Black couple sue after claiming home value increased by nearly $300,000 when shown by white co-worker

By Justin Gamble and Virginia Langmaid, CNN

A Maryland couple sued a local real estate appraiser and online mortgage provider, alleging the home appraisal they received was unfairly low because of their race, in violation of the Fair Housing Act, after a second appraisal gave a result nearly $300,000 higher. .

Nathan Connolly and Shani Mott filed suit against 20/20 Valuations LLC, its owner Shane Lanham and loanDepot.com on Monday, alleging that defendants 20/20 Valuations LLC and its owner “discriminated against plaintiffs by significantly undervaluing their home in an appraisal because of the applicants’ race and the location of their home next to a black census block, although it was also located in Homeland, a predominantly affluent neighborhood white,” and loanDepot.com discriminated against them based on that assessment to deny their refinance loan.

According to the complaint, Connolly and Mott are black professors at Johns Hopkins University who asked loanDepot.com to refinance the mortgage on their four-bedroom home in Homeland, Md., a predominantly white neighborhood in Baltimore.

Lanham’s company, 20/20 Valuations, performed loanDepot’s valuation and returned a valuation that was more than $75,000 lower than the conservative valuation estimate loanDepot had given the couple, according to the lawsuit. LoanDepot denied the couple the mortgage refinance due to the low valuation, according to the complaint.

“The complainants were shocked by the rating and acknowledged that the low rating was due to racial discrimination. They told their LoanDepot loan officer and disputed the rating in a detailed letter,” the statement reads. court case.

Gabriel Diaz, an attorney for the couple, told CNN the lawsuit represents the perspective of his clients.

Connolly and Mott then reapplyed with another lender and “whitewashed” their home, according to the lawsuit. This involved removing photos of their black family from the home and asking a white colleague to present the property to the appraiser. The lawsuit says that valuation came in at $750,000, more than a quarter of a million dollars more than 20/20 Valuations’ valuation of $472,000.

According to the lawsuit, Lanham allegedly used a valuation method in which he compared the couple’s home to properties in a local majority-black 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 to Homeland, a neighborhood attractive and predominantly white, and that a house with black homeowners located next to a predominantly black area is worth less than if they were in the whiter areas that he considered “the heart” of Homeland” , the lawsuit alleges.

CNN has reached out to Lanham for comment.

Jonathan Fine, vice president of public relations at loanDepot, told CNN the company “strongly” opposes housing discrimination.

“While valuations are conducted independently by outside expert firms, everyone involved in the home finance process should work to find ways to help eliminate bias,” Fine said.

The couple allege Lanham’s ‘significantly lower valuation reflected his belief that a black family did not truly belong in the homeland and could not own a higher value home’.

“Lanham violated professional standards to devalue the Plaintiffs’ home because of these racist beliefs. The defendant loan filing relied on Lanham’s assessment despite being told he was infected with discrimination and stopped answering or returning plaintiffs’ calls once they challenged the ‘assessment on this basis,’ the suit states.

The couple seek damages from Lanham, 20/20 Valuations LLC and loanDepot for violations of the Fair Housing Act, Equal Credit Opportunity Act, Civil Rights Act of 1866 and Maryland’s fair housing laws, according to the complaint.

The couple’s lawsuit is the latest example of the hardship and discrimination some black homeowners say they face.

Last year, a black California couple filed a lawsuit in federal court in San Francisco, arguing that racial discrimination played a role in their home’s low valuation.

Tenisha Tate-Austin and her husband grew suspicious when the Northern California home they spent years renovating was rated by an appraiser far lower than they expected. When they asked for a second opinion, a white friend pretended to own their house and they removed all artwork and photos that might show it was black family. The new valuation of their home in Marin County was over $1.4 million and nearly half a million dollars more than the previous estimate, they told CNN at the time. Earlier this yearthe Department of Justice filed a declaration of interest in the case, which is still pending.

And in Indiana last yearwhen Carlette Duffy hid that she was black, she told CNN the appraised value of her home more than doubled.

Home appraisals fall under fair housing and fair lending laws. More than 50 years after the passage of the Fair Housing Act, the racial gap in home ownership is wider than ever. In 2021, for example, the homeownership rate for blacks was 44% while the homeownership rate for whites reached 74% according to the Census Bureau.

Homeownership is the biggest contributor to multigenerational wealth creation for black and brown households, study finds in a report of the National Association of Realtors (NARS).

But the bias in home valuations limits the ability of black and brown families to see fair financial returns associated with homeownership, the NARS report said.

“The purpose of the trial is to obtain a measure of justice for [Connolly and Mott] and what they went through in the form of monetary compensation, but I think there’s also the issue of education,” Diaz told CNN.

“I think it’s an issue that’s not well understood, not widely understood. Hopefully the case will get people to understand and appreciate and also change the anger so it doesn’t happen to people. in the future,” Diaz said.

The-CNN-Wire
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Anna Bahney of CNN Business contributed to this report.

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