Black Homeowners in an Affluent White Area File Suit Alleging a White Realtor, “20/20 Valuations” and loanDepot Undervalued Their Home in a Racial Conspiracy to Deny their Refinance Loan

From [HERE] Claiming racial discrimination, a pair of Black homeowners in an affluent neighborhood of Maryland called Homeland claim in a federal complaint that they missed out on historically low interest rates because Loandepot.com would not refinance their mortgage on the basis of a low appraisal conducted by 20/20 Valuations.

The complaint states:

Plaintiffs Dr. Nathan Connolly and Dr. Shani Mott bring this action for damages, injunctive relief, and declaratory relief against Defendants Shane Lanham, 20/20 Valuations, LLC, and loanDepot.com, LLC (“loanDepot”), to seek redress for violations of the Fair Housing Act, 42 U.S.C. § 3601 et seq., the Equal Credit Opportunity Act, 15 U.S.C. § 1691 et seq., the Civil Rights Act of 1866, 42 U.S.C. §§ 1981, 1982, and Maryland Fair Housing Laws, Md. Code, State Gov’t § 20-702 et seq.

Defendants Lanham and 20/20 Valuations discriminated against Plaintiffs by dramatically undervaluing their home in an appraisal because of Plaintiffs’ race and their home’s location adjacent to a Black census block, notwithstanding that it is also located within Homeland, an affluent, mostly white neighborhood. Defendant loanDepot discriminated against Plaintiffs by knowingly relying on that appraisal to deny Plaintiffs a refinance loan and retaliating when Plaintiffs explained why the appraisal was discriminatory.

Homeland is a historic neighborhood in Baltimore. It is predominantly white. Plaintiffs bought a four-bedroom, 2600 square foot single-family detached house in Homeland and moved there in 2017. They are professors at Johns Hopkins University. Both are Black.

Plaintiffs applied to Defendant loanDepot in mid-2021 to refinance their existing mortgage debt and take advantage of historically low interest rates. loanDepot approved their application for a loan with a 2.25% interest rate, subject to confirming the $550,000 estimated value of the home with a formal appraisal. loanDepot’s loan officer wrote to Plaintiffs that “we should be good” because the estimated value was “pretty conservative.”

loanDepot contracted with Defendant Shane Lanham’s company, Defendant 20/20 Valuations, for the appraisal.

Lanham conducted the appraisal, which was inconsistent with professional appraisal standards in many ways. He improperly limited his search for comparable recently-sold properties to a very small portion of Homeland, north of Northern Parkway (and, still, chose a comparable from outside the neighborhood boundary); failed to consider houses throughout Homeland, both north and south of Northern Parkway, that were more similar to Plaintiffs’ house than ones he used for his valuation; made excessive downward adjustments to the sales prices of the houses he used; failed to make appropriate upward adjustments to reflect features those houses lacked but that Plaintiffs’ house has; and failed to account for substantial improvements Plaintiffs made to their home in 2020. Lanham also questioned whether Plaintiffs were legitimate residents of Homeland by asking if they paid dues to the Homeland Association.

Lanham appraised Plaintiffs’ home for only $472,000, over $75,000 below the loan officer’s “conservative” estimate of value. Defendant loanDepot denied Plaintiffs’ loan application because of the low valuation.

Plaintiffs were shocked at the appraisal and recognized that the low valuation was because of racial discrimination. They told this to their loanDepot loan officer and challenged the appraisal in a detailed letter.

loanDepot maintained its application denial and did not provide any substantive response to Plaintiffs’ communications about the discriminatory and flawed nature of the appraisal. Instead, the loan officer stopped responding to Plaintiffs’ phone calls.

Plaintiffs applied to another lender in early 2022 to refinance their mortgage debt. This time they “whitewashed” the house prior to the appraisal, removing the many indicia that a Black family lived there, such as family photos and their children’s drawings of Black people, and replacing them with items borrowed from white friends. Plaintiffs enlisted a white colleague to be present when the appraiser came and stayed away from the house themselves.
The home appraised for $750,000. Plaintiffs obtained their refinance loan on that basis, but at a higher interest rate than they would have received from loanDepot. Defendant Lanham’s dramatically lower valuation reflected his beliefs that a

Black family did not genuinely belong in Homeland and could not be the owners of a higher- valued home, and also that their home was less valuable because it was at the edge of an area with a predominantly Black population. Lanham violated professional standards to devalue Plaintiffs’ home because of these racist beliefs. Defendant loanDepot relied on Lanham’s appraisal despite being informed that it was infected by discrimination and stopped answering or returning Plaintiffs calls once they challenged the appraisal on that basis.

Defendants’ actions reflect intentional racial discrimination and retaliation against Plaintiffs for identifying those actions as discriminatory. Defendants’ actions have caused financial and emotional injury to Plaintiffs for which they seek declaratory and injunctive relief and compensatory and punitive damages. [MORE]