Understanding the Revised ETHICS RULE

Feb 1, 2024 | News

In the ever-evolving landscape of appraisal practices, it’s crucial for professionals to stay informed about changes and updates to standards. A significant revision has been made to the ETHICS RULE by the Appraisal Standards Board (ASB), particularly with the introduction of a new Nondiscrimination section. This change is pivotal in reinforcing the commitment to fair and unbiased appraisal practices.

The New Nondiscrimination Section in the ETHICS RULE

The ASB has replaced the previous language in the ETHICS RULE concerning supported and unsupported conclusions with a clearer, more direct Nondiscrimination section. This section explicitly prohibits discrimination, aligning appraisers and stakeholders with federal, state, or local antidiscrimination laws and regulations. It cites three critical federal laws: the Fair Housing Act (FHAct), the Equal Credit Opportunity Act (ECOA), and the Civil Rights Act of 1866. These laws are integral to understanding and upholding fair housing and lending practices.

Furthermore, the Nondiscrimination section introduces the concepts of ‘disparate treatment’ and ‘disparate impact.’ These are key to comprehending the broader spectrum of fair housing and lending regulations and ensuring that appraisal practices do not inadvertently contribute to discrimination.

Advisory Opinions Update for 2024

In conjunction with these changes, the ASB has retired Advisory Opinion 16 (AO-16) and introduced two new Advisory Opinions, AO-39 and AO-40, for 2024. These opinions, while not establishing new standards or being enforceable, offer valuable guidance. AO-39 illustrates the application of antidiscrimination laws in appraisal assignments through three examples. AO-40 focuses on identifying language in appraisal reports that could be seen as discriminatory, addressing issues like pretext and code words, with four illustrative examples.

Impact on Appraisers

It’s important to note that these revisions do not suggest that appraisers were previously biased. Instead, they serve to underscore the existing commitment to unbiased practices. The revisions clarify that unbiased practices extend across all facets, including gender, race, age, or any other classification unrelated to property valuation.

For appraisers, these revisions are a reaffirmation of ethical standards that have always been at the core of professional appraisal practice. They reinforce the principle that property valuation must be conducted impartially, free from discriminatory influences.

At Appraisal Innovations, we are committed to staying at the forefront of appraisal standards and ethics. Understanding and implementing these revisions is not just about compliance; it’s about upholding the integrity and trustworthiness of the appraisal profession. Let’s continue to lead the way in fair, unbiased, and ethical appraisal practices.

Recent Posts

Freddie Mac’s New Appraisal Language Standards

Freddie Mac’s New Appraisal Language Standards

In the dynamic world of real estate financing, staying ahead of changing standards and practices is crucial for lenders, especially those selling loans to Freddie Mac. A recent webinar shed light on important updates and best practices in appraisal language, focusing...

New Legislation to Restrict Hedge Fund Ownership in Housing

New Legislation to Restrict Hedge Fund Ownership in Housing

Representative Adam Smith and Senator Jeff Merkley have introduced the End Hedge Fund Control of American Homes Act of 2023, targeting the growing issue of hedge funds owning single-family homes. This trend has exacerbated housing unaffordability and wealth...

FHFA Increases CLL for 2024

FHFA Increases CLL for 2024

The Federal Housing Finance Agency (FHFA) has announced an increase in the conforming loan limit values (CLLs) for 2024. The new baseline CLL for one-unit properties in most of the United States will be $766,550, marking a significant increase of $40,350 from the 2023...