They screwed up healthcare, the energy industry, finance, and now they are attempting to increase control over the housing market…
Biased from the beginning…
It is impossible to believe that any effort headed by three black, radical, racist, progressive communist democrat Obamacons whose Marxist viewpoint demands divisions between whites (oppressors) and minorities (Oppressed victims) can produce an unbiased report useful for anything other than demanding more government regulation of the housing market.
The real estate valuation industry…
Residential real estate valuations are produced either by automated systems using recently-sold comparables or a deeper appraisal by an individual appraiser who looks at other factors in addition to recent comparables. It is a disjointed industry rife with fraud. Like the corrupt rating agencies, the appraisers are typically selected and approved by the mortgage originator or lender. The trick is to secure the highest appraisal supporting the highest loan – with the loan risk passed from the mortgage originator to an investor in the secondary market as the mortgage is securitized. Underwriting criteria and appraisals will be more conservative in the case of a portfolio lender who will own the loan.
But no matter how an appraisal is produced, there is an underlying truth: the immediate area where the property is located pretty much determines its value. Therefore, it would be expected that a property in a decaying inner-city location situated on a block with ramshackle properties will not and cannot be accurately appraised to support higher loan risk levels on a racial basis.
Therefore, it appears that the federal government wants to take over the appraisal industry to ensure diversity, inclusion, and equity – an apt acronym, DIE!
The Fudge Report -- also known as the “Action Plan to Advance Property Appraisal and Valuation Equity”…
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Excerpts -- Executive Summary
This Action Plan to Advance Property Appraisal and Valuation Equity (PAVE) (“the Action Plan”) is the blueprint for how all Americans can benefit fairly from the equity built through homeownership.
Specifically, this Action Plan:
- Outlines the historical role of racism in the valuation of residential property;
- Examines the various forms of bias that can appear in residential property valuation practices; and
- Describes affirmative steps that federal agencies will take to advance equity in the appraisal process, and outlines further recommendations that government and industry stakeholders can initiate.
New studies validate appraisal bias in the U.S. housing market
Researchers have observed a market value gap between majority-Black and majority-white neighborhoods for decades. On average, homes in majority-Black neighborhoods are valued at less than half of those in neighborhoods with few or no Black residents. Statistical analyses show that accounting for neighborhood and property characteristics and amenities—such as the age of the property or its proximity to public transportation—does not explain the entire disparity. Recent research has identified appraisals as one of the drivers of the gap.
[OCS: There is little doubt in my mind that flawed statistical analysis by progressive-biased researchers produces flawed studies. Drive through almost any poor neighborhood, black or white, and you see mostly decaying homes in decaying neighborhoods where the funds needed to maintain or improve the property are allocated to life’s necessities. In some areas, vandals will deliberately deface freshly painted surfaces or destroy property improvements – sort of a visual statement of equity or jealousy.]
New research from Freddie Mac (2021) using census data finds 12.5 percent of appraisals for home purchases in majority-Black neighborhoods and 15.4 percent in majority-Latino neighborhoods result in a value below the contract price (the amount a buyer is willing to pay for the property, compared to only 7.4 percent of appraisals in pre-dominantly white neighborhoods. This research corroborates prior observations that a neighborhood’s average appraised property value tends to decrease as the share of historically marginalized populations increases.
[OCS: Both Fannie Mae and Freddie Mac are two corrupt quasi-governmental, Democrat-created, and dominated institutions that control the residential loan market. Like the CFPB (Consumer Financial Protection Bureau), they are highly politicized and are aligned with the progressive communist democrat agenda.]
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The research the progressive communist democrats ignore…
The proximate cause of racial disparities can be correlated to the government’s misguided and mismanaged efforts to address actual or imagined disparities using welfare programs, school quality initiatives, criminal justice reform, developer-driven special interest urban renewal, and public housing creation and management. All of which are rife with corruption and incompetence.
Consider the progressive communist democrat’s efforts to destroy the nuclear family when it is a statistical fact that married couples have higher homeownership rates than single individuals -- regardless of race. Perhaps the government should incentivize marriage in minority communities and promote individualism and financial responsibility.
A blatant power grab to control the housing market...
This flawed report will drive the House Financial Services Committee hearings, under the Chairmanship of the corrupt, disgraced Maxine Waters (D-CA), on the proposed Fair Appraisal and Inequity Reform Act, which would hand over the nation’s entire home valuation process to a new agency known as the FVA (Federal Valuation Agency.)
Bottom line…
The goal of the progressive communist democrats is three-fold: to extend the government’s control over the housing markets through valuations and loans, to financially compel citizens to migrate to easily-controlled dense inner-city population centers with freedom-limiting mass transit, and to eliminate private property. A model developed in Beijing and Moscow.
How many people watch large corporations like Black Rock buying up swaths of real estate through real estate investment companies to create continuing rental cash flows?
Letting the government control the housing market is as dangerous as letting them control healthcare, the energy industry, the financial industry, and food production.
We are so screwed.
-- steve