Home Buyers Get Right to Challenge Appraisals: New Law Targets Bias and Low Valuations

The Appraisal Modernization Act is a big deal for anyone buying, selling, or refinancing a home. At its core, this bill establishes a consumer right to request a second look—either a "reconsideration of value" or a subsequent appraisal—if they believe their home’s valuation is unsupported, deficient due to unacceptable practices, or reflects discrimination. This right applies to credit transactions secured by your primary residence, meaning if you’re getting a mortgage, this is your new safety net.

The New Rulebook for Appraisals

Think of this as a major upgrade to the Truth in Lending Act (Section 129E). The bill clearly defines what counts as an "unacceptable appraisal practice." This isn't just about getting a number you don't like; it targets specific, problematic behavior. For example, appraisers can’t use subjective terms without analysis, rely on incomplete data, or use inappropriate comparable properties without a solid explanation. Crucially, they are explicitly forbidden from making references to crime rates or statistics when evaluating a property. This provision is directly aimed at rooting out appraisal bias, which often relies on subjective factors to justify lower valuations in certain neighborhoods.

If you, the consumer, think the appraisal is off, your lender (the creditor) must have a formal procedure to handle your complaint. You get one shot to request a reconsideration or a subsequent appraisal before closing, or within 60 days if your loan application was denied because of the low appraisal. You’ll submit your request on a standardized form, which can include up to five alternative comparable properties and data sources you think the appraiser missed. This puts real power in the hands of the homeowner or buyer to challenge what they see as a bad call.

Who Pays When Things Go Wrong?

This is where the rubber meets the road for lenders. The bill requires creditors to perform their own review of the appraisal before handing it to you. If the creditor finds material deficiencies that aren't corrected, or if they have "reason to believe" the appraisal reflects discrimination—meaning they reviewed the evidence and suspect a violation of anti-discrimination law—they must order a subsequent appraisal at their own expense.

This is a significant cost shift. If you suspect discrimination, the lender eats the cost of the second appraisal to confirm or deny the issue. If the enforcement agency later makes a final determination of discrimination, the lender can then seek reimbursement from the original appraiser. This mechanism provides a strong incentive for lenders to take claims of bias seriously and for appraisers to ensure their work is bulletproof. For lenders, this means new compliance costs and the potential for absorbing the expense of a second valuation, but it’s a necessary step to ensure fair lending.

Shining a Light on the Market

Beyond the individual transaction, the bill takes aim at market transparency. It mandates that the Comptroller General conduct a feasibility study within 240 days to assess creating a public appraisal database. This database would combine appraisal data from major agencies like the FHFA, FHA, VA, and USDA. The goal is to create a searchable file that allows the public, government agencies, and researchers to see if financial institutions, appraisers, and even automated valuation models (AVMs) are operating consistently and fairly across all communities.

The report must assess the risks—like consumer privacy concerns or whether making certain data public could create unfair business advantages—but the purpose is clear: to provide data that helps determine if the housing market is serving everyone efficiently. This move toward data transparency is crucial for spotting systemic issues that individual homeowners currently have no way of seeing. For researchers and fair housing advocates, this database could be a game-changer, providing the necessary evidence to hold the industry accountable for inconsistent or biased valuations.