TRENTON – In action meant to push back against discrimination in property appraisals, the Senate advanced the “Fair Appraisals Act.” The legislation sponsored by Senator Nellie Pou and Senator Troy Singleton would prohibit appraisal professionals from discriminating against individuals on the basis of the actual or perceived race, creed, color, national origin or other characteristic listed pursuant to the “Law Against Discrimination” during the appraisal process of a residential property.
The bill would also clarify enforcement of discrimination in housing appraisals, whether that discrimination is shown toward the property buyer or property seller.
Under the bill, S-777, appraisal professionals found to be engaged in discriminatory practices concerning appraisals of property would be subject to punishment imposed by the New Jersey State Real Estate Appraiser Board and the Division on Civil Rights, which could suspend the appraiser’s license, certification or registration, or order the holder to make restitution of the cost of the discriminatory appraisal, and require the license holder to attend an anti-bias seminar approved by the Real Estate Appraisal Board.
“Sadly, housing appraisal discrimination remains alive and well in New Jersey and elsewhere. As recent research has borne out, appraisals are systematically lower for Black and Latino families than for white families across the country,” said Senator Pou (D-Passaic/Bergen). “This law will help us further protect families from this discrimination and also contribute to lowering the racial wealth gap in our state.”
Based on research conducted by Freddie Mac, which looked at more than twelve million appraisals nationally for home purchases from 2015-2020, properties in Black and Latino census tracts receive appraisal values lower than contract price substantially more than in white tracts.
“Like other forms of racial housing bias over the years, appraisal discrimination strips wealth from families of color, who are not able to enjoy the same financial benefits of homeownership as their white neighbors,” said Senator Singleton (D-Burlington), Chair of the Senate Community and Urban Affairs Committee. “With this legislation we hope to ensure fair and unbiased home appraisals, which will ultimately help build generational wealth through homeownership equity.”
Nationally there are 78,015 housing appraisal professionals as of 2019 according to the Appraisal Institute. Of the 78,015 over 85 percent are Caucasian or white, 4.3 percent are Hispanic or Latino, and only 1.3 percent are Black or African American.
In a related bill meant to address discrimination in the housing market, the Senate also passed another bill sponsored by Senator Pou, as well as Senate Majority Leader M. Teresa Ruiz, which would eliminate harmful and discriminatory practices in the real estate industry.
The second bill, S-3317, would prohibit discriminatory practices in property appraisals and require real estate appraisers to participate in anti-bias training. Under the bill, a real estate appraiser would be prohibited from considering race, sexual orientation, and other personal characteristics as part of the appraisal analysis of a property.
The bill would require appraisers to complete a fair housing and appraisal bias education course offered by the Appraisal Qualifications Board (AQB) of the Appraisal Foundation. The bill would establish the course as a precondition to satisfy the appraiser’s continuing education requirements.
“Roadblocks within the housing industry are extremely detrimental to low-income communities, and disproportionately affect people of color. These discriminatory practices in real-estate appraisals produce damaging long-term effects, including limiting the building of equity and generational wealth,” said Senator Ruiz (D-Essex).
The bills passed the full Senate by votes of 22-11, and 30-2, respectively.