The Federal Housing Finance Agency (FHFA) isn’t doing all that it can to prevent appraisal bias, according to the agency’s Office of Inspector General.

In a report issued on Wednesday, the watchdog said the regulator of Fannie Mae and Freddie Mac, which itself published a report that drew attention to racial bias claims in December 2021, should notify state regulators and licensing authorities when it finds cases of appraisal bias. It should also alert regulators and licensing authorities when it files complaints against appraisals, the OIG said.

The OIG found that the FHFA in 2022 made 17 referrals and provided 25.6 million active appraisal records to the U.S. Department of Housing and Urban Development (HUD), but did not take further action.

“The Associate Director of FHFA’s Office of Fair Lending Oversight informed us that the Agency does not file complaints with the state licensing authorities and has no policy in place on the subject,” the report said.

The OIG also said that while the FHFA identified appraisals that made overt references to prohibited bases like race or color in certain appraisal reports it reviewed, the “FHFA has not determined the extent to which the Enterprises are using appraisals that improperly consider biases that are prohibited by federal fair lending law.”

The FHFA agreed to properly file complaints with state regulatory agencies for each appraisal specified in the December 2021 review. It also recommended that the FHFA coordinate with Fannie Mae and Freddie Mac to determine which appraisals have detected bias. The new policies are to be in place by May of 2023.