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Black couple settles bias suit over lowballed home appraisal

A white appraiser must compensate a Black couple, attend training and watch a documentary on preventing housing discrimination.

SAN FRANCISCO (CN) — A Black couple living in the San Francisco Bay Area city of Marin City have settled their claims against an appraiser they accused of racial discrimination for drastically lowballing their home value.

Tenisha Tate-Austin and her husband Paul spent years renovating their Marin City home with views of the San Francisco Bay which they bought in 2016. After refinancing their home several times to finance the revamp, they decided to refinance one more time in 2020 to take advantage of low interest rates and pay for an additional unit.

Appraiser Janette Miller was hired by appraisal services company AMC Links to do the inspection in January 2020. The Austins claimed Miller valued their home at $995,500 — an amount their complaint calls “erroneously low” considering their home appraised for $1.4 million in 2019. Marin County has some of the highest housing prices in the state, with Zillow currently showing the average home price across the entire region at $1,363,168 — up 3.4% since last year.

The couple’s lawsuit quotes from Miller’s report attributing her appraisal to declining home values in Marin City following the Great Recession and foreclosure crisis of 2007-2008. The Austins say Marin City experienced higher foreclosure rates than other predominately white areas, which is “directly linked to the history of redlining, segregation, discrimination, and lack of access to credit in such communities.” Though more than 10 years had passed and home values had rebounded, they said Miller insisted on using outdated market trends to disproportionately devalue Marin City homes.

The couple enlisted a white friend to stand in for them during a second appraisal, “white-washing” their home to remove family photos and African art from the walls. The friend replaced the photos with those of her own family — and the home appraised for $1,482,500.

The U.S. Department of Justice filed a statement of interest in the case urging U.S. District Judge Maxine Chesney to hold that the Fair Housing Act applies to discriminatory appraisals and that individual appraisers should be held liable for discrimination under the law.

Chesney found the Austins made plausible claims of disparate treatment, and that race may have been a “motivating factor” in Miller’s appraisal. She dismissed the Austins’ claim for discriminatory housing practice under the Fair Housing Act, which makes it illegal to refuse to sell or rent to someone based on their race, or to advertise a dwelling indicating a racial preference. However, she found the appraiser could be held liable for a discriminatory real estate transaction since Paul Austin was at his home and the Austins’ family photos were on display while Miller performed the inspection.

In a motion to dismiss filed June 2022, Miller noted appraisers who erroneously value a property may be liable to persons who suffer damages in reliance upon the valuation, and plaintiffs proceeding on a theory of professional negligence must meet the burden of establishing that the defendant appraiser owed them a duty of care by making the appraisal.

She asked Chesney to throw out the case in part because the Austins did not offer specific facts “to show how they actually relied upon the Miller appraisal.”

“Other than alleging that they were 'shocked' by the valuation in the Miller appraisal such that they requested that their AMC order a second appraisal, plaintiffs failed to allege that they actually relied upon the Miller appraisal to their detriment,” the appraiser said in the motion. “Plaintiffs made no change in their behavior when they received the Miller appraisal other than to request a second appraisal.”

But this past April, Chesney found that there was plausible discrimination in the couple’s case that the home was drastically undervalued by Miller, a white appraiser, so they could move forward with a claim for race discrimination. By October, the parties indicated they were near a settlement, leading the judge to order dismissal of all the claims with prejudice.

The settlement announced Monday includes an undisclosed financial compensation from Miller and her firm, Miller and Perotti Real Estate Appraisers. The settlement also requires Miller to attend training on prevention of housing discrimination in the county and watch the documentary “Our America: Lowballed,” on housing discrimination cases. 

Attorneys for the appraiser did not respond to emails seeking comment before deadline.

Co-plaintiff nonprofit Fair Housing Advocates of Northern California said in a statement Monday that the Austins’ case is a "dramatic example of how an unfairly low appraisal can affect your ability to access a loan with good terms and build generational wealth."

“Unfortunately, their experience is not unique," said executive director Caroline Peattie.

"Studies show that Black and Latinx applicants are more likely than white applicants to receive an appraisal value lower in both the sales and refinancing process," Peattie said. "These studies show that appraisers choose so-called comparable properties ('comps') of other property sales located substantially closer to the property being appraised if it’s located in a predominantly Black or Latinx census tract than if it’s located in a predominantly white census tract, even if those closer properties are not at all comparable — so appraisers likely still view neighborhoods and relevant comps based on racial demographics, which is part of what what we believe happened in the Austins’ case.” 

Paul Austin said the family is pleased with the resolution. “We’re glad that we can put this lawsuit behind us,” he said. “Having to experience everything that came with receiving the lowballed appraisal was overwhelming. Being able to tell our story and knowing we had legal recourse helped. We want others to know that if you experience discrimination, you can go to your local fair housing agency so they can investigate your case and help you if you want to file a complaint.” 

Tenisha Tate-Austin added: “We missed out on a better interest rate because of the unfair appraisal we received. Having to erase our identity to get a better appraisal was a wrenching experience. We know of other Black families who either couldn’t get a loan because of a discriminatory appraisal and therefore either lost the opportunity to buy or sell a home, or they had to sell their home because they had an unaffordable loan.

"The ongoing undervaluation of homes in Black neighborhoods perpetuates the wealth gap between Black and white families," she added. "We hope by bringing attention to our case and this lawsuit settlement, we can help change the way the appraisal industry operates, and we can start to see a different trend.” 

Categories:Civil Rights, Consumers

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