retirement, or pass along assets to the next generation — and, usually, all of those things.

Historically, many communities of color, however, have been prevented from taking full advantage of the wealth-building power of homeownership. 

For example — and the Californians here and most of us remember — in California, in 1913, California passed the Alien Land Law, which targeted Asian Americans from owning land.  Similar laws were on the books in states around the country until the 1950s. 

In the early 20th century, millions of Latino Americans were removed from our country, their property confiscated, in an illegal act inaccurately known as “repatriation.”

And segregation, restrictive covenants, and red-lining long, long denied Black homeowners a share in the American Dream.

That inequity continues today in the home appraisal system.  Appraisals are meant to be fair and objective estimates of the market value of a property.  There’s a lot that rides on that estimate.  But far too often, for far too many people, they are not fair and objective.

Research has repeatedly shown that Black homeowners are more likely to have their homes undervalued than other homeowners.  And homes in majority-Black and majority-Latino neighborhoods are almost twice as likely to be undervalued than homes in other neighborhoods.

Because their homes are undervalued — because their homes are undervalued — because, understand, there’s a real consequence — Black and Latino people often have to pay more for their mortgage, receive less when they sell the home, and are less able to access home equity lines of credit.

Systemic bias in home valuations widens the racial wealth gap — widens the racial wealth gap and deepens the longstanding financial inequities that divide our communities.

And we’ve have heard the stories — stories of people who have tried everything to avoid an unfair appraisal.  Stories like that of Tenisha and her family.  And these stories are shocking, and they are evidence that systemic change is urgently needed.

Throughout my career, I have fought to defend homeowners from abuse and injustice.  As Tenisha shared, when I was the Attorney General of California, we secured $20 billion for homeowners harmed by the big banks during the foreclosure crisis.  And part of that was about predatory lending practices targeting just the same communities that we are talking about today.

So, then, I drafted and helped pass the Homeowner Bill of Rights to help protect consumers from unfair mortgages and predatory foreclosure practices.  It was one of the first bills of its kind in our country.  

And our administration is continuing that work by fighting on behalf of all homeowners.  Last summer, our President, Joe Biden, created the Property Appraisal and Valuation Equity Task Force, also known as PAVE. 

This task force will identify and root out systemic home appraisal bias.

Today, after months of deliberation and collaboration with homeowners and homebuyers, representatives of the mortgage and appraisal industry, and community leaders, our administration is releasing the PAVE Action Plan.

This plan outlines a comprehensive set of actions that our administration will take to advance equity in the appraisal process.  The home appraisal workforce is one of the least diverse in our nation.  Less than 5 percent of home appraisers in America are people of color.  This lack of diversity can introduce both conscious and unconscious biases that make home appraisals less accurate and less fair. 

Our administration will now require: Those who conduct appraisals for federal programs must take part in anti-bias fair housing and fair lending training.  (Applause.)  There are solutions.  There are solutions.  And we will work with the industry to require all appraisers to receive this training.  

We will also help expand the training pipeline for new appraisers.  In many states, in addition to classroom learning, appraisers have to complete thousands of hours of apprenticeship-like training before they becoming fully certified. 

So, these apprenticeships, while they’re often unpaid and apprentices often are required to find an appraiser themselves who is willing to take them on as a trainee.  So, if they don’t have those relationships, if those relationships don’t exist in their community, then it is much more difficult for them to satisfy the requirements to become an appraiser. 

So, we have to take that into account also.  And the solution — part of the solution is to provide funding and technical assistance to states to make pathways into the profession more accessible for underrepresented groups.  (Applause.) 

Another issue is home appraisal algorithms.  So, algorithms — it’s a fancy word for basically a system that will make decisions — right? — based on the input it has that will arrive at conclusions that can have a real impact on the subjects of those decisions.

So, these algorithms — the home appraisal algorithms — have the potential, when used properly, to reduce bias in the home appraisal process.  But if these algorithms are based on biased data, well, then there’s a real risk they could produce biased valuations. 

So, to address this, we are proud to announce that new rules are being developed to eliminate bias in appraisal algorithms — (applause) — rules that if — and I’m going to say “when” — approved, will apply to all lenders using these technologies.

So today, we are also releasing a resource guide for homeowners and homebuyers who suspect that they have received a biased appraisal.  And this guide will explain to folks who are concerned that this might’ve happened their rights.  It’ll explain their rights as consumers to challenge and correct a biased appraisal.  And it is available on the website at HUD and will be available to all those who — who would like to have that information.  

Today, we are also launching a public awareness campaign to ensure consumers — that they know their rights before they seek a home appraisal.  (Applause.)   And our action plan serves as an important step toward a more just and equitable home valuation system.

Our administration will continue to fight to ensure that all homeowners and homebuyers in our nation are treated fairly. 

For so many people in our country, a home is more than just a roof over your head and a place to live.  Those are essential needs.  But a home represents, in addition to that, so much that is about financial security, that is about the potential to build intergenerational wealth.  Owning a home, well, it means a shot at a better future.  Owning a home is also a symbol of the benefit of hard work, the benefit of having ambition and aspiration for oneself and their family. 

And so, we don’t want to have a system that denies people an ability to have that goal simply because there is bias in a system.  We can correct that.  And our administration is fighting to make sure every person, no matter where they live or who they are, has an opportunity to not only succeed but to thrive. 

Thank you all and take care.  (Applause.)

END            11:26 A.M. EDT