DOJ weighs in on Hopkins profs’ home appraisal suit
The U.S. Department of Justice intervened in the federal case of two Johns Hopkins University professors who say they were discriminated against when having their house appraised, filing a statement of interest Monday to explain how the law applies to discriminatory home appraisals.
The statement of interest, a filing to demonstrate the agency’s position on an external issue, was filed by U.S. Attorney for the District of Maryland Erek L. Barron and Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division, along with the Consumer Financial Protection Bureau.
“The requirement that applicants and homeowners be treated equally is not new,” said Barron in a news release. “Appraisal bias is a serious and ongoing issue in this country, and it is critical that the United States ensures the proper construction and application of the Fair Housing Act and the Equal Credit Opportunity Act to hold appraisers and lenders accountable.”
The Fair Housing Act outlaws housing discrimination based on race. The Equal Credit Opportunity Act prohibits racial discrimination by creditors.
Hopkins professors Nathan Connolly and Shani Mott, who are Black, believe they were given a lower appraisal because of their race. After getting their Baltimore home appraised, Connolly and Mott replaced their décor and family photos to make the home seem white-owned. A second appraisal valued it for 60% more than the original appraisal, they said.
The couple also alleged that their lender, loanDepot.com denied the loan and retaliated against them after they notified the company of the suspected discrimination.
The couple filed a lawsuit against the appraiser, Shane Lanham, and loanDepot. The defendants have moved to dismiss the case. Connolly and Mott have opposed such motions.
Lanham declined to comment, and his attorney did not immediately respond to voicemails Tuesday afternoon.
In a statement, loanDepot said: “loanDepot is committed to fair lending and providing access to homeownership to diverse communities of homebuyers. We fully recognize the importance of preventing appraisal bias in the housing industry, and our robust processes reflect our commitment to doing so.
“Consistent with this commitment, we strongly disagree with the statements made by the federal agencies and their mischaracterization of our arguments and the facts in this matter. We stand by our policies and procedures and will continue to vigorously defend this litigation.”
The Justice Department’s statement of interest describes the legal principles its says loanDepot used incorrectly in its motion to dismiss, the U.S. Attorney’s office said in its news release.
The statement first lays out the “appropriate pleading standard” for claims related to the Fair Housing Act and the Equal Credit Opportunity Act. Then, the statement explains the illegality of a lender relying on an appraisal “that it knows or should know to be discriminatory.”
The statement also says that loanDepot incorrectly interpreted how the Fair Housing Act can be violated. The company argued that the plaintiffs needed to claim an additional violation for the allegation of discrimination against loanDepot to be valid, though the statute does not support this, according to the Justice Department.
“Lenders that discriminate against people seeking homeownership perpetuate inequities that prevent communities from thriving,” said Zixta Martinez, deputy director of the Consumer Financial Protection Bureau, in the release. “CFPB’s Statement of Interest filing with the Justice Department is one piece of our broader efforts to ensure fair and accurate appraisals in our residential mortgage markets.”