A black couple is suing after saying the home’s appraisal has risen by nearly $300,000 when shown by a white colleague

Nathan Connolly and Shani Mott filed suit Monday against 20/20 Valuations LLC, its owner Shane Lanham and LoanDepot.com, alleging defendants 20/20 Valuations LLC and its owner “discriminated against plaintiffs by selling their home in a rating dramatically underestimated because of the plaintiffs’ race and location next to a black census block, despite also being in “Homeland,” an affluent, mostly white neighborhood,” and LoanDepot.com discriminated against them by citing ” based the refusal of its refinancing loan on this assessment.

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

Lanham’s company, 20/20 Valuations, performed the valuation for LoanDepot and returned a valuation that was more than $75,000 below the conservative estimate of the valuation LoanDepot had given the couple, according to the lawsuit. LoanDepot refused to refinance the couple’s mortgage because of the low valuation, the complaint said.

“The plaintiffs were shocked by the rating and realized that the low rating was due to racial discrimination. They reported this to their LoanDepot loan officer and sent a detailed letter challenging the assessment,” the lawsuit reads.

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

Connolly and Mott later reapplied to another lender and “whitewashed” their home, according to the lawsuit. This included removing photos of her black family from the home and having a white colleague present the property to the appraiser. The lawsuit claims that valuation came back to $750,000, more than a quarter million dollars higher than 20/20 Valuation’s estimate of $472,000.

According to the lawsuit, Lanham allegedly used an appraisal method in which he compared the couple’s home to properties in a black-majority area rather than the rest of the home country.

“Defendant Lanham’s decision to limit geographically the territory from which he selected comparable sales reflected his belief that Dr. Connolly and Dr. Mott, because of their race, are not part of Homeland, an attractive and predominantly white neighborhood, and that a Black homeowner that borders a predominantly Black area is worth less than if it were in the whiter areas, which he called ‘the heart’ of the homeland,” the lawsuit claims.

CNN has reached out to Lanham for comment.

Jonathan Fine, vice president of public relations at LoanDepot, told CNN the company is “firm” against discrimination in housing.

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

The couple claim that Lanham’s “dramatically lower rating reflects his belief that a black family doesn’t truly belong in the homeland and cannot own a superior home.”

“Lanham violated professional standards because of these racial beliefs in order to devalue the plaintiffs’ home. Defendant LoanDepot relied on Lanham’s assessment, despite being informed that it was tainted by discrimination, and stopped answering or returning plaintiffs’ calls after they challenged the assessment on that basis,” the statement said lawsuit states.

The couple are seeking damages and compensation 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 the Maryland Fair Housing Laws, according to the complaint.

Black home ownership is now lower than it was a decade ago

The couple’s lawsuit is the latest example of the hardship and discrimination faced by some black homeowners.

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 became suspicious when the Northern California home they spent years renovating received a much lower appraiser rating than they expected. When they asked for a second opinion, a white friend pretended to own their home and they removed all artwork and photos that might show it belonged to a black family. The new appraisal for their Marin County home was more than $1.4 million, nearly half a million dollars higher than the previous appraisal, they told CNN at the time. Earlier this year, the Justice Department filed an expression of interest in the case, which is still pending.
And when Carlette Duffy hid in Indiana last year that she was black, she told CNN that the appraised value of her home more than doubled.

Real estate appraisals fall within the scope of fair housing and fair lending laws. More than 50 years after the passage of the Fair Housing Act, the racial divide in home ownership is wider than ever. For example, in 2021, black homeownership was 44%, while white homeownership hit 74%, according to the Census Bureau.

According to a study highlighted in a National Association of Realtors (NARS) report, homeownership is the single most important contributor to multigenerational wealth accumulation for black and brown households.
But bias in home valuations limits the ability of black and brown families to earn reasonable financial returns associated with home ownership, the NARS report said.

“The purpose of the lawsuit is to seek some measure of justice [Connolly and Mott] and what they’ve experienced in terms of financial compensation, but I think there’s an educational issue involved,” Diaz told CNN.

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

Anna Bahney of CNN Business contributed to this report.

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