Two Baltimore professors say their house in the city’s historic Homeland neighborhood was undervalued by an appraiser because they are Black, according to a new lawsuit filed this week in federal court.
The first appraiser who evaluated the home knew that the family was Black, according to the lawsuit, and valued the house at $472,000. The couple said they then “whitewashed” their home, removing any sign that a Black family lived there, before a second appraisal a few months later. That appraisal came in at $750,000.
The plaintiffs, Nathan Connolly and Shani Mott, are both professors of history at Johns Hopkins University. Their lawyer, John Relman, said the case offers a real-world example of the harms of appraisal discrimination.
“We have individuals who have done everything that the market would have told them to do to take advantage of rising values,” said Relman, of Relman Colfax, PLLC in Washington, D.C.
“They want to access their capital and they can’t,” he said. “Their neighbors who are white would be able to.”
The appraiser who is named as a defendant in the lawsuit, Shane Lanham, declined to comment. His Maryland company, 20/20 Valuations, is also named as a defendant, as is the lender who used his appraisal.
The lawsuit was first reported by The New York Times. Connolly and Mott filed their complaint on Monday in U.S. District Court in Baltimore.
According to the complaint, the couple sought to refinance their mortgage to take advantage of low interest rates in mid-2021. They bought their home, on Churchwardens Road, for $450,000 in 2017 and have made tens of thousands of dollars in repairs and improvements since then.
The couple’s lender estimated the home’s value at $550,000 and approved them for a refinance loan at a 2.25% interest rate pending the appraisal, according to the lawsuit. Lanham, the appraiser, reached the lower figure of $472,000 after visiting the home in June 2021 and meeting the family in person, the lawsuit claims.
The complaint alleges that Lanham also ignored more comparable houses in the Homeland neighborhood and instead limited his comparison to houses north of the Northern Parkway.
One of those homes was located outside the neighborhood in a majority-Black census block; another was in Homeland but pulled from a small majority-Black area in the neighborhood. Homeland is a majority white neighborhood.
“Lanham’s decision to geographically limit the area from which he selected comparable sales reflected his belief that, because of their race, Dr. Connolly and Dr. Mott did not belong in Homeland, an attractive and predominantly white neighborhood, and that a home with Black homeowners located adjacent to a predominantly Black area is worth less than if it were in the whiter areas that he deemed ‘the heart’ of Homeland,” the lawsuit claims.
The couple sought another appraisal in early 2022. This time, they removed all signs that a Black family lived in the home, including family pictures and artwork, and replaced them with photographs borrowed from white friends and colleagues, according to the complaint. A white colleague of the couple was present when the second appraiser came to the home.
That appraiser pulled comparable homes from majority-white areas of the Homeland neighborhood, according to the suit. His appraisal came in at $750,000.
Connolly and Mott ultimately got their refinance loan based on the second appraisal, but at a higher interest rate than they would have received if the first appraisal had been used. Their application for a refinance loan had been denied after the first appraisal.
The suit claims violations of the Fair Housing Act, the Equal Credit Opportunity Act, civil rights law and Maryland fair housing laws.
Relman said that in addition to the financial cost that the couple suffered, there was a significant emotional cost.
“Think about what it means if you have to explain to your children why you are taking down all the pictures in your house before you do an appraisal,” he said.