Summary List Placement
When President-elect Joe Biden takes office in January, he will inherit a divided country with wildly mixed views on a wide range of subjects including systemic racism and discrimination — two issues that plague the housing industry.
Biden has said that tackling the discrimination based on race that is prevalent in the current housing market is a priority, and he has a several plans to combat the ever-widening racial wealth gap in real estate.
Here are the central actions he’s promised to take.
READ MORE: The winners and losers of Biden’s real-estate policies
Fix biased home-appraisal practices
When it comes to determining a home’s worth, Biden plans on implementing a national standard for appraisals. This would help prevent homes in communities of color from being undervalued.
A 2018 case study by the Brookings Institution found that when compared to neighborhoods with very few or no Black residents, similar quality homes in majority Black neighborhoods with similar amenities were valued 23% less.
“The undervaluation of housing in black neighborhoods has important social implications,” the report reads. “Black homeowners realize lower wealth accumulation, which makes it more difficult to start and invest in businesses and afford college tuition.”
Some appraisal industry professionals have objected Biden’s idea, using the argument that a national standard for appraisals already exists.
“The assertion that appraisers would systematically undervalue or overvalue real estate due to these factors is absurd and shows a profound misunderstanding of the real-estate valuation profession. Appraisers have nothing to gain by such behavior, and in doing so we would lose the hard-fought public trust we have achieved over many, many years,” the president of the Appraisal Institute, Jefferson L. Sherman, wrote in a letter to Biden back in March. “Since national appraisal standards and ethics requirements already are in place, and since those requirements are enforced as law, there is no need for additional standards.”
But a September study in the journal Social Problems found that the widening gap between Black home appraisals and white home appraisals could be attributed to appraisers using the “sales comparison approach” to valuing homes. This strategy, based off previously sold properties nearby, can result in unaware appraisers valuing homes based on pricing that was determined prior to the implementation and enforcement of fair housing laws in the 1960s and 1970s.
By using neighboring properties — whose prices may have been depressed for decades — as benchmarks, appraisers today “literally baked into the system the racialized element and continued it,” said Junia Howell, one of the authors of the study.
In addition to appraisals, Biden plans to allow the Office of Fair Lending and Equal Opportunity to enforce settlements against lenders who have discriminated against borrowers.
In 2018, under Trump, Acting Consumer Financial Protection Bureau Director Mick Mulvaney stripped the agency’s fair-lending office of enforcement powers, American Banker reported.
Bring back the Fair Housing Act
He would also re-implement the Affirmatively Furthering Fair Housing (AFFH) provision of the Fair Housing Act, which was introduced by the Obama administration but then suspended by the Trump Administration …read more
Source:: Businessinsider – Politics