Homeowning while Black: Couple alleges bias in appraisal

Aug 20, 2022, 1:04 AM | Updated: 1:50 pm

NEW YORK (AP) — How much does it pay to hide the photos of your family at your home, or anything else that shows your race? If you’re Black and trying to find out how much your house is worth, one family suggests it could be hundreds of thousands of dollars.

A couple in Baltimore is suing an appraiser and a mortgage lender, alleging their home was severely undervalued because they are Black, blocking them from refinancing their mortgage. The couple says a separate appraisal, done after “whitewashing” the place by removing family photos and having a white colleague stand in for them, pegged the home’s value higher by $278,000.

The two “were shocked at the appraisal and recognized that the low valuation was because of racial discrimination,” according to the suit filed earlier this week in U.S. District Court in Maryland.

Officials at the lender accused in the case, loanDepot, declined to discuss the allegations. But in a statement, the publicly traded company said it strongly opposes bias. “While appraisals are performed independently by outside expert appraisal firms, all participants in the home finance process must work to find ways to contribute to eradicating bias.”

The appraisal company in the case, 20/20 Valuations, could not be immediately reached for comment. Neither it nor the individual appraiser named in the suit has lawyers listed yet in the court filings.

The situation began last year, when two professors at Johns Hopkins University, Nathan Connolly and Shani Mott, wanted to do the same thing millions of others across the country were doing. They hoped to take advantage of low interest rates and refinance their mortgage and a home-equity loan.

The couple had bought their four-bedroom home in 2017 for $450,000 and had made several upgrades to it. They remodeled their club room for $35,000, for example. They also invested in a tankless water heater, recessed lighting and other improvements that the family’s lawyers say raised the value of the home.

That would be on top of the general rise that home prices enjoyed in the area and across the country between 2017 and 2021.

The couple applied in mid-2021 with loanDepot, which initially approved them for a 2.25% interest rate, pending an appraisal to ensure the home was worth enough in case of a default. A loanDepot lending officer told the family a “pretty conservative” estimate was $550,000, according to the suit.

But the appraiser from 20/20 Valuations, who was hired by loanDepot, said the home was worth only $472,000, according to the complaint. That pushed loanDepot to call to say it would not extend the loan, according to the complaint.

The suit alleges that while researching other homes to benchmark against the plaintiff’s home, the appraiser ignored nearby sales in majority-white areas, similar to the plaintiff’s, that had higher values. Instead, the complaint said he included lower-valued homes and ones in areas with more Black residents.

Later that year, the couple learned the government assessed the value of their home at $622,000. After that, they tried for another loan. This time, they conducted an experiment where they replaced family photos with ones borrowed from white friends and colleagues. They even brought in new artwork, including a vintage print featuring a “white pin-up model.” And they made sure not to be home during the appraisal, with a white colleague there instead to greet the appraiser.

After that, the home appraised for $750,000, or 59% more than the appraisal from less than seven months earlier.

“It’s shocking to a lot of people that a home should be an objective valuation, but when the appraiser appraises it believing it’s a Black-owned home, it gets one value, and suddenly it’s worth 50% more when the appraiser believes it’s a white-owned home,” said John Relman of the Relman Colfax law firm that’s representing the plaintiffs.

“You have two eminent professors at Johns Hopkins. They did everything they were told to do,” Relman said. But “appraisal discrimination is so nuanced and so pernicious that it literally follows them into this predominantly white neighborhood. And they, unlike their neighbors, can’t access the value that’s rising and that they should benefit from.”

The U.S. housing industry has a long history of racial discrimination, one that helped build the racial wealth gap and one that carries through today. Last year, on the 100th anniversary of the Tulsa race massacre, President Joe Biden said he was launching an interagency initiative to combat bias in home appraisals.

It’s a history with which the plaintiffs are well aware. Connolly has written a book about how property ownership helped set the terms of Jim Crow segregation between the early 1900s and the 1960s. Mott has written about African-American and American literature and history.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

Seattle Mariners including Jesse Winker, left; Ty France, third from right; Logan Gilbert, second f...
Tim Booth, Associated Press

Mariners end two decades of misery returning to postseason

Baseball is fun again in the Pacific Northwest in a way that it hasn’t been in more than two decades. The longest postseason drought in the four major professional sports ended Friday night when the Mariners earned a long-coveted spot in the Major League Baseball playoffs.
15 hours ago
FILE - A sign stands outside the Iowa State Penitentiary in Fort Madison, Iowa, on July 1, 2017. A ...
Associated Press

Panel rejects $1M payouts to inmates given vaccine overdoses

DES MOINES, Iowa (AP) — A state board on Monday rejected claims for $1 million payments for 52 prison inmates who were given six times the proper dose of COVID-19 vaccines last year. The three-member State Appeals Board, which considers state legal financial obligations, unanimously denied the claims from inmates who received the extra doses […]
15 hours ago
Associated Press

$500M-plus from opioid deal starts heading to Washington

SEATTLE (AP) — The first payments from a $518 million settlement with the nation’s three largest opioid distributors will begin reaching Washington communities in December, providing much-needed cash officials can use to hire first responders or direct toward prevention, treatment and other services, Attorney General Bob Ferguson said Monday. “These significant resources will help Washington […]
15 hours ago
Associated Press

Indigenous wall paintings uncovered at Mexican convent

MEXICO CITY (AP) — Indigenous symbols like a feather headdress, an axe and a shield have been found under layers of lime plaster at open-air chapels in a convent just south of Mexico City, experts announced Monday. The finds suggest Spanish priests not only altered their church architecture to accommodate the large number of Indigenous […]
15 hours ago
Associated Press

$20K reward for info on killings of 5 wild horses in Nevada

LAS VEGAS (AP) — A $20,000 reward is now being offered for information leading to the arrest and conviction of whoever killed five wild horses in eastern Nevada late last year, the Bureau of Land Management announced Monday. BLM officials said the National Mustang Association pledged to double the previous $10,000 reward in the case. […]
15 hours ago
Associated Press

NY’s limo safety task force releases safety recommendations

ALBANY, N.Y. (AP) — A New York state task force created after a 2018 limo crash that killed 20 people issued a safety report with recommendations including equipping the vehicles with side impact protection devices and taking them off the roads after a certain number of miles. The 16-recommendation report from the task force was […]
15 hours ago

Sponsored Articles

Anacortes Christmas Tree...

Come one, come all! Food, Drink, and Coastal Christmas – Anacortes has it all!

Come celebrate Anacortes’ 11th annual Bier on the Pier! Bier on the Pier takes place on October 7th and 8th and features local ciders, food trucks and live music - not to mention the beautiful views of the Guemes Channel and backdrop of downtown Anacortes.
Swedish Cyberknife Treatment...

The revolutionary treatment of Swedish CyberKnife provides better quality of life for majority of patients

There are a wide variety of treatments options available for men with prostate cancer. One of the most technologically advanced treatment options in the Pacific Northwest is Stereotactic Body Radiation Therapy using the CyberKnife platform at Swedish Medical Center.
Work at Zum Services...

Seattle Public Schools announces three-year contract with Zum

Seattle Public Schools just announced a three-year contract with a brand-new company to the Pacific Northwest to assist with their student transportation: Zum.
Swedish Cyberknife 900x506...

June is Men’s Health Month: Here’s Why It’s Important To Speak About Your Health

According to the Centers for Disease Control and Prevention, men in the United States, on average, die five years earlier than women.
...

Anacortes – A Must Visit Summertime Destination

While Anacortes is certainly on the way to the San Juan Islands (SJI), it is not just a destination to get to the ferry… Anacortes is a destination in and of itself!
...

Ready for your 2022 Alaskan Adventure with Celebrity Cruises?

Celebrity Cruises SPONSORED — A round-trip Alaska cruise from Seattle is an amazing treat for you and a loved one. Not only are you able to see and explore some of the most incredible and visually appealing natural sights on the planet, but you’re also able to relax and re-energize while aboard a luxury cruise […]
Homeowning while Black: Couple alleges bias in appraisal