to washington, anytime, anywhere. >> c-span is your unfiltered view of government who are funded by these television companies and more including charter communications. >> charter is proud to be recognized as one of the best internet providers and we're just getting started, building 100,000 miles of new infrastructure to reach those who need it most. >> charter communication supports c-span as a public service, along with these other television providers, giving you a front row seat to democracy. >> housing and urban development secretary marcia fudge along with rorohit chopra and witnesses had appraisals on their california homes. this is just over two hours. >> good morning. thank you for joining the appraisal subcommittee on appraisal bias in the residential real estate market. this hearing is being recorded and live streamed at consumer finance.gov back slash events. i serve as chair of the board of the appraisal subcommittee or asc. i also serve as the deputy director for the consumer financial protection bureau, the cfpd. today's hearing presents an opportunity to learn more about appraisal bias and get that information to the public. here is what you can expect. asc executive director jim park will frame the discussion by providing a short presentation about the afc and its authorities. following his presentation we'll hear from a panel of witnesses who represent different sides of the appraisal transaction, home owner, lender, appraiser and an academic who has conducted statistical analysis of available data on appraisal bias. the witnesses will share their perspectives on appraisal bias, its scope, root causes and impacts on consumers and the marketplace more broadly. after opening statements from our witnesses, representatives of each of the seven agencies comprising the afc board will pose questions to the witness panel. to kick off today's hearing, we're honored to have the secretary of the u.s. department of housing and urban development, the honorable marsha l. fudge. secretary fudge's career has been dedicated to helping families and communities across the nation. before serving as the 18th secretary at hud, secretary fudge served as the director of budget and finance in ohio's cuyahoga county prosecutor's office, two terms as the mayor in warrensville, ohio and u.s. representatives for ohio's 11th congressional district from 2008 to 2021. throughout her service, secretary fudge earned a reputation of tackling the unique challenges confronting low income families, seniors and communities across the country. the secretary co-chaired the inner agency task force on property appraisal and valuation equity along with ambassador susan rice, the president's domestic policy advisor. the afc and the individual federal agencies represented on the afc board are also members of pace. i'm extremely pleased and honored to invite secretary fudge to the podium. [applause] >> good morning. that response, good morning. thank you very much. it's a pleasure to be here, i want to thank deputy director martinez. i'm certainly happy to be here and i want to thank all of the members of the appraisal subcommittee including vice chair bobby borland, a member of our team at hud. it's a pleasure to join so many of my colleagues, including fha commissioner gordon who will ask questions of our witnesses later and several other public servants who are committed to collaborating with our partners across government and industry to address this very important issue. mr. james spark, i thank you for your leadership and your partnership on the appraisal task force, your expertise, your passion and your commitment have made this a lot easier for us to move this process forward. i want to thank you for making a difference, we appreciate it. since day one, the biden-harris administration has worked to root out bias in the appraisal system. the work is critical to our efforts to advance equity, racial equity in particular in all that we do. and it is deeply important to me, both as secretary of hud and as a black woman. i know firsthand what it is like to be told that your home is worth less than the house down the street because of the color of your skin. it is heartbreaking to hear the stories from black and brown home owners across the country who feel forced to remove family momentos and photos in hopes of receiving a fair and accurate valuation. i do not intend to do that and i do not intend for anybody else to have to do it. the impact that discrimination has on a person cannot be overstated. the fair housing act of 1968 was signed into law 65 years ago to put an end to ugly practices of housing segregation and knowingly excluding black people and all those who have been pushed to the sidelines of our society for far too long. owning a home should provide a clear and direct path to the american dream. instead the current system continues to signal to people that look like me that this country does not see us as deserving of equitable treatment. as an administration, we knew we had a responsibility to address this issue thoughtfully. that's why on june 1st, 2021, 100 years after the tulsa race massacre, president joe biden and vice-president kamala harris established the interagency task force on property appraisal evaluation equity that are known. and the task force led by me and susan rice are the first to root out racial discrimination in the appraisal and home buying process. it's brought together a robust team of cabinet level and independent agencies to speak with one voice and exact change under existing authorities so families of all backgrounds, in all neighborhoods, can have a better chance to build a generation of wealth. less than a year after the task force was established, we delivered to the president an action plan that constitutes the most wide ranging set of reforms ever to advance racial equity in the home appraisal process and we didn't stop there. every day in earnest, we are delivering results together to empower consumers, make the appraisal industry more accountable, cultivate a well-trained and diverse appraiser work force and make sure technology does not perpetuate bias. at hud we've made $28 million available for -- to fund testing, education, and outreach efforts to communities on appraisal bias. next week, we will host the first webinar in a three-part series to train housing counselors, appraisers and housing professionals how to identify bias and protect homes. we know how to identify it because we see it every day. further, we are working to give people seeking fha financing an avenue for recourse if they believe their appraisal may have been skewed by racial bias. we also have a platform that all of you can make comments on that is our fha drafting table platform, please take the opportunity to do it. this is a major step and i'm going to just say a couple of things that are not on my script because i live this every day. i live in a black community by choice. director, you know that, by choice. but i want for my children in my schools get the same schools that people get in the neighbors next to me. you do that by property taxes, even though i think it's unconstitutional that we fund schools by the property taxes, but wii do. i want the same police protection, same fire protection, but you can't do it if my house is valued $50,000 less than the house next to me. two doors next to me is all white next to my all black neighborhood. my house is bigger, lot is bigger, my house is nicer, but that house is valued more than mine. this is not the america that we should be living in in the year 2023. it is a travesty. it is outrageous and as people of goodwill, we must change it. i am hopeful that all of the people who need to be at the table, whether it be the subcommittee, the foundation, come and do what is right for the american people. i hope you have a very robust and productive discussion today and i'm going to go back to work. thank you all so much. [applause] >> thank you secretary fudge. there are many aspects and considerations that attach to appraisal bias and today's hearing is not meant to be exhaustive. in fact, some crucial voices are not represented here today. based on the information we gather, the asc may hold additional topics related to appraisal bias. to help gather more information the asc is taking written comments from the public through february 8th, 2023, you can submit a comment by e-mailing appraisal bias [email protected]. it's now my pleasure to introduce the asc representatives. they are rohit chopra, julia gordon assistant secretary for housing and the u.s. housing and your began development. and the director of the housing financial agency. jean marie, deputy director credit union sources and expansion at the national credit union administration. luke brown, associate director for the supervision policy branch within the division of depositor and consumer protection at the federal deposit insurance corporation. and the deputy director of supervision and regulation at the board of governors at the federal reserve system and enos thomas at the comptroller of the currency. next, i'm pleased to introduce the asc's executive director jim park, who will provide remarks about the asc's mission and authorities. jim has served as executive director since 2009. jim, you have the podium. [applause] >> good morning, everyone. i'm jim park, i'm the executive director of the appraisal subcommittee and i've had the privilege as chair martinez just mentioned, this privilege since march of 2009. i'm also certified general appraiser in the commonwealth of virginia. this morning, i'm going to give a brief overview of the asc's role in the appraisal regularsy system and recent asc initiatives that address appraisal bias. first, i want to thank secretary fudge for her kind word. they are really greatly appreciated. the appraisal regularity system in this country is unique, you'll find anything unlike it in the united states or abroad. the system has been in place since 1989. when congress determined that appraisers play a vital role in the financial system and needed to be regulated. the appraisal regularly system consists of three main participants, the private sector, the state and the federal government. the most unusual aspect of the system is the nature of the authority afforded to the private sector. the appraisal foundation is a nonprofit organization that was given the extraordinary authority over the appraisal industry, which directly affects states, financial markets, and consumers. that authority is related to developing and issuing standards and ethics that appraisers must follow when developing and reporting real property appraisals and the minimum qualifications to become a state licensed or certified appraisers. the states are required that aphi the qualities, standards. the baseline of their appraisers. states can exceed the requirements, but not fall short of them. the states handle the administration of appraiser credentials, including disciplining appraisers who fail to comply with appraisal foundation and state requirements. the asc is an important part of the federal government piece of the puzzle. the asc is an independent executive branch, federal agency, with the seven-member board made up of the federal agencies you see seated before you today. the asc's role is focused on oversight and support of the appraisal regulatory system. in terms of oversight, reconduct regular compliance reviews of the state programs to determine their level of compliance with appraisal foundation and other federal requirements. if a state is found to be out of compliance, asc has the enforcement authority to ensure this they return to compliance. however, the asc's oversight of the foundation is limited to monitoring and reviewing their work. the asc has no enforcement authority as relates to the foundation or its boards. the asc also provides support to the regulatory system. we provide the support in the form of federal grants which are available to the states and to the appraisal foundation. my staff and i also spend a lot of time coordinating with the states, the foundation, and other industry stake holders to ensure they are informed on the asc's requirements for compliance with federal law and regulation and encouraging everyone in the regulatory system to work together to advance the needs of stake holders, including consumers. the asc also houses the national registry of appraisers and appraisal management companies. the asc operates a hot line online and by phone to provide referrals regarding complaints about noncomplaints with the uniform standards, set by the standards board and appraiser independent standards from home buyers, lenders, appraisers and others to the appropriate regulator. although currently the hot line only provides general information about where to file a discrimination or bias complaint, we are developing a strategy to expand the hot line to provide referrals from pro tension victims of bias and discrimination at both state and federal levels. why, why is the asc holding this hearing? well, as the federal agency charged with oversight of the federal appraisal regulatory system we have been increasingly concerned about the accounts of appraisal bias circulated in the national media over the past several years, as well as recent studies on the topic. the agency is also very concerned about the lack of diversity among appraisers, and excessive barriers to entry that likely deter entry into the profession, particularly for people of color. what is the asc doing to address these conversation? asc has made these issues a cornerstone of its work. we're using what is at our disposal to highlight appraisal bias and lack of diversity if the profession. since 2019 we've held two round table to obtain input from various experts in the appraisal, mortgage lending, regulatory, fair housing, and civil rights industries. we were fortunate enough to have secretary fudge open one of those round tables. we also commissioned a report by a consortium of fair housing and legal experts led by the national housing alliance to study appraiser standards and qualification toss ensure that neither the standards or qualifications systemized buys and both promote fairness, equity, objectivity and diversity in both appraisals and the training and credentialing of appraisers. that comprehensive study, which is available on our website, was issued just over a year ago and it resulted in some troubling conclusions and thoughtful recommendations as well. i encourage everyone to read it. the asc has also been a leader in the biden administration's property appraisal and valuation equity task force or pave, pave is led by secretary fudge, and includes 13 federal agencies and departments. >> it's all of government approach to address appraisal bias and ownership of people of color ensuring that everyone has equitable access to the value in their homes and the intergenerational wealth home equity builds. in response to the pave action plan, the asc recently sent a letter to the state regulatory programs urging them to address unnecessary barriers to entry and collaborate where possible to address them. we appreciate that states have the legal authority to establish qualifications exceeding the aqb minimum requirements, but we are encouraging the states to have an appropriate rationale in doing so. the asc has been involved in the occ's project reach which promotes financial inclusion through greater access to credit and capital. reach brings together leaders from the banking industry, national civil rights organizations, business and technology, to reduce specific barriers that prevent full, equal, and fair participation in the nation's economy. the asc is also using for the very first time hearings to highlight and amplify problems with appraisal bias and the need to diversify the profession. in closing, i want to thank secretary fudge, asc chair martinez and all of the members for their attention and leadership on this topic. while it won't be easy and nothing worthwhile ever is, working together, i'm hopeful we'll find solutions to these longstanding problems. i also want to thank the witnesses for participating in in hearing. in different ways, all of you, or your organizations, are in key positions to foster change and contribute to making appraisals free of bias and changing the appraisal industry so that appraisal professionals better reflect the communities they serve. the nda and dr. howe your data need today shine an empirical light on the problem and the austins through your willingness to come forward and share such a personal and painful experience. no one should have to hide who they are to obtain a credible appraisal that's independent, nonbiased and performs in a competent manner. thank you, and i look forward to today's discussion. [applause] >> thank you, jim. clearly the asc has the ability to make market impacts. we will now move to the witness portion of the hearing. witnesses will have approximately five minutes to share their thoughts on what appraisal bias is, its causes and its impacts. joining us as witnesses today are dr. howe visiting assistant professor of socialology at the university of illinois, chicago. paul austin and tenesha austin, home owners. and a chief economist at the mortgage bankers association, and craig steinley, president of the appraisal institute. we'll begin with dr. howell. dr. howell. >> thank you, good morning, representatives of the sub-- appraisal committee and doctors park and martinez. thank you for this opportunity to testify in front of you today. a decade ago my collaborator and i began researching appraisers. like most people taught that the property value was with ap ample retail establishments should be worth more. and as we began to investigate, something was off. at the time we were living in houston where there are several sought after black and latinx communities. and we were noticed they were valued considerably lower. and they were for sale and buyers had higher offers. there were three studies. the first study looked at houston's real estate market. we started by interviewing and observing over 100 industry professionals, excuse me, and we noticed that their racialized assumptions influenced how much they were appraising properties. that's not how they understood it themselves. they thought their method, the sales comparison approach was giving them the most accurate. and to test that we used nearly one million record of single family houses across the country that houston is located in, excuse me, and we noticed first that homes in committee communities were valued at 800% more than communities of color. now, granted, like appraisers and others repeatedly pointed out, there are many reasons, historical and contemporary and racist to urban planning and concentrated black and latinx with lower housing quality and less school resources and higher crime. we could eliminate those and compare apples to apples and we could have those that are comparable even with real estate demand. and homes in white neighborhoods were still appraised 250% more than homes in communities of color. what appraisers understood their method to be doing isn't what was happening. we were in houston and was this a national problem or changing over time? they led us to the next study that examined homes across metropolitan areas, 1980 to 2015. and homes were a quarter of a million dollars more than homes in community of color that were identical in comparable communities. more troubling, this was not explained by historical red lining and this was over time exago-- exacerbating. and we brought our research up-to-date and as well as using data from appraisers themselves. we were able to demonstrate that homes in white communities were higher than