New legislation was introduced in the U.S. Senate on Thursday that aims to address systemic appraisal bias in the homebuying and selling process.
The Appraisal Modernization Act was co-sponsored by Democratic senators Raphael Warnock, Angela Alsobrooks, Cory Booker, Andy Kim, Lisa Blunt Rochester and Elizabeth Warren. The legislation aims to support oversight and enforcement against bias by requiring the Federal Housing Finance Agency (FHFA) to publish an online database of property-level appraisal and other home valuation data that lenders collect in connection with a mortgage application.
It would also codify consumers’ rights to appeal home valuations — also known as a reconsideration of value (ROV) — or request a second appraisal. The legislation would direct the development of standardized policies to ensure consistent treatment of consumers who request an ROV or second appraisal.
“Together, these provisions will empower consumers to realize the full value of their homes,” Warnock’s statement read. “The urgency of this legislation was only further heightened when, last week, the Trump administration announced it was ending the federal task force dedicated to removing racial bias from the appraisal process.”
Alsobrooks stated she was proud to continue the work she started as a Maryland county executive to make homeownership more equitable and accessible.
“As county executive I signed a law that outlawed appraisal bias in Prince George’s County — and now it’s time we outlaw it across the nation. Homeownership should not be just a dream for the rich but an opportunity for all,” she said. “Many Marylanders see homeownership as the surest way to build wealth, and they’re right. This legislation will increase transparency, protect consumers and give Marylanders a true chance to thrive.”
Booker, the senior senator from New Jersey, said the legislation is needed because too many families of color suffer from systemic biases in the home appraisal process. Brookings Institution research has found homes in Black neighborhoods are valued roughly 21% to 23% below what their valuations would be in non-Black neighborhoods.
“One of the largest drivers of wealth for Americans is their home, and the color of your skin should not be a determinant of your home’s value,” Booker stated. “This bill is a critical step in ensuring more reliable appraisal methods, and empowering consumers to appeal potentially discriminatory valuations.”
According to Warnock’s statement, inconsistency in the appraisal market can disrupt the entire housing ecosystem by improperly inflating or deflating home values, while bias can perpetuate historic disinvestment in communities of color and contribute to the widening racial and ethnic wealth and homeownership gaps. That is why many industry stakeholders and fair housing advocates have long supported increasing transparency in appraisal data and why most responsible lenders believe ROV is an important part of maintaining the integrity of the appraisal process.
Studies have identified a relationship between lower home valuations in Black neighborhoods and revealed overt references to race in appraisals. One by the Federal Reserve showed that on average, white families today hold $1.3 million in wealth, compared to $211,000 for Black households and $227,000 for Latino families. For most Americans, the largest driver of wealth is their home, it stated. This makes it important to have accurate, unbiased home valuations.
“For far too long, the American Dream of buying a home has been kept out of reach for families of color by a system that is fundamentally broken,” said Senator Kim. “Every family should be able to achieve that dream, and this bill will take common sense steps to make the changes needed to make those dreams come true.”
Many industry leaders were included on the statement commenting on its importance, including National Fair Housing Alliance (NFHA) Executive Vice President Nikitra Bailey; Housing Policy Council (HPC) President Ed DeMarco; National Association of Mortgage Brokers President Jim Nabors; National Consumer Law Center Senior Attorney Andrew Pizor; and UnidosUS Senior Vice President of Economic Initiatives Laura Arce.
“An appraisal has the power to determine the value of a consumer’s most important financial asset and can hold the key to determining whether the consumer is able to purchase a permanent home rather than rent, access credit on reasonable terms and build wealth for generations to come,” said Bailey. “NFHA commends Senator Warnock and his colleagues for a sensible bill designed to help consumers, appraisers and lenders obtain the data necessary to ensure home valuations are fair and consistent.”
“I will always support any legislation that ensures the fairness, protection and privacy of homebuyers, and I applaud Senator Warnock for leading this effort,” said Nabors. “The reality is that we must be thorough in the quest to protect consumers, and we hope that your colleagues will consider this important bill as it navigates the legislative process.”
“The Appraisal Modernization Act is a vital first step toward remedying the decades of discrimination that have been baked into the home valuation system,” said Pizor. “The public appraisal database will enable researchers to develop more reliable valuation methods that do not rely on old data tainted by unacceptable attitudes and practices. And strengthening the consumer’s right to appeal a defective valuation will help them to protect their home equity going forward.”
