WASHINGTON, D.C. (KGO) — The Department of Housing and Urban Development has charged a lender, appraisal management company, and appraiser with racial discrimination and violating the Fair Housing Act in the home appraisal process for the first time since ABC7 News’ groundbreaking reporting on the issue created a national conversation and increased awareness.
In a release, HUD announced Monday that it charged Rocket Mortgage, an appraisal management company, and an appraiser with racial discrimination related to the appraisal of a Black Denver homeowners property.
“Our America: Lowballed” follows Black and Latino families as they fight for fair home values after lower than expected appraisals.
The release states that HUD found the appraiser generated an insupportably low appraisal of a duplex owned by a Black homeowner in a majority white area of Denver. The charge alleges the appraiser deviated from acceptable methodologies and relied on comparable properties in neighborhoods with greater Black populations and excluded potential comps in neighborhoods with greater white populations.
HUD also alleges that both the appraisal management company and Rocket Mortgage reviewed the appraisal “rife with inaccuracies” and failed to correct it despite several “red flags.” The homeowner was told she could only proceed with her loan application based on the appraisal she alleged was discriminatory leading to her application being denied.
The case now goes to an administrative law judge who will determine whether to award damages to the homeowner or order changes to business practices.
The case could be heard in federal court potentially before a jury if any party chooses that option instead.
Rocket Mortgage responded to ABC7 News’ request for comment and provided the following statement.
“Under federal law, mortgage lenders are required to work at arm’s length during the appraisal process, partnering with independent appraisal management companies who assign the work to state-licensed professional appraisers. The law’s intent is to determine the home’s value without any input or bias from the lender or any other party with interest in the transaction.
For that reason (and more), our company is clearly a misplaced target used simply to score headlines because of its brand and position in the industry. We look forward to bringing the facts of this case to court to set the record straight. Until then, we will continue offering affordable options and championing other equitable initiatives to make the dream of homeownership accessible to all.”
ABC7 News reached out to the appraiser and appraisal management company for comment but did not immediately hear back.
ABC7 News has reported on allegations of discrimination in the home appraisal process for years taking the issue all the way to the White House. Most recently, we shared the story of an East Oakland homeowner who reached a settlement agreement with a California appraiser and a mortgage company after receiving an appraisal that came in more than $300,000 lower than expected.
RELATED: Oakland homeowner settles with appraiser, lender after $300,000 lowball appraisal
The subjects of ABC7 News documentary “Our America: Lowballed,” whose story of an appraiser undervaluing their Marin City home due to alleged racial discrimination that shifted state and federal housing policy, settled a lawsuit against the appraiser last year.
Paul and Tenisha Austin’s story went viral when ABC7’s Julian Glover reported in 2021 that the value of their home skyrocketed by $500,000.
The appraiser who performed the low appraisal has to pay the Austin’s an undisclosed amount of money, is required to agree not to discriminate in the future, attend a training session regarding the history of segregation in real-estate discrimination provided by the Fair Housing Advocates of Northern California, complete state-assigned continuing education, and is required to watch Julian Glover’s documentary “Our America: Lowballed.”
This reporting on the devaluation of Black and Latino homes has spurred new laws 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 effects of the undervaluation of properties in majority BIPOC communities. Our “Lowballed” investigation also led President Biden to create the Property Appraisal Valuation Equity (PAVE) task force to identify solutions to root out appraisal bias.
RELATED: Settlement reached in favor of Black Bay Area couple lowballed $500K in home appraisal
The Austin family, whose story was first told by Glover in February 2021, was invited to speak at the White House in March 2022 as the Biden Administration rolled out the PAVE Action Plan after an unprecedented interagency collaboration with 13 federal offices and agencies. In addition, Congresswoman Maxine Waters, also featured in the documentary, introduced legislation to combat appraisal bias with the Fair Appraisal and Inequity Reform Act (FAIR). In the announcement of the FAIR Act, Waters highlighted the Curtis’ case from Oakland, also featured in “Lowballed”. In 2024, the Department of Housing and Urban Development (HUD) and the Federal Housing Administration (FHA) responded to a top concern of inattention raised by “Lowballed.” They released new guidance standardizing how lenders handle appraisal bias cases.
You can watch the award-winning documentary “Our America: Lowballed” here.
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