Multiple federal regulators in charge of enforcing the Federal Fair Housing Act (FFHA)

and Equal Credit Opportunity Act (ECOA) submitted a joint letter to The Appraisal Foundation, the private organization that sets appraisal standards.

The letter, signed by members of the Consumer Finance Protection Bureau (CFPB), Department of Housing and Urban Development (HUD), Department of Justice (DOJ) and Federal Housing Finance Agency (FHFA), urged The Appraisal Foundation to revise their latest draft of the Uniform Standards of Professional Appraisal Practice (USPAP).

Specifically, The Appraisal Foundation’s Ethics Rule found within the 2023 USPAP is what the federal regulators targeted.

The regulators pointed out the Ethics Rule uses the phrase, “An appraiser may not engage in unethical discrimination.” The statement implies an appraiser may engage in “ethical” discrimination — a concept foreign in existing legal codes and which creates unnecessary confusion between unethical discrimination and unlawful discrimination.

The regulators stress the importance for The Appraisal Foundation to provide appraisers clear and unambiguous statements about federal law requirements covering appraisal standards.

The Appraisal Foundation responded with a letter soon thereafter stating they will continue to work to clarify their Ethics Rule with an upcoming fifth draft of the USPAP.

The fifth draft USPAP was released on March 30, 2023.

Related Video: Rules Controlling Appraisals

Click here for more information on appraiser independence.

Preventing discrimination in appraisals

To prevent discrimination during the appraisal process, licensees are prohibited from basing their appraisal on the basis of:

  • race;
  • color;
  • religion;
  • gender;
  • gender expression;
  • age;
  • national origin;
  • disability;
  • marital status;
  • source of income;
  • sexual orientation;
  • familial status;
  • employment status; or
  • military status. [Calif. Business and Professions Code §11424(a)]

This applies to all individuals who may be present or impacted by the appraisal, including the property’s prospective or current owners, any tenants, or occupants of neighboring properties. [Bus & P C §11424(a)]

To ensure compliance, as of January 1, 2022, the California Bureau of Real Estate Appraisers (BREA) is required to include a check box within their existing complaint form, asking the complainant whether they believe the appraisal to be below market value. Further, complainants will have the option to include their demographic information on the form. [Bus & P C §11310.3(b)]

The BREA is required to study this demographic information and provide a report of their findings to the state legislature before July 1, 2024. [Bus & P C §11310.3(e)]

Homeowners, buyers, sellers and agents who believe they have been the subject of appraiser discrimination may file an online complaint with the BREA.

Related article:

The votes are in: Appraiser discrimination is rare — here’s how to spot it