New evidence on appraisals: One link in the chain of devaluation – Fortunately, important new research sheds considerable light on these issues and directly tests whether racial discrimination influences home valuations determined by licensed appraisers.
A team of economists and data scientists at Freddie Mac analyzed more than 12 million appraisals for purchase transactions submitted to Freddie Mac from January 1, 2015, to December 31, 2020 through the Uniform Collateral Data Portal (UCDP). Freddie Mac is a government-sponsored enterprise chartered to buy mortgages from banks in order to lower the cost and increase the supply of residential loans.
In practice, their strict standards set the industry norm for what qualifies as an acceptable loan, and they have access to uniquely detailed data on mortgages submitted by banks. The research team’s main finding is that homes located in majority Black neighborhoods and majority Latino or Hispanic neighborhoods are significantly more likely to have appraisals submitted to Freddie Mac that are below the contract price when compared to homes in majority white (not Latino or Hispanic) neighborhoods.
- The share of homes under-valued are 7.4% for homes in white neighborhoods, 12.5% in majority Black neighborhoods, and 15.5% in majority Latino or Hispanic neighborhoods.
- Readers may wonder whether an appraisal below contract price indicates discrimination and whether that discrimination is against the seller or the neighborhood.
The contract price is one agreed to by the buyer and seller. In most markets the transaction would take place as soon as that agreement was reached, but housing is different because an intermediary—usually a bank—has a stake in avoiding loans that reflect an inflated valuation of the underlying property.
If Black or Latino or Hispanic buyers routinely bought homes above their “true” price, this would be reflected in lower resale value. The Freddie Mac economists ruled this out, however, by observing no meaningful racial difference in purchase price for recently sold homes, after adjusting for home qualities.
Since Black and Latino or Hispanic homebuyers are not overpaying relative to recent sales of the same property, it stands to reason that the contract price is a more accurate reflection of the home’s true value than the appraisal. Thus, the Freddie Mac economists correctly interpret appraisals below the offered contract price as undervaluations.
- Of course, the homes and neighborhood conditions in Black and Latino or Hispanic neighborhoods are likely to be different than the homes and conditions in mostly white neighborhoods.
- The research team accounts for this in models they describe.
- Unfortunately, they do not disclose the results, but they report that the basic undervaluation pattern remains after they run models that control for the characteristics of the neighborhood and property and even appraiser effects (meaning they adjust for the fact that some appraisers may use algorithms that always over or undervalue relative to the mean appraisal).
The research team does not say whether the race of the buyer predicts lower appraisals relative to the contract price, but they provide strong evidence that appraisers discriminate against majority Black and majority Latino or Hispanic neighborhoods.
It would be instructive to ask appraisers to explain their valuations, but it is unlikely any would say they undervalued a home because of the racial composition of the neighborhood, since they are instructed not to do so. From the Freddie Mac analysis, it appears that appraisers choose a set of recently sold homes as comparables that are too low in their valuations.
One significant limitation to this study is that the Freddie Mac researchers define neighborhoods as White even when they are home to diverse populations, so long as 50% or more of residents are white. The problem is that a neighborhood that is 60% White reflects the U.S.
How many appraisals did Freddie review?
Freddie Mac study of 12 million appraisals shows racial disparity.
What is discriminatory appraisal?
Connolly & Mott v. Lanham et al. – In May 2021, a Black couple living in Baltimore sought to refinance their home to take advantage of the historically low interest rates. The mortgage lender they applied to, loanDepot, conditionally approved the couple’s loan subject to an appraisal by an independent third party: 20/20 Valuations, owned by Shane Lanham.
- The couple claims that when Mr.
- Lanham visited the home for the appraisal, the couple and their children—all of whom are Black—were present, and the home included family photos and other décor making it clear that a Black family lived there.
- A few days after the appraisal, the family received a call from loanDepot denying the application because the appraisal valued the home at only $472,000.
Some months later, the family applied for a new loan from a new mortgage lender. This time, they explained, they made the difficult decision to “whitewash” their home—replacing family photographs with photographs borrowed from white friends and colleagues, replacing their artwork with stock images featuring white subjects, and having a white colleague stand in for them during the appraisal.
Just a few days later, the family learned that their home appraised at $750,000. While they were then able to refinance their loan based on that appraisal, the interest rates at the time were higher than when they first applied. The family sued loanDepot, 20/20 Valuations, and Mr. Lanham under ECOA, the Fair Housing Act (FHA), and other federal and state civil rights laws.
loanDepot is fighting the case by, among other things, suggesting that it can’t be held liable for making a lending decision based on a discriminatory appraisal because the alleged discrimination was committed by a third-party appraiser. The Statement of Interest filed today by the CFPB and DOJ explains that, to the contrary, mortgage lenders can be liable under the FHA and ECOA for relying on discriminatory appraisals.
The law is clear that mortgage lenders cannot take race, sex, or any other prohibited bases into account when evaluating the creditworthiness of an applicant. That means lenders can’t rely on an appraisal if they knew, or should have known, that the appraisal was discriminatory. A contrary result would directly undermine the purpose of the FHA and ECOA to guard against discrimination in housing and access to credit.
The Statement of Interest also clarifies the pleading standard for FHA and ECOA claims. Read the joint Statement of Interest, Read DOJ’s press release on today’s joint Statement of Interest.
Does Freddie Mac require an appraisal?
For each Mortgage transaction that requires an appraisal, the Mortgage file must contain an appraisal report that meets Freddie Mac’s requirements to evidence that the Mortgaged Premises is acceptable collateral.
What are the different Freddie Mac appraisal forms?
The following appraisal report forms for all conventional appraisal reports are required to be submitted to the UCDP:
Uniform Residential Appraisal Report (Freddie Mac Form 70)* Manufactured Home Appraisal Report (Freddie Mac Form 70B) Small Residential Income Property Appraisal Report (Freddie Mac Form 72) Individual Condominium Unit Appraisal Report (Freddie Mac Form 465)* Exterior-Only Inspection Individual Condominium Unit Appraisal Report (Freddie Mac Form 466)* Exterior-Only Inspection Residential Appraisal Report (Freddie Mac Form 2055)*
*Indicates UAD forms.
How many appraisals are there a year?
Appraisals- Should It Be Yearly Or Half Yearly? ALL DISCUSSIONS (LIST) couvery 183 Hi All, Appraisals depends on the performance of the employee but I want your opinions for the number of appraisal in a year. Like, most often companies have yearly appraisals for the salary of the employees but also I have seen a few companies that offer appraisal twice a year. 369 Hi Couvery, The number of appraisals depends on a number of factors. Leaving aside salary appraisals, which should be done once a year, Number of Performance appraisals depends on the first initial appraisal; If no improvements are required (very rare), then half yearly appraisals are fine.
However, if an appraisal requires improvement(s), then a time limit should be set depending on the required improvement. For example, if the improvement is, say, accuracy in documentation, then a time limit of one month is acceptable before the next appraisal. If an improvement in, say, Sales Targets is required, then three months is acceptable.
And so on. It all depends on the improvement required and your or managements view on the time limit to be set. Therefore, there is no set number of appraisals. I hope the above helps. Regards, Harsh 16th July 2013 From United Kingdom, Barrow Ed Llarena, Jr. 89 Hi! In THEORY, appraisals can be done anytime as the company or HR may see the need for it. But appraisals and its mechanisms should be understood properly so it can be administered correctly. As we all know, appraisals are generally linked to certain personnel movements like regularization, promotion, bonuses, or dismissal.
Hence, there is a need to prepare the tool, administer/ coordinate its implementation, process/ interpret its results, and announce its effect/ impact to employees within certain specified timelines to meet top management’s calendar for such events. Moreover, regardless of a company’s need or desire, the following factors will determine the feasibility of multiple appraisal in a given year: 1.
The quantity of employees that a company has. The more employees a company has, the more difficult it will be to implement multiple appraisals within a year. When a company has thousands (e.g.5,000) employees, it will be nearly impossible to conduct more than one (1) appraisal per year.2.
- The size of the HR Department There are companies whose HR Dept is a “ONE MAN/ WOMAN TEAM”.
- If you are in this company, it will be impossible for you to conduct multiple appraisals in a given year- even if your company only has a few hundreds (not thousands) employees.
- Indeed, only big companies with a huge HR Dept can create a section or team that can focus exclusively on the preparation, implementation, and processing of appraisal results.
They are the ones that can realistically conduct multiple appraisals in a given year. Hope this helps. Best regards. Ed Llarena, Jr. Managing Partner Emilla International Consulting Services Tel: 00652-201-0568/ 17th July 2013 From Philippines, Parañaque rdkanna 1 Dear Sir, Normally we can conduct Performance appraisal twice in a year. But it is advisible that we should closely link the appraisal to salary increment once in a year. If we give appraisal once in six months, it will create more expectation from the employees side. 89 Hi! If your company (and HR) has the capability of implementing an appraisal twice (2X) per year, and you opt to do it once, it is your and/ or company’s option/decision/discretion. But the fear for “salary increase expectation” (that is associated with an appraisal) should never be a reason because HR can simply issue a memo clarifying the policy on salary increases (which is once a year) and the reasons for the conduct of a midterm appraisal.
But what about the employees who are due for regularization? Are they not supposed to be evaluated whether they meet the minimum standards of the company for the job by which they were hired? I know companies that implement appraisals twice per year because they believe that a “mid-term appraisal” (half year or 6 months) provides a good opportunity for review and assessment to determine early if employees are “on track” with their targets for the year.
If on track, the employee will be encouraged to continue and/ or move to achieve the milestone targets included in the performance plan; if NOT ON TRACK, the employee is made to undergo an immediate improvement/ corrective action so he/ she will be able to achieve the agreed target by the end of the year.
What is the most common appraisal?
The most common type of appraisal assignment is the development of an opinion of market value.
How do you identify discriminatory behaviour?
Examples of discriminatory behaviour are: Physical assault against a person or group of people. Derogatory name calling, insults and discriminatory jokes. Graffiti and other written insults. Provocative behaviour such as wearing badges and insignia and the distribution of discriminatory literature.
What is Freddie Mac appraisal identifier?
The unique identifier assigned by the Uniform Collateral Data Portal ® (UCDP ® ) to the appraisal data delivered to the UCDP for the subject Mortgage.
How long is an appraisal good for Freddie Mac?
The effective date of the appraisal report must not be more than 12 months prior to the Note Date of the subsequent transaction.
What are the standards for Fannie Mae and Freddie Mac?
Fannie Mae and Freddie Mac Requirements Fannie Mae and Freddie Mac have similar qualification requirements, which include: Debt-to-income (DTI) ratio as high as 43% or 50% in some cases. Credit score of at least 640 or 620 in some cases. Down payment as low as 3%
What are the 4 types of appraisals and explain their use?
The four types are the full appraisal, exterior-only appraisal, the rental analysis, and the broker price opinion. A full appraisal is the most common type of appraisal. How the appraised value is determined is the same for all home appraisal types. The appraisal costs for each is different.
What are the three types of appraisals?
In historical terms, however, appraisal practice has recognized that there are three main methods of appraisal, namely the Comparison Approach, the Income Approach, and the Cost Approach.
How many times performance appraisal should be done?
My viewpoint on performance reviews has changed dramatically over the years. Previously, I was of annual reviews; structured conversations and goal setting tied to annual raises. Generationally, the Baby Boomers desired regimented feedback with an annual formal face-to-face discussion.
However, social media, smart phones, 24/7 emails, remote work locations, and a very mobile workforce have antiquated annual performance reviews. They no longer meet the needs of all generations in the workforce; specifically, the Millennials. Millennials, the largest group in the workforce today, desire ongoing and hyper-connected discussion regarding what the employee is working on and what needs to be improved.
They crave feedback that is structured against their performance that outlines specific goals for immediate response. This also requires spending time with the employee to help them gain more acute insight into ongoing improvement, more efficient task-management, and achieving their set goals.
- Performance review discussions become a “coaching” opportunity to lead the employee to see gaps in their performance.
- The frequency of these conversations help the employee be more receptive to constructive feedback and less defensive as they see you as a coach and support system to help them meet higher standards.
Companies that refuse to alter their performance management approaches to meet the needs of all employees will lose the top talent Millennials in their workforce. When it comes to designing your approach, timing is everything. With older employees, if you do reviews too often, they may feel as if they are always being watched or may not have sufficient time to implement the feedback you are providing.
If you don’t do reviews timely enough, you may not catch issues with employees as quickly as you should. So how often is too often? Here are some factors outside of generational specifics to consider when determining the frequency with which your business should hold performance reviews. How Often Can You Afford to Increase Wages The majority of companies tie performance reviews in with raises or wage increases,
This is an incentive for employees to strive for better performance. Some companies do reviews and wage increases once a year, while others do them two times per year. One factor to take into account when determining timing of reviews is how often you can afford to increase wages.
If you tie performance reviews into wage increases and can only increase wages once per year, you may only wish to have one performance review. On the other hand, if you can afford to raise wages twice a year, or can do minimal increases, you may wish to do performance reviews bi-annually. How Much Time it Takes Managers to Complete Performance Reviews Another factor to consider when determining how often your company should have performance reviews is how much time it takes managers to complete these reviews.
Many companies think that they are saving money by doing reviews only one time per year, because then managers aren’t filling out review forms twice a year. However, managers may have to dig as far back as 12 months prior in an employee’s files or metrics to see how their performance has shifted or improved during the course the year.
- This can be time consuming.
- While a manager may have to fill out forms two times a year if you have biannual reviews, it may be less time consuming than digging through work a year old.
- Always consider how much time managers take in completing these reviews to find the solution that makes the most sense for your company.
How Far Back Do You Want to Hold Employees Accountable When deciding how often to do performance reviews, consider the lengthy of time for which you want to hold employees accountable. For example, a critical incident that occurred 10 or 11 months will be relevant in a performance review if you only hold them every 12-18 months.
- By that time, the employee may have already corrected the mistake, and having it resurface in a performance review can cause frustration and discouragement.
- Having more frequent reviews can ensure that a mistake or error that has aged out of relevance is caught and corrected sooner, and employees feel that supervisors are aware of their performance improvement.
How Long Does it Take Employees to Implement Change The final factor you need to consider when determining the frequency with which your company should hold performance reviews is how long it takes for an employee to implement the feedback they received from their last performance review into their work.
This varies greatly based on the industry of your business. In some industries, the employee can take the feedback and implement it into their work immediately. In a customer service based call center, an employee who isn’t excelling may be able to make changes to increase customer satisfaction immediately.
In other industries, it can take months for these changes to be implemented and then become evident. Employees may be making an effort, but the results may not yet show. In these instances, waiting a year between performance reviews may be beneficial. However, if results are shown quickly, you may want frequent reviews, to ensure employees are implementing the feedback they are given.
- Many companies do performance reviews as frequently as once per quarter or as far out as once every 18 months.
- However, most experts recommend you conduct performance reviews every 6-12 months.
- The exact frequency should vary from company to company based on how often they can afford to raise wages, how long it takes managers to conduct performance reviews and how long it takes employees to implement change and that to be evident in their results.
Considering all of these factors will help your company decide how often it needs to do performance reviews.
How often should appraisals occur?
What is an appraisal? – Appraisals are meetings set up by your employer that allow you both to discuss your work performance. There is no legal requirement to carry out appraisals, but most employers have a yearly or twice-yearly review process. Appraisals are often used to determine whether targets have been achieved and make decisions about future work.
Should you get multiple appraisals?
Conclusion – Appraisals provide a professional estimate of a property’s financial value. Lenders typically carry these out to determine the actual cost and potential risks of taking on a new property or provide funding for refinancing purposes. Valuations apply to residential and commercial properties with complementary approaches to determine current market values and income potential.
- While lenders often rely on one comprehensive appraisal, there are benefits to getting two or more appraisals.
- Multiple reports are valuable to everyone at the negotiating table.
- Appraisals protect sellers by providing accurate reflections of the property’s market value along with the improvements they made.
These provide buyers reliable estimates of the fair market value by comparing it to other recently sold properties in the area. Third, it assures investors that properties have the potential to generate revenue and protect their interests. Thus, multiple appraisals are ideal as these ensure properties have sufficient value to secure loans and guarantee investments for everyone involved.
Which of the three types of appraisal is the most thorough?
Detailed (narrative) method – the most comprehensive of the three. Allows the appraiser to guide the reader through the process by which the opinion of value was obtained.
What are the 2 basic types of performance appraisals?
Types of Performance Appraisals – Most performance appraisals are top-down, meaning that supervisors evaluate their staff with no input from the subject. But there are other types:
Self-assessment : Individuals rate their job performance and behavior. Peer assessment : An individual’s work group or co-workers rate their performance. 360-degree feedback assessment : Includes input from an individual, supervisor, and peers. Negotiated appraisal : This newer trend utilizes a mediator and attempts to moderate the adversarial nature of performance evaluations by allowing the subject to present first. It also focuses on what the individual is doing right before any criticism is given. This structure tends to be useful during conflicts between subordinates and supervisors.
There are many performance appraisal apps that have been developed to help companies automate the evaluation process.
Who are the largest residential real estate appraisal companies?
Nationwide leader in compliant residential real estate appraisal solutions – Our mantra is simple: A company is only as strong as the team behind it. Since our inception in 1987, we’ve offered an appraiser-staff model that has fostered the ability for our appraisers across the country to set their own schedule while receiving a steady volume of work.
- Utilizing this model allows us to attract and retain the highest-caliber residential real estate appraisers in the industry with access to the latest in superior technology, technical support and benefit packages.
- For our clients, this emphasizes our accountability in producing reliable, fully compliant residential real estate appraisal solutions and alternative valuation products.
Metro-West Appraisal is the largest independent residential appraisal firm in the nation, with staff appraisers located in over 80 major metro markets throughout the United States. Each office is staffed with full-time W-2 appraisers, helping to maintain quality and consistency throughout our entire network.
Clients are informed at every step of the appraisal process through our reporting and real-time status updates. Our team has a blend of diverse backgrounds offering vast personal and professional experience. Several of our support staff and appraisers are fluent in Spanish and Arabic, allowing us to communicate with our clients’ customers who speak these languages.
This enables us to provide more personalized service with an understanding of the changing regional marketplaces nationwide. Our appraisal professionals are prepared to serve institutions and individuals with equal care and consideration.
How much did Freddie leave his family?
When did Freddie Mercury and Mary Austin split up? – Picture: Getty While there had been rumours about Freddie’s sexuality, the constant presence of Mary meant his sexuality was not seriously questioned for some time. He dedicated the song ‘Love Of My Life’ to her, and proposed in 1973. Mary said: “I was speechless. I remember thinking, ‘I don’t understand what’s going on’. It wasn’t what I’d expected at all.”
- Freddie Mercury unseen photos: Brian May releases new-found private images of Queen bandmates
- Queen: Rare video of Freddie Mercury playing the drums at a band rehearsal in 1977 is phenomenal
- Freddie Mercury vs Crowd: When the Queen frontman challenged his fans to a spine-tingling sing-off
However, Freddie could not ignore his attraction to men and started having affairs. He is said to have told her that he was bisexual in 1976. Mary later said: “I’ll never forget that moment. I remember saying to him, ‘No Freddie, I don’t think you are bisexual. Virtual Coffee Break with Queen’s Brian May – the full interview
What is the highest level of appraisal?
The top level of appraisal license is the certified general appraiser license. This requires a total of 300 hours of course work, plus 3,000 hours of work experience and a degree. Certified general appraisers can assess the value of commercial and non-commercial properties of any value.
What’s the longest an appraisal can take?
Appraisals generally take 1 to 2 weeks, but can take as long as 4 weeks in a busy real estate market. The biggest reason for appraisal delays is lack of appraiser availability. The number of available appraisers is declining 3% each year.