WASHINGTON, DC (KGO) — The Department of Housing and Urban Development has sued a lender, an appraisal management company and an appraiser for racial discrimination and violations of the Fair Housing Act in the home appraisal process, the first since ABC7 News' groundbreaking reporting on the issue sparked a national debate and awareness.
HUD announced in a statement Monday that it has filed charges against appraisal management company Rocket Mortgage Inc. and an appraiser for racial discrimination in connection with appraisals of properties belonging to Black homeowners in Denver.
“Our America: Lowballed” follows Black and Latino families as they fight for fair housing after their homes are appraised at lower than expected values.
According to the release, HUD determined that the appraiser provided an intolerably low appraisal for a duplex owned by a black homeowner in a majority-white neighborhood of Denver. The allegations were that the appraiser deviated from acceptable methodology by relying on similar properties in neighborhoods with large black populations and excluding potential comparable properties in neighborhoods with large white populations.
HUD also alleges that both the appraisal management company and Rocket Mortgage reviewed appraisals that were “riddled with inaccuracies” and failed to correct them despite several “red flags. The homeowner was told she could only proceed with her loan application based on the allegedly discriminatory appraisal, which led to her application being denied.
The case will now go to an administrative law judge, who will decide whether to pay damages to the homeowners or order them to change their business practices.
If either party elects a jury trial, the case could be tried in federal court and there could be a jury trial.
Rocket Mortgage released the following statement in response to ABC7 News' request for comment:
“Federal law requires mortgage lenders to work independently during the appraisal process, partnering with an independent appraisal management company and assigning the work to a state-licensed professional appraiser. The purpose of the law is to determine the value of the home without any information or bias from the lender or any other party with an interest in the transaction.”
For these reasons (and more), it is clear that we are a misguided target exploited solely for headlines because of our brand and industry position. We look forward to taking the facts of this case to court and setting the record straight. Until then, we will continue to provide affordable options and promote other equitable efforts to make the dream of homeownership a reality for all.”
ABC7 News reached out to the appraiser and the appraisal management company for comment but did not immediately hear back.
ABC7 News has reported for years on allegations of discrimination in the home appraisal process, an issue that has even made it to the White House, and most recently we told you the story of an East Oakland homeowner who reached a settlement agreement with a California appraiser and mortgage company after receiving an appraisal value that was more than $300,000 lower than expected.
RELATED: Oakland homeowner settles with appraiser, lender after $300,000 undervaluation
The subject of the ABC7 News documentary “Our America: Lowballed” is an appraiser who undervalued his Marin City home in a case that led to a settlement last year of a lawsuit against the appraiser, a racial slur that changed state and federal housing policy.
The story of Paul and Tenisha Austin made headlines in 2021 when ABC7's Julian Glover reported that the value of their home had skyrocketed by $500,000.
The appraiser who gave the low valuation must pay the Austins an undisclosed amount, agree not to discriminate in the future, attend training on the history of racial segregation in real estate discrimination offered by the Northern California Fair Housing Advocates, complete state-mandated continuing education and watch the Julian Glover documentary “Our America: Lowballed.”
This coverage of the undervaluation of Black and Latino homes has prompted new legislation at the state and federal levels. In 2023, California became the first state to require appraisers to complete anti-bias training courses. In Maryland, the state legislature created a task force to study the impact of property undervaluation in areas with majority BIPOC communities. Our “Lowballed” investigation also led President Biden to create the Property Appraisal Equity (PAVE) Task Force to identify solutions to eradicate bias in appraisals.
RELATED: Black Bay Area couple undervalued by $500,000 in home appraisal, settles
The Austin family's story, first told by Glover in February 2021, led to an invitation to speak at the White House in March 2022, when the Biden administration rolled out the PAVE Action Plan after an unprecedented interagency collaboration with 13 federal agencies. In addition, Congresswoman Maxine Waters, who also appeared in the documentary, introduced legislation to combat appraisal bias with the Fair Appraisal and Inequality Reform Act (FAIR). In announcing the FAIR Act, Waters highlighted the case of the Curtis family of Oakland, also featured in “Lowballed.” In 2024, the Department of Housing and Urban Development (HUD) and the Federal Housing Administration (FHA) responded to the biggest concern raised in “Lowballed”: negligence. They announced new guidelines that standardize how lenders handle cases of appraisal bias.
You can watch the award-winning documentary, “Our America: Lowballed,” here.
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