Black Couple Settles Housing Discrimination Lawsuit

Paul Austin and Tenisha Tate-Austin had an encounter with a real estate appraiser they felt demonstrated housing discrimination. To address the issue, they filed suit in federal court against her and her firm.

On Monday, they reached a settlement with Janette Miller and her firm, Miller and Perotti Real Estate Appraisers, receiving financial compensation. Furthermore, Janette must attend training on how to prevent housing discrimination as well as watch the documentary Our America: Lowballed for further guidance.

Appraiser’s Race-Based Appraisal

Home appraisals are an integral part of buying, selling or refinancing a home and can significantly influence how much equity a homeowner builds into their property. Unfortunately, they're often marred by discrimination.

Racial bias in the appraisal system - a longstanding practice born of racism - often results in lower appraisal values for homes in Black neighborhoods than comparable white ones. This can rob families of generational wealth and make it more difficult to refinance or purchase a home in an area with higher home values.

A Black couple in Marin City, California has recently reached a settlement in their housing discrimination lawsuit against a San Rafael appraiser they believed was guilty of race-based prejudice. The couple claims the appraiser "whitewashed" their home by taking away all evidence of their ethnic identity inside the house--including personal portraits and artwork featuring African themes.

On Tuesday in federal court, a settlement was reached that requires the appraiser (who has yet to be named) to attend training sessions and watch a documentary about discriminatory real estate practices and racial segregation in Marin County. She will also receive an undisclosed amount of compensation from Miller & Perotti Real Estate Appraisals Inc.

Tenisha Tate-Austin and Paul Austin have a history of discrimination in their real estate transactions that has been documented. Recently, PEOPLE magazine featured them in a story, while ABC television show Our America: Lowballed highlighted their case.

Their case exemplifies a longstanding issue with housing in America, one that dates back to Depression-era policies like redlining that kept Black residents out of certain neighborhoods. The COVID-19 pandemic has further compounded this problem by disproportionately impacting communities of color and their homes.

Homeowners of color have been less fortunate than their white neighbors during the pandemic-related home value increases, often finding their houses to be worth significantly less than those belonging to different races. This has added fuel to an already widening racial wealth gap - estimated at $1.5 trillion by 2020.

Appraiser’s “Whitewashing Experiment”

One of the most direct ways to build generational wealth is homeownership, yet Black Americans are denied mortgages at disproportionately high rates due to racist policies that have plagued America since the Great Depression, such as redlining.

In Baltimore, a Black couple who had recently renovated their home were looking to refinance it when they learned of an opportunity for lower interest rates by decreasing their appraisal value. So they removed all traces of Blackness from the house and sent a white male professor from John Hopkins University to act as owner during a second appraisal, reported The New York Times.

Shane Lanham, hired by loanDepot to appraise the home, gave it a value of $472,000. Unfortunately, their loan application was denied; however, several months later they applied to another lender and successfully renegotiated their loan with a new appraiser who valued the house at $750,000.

After receiving both appraisals, the couple filed a lawsuit against Lanham and loanDepot. Their suit contends that their first appraisal was unfairly low due to their race, while the new appraisal violated the Fair Housing Act. Furthermore, Lanham "erased and replaced photos of their family, including pictures of their children" from his appraisal report.

This is an "whitewashing" experiment, in which an appraiser replaces photographs of family members with images of white people. It's done to make them more objective and is a common occurrence.

Connolly and Mott are not the only Black homeowners to be accused of discrimination by biased appraisers. These claims have received national attention, with several states including California considering legislation to address these concerns.

Despite all this attention, reports of systemic racism and bias remain widespread. Therefore, the Interagency Task Force on Property Appraisal and Valuation Equity, led by former Housing and Urban Development Secretary Marcia Fudge, is working to identify the causes of this issue and devise strategies for eliminating it.

By year-end, a federal proposal could become law that provides Black homeowners with an avenue to challenge their appraisal if they believe it to be discriminatory. Under this proposed plan, homeowners with mortgage insurance insured by the Federal Housing Administration would have uniform procedures to take in order to object to any appraisal they feel is unfair or biased.

Appraiser’s “Racial Discrimination”

In the United States, racial bias is deeply-ingrained in the housing industry. Black homeowners frequently encounter discrimination when it comes to their home's value; as a result, some have taken their complaints to government authorities.

Paul Austin and Tenisha Tate-Austin of Marin City, California were shocked by the low appraisal for their home. To get a second opinion from their lender, who hired another appraiser, they requested another opinion from an independent appraiser.

Janette Miller of Miller and Perotti Real Estate Appraisers used unsuitably biased comparable home sales, or "comps," to determine the value of Austin's property. This led the couple to sue in federal court.

In an effort to prove their home's value was undervalued, the Austins asked a white friend to pose as the owner of the house and attend an inspection. She swapped out family photos and African-themed art with her own creations, then pretended she owned it all.

According to the lawsuit, this act of racial shaming caused Austin's property value to decline by 49 percent, or $500,000, from $1,482,500 to $1,482,500. Furthermore, the appraisal undervalued rental income, square footage and bedrooms at the residence.

The Austins' lawsuit against Miller is not the first racial discrimination-based lawsuit filed against an appraiser in recent history, but it is the first of its kind to go to trial. The case is currently pending in U.S. District Court in Northern California.

The lawsuit asserts that race was a motivating factor in the appraisal and Miller committed multiple violations of the Fair Housing Act. Although Judge Maxine Chesney dismissed their claim of disparate treatment, she found evidence supporting race's role as an motivating factor and found violations to the Fair Housing Act committed by Miller.

In addition to the settlement, the appraiser must attend training sessions on segregation and promise not to discriminate in the future. She will also have to watch a documentary that chronicles the history of racial discrimination in housing.

A federal proposal could make it simpler for Black homeowners to contest an appraisal if they feel there has been a racial bias in the value of their home that wasn't realized if it had been evaluated by non-racial appraisers. Currently, one must wade through layers of bureaucracy in order to challenge an appraisal; this process is time-consuming and expensive - something many Black homeowners cannot stomach.

Appraiser’s “Sex Discrimination”

A case that emphasizes the significance of FHA compliance, a Black couple filed a lawsuit against an appraiser for violating their rights. The husband and wife claim that this appraisal infringed upon their civil liberties and was motivated by discrimination due to their race.

The Federal Housing Administration (FHA) is the nation's primary agency responsible for overseeing lending practices, prohibiting discrimination based on protected attributes like gender, race or national origin. This applies to home valuations and other decisions made by real estate professionals such as loan officers and appraisers.

It is essential to recognize that discrimination in the home valuation process can have a major effect on those trying to purchase or refinance their properties. Not only does this hinder economic development in communities, but it may even cause families to lose their homes.

Recent research revealed that home values in predominantly Black neighborhoods tend to devalue at much higher rates than those found in predominantly white ones, likely due to the segregation and disenfranchisement experienced by residents of these areas.

This issue can be made even worse by the fact that mortgage lenders often rely on appraisals to value a property. An appraised value plays an integral role in deciding how much money a lender will lend for a home purchase, and challenging an appraisal based on discriminatory practices can prove challenging.

This Black couple sought an appraisal from Janette Miller at Miller & Perotti. However, when they disputed the value placed on their home, another company valued it much higher.