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In real estate, appraisal bias can keep homeowners from receiving the full value of their home. IDFPR Deputy Secretary Ericka Johnson breaks down what appraisal bias is, how exactly it affects consumers, and what you can do if you believe you’re a victim in our newest episode of Making Cents of Money.


Show Notes:

HUD: Appraisal Bias and the Valuation Process - https://www.hudexchange.info/programs/housing-counseling/housing-counseling-today/appraisal-bias-and-the-valuation-process/

NPR: Racial Bias often creeps into home appraisals. Here’s what’s happening to change that -https://www.npr.org/2023/03/13/1161713496/home-appraisals-racial-bias-black-latino-homeowners-lawsuit

Making Cents of Money podcasts:

- Buying a Home! (ep. 36): https://soundcloud.com/idfpr/episode-36-buying-a-home
- Mortgages (ep. 38): https://soundcloud.com/idfpr/episode-38-mortgages
- Credit Access (ep. 42): https://soundcloud.com/idfpr/episode-42-credit-access
- Selling a Home (ep. 45): https://soundcloud.com/idfpr/episode-45-selling-a-home
- The Community Reinvestment Act (ep. 47): https://soundcloud.com/idfpr/episode-47-the-community-reinvestment-act
- Help for Homeowners (ep. 63): https://soundcloud.com/idfpr/episode-63-help-for-homeowners
- Lines of Injustice: What is Redlining? (ep. 83): https://soundcloud.com/idfpr/episode-83-lines-of-injustice-what-is-redlining
- The Federal Community Reinvestment Act (CRA) (ep. 85): https://soundcloud.com/idfpr/episode-85-the-federal-community-reinvestment-act-cra
- The Illinois Community Reinvestment Act (ep. 86): https://soundcloud.com/idfpr/episode-86-the-illinois-community-reinvestment-act

Research

• How racial bias in appraisals affects the devaluation of homes in majority-Black neighborhoods (Brookings, 2022): https://www.brookings.edu/articles/how-racial-bias-in-appraisals-affects-the-devaluation-of-homes-in-majority-black-neighborhoods/
• HUD reaches groundbreaking settlement with The Appraisal Foundation to ensure equal opportunity in the appraisal profession (HUD, 2024): https://www.hud.gov/press/press_releases_media_advisories/HUD_No_24_176
• Racial and ethnic valuation gaps in home purchase appraisals (FreddieMac, 2021): https://www.freddiemac.com/fmac-resources/research/pdf/202109-Note-Appraisal-Gap.pdf

Government Resources and Legislative Efforts:

• How to become an appraiser in Illinois:
https://idfpr.illinois.gov/content/dam/soi/en/web/idfpr/forms/dre/hdi/how-do-i-become-an-appraiser-in-illinois.pdf

• Fair Housing and Equal Opportunity from HUD: https://www.hud.gov/fairhousing
• PAVE Interagency task force on property appraisal and valuation equity (HUD): https://pave.hud.gov/
• Protecting homeowners from discriminatory home appraisals (CFPB, 2023): https://www.consumerfinance.gov/about-us/blog/protecting-homeowners-from-discriminatory-home-appraisals/
• IDFPR Real Estate Valuation Task Force: https://idfpr.illinois.gov/profs/boards/rev-task-force.html
• IDFPR “How To” Series from the Division of Real Estate: https://idfpr.illinois.gov/dre/howtoseriesdre.html

In our latest episode of Making Cents of Money, Acting Director of Banking Susana Soriano discusses Illinois’ historic Community Reinvestment Act (CRA). From reducing discrimination to combatting redlining, learn how this landmark legislation will help Illinois consumers!

Show Notes:

• Please note, this podcast was recorded before rules for Illinois’ Community Reinvestment Act were adopted on May 1, 2024. The rules may be found below:
o Banks: https://idfpr.illinois.gov/content/dam/soi/en/web/idfpr/forms/CRA-Banks.pdf
o Credit Unions: https://idfpr.illinois.gov/content/dam/soi/en/web/idfpr/forms/CRA-CU.pdf
o Mortgage Lenders: https://idfpr.illinois.gov/content/dam/soi/en/web/idfpr/forms/CRA-ML.pdf

• Legislation for the Illinois Community Reinvestment Act: https://www.ilga.gov/legislation/ilcs/ilcs3.asp?ChapterID=20&ActID=4086
• Illinois CRA Coalition Fact Sheet: https://housingactionil.org/downloads/Policy/ILCRAOverviewMarch2023.pdf

Did you know federal law aims to curb discriminatory lending? Ed Hill from IDFPR’s Division of Banking breaks down the Community Reinvestment Act and how it works to increase lending to underserved communities in our latest episode of the Making Cents of Money podcast!

Show Notes:

• Community Reinvestment Act (CRA) via Federal Reserve Board - https://www.federalreserve.gov/consumerscommunities/cra_about.htm
o CRA Ratings via FFIEC - https://www.ffiec.gov/craratings/default.aspx
• Housing Discrimination Under the Fair Housing Act via HUD - https://www.hud.gov/program_offices/fair_housing_equal_opp/fair_housing_act_overview
• Equal Credit Opportunity Act via FTC - https://www.ftc.gov/legal-library/browse/statutes/equal-credit-opportunity-act
• Home Mortgage Disclosure Act via FFIEC - https://ffiec.cfpb.gov/
• Illinois Community Reinvestment Act (CRA) via IDFPR - https://idfpr.illinois.gov/admin/cra.html

There’s a big transition happening for the Public Service Loan Forgiveness Program (PSLF)! In our latest episode of Making Cents of Money, we break down what’s happening and what this means for borrowers looking to have their college loans forgiven for public service.

In the newest episode of Making Cents of Money, IDFPR Secretary Mario Treto, Jr. discusses the topic of redlining and how it leads to disparities for generations. Learn what IDFPR is doing to address this serious topic and to help redlining to become a policy of the past.


Resources:

Investopedia: What is Redlining? Definition, Legality, and Effects: https://www.investopedia.com/terms/r/redlining.asp#:~:text=Redlining%20is%20the%20discriminatory%20practice,on%20their%20race%20or%20ethnicity.

Federal Reserve: Redlining: https://www.federalreservehistory.org/essays/redlining

Urban Institute: The Ghosts of Housing Discrimination Reach Beyond Redlining: https://www.urban.org/features/ghosts-housing-discrimination-reach-beyond-redlining

Rothstein, R. (2017). The color of law: A forgotten history of how our government segregated America. Liveright Publishing.


Previous episode:

- Ep. 42: Credit Access: https://soundcloud.com/idfpr/episode-42-credit-access?utm_source=clipboard&utm_campaign=wtshare&utm_medium=widget&utm_content=https%253A%252F%252Fsoundcloud.com%252Fidfpr%252Fepisode-42-credit-access

Did you know that Illinois Treasurer Michael Frerichs provides FREE financial education materials and programs? Listen to Financial Programs Manager Maggie Owens talk about these great resources on the latest episode of Making Cents of Money.


Show Notes

Money Minded Curriculum: https://www.illinoistreasurer.gov/Financial_Education/Money_Minded_Illinois

Financial Literacy Resources:
https://www.illinoistreasurer.gov/Financial_Education/Financial_Literacy_Resources

IL Financial Wellness Hub
https://www.illinoistreasurer.gov/Financial_Education/IL_Financial_Wellness_Hub


Financial Education Research:

Amagir, A., Groot, W., Maassen van den Brink, H., & Wilschut, A. (2018). A review of financial-literacy education programs for children and adolescents. Citzenship, Social and Economics Education, 17)1), 56-80.

Brown, M., Grigsby, J., Van Der Klaauw, W., Wen, J., & Zafar, B. (2016). Financial education and the debt behavior of the young. The Review of Financial Studies, 29(9), 2490-2522.

Kaiser, T., & Menkhoff, L. (2020). Financial education in schools: A meta-analysis of experimental studies. Economics of Education Review, 78, 101930.

Miller, M., Reichelstein, J., Salas, C., & Zia, B. (2015). Can you help someone become financially capable? A meta-analysis of the literature. The World Bank Research Observer, 30(2), 220-246.

Xiao, J. J., & O'Neill, B. (2016). Consumer financial education and financial capability. International Journal of Consumer Studies, 40(6), 712-721.