Dr. Nathan Connolly and his wife, Dr. Shani Mott, wanted the mortgage of their Baltimore home refinanced so they could benefit from the significantly low-interest rates. The couple, who purchased the home for $450,000 in 2017, were confident their property was going to be priced higher because they had also spent $40,000 to renovate the space.
Per Zillow.com, the value of homes in Baltimore has shot up by 42% over the last five years, The New York Times reported. But an appraiser with the Maryland-based 20/20 Valuations appraisal company valued their property at $472,000. As a result, loanDepot denied the couple’s application for a refinance loan.
Dr. Connolly, who is an expert in housing discrimination and redlining, told the news outlet that he felt the appraiser had undervalued their home because of their race. They, therefore, applied for another appraisal.
But this time around, the Black Johns Hopkins professor made a White colleague pose as the owner of the property. The couple also removed evidence to suggest the home was owned by a Black family. The second appraiser valued their home at $750,000.
“We had to have a conversation with our kids about why we’re pulling down all their drawings,” Dr. Connolly said. “It’s very humiliating to strip yourself of your own home.”
Dr. Connolly and his wife have since filed a lawsuit against loanDepot and 20/20 Valuations. Shane Lanham, who owns the appraisal company, is also named as a defendant in the lawsuit.
“We were clearly aware of appraisal discrimination,” Dr. Connolly said. “But to be told in so many words that our presence and the life we’ve built in our home brings the property value down? It’s an absolute gut punch.”
Over the last two years, the home appraisal industry has reportedly come under intense scrutiny. And in what was a summer of racial reckoning following the 2020 death of George Floyd, several Black homeowners came out to allege White appraisers had undervalued their properties because of their race.
“Appraisal discrimination is insidious because it’s so nuanced,” the couple’s attorney, John Relman, said.
“But what’s unique about this case is it’s not a typical redlining case. You can’t get more accomplished than these two individuals. They have done everything the market told them to do, and they invested in a community where everyone else had the benefit of rising real estate values. And yet they were still discriminated against.”
Glaring reality
Racial discrimination in the housing system in the United States continues to persist, with Black Americans usually struggling to secure home loans compared to their fellow Whites, The New York Times reported in 2020. The former are also subjected to redlining, where they are denied mortgages in some neighborhoods. This practice further devalues homes in Black neighborhoods. Black homeowners also reportedly claim their properties are usually appraised far less than that of their neighbors in mixed-race and predominantly White neighborhoods.
A 2018 report by researchers at Gallup and the Brookings Institution also shed some light on the devaluation of properties in Black neighborhoods compared to similar homes in White neighborhoods. According to the report: “Owner-occupied homes in black neighborhoods are undervalued by $48,000 per home on average, amounting to $156 billion in cumulative losses.”
Speaking to The New York Times, Andre Perry, one of the writers of the Brookings Institution report, said Black homeowners still continue to bear the brunt of their homes being devalued – irrespective of the neighborhood they find themselves in.
“We still see Black people as risky,” Perry said. “White appraisers carry the same attitudes and beliefs of white America — the same attitudes that compelled Derek Chauvin to kneel casually on the neck of George Floyd are shared by other professionals in other fields. How does that choking out of America look in the appraisal industry? Through very low appraisals.”
A report by Redfin also revealed only 44% of Black Americans managed to own homes in 2020 as compared to 74% of White Americans. President Joe Biden has proposed financial reforms to make it less cumbersome for Black Americans to purchase homes.
