HUD dissolves policies created by PAVE task force

The Department of Housing and Urban Development has “effectively disband[ed]” the Biden-era interagency Property Appraisal and Valuation Equity initiative, the federal housing agency announced late Thursday.

The department withdrew three mortgagee letters related to appraisal reviews, including the reconsideration of value process, it noted in its press release. These recessions were previously highlighted in an FHA mortgagee letter in March.

The move eliminates “unnecessary regulatory hurdles” impacting the mortgage industry and will help the Federal Housing Administration better serve homebuyers and homeowners, the department said in a statement.

HUD Secretary Scott Turner, who also recently terminated the Affirmatively Furthering Fair Housing rule, noted the elimination of PAVE-related policies will free mortgage professionals from “a tangle of red tape that drove up costs.”

“Under President Trump’s leadership, the Biden-era’s obsession with [diversity, equity and inclusion] and overregulation is over,” Turner said in a statement. “At HUD, we’re restoring common sense and putting the American Dream of homeownership back within reach.”

The PAVE task force was rolled out in 2021 as a means to root out racial and ethnic bias in appraisals. This issue gained national attention after several high-profile cases in which homeowners received low-ball appraisals while attempting to refinance during the pandemic. These incidents prompted the introduction of new federal guidance on appraisal practices.

In April 2024, the Biden administration touted its success in tamping down on racial bias in appraisals, claiming the so-called appraisal gap between white and Black homes had closed by 40% since the task force launched.

Jeffrey Clark, the acting head of the Office of Management and Budget (OMB), who worked with HUD to rescind certain PAVE-related policies, commented Thursday that “wokeism at HUD was a brass-tacks economic policy that snatched away the American Dream of homeownership from an entire generation.” 

“That ends today,” Clark added.

The Fair Housing Act and Equal Credit Opportunity Act, which prohibit discrimination in housing-related transactions, will continue to be enforced, HUD added.

Trade groups and housing advocates had a lukewarm reaction to the news, with some fair housing organizations, including the National Housing Conference, declining to comment.

The Mortgage Bankers Association, one of the largest trade groups for the industry, said its members are committed to “working with HUD, policymakers, and key stakeholders, including appraisers, to ensure borrowers receive an accurate estimate of the value of their home.”