ABA: Combating appraisal bias starts with appraisers, regulators

Appraisers and their state regulators are in the best position to limit bias in the appraisal process as banks are not well-positioned to detect such bias, American Bankers Association Vice President Sharon Whitaker told the federal Appraisal Subcommittee during a hearing today on the subject. Whitaker was one of five witnesses to address the subcommittee of the Federal Financial Institutions Examination Council that provides federal oversight of state appraiser and appraisal management company regulatory programs. She noted that ABA members regularly discuss policies and procedures to promote the accuracy of appraisals and allow all residential borrowers to request reconsiderations of value, with the association having a working group on appraisal-related topics.

“Most, if not all, banks have pre-established complaint monitoring systems with formal procedures for receiving informal and formal consumer complaints,” Whitaker said. “[ABA] members report that complaints that include any allegation of appraisal bias are identified and escalated within the complaint monitoring process, so these complaints can be addressed by bank staff with appropriate training.”

Still, banks are not in the best position to detect bias except in cases where an appraiser includes biased remarks in an appraisal’s narrative section, Whitaker said. That job is best left to appraisers and their regulators, she added. “Banks are committed to fairness and equal treatment of consumers, and they’re interested in exploring workable means to identify potential bias. These efforts, however, do not mean that it’s appropriate to impose legal responsibility for hidden bias on banks.”