What's Changed About FHA Appraisal Guidelines
These policy changes required modifications to HUD 4000.1, the FHA Single Family Lender’s Handbook.
The changes were made and announced as being effective immediately including a major alteration to HUD 4000.1 in the form of a new section of the rulebook that includes specific Fair Housing Act compliance in the area of “appraiser conduct.”
That modification includes the usual requirement to be competent, independent, and objective. But the new rules state clearly that the appraiser working on an FHA case may not, as published on HUD.gov:
- Discriminate in developing any part of the appraisal or value conclusion based on characteristics that are protected by federal, state, or local laws.
- Misrepresent the scope of work performed in the completion of the FHA appraisal.
- Develop an appraisal report to FHA that is knowingly misleading or fraudulent.
HUD’s press release about these changes includes a requirement that no part of the FHA appraisal process violates Fair Housing laws.
That would mean the appraiser may not allow non-appraisal related factors such as race, color, religion, sex, “actual or perceived sexual orientation”, actual or perceived gender identity, age, actual or perceived marital status or any other non-relevant factor described in the Fair Housing Act.
Why the push to upgrade these rules? Housing discrimination is still a major American problem in spite of the Fair Housing Act. Evidence of this can be found in a report by the National Fair Housing Alliance from 2020--that report indicates there are still many areas where the American housing market needs improvement.
“Complaints alleging discrimination on the basis of disability continued to constitute the largest percentage of complaints at 58.90 percent, followed by race-based complaints at 16.47 percent, and familial-status-based complaints at 7.71 percent.”
Have you have experienced it at any stage of the housing process whether renting or buying? If so, report it to HUD by calling them at 1-800-669-9777 or 1-800-877-8339. If you don’t report the discrimination you experience when looking for a home, the same violators of the Fair Housing Act may repeat this illegal discrimination with other applicants. Don’t allow the abuse to continue--report it if you experience it.
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