NEW YORK (AP) — How much does it cost to hide photos of your family in your home or anything else that reveals your race? If you’re black and trying to find out how much your home is worth, one family estimates it could be hundreds of thousands of dollars.
A Baltimore couple is suing an appraiser and mortgage lender, claiming their home was severely undervalued because they are black, preventing them from refinancing their mortgage. The couple say a separate appraisal, conducted after they “whitewashed” the place by removing family photos and replacing them with white counterparts, put the home’s value at $278,000 higher.
Both “were shocked by the grade and acknowledged that the low grade was due to racial discrimination,” according to the lawsuit 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. “Although the valuations are conducted independently by external expert valuation firms, everyone involved in the financial process at home must work to find ways to contribute to eliminating bias.”
The appraisal company in the case, 20/20 Valuations, could not immediately be reached for comment. Neither he nor the individual appraiser named in the lawsuit have attorneys listed in court documents yet.
The situation began last year when two Johns Hopkins University professors, Nathan Connolly and Shani Mott, wanted to do what millions of others across the country were doing. They hoped to take advantage of low interest rates and refinance their mortgage and home equity loan.
The couple bought their four-bedroom home in 2017 for $450,000 and have made several upgrades. They redid their club room, for example, for $35,000. They also invested in a tankless water heater, recessed lighting and other improvements that the family’s lawyers say increased the home’s value.
This would be on top of overall house price growth in the region and across the country between 2017 and 2021.
The couple applied in mid-2021 to Lender’s, which initially approved them for a 2.25% interest rate pending an appraisal to make sure the home is worth enough in the event of a default. A loanDepot loan officer told the family that $550,000 was a “fairly conservative” estimate, according to the lawsuit.
But an appraiser with 20/20 Valuations hired by loanDepot said the home was only worth $472,000, the complaint said. That prompted loanDepot to call and say it would not continue the loan, the complaint said.
The suit alleges that while researching other homes to compare to the plaintiff’s home, the appraiser ignored nearby sales in areas with the highest white population, similar to the plaintiff’s, that had higher values. Instead, the complaint said, he included lower-value homes and homes in areas with more black residents.
Later that year, the couple learned that the government had assessed the value of their home at $622,000. After that, they tried to get another loan. This time they conducted an experiment where they replaced family photos with those borrowed from white friends and colleagues. They even brought in new artwork, including a vintage print of a “white pin-up model.” And they made sure that no one was at home during the assessment and a white colleague met the assessor.
After that, the home was appraised at $750,000, or a 59% increase from the appraised value less than seven months ago.
“It shocks a lot of people that a house should be valued objectively, but if the appraiser values it assuming it’s a black-owned home, it gets one value, and suddenly it’s worth 50% more if the appraiser thinks it’s the white house. – a home that belongs,” said John Relman of the Relman Colfax law firm, which represents the plaintiffs.
“You have two outstanding Johns Hopkins professors. They did everything they were told to do,” Relman said. But “the discrimination in assessment is so subtle and so pernicious that it literally follows them into this predominantly white neighborhood. And they, unlike their neighbors, cannot access the value that is growing and from which they should benefit.”
The U.S. housing industry has a long history of racial discrimination that has helped widen the racial wealth gap, and one that continues today. Last year, on the 100th anniversary of the Tulsa massacre, President Joe Biden said he was launching an interagency initiative to combat bias in home appraisals.
This is a story with which the plaintiffs are very familiar. Connolly wrote a book about how property ownership helped define the terms of Jim Crow segregation between the early 1900s and the 1960s. Mott wrote about African American and American literature and history.
https://www.gettysburgtimes.com/news/business/article_6b161231-5091-5d64-b0c0-7009a71fd596.html
