On July 10, the U.S. Department of Housing and Urban Development (HUD) and the Office of Management and Budget (OMB) jointly announced the effective disbandment of the interagency Property Appraisal and Valuation Equity (PAVE) Task Force, a Biden-era initiative aimed at addressing discrimination in real estate appraisals through a whole of federal government approach. The announcement states that this decision to eliminate “the core policies of the PAVE Task Force” is in response to President Trump’s Executive Orders, including Ending Radical and Wasteful Government DEI Programs and Preferencing and Delivering Emergency Price Relief for American Families and Defeating the Cost-of-Living Crisis.
Specifically, HUD Secretary Scott Turner and Acting Administrator of the Office of Information and Regulatory Affairs (OIRA) Jeffrey Clark at OMB stated that several policies associated with the PAVE Task Force have been terminated. These include:
- ML 2024-16: Extension to the Effective Date of Appraisal Review and Reconsideration of Value (ROV) Updates.
- ML 2024-07: Appraisal Review and Reconsideration of Value.
- ML 2021-27: Appraisal Fair Housing Compliance and Updated General Appraiser Requirements.
The announcement indicates that these changes are designed to eliminate what HUD describes as “burdensome policies” and “onerous hurdles” that have increased costs, inhibited access to homeownership, and discouraged market participation. The policy terminations will also allow HUD’s Federal Housing Administration (FHA) to better serve American homebuyers and homeowners.
The announcement states that the federal fair lending laws (Fair Housing Act and Equal Credit Opportunity Act), which prohibit discrimination in housing-related transactions, including the homebuying and lending processes, will continue to be enforced by the agencies.
Critique of PAVE Task Force
The PAVE Task Force was established by President Biden 2021 in response to media reports concerning discrimination in appraisals and systemic under-valuation of residential properties in Black and Hispanic neighborhoods. Led by HUD, the PAVE Task Force was instructed to evaluate the causes, extent, and consequences of appraisal bias and to establish a transformative set of recommendations to root out racial and ethnic bias in home valuations. The PAVE Task Force issued a comprehensive action plan in 2022, stating it would exercise broad oversight and compliance authority to strengthen “guardrails against unlawful discrimination in all stages of residential valuation.”
While the PAVE Task Force undertook various initiatives on both an interagency and single agency basis from the period 2022-2024, it was criticized in some quarters for overreaching, increasing compliance burdens on financial institutions, and focusing too narrowly on appraisers while not addressing the root causes of valuation disparities. The HUD/OMB announcement argues that factors unrelated to race, such as educational attainment and credit scores, are more significant drivers of appraisal outcomes.
Our Take
The dismantling of the PAVE Task Force was not unexpected, but it remains to be seen what becomes of various other actions taken by federal agencies under the umbrella of the PAVE Task Force and whether those policies or rulemakings will be rescinded or withdrawn. Each federal agency will continue to have legal authority under the Fair Housing Act and the Equal Credit Opportunity Act to address appraisal-related issues, but the elimination of the PAVE Task Force will make it more difficult to address appraisal bias systemically.
