NEW YORK (AP) — How much does it cost to hide photos of your family or anything else that reflects your race in your home? If you are black and want to find out how much your home is worth, a family proposal could cost hundreds of thousands of dollars.
A Baltimore couple is suing an appraiser and a mortgage lender, claiming their home was grossly undervalued because they are black, preventing them from refinancing their mortgage. A separate appraisal, the couple says, was conducted after the home was “whitewashed” by removing family photos and having a white colleague stand in for them, with the home being valued at more than $278,000.
According to the lawsuit filed earlier this week in U.S. District Court in Maryland, the two were “shocked by the rating and believed the low rating was due to racial discrimination.”
Officials at Loan Depot, the lender accused in the case, declined to discuss the allegations. However, in a statement, the publicly traded company said it firmly rejects bias. “While appraisals are conducted independently by external specialist appraisal firms, everyone involved in the mortgage lending process must work to find ways to help eliminate bias.”
The evaluation company in the matter, 20/20 Evaluation, could not be immediately reached for comment. Neither she nor the personal expert named in the lawsuit have named attorneys in court filings.
The situation began last year when two Johns Hopkins University professors, Nathan Connolly and Shani Mott, wanted to do what millions of others were doing across the country. They hoped to take advantage of lower interest rates and refinance their mortgage and home equity loans.
The couple bought their four-bedroom home in 2017 for $450,000 and underwent several upgrades. For example, he remodeled his club room for $35,000. He also invested in a water heater, recessed lighting and other improvements that family lawyers said added value to the home.
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This would be in addition to the general increase in property prices between 2017 and 2021 in the region and across the country.
The couple applied to Loan Depot in mid-2021, which initially gave them an interest rate of 2.25% pending an appraisal to ensure the home was of sufficient value in the event of a default. A credit depot official gave the family a “rather conservative” estimate of $550,000, according to the lawsuit.
But the appraiser from 20/20 Valuations hired by LoanDepot said the home was only worth $472,000, according to the complaint. According to the complaint, the couple is less than what they paid for the home and have asked the loan custodian to say it would not extend the loan.
The lawsuit alleges that in searching for other homes to compare to the plaintiff’s home, the appraiser ignored nearby sales in similar, majority-white areas of the plaintiff’s that had higher values. Instead, the complaint says they included low-value housing and areas with more black residents.
Later that year, the couple learned the government had appraised their home at $622,000. Then he tried to get another loan. This time, they conducted an experiment in which they replaced family photos with photos borrowed from white friends and co-workers. They also brought new artwork, including a vintage print featuring a “white pin-up model.” And he made sure not to be home during the appraisal, with a white assistant greeting the appraiser.
After that, the home was valued at $750,000, or 59% higher than less than seven months ago.
“It’s shocking to a lot of people that a home should be an objective appraisal, but when the appraiser accepts the appraisal and assumes it’s a Black-owned home, they get a value, and suddenly they’re 50 % higher. is of value if the appraiser believes the home is white-owned,” said John Rillman of the law firm Rillman Colfax, representing the plaintiffs.
“You have two outstanding professors at Johns Hopkins. They did everything they were told,” Railman said. But “Rating discrimination is so subtle and so deadly that it literally follows them in this mostly white neighborhood. And, unlike their neighbors, they cannot achieve increasing value from which they should benefit.” ”
The American housing industry has a long history of racial discrimination that helped create the racial wealth gap and continues to this day. 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 household valuations.
This is a story of which plaintiffs are well aware. Connolly wrote a book about how property ownership helped set the terms of Jim Crow’s breakup in the 1900s and early 1960s. Mott has written on African American and American literature and history.
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