The New York State Senate

received in fines by the department of state shall be allocated to the
"anti-discrimination in housing fund" established by section 80-a of the
state finance law. The department may revoke, suspend, fine, or disci-
pline a state certified or licensed real estate appraiser for reasons
listed in section two.

Section two, three, and four amend various subdivisions of section 160
of the executive law to permit that based on disciplinary proceedings,
certificates or licenses can be suspended, revoked, or fines imposed on
real estate appraisers, provided that appropriate written notice and
hearings be provided. If the department determines that a state certi-
fied or licensed appraiser has violated any provision in the article the
department shall investigate and recommend that the appraiser be repri-
manded or have their certification or license suspended, revoked, or
fined.

Section five amends subdivisions 2 and 3 of section 80-a of the state
finance law, that the anti-discrimination in housing fund shall be fund-
ed by fines and forfeitures provided under various sections of.law. The
state can also fund the anti-discrimination in housing fund with grants,
gifts, or bequests. Money in the anti-discrimination fund shall not be
commingled with other money in the custody of the state comptroller, and
this fund shall be available to use by the office of the attorney gener-
al, for fair housing testing, including for testing appraisers. Also,
funds shall be allocated to county, city, town, or village human rights
commissions, or other non-profit agencies that specialize in the
prevention of unlawful discrimination in housing.

Section 6 provides the effective date.

 
JUSTIFICATION:

The United States has a long history of excluding Black Americans 'and
other marginalized groups from fully participating in American society,
and from wealth-building activities. The New Deal created the Federal
Housing Administration (FHA) and the organization provided mortgage
insurance on loans made by FHA-approved lenders.  This mechanism
protected lenders against losses, enticing more lenders to take the risk
and provide loans to a wide variety of people. The FHA intentionally
created policies that limited lending to white communities and excluded
Black and Hispanic communities. The federal government designated the
mere presence of Black, Hispanic, and other ethnic minority groups as an
economic hazard and color-coded these neighborhoods 'red' on federal
maps, a hazardous zone. These 'redlined' communities were unable to
participate in the largest wealth accumulation process of the 20th
century, the growth of the housing market following the Second World
War.

Another exclusionary aspect of federal policies was the limiting of
federal funds to developers. To access federal funding, housing develop-
ers were encouraged to have racial covenants forbidding non-whites from
purchasing homes. During the height of FHA's discriminatory practices,
Black homeownership rate was 35%. Although the federal government ended
its explicitly racist policy with the passing of the 1968 Fair Housing
Act, nothing in the act addressed the past harm done; as of 2021 Black
homeownership rate is at 44% and white homeownership rate is 74%.

Most Americans build their wealth by growing their home's equity, howev-
er, these racist policies limited the ability of Black and Hispanic
Americans' ability to build their wealth. Today many people of color,
and particularly Black Americans continue to face an uphill battle to
increase their home equity; the main wealth-building process in the
country.

Many Black Americans must still contend with appraisal discrimination,
which unfairly devalues their homes. In 2018 a Brookings Institute
report found that homes in a majority Black neighborhood, even when
controlling for the homes' physical characteristics and neighborhood
amenities, were undervalued by 23% an average of $48,000 per home, a
cumulative loss of $156 billion in total wealth for Black Americans in
2016. The authors also found that devalued homes in Black neighborhoods
were more segregated, and that Black children who grew up in these
communities had less upward mobility. The devaluation of Black homes
also has a negative impact on community schools.

The Fair Housing Act was amended in 1988 to include appraising as a real
estate-related transaction. However, this does not prevent appraisers
from producing biased appraisals. The federal government has taken
action to address appraisal discrimination with the creation of the
Property Appraisal Valuation Equity (PAVE) task force in June of 2021.
The PAVE task force recently completed its evaluation and has compiled a
set of possible solutions, but absent action at the federal level, there
are actions that can be taken at the state level today.

Racial and ethnic minority groups have historically been excluded from
wealth-building activities, and appraisal discrimination is a continua-
tion of this legacy. While appraisal discrimination is embedded in the
home purchasing process there are several actions that can be taken at
the state level to correct or reduce the harm caused by federal and
state policies. New York can end the trauma that many Black New Yorkers
experience when they realize that their very presence, their existence,
is devaluing their homes. This legislation will help bring an end to
appraisal discrimination and give all residents of NY a chance to fully
and fairly participate in the housing market.

 
LEGISLATIVE HISTORY:

New legislation.

 
FISCAL IMPLICATIONS:

None.

 
EFFECTIVE DATE:
This act shall take effect immediately; provided that if chapter 687 of
the laws of 2021 shall not have taken effect on or before such date then
section four of this act shall take effect on the same date and in the
same manner as such chapter of the laws of 2021 takes effect.