By: Hope Williams, Supervising Attorney, Fair Housing Project, Legal Aid of North Carolina
When Drs. Nathan Connolly and Shani Mott, a Black married couple who are professors at Johns Hopkins University in Maryland, sought an appraisal of their home in the summer of 2021 in connection with their goal to refinance their mortgage, they were surprised to get an appraisal report indicating their house’s value had increased by less than $25,000 since 2017, when they purchased the home. During those four years, they had made renovations and upgrades totaling over $40,000 and house prices had been on the rise both locally and nationally. Because of the low appraisal, the couple was denied the refinance loan, missing out on historically low interest rates.
A few months later, they applied for another loan and a new appraisal was conducted—but this time, Drs. Connelly and Mott removed all evidence from the home that they were Black and had a white friend stand in for them at the time of the appraisal. Their appraisal came back at $250,000 over their initial purchase price.
On August 15, 2022, Relman Colfax PLLC filed a federal lawsuit on their behalf, against Shane Lathan, the initial appraiser, his company 20/20 Valuations, and the residential mortgage lender, LoanDepot, LLC, who contracted with 20/20 Valuations to conduct the appraisal and then denied the Plaintiffs’ loan application based on the low home valuation. The lawsuit asserts claims under the federal Fair Housing Act, Equal Credit Opportunity Act, the Civil Rights Act of 1866, and Maryland fair housing laws.
The lawsuit alleges that Mr. Lathan and 20/20 Valuations engaged in discriminatory conduct because, instead of comparing the Plaintiffs’ home with similar homes in the Plaintiffs’ mostly white neighborhood to appraise the value, they selected homes in other neighborhoods with higher Black homeownership. Additionally, the Defendants did not appropriately account for improvements made to the property and made an excessive downward adjustment to the value of the home for its location on a busy road that was inconsistent with industry standards. When Dr. Connolly, a professor whose scholarship focuses on racism, capitalism and politics, raised his concern to 20/20 Valuation that their methods indicated a flawed and discriminatory methodology, the Defendants stopped returning their calls. Drs. Connelly and Mott seek injunctive relief to prevent other homeowners from experiencing similar discriminatory practices in the future, as well as compensatory and punitive damages.
The Plaintiffs’ experience mirror those of other Black homeowners as demonstrated by a similar lawsuit filed in December 2021 in Marin County, California, by Tenisha Tate-Austin, her husband Paul Austin, and the Fair Housing Advocates of Northern California, which alleges that the Defendant appraiser used similar techniques and appraised the Plaintiff’s home at nearly half a million dollars less than a later appraisal that was conducted after the Plaintiff’s removed evidence of their race from their home. Similar lawsuits have also been filed in other states.
A recent report by the National Community Reinvestment Coalition documenting the results of their testing of appraisers in the Baltimore area also revealed discriminatory practices including lower valuation of homes owned by Black homeowners and unprofessional treatment of Black homeowners that was not experienced by their white counterparts.
Click here to read the Connelly/Mott complaint.
Click here to read the Connelly/Mott press release.
Click here to read the Austin Press Release and Complaint.
Click here to access the National Community Reinvestment Coalition report: Faulty Foundations: Mystery-Shopper Testing in Home Appraisals Racial Bias Undermining Black Wealth report.
More from this Newsletter Issue: December 2022
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