Bill targets discrimination in NJ home appraisals — but might not get a vote soon

Lawmakers and advocates in New Jersey have just weeks to pass bills they say will help close the generational wealth gap for Blacks and Latinos in the state — or punt the matter to a new Legislature.

The Fair Appraisals Act comprises two bills targeting home appraisal discrimination — when an appraiser unfairly assigns a lower value to a home based on protected characteristics like race, gender or religion of the owner.

Those bills passed the state Senate earlier this month. But some of the bills’ supporters fear if they don’t make it through the state Assembly and get Gov. Phil Murphy’s signature before the current legislative session ends Jan. 9, it could be months or years before they’re considered again.

“If we go to the new legislative session, where the clock restarts and the bill has to be reintroduced, we have to find new cosponsors. We have a new Assembly coming in with over a dozen new members. So there's a re-education component as well,” said Matthew Hersh, director of policy and advocacy at the Housing and Community Development Network of New Jersey.

Both bills still need hearings in the Assembly’s Housing committee and Regulated Professions committee before the chamber votes on them; neither has yet been scheduled. Housing Committee Chair Yvonne Lopez’s office says it's committed to reviewing the bill “in the new session,” but declined to clarify if that means a vote this session is off the table.

The Assembly is scheduled to meet three more times before the legislative session ends Jan. 9.

State Sen. Nellie Pou, a Democrat from Paterson and the legislation's prime sponsor, said the Senate “certainly made it a point of getting it through” this month before the end of the “lame-duck” session — the period between an election and the start of a new legislative calendar year, when some new legislators take office. “I'm hoping that the Assembly will continue to do that as well,” she said.

Under one of the bills, appraisers found to discriminate against protected classes by assigning their homes lower values than they’re worth would face steep penalties — $10,000 for a first offense, $25,000 for a second and $50,000 for a third. The bill would also require violators to make restitution payments equal to the amount of discriminatory appraisals and attend anti-bias seminars.

Those who discriminate multiple times could also have their licenses suspended or revoked.

Pou said that the legislation would ensure there is “more equitable and fair and transparent” home appraisal for Black and Latino homeowners and sellers in New Jersey.

“I think we're talking about making sure that we are able to ensure that families that have made the great difficulty and hardship of being able to purchase a home on their own and want to maintain the value of that for future generations that there is an opportunity for them to be able to pass on generational wealth,” Pou said.

Pou’s co-prime sponsor on one of the bills, state Sen. Troy Singleton, said that while the country has veered away from discriminatory housing practices, such as redlining, in the area of appraisals “we still see some of the vestiges” of an unfair system.

A fair home appraisal creates opportunity for “a family’s financial trajectory to be changed,” said Singleton, a Democrat from Moorestown in South Jersey.

“And if we are artificially reducing the actual value of that home, we're actually cheating those homeowners out of the full expected value of a potential home sale,” he said.

A national study by the Brookings Institution on racial bias in home appraisals found homes in Black neighborhoods are valued “roughly 21% to 23% below what their valuations would be in non-Black neighborhoods.” The study also found that homes appraised in majority-Black neighborhoods are 1.9 times more likely to be appraised under the agreed-upon sale price than homes in majority-white neighborhoods.

And according to a 2022 study by the New Jersey Institute for Social Justice, a progressive advocacy organization, 75.9% of white New Jersey households own their homes, compared to 38.4% of Black families.

Laura Sullivan, director of economic justice at the New Jersey Institute for Social Justice, said home appraisal discrimination is a contributor to the racial wealth gap.

“We really know that it's crucial that for families to be able to benefit from home ownership, they need to get fair appraisals and so the legislation would really move us in the right direction,” she said.

Sen. Robert Singer, a Republican from Lakewood, voted against the bills. He called the fines for appraisers “outrageous” and questioned the need for them as federal law protects against discriminatory home appraisal under the Fair Housing Act.

“What they're doing with these fines and everything, people are not going to want to do appraisals. I mean, it just doesn't make sense,” Singer said.

Sen. Holly Schepisi, another Republican who opposed the legislation, also said that while she thought the legislation was “well-intentioned” she feared it could have unintended consequences.

“It could have an inverse impact where in certain communities now the cost of doing business and potentially getting hit with civil fines of $10,000 plus having to pay the differential that you're now going to have a lot of the appraisers that refuse to do work in certain communities,” Schepisi, from Westwood, said.

LisaAnn Weiss, executive director of the Appraisal Institute's southern New Jersey chapter, said she doesn’t share the Republican lawmakers’ concern that this bill will make appraisers' jobs harder.

“I don't want to say we have nothing to fear, but we have nothing to fear in the fact that we play by the rules,” Weiss said. Her nonprofit provides resources and education for appraisers.

Weiss said that while this bill creates more government regulations of her industry, the organization supports it because “if people are not doing the job the way it should be done, they should be punished.”

“And it's a shame that legislation has to come into it to babysit those that don't follow common rules of decency,” she said.

Singer said the lawmakers pushing this legislation never showed data that discriminatory home appraisal is a problem in New Jersey.

“And they're saying, well, they're undervaluing properties in certain areas. Why would we do that? I mean, show me where it's happening, and I'm more than willing to listen. No one showed me that,” he said.

Both Pou and Singleton, the bill's prime sponsors, said they provided anecdotal evidence of discriminatory home appraisals in the Garden State throughout the process, including at two public hearings on the legislation. At one of the hearings in June 2022, Junea Williams-Edmund, a Black attorney from Newark, testified about how an appraisal came in for her home $45,000 under the $240,000 price offered by a buyer. They ultimately agreed to $20,000 less than that initial offer.

“My realtor had previously warned me that there were what he called ‘funky things’ happening with the appraisals in Newark at that time,” NJ.com quoted Williams-Edmund saying at the time. Newark is mostly Black and Latino, according to the U.S. Census.

Sullivan, from the New Jersey Institute for Social Justice, said this legislation would help New Jersey gather better data on where discrimination is taking place. She said that a consumer education component of the legislation will help people who don’t realize that they’ve been discriminated against realize that it happened, and direct them to file complaints with the state. Under the bill, any complaints of alleged discrimination would be investigated by the state Division of Civil Rights.

“And then it requires the state to collect those complaints and then publish that information,” Sullivan said. “So we will have a better sense of what's happening here in our state with the passage of this legislation.”