Regulators take issue with discrimination definition in proposed appraisal standards

A proposed update of professional guidelines for property appraisals contains confusing language about what constitutes discrimination, and would even suggest appraisers could engage in “ethical” discrimination, regulators from across multiple federal agencies said Tuesday in a letter to the Appraisal Foundation’s Appraisal Standards Board.

The Appraisal Foundation is a nongovernmental, professional body with a congressional mandate to set appraisal standards and minimum real estate appraiser qualifications, which are adopted by states. The organization is currently in the process of updating its professional standards, the Uniform Standards of Professional Appraisal Practice. Federal regulators had previously written to the foundation to urge it to include a detailed statement of federal prohibitions against discrimination in the standards. However, in their letter, regulators said the most recent proposed update tries to distinguish between unlawful discrimination and “unethical discrimination”—the latter a term not well established in current law or practice, they said.

“Accordingly, we believe the introduction of the term in USPAP, and the resulting need to distinguish between unethical discrimination and unlawful discrimination, would create confusion in the appraisal industry,” the regulators said. They added that the inclusion of the term “unethical” suggests appraisers could engage in “ethical” discrimination, saying the draft further suggests such discrimination is a protected characteristic “essential to the assignment and necessary for credible assignment results.”