Baltimore couple Nathan Connolly and Shani Mott expected a modest increase in their home’s value after making significant upgrades to their home. Instead, they got a significantly biased appraisal that undervalued their property and tanked an opportunity to refinance. (Photo Courtesy of Will Kirk/Johns Hopkins University)

Baltimore couple’s home rises nearly $300,000 in value after White colleague stands in for appraisal

By Megan Sayles, AFRO Business Writer
Report for America Corps Member
msayles@afro.com
and Kara Thompson, Special to the AFRO
kthompson@afro.com

Nearly a year ago, Baltimore couple Nathan Connolly and Shani Mott decided that they would capitalize on the housing market’s historically low interest rates during the COVID-19 pandemic and refinance their mortgage. 

Connolly is a Johns Hopkins University (JHU) professor of history and Mott is a JHU Africana studies professor. The two have lived in a house in Homeland, a neighborhood in North Baltimore, since 2017. They’ve been upgrading their property ever since.

A renovation to the club room on their property totaled $35,000. 

They also added a $5,000 tankless water heater. Connolly and Mott believed their home would certainly be worth more than the $450,000 they paid for it. 

According to RedFin, a full-service real estate brokerage, housing values in Baltimore also began to climb in 2021. 

But when Parkville-based appraisal company 20/20 Valuations came to assess the house, they valued it at $472,000, and subsequently, the couple was denied a refinancing loan from loanDepot, a mortgage lender. 

In 2022, Connolly and Mott tried again, but this time, they changed their approach.

The couple applied to a different lender and “Whitewashed” their home, or removed family photos and all indications that a Black family lived there. They replaced their own photos with items from White family friends. They also asked a White colleague to stand in for them during the appraisal.

This time, the home was valued at $750,000. 

Now, Connolly and Mott have filed a housing discrimination lawsuit against 20/20 Valuations, loanDepot and Shane Lanham, who conducted the appraisal on the house and owns 20/20 Valuations. 

“I think often there are two main types of appraisal discrimination that are widely recognized. People will have their homes devalued because the homes are in areas that are primarily or historically areas of color, and then the second one is that sometimes people will have their homes devalued because they are homeowners of color, irrespective of where their house is,” said Gabriel Diaz, counsel at Relman Colfax, which represents the couple. “This case actually has a bit of a mix of both.” 

Appraisals free of bias and prejudice are needed in order to realize the true value of Black homeowners and Black communities. (Photo by Kostiantyn Li on Unsplash)

Although Homeland is primarily a White neighborhood in Baltimore, Connolly and Mott’s house borders one of the significantly Black blocks in the community, according to the complaint. 

When the couple applied for a refinancing loan from loanDepot, they were approved, pending the house’s appraisal. 

According to the complaint, loanDepot informed Connolly and Mott that they should “be good” because they had been “pretty conservative on the estimated value,” which was $550,000. 

Lanham, hired by loanDepot, used a sales comparison approach to appraise the home, which involves comparing the values of a property to those with similar characteristics and located in the same neighborhood. He limited his search to less than 17 percent of the neighborhood, excluding more than 80 houses, and of his four comparables, two were located on significantly Black blocks, according to the complaint. 

Baltimore appraiser Gale McClelland said one of her trainees sent her a news article about the incident, and when she saw the discrepancy in valuations, she thought it was absurd. 

“I know there’s going to be a difference in appraisals but not that big of a difference,” said McClelland. 

McClelland has owned Home Appraisal Services in Towson, Md., for over 30 years, and she’s witnessed instances like this happen before. 

She also uses a sales comparison approach for appraisals, and she always reminds her apprentices that every sale in a neighborhood is not a comparable property, even if it’s just a block away. 

McClelland said to determine proper comparables she looks for similar locations, school districts, amenities, square footage, construction quality and property conditions.

She also takes care to consider the renovations that have been made to her client’s property. 

McClelland said Black homeowners should always challenge the valuations given to them by appraisers, especially if they think they are being discriminated against. After they receive it, she recommends that they conduct their own research about the values of similar properties. 

According to Diaz, Connolly and Mott’s case addresses an area of the law that has started to draw attention more recently. 

Black homeowners across the country are “Whitewashing” the inside of their homes to significantly increase the value of their property at appraisal time–and reports show it’s working. (Photo by Tom Rumble on Unsplash)

This spring, the Biden-Harris Administration released an action plan to address racial ethnic bias in home valuations after forming the Interagency Task Force on Property Appraisal and Valuation Equity in 2021. 

“Even though appraisal discrimination is something that has been happening to people for a long, long time, I think it’s something that large segments of the population are starting to wake up to and starting to understand,” said Diaz. “To the extent that this case can educate people and prevent this sort of thing from happening—at the very least, less often—to others in the future, I think that would be a wonderful outcome.” 

Jadaya Cason, a realtor at Harris Hawkins & Co., has had a few personal experiences with biased appraisals during her career, in addition to hearing stories from other coworkers and real estate friends.

“I had a recent experience with a listing that I sold in the Madison-Eastend neighborhood,” said Cason. “Because of that neighborhood where [the property was], the appraiser came in and as soon as he got out of his truck, I sensed there was going to be an issue. He got into the home and he just started making all types of uncomfortable comments about the safety of their neighborhood, the people that occupy that area because it was a predominantly Black neighborhood.”

“He determined the value of the home just strictly based on location and not the amenities that the home offered, not the recent sales within an immediate radius at the home that supported the list price, and he devalued the home by almost $50,000,” she said.

Because of this, Cason recommends that her clients de-personalize their homes before putting them on the market, to take away that factor as it plays into appraisal value.

This is not the only recent instance where something like this has happened. 

“In the past 12 months, our commission on appraisal has received four complaints, in our view, that’s far too many,” said Joseph Farren, chief strategy officer of the Maryland Department of Labor. 

Of these four complaints, Farren said three came from Prince George’s County and one came from Calvert County.

These complaints are from Maryland residents who think that their properties were devalued during the appraisal process. Farren says that their organization recognizes this is a big issue and is working to combat it.

“The Maryland Real Estate Appraiser Commission has put forward a proposed regulation that would require every appraisal license applicant, as well as a renewal, to have training about racial discrimination and implicit bias in the appraisal fields,” he said. 

But there’s only so much that can be done at a state level.

“The practice and standards that cover appraisal are set and managed on the national level at the Appraisal Foundation,” Farren said. 

He encourages residents not only to report issues with appraisals to the Maryland Department of Labor but also to the Appraisal Foundation so that change can be made at a national level.

“​​One of the most important things we can do is awareness and education,” said Farren. “Within the appraisal industry, [this means] having more knowledge about this potential issue, and making sure that appraisers are getting the appropriate amount of education and training on the issue of racial bias and or implicit bias.”

Some real estate agents agree that this could help combat the issue.

“The bar to be an appraiser is too high and sometimes it’s unrealistic, and so you have a lot of older, old-school ways of appraising that are still working,” said Cason. 

“Maybe they should be required to have some kind of fair housing sensitivity training,” said Brittany Campell of Harris Hawkins & Co. “Something has to happen because we’re seeing a big gap in equity from White neighborhoods to African-American neighborhoods.”

Have you experienced a biased appraisal of your home? Send your story to the AFRO at editor@afro.com .

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