New Appraisal Database Will Expose Housing Bias; Gives Homebuyers the Right to Challenge Low Valuations

The newly proposed Appraisal Modernization Act is designed to tackle a persistent, costly problem in the housing market: unfair and potentially biased property valuations. This bill does two major things: it creates a massive, public database of appraisal data and gives consumers a formal right to challenge a low valuation, forcing lenders to review the evidence.

The core idea is transparency. The bill requires major government-backed entities—like Fannie Mae, Freddie Mac, and the FHA—to hand over all their appraisal data collected since January 1, 2017, and continue submitting data quarterly going forward (SEC. 2). This isn't just the final value; the database will contain detailed, itemized information about the property, the comparable sales used, the adjustments made to those sales, and, crucially, the borrower's race and ethnicity. Within two years of enactment, this massive dataset will be put online, searchable and downloadable for the public. This means researchers, journalists, and regulators will finally have the raw data needed to spot patterns of bias—like habitual low valuations in specific neighborhoods—that have been historically hidden.

Your Right to Fight a Flawed Appraisal

For the average person buying or refinancing a home, the biggest change is the new Right to Reconsideration of Value (ROV), added to the Truth In Lending Act (SEC. 3). If your appraisal comes in low, limiting your loan amount or killing your sale, you now have a formal process to challenge it. The law clearly defines "unacceptable appraisal practices," which include things like using bad data, making unfair adjustments, or citing unsupported opinions.

If you think the appraisal is flawed or discriminatory, you get one shot to submit a challenge to the lender, either before closing or within 60 days if your application was denied. You must explain why it's flawed and can include up to five alternative comparable properties you think the appraiser missed. The lender must then use a standardized format to send your concerns directly back to the original appraiser for review and a revised report.

When the Lender Has to Pay

This is where the teeth come in. If the original appraiser doesn't fix material problems found by the lender, or if the lender suspects the appraisal reflects discrimination, they must order a brand new appraisal from a different appraiser—and they have to pay for it (SEC. 3). If a government agency later determines that discrimination did occur, the original appraiser is required to reimburse the creditor for the cost of that second appraisal. This provision shifts the financial risk away from the consumer and onto the parties responsible for the valuation, adding a significant layer of accountability for appraisers and lenders.

Who Carries the Load?

While consumers and fair housing advocates clearly benefit, this bill introduces significant new compliance work for lenders and appraisers. Financial institutions must now establish formal procedures for handling ROV requests, managing the paperwork for seven years, and taking on the administrative burden of collecting and submitting extensive historical and ongoing data to the new federal database. Appraisers and Appraisal Management Companies (AMCs) will face unprecedented scrutiny, as their work will be publicly visible and subject to formal consumer challenge, backed by the threat of having to pay for a second appraisal if bias is found. This is a big step toward ensuring that a home's value is based on the property itself, not on who happens to live there.