Trump’s assault on DEI hasn’t ended federal efforts to stop appraisal bias

The appraisal industry shed no tears when the Trump administration sought to undo the Property Appraisal and Valuation Equity (PAVE) Interagency Taskforce, the federal effort to investigate racial bias in appraisals implemented by former President Joe Biden.

But that doesn’t mean appraisers have seen the end of federal regulation and litigation around appraisals, or the potential for discriminatory practices. That’s because while the Trump administration has rolled back many related initiatives, some remain in place.

That was the focus of a webinar hosted Thursday by the National Association of Minority Mortgage Bankers of America (NAMMBA), during which attendees received information on the current state of play and guidance on the issue of appraisal bias moving forward.

“When the Biden administration was always wrapping up, we had an environment where this was an area of major regulatory focus,” Olivia Kelman, a partner with Mitchell Sandler PLLC, said on the call.

“We don’t know where this is going to go, but from the perspective of understanding the regulatory environment and the legal risks around this topic, it’s significant that the administration is continuing enforcement actions in this area.”

Under Biden, the U.S. Department of Housing and Urban Development (HUD) issued two mortgagee letters (MLs) — official policy changes that apply to the Federal Housing Administration (FHA) — that applied new regulations related to fair housing and appraisals.

The first was issued in 2021. It sought to strengthen the Uniform Standards of Professional Appraisal Practices (USPAP) ethics code by requiring appraisers and mortgage lenders to demonstrate compliance with fair housing laws, in addition to clarifying and reinforcing other aspects of it.

The second was issued in 2024. It gave borrowers the right to request a reconsideration of value (ROV) and developed a process through which to do it. It established procedures for lenders to follow when a borrower initiated the process.

Under Trump, HUD rescinded both of these letters in March, stating that previous USPAP updates resolved the issues related to the first letter and deregulation with regard to the second one.

But the Department of Justice (DOJ) is still litigating a case in which a borrower — an African American woman — alleged that her application to refinance a mortgage in 2021 was denied on the basis of a discriminatory appraisal report, thus constituting a violation of the Fair Housing Act.

She claims her application was for a duplex in a predominantly white neighborhood in Denver and asked HUD to investigate. Charges were filed in October 2024. The defendants in the case are Rocket Mortgage, Maverick Appraisal Group, Maverick CEO Maksym Mykhailyna and appraisal management company (AMC) Solidifi.

While this would seem to be exactly the type of diversity, equity and inclusion (DEI) matter that Trump railed against on the campaign trail, the DOJ continues to pursue the case.

In the most recent developments in the case, the borrower filed an intervenor complaint that the defendants have submitted a motion to dismiss. Solidifi claims it did not know the borrower was Black, meaning she has no basis for a discrimination claim.

“The allegations in this particular lawsuit are that there was an intentional consideration of race in connection with the appraisal that was at issue, and an intentional decision by the lender to continue to rely on that appraisal,” Kelman said.

“There have been statements from various government agencies that fair lending enforcement will be focused on areas where there are identified instances of intentional discrimination. So this checks that box.”