The Power To Define Appraisal Rules For U.S. Real Estate Belongs To TAF. It’s Desperate Not To Lose It
This is the final installment of a four-part Bisnow investigative series exploring the appraisal profession, its importance to commercial real estate and the broader economy, and the people and organizations that govern the industry. Read Part 1 here, Part 2 here and Part 3 here.
Tucked away in a nondescript office building in downtown Washington, D.C., is a 13-person nonprofit that writes the rules for how trillions of dollars of residential and commercial real estate is valued in America.
The Appraisal Foundation, the governing body for appraisers across the U.S., has overseen the way property values are determined for more than 30 years. But in recent years it has come under heightened scrutiny about its influence and effectiveness, both from within the ranks of the appraisal industry and among the federal officials who monitor it.
Since 2020, TAF has been the subject of a federal fair housing probe, doubled its financial assets and sought to exert more control over — and extract more revenue from — appraisal certification materials, a Bisnow investigation found.
The group is the leading administrator of ethics and independence when it comes to property valuation, but appraisers say that TAF’s behavior diminishes the trust that the industry heavily relies on to operate — a trust that is vital as values reset after a historic shock to the more than $20T commercial real estate industry.
“This little weird, obscure [organization] that no one's ever heard of outside of appraisers is pretty scary because they have an outsize influence over something like a $14T U.S. mortgage market,” said Jeremy Bagott, a certified general real estate appraiser who wrote The Compact Real Estate Appraiser and is an outspoken advocate for reforming the industry's governance.
TAF’s upheaval has come as commercial property appraisers are growing in influence. With an estimated $1.2T in commercial mortgages set to mature by the end of 2025, appraisals are at the forefront of the reckoning facing commercial real estate.
Appraisals are seen as part of the driver of the wealth gap in the country, and TAF has been accused of shirking its responsibility to ensure real estate is valued fairly, regardless of the race of its owner.
Just last week, the foundation reached a settlement to end a federal investigation into its alleged failure to prevent racial discrimination in the housing industry. Its longtime president stepped down earlier this year, but public pressure to reform the industry over which TAF looms hasn't abated.
For the past four years, TAF has been rejecting the millions in federal grant money it received for the first three decades of its existence. According to documents obtained by Bisnow and sources with knowledge of TAF's internal discussions, it decided to turn away available funding to avoid risking the copyright of its cash cow, the Uniform Standards of Professional Appraisal Practice, and related training materials.
TAF has also barred federal staff from its meetings, Bisnow has learned, in part because it didn't want those meetings to be subject to federal disclosure laws.
“I think there has been a long history of [TAF] sidestepping the monitor and review process,” Consumer Financial Protection Bureau Director Rohit Chopra said during a hearing in February.
Chopra is the designated executive sponsor of the Appraisal Subcommittee, the body that monitors TAF and is made up of officials from a variety of regulatory bodies, including the Federal Reserve, the Federal Deposit Insurance Corp. and the Federal Housing Finance Agency.
Chopra publicly expressed concerns that The Appraisal Foundation, “while acting essentially as a lawmaking body, is neither accountable to the public nor subject to competitive market force.”
“If the two organizations, The Appraisal Foundation, the Appraisal Subcommittee — one who sets the standard, the other who provides oversight — if they're not getting along, that creates distrust in the users of the appraisal reports,” said Phil Crawford, who has been an appraiser for more than 20 years and hosts a podcast on the industry.
TAF officials declined to make anyone available for an interview for this story and declined multiple requests for comment on a detailed list of questions. The Appraisal Subcommittee also declined Bisnow’s request for comment.
Pulling Back
TAF was born out of a crisis.
In 1989, the U.S. government dished out $160B to save the economy after more than 1,000 financial institutions failed in the wake of the savings and loan crisis. To ensure that real estate appraisals are performed adequately, a regulatory system was created involving state and federal governments, along with an entity created just two years prior: The Appraisal Foundation.
But the power that TAF has been granted by lawmakers with that authorization is now coming into question as the entity becomes more opaque to both its federal monitor and the industry it serves.
“They are not leaders. They are their own silo in the valuation industry,” said Jonathan Miller, the CEO of appraisal firm Miller Samuel and an outspoken TAF critic. “It has severely damaged the public trust of the appraisal industry, something that they're responsible for.”
Throughout its 35 years of existence, TAF has largely had a close relationship with the subcommittee, commonly referred to as the ASC.
Historically, the ASC provided TAF with grants that made up as much as 20% of its annual revenue, according to the group’s annual tax filings. TAF was also friendly with the ASC, often financing its members' attendance at conferences and other events by paying for flights, hotels and other travel expenses, according to expense reports obtained by Bisnow.
That began to change under the guidance of Kelly Davids, three sources close to the nonprofit told Bisnow. Davids joined the organization in 2013 and was named president four months ago.
After Davids was hired as senior vice president, the group more closely reviewed its grants and became fearful of potential repercussions of accepting money from the ASC, according to documents obtained by Bisnow and interviews with high-level sources.
Specifically, TAF worried that if it continued taking grant money, the subcommittee would share ownership of the products TAF makes, including the Uniform Standards of Professional Appraisal Practice, or USPAP, considered to be the bible of the appraisal industry.
The vast majority of TAF’s revenue comes from the sale of those materials, which appraisers are required to purchase under its federal authority.
Its revenue from sales and program services has grown from $2.7M in 2010 to $4.6M in 2018. In 2020, the most recent year it released USPAP for which records are available, it brought in more than $5M in sales revenue.
The fear within TAF became, according to documents and interviews, that the ASC could publish the materials for all to see, for free.
TAF also began to worry that if subcommittee members attended TAF meetings, the content of those meetings could be released via the Freedom of Information Act, a law that allows the public to request disclosure of government documents. ASC is subject to FOIA rules, but TAF isn't.
“They are paranoid, and that is absolutely the word, in my opinion: paranoid,” one high-ranking insider told Bisnow under the condition of anonymity due to their ongoing relationship with TAF.
In 2020, TAF pulled back from its relationship with the subcommittee, according to letters between ASC Executive Director James Park and TAF’s then-president, David Bunton, obtained by Bisnow.
“Reasonable minds would find that as the Foundation’s service to the profession has matured over the last three decades, the need for monitoring has diminished,” Bunton wrote in one letter.
Taking the matter into its own hands, TAF then sought to reject the monitoring that came packaged with ASC’s funding.
The subcommittee offered TAF $3M between the end of 2020 and 2023, according to a notice of funding availability. That funding could only be used for specific projects outlined by the ASC, and some of those proposed included hiring outside experts to review TAF’s work.
If the grant money went unused or generated a profit, the extra funds were required to be rolled back into approved projects or returned to the ASC, an insider familiar with the process told Bisnow.
Because the $3M was to be used for USPAP and other materials TAF sold, the nonprofit passed on the funding. Instead, TAF submitted an alternate grant proposal in March 2020 that would have given it the funds while cutting the ASC’s access to any revenue-generating products.
The proposal, obtained by Bisnow, indicates TAF retained legal counsel to examine its copyright over USPAP. The group insisted that it should be able to distribute the funds to portions of its business that don't generate revenue.
The subcommittee shot the proposal down.
“By unanimous vote, the [ASC] declined to entertain the alternate grant proposal submitted,” Park responded in an April 14, 2020, letter.
The ASC indicated willingness to continue working with TAF but made clear it was inspecting the mechanisms by which the two groups worked together.
“We are willing to explore assurances that the 2020 grant will be administered similarly to past [ASC] grants to TAF,” Park wrote. “At the same time, we are conducting legal research to identify any areas that may need to be addressed in the future and are committed to sharing information with TAF as we learn more on this topic.”
That August, Bunton wrote to Park declining the grant for 2020, citing savings during the pandemic. Then, on Oct. 27, Bunton again wrote to Park notifying him that TAF wouldn't submit for the 2021 grant, widening the divide between the two groups.
2020 was the first year in TAF's three-decade history that it rejected federal funds to execute its work. The group hasn't received such funds since.
By 2022, grants and other contributions made up just 2.6% of TAF’s revenue, according to tax filings. And TAF’s secrecy, as well as its reliance on appraisers' money, grew as subcommittee oversight faded.
“Accountability is really a problem. Without the proper oversight, they have no accountability,” a high-ranking insider told Bisnow. “[TAF] experimented with things that are a waste of time and money, and it’s appraiser money.”
Since distancing itself from the ASC four years ago, TAF has accumulated almost $13M in assets, more than double what it had in 2017, when its filings showed $5.5M in assets.
Executive compensation made up 23% of TAF’s total expenses in 2022, totaling approximately $1.3M.
Bunton made nearly $394K in salary and another $108K in other compensation, according to filings from 2022, the most recent year available. The average nonprofit CEO pay between 2021 and 2022, excluding health and university system executives, was approximately $170K, according to an analysis of 426 U.S. nonprofits by Excellence in Giving.
In some years, Bunton has made even more. Bunton’s 2017 salary was $667K, with $93K in additional compensation, according to filings, for a total of $760K. The same year, the average Wall Street salary was $423K.
A Path Alone
TAF’s moves to insulate itself went beyond its balance sheet.
On July 16, 2020, shortly after declining grant funding, a letter signed by Bunton and TAF Board of Trustees Chair Leila Bunbar denounced the “increasingly heavy handed and authoritarian approach from [ASC] staff while performing monitoring activities.”
Bunton and Bunbar said the ASC had gone too far in monitoring TAF, including “giving unsolicited opinions” and disrupting work sessions. To prevent its influence, TAF forbade the subcommittee from attending its private meetings. If any ASC members are invited to attend, Bunton and Bunbar wrote, they can only speak when called on by the chair or president.
TAF also limited the ASC’s review to publicly released financial documents. Moving forward, the only communication between the two organizations would be between the ASC's executive director and TAF's president.
In the letter, Bunton and Bunbar acknowledged that removing the subcommittee from meetings was, in part, to limit transparency. In meetings that the ASC participates in, meeting notes are subject to FOIA rules.
“The most damaging result of these written observations, however, is the chilling effect they have on private discussions,” they wrote. “Board members and staff state that they no longer feel free to express opinions that may be at odds with ASC staff for fear of having their disagreements show up in a written report.”
The CFPB’s Chopra has repeatedly raised TAF's decision to boot the monitors from its meetings as a concern. But at a Feb. 13 hearing, Bunton claimed that TAF didn't make that change to their relationship.
“We didn’t come out with an exclusionary policy,” Bunton said. “That came from you.”
During the hearing, Chopra said that assertion is “at odds with what we are hearing from the subcommittee staff.” He later wrote in a blog post that Bunton conceded that the exclusion was intentional. Chopra declined Bisnow’s request for comment.
In 2021, TAF doubled down on forging its path alone, creating Vision 2030, a strategic plan for the future of the organization. The first “key driver of change” in the plan is financial independence for the foundation due to, among other reasons, the “relationship/dynamic with the Appraisal Subcommittee (grant funding, changing relationship, increasing oversight pressure).”
Earlier this year, TAF gathered for a board meeting during which board members discussed the plan for future funding, an attendee, who requested anonymity out of fear of reprisal, told Bisnow.
“They're sitting there talking about all the different ways to generate more revenue, like a for-profit organization,” they said. “It’s almost surreal. You've got an entity that is willing to give them money for the work they're required to do.”
It was also at that meeting that the board greenlighted signing a conciliation agreement with the Department of Housing and Urban Development to end HUD's investigation of whether TAF's qualification criteria violated the Fair Housing Act.
TAF admitted no wrongdoing in the settlement but agreed to take several steps to address the allegations that it had helped fuel housing discrimination. Foundation staff and the Appraisal Qualifications Board must undertake fair housing training, and TAF must make its Practical Applications of Real Estate Appraisal program more accessible, including by funding a $1.2M scholarship fund to cover the cost of PAREA for people from underprivileged backgrounds.
“This groundbreaking agreement will help to remove barriers to the appraisal profession and provide a scholarship fund to encourage entry to the profession, among other terms, building a new class of appraisers who truly look like America,” Diane Shelley, HUD's principal deputy assistant secretary for fair housing and equal opportunity, told Bisnow in a statement.
‘Don't Judge The Foundation’
In March, Bunton retired after serving as TAF’s president since 1990, though he remains involved as senior adviser.
Bunton has been among the most influential figures for decades in the appraisal industry, which is among the least diverse in the country. Appraisers were 95% white and less than 1% Black in 2023, according to Bureau of Labor Statistics data.
Lawsuits and investigations in recent years revealed that appraisers had been valuing the homes of white and Black homeowners differently. HUD investigators claimed TAF's policy requiring a trainee to find a mentor to provide more than 1,000 hours of on-the-job training helped fuel the industry's homogeneity.
Many of the conditions TAF assented to in its bid to end HUD's investigations include adding safeguards to prevent bias, sponsoring diversity initiatives and deliberately finding ways of bringing more people of color into the appraisal profession.
TAF also agreed to “make significant changes to the Board of Trustees governance structure” by adding public interest seats. HUD plans to monitor TAF to ensure it complies with the terms of the settlement.
The investigation has coincided with the ASC’s four-part hearings on appraisal bias over the past three years. Those hearings have focused more and more on the foundation’s governance.
Bunton officially stepped down after the most recent one in February, and Davids stepped in.
Davids' ascension led to backlash from the industry and ASC regulators. Some appraisers flocked to public forums, including Reddit and appraisersforum.com, where they have repeatedly expressed frustration about Davids’ appointment, critiquing her lack of professional experience, highlighting her and Bunton's compensation and calling her hiring “cronyism.”
Others viewed the appointment as a failure to evolve the organization.
During the most recent hearing on Feb. 13, after Bunton had indicated his plans to step down, Chopra asked if Bunton had “played no role” in selecting his successor after more than 30 years as head of TAF.
“I have not participated in any of [the search committee’s] decisions, nor have I been in the room when those decisions were made,” Bunton responded.
Chopra wrote a month later that Bunton “admitted that he had in fact made suggestions about who his successor should be.” TAF appointed Davids, Bunton's longtime right hand.
“I think that was a missed opportunity to demonstrate transparency,” New York-based appraiser Jillian White, who previously served on TAF’s board of trustees, told Bisnow in an interview following Davids’ promotion. “And I think it sets Kelly in a position where she's going to have to work probably about three times harder to demonstrate transparency, given her election process was not transparent.”
Despite her decade working closely with Bunton, Davids has positioned herself as the figure to lead the appraisal industry forward into a fairer future. In a video posted to TAF's YouTube channel on March 25, Davids spoke about her new role and acknowledged the criticism her organization has faced.
“For the naysayers out there, I challenge you to ask what you can do to support these efforts before you throw that next stone,” Davids said. “Don't judge the foundation, and don't judge me by what you may have disagreed with in the past.”
Bisnow reporters Ryan Wangman and Matt Wasielewski contributed to this report.
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