- A Baltimore couple filed a lawsuit alleging that their home was undervalued because they are Black, The New York Times reported.
- An appraisal company valued their home much higher when they had a white colleague stand in for them.
- Many homeowners of color have spoken out against housing appraisal discrimination and taken legal action in recent years.
A professor at Johns Hopkins University found himself to be a potential victim of the very thing he studies — housing discrimination.
That's according to a lawsuit filed by Nathan Connolly and his wife, Shani Mott, who allege that loanDepot, a mortgage dealer, denied their request for a refinance loan based on racial discrimination, The New York Times' Debra Kamin reported this week. Both Connolly and Mott, who are professors of history and Africana studies, respectively, are Black.
Last year, an appraiser from 20/20 Valuations, a Maryland appraisal company, assessed the value of Connolly and Mott's home, as the couple intended to take advantage of record-low interest rates and refinance their mortgage. The couple believed their Baltimore home had increased in value since they bought it for $450,000 in 2017, due to $40,000 in renovations. On top of that, home prices have skyrocketed during the pandemic, which was bad news for homebuyers and good news for homeowners.
20/20 Valuations, however, said that Connolly and Mott's home had only increased in value to $472,000 in four years, after all their improvements. Afterward, loanDepot denied the couple's request to refinance. In addition to loanDepot, Connolly and Mott sued 20/20 Valuations, which performed the appraisal loanDepot used, and Shane Lanham, the owner of 20/20 Valuations, who performed the inspection of Connolly and Mott's home. loanDepot had hired 20/20 Valuations as a subcontractor.
Connolly and Mott claim the lower-than-expected valuation was a result of racial discrimination. Their evidence: Connolly and Mott applied for another refinance loan a few months later, removed all photos of their family from the residence, and had a white male colleague of Connolly's stand in for them at the appraisal. The second appraiser determined that the house was worth $750,000, The Times reported.
Connolly and Mott aren't alone in alleging housing discrimination, and suing for it. Since the summer of 2020, dozens of Black homeowners have alleged discrimination by appraisal companies, according to The Times, with many of them filing lawsuits in response. And according to the Bureau of Labor Statistics, 97% of home appraisers are white.
A 2021 working paper published by the National Bureau for Economic Research found that Black and Latinx people are subject to housing discrimination in a majority of US cities, and that higher levels of housing discrimination, especially for Black people, are correlated with greater disparities in economic mobility.
"We were clearly aware of appraisal discrimination," Connolly told The Times. "But to be told in so many words that our presence and the life we've built in our home brings the property value down? It's an absolute gut punch."
'It should be a concern for the entire appraisal industry'
James Park, executive director of the Appraisal Subcommittee, the independent federal agency that monitors the Appraisal Foundation, which sets standards for appraisals in real estate, told The Times that racial discrimination in appraisals should be a concern for many organizations involved in the homebuying process.
"It's a concern, and it should be a concern for the entire appraisal industry, as well as mortgage lenders," Park said.
Park's comments come as racial discrimination in housing appraisals continues to undergo a public reckoning. In one ongoing case involving a Black couple from California who allege that an appraiser undervalued their home by $500,000, the Department of Justice issued a statement of interest emphasizing that home appraisers can be held legally liable for violating the Fair Housing Act of 1968, which makes discrimination in housing illegal.
The Biden administration announced the creation of the Interagency Task Force on Property Appraisal and Valuation Equity last year, intended to address racial bias in home lending and appraisals.
The public outcry over the last few years regarding housing appraisal discrimination — both by homeowners and the federal government — underscore that while housing discrimination practices such as appraisal discrimination, redlining, and blockbusting have long been illegal, they are still persistent forces in US neighborhoods.
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