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    Appraisal Discrimination & Valuation Bias

    State Measures Regarding Appraisal Discrimination & Valuation Bias

    Valuation bias and discrimination have no place in real estate valuation and is prohibited by federal and state laws. Appraisers must be unbiased, and their value opinions and conclusions need to be credible and supported with relevant data and analyses unrelated to the personal characteristics of the people occupying a subject property or living in the surrounding area.

    The Appraisal Institute supports the adoption of laws and/or regulations that require appraisers to take a course specific to valuation bias and discrimination as part of their qualifying education to become a state-licensed or certified appraiser. Further, AI supports the adoption of laws and regulations that require currently licensed appraisers to take at least one course on valuation bias and discrimination (or equivalent) as part of their continuing education for license renewal. Continuing education requirements should be evaluated within the context of any Uniform Standards of Professional Appraisal Practice education requirements.

    Appraisers who have engaged in discriminatory activities as part of an appraisal are subject to existing federal and state anti-discrimination laws that carry significant civil and/or criminal penalties. AI supports the adoption of reasonable measures clarifying that appraisers who have gone through administrative or judicial proceeding and have been found guilty of engaging in valuation bias or discrimination must face appropriate discipline by state appraiser regulatory agencies who have the responsibility to suspend or revoke licenses.

    However, AI believes that state appraiser regulatory agencies should not be responsible for investigating and prosecuting claims of bias and discrimination against appraisers. Instead, it should be the responsibility of entities with expertise in investigating and prosecuting these types of cases, such as the U.S. Department of Housing and Urban Development, the U.S. Department of Justice, state attorneys general and fair housing offices. The Texas Appraiser Licensing and Certification Board (TALCB) has entered into a memorandum of understanding with the Texas Workforce Commission, the agency responsible for enforcing the state’s fair housing and anti-discrimination laws, whereby each agency investigates and adjudicates complaints alleging appraisal bias according to their jurisdiction – USPAP and the state appraiser licensing and certification law by the Board, and the state’s fair housing and anti-discrimination laws by the Commission.

    Federal laws include private rights of action to make claims against appraisers. AI believes state private rights of action should also apply to other valuation products and services, including evaluations, comparative market analysis, broker price opinion and automated valuation models.


    The most common allegations of appraiser bias in mortgage lending for purchase and refinance involve claims that an appraiser is aware of the personal characteristics of a property owner or borrower, which influences them to undervalue properties. Most cases — but not all — involve residential properties.

    Policymakers in several states are taking notice of appraisal bias allegations and are proposing legislation and regulation to prevent it. For example:

    • California passed a law – AB 948 - that contains multiple provisions related to appraisal bias. Beginning July 1, 2023 all residential sales contracts must include a statement promising that appraisals are unbiased and not influenced by improper or illegal considerations. Refinance transactions must have the same statement included within the loan documents provided to borrowers. The state’s Bureau of Real Estate Appraisers was required to change its complaint form to include a way for individuals to note their belief that their appraisal was below market value; BREA is required to collect data regarding complaints that allege low valuations and report its findings to the state legislature on or before July 1, 2024. The law also made it a violation of licensing law for appraisers to base their opinions of value on any of the generally recognized protected characteristics and made it a violation of the California Fair Employment and Housing Act for appraisers to discriminate on the basis of any of the generally recognized protected characteristics. Lastly, beginning Jan. 1, 2023, appraiser pre-licensing education is required to include one hour of instruction in cultural competency, while continuing education must include two hours of elimination of bias training and one hour of cultural competency instruction.
    • New York requires every licensed or certified appraiser to complete an approved course of study in fair housing and fair lending every two years as part of their required continuing education. New York already requires the completion of a fair housing and fair lending course as part of the qualifying education to become an appraiser.
    • Two states – Illinois and Maryland – have created Task Forces to study whether there is anything specific in appraiser laws and regulations that might contribute to unfair and inequitable appraisals, as well as if the qualifications to become an appraiser disproportionately impact historically underrepresented populations in the profession.
    • In 2023, Oregon enacted a law that requires all appraisers in the state to take periodic training on implicit and explicit bias and how each may become part of an appraiser’s work.


    Valuation bias occurs when an appraiser explicitly, implicitly or structurally selects and applies data to an appraisal methodology or technique in a biased manner that harms a protected class, as defined by the Fair Housing Act of 1968, and its amendments. It does not necessarily include one or more violations of federal, state or local anti-discrimination laws, and an appraiser can commit valuation bias without violating any laws. It’s also important to note that not all valuation disputes involving a participant from a protected class should be presumed to be the result of explicit, implicit or structural bias.

    Personal characteristics refer to the traits of an individual or group of individuals such as race, color, religion, national origin, gender, marital status, familial status, age, receipt of public assistance income or disability. Some personal characteristics may also be protected characteristics or classes under applicable law.

    Laws and regulations currently in place

    The Fair Housing Act, which makes it illegal to discriminate in the sale or rental of housing, including against individuals seeking a mortgage or housing assistance, or in other housing-related activities. The Fair Housing Act prohibits this discrimination based on race, color, national origin, religion, sex, familial status or disability.

    There are various federal civil rights laws that prohibit discrimination in housing and community development programs and activities, including Title VI of the Civil Rights Act, Section 504 of the Rehabilitation Act, and the Americans with Disabilities Act. The U.S. Department of Housing and Urban Development’s Office of Fair Housing and Equal Opportunity works to eliminate housing discrimination and promote civil rights and economic opportunity through housing, enforces fair housing laws and investigates complaints of housing discrimination.

    Most states have their own fair housing and anti-discrimination laws, and violations may be enforced by state and local agencies or attorneys general.

    The Nondiscrimination Section of the Uniform Standards of Professional Appraisal Practice’s Ethics Rule focuses on core concepts from key antidiscrimination laws and explicitly requires that appraisers be knowledgeable about and follow antidiscrimination laws that apply to the appraiser or the assignment. USPAP violations are typically enforced by state appraiser regulatory agencies.

    The Appraisal Institute Code of Professional Ethics Rule 1-5 states, “It is unethical to base an analysis, opinion or conclusion, either partially or completely, on characteristics such as race, color, religion, national origin, gender, marital status, familial status, age, receipt of public assistance income, disability or any protected characteristic under applicable law, or a conclusion that homogeneity of such characteristics is necessary to maximize value.” AI professionals who violate the CPE could be disciplined and may have to forfeit their designation.

    Investor/guarantor overlays say that an appraiser who performs an assignment for property intended to be sold to one of the government-sponsored enterprises or that is to be insured by the Federal Housing Administration is required to sign a certification that reads, in part:

    "I did not base, either partially or completely, my analysis and/or opinion of market value in this appraisal report on the race, color, religion, sex, age, marital status, handicap, familial status or national origin of either the prospective owners or occupants of the subject property or of the present owners or occupants of the properties in the vicinity of the subject property or on any other basis prohibited by law."

    Additionally, lender and loan-seller guidelines related to appraisal typically include examples of unacceptable practices pertaining to discrimination that may become assignment conditions for appraisers and enforceable by state appraiser regulatory agencies.