Marcia L. Fudge, the secretary of Housing and Urban Development, announced the new review process on Friday during a screening of “Our America: Lowballed,” a new ABC documentary on appraisal bias in the United States, co-hosted by the Brookings Institution and the National Fair Housing Alliance. “For decades, the appraisal complaint process has been one-sided,” Ms. Fudge said at the event. “Having a system that is a check on itself is not working, and we are looking to change it.”
This would be the first time that HUD has specifically cited bias or violations of fair housing laws as a legitimate cause for flagging, and potentially scrapping, an appraisal — a major step that follows widespread allegations from Black homeowners that their homes’ values were lowballed because of their race. Dozens of homeowners have come forward in recent years to allege discrimination, and many have tried to prove bias in their homes’ valuations through what is known as the “whitewashing experiment.” Homeowners scrub their property of any signs that Black people are the occupants.
In some cases, the gulf in valuations amounts to hundreds of thousands of dollars. After a white appraiser gave their Baltimore-area house a value of $472,000 in 2021, Nathan Connolly and his wife, Shani Mott, both professors at Johns Hopkins University, conducted a whitewashing experiment, removing family photos, posters and books from their home and asking a white friend to stand in for them. Months later, a second appraiser, unaware a Black family lived in the home, gave the property a value of $750,000.
A November study from two respected sociologists — the first ever to analyze millions of home appraisal records by race — supported what scores of homeowners have said: There is a widespread practice in the home appraisal industry to give higher values to homes when the occupants are white, and devalue them if the owners are people of color.
That study, as well as dozens of high-profile whitewashing experiments that have revealed questionable valuations, has put an uncomfortable spotlight on the appraisal industry. The dream of homeownership is one of the most direct avenues for building generational wealth, yet Black Americans continue to be shut out of the opportunity for upward mobility. They are denied mortgages at disproportionate rates, and although Black homeownership has been inching forward since the passage of the 1968 Fair Housing Act, discrimination continues to seep into every aspect of the home buying process.