Fair housing advocacy: Mortgage lending transparency matters more than ever

Fair Housing, as we have known it for several decades under Republican and Democratic administrations, is over.

Changes in policy, including withdrawal of the disparate impact rule, rescinding the rule permitting special purpose credit programs, canceling high-profile settlements like U.S. Housing and Urban Development’s Conciliation Agreement with The Appraisal Foundation, as well as dramatically reducing resources supporting fair housing enforcement efforts, are among the actions that have vitiated what Congress called for in the 1968 Fair Housing Act.

But progress is still made when advocacy persists, as indicated by recent debates over appraisal bias.

Appraisal bias occurs when an appraiser’s opinion of a property’s value is colored by negative attitudes regarding race or ethnicity of the homeowner or neighborhood in which the home is located. Bias does not tinge every appraisal, but it does sometimes. And evidence shows that it was less frequent after steps taken by the Biden Administration, which were ended by President Trump.

The Biden Administration created the Property Appraisal and Valuation Equity Task Force in June 2021 to address appraisal bias.

Among the final recommendations was to enhance public access to appraisal data, which the Federal Housing Finance Agency started with publication of the Uniform Appraisal Dataset. HUD disbanded PAVE in 2025, and FHFA has not reported annual data past 2023.

Under-appraisals were more frequent in minority areas

Since appraisals are supposed to be a fact-based opinion of home values, one would expect that appraised value and sale price should be approximately the same. There is no reason for appraisals to more frequently be below the sale price in minority areas and above the sale price in white areas, absent racial or ethnic bias. Differences should be random and small.

But FHFA data summarizing the nation reveal that the share of homes where appraised values were below the sale price was higher in minority communities, and the share of homes where appraised values exceeded the sale price was higher in White neighborhoods.

Also striking is the inflection point in 2020-2021. The likelihood of over- and undervaluation declined sharply in the early 2020s when policy initiatives were advanced to address appraisal bias. This same pattern is found in many metropolitan areas around the country, including big and small areas, red and blue areas, coastal and Midwestern regions, etc.

For example, in the Atlanta metro area, between 2013 and 2023, under-appraisals were more frequent in minority areas than in white areas. And over-appraising was a more dominant feature in white than in substantially minority areas. But there is a notable inflection point in 2021 when over- and under-appraising declined, which corresponds to enhanced public attention and federal scrutiny on the issue. However, as noted above, FHFA has not released annual data beyond 2023. But that might be changing.

Since appraisals are supposed to be a fact-based opinion of home values, one would expect that appraised value and sale price should be approximately the same. There is no reason for appraisals to more frequently be below the sale price in minority areas and above the sale price in white areas, absent racial or ethnic bias. Differences should be random and small.

But FHFA data summarizing the nation reveal that the share of homes where appraised values were below the sale price was higher in minority communities, and the share of homes where appraised values exceeded the sale price was higher in White neighborhoods.

Also striking is the inflection point in 2020-2021. The likelihood of over- and undervaluation declined sharply in the early 2020s when policy initiatives were advanced to address appraisal bias. This same pattern is found in many metropolitan areas around the country, including big and small areas, red and blue areas, coastal and Midwestern regions, etc.

For example, in the Atlanta metro area, between 2013 and 2023, under-appraisals were more frequent in minority areas than in white areas. And over-appraising was a more dominant feature in white than in substantially minority areas. But there is a notable inflection point in 2021 when over- and under-appraising declined, which corresponds to enhanced public attention and federal scrutiny on the issue. However, as noted above, FHFA has not released annual data beyond 2023. But that might be changing.

The 21st Century ROAD to Housing Act became law on July 11. Section 704 calls for the federal government to conduct a study to determine if appraisal data should be collected and made available to various federal agencies, researchers, advocates and the general public.

The U.S. comptroller general will have 240 days to complete this feasibility study. This must be an objective, fact-based inquiry reflecting voices of the industry, fair housing groups, consumer advocates and others with real estate interests.

Bad actors are encouraged by lack of national standards

We recommend that the comptroller general review the history and positive impact that the 1975 Home Mortgage Disclosure Act had on transparency into mortgage lending and ultimately, to fair housing enforcement and consumer protection in the home mortgage market.

Author Josh Silver demonstrated this in his book “Ending Redlining Through a Community-Centered Reform of the Community Reinvestment Act” (2025). HMDA requires most mortgage lenders to publicly disclose the income, race and other demographic data of mortgage applicants, the census tract of the property and whether the application was approved or rejected. These data protect applicants’ privacy while providing lenders, regulators, and consumers information about access to and fairness in mortgage markets. Similar disclosure of appraisal data would likely yield similar benefits.

Today transparency in mortgage lending is an established and accepted industry norm. Annual submissions by lenders are routine. And these data have undoubtedly served to promote fairness in mortgage lending. Without an equally transparent standard for the nation’s property appraisers, and in the context of a diminished fair housing enforcement effort, the subset of bad actors within the industry will be able to act without fear of consequence.

Protect privacy, yes. Shroud the industry from public scrutiny, no. The comptroller general’s effort must balance the legitimate public and private interests. Informed advocacy can make that happen.