This Brief examines racial equality in the valuation homes receive in an appraisal as part of the process to obtain a mortgage to purchase a home or to refinance an existing mortgage. The first sections of the Brief utilize county-level summaries from the Federal Housing Finance Agency’s (FHFA) Uniform Appraisal Dataset (UAD). These data offer a contemporary overview and trends in the volume, type, and average dollar value of completed appraisals for purchase and refinance mortgages. The next section also offers a county-level presentation of the degree to which appraisals for home purchases comport with sale prices. The next section focuses on neighborhoods in Philadelphia, the central city of the region. FHFA UAD data are used to observe any patterns in the degree to which appraisals connected with GSE-related home purchase mortgages match sale prices. This effort has limits because, in recent years, the UAD has a substantial amount of data suppression at the census tract level making sub-city generalizations less secure than larger geographies. The final section of this Brief uses data reflective of applications for cash-out refinances that were denied with the stated denial reason being “collateral.” Collateral, or the value (as established typically by an appraiser) of the home that is pledged to secure a mortgage, is one of multiple reasons a lender may have to deny a mortgage application.
The two analyses, using different data reflective of different kinds of transactions, point to a similar finding: if you are Black or Hispanic or live in a minority neighborhood, it is more likely that you will have an appraisal that is less than the market value of your home. And if you are a Black homeowner or live in a predominantly Black neighborhood in Philadelphia, you are more likely to have your application to refinance your mortgage denied because of your collateral.
Ira Goldstein, Ph.D., is the Senior Advisor of Policy Solutions at Reinvestment Fund, a results-oriented, socially responsible community investment group. Dr. Goldstein has conducted detailed spatial and statistical analyses in many cities and regions across the US.
Gregory D. Squires is a Research Professor and Professor Emeritus in the Department of Sociology at George Washington University. Currently he is a member of the Fair Housing Task Force of the Leadership Conference on Civil and Human Rights, the Social Science Advisory Board of the Poverty & Race Research Action Council, and the Board of the Duke Ellington School of the Arts in Washington, DC. He has served as a consultant and expert witness for fair housing groups and civil rights organizations around the country including HUD, the National Fair Housing Alliance, the National Community Reinvestment Coalition, and many others.
Alana Kim is the Civic Data Manager for Reinvestment Fund’ Policy Solutions group. In this role she maintains and improves department data infrastructure and practices, and support projects on matters of data – including discovery, curation, analysis, preservation, and visualization.
Zoe Millstein is the 2024-2026 Jeremy Nowak Fellow at Reinvestment Fund, where she works primarily with the Policy Solutions team on quantitative and qualitative research. Her projects cover areas such as affordable housing, real estate market analysis, and early childhood education.
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