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HUD No. 24-096
HUD Public Affairs
(202) 708-0685
May 1, 2024

HUD Issues New Guidance to Protect Borrowers from Appraisal Bias

Federal Housing Administration’s new Reconsideration of Value policy requires lenders to provide a pathway for borrowers to request reviews of home appraisal valuations.

WASHINGTON - Today, the U.S. Department of Housing and Urban Development (HUD), through the Federal Housing Administration (FHA), announced a major new step in the Department’s work to protect borrowers from racial or ethnic bias in home appraisals. FHA’s new requirement for lenders participating in its Single Family program will enable borrowers to request a re-assessment of the appraised value of their property if they believe that the appraisal was inaccurate or biased. The Reconsideration of Value policy represents months of collaboration with the Federal Housing Finance Agency to develop an aligned approach for both FHA-insured mortgages and those purchased or guaranteed by Fannie Mae and Freddie Mac.

“We know that biased home appraisals not only disproportionately harm homeowners of color, but stunt economic opportunity for the communities we serve,” said HUD Acting Secretary Adrianne Todman. “Today, we are announcing a new step in our work to root out racial and ethnic bias in home valuations, which will give borrowers greater ability to have their home valuation reconsidered.”

Today’s announcement fulfills a commitment of the Interagency Task Force on Property Appraisal and Valuation Equity (PAVE), made up of leaders from 13 federal agencies, to establish a transformative set of recommendations to root out racial and ethnic bias in home valuations.

“Appraisal bias harms homeowners of color at every stage of homeownership, and it can lock in inappropriately lower values for entire neighborhoods,” said Federal Housing Commissioner Julia Gordon. “Our new policies will arm homeowners, lenders, and FHA with a clear process to address biased or inaccurate appraisals.”

Effective for FHA case numbers assigned on or after September 2, 2024, FHA policy contained in its Single Family Housing Policy Handbook 4000.1 will include an updated Reconsideration of Value section with new guidance on borrower initiated reconsideration of value requirements. These updates include requirements for transactions in both single family forward and Home Equity Conversion Mortgage programs. FHA’s new policy requires lenders to disclose to borrowers that they may request a reconsideration of value with instructions that explain the process, including what information will be required from a borrower and the expected Reconsideration of Value processing times. These disclosures must be provided at both the time of mortgage application and at the presentation of the appraisal. For lenders, the new policy includes:

  • A requirement that underwriters be trained to identify and remedy appraisal deficiencies, including racial and ethnic bias;
  • Requirements for lenders when receiving, processing, and communicating the status of the reconsideration of value requests initiated by a borrower;
  • Standards for lender quality control of appraisal reviews and reconsiderations of value; and
  • Standards for appraisers to respond to requests from lenders for a reconsideration of value review.


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