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FFIEC Issues Statement of Examination Principles Designed to Mitigate Appraisal Bias
Michael Christians • February 17, 2024
On February 12th, the Federal Financial Institutions Examination Council (FFIEC), on behalf of its member entities, issued a statement of examination principles designed to mitigate appraisal bias.
According to the statement, during a consumer compliance examination, examiners will consider the following when determining whether an institution's risk management practices are appropriate to identify and address valuation discrimination:
- Board and senior management oversight of its real estate valuation program,
- The institution's due diligence and ongoing monitoring of third-party valuation providers,
- Policies and procedures in place to detect discriminatory valuation practices, and
- Evaluation of consumer complaints alleging potential valuation discrimination.
The statement goes on to remind institutions that their real estate valuation programs must also comply with the following laws and regulations: Equal Credit Opportunity Act; Truth in Lending Act; prohibition against unfair, deceptive, and abusive acts and practices; Uniform Standards of Professional Appraisal Practice (USPAP); and other appraisal regulations (e.g., NCUA Part 722).
You can access the FFIEC's statement here.
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Michael Christians Consulting, LLC
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