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ASA Sends Letter to Former Vice President Joe Biden Addressing His Concerns With Appraisals in Minority Communities

by Todd Paradis | Mar 11, 2020
 
ASA Supports Ability of USPAP to Prevent Appraiser Bias; Do See Potential Concerns with Overreliance on Sales Comparison Approach

On March 9, ASA sent a letter to the presidential campaign of former Vice President Joe Biden addressing his concerns about appraisals and home values in minority communities. In the letter ASA emphasizes that the Uniform Standards of Professional Appraisal Practice, or USPAP, is currently equipped to prevent explicit or implicit appraiser bias from affecting minority communities when enforced by the appropriate state appraiser licensing agency. Previously, Mr. Biden had broached the idea of creating new standards for appraisals to address concerns about home devaluation in minority communities.

ASA does acknowledge, however, that where lenders are overly reliant on the Sales Comparison approach historical factors that disproportionally affected minority communities (such as redlining) could create unintended issues when appraisers rely on historical sales transactions to develop their opinion of value. ASA encourages lenders to allow appraisers to more thoroughly consider the Cost and Income approaches when developing an opinion of value, and by using contemporaneous data better reflect current market activity while overcoming some engrained value impacts from redlining and other adverse factors. However, ASA cautions that intentional inflation of values without support can be equally as problematic as devaluation.

To read ASA’s letter to Vice President Biden, click here.