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Comment

My name is Leigh Lester and I am the Founder/Executive Director of the Ubuntu Institute of Learning. As a former mortgage banker and currently a trainer and consultant in the affordable housing & diversity, equity & inclusion space, I wanted to comment on two points:

* Valuation differences by borrower and neighborhood ethnic makeup.

Regarding potential bias in appraising or the historical devaluing of properties in black & brown communities(See attached) from a community advocates perspective, I would like to see more transparency. From academia, we are hearing there is bias, there is no bias with both providing data and analysis to support their claim. All of this serves to increase public distrust of the appraisal industry (To those not affiliated with the appraisal industry valuation from the city is the same as from an independent appraiser - See article regarding Black taxes).

1. Make the process for filing a complaint consistent nationwide and available to the public
2. I also recommend that like Dodd-Frank requires mortgage lenders to be licensed which weeds out bad apples by preventing them from just changing locations and opening up shop again, the same should be done for appraisers.
3. We need to not just collect & analyze data on homes that sell but also homes where the sale falls thru especially in black and brown communities. My understanding is, that that data is not being collected and analyzed at the time. We are missing a whole subset of information. I am not saying that there will be a huge difference but without collecting the data there is no way to know.
4. Also, put a collective effort into removing the impediments to becoming an appraiser, Our communities weren’t devalued by just one discipline. That was a collective effort kicked off with the support if not the best of our federal government. So we need that same collective effort going into the solution as well as federal support for the effort. It needs to be as robust in correcting the damage done as it was in creating it.
5. Finally. Focusing and investing in appraisers of color is absolutely necessary because of that whole trust issue. That means actively supporting culturally appropriate marketing efforts reaching them where they are. There is a phrase used by inclusive marketing organizations “Nothing about us, without us.”

A question that a few have brought up is the issue of Equity. We know as Jillian White and others so eloquently demonstrated, the systemic devaluing of black & brown communities is still being felt today and I would posit that is because it has never been addressed in any meaningful way. I would invite FHFA to begin having that dialogue as well. We need to be at that table.

* Automated Valuation Models (AVMs) and appraisal waivers

According to the California Housing Partnership and the Southern California Association of Nonprofit Housing, 568,255 new units are needed to satisfy the demand of lower-income renters.

Median rents in Los Angeles County increased by 25% between 2000 and 2012, while the median income declined by 9%. One in nine homeless people is a veteran. This shows our values as a state, a nation.

151,278 were homeless as of 2019. Up 17% not from 2015 or 2016 , but from the year before in 2018.

Last year in Los Angeles County, there were 66,433 homeless up 13% from the year before.

In southern ca, the housing market is growing and homes are beginning to sell for more than they appraise for again. Realtors are requesting the contracts should be submitted without the appraisal contingency again or they push for an appraisal waiver. This poses several societal problems as I see it.

1. The low-income/minority communities will get pushed out of their currently affordable communities or they will not be able to move into more favorable communities because they are losing opportunities to purchase because of their limited funding options.
2. Not too long ago, during the mortgage market crisis, people of considerable mean were walking away from their homes because the values had dropped and they owed so much more than their homes were worth. Well, that can very likely happen again after this pandemic with so many people unemployed or under-employed and with so many jobs permanently lost.
3. Looking at this through a Community Development lens, this practice will cause black and brown neighborhoods to get gentrified at a faster rate. See what happened after the last recession to black and brown communities. (Article attached)

The Uniform Appraisal Dataset (UAD) and the design of appraisal forms;

Add a simple summary page for the general public.
The current appraisal form (1004) is difficult for the average consumer to understand. If we are to make sure we have the public trust then along with transparency, we need to add a document that clearly and simply shows them the value and how it was reached. Similar to how the mortgage documents were simplified so consumers could easily compare the costs from lender to another, a consumer should be able to look at their property and see how it is compared to other homes in the neighborhood.