A Maryland couple recently filed a lawsuit against a real estate appraisal company and an online mortgage loan provider after claiming they experienced appraisal discrimination.
Dr. Nathan Connolly and his wife, Dr. Shani Mott, both professors at John Hopkins University, filed a housing discrimination lawsuit in Maryland District County on Aug. 15 against mortgage lender loanDepot and Shane Latham, owner of 20/20 valuations, who conducted the initial appraisal.
“We were clearly aware of appraisal discrimination,” Dr. Connolly told The New York 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.”
In their lawsuit, the couple argues that 20/20 Valuations “cherry-picked low-value homes as comps” and “ignored legitimately comparable homes with much higher sales prices.”
At press time, neither loanDepot nor 20/20 Valuations responded to the media’s request for comment.
Low Appraisal, Refinance Denial
Almost a year ago, the couple applied for a mortgage refinance by loanDepot. The mortgage lender hired Maryland-based 20/20 Valuations to perform the appraisal.
According to court documents, Connolly, Mott, and their children were home during the visit. Their home was filled with family photos, literature by Black authors, and other relics that indicated that the home was owned by Black Americans.
In 2017 Connolly and Mott purchased their home for $450,000. Since then, the couple has completed more than $35,000 in renovations, so the couple was completely surprised when the appraisal company’s home valuation was $472,000. In addition, Baltimore’s home values have increased by 42 percent within the last five years. As a result of the low appraisal, loanDepot denied the refinance loan.
Whitewashing Experiment
Several months later, the couple reapplied for a loan, this time using a “whitewashing experiment.” The couple removed any trace of their race in the home, giving appraisers the impression that the home was owned by a white family. Gone were bookshelves filled with works by Black writers. Gone were drawings by their children depicting Black figures. And in their place were photographs of white people. At the time of the appraisal, the couple had a white colleague present in the home.
Following the second inspection, the appraiser valued the couple’s home at $750,000.
Appraisal Discrimination: An Example of Systemic Racism
Connolly and Mott are not the only Black Americans who have faced housing discrimination from biased home appraisers. The lawsuit notes that 97 percent of home appraisers in the United States are white, creating concerns of the inherent bias and systemic racism.
In addition, several lawsuits have caught national attention spurring the development of the Interagency Task Force on Property Appraisal and Valuation Equity. Led by HUD Secretary Marcia Fudge along with former National Security Advisor Susan Rice, the initiative’s mission is to evaluate appraisal bias and develop plans to shift the industry.
