Black Knight has launched CA Risk Profiler Plus, a tool designed to help mortgage lenders, appraisers and appraisal management companies (AMCs) identify potential minority bias in the home valuation process. By flagging potentially problematic valuations, CA Risk Profiler Plus enables a more rigorous collateral review process that can help reduce risk exposure for lenders and appraisers and support more equitable underwriting decisions.
“Today’s appraisers must balance market demand for speed and efficiency with their obligation to support home valuations that are objective, equitable and accurate,” said Mike Sklarz, EVP, Managing Director, Black Knight Collateral Analytics. “CA Risk Profiler Plus combines valuation science and Black Knight’s market-leading property data assets to make it easier than ever for appraisers, AMCs and lenders to identify and remove subjectivity from the appraisal process.”
How It Works
CA Risk Profiler Plus evaluates an appraiser’s list of selected comparables (i.e., properties with similar characteristics to the subject property) against a list derived from Black Knight’s comprehensive U.S. property database. By identifying discrepancies between the two lists and by analyzing certain patterns, CA Risk Profiler Plus is able to alert customers when an appraisal may contain potential bias.
CA Risk Profiler Plus is an optional add-on to CA Risk Profiler, a tool that helps lenders and AMCs determine the overall valuation risk of an appraisal or hybrid valuation based on factors like the degree of similarity between the subject property and comparables, the amount of variance between the appraised value and automated valuation models (AVMs), and the appraisal’s compliance with Uniform Appraisal Dataset (UAD) standards. Both solutions are developed by Collateral Analytics (CA), a provider of property valuation and mortgage risk analysis tools that was acquired by Black Knight in March 2020.
Appraisal Bias on the National Stage
Research shows that inequities in home lending and appraisal processes disproportionately impact communities of color. For example, research from Freddie Mac shows that appraisers’ opinions of value are more likely to fall below the contract price for homes in majority Black or Latino census tracts than for those in White tracts.
An action plan published March 23 by the Interagency Task Force on Property Appraisal and Valuation Equity (PAVE) calls on housing industry stakeholders to take affirmative steps to advance equity in the valuation process by addressing potential bias in appraisals and AVMs.
“U.S. policymakers are actively working to address valuation bias and its impact on America’s racial wealth gap. PAVE’s action plan clearly signals that industry stakeholders can expect greater process scrutiny and regulatory action in the near future,” Sklarz said. “Black Knight is responding to this emerging trend by investing in tools like CA Risk Profiler Plus that help position lenders and appraisers to address valuation bias in a proactive manner that is grounded in objective data.”
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