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Justice Department takes interest in lawsuit accusing an appraiser of undervaluing homes based on race

Black couple's home appraised nearly $300,000 less than valued
Discrimination Lawsuit.png
Posted at 7:57 AM, Mar 14, 2023
and last updated 2023-03-14 19:18:39-04

BALTIMORE — A Baltimore couple's discrimination lawsuit against an appraiser and lender for devaluing their home because they are Black has gained the attention of the U.S. Justice Department.

The lawsuit claims the appraiser and lender violated both the Fair Housing Act and the Equal Credit Opportunity Act in denying the couple's refinancing application based on the low appraisal.

Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division said "the Justice Department is working to ensure an open and fair housing market by taking on appraisal bias, modern-day redlining, discriminatory loan pricing practices, and other forms of discrimination that may rear their ugly head at any stage of the home-buying process.”

The husband and wife are both professors at Johns Hopkins University. they are experts in their fields of history, racism, capitalism, and politics, but they didn't expect to find themselves at the crossroads where all of those issues intersect.

Dr. Nathan Connolly and his wife Dr. Shani Mott had invested thousands of dollars fixing up their home and they were looking to refinance it to lower their interest rate.

The State of Maryland Tax Assessment for their house taxed it at a value of more than $600,000.

When they got an appraisal to refinance their home, the appraiser came back with a value of $472,000, about a $130,000 difference.

The couple claim the appraiser, Shane Lanham with 20/20 valuations, significantly undervalued their home because they are Black.

They decided to get a second opinion but this time they 'white washed' their home and removed any evidence that a black family lived there, including removing themselves from the picture.

They had a white colleague meet with the appraiser instead. a few days later, the new assessment for their home came in at $750,000.

The new appraisal was nearly 60% higher than the original one.

RELATED: Homeowning while Black: Couple alleges bias in appraisal

They say they told their lender that the appraisal was discriminatory, but Loan Depot still denied the loan and retaliated them.

At the time of filing the lawsuit last summer, Connolly said “to feel that we're very much part of that historical process of black folks being devalued, not being able to get a fair shake and it also feels as though frankly we're at a moment where we need a new movement that is able to operate able to kind of distill this particular form of racism and really challenge it.

The United States Attorney for the District of Maryland, the Justice Department’s Civil Rights Division, and the Consumer Financial Protection Bureau all have an interest in this case.

Federal law prohibits discrimination in housing on the basis of race, color, religion, sex, having one or more children under 18, national origin or disability.

Creditors are prohibited from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, or age.

U.S. Attorney for the District of Maryland Erek L. Barron said “Appraisal bias is a serious and ongoing issue in this country, and it is critical that the United States ensures the proper construction and application of the Fair Housing Act and the Equal Credit Opportunity Act to hold appraisers and lenders accountable.”

In reaction to the lawsuit, the mortgage lender had issued a statement to ABC News last summer stating, “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.”

Meanwhile, the DOJ says Loan Depot has tried to have this case dismissed as it is currently pending before the court.

U.S. Department of Justice Statement of Interest