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The Federal Housing Finance Company (FHFA) isn’t doing all that it might probably to stop appraisal bias, in keeping with the company’s Workplace of Inspector Common.
In a report issued on Wednesday, the watchdog mentioned the regulator of Fannie Mae and Freddie Mac, which itself printed a report that drew consideration to racial bias claims in December 2021, ought to notify state regulators and licensing authorities when it finds instances of appraisal bias. It must also alert regulators and licensing authorities when it recordsdata complaints towards value determinations, the OIG mentioned.
The OIG discovered that the FHFA in 2022 made 17 referrals and offered 25.6 million lively appraisal information to the U.S. Division of Housing and City Growth (HUD), however didn’t take additional motion.
“The Affiliate Director of FHFA’s Workplace of Truthful Lending Oversight knowledgeable us that the Company doesn’t file complaints with the state licensing authorities and has no coverage in place on the topic,” the report mentioned.
The OIG additionally mentioned that whereas the FHFA recognized value determinations that made overt references to prohibited bases like race or coloration in sure appraisal studies it reviewed, the “FHFA has not decided the extent to which the Enterprises are utilizing value determinations that improperly take into account bases which can be prohibited by federal truthful lending regulation.”
The FHFA agreed to correctly file complaints with state regulatory companies for every appraisal specified within the December 2021 assessment. It additionally really helpful that the FHFA coordinate with Fannie Mae and Freddie Mac to find out which value determinations have detected bias. The brand new insurance policies are to be in place by Might of 2023.
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