Home collateral GSE affirms its commitment to racial equality in housing

GSE affirms its commitment to racial equality in housing


In a recent Perspectives blog, “Our commitment to reduce evaluation bias“, Fannie Mae Vice-President, Risk Management for Single Family Guarantees Jake williamson examines media reports alleging racial bias in house ratings, as the nation focuses on inequality in the rating process.

“Fannie Mae is committed to racial equity in housing, and we take these allegations seriously,” Williamson said in the blog. “As one of the biggest consumers of home assessments in the United States, we wondered if we were doing everything we could to identify it and help prevent it. “

The GSE provides its Collateral Underwriter (CU) tool to the market, offering a set of risk indicators and messages, including triggers for potential overvaluation risk, appraisal quality risk and asset eligibility risk. . CU is regularly the subject of fair loan reviews by Fannie Mae’s Fair Lending team, and GSE says CU will experience improvements in 2022 with new message on undervaluation risk that will help lenders resolve potential bias issues early in the process.

“One of the first steps we take is research – we use our database of about 54 million reviews to analyze an undervaluation that might indicate bias,” Williamson said. “We believe the results of this research will help identify the root causes of undervaluation, and through our partnerships with industry, we hope to create solutions that will address it.”

When it comes to the racial makeup of the appraisal and appraisal industry, the Reports of the Evaluation Institute that rater demographics do not reflect the U.S. population because raters are 85% white and 78% male.

“While many factors can contribute to potential bias in assessments, having an assessment workforce that better represents the communities in which they work could instill more confidence in the process and mitigate bias. Williamson said.

In order to promote diversity, Fannie Mae collaborated with the National Urban League in 2018 to launch the Diversity Rater Initiative (ADI), designed to attract new entrants to the home appraisal field and help overcome entry barriers (such as education, training and experience requirements).

In addition to Fannie Mae’s efforts, Chase recently allocated $ 3 million to ADI, which also signed Freddie Mac as a lead partner, providing additional resources and advising support. Chase’s commitment to ADI will spend $ 1 million per year, for three years, to support intern training programs, and is expected to help approximately 700 students with costs that include textbooks, calculators and purchasing. any additional course required.

“We are proud to say that ADI is successful in attracting a variety of aspiring reviewers, awarding them scholarships and seeing them launch their careers,” said Williamson. “Jessica brown and Marcus Chevalier, two ADI fellows, represent a new generation of evaluators.

Click here to read Fannie Mae’s Perspectives blog, “Our Commitment to Reducing Appraisal Bias. “


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