Black Couple Sues Real Estate Appraiser After Home Valuation Increases By $300,000 When Shown...

A Maryland couple is suing a local real estate appraiser and an online mortgage provider after alleging that the housing appraisal they received was unfairly low due to their race, violating the Fair Housing Act. 

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Nathan Connolly and Shani Mott have filed a lawsuit against 20/20 Valuations LLC, its owner Shane Lanham, and after alleging that all the defendants listed  “discriminated against Plaintiffs by dramatically undervaluing their home in an appraisal because of Plaintiffs’ race and their home’s location adjacent to a Black census block, notwithstanding that it is also located within Homeland, an affluent, mostly white neighborhood. and discriminated against them by relying on that appraisal in denying their refinance loan.”

Beyond the low valuation for the refinancing of the mortgage on their four-bedroom home in Homeland, Maryland, a predominantly white neighborhood, the couple also stated that when one of their white colleagues got the home reappraised posing as the owner, the home’s valuation increased by nearly $300,000. 

Connolly and Mott are both professors at Johns Hopkins University. 20/20 Valuations, owned by Lanham, performed the valuation for loanDepot and gave an estimate that was more than $75,000 below the conservative estimate of valuation that loanDepot gave the couple, according to the lawsuit. LoanDepot also denied the couple the chance to refinance their mortgage due to the low valuation.

“Plaintiffs were shocked at the appraisal and recognized that the low valuation was because of racial discrimination. They told this to their loanDepot loan officer and challenged the appraisal in a detailed letter.”

An attorney for the couple, Gabriel Diaz, spoke to the media about his clients point of view in the lawsuit. He explained how Connolly and Mott re-applied for refinancing with another lender and “whitewashed their home” by removing all images of their Black family from the home and had one of their white work colleagues present the home to the appraiser. 

The suit states that this second valuation came back at $750,000, more than $250,000 more than the valuation Connolly and Mott received from 20/20 Valuations, who appraised the home to be worth $472,000.

According to the lawsuit, Lanham allegedly “used an appraisal method where he compared the couple’s home to properties in a majority-Black local area, instead of the rest of Homeland.”

“Defendant Lanham’s decision to geographically limit the area from which he selected comparable sales reflected his belief that, because of their race, Dr. Connolly and Dr. Mott did not belong in Homeland, an attractive and predominantly white neighborhood, and that a home with Black homeowners located adjacent to a predominantly Black area is worth less than if it were in the whiter areas that he deemed ‘the heart’ of Homeland,” the lawsuit alleges.

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“[We’re alleging] Lanham’s dramatically lower valuation reflected his beliefs that a Black family did not genuinely belong in Homeland and could not be the owners of a higher valued home.”

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Jonathan Fine, Vice President of Public Relations with loanDepot, told the media that the company “strongly opposes housing discrimination. 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.”

The suit itself states that “Lanham violated professional standards to devalue Plaintiffs’ home because of these racist beliefs. Defendant loanDepot relied on Lanham’s appraisal despite being informed that it was infected by discrimination and stopped answering or returning Plaintiffs calls once they challenged the appraisal on that basis.”

The couple is seeking damages and relief from Lanham, 20/20 Valuations LLC, and loanDepot for violations of the Fair Housing Act, the Equal Credit Opportunity Act, the Civil Rights Act of 1866, and Maryland Fair Housing Laws, according to the legal complaint. 

Home appraisals are meant to abide by all fair housing and fair lending laws, which vary depending on the location. However, more than 50 years after the Fair Housing Act was passed, the racial homeownership divide has never been wider. In 2021, the Black homeownership rate was 44% while the White homeownership rate reached 74%, according to the Census Bureau.

“The goal with the lawsuit is to get a measure of justice for [Connolly and Mott] and what they experienced in the form of monetary compensation, but I think relatedly there is the question of education,” Diaz told the media.

“I think that this is an issue that is not properly understood, not widely understood. Hopefully, the case will allow people to understand better so that this doesn’t happen to people going forward,” Diaz said.