Black Homeowners Face Discrimination in Appraisals
Companies that value homes for sale or refinancing are bound by law not
to discriminate. Black homeowners say it happens anyway.
A second appraisal valued Abena and Alex Horton’s Jacksonville
home 40 percent higher than the first appraisal, after Ms. Horton
removed all signs of Blackness.
A second appraisal valued Abena and Alex Horton’s Jacksonville home 40
percent higher than the first appraisal, after Ms. Horton removed all
signs of Blackness.Credit...Charlotte Kesl for The New York Times
ByDebra Kamin
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NY Times, PublishedAug. 25, 2020UpdatedAug. 27, 2020
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Abena and Alex Horton wanted to take advantage of low home-refinance
rates brought on by the coronavirus crisis. So in June, they took the
first step in that process, welcoming a home appraiser into their
four-bedroom, four-bath ranch-style house in Jacksonville, Fla.
The Hortons live just minutes from the Ortega River, in a predominantly
white neighborhood of 1950s homes that tend to sell for $350,000 to
$550,000. They had expected their home to appraise for around $450,000,
but the appraiser felt differently, assigning a value of $330,000. Ms.
Horton, who is Black, immediately suspected discrimination.
The couple’s bank agreed that the value was off and ordered a second
appraisal. But before the new appraiser could arrive, Ms. Horton, a
lawyer, began an experiment: She took all family photos off the mantle.
Instead, she hung up a series of oil paintings of Mr. Horton, who is
white, and his grandparents that had been in storage. Books by Zora
Neale Hurston and Toni Morrison were taken off the shelves, and holiday
photo cards sent by friends were edited so that only those showing white
families were left on display. On the day of the appraisal, Ms. Horton
took the couple’s 6-year-old son on a shopping trip to Target, and left
Mr. Horton alone at home to answer the door.
The new appraiser gave their home a value of $465,000 — a more than 40
percent increase from the first appraisal.
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Race and housing policy have long been intertwined in the United States.
Black Americans consistently struggle more than their white counterparts
to be approved for home loans, and the specter of redlining — a practice
that denied mortgages to people of color in certain neighborhoods
—continues to drive down home values
<https://www.nytimes.com/2017/08/24/upshot/how-redlinings-racist-effects-lasted-for-decades.html>in
Black neighborhoods.
Even in mixed-race and predominantly white neighborhoods, Black
homeowners say, their homes are consistently appraised for less than
those of their neighbors, stymying their path toward building equity and
further perpetuating income equality in the United States.
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Home appraisers are bound by the Fair Housing Act of 1968 to not
discriminate based on race, religion, national origin or gender.
Appraisers can lose their license or even face prison time if they’re
found to produce discriminatory appraisals. Title XI of the Financial
Institutions Reform, Recovery and Enforcement Act, enacted in 1989, also
binds appraisers to a standard of unbiased ethics and performance.
“My heart kind of broke,” Ms. Horton said. “I know what the issue was.
And I knew what we needed to do to fix it, because in the Black
community, it’s just common knowledge that you take your pictures down
when you’re selling the house. But I didn’t think I had to worry about
that with an appraisal.”
Appraisals, by nature, are subjective. And discrimination, particularly
the subconscious biases and microaggressions that have risen to the fore
in white America this summer following the death of George Floyd, is
notoriously difficult to pinpoint.
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Ms. Horton shared her experiment in awidely circulated Facebook post
<https://www.facebook.com/abbbbbbSH/posts/10157315957283671>, earning
25,000 shares and more than 2,000 comments, many of which came from
Black homeowners and carried the same message: This also happened to me.
In each comment, a repeated theme: Home appraisers, who work under codes
of ethics but with little regulation and oversight, are often all that
stands between the accumulation of home equity and the destruction of it
for Black Americans.
ImageThe value of Stephen Richmond’s home in a Hartford, Conn.,
suburb jumped after he removed family photos and movie posters, and had
a white neighbor stand in for him during a second appraisal.
The value of Stephen Richmond’s home in a Hartford, Conn., suburb jumped
after he removed family photos and movie posters, and had a white
neighbor stand in for him during a second appraisal.Credit...Monica
Jorge for The New York Times
After the first appraisal came up short on his house in an affluent,
racially mixed suburb of Hartford, Conn., Stephen Richmond, an aerospace
engineer, took down family photos and posters for Black movies and had a
white neighbor stand in for him on a second appraisal. He was hoping to
refinance; with the second report, he saw his home’s value go up $40,000
from the initial appraisal just a few weeks earlier.
In 2000, the American actor and comedian D.L. Hughley had an appraisal
on his home in the Montevista Estates neighborhood of West Hills, a
primarily white area in the San Fernando Valley in Los Angeles. Despite
a steady uptick in the housing market and the addition of a pool and new
hardwood floors, the house was appraised for nearly what he had bought
it for three years earlier — $500,000.
In Mr. Hughley’s case, his bank flagged the report.
“They were like, this has to be some kind of mistake because in order
for your house to have come in this low, it would have to be in some
level of disrepair,” Mr. Hughley said.
The bank ordered a new appraisal, which came back $160,000 higher, and
Mr. Hughley went on to sell the home for $770,000.
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Mr. Hughley talks about the experience in his book, “Surrender, White
People!”, a satirical look at white supremacy, which was published in
June by Harper Collins and examines racial inequality in the United
States across education, health care and the housing market.
“People always tell us to pull ourselves up by our bootstraps. But what
if you remove the straps?” he said. “You’re invested in the American
dream, you have capital, you have a chip in the game. And the fact that
somebody could summarily minimize my wealth just because of a bias, it
seemed crazy to me.”
In response to the coronavirus pandemic, a federal ruling issued in
March allowed appraisals for homes that were being sold to be done
remotely in certain circumstances, temporarily pausing the need for
interior home inspections. Those looking to refinance, however, still
must complete an in-person appraisal.
In Mr. Hughley’s case, the appraiser was fired. Ms. Horton has filed a
complaint with the Department of Housing and Urban Development; when
contacted about her case, HUD said it had been assigned to the
Jacksonville Human Rights Commission. The agency added that it receives
a handful of similar complaints each year.
In 2018, researchers from Gallup and the Brookings Institution
publisheda report
<https://www.brookings.edu/research/devaluation-of-assets-in-black-neighborhoods/>on
the widespread devaluation of Black-owned property in the United States,
which they discussed in a 2019 hearing before the House Financial
Services Subcommittee. The report found that a home in a majority Black
neighborhood is likely to be valued for 23 percent less than a
near-identical home in a majority-white neighborhood; it also determined
this devaluation costs Black homeowners $156 billion in cumulative losses.
Many appraisers, both during the hearing and in the weeks after,
defended their practice, noting that it’s their job to report on local
market conditions, not set them.
“Is there a problem with poor and underserved communities in the United
States? Yes. Is it the appraisal profession’s fault? No,” wrote Maureen
Sweeney, a Chicago-based appraiser in a letter to the house subcommittee
following the hearing. “It’s like blaming the canary for the bad air in
the coal mine, or blaming the mirror for your bad hair day. Appraisers
reflect the market; we do not create it.”
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But what about a Black homeowner in a white neighborhood whose property
is appraised for less than his neighbor’s? Whether appraisers are
devaluing Black homes or entire Black neighborhoods, the core issue is
the same, said Andre Perry, one of the writers of the Brookings
Institution report and the author of “Know Your Price: Valuing Black
Lives and Property in America’s Black Cities.”
“We still see Black people as risky,” Mr. Perry said. “White appraisers
carry the same attitudes and beliefs of white America — the same
attitudes that compelled Derek Chauvin to kneel casually on the neck of
George Floyd are shared by other professionals in other fields. How does
that choking out of America look in the appraisal industry? Through very
low appraisals,” he said.
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Twitter:@nytrealestate <https://twitter.com/nytrealestate>.
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