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Black Knight Inc. has announced the launch of a tool designed to help mortgage lenders, appraisers, and appraisal management companies identify potential minority bias in the home valuation process.
The CA Risk Profiler Plus is designed to flag potentially problematic valuations and enable a more rigorous collateral review process that can help reduce risk exposure for lenders and appraisers and support more equitable underwriting decisions.
The tool evaluates an appraiser's list of selected comparables — such as properties with similar characteristics to the subject property — against a list derived from the software, data, and analytic company’s comprehensive U.S. property database, company officials said. By identifying discrepancies between the two lists and by analyzing certain patterns, CA Risk Profiler Plus can alert customers when an appraisal may contain potential bias.
"Today's appraisers must balance market demand for speed and efficiency with their obligation to support home valuations that are objective, equitable, and accurate," said Mike Sklarz, executive vice president, managing director of collateral analytics. "CA Risk Profiler Plus combines valuation science and Black Knight's market-leading property data assets to make it easier than ever for appraisers, AMCs, and lenders to identify and remove subjectivity from the appraisal process."
Appraisal bias has been the subject of discussion on a national level as research shows that inequities in home lending and appraisal processes disproportionately impact communities of color. Research by Freddie Mac, as reported by National Mortgage Professional, showed that appraisers' opinions of value are more likely to fall below the contract price for homes in majority Black or Latino census tracts than for those in white tracts.
Also, an action plan published last month by the Interagency Task Force on Property Appraisal and Valuation Equity (PAVE) called on housing industry stakeholders to take affirmative steps to advance equity in the valuation process by addressing potential bias in appraisals and AVMs.
"U.S. policymakers are actively working to address valuation bias and its impact on America's racial wealth gap. PAVE's action plan clearly signals that industry stakeholders can expect greater process scrutiny and regulatory action in the near future," Sklarz said. "Black Knight is responding to this emerging trend by investing in tools like CA Risk Profiler Plus that help position lenders and appraisers to address valuation bias in a proactive manner that is grounded in objective data."