SOURCE: Chief Appraiser Knowledge Base — Fair Housing Laws and Appraisal Bias Regulation
Compiled from: Fair Housing Act (Title VIII, 42 U.S.C. 3601 et seq.); Equal Credit
Opportunity Act (Regulation B); USPAP Ethics Rule and Advisory Opinions AO-39/AO-40
(The Appraisal Foundation); Appraiser Qualifications Board Real Property Appraiser
Qualification Criteria (effective January 1, 2026); HUD Mortgagee Letters; FHFA
Enterprise ROV policy announcements; Fannie Mae Selling Guide; Nevada Revised
Statutes Chapter 118; Nevada Equal Rights Commission (detr.nv.gov/nerc)
Last reviewed: July 2026
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Fair Housing Laws and Appraisal Bias Regulation
Appraisers operate under two overlapping obligations: general civil rights law
that applies to anyone engaged in a residential real estate transaction, and
USPAP-specific ethics requirements that apply because they are appraisers.
Getting the appraisal right on value is not sufficient. The process and the
language used to get there must also be free of bias, whether intentional or
not.
This is a fast-moving regulatory area. Several federal enforcement initiatives
launched between 2021 and 2024 were rolled back in 2025. What has not changed
is the underlying law, the Fair Housing Act and the Equal Credit Opportunity
Act, and USPAP's Ethics Rule. What has changed is which federal
mortgagee-letter-level enforcement mechanisms are currently active.
Federal law: the two statutes that govern appraiser conduct.
The Fair Housing Act, Title VIII of the Civil Rights Act of 1968, 42 U.S.C.
3601 et seq., protects race, color, national origin, religion, sex, familial
status, and disability, and applies to any person or entity involved in a
residential real estate transaction, including appraisers.
The Equal Credit Opportunity Act, Regulation B, protects race, color, national
origin, religion, sex, marital status, age, and receipt of public assistance
income, and applies to anyone involved in a credit transaction. Appraisals
ordered for lending purposes fall within its scope.
Practical effect for appraisers: an appraisal may not be developed or reported
in a manner that considers, or gives the appearance of considering, the race,
color, national origin, religion, sex, disability, familial status, marital
status, or age of current or prospective owners or occupants, or of the
residents of the surrounding area. This applies to comparable selection,
adjustments, narrative comments, and photographs.
Common violation patterns include using neighborhood demographic composition,
rather than market data, to support a value conclusion; describing a
neighborhood or its residents in a way that signals racial or ethnic
composition; selecting comparables that steer value based on the racial
composition of the comp's location rather than legitimate market factors; and
subjective language about "pride of ownership," "up-and-coming," or similar
phrases that can encode bias.
USPAP: the Ethics Rule and Advisory Opinions.
The Ethics Rule, effective January 1, 2024, was strengthened in the current
USPAP edition to more explicitly prohibit basing an assignment result, or
communicating an analysis, opinion, or conclusion, on a prohibited basis such
as race, color, religion, national origin, sex, familial status, disability,
or other protected classes under applicable federal, state, or local law.
The old Fair Housing advisory opinion, Advisory Opinion 16, has been retired
and replaced with two more targeted opinions. Advisory Opinion 39 (AO-39)
addresses how federal antidiscrimination laws, the Fair Housing Act and the
Equal Credit Opportunity Act, intersect with and affect appraisal practice
generally. Advisory Opinion 40 (AO-40) addresses the proper handling of
location, neighborhood, and demographic data: what may and may not be
researched, analyzed, and reported in a residential assignment.
The key takeaway from AO-40 is that appraisers may analyze objective,
market-derived location factors such as proximity to employment, school
ratings tied to academic performance data, crime statistics from official
sources, and access to amenities. Appraisers may not use demographic
composition, meaning the race, ethnicity, or national origin of residents, as
an analytic factor, and should be cautious with subjective or unverifiable
neighborhood characterizations.
The 2026 continuing education requirement for valuation bias and fair
housing.
The Appraiser Qualifications Board adopted new Real Property criteria,
effective January 1, 2026, requiring a standalone seven-hour course on
valuation bias and fair housing law as part of both initial qualifying
education for new licensees and continuing education at renewal for all real
property appraisers. This is a change from the prior model, where fair
housing content was often folded into the general USPAP update course.
Appraisers should confirm with their state licensing board how this seven-hour
requirement maps onto that state's specific continuing education hour
requirements at renewal.
Reconsideration of value: status is split by loan type.
This is the area that has changed the most and is the most likely source of
confusion for both appraisers and the real estate agents and lenders they
work with. The rule to remember is that reconsideration of value, or ROV,
requirements are no longer uniform across FHA and conventional, meaning
GSE-backed, loans, so the loan type must be tracked before advising anyone on
procedure.
The Interagency Task Force on Property Appraisal and Valuation Equity, known
as PAVE, was created in June 2021 and released an action plan in March 2022
aimed at addressing racial and ethnic bias in home valuations. It led to HUD
mortgagee letters requiring borrower-initiated reconsideration of value
processes and appraisal fair-housing-compliance requirements.
As of mid-2026, the status of those programs has diverged by loan type. For
FHA loans administered by HUD, the borrower-initiated reconsideration of
value requirements have been rescinded: a 2025 HUD mortgagee letter rolled
back the earlier appraisal fair housing compliance and reconsideration of
value update requirements. FHA borrowers may still ask their lender to
request a reconsideration of value, but the formal borrower-initiated
disclosure and timeline requirements are no longer mandated by HUD.
For conventional loans backed by Fannie Mae or Freddie Mac, the
reconsideration of value policy is still in effect. FHFA-directed
reconsideration of value policies published by the enterprises remain active,
and a 2025 Fannie Mae Selling Guide update amended, but did not eliminate, the
reconsideration of value disclosure requirement: lenders must still provide
the disclosure when the appraisal copy is delivered to the borrower, though
the requirement to also disclose at initial application was dropped.
The PAVE Task Force itself has been effectively disbanded; HUD and the Office
of Management and Budget stated in mid-2025 that the task force's associated
policies were being terminated or rolled back.
The practical guidance is straightforward: do not assume a single
reconsideration of value standard applies to every file. Check whether the
loan is FHA or conventional before advising a lender, borrower, or real estate
agent on reconsideration of value procedure, and confirm current requirements
with the AMC or lender at the time of assignment, since this is an area still
being actively revised.
Nevada state law on fair housing.
Nevada Revised Statutes Chapter 118, Discrimination in Housing, sections
118.010 through 118.120, prohibits housing discrimination on the basis of
race, color, national origin, religion, disability, sex, sexual orientation,
gender identity or expression, ancestry, and familial status. NRS 118.100
specifically lists prohibited discriminatory acts and practices, which
include discrimination in the appraisal of a dwelling. The Nevada Equal
Rights Commission investigates housing discrimination complaints, including
appraisal-related complaints, and works with HUD on dual-filed cases.
Practical checklist for appraisers avoiding fair housing and bias violations.
Base every adjustment and value conclusion on verifiable market data, never
on the demographic composition of a neighborhood or of current or prospective
occupants. Avoid subjective descriptive language about neighborhoods or
occupants, such as "pride of ownership," "desirable area," "undesirable
area," or "transitional neighborhood," unless the description is tied to an
objective, reportable market factor. Select comparables based on physical and
locational similarity and market evidence, and document the rationale.
Photograph the subject property and comparables consistently; do not
selectively frame images to emphasize or downplay a neighborhood's
demographic characteristics. Know which reconsideration of value process
applies, FHA or conventional, before advising a lender or borrower. Complete
the AQB-required seven-hour valuation bias and fair housing course as part of
2026 and later continuing education, verified against the specific state
renewal cycle. If a complaint or reconsideration of value request alleges
bias, document the objective basis for every judgment made, since this is the
primary defense against a bias allegation.
Why this matters to real estate agents, not just appraisers: an agent
preparing a seller for a listing, or representing a buyer through financing,
may be asked directly whether an appraiser can consider a neighborhood's
racial or ethnic makeup, or may need to explain a reconsideration of value
process to a client who suspects bias affected their appraisal. Agents are
not the ones who file a reconsideration of value request, the borrower or
lender initiates that, but understanding which process applies and what an
appraiser is and is not permitted to consider lets an agent set accurate
expectations with a client rather than guessing or escalating unnecessarily.
Beyond Nevada: every state has its own fair housing statute layered on top
of the federal Fair Housing Act and Equal Credit Opportunity Act, and most
state real estate licensing boards, not just appraiser boards, separately
require fair housing training for real estate agents. An agent's own
licensing continuing education on fair housing covers agent conduct such as
steering and advertising; it is a related but distinct body of law from the
appraiser-specific USPAP Ethics Rule and Advisory Opinions AO-39 and AO-40
covered above. An agent should not assume their own fair housing training
answers a client's question about what an appraiser is permitted to
consider, since the appraiser-facing rules are the more specific and
controlling standard for how a valuation itself is developed and reported.
Summary for a quick answer: an appraisal may never be based on, or appear to
be based on, the race, ethnicity, religion, sex, familial status, disability,
or similar protected characteristics of a property's owners, occupants, or
neighborhood residents. Objective market data, not demographic composition,
must support every conclusion. If a client believes bias affected their
appraisal, the correct next step depends on loan type: FHA loans no longer
have a formally mandated borrower-initiated reconsideration of value process
since the 2025 HUD rescission, while conventional loans backed by Fannie Mae
or Freddie Mac still require lenders to provide a reconsideration of value
disclosure. Direct the client to raise the concern with their lender, who
initiates the reconsideration of value request on the borrower's behalf.
Key citations for further reading: the Fair Housing Act, Title VIII, Civil
Rights Act of 1968, 42 U.S.C. 3601 et seq., covers federal fair housing
protections. The Equal Credit Opportunity Act, Regulation B, covers
credit-transaction protections. USPAP's Ethics Rule, current edition, covers
the nondiscrimination standard appraisers must follow. USPAP Advisory
Opinion 39 covers how antidiscrimination law affects appraisal practice, and
USPAP Advisory Opinion 40 covers how location and demographic data may and
may not be used. The Appraiser Qualifications Board's Real Property
Appraiser Qualification Criteria, effective January 1, 2026, covers the new
seven-hour continuing education requirement. HUD Mortgagee Letter 2025-08
covers the FHA reconsideration of value rescission. FHFA's Enterprise
reconsideration of value policy announcement and Fannie Mae's Selling Guide
cover the conventional loan reconsideration of value policy that remains in
effect. Nevada Revised Statutes Chapter 118, especially section 118.100,
covers Nevada's own fair housing law and its explicit inclusion of appraisal
discrimination as a prohibited act.