The Appraisal Bias Conundrum

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It’s been my experience that credit unions fervently attempt to comply with new and emerging regulations, almost to a fault. Conversely, it has been my experience that credit unions often neglect to document just how much they are doing. So, consider this a gentle nudge about the steps you should be taking to document your appraisal processes.

First, why is this an issue? Because the Biden Administration has made addressing appraisal bias the top priority of its housing reform agenda. In 2021, it created the PAVE Taskforce under the direction of former Congresswoman Fudge turned Secretary of HUD. The working assumption is that appraisal bias is a persistent and ongoing problem in housing which has contributed to a lack of equity in the minority community. Federal regulators have put lenders on notice that they are scrutinizing this area. We are now starting to see a somewhat stringent regulatory framework proposed. For instance, NCUA’s webinar on the subject is titled “Combatting Appraisal Bias.” As these regulations are proposed, here are some simple things you should consider integrating into your policies and procedures, if you haven’t done so already.