The Biden Administration is coming up with a new rule to help curb racial bias when it comes to home valuations.
On Thursday, Vice President Kamala Harris made the announcement. “Today, I’m proud to announce we are developing a rule that will require that financial institutions ensure that their appraisal algorithms are not biased, for example, that they do not produce lower valuations for homes owned by people of color,” Harris said on a call with reporters. “We are also releasing the guidance to make it easier for consumers to appeal what they suspect to be unbiased valuation.”
The plan is an effort to ensure homeowner prospects have fair algorithms and increased transparency when it comes to home valuations, the White House stated.
Harris went on to say homeownership is one of the most powerful ways for American families to create wealth. However, reports show Black and Latino families’ homes are more likely to be undervalued compared to other homeowners.
“Millions rely on the equity in their homes to put their children through college, to fund a startup, to retire with dignity, to create intergenerational prosperity and wealth,” Harris said. “We also know for generations many people of color have been prevented from taking full advantage of the benefits of homeownership.”
Harris said only about 5% of home appraisers are people of color. The Biden Administration hopes to increase the representation of people of color through their plan through training opportunities for groups underrepresented in the industry, NBC News reported.
The goal is “to make sure that people who conduct home appraisals better reflect the communities they serve,” Harris added.
Studies have found that white-owned homes are more likely than homes owned by Black people to be appraised at values that exceed algorithmic predictions, President Joe Biden’s domestic policy adviser, Neera Tanden, said on the call.
The administration will also make home valuation data for more than 600,000 properties public, which will provide data on 48 million homes, Harris said.
