The Appraisal Foundation settles Fair Housing Act case with HUD

The Appraisal Foundation, a private organization that is the de facto regulator of appraisers, has settled with the United States Department of Housing and Urban Development (HUD) over allegations that its qualification program violated the Fair Housing Act. 

HUD opened an investigation in December 2021 to determine whether the foundation’s Appraiser Qualification Criteria, established by the Appraiser Qualification Board (AQB), have resulted in violations of the Fair Housing Act by creating disparate racial impacts on entry into the appraiser profession—mainly against Black people and other persons of color. 

The Appraisal Foundation, an industry-run private nonprofit, denies the allegations but agreed with the settlement to conclude the investigation. 

“We are pleased to have reached this conciliation agreement,” Kelly Davids, president of the foundation since March, said in a statement. “We appreciate HUD’s recognition of our proactive efforts to lead the appraisal profession to welcome a new, diverse generation of appraisers and their support of our forthcoming scholarship program to aid new entrants to the field.”

Under the settlement terms, within six months, the foundation will establish the “Pathways to Success Scholarship Fund,” designed for aspiring appraisers to attend the Practical Applications of Real Estate Appraisal (PAREA) program, which is a way to fulfill their required experience. 

The scholarship fund will be administered by a third party approved by HUD and funded by the foundation or other sources with a minimum of $1.22 million. 

“Today’s historic agreement will help build a class of appraisers based on what they know instead of who they know. This settlement will help bring us one step closer to rooting out discrimination in housing and opening doors to opportunity for all,” HUD Acting Secretary Adrianne Todman said in a statement. 

According to the HUD complaint, the foundation’s requirement for supervised on-the-job experience hours for licensure allegedly perpetuates the lack of diversity in the profession. 

That’s because aspiring appraisers allegedly rely heavily on identifying a friend or family member who is already a licensed appraiser to be their mentor. And, per the Bureau of Labor Statistics 2023 data, the property appraisers and assessors’ occupation was 94.7% White and 0.6% Black, ranking as the least racially diverse of 800 occupations surveyed.

“HUD’s agreement requires policy changes that expand the pathways to becoming an appraiser, a change that will promote greater inclusion of Black people and other persons of color who have been the least likely to gain access to this industry,” Diane M. Shelley, HUD’s principal deputy assistant secretary for Fair Housing and Equal Opportunity, said in a statement.  

The settlement, which will govern the foundation’s conduct for three years, requires enhancements to the PAREA program. For example, mentors must complete a course related to valuation bias and fair housing laws, and there are terms for marketing the PAREA program and the scholarship fund to diverse communities.

The foundation claims that it has promoted diversity, equality, and inclusion in the appraisal profession since 2020. Among other things, it created a Diversity, Equity, and Inclusion (DEI) special committee and developed a pathway to the profession that does not require a college degree.