We have conducted, and continue to conduct, research and analysis using our database of more than 50 million appraisals to identify patterns of undervaluation and possible bias. The results help us identify root causes of undervaluation, and through our industry partnerships, we hope to create solutions that will address them.

Read: Appraising the appraisal

Fannie Mae’s Selling Guide outlines ways lenders are responsible for providing objective and unbiased appraisals as a part of lender responsibilities and further explicitly provides examples of unacceptable appraisal practices, including prohibiting:

• The development of a valuation conclusion based either partially or completely on the sex, race, color, religion, disability, national origin, familial status, or including a reference to any protected class of either the prospective owners or occupants of the subject property or the present owners or occupants of the properties in the vicinity of the subject property, and
• The use of unsupported assumptions, interjections of personal opinion, or perceptions about factors in the valuation process and the use of subjective terminology.

Learn about lender responsibilities and unacceptable appraisal practices.

The Appraiser Quality Monitoring (AQM) program is designed to improve appraisal quality by identifying patterns of quality issues in appraisal reports — which could indicate bias in some instances — and providing feedback directly to individual appraisers. In some cases, we refer poor quality appraisals to the relevant state appraisal oversight and licensing boards for further investigation. In 2021, we began including using text scanning tools that identify the use of prohibited language in appraisals to trigger additional AQM reviews. This includes references to subjective terminology, such as “good neighborhood,” “pride of ownership,” or “desirable location” as well as references to race, ethnicity, or religion. Use of prohibited language does not necessarily indicate bias in the valuation outcome, but it is a clear violation of the Fannie Mae Selling Guide.

Visit the Appraiser Quality Monitoring page

Better use of data, technology, and process design can be powerful tools to drive more factual, objective, accurate, and reproducible appraisals. Fannie Mae is on a journey of continuous improvement to make the home valuation process more efficient and accurate. We've transitioned to a spectrum of options to establish a property’s market value, with the option matching the risk of the collateral and the loan transaction. The spectrum balances traditional appraisals with appraisal alternatives. Options include the use of automated valuation models to validate the estimated property value, the collection of updated property data to confirm the model value, and the use of alternative-scope approaches, like hybrid and traditional appraisals. This valuation spectrum mitigates appraisal pain points and risks of human bias.

Visit the Valuation Modernization page.

The Appraiser Diversity Initiative (ADI) was launched to raise awareness of real estate appraisal career options through outreach events and to facilitate opportunities for overcoming barriers to entry in the field. In conjunction with the Appraisal Institute, Freddie Mac, and the National Urban League, Fannie Mae is helping to build appraisal career path awareness. ADI focuses on scholarships, mentoring, and an introduction to job opportunities, using approaches designed to educate, advise, and provide financial assistance to candidates through scholarships.

Learn more

Collateral Underwriter® (CU®) is a free, web-based application that helps lenders manage collateral risk as part of their underwriting and quality control processes. In June 2022, we added an undervaluation risk flag with 16 risk reason codes to complement the existing overvaluation risk flag and reason codes. These flags can help lenders allocate finite appraisal review resources to proactively identify and correct cases of mis-valuation. We have seen that appraisers are much more likely to revise their opinions of value in cases where the flags fired. This ultimately benefits homeowners and borrowers by providing them with more accurate information about the value of their homes, by supporting lenders in making prudent lending decisions, and by strengthening Fannie Mae's safety and soundness.

Visit the Collateral Underwriter page

Fannie Mae and Freddie Mac (the government-sponsored enterprises) are collaborating to update the Uniform Appraisal Dataset (UAD), retire the existing appraisal forms, and redesign the Uniform Residential Appraisal Report (URAR). By capturing more property and market information as objective data points and using less free-form commentary, this will help reduce subjectivity and thus lessen the risk of bias in the appraisal.

Visit the Uniform Appraisal Dataset page.

In addition to the work streams above, Fannie Mae often publishes Perspectives Blogs, Appraiser Update articles, and other commentaries to educate the industry and fight potential appraisal bias. Below is some of this growing body of work.

Our commitment to reducing appraisal bias

How we manage appraisal quality

The journey to a more efficient and fair home valuation process

Progress report regarding prohibited or subjective appraisal language

Updated unacceptable appraisal practices

Prohibited factors and subjective terms

Improve appraisal commentary with facts, not feelings

Avoiding problematic phrases